Independent Bank (INDB -0.07%), the regional banking group behind Rockland Trust, released its earnings for the second quarter of 2025 on July 17, 2025. The bank reported revenue and earnings per share that surpassed Wall Street expectations. Non-GAAP earnings per share reached $1.25, beating the analyst forecast of $1.21, while revenue climbed to $181.8 million, ahead of the $178.2 million estimate. The quarter was marked by improved profitability, stronger asset quality, and steady progress in deposit growth. However, management noted continued expense growth and the execution challenges related to its recent Enterprise Bancorp acquisition. Overall, it was a strong quarter that showed progress on critical business priorities while highlighting some ongoing risks.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.25 | $1.21 | $1.21 | 3.3% |
| Revenue (GAAP) | $181.8 million | $178.2 million | $170.3 million | 6.7% |
| Net Interest Income | $147.5 million | $137.9 million | 6.9% | |
| Net Interest Margin | 3.37% | 3.25% | 0.12 pp | |
| Noninterest Income | $34.3 million | $32.3 million | 6.1% | |
| Efficiency Ratio | 59.84% | 58.51% | 1.33 pp |
Source: Analyst estimates for the quarter provided by FactSet.
Company Overview and Business Focus
Independent Bank operates primarily in Eastern Massachusetts and Rhode Island through its Rockland Trust division. It serves retail and business customers with a network of over 120 branches and various loan centers. The bank competes with both traditional local banks and online lenders, relying on a strong community presence to grow its deposit and lending base.
Its business is centered on core lending to businesses and consumers, with a heavy concentration in commercial loans and an expanding footprint in commercial and industrial (C&I) products. Recent efforts have focused on reducing exposure to commercial real estate, investing in digital banking capabilities, and managing regulatory requirements. The bank’s key success factors include maintaining a stable deposit base, managing credit risk, and keeping up with changing customer and regulatory expectations.
Quarter Highlights and Financial Performance
During the period, Independent Bank reported strong results across multiple metrics. Revenue rose 6.7 % over the prior year, outpacing analyst expectations. Non-GAAP operating earnings per share increased 3.3 % year over year, also exceeding consensus. The bank’s net income for the quarter was $51.1 million, roughly flat year over year but up 15 % from the previous quarter. Excluding $2.2 million in merger-related expenses, operating net income improved 4 % year over year.
Loan composition shifted as planned, with C&I loans growing 6.9 % while commercial real estate loans fell 3.3 %. Small business loans increased 11.6 %. The bank intentionally reduced its concentration in commercial real estate, in line with a sector-wide response to greater risk in that asset class. Total outstanding loans rose slightly to $14.5 billion, and deposits grew to $15.9 billion. Notably, noninterest-bearing demand deposits rose to $4.53 billion, representing 28.5 % of deposit balances, which improves funding stability and reduces costs.
Net interest income increased to $147.5 million, while the net interest margin—a measure of lending profitability—fell 5 basis points sequentially to 3.37 %. Management attributed the margin decline to higher funding costs after a subordinated debt issuance. However, the average cost of deposits bucked industry trends, falling 2 basis points to 1.54 %. The efficiency ratio, which tracks noninterest expenses as a proportion of revenue, rose modestly to 59.84 %, reflecting continued upward pressure on salary and operating costs.
Noninterest income, which covers revenue streams beyond basic lending—such as wealth management and fees—rose 6.1 % on growth in card fees and advisory services. Wealth management assets under administration increased to $7.4 billion. The bank also logged gains on life insurance policies, while mortgage banking income jumped nearly 45 %. The only material negative in noninterest income was a sharp drop in loan-level derivative revenue, which reflects lower customer demand for hedging financial products.
Credit quality improved meaningfully this quarter. Nonperforming loans dropped from $89.5 million to $56.2 million, driven by resolution and modification of large office and commercial exposures. Net charge-offs, which are loans written off as uncollectible, plummeted to $6.5 million, down from $40.9 million in the prior quarter. The provision for credit losses—a forward-looking estimate of future loan losses—declined to $7.2 million compared to $15.0 million in the previous period. Delinquency levels and nonperforming asset coverage both improved, with management highlighting the reduction as due to the resolution of two large nonperforming balances.
Balance sheet measures remained strong. Tangible book value per share—the bank’s book value excluding intangible items—rose 8 % year over year to $48.80. Regulatory capital ratios rose, with the Common Equity Tier 1 capital ratio at 14.7 %. The bank paid down $100 million in Federal Home Loan Bank borrowings this quarter and announced a new $150 million share repurchase plan, citing its solid capital position.
Expenses grew faster than revenue, up 9.2 % year over year, mainly because of increased payroll costs, director equity compensation, higher check and fraud losses, and professional fees. Merger-related expenses contributed $2.2 million. The efficiency ratio’s year-over-year increase means a greater share of revenue is being spent on operating costs.
The Enterprise Bancorp acquisition formally closed at the start of the third quarter. Management reported onboarding of new staff, and plans to complete system integration by October 2025. Integrating these operations is expected to generate new opportunities, but also presents operational and cost risks.
Looking Forward: Management Outlook and Key Considerations
Independent Bank’s leadership reaffirmed its guidance for “low single-digit percentage increase in loans for the full year” and “low to mid-single digit growth for deposits.” The bank expects noninterest income and expenses to achieve mid-single digit growth for fiscal 2025 compared to fiscal 2024. Management did not provide explicit guidance for the third quarter but noted that credit costs should moderate as problem loans were resolved in the current period.
Margin pressures may continue, especially as the effect of the March 2025 subordinated debt raise fully flows through results and the competitive landscape for deposits remains intense. Expense growth is likely to remain elevated due to mergers, talent retention measures, and planned investments in core systems. Investors should watch for updates on Enterprise Bancorp integration, continued shifts in loan portfolio mix (especially out of commercial real estate), and trends in core funding costs. The bank raised its quarterly dividend to $0.55 per share, up 3.8 % from the previous payment.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
