Independent Bank (INDB) Earnings Call Transcript

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DATE

Friday, April 17, 2026 at 10:00 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Jeffrey J. Tengel
• Chief Financial Officer and Head of Consumer Lending — Mark J. Ruggiero

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RISKS

• Management cautioned that the office portfolio remains a "challenging" asset class, stating, "we are not out of the woods yet with respect to our office portfolio."
• CFO Ruggiero noted, "loan growth somewhat at bay" amid economic uncertainty, with pricing competition contributing to deposit runoff as the company "have seen some flow of excess customer funds leave for pricing that we are not willing to match."
• New criticized loans include a multifamily credit with delayed lease-up and an office loan with an exiting single life science tenant, raising specific reserve requirements and classified asset levels.
• Guidance for CRE and construction loan growth was lowered to "flat to low single-digit" increases, reflecting competitive pressures and "muted demand" due in part to potential rent control in Massachusetts and overall borrower caution.

TAKEAWAYS

• GAAP net income -- $79.9 million with diluted EPS of $1.63, resulting in a 1.31% return on assets, a 9.02% return on average common equity, and a 13.67% return on average tangible common equity.
• Adjusted operating net income -- $82.1 million and $1.68 diluted EPS, excluding $3 million in merger and acquisition expenses and related taxes, producing a 1.35% return on assets, a 9.27% return on average common equity, and a 14.05% return on average tangible common equity.
• Net interest margin (NIM) -- Reported NIM was 3.9%, up 13 basis points sequentially; core NIM, excluding accretion income, increased 8 basis points.
• Capital return -- $94 million returned to shareholders, including repurchase of 802,000 shares for $63 million; tangible book value increased to $47.86.
• Dividend -- Quarterly dividend raised by 8.5% to $0.64 per share.
• CET1 ratio -- 12.87% at quarter end, maintained despite capital return activity.
• Total commercial loans -- Decreased $50 million from the prior quarter; C&I loans, excluding a $39 million reduction from the dealer floor plan portfolio exit, rose at a 7% annualized rate.
• Commercial real estate (CRE) portfolio -- Balances declined $94 million, with $56 million from the office segment; CRE concentration now 283%, nearing targeted reduction for transactional CRE.
• Approved commercial loan pipeline -- Increased to $313 million from $278 million at year-end, indicating near-term lending prospects.
• Deposit balances -- Period-end balances were flat; average deposits declined 1.5% sequentially due to seasonality; cost of total deposits was 1.36%.
• Net charge-offs -- $4.8 million, or 11 basis points annualized; a $4 million charge-off related to CRE was paid off in full days after quarter end.
• Total nonperforming assets -- Increased to $98.7 million, or 0.52% of loans, primarily due to downgrading one $17.7 million office loan (Class B, single life science tenant) with a $2.8 million specific reserve.
• Provision for loan losses -- $5.5 million, driven by specific downgrades, a larger-than-reserved charge-off, and $1 million–$2 million added on consumer portfolios for prudence.
• Criticized and classified loans -- Rose to 4% of total commercial loans; increase concentrated in three loans across office, C&I, and multifamily, but still within the typical historical range.
• Wealth management assets under administration (AUA) -- Flat at $9.2 billion, with positive net flows and revenue growing at an 11% annual rate due to asset-based fees and insurance commissions.
• Expense management -- Core expenses were $139.9 million, modestly above guidance mainly due to $2 million in snow removal; $1.1 million spent on core system conversion preparation; actual headcount flat despite banker hires.
• Core system conversion -- Transition from Horizon to IBS (FIS ecosystem) scheduled for October, cited as a milestone for future product capability and efficiency.
• AI initiatives -- "Office of digital innovation" and an AI governance framework established; initial use cases to focus on efficiency gains.
• CRE and construction loan growth guidance -- Annual outlook updated to "flat to low single-digit percentage increases," with all other loan and deposit guidance unchanged.
• NIM guidance -- Year-end NIM estimate raised to 3.9%-3.95%, assuming 10 basis points of purchase accounting accretion.
• Dealer floor plan portfolio -- Portfolio being exited due to lack of scale; reduced by $39 million in the quarter and stands just above $50 million, expected to substantially run off by year-end.
• Basel III endgame impact -- Expected to reduce risk-weighted assets by 7%-8%, equating to $150 million-$160 million in capital relief when implemented.
• Commercial loan origination yields -- New commercial loans booked in the low-6% range; runoff loans at 5%-5.25%, creating a roughly 100 basis point yield lift.
• Securities portfolio strategy -- Majority of investment cash flow redirected to maintain portfolio size; new investments in mortgage-backed securities yield 4%-4.25%, replacing runoff at 1.50%-2%.
• Spot net interest margin (March) -- Core spot margin was 3.72% at March end, in line with the quarterly average.
• Deposit pricing competition -- Described as "very, very competitive" with market offers in the 4%-4.50% range; management reiterated it will not sacrifice pricing discipline for growth.
• Bank M&A posture -- "Pencils down" on bank M&A until October's core system conversion completes, but open to wealth or deposit franchise opportunities.

SUMMARY

Independent Bank Corp. (NASDAQ:INDB) reported stable profitability and capital metrics for the quarter, with management emphasizing disciplined capital return and ongoing technology investments. The company highlighted a pause in bank M&A activity until after the October core system conversion, while maintaining openness to wealth or deposit franchise opportunities. Management cited competitive deposit pricing and macroeconomic uncertainty as factors limiting loan and deposit growth, and updated guidance increased projected year-end NIM. The company also described progress in reducing transactional CRE exposure and continued investment in AI and digital innovation initiatives.

• The dealer floor plan exit is progressing, with the outstanding balance expected to fall below $50 million before year-end as legacy relationships transition to other banks.
• The company forecasts maintaining the CET1 ratio near current levels, with future share repurchases paced to keep capital flat and accommodate loan growth when markets recover.
• Basel III endgame implementation is anticipated to reduce risk-weighted assets by about 7%-8%, enabling substantial capital flexibility or incremental buybacks.
• Management noted that tenure and quality of the existing multifamily book mitigate stress from proposed rent regulation, but new construction lending remains subdued due to legislative uncertainty.

INDUSTRY GLOSSARY

• Dealer floor plan portfolio: Short-term revolving credit provided to auto dealers for vehicle inventory financing.
• CET1 ratio: Common Equity Tier 1 capital as a percentage of risk-weighted assets, measuring a bank's core financial strength.
• Transactional CRE: Commercial real estate loans originated for one-off or non-relationship clients, typically higher risk than core relationship-based CRE lending.
• Accretion income: Income recognized due to the gradual unwinding of purchase discounts from acquired loan or bond portfolios.

Full Conference Call Transcript

Jeffrey J. Tengel: Thank you. Good morning, and thanks for joining us today. I am accompanied this morning by CFO and head of consumer lending, Mark J. Ruggiero. When we last spoke in January, I highlighted several major areas of focus for Rockland Trust in 2026: organic growth, expense management, and capital optimization. Our first quarter results reflect progress in all of these areas. While reported loan and deposit growth were somewhat muted, I will talk later about why we remain encouraged with our ability to continue to grow organically. And we held the line on expenses and continue to proactively manage our capital. The first quarter also saw continued NIM improvement, increasing 13 basis points from the fourth quarter.

This reflects pricing discipline across both our loan and deposit portfolios. Excluding loan accretion income, our adjusted NIM rose by 8 basis points. Mark will elaborate on our NIM during his comments. Excluding M&A charges, expenses were down 1.5% from the fourth quarter as we realized the impact cost savings from the Enterprise transaction, which was offset by seasonally higher employee and occupancy costs. Additionally, the quarter reduction benefited from the absence of certain outsized expenses incurred in the fourth quarter. With 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.

We returned $94 million of capital to shareholders in the first quarter, including the repurchase of 802,000 shares for $63 million. I would like to point out that despite our aggressive capital actions, tangible book value rose to $47.86. We also recently announced an 8.5% increase in our quarterly dividend. With expected further improvement in our profitability and moderate balance sheet growth, we expect capital management to remain a key priority for the balance of the year. There is a significant amount of work underway as we prepare to transition our core operating platform from Horizon to IBS, both part of the FIS ecosystem. The conversion is scheduled to take place in October.

The new operating system will provide additional product capability and enhanced efficiencies that reflect the size and scale of our organization. This is an important milestone for Rockland Trust and will position us for future growth. Related, I would like to take a moment to talk about AI. This is obviously a topic on investors’ minds. In the first quarter, we established an office of digital innovation. We have established a governance framework around our AI activities to ensure we stay within the guardrails of our moderate risk profile and any actions are consistent with our award-winning culture. This governance framework includes a steering committee that will serve as a clearinghouse for AI use cases.

This will allow us to make AI investments in those areas that have a meaningful payback and avoid the proverbial boiling the ocean. I expect us to start with some relatively easy use cases as we build muscle memory. Over time, this should enable us to gain confidence in our ability to execute and take on bigger, more impactful applications. I mentioned earlier that loan and deposit growth was somewhat muted in the quarter. Given the Iran war, the marked volatility in interest rates, and the lingering inflationary environment, it should be no surprise there is not a uniform consensus on the current business climate from our bankers and customers.

The duration of the war and its impact on oil prices will dictate the ultimate effect on distribution companies, contractors with truck fleets, manufacturers, construction firms, and energy-intensive operators. Clients broadly expect prolonged energy and commodity price volatility to weigh on cost structures. While a notable share of our clients indicate that they have adjusted to the current rate environment, others suggest that the higher rates have delayed expansion plans. Lastly, inflation remains a dominant concern across sectors, particularly with respect to labor, health care benefits, materials, and utilities. Suffice to say, the environment is best characterized as somewhat challenging. I would summarize our customers’ mindset as cautious.

Importantly, though, we have not seen any meaningful stress in our loan portfolios as a result of the current environment and our customers continue to manage through this very well. With that as a backdrop, our total commercial loans declined by $50 million from the fourth quarter. If we peel back the onion a bit though, underlying results were stronger than reported. For example, excluding the impact of the $39 million decrease in our dealer floor plan business, which we are exiting, our C&I loans rose at a healthy 7% on an annualized basis. In addition, we would note that the office portfolio contributed $56 million of the $94 million drop in commercial real estate balances for the quarter.

Our CRE concentration now stands at 283%, and we believe we have achieved most of the targeted reduction in transactional CRE business. While we have reduced transactional CRE balances, we funded $179 million of relationship-based CRE loans in the first quarter and added $290 million of CRE commitments. We still like the CRE asset class and will continue to support our clients in this space the way we always have. This dynamic continues the rebalancing of our commercial lending business. C&I loans now represent 25% of total loans versus 22% at year-end 2024. It is important to note that our C&I growth is being driven by core relationship banking.

We do not have any exposure to the NDFI or private credit segments that have driven much of the industry’s loan growth. In summary, we are optimistic about our market position. We have the product set and talent to drive commercial loan growth going forward. Our approved commercial loan pipeline totaled $313 million, up from $278 million at year-end. But importantly, we will not sacrifice credit structure or rate for new business. This is consistent with how the legacy Rockland Trust has always operated. On the funding side, period-end deposit balances were essentially flat.

The 1.5% decrease in average deposits from the fourth quarter is consistent with prior years, as seasonality tends to adversely impact business operating balances in the first quarter of the year. DDAs represent 28% of overall deposits, and the cost of total deposits was 1.36% in the first quarter, highlighting the immense value of our deposit franchise. Similar to the loan portfolio, and as we have said many times, we will not sacrifice rate to show deposit growth with transactional one-product customers. With respect to asset quality, our net charge-offs were 11 basis points for the first quarter, and have averaged just 11 basis points over the last year.

As we suggested last quarter, we are not out of the woods yet with respect to our office portfolio. This quarter, several office loans exited the bank while a couple of new office loans were added to criticized status. We continue to believe the challenges within our office portfolio are identifiable and manageable. As I have mentioned in the past, there is no quick fix here. We remain diligent in managing this portfolio segment. While we are confident the worst is behind us, we will continue to be transparent with the market as we work down this asset class. Our wealth management business continues to be a key fee income driver for us.

Despite an incredibly volatile market, our AUA were essentially flat at $9.2 billion as positive net asset flows and strong relative portfolio performance mostly offset market-related declines. Importantly, we were pleased with the diversity of new client inflows. Revenues grew at an 11% annual rate driven by higher asset-based fee revenue and insurance commissions. We believe first quarter results represent another step forward in driving improved profitability at Rockland Trust. We remain focused on accelerating our organic growth, reducing our CRE office portfolio, and prudent capital management. These actions, coupled with our industry-leading deposit cost, disciplined expense management, and operational excellence, will return INDB to our historical market premium valuation.

I feel particularly confident about Rockland Trust’s positioning across our markets, driven by the strength of our products, the dedication of our people, and the effectiveness of the strategies we put in place. I want to thank all Rockland Trust employees for their tremendous efforts in making the first quarter a success. Every measure of our success is a direct result of their commitment. On that note, I will turn it over to Mark.

Mark J. Ruggiero: Thanks, Jeff. To summarize the quarter results, 2026 first quarter GAAP net income was $79.9 million and diluted EPS was $1.63, resulting in a 1.31% return on assets, a 9.02% return on average common equity, and a 13.67% return on average tangible common equity. Excluding $3 million of merger and acquisition expenses and the related tax impact, the adjusted operating net income for the quarter was $82.1 million, or $1.68 diluted EPS, representing a 1.35% return on assets, a 9.27% return on average common equity, and a 14.05% return on average tangible common equity.

As Jeff alluded to in his comments, we maintained our robust CET1 capital ratio at 12.87% while repurchasing $63.3 million in capital during the quarter and increasing our common dividend 8.5% to $0.64 per quarter. With only $24 million left on the current repurchase authorization, we anticipate establishing another round here in the second quarter as we continue to prioritize capital return to shareholders amidst an uncertain economic environment. We saw this element of uncertainty play out during the quarter in a couple of areas. The first area I will note is in regards to pricing competition, particularly on the deposit side.

As a bank that has never looked to lead with rate, we have seen some flow of excess customer funds leave for pricing that we are not willing to match. This dynamic, combined with seasonal volatility, led to the fairly flat deposit balances quarter over quarter. We operate with conviction that finding the right balance of pricing discipline while supporting our relationship customers is crucial. And we believe the Q1 results of flat deposit balances while reducing the cost of deposits 10 basis points is a strong outcome of this philosophy.

On the lending side, we saw demand impacted in a few areas, as all of the macroeconomic uncertainty that Jeff just talked about is keeping some customers on the sidelines. Our largest commercial portfolio, multifamily, is one particular asset class where we have seen this impact. With the reduced CRE portfolio much more representative of our legacy relationship lending profile, and an overall concentration level now in the low-280% range, we are comfortable suggesting a forward growth strategy commensurate with our historical approach. While this CRE strategy continues to play out, we remain extremely optimistic over our near-term C&I growth prospects.

Reiterating the $39 million decrease associated with our winding down of the dealer floor plan portfolio, other C&I balances increased $78 million during the first quarter, or 7% on an annualized basis. In addition, the rebuild of our approved total commercial pipeline should bode well for second-half growth in 2026. On the consumer side, typical seasonality drove reduced overall volumes in the mortgage business, but an increase in salable activity kept mortgage banking results relatively flat while absorbing runoff of lower-yielding portfolio balances. And home equity volume has remained consistently strong with the $10 million increase in balances despite continued lower utilization rates versus pre-COVID levels.

Switching gears a bit, the combination of the deposit cost reductions that I just discussed along with loan and securities cash flow repricing dynamics drove a solid 8 basis point lift in the core margin. And with elevated purchase accounting accretion versus the prior quarter, the reported margin rose sharply to 3.9% for the quarter. The balance sheet remains very well positioned to continue to drive consistent improvement in the net interest margin, while providing flexibility to lever up or down as needed to stay neutral to any short-term rate changes from the Federal Reserve. Moving to asset quality, we highlight the following notable items for the first quarter.

Total nonperforming assets increased to $98.7 million, or 0.52% of total loans, driven primarily by the downgrade of one office loan which has an approximately $2.8 million specific reserve established. Net charge-offs for the quarter were $4.8 million, or 11 basis points annualized, with $4 million related to a CRE relationship that was partially reserved for last quarter. And as a quick positive update, this $4 million charge-off loan was associated with a nonperforming office loan that actually repaid the full remaining balance subsequent to year-end, in fact, just a few days ago. The first quarter provision for loan loss was $5.5 million.

And while total criticized and classified loans increased versus the prior quarter, Q1 levels of 4% of total commercial loans remain in the range we have experienced over the last year or so. The downgrades to criticized status during the quarter were primarily isolated to a few credits, with no identified loss reserve recognized at this point. Our fee income businesses performed in line with expectations for the quarter, coming in relatively consistent with the prior quarter results despite fewer days in the quarter.

Jeff provided color on the positive momentum within our wealth management group, and we are also pleased with the continued expansion of our treasury management services as many of the newer C&I customers leverage the full suite of cash management products that we offer. On the expense side, I will first point out that we did have a final round of severance related to the Enterprise acquisition that made up the majority of the $3 million of M&A expenses for the quarter. Total core expenses of $139.9 million are slightly higher than our guidance due primarily to significant snow removal expenses, which were a little over $2 million for the quarter.

We remain focused on analyzing all areas of the bank to ensure expenses are appropriate and justified as we move forward into an environment where we know technology will play a larger role. Along those lines, our work on the upcoming core conversion is ongoing, with approximately $1.1 million of expenses in the first quarter directly attributable to those conversion efforts. And lastly, as expected, the tax rate increased from the prior quarter to 23.38%. With that, I will now finish up by revisiting our 2026 guidance. First, we reaffirm our two primary profitability targets for 2026. The first is return on average assets of 1.4% and the second is return on average tangible capital of 15%.

Regarding loan growth, we update our CRE and construction full-year estimates to now be flat to low single-digit percentage increases. All other loan and deposit estimates remain unchanged. For the net interest margin, we increase our estimate to suggest that 2026 fourth quarter margin will now be in the range of 3.9% to 3.95%, while still assuming a 10 basis point impact from purchase accounting accretion. All other guidance remains unchanged from the prior quarter. That concludes my comments. And with that, we will now open it up for questions.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Justin Crowley with Piper Sandler. Your line is open. Please go ahead.

Analyst: Hey. Good morning, everyone. Hi, Doug. Good morning. Was wondering if you could start off on loan growth. Tweaked the guide a bit lower on the CRE side, of course. So I was just curious if you could expand even a little more on what informed that decision. And then also if you could just give us a sense, you mentioned some caution on the borrower side, but just as far as demand, how you have seen borrowers respond with some of the heightened macro volatility and how long you think that could maybe persist.

Jeffrey J. Tengel: Yeah. On the CRE side, it is interesting because the commercial real estate market has gotten very, very competitive. It is really competitive at the low end with a lot of the smaller banks and the mutuals, and we see it at the larger end too with some of the larger banks. And it is a space where, as I said in my comments, we are not going to stretch for structure or for rate, and so we think that the environment is really very, very competitive. So we are continuing to support our existing clients where we can.

The other thing that I think is providing a little bit of a cloud over the commercial real estate business in Eastern Massachusetts anyways is the prospect of rent control. And so a lot of the multifamily projects—these would be mostly construction loans—really are not happening. A lot of the investors are on the sidelines and they are not commencing with any of the historical pace that they would have in the construction space in that multifamily asset class. So we have definitely seen a marked slowdown there. With respect to the second part of your question, it is kind of hard to pinpoint when that is going to turn.

If you could tell me when the war is going to be over and when the price of oil is going to return to where it was prior to the war, I think I might have maybe a little bit better answer, or maybe in listening to our clients have a better sense for how they are thinking about it. But I think caution right now is definitely the word I would use to express how generally our middle market and lower middle market client base feels. It does not mean there is no activity at all. We still have clients that are very healthy and very strong and they will continue to invest where they think it is prudent.

But it definitely is causing the owner-operators that we typically bank—it is just giving them pause, and it probably makes them think a little bit long and hard. You know, the phrase about measure twice and cut once I think is definitely something that they are running through their minds.

Analyst: Okay. Got it. That is helpful.

Mark J. Ruggiero: Sorry. I was just—from a guide standpoint, I think all of that uncertainty certainly has increased a bit over the first quarter. And I think just a bit of a positive element to it that, you know, the $40 million office loan we had a sense could come to fruition here in 2026. But having that play out in the first quarter and creating a little bit more of a drag on net loan growth was—those are probably the two primary drivers to just being practical around the expectations going forward. But I think in terms of opportunity and the pipeline growing, as Jeff alluded to, there is still a lot of optimism and positivity there.

I think it is just, you know, a little bit more uncertainty with the war and the office payoffs, to be quite honest, driving the guide reset.

Analyst: Okay. Understood. And then just flipping to, you know, on the credit side, you saw nonperformers up a bit and then had the criticized inflow. Can you provide a little more detail on the drivers there? I think you mentioned office is a factor, at least on the nonperforming side, a bit. I am not sure of the extent when you looked at criticized balances. And then I know it is pretty formulaic at this point, but just how do you call the input, how that gets you to an allowance that was pretty flat for the quarter, and just where you feel or how you stand on credit quality?

Jeffrey J. Tengel: Yeah. I will take the first part of that, Justin, and then I will let Mark take the second part. With respect to the criticized assets, we really had three larger loans that moved to criticized status that make up the bulk of that increase. And all three are in different asset classes. Only one of those is in the office asset class, one of them is C&I, and the other one I think is the multifamily space, which is really the first multifamily loan that I think has been criticized in quite some time. And in that particular instance, it is just a little bit slower lease-up, which we are not overly concerned about.

It is just taken a bit longer, and we were just being prudent in moving it to criticized status. But still feel really, really confident that things are going to work out. So that is the quick overview of the increase in criticized loans. And as Mark pointed out, we are still well within the historical levels of criticized loans that we have operated at in the past. I will let Mark address the second part of your question.

Mark J. Ruggiero: Yeah, I think from a provisioning standpoint, it dovetails into a bit of that answer, which is obviously the downgrades on those loans Jeff talked about drive a bit higher allocation in the model as you would expect. But they are not at a point now where we have any reason to suggest there is a specific reserve or actual loss reserve that needs to be set. So as a—call it a risk-rated 7 loan versus a risk-rated 6 loan—there is a higher allocation in the model, but it will not move the needle too much. So that drove a little bit of the need for provision. I talked about the $4 million charge-off in the quarter.

That was a couple million dollars higher than what we had reserved as of last quarter. So that required a couple million dollars in provision. And then, you know, we are tweaking the model a bit to have a bit more of a conservative macroeconomic environment factor playing through. I think on the consumer side, we feel really good about the credit picture right now, but I think you would be naive to suggest there is not a little bit more pressure on the health of the consumer. So, you know, $1 million or $2 million of added reserve on mortgage and home equity portfolios is appropriate. So those would be the three main drivers behind the $5.5 million provision.

Obviously, there was not much loan growth, so that helps from a provision standpoint, but it was really the charge-off, the downgrades, and a little bit of build on the consumer side.

Analyst: Great. And then just one last one. You know, a good chunk of the buyback in the quarter. Obviously, a lot of volatility in the market. But with average pricing coming in about where we are at today, just curious if you could speak a little more on the ability and appetite to keep this sort of a pace as you look to reduce excess capital.

Mark J. Ruggiero: Yeah. I can tell you it will absolutely be a priority. You know, the goal high level would be to keep capital relatively flat. Now we can lever up and down a little bit from there, but I think that is the right level that will allow us and afford us to do a bit of management over holding company liquidity, CRE concentration, and obviously optimizing capital. So I would—we have not announced a new plan yet. I am very comfortable suggesting we will likely put one in place here in the second quarter. But the level of buybacks should be at a pace where we are going to try and keep capital relatively flat.

Analyst: Great. I appreciate it. I will leave it there. Thanks for the time this morning.

Jeffrey J. Tengel: Thanks, Michael.

Operator: Your next question comes from the line of David Conrad with KBW. Your line is open. Please go ahead.

David Conrad: Yes. Thanks. Just really a follow-up on the capital and the buyback. I mean, your CET1 level is about 12.09.

Mark J. Ruggiero: And you started the buyback, and it really did not budge. And I think earnings power is going to improve even if loan growth improves a bit. So maybe balance the discussion of why you would want or desire to keep that flat instead of working that down a bit, and how you weigh the environment with, like, narrowing credit spreads and excess competition with potential—using that for a potential buyback to offset that.

Chris O’Connell: Yeah. It is a fair—

Mark J. Ruggiero: question. You know, I think we are still feeling like there is a growth path that we would like to leave some level of capital flexibility. You know, ideally—I have said this a few times now—ideally, we would grow into that excess capital position, but we also are being realistic and recognize, you know, we are talking a lot about uncertainty in the environment. That is going to keep loan growth somewhat at bay. So we absolutely are looking at a minimum to basically keep flat. Doing more than that, David, to be honest, some of the practical limitations there will be funding.

So in a holding company–bank structure, the way you will typically fund that ideally would be through earnings and through bank-to-holding-company dividends. Doing that at a pace that exceeds earnings puts some pressure on the ability to rely on that as a funding base. So we would have to go to the outside market to borrow if we really wanted to ratchet that up. And I am not saying we would not do it, but we are still weighing that pro and con. And then we are still being cautious about keeping CRE concentration at a range that we think is appropriate and allows us to grow when the market turns.

So that 280% to 290% range, we are very comfortable with. But the more we do on the buyback side, the more that constrains keeping that CRE ratio in that range. We are trying to find that right balance of, like I say, at a minimum keeping capital flat. That will not pressure funding and/or CRE concentration. But when you start to exceed that, we would just have to weigh sort of the pros and cons.

David Conrad: Got it. Fair enough. And then maybe a follow-up. Just regarding the Fed’s proposal for Basel III, just want to get any thoughts on risk-weighted assets with any potential benefit in your mortgage or CRE portfolio, given their guidance?

Mark J. Ruggiero: Yep. Yeah. We have done some rough modeling on that and think we would be comfortable suggesting our impact would be aligned with probably what you are seeing as sort of the industry expectation. Meaning, with 25% of our book in the consumer space—mortgage, home equity—where our LTVs are, I think you would expect to see somewhere around 15 basis points of risk-weighted asset relief there. And then on the commercial side, in general, 5 basis points of RWA relief. So that probably pencils out to 7% or 8% sized basis points. So 5% reduction in RWA, 15% reduction on the mortgage side.

It is about a 7% to 8% reduction in risk-weighted assets, which gives you about $150 million to $160 million of capital relief when this comes to fruition, which certainly allows for an expectation for even more buyback or, obviously, just more capital flexibility.

Chris O’Connell: Great. Perfect. Thank you.

Operator: Your next question comes from the line of Steve Moss with Raymond James. Your line is open. Please go ahead.

Mark J. Ruggiero: Hi. Good morning, guys.

Jeffrey J. Tengel: Hi, Steve.

Chris O’Connell: Hey, Jeff. Mark.

Mark J. Ruggiero: Maybe just—

Analyst: you know, going back to the loan pipeline here and loan yields, just good to see the step up in activity and the organic growth there. Just kind of curious, where are you guys putting on loans these days?

Mark J. Ruggiero: Yeah. On the commercial side, Steve, it is low 6s—probably 6.10% to 6.20% range. Runoff is in the 5% to 5.25% range on the commercial side, so you are still getting that 100 basis point lift or so on the churn. On the consumer side, there is not a lot of portfolio mortgage going in, but that is probably a little bit lower yield, call it 5.75% to 6%. Most of the home equity volume continues to be prime, so that is obviously at a better rate. But the biggest driver on the commercial side, call it, low 6s replacing low 5s.

Chris O’Connell: Okay.

Analyst: And then in terms of the securities cash flows here that you have coming off, just curious—Mark, you mentioned deposit pricing, obviously saw some things run off. Are you thinking of using some of those cash flows to continue to manage higher-cost deposits lower, or are you thinking about parking those in securities here or just what is the dynamic of thinking going forward?

Mark J. Ruggiero: Yeah. I think from a balance sheet position and liquidity management perspective, we would be looking to keep the securities portfolio pretty flat where it is. I probably would not want it to get too much lower. Where we are—maybe down to 11%–12% we certainly would be comfortable—but I think I would expect to see the majority of the cash flow go back into the securities portfolio. We are seeing good yields there, and we are very conservative in terms of managing that portfolio. We are buying deep-discounted, fairly matured mortgage-backed securities. We are not stretching for yield in that portfolio, but we are getting, on average, 4%–4.25% rate.

And that is replacing—in the first quarter, actually $100 million that came off was at a 1.50% rate. I would expect more of what is going to run off in the second half of the year to be closer to 2%. But that dynamic, giving you 200 to 225 basis points of lift on the securities book, is another big driver of the margin expansion you saw. But I would—long way of saying I would expect us to keep that portfolio relatively flat.

Analyst: Okay. Appreciate that color. And then in terms of just the multifamily business in Massachusetts, you guys have about a $2.9 billion book. Just kind of curious, with the rent legislation here, are you guys going to tighten underwriting standards? Are there any thoughts of adjusting the way you operate on that front? And could that be a little more of a headwind beyond just this year if it passes?

Jeffrey J. Tengel: Yeah. I mean, the—the most obvious headwind would just be the muted new business coming from construction loans in the multifamily space. As I mentioned in my comments, I think a number of investors—and I have spoken to several of them—they will tell me, look, we have choices. We do not have to invest in Massachusetts. We can invest in Connecticut or New York or wherever. And so I think until that issue gets—there is some clarity around it, I think there is going to continue to be muted demand on the construction side. Within the existing portfolio, our multifamily portfolio is—I would suggest—pretty seasoned. It has been underwritten consistent with historical Rockland Trust conservatism.

We do not underwrite to trended rents or any of those sorts of things. So we feel really good about the existing portfolio of multifamily loans that we have because we have not seen any signs of stress as we move through these quarters. So I think the biggest challenge is going to be with new business as opposed to feeling like our existing portfolio is going to experience stress.

Analyst: Okay. Fair. And then in terms of just going back to the office credit here, just want to clarify with regard to the payoff and the charge-off. Is it fair to—did I understand correctly that you charged off the $4 million and then the remaining balance, which I am assuming is the $13.07 million on the—in the deck—was paid off just a few days ago? Or is it just the recovery? I am just kind of—

Mark J. Ruggiero: No. No. We charged it off to the P&L to what we knew was going to be the sale price, then that sale went through this week.

Chris O’Connell: That is what I expected. I just was not quite sure I heard it right. Okay. Great. And then one more thing just on the noninterest-bearing dynamics for the quarter. Just kind of curious—they went down quite a bit but EOP was flattish. Was there anything seasonal that maybe we should have been thinking about?

Jeffrey J. Tengel: On the deposit side? Particularly?

Chris O’Connell: Yes. On noninterest-bearing.

Mark J. Ruggiero: Yeah. Yeah. There is definitely seasonality, particularly in our business segment. When you look at the data in the reporting for the quarter, we are encouraged by a couple of things. The first is we still brought in new relationships and deposit dollars associated with new relationships that outpaced closed relationships. So where we saw some of that average deposit pressure is in existing balances being utilized. And I would attribute that to a couple of things. One is typical seasonality—tax payments, distributions, whatever it may be. We always see the low point of our deposits in the first quarter of a calendar year.

Second is, I think there is some level of just inflationary pressure that is probably increasing to some modest degree a level of spend. I think that is putting a little bit of pressure on outstanding deposit balances. And then third, to be very candid, there is some money that we knew we let go due to just not a willingness to match some of the rates that we are seeing in our market. So you may see a customer with X amount of dollars in their account. They are carving out a small piece and looking for top rate, and we are going to—sometimes that answer is we price up and match.

Sometimes, depending on the overall relationship, we have been willing to not match. So all three factors are in play in the first quarter, but I would say the biggest majority is your typical usage that we would look to see rebound in the second quarter.

Chris O’Connell: Okay. Great. I appreciate all the color here, and I will step back in the queue. Thank you very much.

Operator: Your next question comes from the line of Laurie Hunsicker with Seaport Research. Your line is open. Please go ahead.

Laurie Hunsicker: Yeah. Hi, Jeff, Mark, and Jerry. Good morning. I wanted to stay where Steve was on office. So just to go back to office for a minute because I am just a little bit confused. When I am looking at your office nonperformers of $53.8 million, that $18 million that repaid is already out of those numbers, correct?

Mark J. Ruggiero: It is the $13.7 million that is out of those numbers.

Laurie Hunsicker: It was originally $18 million, charged down to $13.7 million, and that paid off in April. Correct?

Mark J. Ruggiero: Correct.

Laurie Hunsicker: Okay. Perfect. Right. So—and then you initially had a $2 million reserve on that in the fourth quarter, so you took another $2 million before you charged it off, and then this new one came on, you took a $2.8 million specific reserve. So if I look at your loan loss provision for the quarter, it basically was all office. Am I thinking about that the right way?

Mark J. Ruggiero: The new nonperformer, the $17.7 million, that has a $2.8 million reserve. We had already reserved $2 million of that last quarter. So there is—the appraisal suggests a bit more of the cure, so to speak, that would be needed. So it was only another, call it, $800,000 of provision needed to establish that reserve. So I’d say modest reserve build.

Laurie Hunsicker: Perfect. Perfect. Okay. And then the $17.7 million that is new, is that a Class A or B? And do you have any occupancy—can you give us any kind of color around that?

Mark J. Ruggiero: The $17.7 million new? Yes. Jeff, do you have whether that is A or B? I do not. But it is basically—the issue with that is it is a single tenant, life science tenant that has represented to us they will be exiting the facility. It is probably Class B would be my—if I had to venture a guess. So we do not expect sponsor support when that happens. So we would likely be looking at a future foreclosure, and the reserve that was established is based on an appraisal kind of on an as-is basis.

Laurie Hunsicker: Gotcha. Okay. And just remind me, your life sciences book—how big is that?

Jeffrey J. Tengel: It is not very big, Laurie. I do not have it in front of me, but I would say it is $100 million, plus or minus. It is not very big, and it is a little bit lumpy. I know we have a couple of larger loans in there. One in particular that—it was a construction loan, and we may have spoken about this in the past, but it continues to lease up really well, which is kind of bucking a trend in that space. And so it continues to get better. Honestly, that larger loan that I am referring to is criticized, and we think it is likely to get upgraded sometime over the course of 2026.

Mark J. Ruggiero: Yeah. That is a $28 million loan that is in the Q4 maturity bucket. So that is $28 million out of the $54 million—that is life science. If you recall, it was once an empty building when we first started talking about this, so it has been a very positive development.

Jeffrey J. Tengel: With good sponsorship, I might add.

Laurie Hunsicker: That is great. And actually that segues to my other question. By the way, I love the slide 10 details. Thanks for continuing to include that. So yes, you touched on the $54 million that is coming due in 2026. Is there anything—kind of looking between the third and the fourth quarter, you have got $20 million coming due and obviously of the $54 million you just touched on the $28 million. Is there anything, or I guess maybe how should we be thinking about that? Is there any color you can give us on those loans?

Mark J. Ruggiero: Yeah. To be honest, some of them we probably talked about in the past. I mean, they each have their own story. Based on those stories, if there is any loss exposure, we have reserved for it. But as you know, I think that we have probably talked about most of the loans that have a specific reserve on, and a lot of these either do not have a reserve because we expect full resolution or they are pretty modest reserves. So we feel genuinely good about that. I think to provide maybe one notable update—so I believe it is a fourth—yeah, one of the fourth-quarter maturity items now.

It is about a $10 million loan that was originally intended to mature here in the first quarter, so if you went back to our deck from last quarter, I believe you would have seen a $9.9 million—or it would have been part of what was set to mature in Q1. That was extended to Q4. But that is a participation deal. The sponsor is looking to refinance or sell. Cash flow is improving. We felt a short-term extension was the right call to get that to a resolution that we still feel would get us paid out in full. So that one is probably one worth noting.

But in general, like I said, the rest of the short-term maturities we feel—knock on wood—pretty good about.

Laurie Hunsicker: Okay. And then just switching over to the dealer floor plan loan. So you mentioned you are discontinuing that book. How quickly does that book run off? And can you give us the current balance and just any color behind your reasoning for discontinuing?

Jeffrey J. Tengel: Yeah. So the reason we decided to exit was we felt like we did not have scale to compete. The segment that we are in tended to be smaller—I will say relatively undercapitalized used car dealers. That industry, as you know, has consolidated quite a bit, and the larger, more well-capitalized companies did not really fit our traditional profile. And so as we looked at it, we said to ourselves, we are not very big in this space, and we do not really feel great about the prospects to grow it in a meaningful way.

And I am not a big fan of hobbies, and I tell our people all the time, if we like the business and like the space, then let us put resources against it and let us grow it. If we do not, then let us exit because otherwise we are going to make a mistake and it will come back to bite us. And so this was a good example of where we just did not feel good about the go-forward strategy and our ability to be a meaningful player, and so we decided to exit. I think it started with, maybe, $100 million–$150 million roughly outstanding, and we are down to, I think, $70 million or $80 million.

It has actually gone quite well, to be honest with you. Our team has done just a terrific job of facilitating the placement of a lot of these relationships with other banks so that the client—we are very trying to be very client-centric—the client is not disadvantaged. They are able to get financing from another local bank that is interested in being in this business. And so I think we have done a nice job of doing this without a lot of customer disruption or negative implications in the market.

Mark J. Ruggiero: I just looked it up. I think we are actually a little—it is only about $50 million, a little over $50 million, left. So I would imagine, Laurie, that will play out over the next year—probably nine to twelve months. Yeah. We will probably be substantially done by year-end.

Laurie Hunsicker: Okay. That is great. Okay. And then expenses, obviously, great guidance that you gave on 05/15. But if I am just looking very high level, so you are at $143 million for this quarter—$3 million of merger dollars, $2 million of snow, and then $1 million of core conversion systems—that takes you down to $137 million. And then, obviously, this quarter had the FICA. How much was the FICA?

Mark J. Ruggiero: Payroll taxes quarter over quarter are up $1.2 million. I would not suggest that goes back down. You know, that will gradually reduce over time. So if I had to predict, Laurie, it is probably—you get $300,000 or $400,000 of expense relief in Q2 versus Q1, if you follow me.

Laurie Hunsicker: Okay. I mean, that is—yeah. I am just looking and—just seems like your core expenses, taking out that core, seems—I mean, you are running better, lower. Right? Am I thinking about that the right way? Or is there some other where—something that we do not know?

Mark J. Ruggiero: You are. You are seeing the full cost save. There was a little bit here in Q1 that I admit we did not capture—a little bit left of M&A. So you actually had that in for half of the quarter in the expense base as well. We are also cognizant that April is when we do our annual merit increases. So you will see an uptick in salaries, all other things being equal, just from annual merit—call it 3% on average. So I think it is holding the line. That is the mentality we are talking about—hold the line in all the major areas. I would hope and expect to see kind of in that $138 million-ish, $139 million range.

Jeffrey J. Tengel: And just as an anecdote, Laurie, we have talked a lot about the number of bankers that we have added over the last six to twelve months, mostly in the C&I space, and we have been able to do that without any net incremental increase in our FTEs in that commercial banking space. It has been people who either have retired or we have performance-managed out or whatever. So when you look at the totals of our salespeople in our commercial space, it is relatively flat despite the fact that we have added a lot of really talented people over the last twelve months.

Laurie Hunsicker: Gotcha. Okay. That is great. And then, Mark, just one quick question. You flagged the outsized loan accretion income, and I appreciate that. But do you have a spot margin for March—maybe even a spot margin—core?

Mark J. Ruggiero: Core spot for March was—it was 3.72%. So in line with the total quarter. February actually had a little bit of a lift. We saw some more securities accretion with a little bit elevated payoff. So I still expect it to increase, obviously, off of that number, but spot was 3.72%.

Laurie Hunsicker: Okay. Great. And then, Jeff, last question for you. I know you have been penciled down on M&A. Any sort of refresh now that EBTC is fully digested and your core systems conversion is right around the corner? How are you thinking about that?

Jeffrey J. Tengel: Yeah. So just to be clear—pencils down on bank M&A. We still remain interested in—if it was in the wealth space or if there were unique deposit opportunities, whether it was branches or other ways that we could improve the overall franchise. But I would say we are still pencils down on bank M&A. The conversion that we have coming up in October is really a big deal. And so we are pretty focused on getting that done and getting it done well. As I told a bunch of our people a few days ago, we have one chance to make a good impression through this conversion. So we have to get it right.

And so we have been spending a lot of our time and energy making sure that we do that. We also feel like we have a lot of really positive momentum and a good path to growth in a number of our core businesses, whether it is the wealth business, which we talked about, the C&I business, which we have been talking about the last couple of quarters. So we feel like organic growth very much remains top of mind and one of the things that we are focused on in addition to getting the conversion done well.

And that, coupled with the environment—the environment right now is, as you know, a little bit uncertain—but I would characterize our posture as pencils down.

Laurie Hunsicker: Great. Thanks for taking my questions. Thanks so much.

Jeffrey J. Tengel: You bet. Thanks, Laurie.

Operator: Your next question comes from the line of Matthew Breese with Stephens Inc. Your line is open. Please go ahead.

Analyst: Good morning, everybody.

Mark J. Ruggiero: Morning, Matt.

Jeffrey J. Tengel: Hey, Matt.

Analyst: Mark, maybe to start with you. Can you provide, if you have it, the spot cost of deposits at quarter end and just maybe expand upon your commentary around competition? I would be curious in terms of where is the most aggressive—product-wise and competitor-wise? Are you seeing that mostly from the bigger banks or the mutuals?

Mark J. Ruggiero: Yeah. Taking the latter—both, to be honest. Massachusetts is a bit of a unique environment. You still have a lot of mutuals at play that are good operators but can be a bit aggressive on pricing. And we are seeing offers even from larger banks, other typical similar-sized banks, a lot in the 4-handle on the deposit side. In some cases, even 4.25%. I think I saw a 4.50% offer out recently on a pretty large relationship. So it is very, very competitive.

And it is those types of dynamics that I was alluding to where, of course, we are looking at the overall relationship, and if there is a portion of money that needs to be a 4-handle and the overall cost of deposits is where we would like it to be, that is the relationship we are going to continue to support. It is when you start to get the majority of a deposit looking for, in some cases, higher than 4% rates. That is a tough one to justify, in my opinion. So you are seeing some of that dynamic. And like I said, it is probably heightened by the level of mutuals.

And I can appreciate in the markets where we—especially where we did the Enterprise deal—you have some competitors in that space that are going to look to be aggressive because they view it as an opportunity. The spot rate on the cost of deposits for March, I am pretty sure, was right in line, Matt, with the quarter—like around 1.36%. So we are at a point now where, you know, I think you are still seeing the Fed cut in December. We were able to make some reductions. You had a little bit of the CD book still giving us some benefit as that was repricing.

You are basically at a point now where any CD maturities are going to be neutral to cost of deposits, and because of the competition, I would imagine new money coming on is going to challenge the 1.36% rate to some degree. But I think keeping deposits flat or slightly up in this environment will be a pretty successful profile.

Analyst: Got it. And then maybe just transitioning that into the NIM and the NIM guide. The presentation suggests that you are going to end the year with a NIM in the 3.90% to 3.95% range. I am assuming that is the core NIM. Is that accurate?

Mark J. Ruggiero: That is reported NIM with a 10 basis point accretion assumption.

Analyst: So the 10 bps would be additive or—I am—is that all that is going to be—So let us work off of the low-3.70s core NIM this quarter. Expected, anticipated expansion is to 3.90% end of the year. Tack on another 10 bps, all-in NIM close to 4% or just over by the end of the year. That is the way to think about—

Mark J. Ruggiero: No. I would suggest 3.72% core goes to, call it, 3.82% core. Tack on 10 to get you to the 3.90% to 3.95% range.

Analyst: Got. Okay. So I guess with that in mind, just considering flat deposit costs, and then your roll-on versus roll-off dynamics are still accretive by, it sounds like, 100 or so basis points, it feels like the longer-term trajectory here is north of 4% on that NIM. Is that a fair—is that a fair assumption?

Mark J. Ruggiero: I do think if the rate environment stays—if the longer term and longer part of the curve stays where it is and we could move the loan yield closer to 6%—then yes, I think a NIM above 4% is a realistic end goal. I think that the guidance now—call it, you know, 3 to 4 basis points of core expansion per quarter—does take into account the fact that we may see a basis point or two tick up in cost of deposits if we are being realistic.

So I think that is a little bit of the development that I would suggest over the next three quarters—you are going to get the loan repricing benefit, you are going to get the securities repricing benefit. Our goal will be to keep deposits flat, but having the pricing pressure that is out there, I would say that is an area where you may see that eat into it slightly—where it is probably more like, as I said, a 3 to 4 basis point core margin expansion.

Analyst: Got it. Okay. Jeff, maybe one for you. We talked about transactional commercial real estate a few times now. I am not sure I have ever seen a dollar amount put on it. What is the identified balance of transactional commercial real estate? Where was it? Where does it stand today? I think you said it is not as much of a headwind to growth. But maybe just characterize for us where you want it to be.

Jeffrey J. Tengel: Yeah. That is a good question, Matt. I do not know that we have a specific number that I would point to in terms of what that is. We have actually talked about trying to get a bit more specific and then ring-fence it and be able to talk about our commercial real estate business as a core relationship, legacy Rockland Trust–originated business, and then a transactional book. But it is obviously less today than it was a year ago, year and a half ago. If I had to venture a guess, I would say it is probably somewhere between $300 million and $500 million—maybe towards the lower end of that, $300 million.

But we have not really put pencil to paper to identify how much it is and then when it is running off. As you can imagine, some of the transactional real estate just has a maturity date that is well beyond the next year or two, and as long as it is performing, we are just going to have to continue to live with it. And that is not necessarily a bad thing because we are getting the income off of it as long as the credit profile is okay. It is really the ones where we feel like there is some stress that we have been a lot more proactive at addressing and looking to move off.

Do not know if that answers your question.

Analyst: No. That is great. The first one is just—I would love your view on which way the pendulum is swinging on the rent control. You know, just sort of kind of a quick Google search, it sounds like it is contested. I am just not sure to what extent. I would be curious what you think there. Is this, like, a likely outcome or not?

Jeffrey J. Tengel: Yeah. I do not know. Maybe we need to go to the betting markets to see what they are saying about this. My own intuition—and this is not based on any inside baseball or anything like that—is I think there is a good chance it does not pass because there is so much research out there that would suggest that it is not a good thing for the economy or for commercial real estate. In general, it can have a muted impact on new affordable housing, new development, and that is clearly not what we would like. We want to continue to see investments in affordable housing and new development.

But we are hopeful that argument kind of wins the day, but I am no expert on this and my crystal ball is not all that precise. Mark, I do not know if you have—

Mark J. Ruggiero: I was going to add—in terms of significant influence, our governor has publicly stated being against it. I think there is a lot of business community lobbyists, including a chamber that I am part of, that would likely start to weigh in and lean in on suggesting why this is not a good answer for the economy. So the question becomes whether those voices outweigh the voters—the consumers that on paper hear rent control and think that will help my pocket. So will the business community’s messaging of why, in the long term, this is not good help defend what probably has some consumer momentum to get it passed?

But I think to Jeff’s point, there will be enough lobbyists and business offset to hopefully come against that. I think the other mitigant here, though, is even if it does get passed, Massachusetts—you look at the last decade historically—rent increases have been below 5%, which is the proposed cap of rent increases if this were to go through—greater of 5% or CPI. So this is a state where rent has been pretty well contained, and it is partly because there is so much demand and need for affordable housing.

So I do think if this does get passed, there is a path forward here to suggest that it still works without a meaningful impact on our economy, but there is a lot of opposition against it.

Analyst: Great. Last one. Jeff, you had mentioned at the onset some work into AI and putting some resources aside for it. Just curious what your initial impressions are—love your thoughts on impacts to the longer-term expense trajectory or maybe even revenue benefits. Just curious. That is all I had. Thank you.

Jeffrey J. Tengel: It is probably a little too early to quantify what we think the benefits will be. I would say it is making—just for us, it is initially going to be around things like efficiencies, freeing up people’s time to reinvest in other activities if they are doing things that are very standardized and routine and we think can be easily accommodated through a chatbot or something like that. I am a believer in not trying to bite off more than we can chew, meaning I would like to get some wins under our belt here, which in my mind probably means a bit more modest use cases.

And then once we get some wins under our belt, I think that will give us some confidence that we can continue to do this well. And I think, as I said in my comments, we can develop some muscle memory around how we roll this out. And then, as we think about use cases, the more confidence we get, the bigger the use cases we will take on, which will have a bigger impact on the company. My intuition would also be it is going to probably lean more towards the expense side of things versus the revenue side of things. But a lot of that is still TBD.

Analyst: Appreciate it. Thank you.

Jeffrey J. Tengel: Thanks, Matt.

Operator: Your next question comes from the line of Jared Shaw with Barclays. Your line is open. Please go ahead.

Analyst: Thanks. Good morning, guys. Just a couple quick ones to wrap up. So, Mark, I do not know if you have the securities accretion—you still called out some of the indirect impacts, but do you have the dollar of securities accretion this quarter, and maybe actually last quarter?

Mark J. Ruggiero: I do not, only because it is basically just like any other discount on a bond is how we are capturing it. So I do not have the actual dollar amount, Jared. I would have to follow up on that just to give you—sort of the discount amortization, I guess, on the Enterprise bond is how I would quantify that.

Analyst: Right. Okay. And then when you look at the—do you still feel that you can get to that 80% CD beta through the cycle? And then, I guess, how are you looking at staying active in the deposit space given the competition versus sort of the loan-to-deposit ratio? And how are you thinking about that dynamic?

Mark J. Ruggiero: Yeah. I think on the CD beta—all-in, I think cost of CDs is right around 3.30%. Let me just triple-check my math here. Yeah, so right about 3.30%. So I think in terms of repricing down, as I mentioned in one of my earlier answers, we have probably seen the vast majority of that. So even though Fed funds are sitting around 3.60%—you know, one-month money, brokered CDs in the one-month space—probably closer to 4% now. So I think of it as we have sort of achieved that beta based on where we are today in our CD ladder.

I would expect, because of the pricing pressure that is out there and the competitive dynamics, we still have a four-month 3.60% offer out there. That is the primary driver of any new CD money. So I think it is going to keep, like I said, cost of CDs somewhat at bay at where they are right now, if not maybe a little bit of an uptick.

In terms of the overall deposit strategy, I would just reiterate what I was suggesting earlier, which is continuing to stay as competitive as we think is appropriate on what we value as total relationship funding, and continuing to do what this bank has done for such a long time in attracting new money. That is the branches. That is the retail network involved in their communities. It is working with nonprofits. It is the C&I wins that we have been having typically coming over with more deposits. We still have good CRE relationships that hold money with us.

So a lot of those pieces are still in place that have been able to drive deposit growth for us in the past. And then we will just couple that with being really smart about our pricing strategy.

Jeffrey J. Tengel: Only other thing I would add to that, because I agree with everything Mark just said about our deposit gathering, is we are trying to get a little bit more focused and a little bit more specific around some of the market disruption that is happening here. And we think that is an opportunity for us because I think we are viewed as sort of the stable—not a lot of change going on—and that is not true with some of our competitors.

And so we have been very focused on developing marketing programs and having both our commercial and our retail bankers—arming them with data—to help them try and take advantage of some of the market disruption that we are seeing. So we are really focused on deposits. We know that is an important part of the overall company and funding the loan growth that we hope to achieve.

So it is a lot of the things Mark talked about, it is being more strategic with some of the market disruption that we are seeing, and then we have a number of businesses that are not credit-oriented businesses—they are just deposit verticals—that we are doubling back on and seeing if there are ways that we can accelerate the growth in some of those areas.

Analyst: Great. Thank you.

Jeffrey J. Tengel: Thanks, Jared.

Operator: There are no further questions at this time. I will now turn the call back to CEO, Jeffrey J. Tengel, for closing remarks.

Jeffrey J. Tengel: Thanks, everybody. Appreciate your interest in INDB and Rockland Trust, and have a great day.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.

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