INDB

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Independent Bank (NASDAQ:INDB) and the rest of the regional banks stocks fared in Q2. Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges. The 95 regional banks stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates. In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results. Tracing its roots back to 1907 and serving as a financial cornerstone in New England for over a century, Independent Bank Corp. (NASDAQ:INDB) operates as the holding company for Rockland Trust, providing banking, investment, and financial services across Eastern Massachusetts and Rhode Island. Independent Bank reported revenues of $253.3 million, up 40.6% year on year. This print fell short of analysts’ expectations by 1.8%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ net interest income and EPS estimates. The market seems disappointed with the results as the stock is down 4.2% since reporting and currently trades at $83.55. Read our full report on Independent Bank here, it’s free. Originally founded in 1964 as a federal savings and loan institution, OFG Bancorp (NYSE:OFG) provides banking and financial services including commercial and consumer lending, wealth management, insurance, and trust services primarily in Puerto Rico and the U.S. Virgin Islands. OFG Bancorp reported revenues of $190.3 million, up 4.4% year on year, outperforming analysts’ expectations by 3.9%. The business had an exceptional quarter with a beat of analysts’ EPS and net interest income estimates. The market seems content with the results as the stock is up 3.5% since reporting. It currently trades at $51.76. Is now the time to buy OFG Bancorp? Access our full analysis of the earnings results here, it’s free. Originally established in 1941 and now operating with a tech-forward approach that includes its SmartStreet platform for homeowner associations, Banc of California (NYSE:BANC) is a California-based bank holding company that provides banking services to small and middle-market businesses, entrepreneurs, and individuals. Banc of California reported revenues of $285.7 million, up 4.7% year on year, falling short of analysts’ expectations by 3.1%. It was a disappointing quarter as it posted a significant miss of analysts’ tangible book value per share estimates and a significant miss of analysts’ net interest income estimates. As expected, the stock is down 11.9% since the results and currently trades at $18.67. Read our full analysis of Banc of California’s results here. Tracing its roots back to 1849 during the California Gold Rush era, KeyCorp (NYSE:KEY) operates KeyBank, a full-service regional bank providing retail and commercial banking, wealth management, and investment services across 15 states. KeyCorp reported revenues of $1.96 billion, up 6.7% year on year. This number met analysts’ expectations. More broadly, it was a slower quarter as it produced a slight miss of analysts’ net interest income estimates and a miss of analysts’ tangible book value per share estimates. The stock is down 6% since reporting and currently trades at $21.92. Read our full, actionable report on KeyCorp here, it’s free. With a network of banking centers spanning the Lone Star State and beyond, Prosperity Bancshares (NYSE:PB) operates full-service banking locations throughout Texas and Oklahoma, offering a wide range of financial products and services to businesses and consumers. Prosperity Bancshares reported revenues of $383.6 million, up 23.8% year on year. This print topped analysts’ expectations by 0.8%. It was a strong quarter as it also recorded a solid beat of analysts’ tangible book value per share estimates. The stock is down 1.3% since reporting and currently trades at $72.62. Read our full, actionable report on Prosperity Bancshares here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Independent Bank currently trades at $84.81 per share and has shown little upside over the past six months, posting a middling return of 2.4%. The stock also fell short of the S&P 500’s 13.5% gain during that period. Is there a buying opportunity in Independent Bank, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free. We’re passing on Independent Bank for now. Here are three reasons why INDB doesn’t excite us, plus one stock we’d rather own. For banks, tangible book value per share (TBVPS) is a crucial metric that measures the actual value of shareholders’ equity, stripping out goodwill and other intangible assets that may not be recoverable in a worst-case scenario. Although Independent Bank’s TBVPS increased by 5.6% annually over the last five years, growth has recently decelerated a bit to a sluggish 3.4% over the past two years (from $45.19 to $48.34 per share). Tangible book value per share (TBVPS) growth comes from a bank’s ability to profitably lend while maintaining prudent risk management and efficient operations. Over the next 12 months, Consensus estimates call for Independent Bank’s TBVPS to grow by 7.6% to $52.01, paltry growth rate. Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends. Over the last five years, Independent Bank has averaged an ROE of 7.5%, uninspiring for a company operating in a sector where the average shakes out around 10%. Independent Bank isn’t a terrible business, but it doesn’t pass our bar. With its shares lagging the market recently, the stock trades at 1.1× forward P/B (or $84.81 per share). This valuation multiple is fair, but we don’t have much faith in the company. We’re fairly confident there are better stocks to buy right now. We’d suggest looking at a dominant aerospace business that has perfected its M&A strategy. ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, July 23, 2026 at 11:00 a.m. ET President and Chief Executive Officer - William Bradford Kessel Executive Vice President and Chief Financial Officer - Gavin A. Mohr Executive Vice President and Head of Commercial Banking - Joel F. Rahn Operator: Good day, and thank you for standing by. Welcome to the Independent Bank Corporation Second Quarter 26 Earnings Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a Q&A session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message device when your hand is raised. To withdraw your question, please press *11 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, President and CEO, Brad Kessel. Please go ahead. William Bradford Kessel: Good morning, and welcome to today's call. Thank you for joining us Independent Bank Corporation's conference call and webcast to discuss the company's results for the second quarter of 26. I am Brad Kessel, President and Chief Executive Officer. Joining me is Gavin A. Mohr, executive vice president and our chief financial officer. and Joel Rahn, executive vice president and head of commercial banking. Before we begin today's call, I would like to direct you to important information on page 2 of our presentations. Specifically the cautionary note regarding forward-looking statements. If anyone does not already have a copy of the press release issued by us today, you can access it at the company's website, independentbank.com. The agenda for today's call will include prepared remarks followed by a Q&A session, and then closing remarks. Earlier this morning, Independent Bank Corporation reported second quarter 26 net income of $18.8 million per diluted share, versus net income of $16.9 million or $0.81 per diluted share in the prior year period. Highlights for the second quarter of 26 include net interest margin of 3.71%, 6 basis point increase from the linked quarter. An increase in net interest income of $1 million or 2.2% over the first quarter of 26. An increase in tangible common equity per share of common stock of $0.86, or 14.8% annualized from 03/31/2026. A return on average assets and a return on average equity of 1.37% and 14.52%, respectively, For the quarter ended June 30, 2026. Net growth in total deposits less brokered time of $38.2 million or 3.2% annualized. Net loan growth of $106 million or 9.8% annualized. An increase in tangible common equity to 8.9% at 06/30/2026. And the payment of our 28 cents per share quarterly dividend on common stock on 05/14/2026. Our second quarter performance demonstrates the strength Independent Bank's community-banking model and the continued benefits of disciplined balance sheet management. Relationship-based lending and a stable locally focused deposit franchise. We saw broad based momentum across the business, with core customer activity supporting loan growth, core deposit growth, improving earning asset yields and continued capital generation. Just as important, we achieved these results while maintaining strong asset quality. Prudent liquidity, and capital levels that position us well in the current operating environment. The quarter also reinforced the value of our strategy, serving attractive Michigan markets, through local decision making, deep customer relationships, and consistent credit discipline. We believe that approach continues to differentiate Independent Bank and supports durable performance through changing rate and economic cycles. We were pleased to complete our acquisition of HCB Financial Corp. On 07/01/2026. Integration work is underway, with a targeted system conversion of November 9. We continue to believe the combination strengthens our presence in complementary markets and enhances our ability to serve customers employees, communities, and our shareholders over the long term. A few other highlights during the second quarter included Independent Bank being named Michigan's best in state bank by Forbes for 2026. Independent Bank is the only bank in Michigan that has been recognized by Forbes 4 years in a row. This also marks our 6th time overall that Independent has received this prestigious recognition. During the quarter, we announced the creation of 2 new regional president roles within our commercial banking structure, reinforcing our commitment to strong local leadership, relationship-based growth, and continued service to customers and communities across Michigan. This new leadership structure reflects our intentional alignment of markets, teams, and strategic priorities as the organization continues to grow. In their new roles, Kyle Johns and Daniel Plummer will lead market level relationship development, strengthen community engagement, foster collaboration across business lines, and help ensure consistent execution of our strategic goals. I am also proud to share that Independent Bank remains a top lender and resource for small business owners and entrepreneurs with our experienced lending team available to help eligible business access financing through the US Small Business Administration loan programs. As a member of the SBA's preferred lenders program, independent Bank has delegated authority to process and approve eligible SBA loan requests in house helping streamline the financing process for borrowers. Independent Bank was recently honored by the SBA Michigan district office as a top 10 lender for its outstanding contributions and support of Michigan small business community during fiscal year 25. Moving to page 5 of our presentation, deposits totaled $4.9 billion at 06/30/2026. An increase of $100 million from the start of the year. This growth occurred in non interest bearing, saving and interest bearing checking and reciprocal deposits offset by a small decline in time deposits and an $18 million reduction in brokered deposits. On a linked quarter basis, business deposits increased by $66 million, retail deposits increased by $15 million offset by a $45 million decrease in municipal deposits, primarily due to seasonality and usage of 47% retail, 40% commercial, and 13% municipal. On page 6, we have included in our presentation a historical view of our cost of funds as compared to the Fed funds spot rate and Fed effective rate. For the quarter, our total cost of funds decreased by 1 basis point to 1.53%. At this time, I would like to turn the presentation over to Joel Rahn to share a few comments on the success we are having in growing our loan portfolios and provide an update on our credit metrics. Joel? Joel F. Rahn: Yeah. Thanks, Brad. Good morning, everyone. Page 7 summarizes our loan activity for this quarter. We experienced strong second quarter loan growth of $105 million or 9.8% annualized. Commercial loan generation was very strong. With $92.6 million of quarterly growth or 16% annualized. During the quarter, our residential mortgage and consumer installment loan portfolios increased 12.9 million and $200 thousand respectively. Year to date, we have grown loans of $138 million by strong commercial loan growth of $146 million. Representing 13% annualized growth. Our strategic investment in commercial banking talent continues to supplement our loan growth. Year to date, we have added 8 experienced commercial bankers, bringing our total to 53 bankers comprising 8 commercial loan teams across our statewide footprint. Compared to a year ago, we have added a net of 6 experienced commercial bankers to our team. Looking ahead, based on a strong pipeline, we believe we will continue to see low-double-digit growth of our commercial loan portfolio for 2026. We continue to see market share opportunities from regional banks in both talent and customer acquisition, and are seeing steady organic growth from existing customers. Looking at the commercial loan production for the first half of the year, the mix of C and I lending versus investment real estate was 58% and 42%, respectively. And for our commercial portfolio, the mix is 67% c and I and 33% investment real estate. Page 8 provides detail on our commercial loan portfolio concentrations. And there has not been any significant shift in our portfolio over the past year. With the portfolio remaining very well diversified. Our largest segment of the C and I category continues to be manufacturing, $194 million or 8.2% of the total portfolio. In the investment real estate segment of the portfolio, the largest concentration is industrial at $219 million or 9.3%. We outlined key credit quality metrics on page 9. Overall, we continue to demonstrate, as Brad said, strong credit quality. Total nonperforming loans were $32.8 million or 74 basis points of total loans at quarter end,, up slightly from 64 basis points at March 31. it is worth noting that approximately 2/3 of the total commercial development exposure that we have discussed in prior quarters. We continue to work through the challenges of this particular project, and are appropriately reserved for any loss exposure. Past due loans totaled $5.6 million or 13 basis points down from $8.2 million or 19 basis points at threethirty 1. it is not reflected on this slide, but also worth noting that we realized net charge offs of $633 thousand or 3 basis points of average loans for the first half of the year. This compares to $442 thousand or 2 basis points in the first half of 2025. At this time, I would like to turn the presentation over to Gavin for his comments, including the outlook for the remainder of 2026. Gavin A. Mohr: Thanks, Joel, and good morning, everyone. I am starting on Page 10 of our presentation. Page 10 highlights our strong capital our strong regulatory capital position. I would highlight the increase in our tangible common equity ratio to 8.9% Turning to page 11, Net interest income increased $3.3 million from the year ago period. Our tax equivalent net interest margin was 3.71%. During the second quarter, 2026 compared to 3.58% in the second quarter of 25 and up 6 basis points from the first quarter of 26 Average interest earning assets were $5.33 billion in the second quarter of 26 compared to $5.11 billion in the year ago quarter and $5.23 billion in the first quarter of this year. Page 12 contains a more detailed analysis of the linked quarter increase in net interest income and the net interest margin. On a linked quarter basis, our second quarter 2026 net interest margin was positively impacted by 3 factors. Change in earning asset mix contributed 3 basis points An increase in earning asset yield contributed 2 basis points and a decrease in funding cost contributed 1 basis point. On page 13, we provide details on the institution's interest rate risk position. The comparative simulation analysis for the second quarter 26 and the first quarter of 2026 calculates the change in net interest income over the next 12 months on under 5 rate scenarios All scenarios assume a static balance sheet The base rate scenario applies spot. Yield curve from the valuation date. The shock scenario is considered immediate, permanent, parallel rate changes. The base case modeled in II is slightly higher during the quarter due to $60 million of earning asset growth 5 basis points of model margin expansion, Earning asset expansion was centered in commercial loans. It was up 97 million. Run off and lower yielding investments and overnight liquidity helped fund earning asset growth. Asset and liability yields were slightly higher during the quarter but that asset yields up 8 basis points and liability costs 3 basis points higher. NII sensitivity to lower rates declined modestly while the benefit to higher rates remain largely unchanged. Reduced exposure to lower rates is due to a $50 million notion notional floor purchases, and termination of $50 million of pay fixed swaps, overall position is closely matched for smaller rate changes of plus or minus 100 basis points. The bank has modest exposure to larger rate declines, and benefits from larger rate increases. Currently, 37.9% of assets repriced in 1 month and 49.4% repriced in the next 12 months. Moving on to page 14. Noninterest income totaled $15.3 million in the second quarter of 2026, as compared to $11.3 million in the year ago quarter and $12 million in the first quarter of 26. Second quarter 26 net gains on mortgage loans sold $1.7 million compared to $1.6 million in the prior year quarter. The increase is primarily due to higher volume of mortgage loans sold that were partially offset by lower profit margins Mortgage loan servicing was a gain of $2.5 million in the second quarter of 2026 compared to a gain of $500 thousand in the prior year quarter. The change due to price was a gain of $1.8 million or $0.07 per diluted share after tax in the second quarter of 26 compared to a loss of $2 million or $0.01 per diluted share after tax in the prior year period. As detailed on page 15, our noninterest expense totaled $37.8 million in the second quarter of 26. Compared to $33.8 million in the year ago quarter and $38.3 million in the first quarter of 26. Compensation and employee benefits expense increased 1.4 million primarily due to salary increases that were effective on 01/01/2026 and higher health insurance related cost. Litigation expense of $400 thousand is attributed to an accrual established for losses we consider probable. As a result of all of our outstanding litigation matters in the aggregate. Advertising expense increased $300 thousand in the second quarter of 26 compared to the prior year quarter, primarily due to new deposit account opening incentives We recorded merger related expenses of $4.4 million in the second quarter of 26. Turning to page 16 is our update for 2026 outlook to see how our actual performance during the second quarter compared to the original outlook that we provided in January of this year. Our outlook estimated full year loan growth of 4.5 to 5.5%. Loans increased a $106 million in the second quarter of 26, or 9.8% annualized, which is above our forecasted range. Commercial loans increased 92.6 million and mortgage loans increased 12.9 million while installment loans were flat for the second quarter. Second quarter 26 net interest income increased by 7.4% over 2025. Which is within our forecasted range of 7% to 8%. I would highlight this is the 12th consecutive quarter of increasing net interest income. The net interest margin was 3.71% for the current quarter and 3.58% for the prior year quarter. And up 6 basis points from our linked quarter. Perspective. The second quarter 26 provision for credit losses was an expense of $2.7 million. Is at the high end of our forecasted range. Moving on to page 17. Noninterest income totaled $15.3 million in the second quarter of 26, which was above our forecasted range of $11.3 million to $12.3 million Second quarter 26 mortgage loan origination sales and gains totaled $145 million, $97.1 million and $1.3 million respectively. Mortgage loan servicing net generated a gain of 2.5 million in the second quarter of 26, which is above our forecasted target. Positively impacting the second quarter results was a gain on equity securities of $1.6 million This is related to the exchange of Visa B2 shares to Visa Class C shares in the quarter. Noninterest expense was $37.8 million in the second quarter, above our forecasted range of $36 million to $37 million. We recorded litigation expense of $4.4 million in the quarter, as well as $400 thousand in merger related costs. Our effective income tax rate was 17.2% for the second quarter of 26 Lastly, there were no shares of common stock were repurchased in the second quarter or first 6 months of 26. That concludes my prepared remarks, and I would like to now turn the call back over to Brad. William Bradford Kessel: Thanks, Gavin. We have built a strong community bank franchise, which positions us well to effectively manage through a variety of economic environments to continue delivering strong and consistent results for our shareholders. As we move through the second half of 26, our focus will be continuing to invest in our team investing in and leveraging our technology, and the successful integration of the HCB franchise, while always working to be Michigan's most people focused bank. At this point, we would like to open up the call for questions. Operator: Thank you. Press 11 on your telephone. If your question has been answered or you wish to remove yourself from the Our first question comes from Brendan Nosal with Hovde Group. Your line is open. Brendan Nosal: Hey. Good morning, everybody. Hope you are doing well. Morning, Brad. Morning. Maybe just starting off here. On the expense number. I guess you guys continue to, add talent and producers and you are investing. I guess if I look at the core expense base, it was just above the high end of kind of the quarterly guidance range. Just kind of curious how you think about the run rate as we move through the balance of the year without considering HCB, just kind of legacy independent versus kind of that $36 million to $37 million range. Gavin A. Mohr: Yeah. So I think your analysis is accurate, Brendan. When I think about the core and based on our forecast, what was not comprehend or we did not have captured in that was certainly the litigation. of $400 thousand. The other thing that we had this quarter we did have incentive accrual catch-up that added $400 thousand. That being said, I mean, that I just would call that, part of core. And then we also had some elevated advertising expense that is related to deposit promotional, that is a deposit promotion that was that has been terminated, but there is still there is still some was still there is still some earnout taking place there. So when I think about on a net, I get back to that, around 37 million or high end of our range going forward. To answer your question. Yes. Yeah. William Bradford Kessel: I agree with that, Gavin. I would add also loan and collection right now is running a little bit higher, and it relates predominantly to the 1 credit. So as we move that through the process and hopefully, we can get that down too. Brendan Nosal: Okay. Fantastic. Thanks for the color there. Maybe pivoting to kind of what you are doing with the balance sheet in terms of the complexion and the margin. You have been on this journey of remixing the asset base into higher yielding commercial loans for some time now, and that is generated quite a bit of margin expansion irrespective of the rate environment. I guess, without asking specifically about the longer term margin expectation, I guess my question is whether the commercial remixing opportunity is exhausted by the end of this year or whether you think there is still more work to do in the future? Gavin A. Mohr: Yeah. The commercial remix-- to make sure I define your question correctly, So correct me if I do not if I get it wrong. So, from commercial wise, in terms of repricing, the commercial book is approaching market. Due to the short duration. That being said, the securities portfolio in the mortgage portfolio that we intend to continue certainly on the mortgage side, continue to redeploy into the commercial pipeline. Has room to run. And I would say we have been, you know, doing some analysis internally It all held the same. And we are seeing some favorability in the positive shape of the yield curve, Brendan. Continuing to grind higher for the next 12 months between flat to where we are at today at 6 basis points a quarter. Is not unreasonable. I do not I think 6 basis points is outsized, but you know, anywhere from 2 to 4 basis points a quarter going forward would not be unreasonable in terms of margin expansion. Fantastic, Gavin. Thank you for answering the question. Operator: 1 moment for our next question. Our next question comes from Nathan Race with Piper Sandler. Nathan Race: Hi, this is Nick on for Nathan Race. Thanks for taking my questions this morning. William Bradford Kessel: Sure, Nick. Nathan Race: Just going to expenses on the HCB deal with the deal closing earlier this month. Can you kind of walk through the cost savings cadence from here and do you kind of expect the savings to build gradually each quarter? Does the bulk of them kind come through after the system's conversion in November? Gavin A. Mohr: Yeah. That would be the latter, Nick. So we for various reasons, we chose to run the banks as separate subsidiaries Through conversion, as Brad highlighted on November 9. So, you know, running 2 individual banks, it did slow down some of those cost saves. But our team is focused on achieving, you know, that number very early in 2027 at the latest. William Bradford Kessel: To have a 2027 is fully implemented and realized. Yeah. I think that number was 40%. Gavin A. Mohr: It was 40%, yep, of half a year. Nathan Race: Got it. that is helpful. And then maybe switching to loan growth. How does the commercial pipeline kind of looks heading into third quarter? And did any of the quarters growth pull forward from the back half? Joel F. Rahn: Yeah. Nick, this is Joel. The pipeline is holding up well. We had a really strong second quarter of production and despite that, the pipeline is strong. And, you know, there is always some seasonality to it. And third quarter, just historically, is a little softer for loan production. Not bad, but typically a little bit softer just because early part of the quarter, a lot of people are on vacation. Business owners like to enjoy the summer. And then we always see the fourth quarter usually be quite strong. So I think that you know, if that sort of cyclical or seasonal pattern will hold this year. But our pipeline in terms of the dollar, where it is at today versus a year ago, very comparable, and we continue to see really good opportunities. Out in the marketplace. Nathan Race: Great. that is everything for me. Thanks, guys. Operator: Thank you. 1 moment for our next question. Our next question comes from Matthew Renck with KBW. Your line is open. Matt Renck: Hey. I hope everybody's doing well this morning. My first question was a follow-up to 1 of the earlier questions about commercial new origination yields. It looks like they were up 2 basis points, and you said the portfolio is approaching market. But do you think market yields have peaked at this point? And then I am just kind of curious how you guys weigh profitability with market share gain given the commercial opportunity in front of you. Gavin A. Mohr: I would say I will start with Joel. Joel F. Rahn: I think the question maybe for you out of the gate is what how do you feel about the market pricing in terms of raw yield? Are we kind of at the-- Well, it is obviously going to follow the industry market. So but in terms of spread, I will just refer to it that way. In terms of spread, we have been holding quite consistent. So it there is a lot of competition, but that is not that is nothing new. So I think it is we are in a pretty stable environment. Always healthy competition. that is just a part of our daily life. But in terms of our spread, we have been holding we have been holding ground, and I do not see that I do not see it growing. But I also do not see that we are, you know, that we are losing ground on our spread. So, again, it is all based on, you know, on market movement too. So we are looking at likely a increased Fed funds here in the near future and the treasury market continues to tick up. So that is the best insight I can provide you on that. Provide you on that. Gavin A. Mohr: Yeah. And, again, so we grew the portfolio, the commercial portfolio by $93 million. William Bradford Kessel: For the quarter. Mhmm. Gavin A. Mohr: The average new origination rate is 6.41. Joel F. Rahn: And the portfolio yield is 6.06. Gavin A. Mohr: Yeah. William Bradford Kessel: That you are right. Joel F. Rahn: I mean, that is as Gavin said, we are getting real close to market We are kind of par on the commercial portfolio now. Because of turnover. Matt Renck: Okay. Got it. And then just 1 follow-up on credit. I appreciate the color from earlier on. About the 2 thirds of it being 1 commercial loan. But is there any insight into the timeline on resolution there? And then just generally, like, looking across the portfolio, any areas you could keep an eye on or you are seeing early signs of stress in? Joel F. Rahn: Yeah. I cannot predict the timeline of that large 1. it is a legal process and it just always moves slower than we want it to move. And yet we do feel like we are gradually making headway. In terms of other areas, no. there is no there is not an industry concern at this point. You know, the 1 other loan of any significance that we moved to non accrual during the quarter On the commercial side, was a management issue. And that is what we are seeing is just the, the poor operators eventually catching up with them, but no industry concern from a commercial standpoint at this point. Matt Renck: Thank you. Operator: And I am not showing any further questions at this time. I would like to turn the call back over to Brad. William Bradford Kessel: In closing, I would like to thank our board of directors and our senior management for their support and leadership I also want to thank all our associates. I continue to be so proud of the job being done by each member of our team. Each team member in his or her own way continues to do their part towards our common goal of guiding our customers to be independent. Finally, I would like to thank each of you for your interest in Independent Bank Corporation. For joining us on today's call. Have a great day. Operator: Thank you. Ladies and gentlemen, that concludes today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day. 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 are built for long-term growth and 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 $369,577!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,301,557!* That performance is why people listen. 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Independent Bank (IBCP) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

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. Performance was driven by a relationship-based community banking model that supported 9.8% annualized net loan growth and improved earning asset yields. Net interest margin expanded by 6 basis points to 3.71%, benefiting from a disciplined shift in earning asset mix toward higher-yielding commercial loans. The bank is intentionally transitioning its portfolio by redeploying runoff from lower-yielding investments and mortgage portfolios into the commercial pipeline. Management attributed successful loan growth to strategic investments in commercial banking talent, adding 8 experienced bankers year-to-date to capture market share from regional competitors. The acquisition of HCB Financial Corp, closed on July 1, 2026, is expected to strengthen the bank's presence in complementary Michigan markets through a localized decision-making structure. Credit quality remains stable with net charge-offs at 3 basis points, though non-performing loans rose slightly due to a specific commercial development project. Management expects continued low-double-digit growth in the commercial loan portfolio for the remainder of 2026, supported by a strong pipeline. Net interest margin is projected to continue 'grinding higher' by approximately 2 to 4 basis points per quarter over the next 12 months, assuming a stable yield curve. The HCB Financial Corp integration is targeted for a system conversion on November 9, 2026, with full cost savings of 40% expected to be realized by early 2027. Loan production is anticipated to follow seasonal patterns, with a typically softer third quarter followed by a strong fourth quarter. Interest rate sensitivity is closely matched for small rate changes, though the bank maintains modest exposure to large rate declines and benefits from large rate increases. Recorded $4.4 million in merger-related expenses during the second quarter associated with the HCB Financial Corp acquisition. A $400 thousand litigation accrual was established for probable losses across outstanding legal matters. Non-performing loans include a significant commercial development exposure that management is working through via a legal process, noting they are appropriately reserved for potential loss. A $1.6 million gain on equity securities was realized from the exchange of Visa B2 shares into Visa Class C shares. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects the core expense run rate to settle around the high end of the $37 million range, excluding HCB impacts. Recent elevated expenses were attributed to litigation accruals, incentive catch-ups, and temporary deposit promotion advertising. The commercial portfolio yield of 6.06% is approaching the market origination rate of 6.41% due to rapid turnover and short duration. Management believes there is still 'room to run' for margin expansion as lower-yielding securities and mortgages are replaced by commercial loans. Management cannot predict the exact timeline for resolving the large non-performing commercial credit as it is subject to a slow-moving legal process. No broad industry-wide credit concerns were identified; recent non-accrual movements were attributed to isolated management issues at specific borrowers.

Interested in Independent Bank Corporation? Here are five stocks we like better. Independent Bank posted stronger Q2 2026 results, with net income rising to $18.8 million, or $0.90 per share, as net interest income increased for the 12th consecutive quarter and net interest margin improved to 3.71%. Loan growth was driven by commercial lending, with total loans up $105.8 million in the quarter and commercial loans accounting for most of the increase; management still expects low double-digit commercial loan growth for 2026. The bank’s deposit base and capital position remained solid, while credit quality was generally stable despite one large problem commercial development exposure. Independent also completed its HCB Financial acquisition on July 1 and is now focused on integration and cost savings. Independent Bank (NASDAQ:IBCP) reported higher second-quarter 2026 earnings as net interest income rose, loan growth accelerated and the company continued to build capital while preparing to integrate its recently completed acquisition of HCB Financial Corp. The Michigan-based bank posted net income of $18.8 million, or $0.90 per diluted share, for the quarter, compared with $16.9 million, or $0.81 per diluted share, in the same period a year earlier, President and Chief Executive Officer Brad Kessel said on the company’s earnings call. → Could Truth API Become Trump Media’s First Meaningful Revenue Driver? Kessel said the quarter reflected “the strength of Independent Bank’s community banking model” and cited disciplined balance sheet management, relationship-based lending and a stable local deposit base as contributors to the results. Chief Financial Officer Gavin Mohr said net interest income increased $3.3 million from the year-ago period. The bank’s tax-equivalent net interest margin was 3.71% in the second quarter, up from 3.58% in the second quarter of 2025 and up 6 basis points from the first quarter of 2026. → 3 Photonics Companies Making Quantum Tech Possible On a linked-quarter basis, Mohr said the margin benefited from three factors: a change in earning asset mix, which added 3 basis points; higher earning asset yields, which added 2 basis points; and lower funding costs, which added 1 basis point. Average earning assets were $5.33 billion, compared with $5.11 billion a year earlier and $5.23 billion in the first quarter. Mohr said the company has now recorded its 12th consecutive quarter of increasing net interest income. During the question-and-answer session, he said additional margin expansion of roughly 2 to 4 basis points per quarter would not be unreasonable, though he called the second quarter’s 6-basis-point increase “outsized.” → AeroVironment’s Stock Is Down, But Drone Demand Is Taking Off Total loans increased $105.8 million in the second quarter, or 9.8% annualized. Joel Rahn, executive vice president and head of commercial banking, said commercial loans accounted for most of the increase, rising $92.6 million, or 16% annualized. Residential mortgage loans increased $12.9 million, while consumer installment loans were essentially flat. Year to date, total loans grew $138 million, led by commercial loan growth of $146 million, or 13% annualized. Rahn said the bank continues to benefit from investments in commercial banking talent, noting that it has added eight experienced commercial bankers so far this year and now has 53 bankers across eight commercial lending teams statewide. Rahn said the bank expects “low double-digit growth” in its commercial loan portfolio for 2026, supported by a strong pipeline and market-share opportunities from regional banks in both talent and customer acquisition. He said first-half commercial production was split 58% commercial and industrial lending and 42% investment real estate. The overall commercial portfolio mix was 67% C&I and 33% investment real estate. In response to an analyst question, Rahn said the commercial pipeline remained strong entering the third quarter, though he noted the third quarter is typically somewhat softer because of seasonal factors, while the fourth quarter is usually strong. Deposits totaled $4.9 billion at June 30, up $100 million from the start of the year. Kessel said growth came from non-interest-bearing deposits, savings and interest-bearing checking accounts, and reciprocal deposits. That growth was partly offset by a small decline in time deposits and an $18 million reduction in brokered deposits. On a linked-quarter basis, business deposits rose $66 million and retail deposits increased $15 million. Municipal deposits declined $45 million, which Kessel attributed primarily to seasonality and the use of American Rescue Plan Act funds. The deposit base was composed of 47% retail, 40% commercial and 13% municipal deposits. The bank’s total cost of funds declined 1 basis point to 1.53% for the quarter. Tangible common equity increased to 8.9% at June 30. Kessel also noted a $0.28 per share quarterly common stock dividend paid on May 14. Rahn said overall credit quality remained strong. Total nonperforming loans were $32.8 million, or 74 basis points of total loans, at quarter-end, up from 64 basis points at March 31. He said about two-thirds of that total related to one commercial development exposure that management has discussed in prior quarters. “We continue to work through the challenges of this particular project and are appropriately reserved for any loss exposure,” Rahn said. Past-due loans totaled $5.6 million, or 13 basis points, down from $8.2 million, or 19 basis points, at the end of the first quarter. Rahn said net charge-offs were $633,000, or 3 basis points of average loans, for the first two quarters of 2026, compared with $442,000, or 2 basis points, in the first half of 2025. During the Q&A session, Rahn said there were no broad industry concerns in the commercial portfolio. He said one other commercial loan of significance moved to nonaccrual during the quarter, attributing it to a management issue rather than an industry trend. Non-interest income totaled $15.3 million in the second quarter, compared with $11.3 million a year earlier and $12.0 million in the first quarter. Mohr said mortgage loan servicing generated a $2.5 million gain, and the quarter also included a $1.6 million gain on equity securities related to the exchange of Visa B-2 shares for Visa Class C shares. Non-interest expense was $37.8 million, compared with $33.8 million a year earlier and $38.3 million in the first quarter. Mohr said compensation and employee benefits increased primarily because of salary increases effective Jan. 1 and higher health insurance costs. He also cited $4.4 million in merger-related expenses and a $0.4 million litigation accrual. Independent completed its acquisition of HCB Financial Corp. on July 1. Kessel said integration work is underway, with a targeted system conversion date of Nov. 9. In response to an analyst question, Mohr said cost savings from the deal are expected to come mostly after conversion, with the company focused on achieving its targeted savings by early 2027 at the latest. Kessel said the company’s priorities for the second half of 2026 include continued investment in its team and technology, as well as successful integration of the HCB franchise. Independent Bank Corporation (NASDAQ: IBCP) is a bank holding company headquartered in Grand Rapids, Michigan. Through its primary subsidiary, Independent Bank, the company offers a full range of commercial and personal banking services designed to meet the needs of individuals, small businesses and corporate clients. The company's offerings span traditional branch-based banking as well as digital and mobile platforms. Independent Bank provides deposit products such as checking and savings accounts, money market accounts and certificates of deposit. 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 Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Independent Bank Corp. recently reported that second-quarter 2026 net charge-offs fell to US$911,000 from US$6,519,000 a year earlier, while also completing multiple buyback tranches totaling US$75.00 million under prior authorizations and announcing an additional US$200.00 million share repurchase plan. Despite these balance sheet and capital management moves, the bank’s second-quarter earnings missed analyst expectations on both revenue and profitability metrics, highlighting pressure from lower net interest income and a higher efficiency ratio. Against this backdrop of earnings underperformance and ongoing share repurchases, we’ll examine how the weaker net interest income affects Independent Bank’s investment narrative. Rare earth metals are the new gold rush. Find out which 29 stocks are leading the charge. To own Independent Bank, you need to be comfortable with a regional lender that is balancing credit quality, acquisition integration and funding costs while trying to protect its net interest income. The latest quarter’s earnings miss reinforces that margin pressure and operating efficiency are the key short term catalyst and the biggest risk right now, but the impact of this specific miss on the longer term thesis is not yet material on its own. The most relevant recent development is the new US$200.00 million share repurchase plan, on top of completed buybacks of US$75.00 million across earlier authorizations. While buybacks can support per share metrics, they sit against earnings that came in below expectations and a higher efficiency ratio, and investors will likely focus on how quickly Independent Bank can improve profitability as it integrates Enterprise and manages its loan book. Yet behind the lower net interest income, investors should be aware that credit costs could still rise if... Read the full narrative on Independent Bank (it's free!) Independent Bank's narrative projects $1.3 billion revenue and $563.8 million earnings by 2029. This requires 15.3% yearly revenue growth and a $323.2 million earnings increase from $240.6 million today. Uncover how Independent Bank's forecasts yield a $90.57 fair value, a 7% upside to its current price. Two fair value estimates from the Simply Wall St Community span a wide range, from about US$90.57 to US$173.31 per share, underscoring how differently investors view Independent Bank’s potential. When you set those views against the recent earnings miss driven by weaker net interest income and a higher efficiency ratio, it highlights why many investors may want to compare several perspectives before deciding how this bank fits into their portfolio. Explore 2 other fair value estimates on Independent Bank - why the stock might be worth just $90.57! Don't just follow the ticker - dig into the data and build a conviction that's truly your own. A great starting point for your Independent Bank research is our analysis highlighting 4 key rewards that could impact your investment decision. Our free Independent Bank research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Independent Bank's overall financial health at a glance. These stocks are moving-our analysis flagged them today. Act fast before the price catches up: The future of work is here. Discover the 33 top robotics and automation stocks leading the charge in AI-driven automation and industrial transformation. AI is about to change healthcare. These 39 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. Capitalize on the AI infrastructure supercycle with our selection of the 54 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. 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]

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Independent Bank (INDB) stock came into focus after Q2 2026 results triggered a 6.8% drop, as earnings and revenue missed analyst expectations and investors reacted to softer net interest income and efficiency metrics. See our latest analysis for Independent Bank. Even after the post earnings drop, Independent Bank’s 7 day share price return of 0.96% and year to date share price return of 15.47% sit alongside a 1 year total shareholder return of 25.64%. This suggests that recent volatility comes against a backdrop of stronger longer term gains supported by ongoing buybacks and reduced net charge offs. If this results season has you thinking beyond a single regional bank, it could be a good time to scan for other ideas with 18 top founder-led companies Independent Bank’s recent slip after Q2 results sits against solid long term returns and steady buybacks, which points to a resilient franchise. The real tension now is simple: is that quality already fully reflected in the price? The most followed narrative currently sees Independent Bank trading below a fair value of $90.57, with that view anchored on earnings power, capital returns, and the recent Enterprise Bank acquisition. Read the complete narrative. Curious what justifies a higher fair value than today’s $84.51 share price? This narrative leans heavily on faster earnings growth, wider profit margins, and a future valuation multiple that undercuts the wider US Banks sector. The full story connects those assumptions into a single, testable view of where Independent Bank could be heading. Result: Fair Value of $90.57 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Independent Bank still faces meaningful risks, including its commercial real estate concentration and the execution challenge related to integrating Enterprise and migrating to the FIS IBS technology platform. Find out about the key risks to this Independent Bank narrative. With sentiment around Independent Bank mixed between recent share price volatility and longer term rewards, it makes sense to review the data and move quickly. To see which factors investors are optimistic about right now, take a closer look at the 4 key rewards If Independent Bank has sharpened your focus, do not stop here. Use these hand picked stock ideas to keep your research moving and avoid missing potential opportunities. Target resilient growth potential by scanning screener containing 20 high quality undiscovered gems that combine strong fundamentals with the possibility of flying under the radar. Strengthen your income stream by checking 8 dividend fortresses that focus on higher yielding companies for investors who want regular cash returns. Dial back risk while staying invested using 82 resilient stocks with low risk scores that concentrate on companies scored for more resilient profiles. 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]

This article first appeared on GuruFocus. Net Income: $81.8 million for the second quarter of 2026. Diluted EPS: $1.70 for the second quarter of 2026. Return on Assets (ROA): 1.34% for the second quarter of 2026. Return on Average Common Equity: 9.24% for the second quarter of 2026. Return on Average Tangible Common Equity: 14.05% for the second quarter of 2026. Non-Time Deposits Growth: Over $300 million, representing 7% annualized growth. Cost of Deposits: Stable at 1.36%. C&I Loan Growth: $116 million increase, 10% annualized growth excluding dealer floor plan business. CRE & Construction Loans Decline: $176 million decrease during the quarter. New CRE Loans Funded: $203 million, up 11% from the first quarter. Approved Commercial Loan Pipeline: $510 million as of June 30, up from $313 million on March 31. Adjusted Net Interest Margin (NIM): Increased by 4 basis points. Share Repurchase: $75 million repurchased during the second quarter. CET1 Ratio: 12.8% as of June 30. Tangible Capital Ratio: 9.7% as of June 30. Non-Performing Assets: $103.8 million, 56 basis points of total assets. Net Charge-Offs: 2 basis points for the second quarter. Loan Loss Provision: $6.3 million, allowance for loan loss at 1.06% of loans. Fee Income: $42.4 million, up over 5% from the prior quarter. Assets Under Administration (AUA): $9.5 billion as of June 30. Core Expenses: Flat versus the first quarter, excluding M&A charges and non-recurring costs. Full-Year Guidance: Reaffirmed ROA of 1.4% and return on average tangible capital of 15% for Q4 2026. Warning! GuruFocus has detected 7 Warning Signs with INDB. Is INDB fairly valued? Test your thesis with our free DCF calculator. Release Date: July 17, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Independent Bank Corp (NASDAQ:INDB) reported solid deposit growth with over $300 million in non-time deposits, representing a 7% annualized growth rate. The company experienced strong C&I loan growth, with a $116 million increase, equating to a healthy 10% annualized growth. The Wealth Management business continues to be a key fee income driver, benefiting from strength in traditional Asset Management and Business Advisory Services. The adjusted net interest margin (NIM) improved by 4 basis points, reflecting pricing discipline across loan and deposit portfolios. Independent Bank Corp (NASDAQ:INDB) maintained a proactive capital management strategy, completing a $75 million share repurchase and announcing a new $200 million buyback plan. The average balance sheet size decreased, and loan accretion income was lower, impacting overall financial performance. Investment CRE & Construction loans declined by $176 million due to elevated payoffs, asset sales, and refinancing away from the bank. The competitive environment led to a slight increase in money market rates, indicating potential pressure on deposit costs in the future. Non-performing assets increased modestly to $103.8 million, with some volatility in residential loan delinquencies. The commercial real estate market remains challenging, with aggressive competition and elevated payoffs impacting growth. Q: Can you provide more details on the factors affecting commercial real estate loan growth and the market conditions? A: Jeffrey Tengel, CEO, explained that the commercial real estate market has become more aggressive, with elevated paydowns due to refinancing on terms they were uncomfortable with. Despite this, they originated a healthy amount of commercial real estate loans and expect paydowns to normalize, leading to flat or modestly increased balances in the second half of the year. Q: How is the company addressing the volatility in deposits and cash balances? A: Mark Ruggiero, CFO, stated they are actively remixing cash into securities and targeting earning cash in the $400 million to $500 million range. They plan to be more aggressive in putting cash into higher-yielding securities while monitoring the pipeline for loan growth opportunities. Q: What is the outlook for deposit costs and net interest margin (NIM) in the coming quarters? A: Mark Ruggiero noted that while they expect some pressure on deposit costs, they are comfortable with the NIM guidance of 3.90% to 3.95% for the fourth quarter. The spot cost of deposits was 1.38% in June, and they anticipate a slight increase in the second half. Q: Can you elaborate on the status of non-performing assets and credit quality? A: Mark Ruggiero highlighted that the largest non-performer is improving and may return to performing status by year-end. The increase in non-performing assets was primarily due to residential loans, but there is sufficient equity in homes, and net charge-offs remain low. Q: What are the company's plans for capital deployment and share repurchases? A: Mark Ruggiero mentioned that they completed the previous year's buyback authorization and announced a new $200 million share repurchase plan. They aim to return excess capital to shareholders, potentially exceeding 100% of quarterly earnings, depending on growth and capital needs. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Independent Bank Corp.? Here are five stocks we like better. Second-quarter profit beat was driven by deposits and lending: Independent Bank reported net income of $81.8 million, or $1.70 per share, supported by stronger deposit growth, C&I loan growth, margin expansion and share repurchases. Commercial lending trends were mixed: C&I loans rose 10% annualized excluding an exited floor-plan business, but CRE and construction loans fell by $176 million due to elevated payoffs. Management said a larger commercial pipeline could help return the bank to positive commercial loan growth. Capital returns and guidance stayed intact: The bank repurchased $75 million of stock and reiterated its focus on buybacks, while reaffirming fourth-quarter targets for a 1.4% ROA and a 15% return on tangible capital. It also kept its margin outlook at 3.90% to 3.95%, though likely near the low end. 3 Volatile Mid-Caps to Trade This Earnings Season Independent Bank (NASDAQ:INDB) reported second-quarter 2026 net income of $81.8 million, or $1.70 per diluted share, as executives said stronger deposit momentum, C&I lending growth, margin expansion and share repurchases supported profitability despite pressure from commercial real estate payoffs. Chief Executive Officer Jeff Tengel said business activity was slow early in the quarter but accelerated as the period progressed. He pointed to “solid deposit growth, strong C&I loan growth, continued improvement in the adjusted NIM, aggressive buyback activity, and excellent results in our wealth management business,” while noting that those gains were partly offset by a smaller average balance sheet and lower loan accretion income. → Why ASML’s AI Monopoly Is Still Getting Stronger Tengel also provided a personal update at the start of the call, saying he had completed treatment for non-Hodgkin’s lymphoma and had learned he is “cancer-free and in remission.” Independent Bank’s deposit franchise produced more than $300 million of non-time deposit growth in the quarter, which Tengel said represented 7% annualized growth. The company held its cost of deposits stable at 1.36%, despite what management described as heightened competition and expectations that the Federal Reserve will keep rates elevated for longer. → Cintas Keeps Beating Expectations—And the Story Isn’t Over Chief Financial Officer Mark Ruggiero said period-end deposit balances grew at a 5.9% annualized rate, although average balances were down for much of the quarter. That created what he called a temporary drag on cash and average earning assets. He said balances rebounded late in the quarter, supported by new core deposit relationships. Ruggiero said the core net interest margin increased four basis points in the second quarter. Reported loan yields declined eight basis points, but core loan yields rose three basis points when excluding volatile purchase accounting accretion and other non-core items. Securities yields increased five basis points in the quarter, and Ruggiero said additional maturities and amortization in the second half should support further improvement. → Blueprint for a Billion: Nebius Group Secures the AI Floor During the question-and-answer session, Ruggiero said the company had introduced a 4% short-term money market special halfway through the second quarter, contributing to some upward pressure in money market rates. He said the spot cost of deposits was 1.38% in June and that management expects some additional pressure in the second half, potentially toward 1.40%, while still maintaining its fourth-quarter margin guidance. Loan growth was mixed during the quarter. Tengel said C&I and home equity lending were robust, while commercial real estate and construction loans declined by $176 million due to elevated payoffs. Excluding a $37 million decline tied to the dealer floor plan business that Independent Bank has largely exited, C&I loans rose $116 million, or 10% annualized. Tengel said that growth was broad-based across market segments. Management emphasized that the company remains active in commercial real estate lending despite the paydowns. Tengel said Independent Bank funded $203 million in new relationship-based CRE loans during the quarter, up 11% from the first quarter, and added $300 million of new CRE commitments. The company’s CRE concentration stood at 278 at June 30. The approved commercial loan pipeline totaled $510 million at quarter-end, up from $313 million at March 31. Tengel said the stronger pipeline, continued origination activity and expected normalization of payoff activity position the company to return to positive commercial loan growth. In response to analyst questions, Tengel said two relationships accounted for $120 million of second-quarter CRE paydowns, including refinancings away from Independent Bank. One refinancing, he said, occurred on “terms and conditions that we were very uncomfortable with.” He said management expects paydowns to return closer to historical levels in the second half and sees potential for flat to modestly higher CRE balances over that period. Ruggiero said the commercial pipeline was roughly split between CRE and C&I, with C&I representing a somewhat larger share than before. He said new commercial loan originations moved into the mid-6% range, with C&I loans in the mid- to high-6% range and CRE loans generally in the low-6% range. Ruggiero said second-quarter results reflected the bank’s ability to drive core profitability and return capital to shareholders in a competitive environment. During the quarter, Independent Bank completed its prior buyback authorization and announced a new $200 million share repurchase plan in May. The company repurchased $75 million of stock in the second quarter. Its common equity Tier 1 ratio was 12.8% at June 30, and its tangible capital ratio was 9.7%. Ruggiero said the buyback plan will remain the primary means of returning excess capital to shareholders. In response to an analyst question, he said returning 100% of quarterly earnings is “the minimum,” adding that the company is committed to executing repurchases aggressively while considering growth trends and funding efficiency. Management said asset quality remained consistent with historical performance. Tengel said net charge-offs were two basis points in the second quarter and have averaged nine basis points over the past five quarters. The loan loss provision represented 14 basis points of average loans in the quarter and has averaged 13 basis points over the past five quarters, excluding the day-one impact of the Enterprise acquisition. Ruggiero said total non-performing assets increased modestly to $103.8 million, or 56 basis points of total assets. He said commercial non-performing asset movement was “fairly benign,” with one office non-performer resolved and another added. Residential non-performers increased by a net $4.7 million, but Ruggiero said there is generally sufficient home equity in workout cases and that charge-offs remain extremely low in that portfolio. Net charge-offs were $911,000 in the quarter, or two basis points annualized. Year-to-date charge-offs were six basis points annualized. The provision was $6.3 million, and the allowance for loan losses rose to 1.06% of loans, primarily due to modest specific reserves on a couple of commercial loans. On office-related credit issues, Tengel said the company is still in what he has previously described as a long “seventh inning,” but said he is encouraged by the work underway to reduce criticized and classified office loans over the next several quarters. Ruggiero said a $22 million large syndicated non-performing loan has begun making interest payments and could potentially return to performing status by year-end. Independent Bank reaffirmed its fourth-quarter 2026 profitability targets of a 1.4% return on average assets and a 15% return on average tangible capital. Ruggiero also reaffirmed the company’s fourth-quarter margin outlook of 3.90% to 3.95%, though he said it is likely to be at the low end of that range. The range includes an assumed 10-basis-point impact from purchase accounting accretion. The company lowered its full-year outlook for CRE and construction loans to flat to a low-single-digit percentage decrease, citing second-quarter paydown activity. It expects C&I growth to land at the high end of its mid-single-digit guidance range, with minimal remaining headwinds from the exited floor plan business. Consumer loans are now expected to increase in the low-single-digit percentage range for the full year. Fee income totaled $42.4 million in the second quarter, up more than 5% from the prior quarter. Ruggiero said wealth management led the increase, with assets under administration of $9.5 billion at June 30, along with higher tax preparation fees, deposit and treasury management fees, and increased swap volume. Expenses were flat versus the first quarter after excluding merger-related costs and non-recurring core system conversion expenses, according to management. Ruggiero said Independent Bank expects core expenses excluding systems conversion costs to be in the $553 million to $557 million range for the year, with one-time system conversion expenses totaling $5 million to $6 million. Tengel said the conversion from HORIZON to IBS, both part of the FIS ecosystem, is scheduled for October and is intended to improve client service, efficiency, product rollout and growth capacity. Independent Bank Group, Inc (NASDAQ:INDB) is a bank holding company headquartered in McKinney, Texas, that provides a range of financial services through its wholly owned subsidiary, Independent Bank. Tracing its roots to the late 19th century, the company has grown from a single community bank into a regional financial institution serving individuals, small businesses and commercial clients. Independent Bank Group became a bank holding company in 1983 and expanded its footprint through organic growth and strategic acquisitions. The company's primary business activities encompass retail and commercial banking, including deposit products, consumer and business lending and credit services. 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 Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.