INDB

• CEO Health Update

  • CEO Jeff Tengel announced he has completed treatment for non-Hodgkin's lymphoma and is currently cancer-free and in remission

• Balance Sheet and Capital Management

  • The bank completed its prior year share repurchase authorization and announced a new $200 million share repurchase plan in May, repurchasing $75 million in shares during Q2 2026
  • CET1 ratio stood at 12.8% and tangible capital ratio at 9.7% at quarter end; returning excess capital to shareholders remains a top priority for 2026
  • Strong late-quarter deposit growth allowed the bank to pay down $100 million in maturing FHLB borrowings while only increasing its working capital line of credit by $25 million

• Asset Quality

  • Net charge-offs were just 2 basis points in Q2, and have averaged 9 basis points over the last five quarters
  • Loan loss provision was 14 basis points of average loans in Q2, averaging 13 basis points over the last five quarters (excluding day one acquisition impacts)
  • Total non-performing assets increased modestly to $103.8 million (56 basis points of total assets), driven by a small net uptick in residential loans; all delinquent residential loans have sufficient borrower home equity, with no meaningful expected losses
  • Total criticized and classified loans decreased quarter-over-quarter, as the bank maintains proactive early identification and workout strategies for problem assets
  • The bank's largest long-standing non-performing loan has resumed making interest payments and could return to performing status by year end

• Strategic and Operational Initiatives

  • Excluding merger-related expenses and non-recurring core system conversion costs, core expenses were flat quarter-over-quarter; management believes the bank has existing scale to grow without significant incremental expense increases
  • The bank is on schedule to convert its core operating platform from Horizon to IBS (both FIS products) in October 2026, which is expected to improve client service, increase operating efficiency, accelerate new product launches, and support long-term growth
  • An Office of Digital Innovation and AI governance framework with a steering committee was established in Q1 2026 to manage AI investments within the bank's moderate risk profile; the bank will start with low-risk, high-payoff use cases to build execution capacity before moving to larger-scale applications
  • The bank's core strategy remains: organic growth via new and existing relationships, disciplined underwriting, positive operating leverage, and deployment of strong capital to generate long-term shareholder value

• Full year 2026 profitability guidance is reaffirmed: the bank targets 1.4% return on average assets and 15% return on average tangible capital for Q4 2026
• Q4 2026 core NIM guidance is reaffirmed at a range of 3.9% to 3.95%, with results expected to land near the low end of this range (this range includes a 10 basis point assumption for purchase accounting accretion impacts)
• Loan growth guidance has been updated: CRE and construction loans are now expected to see a flat to low single-digit percentage decrease for full year 2026, down from prior expectations due to elevated Q2 payoffs. C&I loan growth is expected to land at the high end of the prior mid-single-digit percentage growth guidance. Full year consumer loan growth is now projected to be in the low single-digit percentage range
• Full year 2026 deposit growth, fee income, and tax guidance (effective tax rate of ~23.4%) remain unchanged
• Full year 2026 expense guidance: core expenses (excluding core system conversion costs) are projected to be between $553 million and $557 million. One-time core system conversion expenses are expected to total between $5 million and $6 million for the full year, with the majority of remaining conversion expenses recognized in Q3 2026

Independent Bank Corp. operates across commercial and consumer lending, deposit services, and wealth management, with the following Q2 2026 performance:

• Commercial & Industrial (C&I/CNI): Excluding the $37 million runoff from the exited dealer floor plan business, CNI loans grew by $116 million (10% annualized). The approved commercial loan pipeline reached $510 million, a 63% increase quarter-over-quarter, with a roughly 50/50 mix of CNI and commercial real estate (CRE).
• Commercial Real Estate (CRE) & Construction: CRE and construction loans declined $176 million in Q2 due to elevated payoffs from asset sales, external refinancing, and maturing construction loans moving to permanent financing. The bank funded $203 million in new relationship-based CRE loans (up 11% QoQ) and added $300 million in new CRE commitments. CRE concentration stood at 27% of total loans at quarter end.
• Consumer Lending: Home equity balances increased $35 million (11% annualized). Residential mortgage activity maintained a balance between increased portfolio balances and solid mortgage banking gain-on-sale results. Full year 2026 consumer loan growth is projected to land in the low single-digit percentage range.
• Deposits: Generated over $300 million in non-time deposits (7% annualized growth), with period-end balances growing at a 5.9% annualized rate. Cost of deposits remained stable at 1.36% (spot rate at 1.38% at end of June). Full year 2026 deposit growth guidance is unchanged.
• Wealth Management: Remains a key fee income driver. Assets Under Administration (AUA) reached $9.5 billion as of June 30, driving higher wealth management fees. Business advisory services for company owners preparing for sales is showing early momentum as a potential catalyst for future AUM inflows.
• Overall Profitability: Q2 2026 net income was $81.8 million, with diluted EPS of $1.70, return on assets of 1.34%, return on average common equity of 9.24%, and return on average tangible common equity of 14.05%. Fee income totaled $42.4 million, up over 5% quarter-over-quarter. Core net interest margin (NIM) increased 4 basis points to 3.76% (excluding purchase accounting accretion).

• Heightened market competition for deposits and loans has increased pressure on deposit costs and led to elevated payoffs of CRE loans when borrowers refinance away from the bank on terms management considers too aggressive to match
• There has been a small uptick in delinquencies and non-performing residential mortgage loans, driven by consumers delaying mortgage payments while continuing other spending; while all current delinquent loans have sufficient home equity, the trend could lead to future losses if economic conditions weaken
• The Massachusetts rent control ballot measure may cap multifamily property cap rates, and the proponent group will have the option to reintroduce an even stricter measure as a ballot initiative in two years, creating long-term uncertainty for the state's multifamily CRE market
• The bank maintains an elevated level of criticized and classified office CRE loans, and while management is working to resolve these exposures, the process is taking longer than initially expected, with the market still in a prolonged

Q: Beyond elevated Q2 payoffs, what market factors drove the downward revision to full-year CRE growth guidance, and what impact might the new Massachusetts rent control ruling have on the state's CRE market? / A: Management noted that competition in CRE lending has grown more aggressive through 2026, with two large loans ($120 million total) refinanced away from the bank on terms management was unwilling to match. While the rent control ruling is too new to show major demand shifts, management expects some increase in multifamily construction and permanent lending activity in the second half of 2026, and notes that the initiative's proponents can reintroduce stricter rent control as a ballot measure in two years, creating ongoing uncertainty.

Q: With elevated end-of-quarter cash balances following deposit volatility, how quickly will management rebalance the cash and securities mix to boost yields, and what yields are available on new purchases? / A: Management is already redeploying excess cash into higher-yielding securities, targeting a $400-$500 million earning cash balance by year end. Approximately $200 million in low-coupon (<2%) securities will mature in both Q3 and Q4 2026, which management expects will drive ~15 basis points of NIM lift per quarter. New securities purchases are mostly deep-discounted MBS with downside protection, currently yielding in the high 4% to 5% range, with management now comfortable taking on modestly more duration.

Q: What is management's outlook for combined dividend and buyback payout ratios, given strong capital levels and moderated loan growth? / A: Management confirmed a minimum 100% payout of quarterly earnings to shareholders, with potential for higher payouts depending on available capital. Most buybacks are planned to be funded via retained earnings and dividend transfers from the bank to the holding company (the most cost-efficient structure under current regulations), though management is open to modest borrowing to support more aggressive buybacks if conditions support it.

Q: What gives management confidence that CRE prepayment activity will slow in the second half of 2026? / A: The elevated Q2 prepayments were heavily driven by two unusually large payoffs totaling $120 million, an outlier level of lumpiness that management does not expect to repeat. The bank also has a strong pipeline of new CRE originations, and management will match competitor pricing on existing client loans when terms are within the bank's risk tolerance, leading to expectations that prepayment volumes will return to historical norms in the second half.

Q: Is Independent Bank Corp. planning geographic expansion into Connecticut following the acquisition of Webster Bank? / A: Management confirmed they are in active discussions with experienced commercial bankers in Connecticut about opening a loan production office (LPO), a model the bank has already executed successfully in Providence, Rhode Island. No final decisions have been made, as entry is contingent on hiring the right local team, and potential entry could target Hartford, New Haven, or Fairfield County.