INDEPENDENT BANK CORP

The following table summarizes the changes in nonperforming assets for the periods indicated:

Table 11 - Activity in Nonperforming Assets

Allowance for Credit Losses The allowance for credit losses is maintained at a level that management considers appropriate to provide for the Company’s current estimate of expected lifetime credit losses on loans measured at amortized cost. The allowance is increased by providing for credit losses through a charge to expense and by credits for recoveries of loans previously charged-off and is reduced by loans being charged-off.

In accordance with its Allowance for Credit Losses Program, the Company uses the Current Expected Credit Losses (or “CECL”) model methodology to estimate credit losses for financial assets on a collective basis for loans sharing similar risk characteristics using a quantitative model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. The model estimates expected credit losses using loan level data over the contractual life of the exposure, which is adjusted for estimated prepayments. Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period of one year, beyond which is a reversion to the Company’s historical long-run average over a period of six months. The Company’s qualitative assessment is structured based upon nine qualitative risk factors impacting the expected risk of loss within the loan portfolio, with an additional factor designed to capture model imprecision. Loans that do not share similar risk characteristics with any pools of assets are subject to individual assessment and are removed from the collectively assessed pools to avoid double counting. For the loans that will be individually assessed, the Company uses either a discounted cash flow approach or a fair value of collateral approach. The latter approach is used for loans deemed to be collateral dependent or when foreclosure is probable.

Management’s allowance for credit loss estimate incorporates an economic forecast over a reasonable and supportable period of 12 months. As of December 31, 2024, the forecast selected by management assumes that the Federal Reserve will make two 25 basis point cuts to the policy rate in 2025 and gradually reduce rates to a neutral level of 3% by late 2026, that progress toward inflation normalization will be slowed as a result of expected fiscal, tariff and immigration policies implemented by the new U.S. presidential administration, and that the 10-year treasury yield will remain elevated near 4% through 2025 and will only gradually decline by the end of the decade. Additionally, the allowance for credit losses is qualitatively adjusted on a quarterly basis in order to ensure coverage for relatio nships that are deemed to be more at risk within certain industries, specific collateral types, or other specific characteristics that may be highly impacted by the current economic environment.