10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

/X/
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal year ended December 31, 2001

or

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                      to                                     

Commission file number 1-9047

INDEPENDENT BANK CORP.
(Exact name of registrant as specified in its charter)

Massachusetts (State or other jurisdiction of incorporation or organization)	04-2870273 (I.R.S. Employer Identification No.)
288 Union Street Rockland, Massachusetts (Address of principal executive offices)	02370 (Zip Code)

Registrant's telephone number, including area code: (781) 878-6100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
None Name of each exchange on which registered
None

Securities registered pursuant to section 12(g) of the Act:

Common Stock, $.0l par value per share
(Title of Class) Preferred Stock Purchase Rights
(Title of Class)

        Indicate by check mark whether, the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes /x/        No / /

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

        As of January 31, 2002, the aggregate market value of the 12,037,238 shares of Common Stock of the Registrant issued and outstanding on such date, excluding 2,312,537 shares held by all directors and executive officers of the Registrant as group, was $266,022,959. This figure is based on the closing sale price of $22.10 per share on January 31, 2002, as reported in The Wall Street Journal on February 1, 2002.

        Number of shares of Common Stock outstanding as of January 31, 2002: 14,349,775

DOCUMENTS INCORPORATED BY REFERENCE

        List hereunder the following documents incorporated by reference and the Part of Form 10-K into which the document is incorporated:

(1)

Portions of the Registrant's Annual Report to Stockholders for the fiscal year ended December 31, 2001 are incorporated into Part II, Items 5-8 of this Form 10-K.

(2)

Portions of the Registrant's definitive proxy statement for its 2002 Annual Meeting of Stockholders are incorporated into Part III, Items 10-13 of this Form 10-K.

INDEPENDENT BANK CORP.

2001 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

Part I
Item 1.	Business	2
	General	2
	Acquisition	2
	Lending Activities	2
	Investment Activities	5
	Sources of Funds	6
	Investment Management	6
	Regulation	7
Item 2.	Properties	10
Item 3.	Legal Proceedings	11
Item 4.	Submission of Matters to Vote of Security Holders	11
Part II
Item 5.	Market for Registrant's Common Equity and Related Stockholder Matters	12
Item 6.	Selected Consolidated Financial and Other Data	13
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 7A.	Quantitative and Qualitative Disclosure About Market Risk	38
Item 8.	Financial Statements and Supplementary Data	38
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	72
Part III
Item 10.	Directors and Executive Officers of Independent Bank Corp.	73
Item 11.	Executive Compensation	73
Item 12.	Security Ownership of Certain Beneficial Owners and Management	73
Item 13.	Certain Relationship and Related Transactions	73
Part IV
Item 14.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	73
Signatures		75

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PART I.

Item 1.    Business

        General    Independent Bank Corp. (the "Company") is a state chartered, federally registered bank holding company headquartered in Rockland, Massachusetts. The Company is the sole stockholder of Rockland Trust Company ("Rockland" or "the Bank"), a Massachusetts trust company chartered in 1907. The Company is a community- oriented commercial bank. The community banking business consists of commercial banking, retail banking and trust services and is managed as a single strategic unit. The community banking business derives its revenues from a wide range of banking services, including lending activities, acceptance of demand, savings and time deposits, trust and investment management services, and mortgage servicing income. Rockland offers a full range of community banking services through its network of 51 banking offices, nine commercial lending centers, three investment management offices and three mortgage banking centers all of which are located in the Plymouth, Norfolk, Barnstable and Bristol Counties of Southeastern Massachusetts. At December 31, 2001, the Company had total assets of $2.2 billion, total deposits of $1.6 billion, stockholders' equity of $133.3 million, and 713 full-time equivalent employees.

Acquisition

        On August 4, 2000 the Company and the Bank, acquired sixteen branches (including associated deposits and loans) that were formerly owned by Fleet National Bank. These branches were among those required to be divested as a result of the acquisition of BankBoston by Fleet Financial Corporation, a transaction that was announced on March 14, 1999. Four of these sixteen branches, acquired in a simultaneous transaction through Sovereign Bank, were originally scheduled to be sold to Sovereign as part of the divestment package which was required of Fleet by the U.S. Department of Justice.

        The acquisition added $336 million in deposits, and $134.3 million of commercial, commercial real estate and consumer loans. The total purchase price of the acquisition was approximately $40 million and was paid in cash. This acquisition is being accounted for by the Company using the purchase method of accounting.

Lending Activities

        General    The Bank's gross loan portfolio amounted to $1.3 billion on December 31, 2001 or 59.1% of total assets on that date. The Bank classifies loans as commercial, real estate, or consumer. Commercial loans consist primarily of loans to businesses for working capital and other business related purposes and floor plan financing. Real estate loans are comprised of commercial mortgages that are secured by non-residential properties, residential mortgages that are secured primarily by owner-occupied residences and mortgages for the construction of commercial and residential properties. Consumer loans consist primarily of installment obligations, the majority of which are automobile loans and home equity loans.

        The Bank's borrowers consist of small-to-medium sized businesses and retail customers. The Bank's market area is generally comprised of the Plymouth, Norfolk, Barnstable and Bristol Counties located in Southeastern Massachusetts. Substantially all of the Bank's commercial and consumer loan portfolios consist of loans made to residents of and businesses located in Southeastern Massachusetts. The majority of the real estate loans in the Bank's loan portfolio are secured by properties located within this market area.

        Interest rates charged on loans may be fixed or variable and vary with the degree of risk, loan term, underwriting and servicing costs, loan amount and the extent of other banking relationships maintained with customers. Rates are further subject to competitive pressures, the current interest rate environment, availability of funds and government regulations.

        The Bank's principal earning assets are its loans. Although the Bank judges its borrowers to be creditworthy, the risk of deterioration in borrowers' abilities to repay their loans in accordance with their existing loan agreements is inherent in any lending function. Participating as a lender in the credit markets requires a strict monitoring process to minimize credit risk. This process requires substantial analysis of the loan application, an evaluation of the customer's capacity to repay according to the loan's contractual terms, and an objective determination of the value of the

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collateral. The Bank also utilizes the services of an independent third-party consulting firm to provide loan review services, which consist of a variety of monitoring techniques performed after a loan becomes part of the Bank's portfolio.

        The Bank's Controlled Asset Department is responsible for the management and resolution of non-performing assets. In the course of resolving non-performing loans, the Bank may choose to restructure certain contractual provisions. In order to facilitate the disposition of other real estate owned (OREO), the Bank may finance the purchase of such properties at market rates, if the borrower qualifies under the Bank's standard underwriting guidelines.

        Origination of Loans    Commercial loan applications are obtained through existing customers, solicitation by Bank loan officers, referrals from current or past customers, or walk-in customers. Commercial real estate loan applications are obtained primarily from previous borrowers, direct contacts with the Bank, or referrals. Applications for residential real estate loans and all types of consumer loans are taken at all of the Bank's full-service branch offices. Residential real estate loan applications primarily result from referrals by real estate brokers, homebuilders, and existing or walk-in customers. The Bank also maintains a staff of field originators who solicit and refer residential real estate loan applications to the Bank. These employees are compensated on a commission basis and provide convenient origination services during banking and non-banking hours. Consumer loan applications are directly obtained through existing or walk-in customers who have been made aware of the Bank's consumer loan services through advertising and other media, as well as indirectly through a network of automobile dealers.

        Commercial loans, commercial real estate loans, and construction loans may be approved by commercial loan officers up to their individually assigned lending limits, which are established and modified periodically by management, with ratification by the Board of Directors, to reflect the officer's expertise and experience. Any of those types of loans which are in excess of a commercial loan officer's assigned lending authority must be approved by various levels of authority within the Commercial Lending Division, depending on the loan amount, up to and including the Senior Loan Committee and, ultimately, the Executive Committee of the Board of Directors.

        Residential real estate loans and home equity loans follow a similar approval process within the retail lending division.

        Sale of Loans    The Bank's residential real estate loans are generally originated in compliance with terms, conditions and documentation which permit the sale of such loans to the Federal Home Loan Mortgage Corporation ("FHLMC"), the Federal National Mortgage Association ("FNMA"), the Government National Mortgage Association ("GNMA"), and other investors in the secondary market. Loan sales in the secondary market provide funds for additional lending and other banking activities. The Bank generally retains the servicing on the loans sold. As part of its asset/liability management strategy, the Bank may retain a portion of adjustable-rate residential real estate loans or fixed-rate residential real estate loans. During 2001, the Bank originated $248.3 million in residential real estate loans of which $120.8 million was retained in its portfolio.

        Commercial Loans    The Bank offers secured and unsecured commercial loans for business purposes, including issuing letters of credit. At December 31, 2001, $151.3 million, or 11.6% of the Bank's gross loan portfolio consisted of commercial loans.

        Commercial loans may be structured as term loans or as revolving lines of credit. Commercial term loans generally have a repayment schedule of five years or less and, although the Bank occasionally originates some commercial term loans with interest rates which float in relation to the Rockland Base rate, the majority of commercial term loans have fixed rates of interest. The majority of commercial term loans are collateralized by equipment, machinery or other corporate assets. In addition, the Bank generally obtains personal guarantees from the principals of the borrower for virtually all of its commercial loans.

        Collateral for commercial revolving lines of credit may consist of accounts receivable, inventory or both, as well as other corporate assets. Commercial revolving lines of credit generally are reviewed on an annual basis and usually require substantial repayment of principal during the course of a year.

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        The Bank's standby letters of credit generally are secured, have terms of not more than one year, and are reviewed for renewal.

        The Bank also provides automobile and, to a lesser extent, boat and other vehicle floor plan financing. Floor plan loans are secured by the automobiles, boats, or other vehicles, which constitute the dealer's inventory. Upon the sale of a floor plan unit, the proceeds of the sale are applied to reduce the loan balance. In the event a unit financed under a floor plan line of credit remains in the dealer's inventory for an extended period, the Bank requires the dealer to pay-down the outstanding balance associated with such unit. Bank personnel make unannounced periodic inspections of each dealer to review the value and condition of the underlying collateral.

        Real Estate Loans    The Bank's real estate loans consist of loans secured by commercial properties, loans secured by one-to-four family residential properties, and construction loans. As of December 31, 2001, the Bank's loan portfolio included $463.1 million in commercial real estate loans, $229.1 million in residential real estate loans and $47.2 million in construction loans.

        A significant portion of the Bank's commercial real estate portfolio consists of loans to finance the development of residential projects. These are categorized as commercial construction loans. As such, a number of commercial real estate loans are primarily secured by residential development tracts but, to a much greater extent, they are secured by owner-occupied commercial and industrial buildings and warehouses. Commercial real estate loans also include multi-family residential loans that are primarily secured by apartment buildings and, to a lesser extent, condominiums. The Bank has a very modest portfolio of loans secured by special purpose properties, such as hotels, motels, or restaurants.

        Although terms vary, commercial real estate loans generally have maturities of five years or less, amortization periods of 20 years, and interest rates that either float in accordance with a designated index or have fixed rates of interest. It is also the Bank's policy to obtain personal guarantees from the principals of the borrower on commercial real estate loans and to obtain financial statements at least annually from all commercial and multi-family borrowers.

        Commercial real estate lending entails additional risks as compared to residential real estate lending. Commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers. Development of commercial real estate projects also may be subject to numerous land use and environmental issues. The payment experience on such loans is typically dependent on the successful operation of the real estate project, which can be significantly impacted by supply and demand conditions in the market for commercial and retail space.

        Rockland originates both fixed-rate and adjustable-rate residential real estate loans. The Bank will lend up to 100% of the lesser of the appraised value of the property securing the loan or the purchase price, and generally requires borrowers to obtain private mortgage insurance when the amount of the loan exceeds 80% of the value of the property. The rates of these loans are typically competitive with market rates. The Bank's residential real estate loans are generally originated only under terms, conditions and documentation, which permit sale in the secondary market.

        The Bank generally requires title insurance protecting the priority of its mortgage lien, as well as fire and extended coverage casualty insurance in order to protect the properties securing its residential and other real estate loans. Independent appraisers appraise properties securing all of the Bank's first mortgage real estate loans.

        Construction loans are intended to finance the construction of residential and commercial properties, including loans for the acquisition and development of land or rehabilitation of existing homes. Construction loans generally have terms of six months, but not more than two years. They usually do not provide for amortization of the loan balance during the term. The majority of the Bank's commercial construction loans have floating rates of interest based upon the Rockland Base rate or, in some cases, the prime rate published daily in the Wall Street Journal.

        A significant portion of the Bank's construction lending is related to one-to-four family residential development within the Bank's market area. The Bank typically has focused its construction lending on relatively small projects and has developed and maintains a relationship with a significant number of homebuilders in the Plymouth, Norfolk, Barnstable and Bristol Counties of Southeastern Massachusetts.

        Construction loans are generally considered to present a higher degree of risk than permanent real estate loans. A borrower's ability to complete construction may be affected by a variety of factors such as adverse changes in interest rates and the borrower's ability to control costs and adhere to time schedules. The latter will depend upon the

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borrower's management capabilities, and may also be affected by strikes, adverse weather and other conditions beyond the borrower's control.

        Consumer Loans    The Bank makes loans for a wide variety of personal and consumer needs. Consumer loans primarily consist of installment loans, home equity loans, cash reserve loans and small business lines. As of December 31, 2001, $408.3 million, or 31.4%, of the Bank's gross loan portfolio, consisted of consumer loans.

        The Bank's installment loans consist primarily of automobile loans. A substantial portion of the Bank's automobile loans are originated indirectly by a network of approximately 120 new and used automobile dealers located within the Bank's market area. Although employees of the dealer take applications for such loans, the loans are made pursuant to Rockland's underwriting standards using Rockland's documentation, and a Rockland loan officer must approve all indirect loans. In addition to indirect automobile lending, the Bank also originates automobile loans directly.

        The maximum term for the Bank's automobile loans is 72 months for a new car loan and 66 months with respect to a used car loan. Loans on new and used automobiles are generally made without recourse to the dealer. The Bank requires all borrowers to maintain automobile insurance, including full collision, fire and theft, with a maximum allowable deductible and with the Bank listed as loss payee. Some purchases from used car dealers are under a repurchase agreement. The dealer is required to pay off the loan (in return for the vehicle) as long as the bank picks up the vehicle and returns it to the dealer within 180 days of the most recent delinquency payment. In addition, in order to mitigate the adverse effect on interest income caused by prepayments, all dealers are required to maintain a reserve, ranging from 0% to 3% of the outstanding balance of the indirect loans originated by them. Reserve option "A" allows the Bank to be rebated on a pro-rata basis in the event of prepayment prior to maturity. Reserve option "B" allows the dealer to share the reserve with the Bank, split 75/25, however for the Banks receipt of 25%, no rebates are applied to the account after 90 days from the loan origination date.

        The Bank's consumer loans also include home equity, unsecured loans and loans secured by deposit accounts, loans to purchase motorcycles, recreational vehicles, motor homes, boats, or mobile homes. The Bank generally will lend up to 100% of the purchase price of vehicles other than automobiles with terms of up to three years for motorcycles and up to fifteen years for recreational vehicles.

        Home equity loans may be made as a term loan or under a revolving line of credit secured by a first or second mortgage on the borrower's residence. The Bank will originate home equity loans in an amount up to 80% of the appraised value or, without appraisal, up to 80% of the tax assessed value, reduced for any loans outstanding secured by such collateral.

        Cash reserve loans are made pursuant to previously approved unsecured cash reserve lines of credit. The rate on these loans is subject to change due to market conditions.

Investment Activities

        The Bank's securities portfolio consists of U.S. Treasury and U.S. Government Agency obligations, state, county and municipal securities, mortgage-backed securities, and corporate debt securities. Most of these securities are investment grade debt obligations with average maturities of five years and less. Government and government agency securities entail a lesser degree of risk than loans made by the Bank by virtue of the guarantees that back them, require less capital under risk-based capital rules than non-insured or non-guaranteed mortgage loans, are more liquid than individual mortgage loans, and may be used to collateralize borrowings or other obligations of the Bank. However, these securities are subject to prepayment risk, which could result in significantly less future income than would have been the case based on the contractual coupon rate and term. The Bank views its securities portfolio as a source of income and liquidity. Interest and principal payments generated from securities provide a source of liquidity to fund loans and meet short-term cash needs. The Bank's securities portfolio is managed in accordance with the Rockland Trust Company Investment Policy adopted by the Board of Directors. The Chief Executive Officer or the Chief Financial Officer may make investments with the approval of one additional member of the Asset/Liability Management Committee, subject to limits on the type, size and quality of all investments, which are specified in the

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Investment Policy. The Bank's Asset/Liability Management Committee, or its designee, is required to evaluate any proposed purchase from the standpoint of overall diversification of the portfolio.

Sources of Funds

        Deposits    Deposits obtained through Rockland's branch banking network have traditionally been the principal source of the Bank's funds for use in lending and for other general business purposes. The Bank has built a stable base of in-market core deposits from the residents of and businesses located in Southeastern Massachusetts, including Cape Cod. Rockland offers a range of demand deposits, interest checking, money market accounts, savings accounts and time certificates of deposit. Interest rates on deposits are based on factors that include loan demand, deposit maturities, and interest rates offered by competing financial institutions in the Bank's market area. The Bank believes it has been able to attract and maintain satisfactory levels of deposits based on the level of service it provides to its customers, the convenience of its banking locations, and its interest rates that are generally competitive with those of competing financial institutions. As of December 31, 2001, total deposits were $1.6 billion, or 6.2% higher than the prior year-end.

        Rockland's branch locations are supplemented by the Bank's Internet Banking services as well as ATM cards and debit cards which may be used to conduct various banking transactions at automated teller machines ("ATMs") maintained at each of the Bank's full-service offices and seven additional locations. The ATM cards and debit cards also allow customers access to the "NYCE" regional ATM network, as well as the "Cirrus" nationwide ATM network. In addition, Rockland has joined the SUM network, which allows access to over 2,500 surcharge-free ATM's throughout New England. Most importantly for our customers, the City of Boston has over 90 SUM ATM locations. These networks provide the Bank's customers access to their accounts through ATMs located throughout Massachusetts, the United States, and the world. The debit card also can be used at any place that accepts MasterCard worldwide.

        Borrowings    Borrowings consist of short-term and intermediate-term obligations. Short-term borrowings can consist primarily of federal funds purchased, treasury tax and loan notes and assets sold under repurchase agreements. In a repurchase agreement transaction, the Bank will generally sell a security agreeing to repurchase either the same or a substantially identical security on a specified later date at a price slightly greater than the original sales price. The difference in the sale price and purchase price is the cost of the proceeds. The securities underlying the agreements are delivered to the dealer who arranges the transactions as security for the repurchase obligation. Payments on such borrowings are interest only until the scheduled repurchase date, which generally occurs within a period of 30 days or less. Repurchase agreements represent a non-deposit funding source for the Bank. However, the Bank is subject to the risk that the lender may default at maturity and not return the collateral. In order to minimize this potential risk, the Bank only deals with established investment brokerage firms when entering into these transactions.

        In July 1994, Rockland became a member of the Federal Home Loan Bank ("FHLB") of Boston. Among the many advantages of this membership, this affiliation provides the Bank with access to short-to-medium term borrowing capacity. At December 31, 2001, the Bank had $313.9 million outstanding in FHLB borrowings with initial maturities ranging from 21 days to 10 years.

Investment Management

        The Rockland Trust Investment Management Group offers a variety of services, including assistance with investments, estate planning, custody services, employee benefit plans, and tax planning, which are provided primarily to individuals and small businesses located in Southeastern Massachusetts including Cape Cod. In addition, the Bank acts as executor or administrator of estates and as trustee for various types of trusts.

        Accounts maintained by the Rockland Trust Investment Management Group consist of "managed" and "non-managed" accounts. "Managed accounts" are those accounts for which Rockland has responsibility for administration and investment management and/or investment advice. "Non-managed" accounts are those accounts for which Rockland acts as a custodian. The Bank receives fees dependent upon the level and type of service(s) provided.

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        The administration of trust and fiduciary accounts is monitored by the Trust Committee of the Bank's Board of Directors. The Trust Committee has delegated administrative responsibilities to two committees, one for investments and one for administration, both of which are comprised of Investment Management Group officers who meet not less than monthly.

Regulation

        General    The Company is registered as a bank holding company under the Bank Holding Company Act of 1956 ("BHCA"), as amended, and as such is subject to regulation by the Board of Governors of the Federal Reserve System ("Federal Reserve"). Rockland is subject to regulation and examination by the Commissioner of Banks of the Commonwealth of Massachusetts (the "Commissioner") and the Federal Deposit Insurance Corporation ("FDIC"). The majority of Rockland's deposit accounts are insured to the maximum extent permitted by law by the Bank Insurance Fund ("BIF") which is administered by the FDIC. In 1994, the Bank purchased the deposits of three branches of a failed savings and loan association from the Resolution Trust Corporation. These deposits are insured to the maximum extent permitted by law by the Savings Association Insurance Fund ("SAIF"). The laws and regulations governing the Company and Rockland generally have been promulgated to protect depositors and not for the purpose of protecting stockholders.

        The Gramm-Leach-Bliley Act of 1999 ("the Act") broadens the scope of the financial services that banks (and their affiliates) may offer to their customers. Among other things, the Act provides that a bank holding company meeting certain specified requirements may qualify as a financial holding company and provide a wider variety of services that are financial in nature, including, among other things, securities underwriting and dealing, merchant banking and insurance activities. The Act also makes certain changes in the regulatory framework for bank holding companies and their activities and provides consumers with new privacy protections with respect to the use of their non-public personal information by financial institutions. A financial holding company, and the companies under its control, are permitted to engage in activities considered "financial in nature" as defined by the Gramm-Leach-Bliley Act and Federal Reserve Board interpretations (including, without limitation, insurance and securities activities), and therefore may engage in a broader range of activities than permitted for bank holding companies and their subsidiaries. A financial holding company may engage directly or indirectly in activities considered financial in nature, either de novo or by acquisition provided the financial holding company gives the Federal Reserve Board after-the-fact notice of the new activities.

        BHCA (The Bank Holding Company Act)    BHCA prohibits a bank holding company from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any bank, or increasing such ownership or control of any bank, without prior approval of the Federal Reserve. The BHCA also prohibits a bank holding company from, with certain exceptions, acquiring more than 5% of the voting shares of any company that is not a bank and from engaging in any business other than banking or managing or controlling banks.

        Under the BHCA, the Federal Reserve is authorized to approve the ownership of shares by a bank holding company in any company, the activities of which the Federal Reserve has determined to be so closely related to banking or to managing or controlling banks as to be a proper incident thereto. The Federal Reserve has, by regulation, determined that certain activities are closely related to banking within the meaning of the BHCA. These activities include, but are not limited to, operating a mortgage company, finance company, credit card company, factoring company, trust company or savings association; performing certain data processing operations; providing certain securities brokerage services; acting as an investment or financial adviser; acting as an insurance agent for certain types of credit-related insurance; engaging in insurance underwriting under certain limited circumstances; leasing personal property on a full-payout, non-operating basis; providing tax planning and preparation services; operating a collection agency and a credit bureau; providing consumer financial counseling and providing certain courier services. The Federal Reserve also has determined that certain other activities, including real estate brokerage and syndication, land development, property management and, except under limited circumstances, underwriting of life insurance not related to credit transactions, are not closely related to banking and are not a proper incident thereto.

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        Interstate Banking    Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking Act"), bank holding companies may acquire banks in states other than their home state without regard to the permissibility of such acquisitions under state law, but subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the bank holding company, after the proposed acquisition, controls no more than 10 percent of the total amount of deposits of insured depository institutions in the United States and no more than 30 percent or such lesser or greater amount set by state law of such deposits in that state.

        Pursuant to Massachusetts law, no approval to acquire a banking institution, acquire additional shares in an institution, acquire substantially all the assets of a banking institution or merge or consolidate with another bank holding company may be given if the bank being acquired has been in existence for a period less than three years or, as a result, the bank holding company would control, in excess of 30%, of the total deposits of all state and federally chartered banks in Massachusetts, unless waived by the Commissioner. With the prior written approval of the Commissioner, Massachusetts also permits the establishment of de novo branches in Massachusetts to the fullest extent permitted by the Interstate Banking Act, provided the laws of the home state of such out-of-state bank expressly authorize, under conditions no more restrictive than those of Massachusetts, Massachusetts banks to establish and operate de novo branches in such state.

        Capital Requirements    The Federal Reserve has adopted capital adequacy guidelines pursuant to which it assesses the adequacy of capital in examining and supervising a bank holding company and in analyzing applications to it under the BHCA. The Federal Reserve's capital adequacy guidelines which generally require bank holding companies to maintain total capital equal to 8% of total risk-adjusted assets, with at least one-half of that amount consisting of Tier 1, or core, capital and up to one-half of that amount consisting of Tier 2, or supplementary, capital. Tier 1 capital for bank holding companies generally consists of the sum of common stockholders' equity and perpetual preferred stock (subject in the case of the latter to limitations on the kind and amount of such stocks which may be included as Tier 1 capital), less goodwill and other intangible assets required to be deducted from capital. Tier 2 capital generally consists of perpetual preferred stock which is not eligible to be included as Tier 1 capital; hybrid capital instruments such as perpetual debt and mandatory convertible debt securities, and term subordinated debt and intermediate-term preferred stock; and, subject to limitations, the reserve for loan losses. Assets are adjusted under the risk-based guidelines to take into account different risk characteristics, with the categories ranging from 0% (requiring no additional capital) for assets such as cash to 100% for the majority of assets which are typically held by a bank holding company, including commercial real estate loans, commercial loans and consumer loans. Single family residential first mortgage loans which are not 90 days or more past due or non-performing and which have been made in accordance with prudent underwriting standards are assigned a 50% level in the risk-weighting system, as are certain privately-issued mortgage-backed securities representing indirect ownership of such loans and certain multi-family housing loans. Off-balance sheet items also are adjusted to take into account certain risk characteristics.

        In addition to the risk-based capital requirements, the Federal Reserve requires bank holding companies to maintain a minimum leverage capital ratio of Tier 1 capital to total assets of 3.0%. Total assets for this purpose does not include goodwill and any other intangible assets or investments that the Federal Reserve determines should be deducted from Tier 1 capital. The Federal Reserve has announced that the 3.0% Tier 1 leverage capital ratio requirement is the minimum for the top-rated bank holding companies without any supervisory, financial or operational weaknesses or deficiencies or those which are not experiencing or anticipating significant growth. Other bank holding companies (including the Company) are expected to maintain Tier 1 leverage capital ratios of at least 4.0% to 5.0% or more, depending on their overall condition.

        The Company currently is in compliance with the above-described regulatory capital requirements. At December 31, 2001, the Company had Tier 1 capital and total capital equal to 9.24% and 12.96% of total risk-adjusted assets, respectively, and Tier 1 leverage capital equal to 6.31% of total assets. As of such date, Rockland complied with the applicable federal regulatory capital requirements, with Tier 1 capital and total capital equal to 9.59% and 10.84% of total risk-adjusted assets, respectively, and Tier 1 leverage capital equal to 6.55% of total assets.

8

        The FDIC has promulgated regulations and adopted a statement of policy regarding the capital adequacy of state-chartered banks, which, like Rockland, are not members of the Federal Reserve System. These requirements are substantially similar to those adopted by the Federal Reserve regarding bank holding companies, as described above. The FDIC's capital regulations establish a minimum 3.0% Tier 1 leverage capital to total assets requirement for the most highly-rated state-chartered, non-member banks, with an additional cushion of at least 100 to 200 basis points for all other state-chartered, non-member banks, which effectively will increase the minimum Tier 1 leverage capital ratio for such banks to 4.0% or 5.0% or more. Under the FDIC's regulations, the highest-rated banks are those that the FDIC determines are not anticipating or experiencing significant growth and have well diversified risk, including no undue interest rate risk exposure, excellent asset quality, high liquidity, good earnings and in general which are considered strong banking organizations, rated composite 1 under the Uniform Financial Institutions Rating System.

        Each federal banking agency has broad powers to implement a system of prompt corrective action to resolve problems of institutions, which it regulates, which are not adequately capitalized. A bank shall be deemed to be (i) "well capitalized" if it has total risk-based capital of 10.0% or more, has a Tier 1 risk-based capital ratio of 6.0% or more, has a Tier 1 leverage capital ratio of 5.0% or more and is not subject to any written capital order or directive; (ii) "adequately capitalized" if it has a Total risk-based capital ratio of 8.0% or more, a Tier 1 risk-based capital ratio of 4.0% or more, a Tier 1 leverage capital ratio of 4.0% or more (3.0% under certain circumstances) and does not meet the definition of "well capitalized"; (iii) "undercapitalized" if it has a total risk-based capital ratio that is less than 8.0%, or a Tier 1 risk-based capital ratio that is less than 4.0% or a Tier 1 leverage capital ratio of less than 4.0% (3.0% under certain circumstances); (iv) "significantly undercapitalized" if it has a total risk-based capital ratio that is less than 6.0%, or a Tier 1 risk-based capital ratio that is less than 3.0%, or a Tier 1 leverage capital ratio that is less than 3.0%; and (v) "critically undercapitalized" if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%. As of December 31, 2001 Rockland was deemed a "well-capitalized institution" for this purpose.

        Commitments to Affiliated Institutions    Under Federal Reserve policy, the Company is expected to act as a source of financial strength to Rockland and to commit resources to support Rockland in circumstances when it might not do so absent such policy.

        Limitations on Acquisitions of Common Stock    The federal Change in Bank Control Act ("CBCA") prohibits a person or group of persons from acquiring "control" of a bank holding company or bank unless the appropriate federal bank regulator has been given 60 days prior written notice of such proposed acquisition and within that time period such regulator has not issued a notice disapproving the proposed acquisition or extending for up to another 30 days the period during which such a disapproval may be issued. The acquisition of 25% or more of any class of voting securities constitutes the acquisition of control under the CBCA. In addition, under a rebuttable presumption established under the CBCA regulations, the acquisition of 10% or more of a class of voting stock of a bank holding company or a FDIC-insured bank, with a class of securities registered under or subject to the requirements of Section 12 of the Securities Exchange Act of 1934 would, under the circumstances set forth in the presumption, constitute the acquisition of control.

        Any "company" would be required to obtain the approval of the Federal Reserve under the BHCA before acquiring 25% (5% in the case of an acquirer that is a bank holding company) or more of the outstanding common stock of, or such lesser number of shares as constitute control over, the Company. Such approval would be contingent upon, among other things, the acquirer registering as a bank holding company, divesting all impermissible holdings and ceasing any activities not permissible for a bank holding company. The Company owns no voting stock in any banking institution other than Rockland.

        Deposit Insurance Premiums, Rockland    Rockland currently pays deposit insurance premiums to the FDIC based on a single, uniform assessment rate established by the FDIC for all BIF-member institutions. The assessment rates range from 0% to 0.27%. Under the FDIC's risk-based assessment system, institutions are assigned to one of three capital groups which assignment is based solely on the level of an institution's capital–"well capitalized," "adequately capitalized," and "undercapitalized"–which are defined in the same manner as the regulations establishing the prompt corrective action system under the Federal Deposit Insurance Act ("FDIA"). Rockland is presently "well capitalized" and as a result, Rockland was not subject to any FDIC premium obligation as of September 28, 2001.

9

        Community Reinvestment Act ("CRA")—Rockland    Pursuant to the Community Reinvestment Act ("CRA") and similar provisions of Massachusetts' law, regulatory authorities review the performance of the Company and Rockland in meeting the credit needs of the communities served by Rockland. The applicable regulatory authorities consider compliance with this law in connection with applications for, among other things, approval of branches, branch relocations, engaging in certain new financial activities under Gramm-Leach-Bliley Act of 1999, and acquisitions of banks and bank holding companies. The FDIC and the Massachusetts Division of Banks have assigned the Bank a CRA rating of outstanding as of the latest examination.

        Bank Secrecy Act    The Bank Secrecy Act requires financial institutions to keep records and file reports that are determined to have a high degree of usefulness in criminal, tax and regulatory matters, and to implement counter-money laundering programs and compliance procedures.

        Recent Regulatory Developments    The terrorist attacks in September, 2001, have impacted the financial services industry and have already led to federal legislation that attempts to address certain related issues involving financial institutions. On October 26, 2001, President Bush signed into law the Act Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA Patriot Act:"). Among its other provisions, the USA Patriot Act requires each financial institution: (i) to establish an anti-money laundering program; (ii) to establish due diligence policies, procedures and controls with respect to its private banking accounts and correspondent banking accounts in the United States for, or on behalf of, a foreign bank that does not have a physical presence in any country. In addition, the USA Patriot Act contains a provision encouraging cooperation among financial institutions, regulatory authorities and law enforcement authorities with respect to individuals, entities and organizations engaged in, or reasonably suspected of engaging in, terrorist acts or money laundering activities.

        Miscellaneous    Rockland is subject to certain restrictions on loans to the Company, on investments in the stock or securities thereof, on the taking of such stock or securities as collateral for loans to any borrower, and on the issuance of a guarantee or letter of credit on behalf of the Company. Rockland also is subject to certain restrictions on most types of transactions with the Company, requiring that the terms of such transactions be substantially equivalent to terms of similar transactions with non-affiliated firms. In addition under state law, there are certain conditions for and restrictions on the distribution of dividends to the Company by Rockland.

        The regulating information referenced briefly summarizes certain material statutes and regulations affecting the Company and the Bank and is qualified in its entirety by reference to the particular statutory and regulatory provisions.

Item 2.    Properties

        At December 31, 2001, the Bank conducted its business from its headquarters and main office at 288 Union Street, Rockland, Massachusetts, and 50 other branch offices located throughout the Plymouth, Barnstable, Bristol and Norfolk Counties of Southeastern Massachusetts. In addition to its main office, the Bank owns seventeen of its branch offices and leases the remaining thirty-three offices. Of the branch offices which are leased by the Bank, eight have remaining lease terms, including options renewable at the Bank's option, of five years or less, seven have remaining lease terms of greater than five years and less than ten years, and eighteen have a remaining lease term of ten years or more. The Bank's aggregate rental expense under such leases was $2.5 million in 2001. In August 2001, the bank sold its property located at 34 School Street, Brockton. This 33,000 square foot building housed a branch and a commercial lending office. The bank also entered into a lease agreement for 100 Belmont Street, Brockton. The bank will consolidate two commercial lending centers from 34 School Street and 942 West Chestnut Street, Brockton into this location along with a full service branch. This location will also house other administrative personnel. A small branch will be maintained at 34 School Street. It is anticipated that this consolidation will be completed in early spring 2002. Certain of the Bank's branch offices are leased from companies with whom directors of the Company are affiliated. The Bank leases space for its Investment Management Group in Hanover, Massachusetts through a joint venture consisting of the Bank and A. W. Perry, Inc. It also leases office space in five additional facilities used as lending centers, one of which, is in Attleboro, also houses an Investment Management Group office. At December 31,

10

2001, the net book value of the property and leasehold improvements of the offices of the Bank amounted to $24.0 million. The Bank's properties that are not leased are owned free and clear of any mortgages. The Bank believes that all of its properties are well maintained and are suitable for their respective present needs and operations. For additional information regarding the Bank's lease obligations, see Note 14 to the Consolidated Financial Statements, included in Item 8 hereof.

Item 3.    Legal Proceedings

        The Company expects that the federal judge presiding over the pending case known as Rockland Trust Company v. Computer Associates International, Inc., United States District Court for the District of Massachusetts Civil Action No. 95-11683-DPW, will issue a final trial court decision, in the form of Findings Of Fact and Conclusions Of Law, sometime soon. The case arises from a 1991 License Agreement (the "Agreement") between the Bank and Computer Associates International, Inc. ("CA") for an integrated system of banking software products.

        In July 1995 the Bank filed a Complaint against CA in federal court in Boston which asserted claims for breach of the Agreement, breach of express warranty, breach of the implied covenant of good faith and fair dealing, fraud, and for unfair and deceptive practices in violation of section 11 of Chapter 93A of the Massachusetts General Laws (the "93A Claim"). The Bank is seeking damages of at least $1.23 million from CA. Under Massachusetts's law, interest will be computed at a 12% rate on any damages which the Bank recovers, either from the date of breach or the date on which the case was filed. If the Bank prevails on the 93A Claim, it shall be entitled to recover its attorney fees and costs and may also recover double or triple damages. CA asserted a Counterclaim against the Bank for breach of the Agreement. CA seeks to recover damages of at least $1.1 million from the Bank, plus interest at a rate as high as 24% pursuant to the Agreement.

        The non-jury trial of the case was conducted in January 2001. The trial concluded with post-trial submissions to and argument before the Court in February 2001. The Company has considered the potential impact of this case, and all cases pending in the normal course of business, when preparing its financial statements. While the trial court decision may affect the Company's operating results for the quarter in which the decision is rendered in either a favorable or unfavorable manner, the final outcome of this case will not likely have any material, long-term impact on the Company's financial condition.

Item 4.    Submission of Matters to a Vote of Security Holders

        Not applicable

11

PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholders' Matters

        Independent Bank Corp. Common Stock trades on the NASDAQ Stock Market under the symbol INDB. The company declared cash dividends of $.44 per share in 2001 and $.40 per share in 2000. The ratio of dividends paid to earnings in 2001 and 2000 was 27.9% and 37.5%, respectively.

        Payment of dividends by the Company on its common stock is subject to various regulatory restrictions and guidelines. Since substantially all of the funds available for the payment of dividends are derived from the Bank, future dividends will depend on the earnings of the Bank, its financial condition, its need for funds, applicable governmental policies and regulations, and other such matters as the Board of Directors deem appropriate. Management believes that the Bank will continue to generate adequate earnings to continue to pay dividends.

        The following schedule summarizes the price range of common stock and the cash dividends paid for the fiscal years ended 2001 and 2000.

Price Range of Common Stock	High		Low		Dividend
2001
4th Quarter	$	22.99	$	14.65	$	0.11
3rd Quarter		21.90		14.89		0.11
2nd Quarter		19.99		14.00		0.11
1st Quarter		15.13		11.88		0.11
2000
4th Quarter	$	12.50	$	10.25	$	0.10
3rd Quarter		15.13		11.00		0.10
2nd Quarter		12.63		9.69		0.10
1st Quarter		12.75		9.50		0.10

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Item 6.    Selected Consolidated Financial and Other Data

SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA

        The selected consolidated financial and other data of the Company set forth below does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by, the more detailed information, including the Consolidated Financial Statements and related notes, appearing elsewhere herein.

		As of or For the Year Ended December 31,
		2001			2000			1999			1998			1997
		(Dollars in Thousands, Except Per Share Data)
FINANCIAL CONDITION DATA:
	Securities available for sale	$	569,288		$	387,476		$	201,614		$	195,199		$	131,842
	Securities held to maturity		132,754			195,416			229,043			284,944			308,112
	Loans		1,298,938			1,184,764			1,028,510			941,112			828,132
	Reserve for loan losses		18,190			15,493			14,958			13,695			12,674
	Total assets		2,199,188			1,949,976			1,590,056			1,575,069			1,370,007
	Total deposits		1,581,618			1,489,222			1,081,806			1,043,317			988,148
	Stockholders' equity		133,261			114,712			98,129			95,848			92,493
	Non-performing loans		3,015			4,414			3,654			5,356			5,891
	Non-performing assets		3,015			4,414			3,654			5,356			5,893
OPERATING DATA:
	Interest income	$	145,069		$	127,566		$	112,006		$	108,712		$	93,820
	Interest expense		54,478			55,419			50,178			49,569			41,578
	Net interest income		90,591			72,147			61,828			59,143			52,242
	Provision for loan losses		4,619			2,268			3,927			3,960			2,260
	Non-interest income		21,278			16,418			14,793			13,125			11,742
	Non-interest expenses		69,047			59,374			45,450			41,697			38,595
	Minority interest expense		5,666			5,319			2,668			2,668			1,645
	Net income		22,052			15,190			17,031			16,139			14,158
PER SHARE DATA:
	Net income—Basic	$	1.54		$	1.07		$	1.20		$	1.10		$	0.97
	Net income—Diluted		1.53			1.06			1.19			1.08			0.95
	Cash dividends declared		0.44			0.40			0.40			0.40			0.34
	Book value, end of period (1)		9.30			8.05			6.92			6.63			6.25
OPERATING RATIOS:
	Return on average assets		1.07	%		0.88	%		1.09	%		1.12	%		1.15	%
	Return on average equity		17.42	%		14.58	%		17.57	%		16.71	%		16.45	%
	Net interest margin		4.84	%		4.60	%		4.30	%		4.36	%		4.52	%
ASSET QUALITY RATIOS:
	Non-performing loans as a percent of gross loans		0.23	%		0.37	%		0.35	%		0.56	%		0.69	%
	Non-performing assets as a percent of total assets		0.14	%		0.23	%		0.23	%		0.34	%		0.43	%
	Reserve for loan losses as a percent of total loans		1.40	%		1.31	%		1.45	%		1.46	%		1.53	%
	Reserve for loan losses as a percent of non-performing loans		603.32	%		351.00	%		409.36	%		255.69	%		215.14	%
	Total reserves for loan losses as a percent of total loans (2)		1.46	%		1.42	%		1.45	%		1.46	%		1.53	%
	Total reserves for loan losses as a percent of non-performing loans (2)		630.18	%		382.15	%		409.36	%		255.69	%		215.14	%
CAPITAL RATIOS:
	Tier 1 leverage capital ratio		6.31	%		5.86	%		8.15	%		7.91	%		8.64	%
	Tier 1 risk-based capital ratio		9.24	%		8.50	%		11.14	%		11.38	%		13.52	%
	Total risk-based capital ratio		12.96	%		10.97	%		12.39	%		12.63	%		14.78	%

(1)

Calculated by dividing total stockholders' equity by the net outstanding shares as of the end of the each period.

(2)

Including credit quality discount.

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The condensed financial review which follows presents management's discussion and analysis of the consolidated financial condition and operating results of Independent Bank Corp. (the "Company") and its subsidiaries, Rockland Trust Company ("Rockland" or "the Bank"), and Independent Capital Trust I ("Trust I"), Independent Capital Trust II ("Trust II") and Independent Capital Trust III ("Trust III"). The following should be read in conjunction with the Consolidated Financial Statements and related notes thereto.

        Independent Bank Corp. is a one-bank holding company whose primary asset is its investment in Rockland Trust Company. Rockland is a state-chartered commercial bank, which operates 51 retail branches, nine commercial lending centers, three investment management offices and three mortgage banking centers, all of which are located in the Plymouth, Barnstable, Norfolk and Bristol counties of Southeastern Massachusetts. The Bank's primary source of income is from providing loans to individuals and small-to-medium-sized businesses in its market area. Independent Capital Trust I, Independent Capital Trust II and Independent Capital Trust III were formed for the purposes of issuing Trust Preferred Securities and investing the proceeds of these securities in junior subordinated debentures issued by the Company.

Forward-Looking Information

        This report on Form 10-K may contain certain forward-looking statements, including without limitation, statements regarding (i) the level of reserve for loan loss, (ii) the rate of delinquencies and amounts of charge-offs and (iii) the rates of loan growth. Moreover, the Company may from time to time, in both written reports and oral statements by Company management, express its expectations regarding future performance of the Company. These forward-looking statements are inherently uncertain and actual results may differ from Company expectations. The following factors which, among others, could impact current and future performance include but are not limited to: (i) adverse changes in asset quality and resulting credit risk-related losses and expenses; (ii) adverse changes in the economy of the New England region; (iii) adverse changes in the local real estate market, as most of the Company's loans are concentrated in Southeastern Massachusetts and a substantial portion of these loans have real estate as collateral; (iv) fluctuations in market rates and prices which can negatively affect net interest margin, asset valuations and expense expectations; and (v) changes in regulatory requirements of federal and state agencies applicable to banks and bank holding companies, such as the Company and Rockland, which could have materially adverse effect on the Company's future operating results. When relying on forward-looking statements to make decisions with respect to the Company, investors and others are cautioned to consider these and other risks and uncertainties.

Overview

        The Company's total assets increased by $249.2 million or 12.8% from year-end 2000 to a total of $2.2 billion as of December 31, 2001. Investment securities increased by $119.2 million or 19.9% to $719.1 million at December 31, 2001 from $599.9 million a year earlier. Loans increased by $114.2 million, or 9.6%, during the twelve months ended December 31, 2001. At December 31, 2001 deposits of $1.6 billion were $92.4 million, or 6.2%, higher than the prior year-end. Core deposits increased $147.1 million, or 16.5%, and time deposits decreased $54.7 million, or 9.2%.

        The Company's assets increased to $1.95 billion in 2000, compared with $1.59 billion in 1999. This increase amounted to $359.9 million or 22.6% over year-end 1999. The growth was driven by the acquisition of certain assets and liabilities from FleetBoston Financial and Sovereign Bank ("the Acquisition") as described below. In 2000, also primarily due to the Acquisition, the Company experienced an increase in loans of $156.3 million, primarily in commercial real estate loans. The securities portfolio increased to $599.9 million at December 31, 2000 compared with $447.7 million at December 31, 1999. The increase occurred in the securities available for sale portfolio, which increased by $185.9 million. As of December 31, 2000 deposits of $1.5 billion were $407.4 million, or 37.7%, higher than December 31, 1999.

14

        For the year ended December 31, 2001, including securities gains and special charges the Company recorded net income of $22.1 million, an increase of 45.2% from 2000 earnings of $15.2 million. The 2001 results reflect a 25.6% increase in net interest income, a 29.6% increase in non-interest income, and an increase of 16.3% in non-interest expenses. Excluding securities gains of $1.4 million in 2001 and $163,000 in 2000 and special charges of $3.6 million in 2000, the Company reported a 21.2% increase in net operating earnings to $21.1 million, compared to $17.4 million at December 31, 2000. Diluted earnings per share on an operating basis increased by 19.7% to $1.46 for the year ended December 31, 2001 versus a $1.22 for the same period in 2000.

        During the third quarter of 2000, the Company successfully completed the integration of sixteen branches, deposits and certain loans acquired from FleetBoston Financial (including four branches and associated loans and deposits from Sovereign Bank). These transactions were announced, respectively, in September 1999 and May 2000 and closed on August 4, 2000. The acquisition added $336 million in deposits and $134.3 million of commercial, commercial real estate and consumer loans and significantly expanded the Company's operations into Barnstable County. The total purchase price of the acquisition was approximately $40 million and was paid in cash. This acquisition is being accounted for in the financial statements using the purchase method of accounting. Under purchase accounting, the acquired assets and liabilities are recognized at their fair value as of the date of acquisition. Unidentifiable intangible assets of $38.3 million generated by this transaction are being amortized on a straight-line basis over fifteen years (see Note 1 Recent Accounting Pronouncements included in the Notes to Consolidated Financial Statements "Summary of Significant Accounting Policies"). Financial results of the acquired branches have been included in the Company's operations beginning on August 4, 2000. These branches opened as Rockland Trust offices on August 7, 2000. In addition, the Company opened a de novo branch in Falmouth in August, thereby achieving complete coverage of the major population centers on Cape Cod.

        In preparation for these transactions, Rockland Trust had converted its data processing systems and application software in June of 2000. The Company also raised $25 million in January of 2000 as capital support for the transaction through the issuance of Independent Capital Trust II Trust Preferred Securities.

Loan Portfolio

        At December 31, 2001, the Bank's loan portfolio amounted to $1.3 billion, an increase of $114.2 million, or 9.6%, from year-end 2000. This increase was primarily in the residential real estate portfolio. Residential mortgage loans increased $67.4 million, or 41.7%. While the Bank sells the majority of its residential real estate loan production, the Bank retained for its portfolio certain adjustable and 15 year jumbo fixed rate residential mortgages. During 2001, the Bank originated $248.3 million in residential real estate loans of which $120.8 million was retained in its portfolio. Commercial and industrial loans increased $17.1 million, or 12.7%. Commercial real estate loans increased $20.9 million, or 4.7%, although payoffs, in the acquired portfolio, have slightly dampened overall commercial real estate loan growth.

        In accordance with governing banking statutes, Rockland is permitted, with certain exceptions, to make loans and commitments to any one borrower, including related entities, in the aggregate amount of not more than 20% of the Bank's stockholders' equity, or $26.7 million at December 31, 2001. Notwithstanding the foregoing, the Bank has established a more restrictive limit of not more than 75% of the Bank's legal lending limit, or $20.0 million at December 31, 2001, which may only be exceeded with the approval of the Board of Directors. There were no borrowers whose total indebtedness in aggregate exceeded $20.0 million as of December 31, 2001.

15

        The following table sets forth information concerning the composition of the Bank's loan portfolio by loan type at the dates indicated.

Loan Portfolio Composition

		December 31,
		2001				2000				1999				1998				1997
		Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
		(Dollars in Thousands)
Commercial		$	151,287	11.6	%	$	134,227	11.3	%	$	126,815	12.3	%	$	119,585	12.7	%	$	130,793	15.8	%
Real estate:
	Commercial		463,052	35.7	%		442,120	37.3	%		321,526	31.3	%		260,574	27.7	%		239,517	28.9	%
	Residential		229,123	17.6	%		161,675	13.7	%		157,502	15.3	%		148,750	15.8	%		153,868	18.6	%
	Construction		47,208	3.6	%		45,338	3.8	%		38,503	3.7	%		50,923	5.4	%		45,786	5.5	%
Consumer:
	Installment		324,271	25.0	%		325,227	27.5	%		326,805	31.8	%		312,234	33.2	%		209,730	25.3	%
	Other		83,997	6.5	%		76,177	6.4	%		57,359	5.6	%		49,046	5.2	%		48,439	5.9	%
Gross Loans			1,298,938	100.0	%		1,184,764	100.0	%		1,028,510	100.0	%		941,112	100.0	%		828,133	100.0	%
Reserve for Loan Losses			18,190				15,493				14,958				13,695				12,674
Net Loans		$	1,280,748			$	1,169,271			$	1,013,552			$	927,417			$	815,459

        At December 31, 2001, $151.3 million, or 11.6%, of the Bank's gross loan portfolio consisted of commercial loans, compared to $134.2 million, or 11.3%, at December 31, 2000. The Bank's commercial revolving lines of credit generally are for the purpose of providing working capital to borrowers and may be secured or unsecured. At December 31, 2001, the Bank had $59.9 million outstanding under commercial revolving lines of credit compared to $54.5 million at December 31, 2000 and $91.1 million of unused commitments under such lines at December 31, 2001 compared to $73.3 million in the prior year.

        As of December 31, 2001, the Bank had $8.3 million in outstanding commitments pursuant to standby letters of credit compared to $6.5 million at December 31, 2000. The Commercial Lending Division manages these facilities.

        Floor plan loans, which are secured by the automobiles, boats, or other vehicles constituting the dealer's inventory, amounted to $14.4 million as of December 31, 2001 compared to $15.5 million in the prior year.

        Real estate loans comprised 56.9% of gross loans at December 31, 2001, as compared to 54.8% at December 31, 2000. The Bank's loan portfolio included $463.1 million in commercial real estate loans at December 31, 2001. This category has reflected increases over the last two years of $20.9 million, or 4.7%, in 2001, and $120.6 million, or 37.5%, in 2000. The 2000 increase is primarily due to the Acquisition. Residential real estate loans, $229.1 million at year-end 2001, increased $67.4 million, or 41.7%, in 2001, and increased $4.2 million, or 2.7% in 2000. While the Bank sells the majority of its residential real estate loan production some residential mortgages were added to the Bank's loan portfolio during 2001 in the adjustable and 15 year fixed jumbo categories. During 2001, the Bank sold $127.5 million of the current production of residential mortgages as part of its overall asset/liability management. Real estate construction loans increased $1.9 million, or 4.1%, in 2001, and increased $6.8 million, or 17.8%, in 2000.

        As of December 31, 2001, $7.5 million, or 15.9%, of total construction loans at such date were for the development of one-to-four family residential lots or the construction of one-to-four family residences verses $10.6 million or 23.4% of total construction loans for the prior year period.

        Consumer loans primarily consist of closed-end installment loans, cash reserve loans, and home equity loans. As of December 31, 2001, $408.3 million, or 31.5%, of the Bank's gross loan portfolio, consisted of consumer loans compared to $401.4 or 33.9%, of the Bank's gross loans at December 31, 2000. The Bank's installment loans consist primarily of automobile loans, which amounted to $267.7 million and $279.8 million at December 31, 2001 and 2000, respectively. Consumer installment loans, decreased $1.0 million, or 0.3%, in 2001 and decreased $1.6 million, or 0.5%, during 2000. The decrease in 2001 is due to the decline in interest rates on indirect automobile lending to the

16

point that, in management's opinion; the risk inherent was not adequately covered in the interest yield. As of December 31, 2001 and 2000, automobile loans represented 65.6% and 69.7%, respectively, of the Bank's consumer loan portfolio. Indirect automobile loans accounted for 83% and 80% of the Bank's total installment loan origination's during 2001 and 2000, respectively. As of December 31, 2001, installment loans other than automobile loans, such as motorcycles, recreational vehicles, motor homes, boats, or mobile homes, amounted to $56.6 million compared with $45.4 million at prior year-end.

        Other consumer loans have consisted primarily of cash reserve loans, home equity loans and small business lines. The balances of other consumer loans increased $7.8 million, or 10.3%, in 2001 and $18.8 million, or 32.8%, in 2000.

        Introduced in 1992, cash reserve loans are designed to afford the Bank's customers overdraft protection. Cash reserve loans are made pursuant to previously approved unsecured cash reserve lines of credit. The rate on these loans is subject to change due to market conditions. As of December 31, 2001, $20.6 million had been committed to but was unused under cash reserve lines of credit compared to $21.1 million in 2000.

        Home equity loans may be made as a term loan or under a revolving line of credit secured by a first or second mortgage on the borrower's residence. As of December 31, 2001, there were $62.5 million in unused commitments under revolving home equity lines of credit compared to $53.7 million at December 31, 2000.

        The following table sets forth the scheduled contractual amortization of the Bank's loan portfolio at December 31, 2001. Loans having no schedule of repayments or no stated maturity are reported as due in one year or less. The following table also sets forth the rate structure of loans scheduled to mature after one year.

Loan Maturity Schedule

	Commercial		Real Estate Commercial		Real Estate Residential		Real Estate Construction		Consumer Installment		Consumer Other		Total
	(Dollars In Thousands)
Amounts due in:
One year or less	$	112,739	$	127,229	$	49,217	$	24,990	$	92,323	$	66,199	$	472,697
After one year through five years		37,188		265,326		111,536		16,342		200,829		14,555		645,776
Beyond five years		1,360		70,497		68,370		5,876		31,119		3,243		180,465
Total	$	151,287	$	463,052	$	229,123	$	47,208	$	324,271	$	83,997	$	1,298,938
Interest rates on amounts due after one year:
Fixed Rate	$	38,548	$	335,568	$	133,997	$	22,218	$	231,948	$	17,798	$	780,077
Adjustable Rate		0		255		45,909		0		0		0		46,164

        As of December 31, 2001, $0.5 million of loans scheduled to mature within one year were non-performing.

        Generally, the actual maturity of loans is substantially less than their contractual maturity due to prepayments and, in the case of real estate loans, due-on-sale clauses, which generally gives the Bank the right to declare a loan immediately due and payable in the event that, among other things, the borrower sells the property subject to the mortgage and the loan is not repaid. The average life of real estate loans tends to increase when current real estate loan rates are higher than rates on mortgages in the portfolio and, conversely, tends to decrease when rates on mortgages in the portfolio are higher than current real estate loan rates. Under the latter scenario, the weighted average yield on the portfolio tends to decrease as higher yielding loans are repaid or refinanced at lower rates. Due to the fact that the Bank may, consistent with industry practice, "roll over" a significant portion of commercial and commercial real estate loans at or immediately prior to their maturity by renewing the loans on substantially similar or revised terms, the principal repayments actually received by the Bank are anticipated to be significantly less than the amounts contractually due in any particular period. In addition, a loan, or a portion of a loan, may not be repaid due to the borrower's inability to satisfy the contractual obligations of the loan.

17

        The principal balance of loans serviced by the Bank for investors amounted to $291.1 million at December 31, 2001 and $259.7 million at December 31, 2000. Under its mortgage servicing arrangements, the Bank generally continues to collect payments on loans, to inspect the mortgaged property, to make insurance and tax advances on behalf of borrowers and to otherwise service the loans and receives a fee for performing these services. Net servicing fee income amounted to $923,000 and $520,000 for the years ended December 31, 2001 and 2000, respectively. The Bank also sells certain loans and does not retain servicing. During 2001 and 2000 the Bank originated and sold $10.2 million and $14.9 million of loans along with the servicing rights, respectively. The servicing release premium on sold loans was approximately $145,000 in 2001 and $184,000 in 2000. Loan origination fees that relate to loans sold by the Bank are recognized as non-interest income at the time of the loan sale. Under its sales agreements, the Bank pays the purchaser of mortgage loans a specified yield on the loans sold. The difference, after payment of any guarantee fee, is retained by the Bank and recognized as fee income over the life of the loan. In addition, loans may be sold at a premium or a discount with any resulting gain or loss recognized at the time of sale. The FASB has issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This Statement replaces SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", and rescinds SFAS No. 127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125." SFAS No. 140, which has subsequently been amended by FASB Technical Bulletin No. 01-1 "Effective Date for Certain Financial Institutions of Certain Provisions of Statement 140 related to Isolation of Transferred Financial Assets", which provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. As of December 31, 2001, and 2000, the Bank's loan-servicing asset was $1.5 million and $1.4 million, respectively.

Securities Portfolio

        The Company's securities portfolio consists of trading assets, securities which management intends to hold until maturity, securities available for sale, and Federal Home Loan Bank (FHLB) stock. Assets placed into a Rabbi Trust by the Bank are recorded in the trading assets account at fair value with changes in fair value recorded in earnings. All assets classified in the trading account at year-end 2001 and 2000 relate to the Rabbi Trust. Trading assets at December 31, 2001 and 2000 were $1.2 million and $0.5 million, respectively. Securities which management intends to hold until maturity consist of U.S. Treasury and U.S. Government Agency obligations, state, county and municipal securities and corporate debt securities. Securities held to maturity as of December 31, 2001 are carried at their amortized cost of $132.8 million and exclude gross unrealized gains of $1.2 million and gross unrealized losses of $5.4 million. A year earlier, securities held to maturity totaled $195.4 million excluding gross unrealized gains of $1.4 million and gross unrealized losses of $8.2 million. As allowed under SFAS 133, the Bank reclassified $102.8 million of held to maturity securities to available for sale. As a result of this transfer the Company recorded $96,000 of unrealized losses, net of tax, in accumulated other comprehensive income (for additional information see Derivative Instruments and Hedging Activities in Note 1 to the Consolidated Financial Statements in Item 8 hereof). There were no sales of securities held to maturity during 2001 or 2000.

        Securities available for sale consist of certain mortgage-backed securities, including collateralized mortgage obligations and U.S. Government Agency obligations. These securities are carried at fair value and unrealized gains and losses, net of applicable income taxes, are recognized as a separate component of stockholders' equity. The fair value of securities available for sale at December 31, 2001 totaled $569.3 million and net unrealized gains totaled $4.0 million. A year earlier, securities available for sale were $387.5 million with net unrealized gains of $3.0 million. The Bank realized net gains of $1.4 million, $163,000 and $34,000 on the sale of available for sale securities in 2001, 2000, and 1999, respectively.

        The following table sets forth the amortized cost and percentage distribution of securities held to maturity at the dates indicated. For additional information, see Note 4 to the Consolidated Financial Statements included in Item 8 hereof.

18

Amortized Cost of Securities Held to Maturity

	At December 31,
	2001				2000				1999
	Amount		Percent		Amount		Percent		Amount		Percent
	(Dollars In Thousands)
U.S Treasury and Government Agency Securities	$	999	0.7	%	$	21,712	11.1	%	$	25,996	11.4	%
Mortgage-Backed Securities		—	0.0	%		77,524	39.7	%		101,081	44.1	%
Collateralized Mortgage Obligations		—	0.0	%		3,563	1.8	%		5,666	2.5	%
State, County and Municipal Securities		54,268	40.9	%		38,284	19.6	%		41,984	18.3	%
Other Investment Securities		77,487	58.4	%		54,333	27.8	%		54,316	23.7	%
	$	132,754	100.0	%	$	195,416	100.0	%	$	229,043	100.0	%

        The following table sets forth the fair value and percentage distribution of securities available for sale at the dates indicated. For additional information, see Note 4 to the Consolidated Financial Statements included in Item 8 hereof.

Fair Value of Securities Available for Sale

	At December 31,
	2001				2000				1999
	Amount		Percent		Amount		Percent		Amount		Percent
	(Dollars In Thousands)
U.S Treasury and Government Agency Securities	$	79,739	14.0	%	$	45,242	11.7	%	$	8,467	4.2	%
Mortgage-Backed Securities		304,171	53.4	%		265,278	68.5	%		121,881	60.5	%
Collateralized Mortgage Obligations		185,378	32.6	%		76,956	19.8	%		71,266	35.3	%
Other Investment Securities		—	—			—	—			—	—
	$	569,288	100.0	%	$	387,476	100.0	%	$	201,614	100.0	%

        At December 31, 2001 and 2000, the Bank had no investments in obligations of individual states, counties or municipalities which exceeded 10% of stockholders' equity. In addition, there were no sales of state, county or municipal securities in 2001 or 2000.

        The investment in the stock of the Federal Home Loan Bank is related to the admission of Rockland as a member of the Federal Home Loan Bank of Boston in July 1994. This investment was increased to $17.0 million during 1999 to maintain investment levels required by FHLB guidelines.

        BOLI    In 1998, the Bank purchased $30.0 million of Bank Owned Life Insurance. The Bank purchased these policies for the purpose of protecting itself against the cost/loss due to the death of key employees and to offset the Bank's future obligations to its employees under the retirement and benefit plans. The value of this life insurance was $35.2 million and $33.4 million at December 31, 2001 and 2000, respectively. The Bank recorded income from Bank Owned Life Insurance of $1.8 million, $1.7 million and $1.6 million in 2001, 2000 and 1999, respectively.

        Deposits    The Bank's branch system consists of 51 locations. Each full-service branch operates as a retail sales and services outlet offering a complete line of deposit and loan products.

        As of December 31, 2001, deposits of $1.6 billion were $92.4 million, or 6.2%, higher than the prior year-end. Core deposits increased by $147.1 million, or 16.5%, particularly in the relationship deposit categories. The time deposits category was managed downward by $54.7 million, or 9.2% to $540.4 million from $595.1 million at year-end 2000, reflecting decreases in jumbo of $34.2 million and brokered certificates of deposits of $30.0 million.

        The following table sets forth the average balances of the Bank's deposits for the periods indicated.

19

Average Balances of Bank's Deposits

		2001				2000				1999
		Amount		Percent		Amount		Percent		Amount		Percent
		(Dollars In Thousands)
Demand Deposits		$	348,431	22.8	%	$	277,777	22.1	%	$	220,727	20.8	%
Savings and Interest Checking			377,250	24.7	%		315,943	25.1	%		280,441	26.5	%
Money Market and Super Interest Checking Accounts			232,568	15.3	%		148,469	11.8	%		108,415	10.2	%
Time Deposits			567,188	37.2	%		514,673	41.0	%		450,425	42.5	%
	Total	$	1,525,437	100.0	%	$	1,256,862	100.0	%	$	1,060,008	100.0	%

        The Bank's simple interest-bearing time certificates of deposit of $100,000 or more totaled $67.5 million at December 31, 2001. The maturity of these certificates are as follows:

Large Certificate of Deposit Maturity Schedule
(In Millions)

1 to 3 months		$	55.2
4 to 6 months			10.3
7 to 12 months			2.0
	Total	$	67.5

        Borrowings    The Bank's borrowings amounted to $387.1 million at December 31, 2001, an increase of $112.0 million from year-end 2000. At December 31, 2001, the Bank's borrowings consisted primarily of FHLB advances totaling $313.9 million an increase of $122.7 million from the prior year-end. The remaining borrowings consisted of federal funds purchased, assets sold under repurchase agreements and treasury tax and loan notes. These borrowings totaled $73.2 million at December 31, 2001, a decrease of $10.7 million from the prior year-end. See Note 8 of the Notes to Consolidated Financial Statements included in Item 8 hereof.

        The following table sets forth the Bank's borrowings at the dates indicated.

Borrowings

	At December 31,
	2001		2000		1999
	(in Thousands)
Federal funds purchased	$	2,325	$	4,540	$	6,170
Assets sold under repurchase agreements		63,851		71,485		87,196
Treasury tax and loan notes		6,967		7,794		9,877
Federal Home Loan Bank borrowings		313,934		191,224		256,224
	$	387,077	$	275,043	$	359,467

        Corporation-Obligated Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures of the Corporation    In 1997, 2000 and 2001 the Company formed Independent Capital Trust I ("Trust I"), Independent Capital Trust II ("Trust II") and Independent Capital Trust III ("Trust III"), respectively, for the purpose of issuing trust preferred securities and investing the proceeds of the sale of these securities in junior subordinated debentures issued by the Company. Under regulatory capital requirements trust preferred securities, within certain limitations, qualify as Tier I and Tier II capital. The Company raised capital through Trust I and Trust II as support for asset growth. More specifically the funds raised through the Trust II issuance were used as capital support for the FleetBoston Financial acquisition. In addition, given the low interest rate environment at the end of 2001, the Company issued trust preferred securities through Trust III, the proceeds of

20

which were used to redeem in full on January 31, 2002, the higher rate securities issued through Trust II. The interest expense associated with the trust preferred securities is reported as Minority Interest Expense on the Consolidated Statements of Income. Trust Preferred Securities totaled $75.3 million and $51.3 million at December 31, 2001 and 2000, respectively and are reported as Corporation-Obligated Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures of the Corporation in the Consolidated Balance Sheets. Minority Interest Expense was $5.7 million, $5.3 million and $2.7 million for 2001, 2000 and 1999, respectively (See Note 15 of the Notes to the Consolidated Financial Statements included in item 8 hereof).

        Investment Management    As of December 31, 2001, the Rockland Trust Investment Management Group maintained approximately 1,500 trust/fiduciary accounts, with an aggregate fair value of over $493 million on that date. Income from the Investment Management Group amounted to $4.0 million and $4.1 million, for 2001 and 2000, respectively.

        On March 1, 1999, the Bank entered into a two year agreement with Independent Financial Market Group (IFMG) a Sun Life Financial Company for the sale of mutual fund shares, unit investment trust shares, interests in direct participation programs, similar non-insurance investment products, and general securities brokerage services. IFMG Securities Incorporated has placed their Registered Representatives on-site to sell these services to our customer base. Total commissions earned by the bank in 2001 and 2000, were $388,000 and $419,000, respectively.

21

RESULTS OF OPERATIONS

        Summary of Results of Operations    The Company's results of operations are largely dependent on net interest income, which is the difference between the interest earned on loans and investments and interest paid on deposits and borrowings. Net interest income is affected by the interest rate spread, which is the difference between the yields earned on loans and investments and the rates of interest paid on deposits and borrowings. The results of operations are also affected by the level of income from loan, deposit, mortgage banking, and investment management fees, as well as operating expenses, the provision for loan losses, the impact of federal and state income taxes, and the relative levels of interest rates and economic activity.

        Net income was $22.1 million, including security gains, for the year ended December 31, 2001. Diluted earnings per share were $1.53 for the same period. Including special charges and security gains, net income was $15.2 million and diluted earnings per share were $1.06 for the year ended December 31, 2000. For the year ended December 31, 2001, excluding security gains and special charges in 2000, the Company reported a 21.2% increase in operating earnings to $21.1 million, or $1.46 diluted earnings per share. This increase in operating earnings was due to an $18.4 million, or 25.6% increase in net interest income. The provision for loan losses increased to $4.6 million compared with $2.3 million for the same period last year. Non-interest income increased $3.6 million, or 22.1%, and non-interest expenses increased $13.3 million, or 23.8%, from 2001 to 2000.

        Special charges for the year ended December 31, 2000 totaled $3.6 million. They were comprised of three items: system conversion charges of $1.3 million, expense of $1.3 million associated with the FleetBoston Financial branch acquisition, and, as previously announced and recorded as a $1.0 million pre-tax charge in the second quarter of 2000, an unfavorable judgment was entered against the Bank in Plymouth Superior Court concerning a proposed commercial loan transaction that was never consummated. The Company realized securities gains on the sale of available for sale securities in 2001 and 2000. These gains amounted to $1.4 million and $0.2 million before taxes for the years ended December 31, 2001 and 2000, respectively.

        Net Interest Income    The amount of net interest income is affected by changes in interest rates and by the volume, mix, and interest rate sensitivity of interest-earning assets and interest-bearing liabilities.

        On a fully tax-equivalent basis, net interest income was $91.9 million in 2001, a 25.4% increase over 2000 net interest income of $73.3 million. Growth in net interest income in 2001 compared with that of 2000 was primarily the result of a 19.0% increase in average earning assets and a 72 basis point decrease in the average cost of interest bearing liabilities. The yield on earning assets was 7.72% in 2001, compared with 8.07% in 2000. The average balance of securities increased by $147.8 million, or 29.7% as compared with the prior year. The average balance of loans, increased by $150.6 million, or 13.9%, and the yield on loans decreased by 28 basis points to 8.22% in, 2001 compared to 8.50% in 2000. This decrease in loan yield was due to decreases that occurred in market interest rates throughout the year. The yield on taxable securities decreased to 6.78% in 2001 compared to 7.16% in 2000, while the fully tax-equivalent yield on non-taxable securities increased 2 basis points to 7.58% in 2001 compared to 7.56% a year earlier. During 2001, the average balance of interest-bearing liabilities increased by $231.6 million, or 18.1%, over 2000 average balances. The average cost of these liabilities decreased to 3.60% compared to 4.32% in 2000. The Company's interest rate spread (the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities) increased by 37 basis points in 2001. This increase is due to a lower cost of funds, attributable not only to the benefit of the acquired core deposits but also to a balance sheet that was well positioned to benefit from the easing of interest rates by the Federal Reserve over the last year.

        The following table presents the Company's average balances, net interest income, interest rate spread, and net interest margin for 2001, 2000, and 1999. Non-taxable income from loans and securities is presented on a fully tax-equivalent basis whereby tax-exempt income is adjusted upward by an amount equivalent to the prevailing federal income taxes that would have been paid if the income had been fully taxable. The assumed tax rate was 34% in these years.

22

		2001						2000						1999
		Average Balance		Interest Earned/ Paid		Average Yield		Average Balance		Interest Earned/ Paid		Average Yield		Average Balance		Interest Earned/ Paid		Average Yield
		(Dollars in Thousands)
Interest-earning assets:
Federal funds sold and assets purchased under resale agreement		$	15,845	$	679	4.29	%	$	10,912	$	660	6.05	%	$	12,207	$	579	4.74	%
Trading Assets			451		7	1.55	%		474		6	1.27	%		439		5	1.14	%
Taxable Investment Securities			602,109		40,823	6.78	%		455,700		32,644	7.16	%		418,010		28,002	6.70	%
Non-taxable Investment Securities (1)			41,561		3,152	7.58	%		40,391		3,052	7.56	%		41,881		3,157	7.54	%
Loans (1)			1,237,230		101,722	8.22	%		1,086,608		92,354	8.50	%		991,319		81,356	8.21	%
Total Interest-Earning Assets		$	1,897,196	$	146,383	7.72	%	$	1,594,085	$	128,716	8.07	%	$	1,463,856	$	113,099	7.73	%
Cash and Due from Banks			62,240						57,769						47,051
Other Assets			105,454						78,806						54,424
	Total Assets	$	2,064,890					$	1,730,660					$	1,565,331
Interest-bearing liabilities:
Savings and Interest Checking accounts		$	377,250	$	4,598	1.22	%	$	315,943	$	5,940	1.88	%	$	280,441	$	4,837	1.72	%
Money Market & Super Interest Checking accounts			232,568		6,022	2.59	%		148,469		3,245	2.19	%		108,415		2,637	2.43	%
Time Deposits			567,189		27,930	4.92	%		514,673		28,697	5.58	%		450,425		23,194	5.15	%
Federal funds purchased and assets sold under repurchase agreements			71,828		2,122	2.95	%		101,961		5,413	5.31	%		84,809		4,077	4.81	%
Treasury Tax and Loan Notes			4,486		123	2.73	%		5,013		216	4.31	%		3,407		184	5.40	%
Federal Home Loan Bank borrowings			260,663		13,683	5.25	%		196,342		11,908	6.06	%		278,613		15,249	5.47	%
Total Interest-Bearing Liabilities		$	1,513,984	$	54,478	3.60	%	$	1,282,401	$	55,419	4.32	%	$	1,206,110	$	50,178	4.16	%
Demand Deposits			348,431						277,777						220,727
Company-Obligated Mandatorily Redeemable Securities of subsidiary Holding Solely Parent Company Debentures			52,739						49,831						28,750
Other Liabilities			23,172						16,448						12,830
	Total Liabilities	$	1,938,326					$	1,626,457					$	1,468,417
Stockholders' Equity			126,564						104,203						96,914
	Total Liabilities and Stockholders' Equity	$	2,064,890					$	1,730,660					$	1,565,331
Net Interest Income				$	91,905					$	73,297					$	62,921
Interest Rate Spread (2)						4.12	%					3.75	%					3.57	%
Net Interest Margin (2)						4.84	%					4.60	%					4.30	%

(1)

The total amount to adjustment of present interest income and yield on a fully tax-equivalent basis is $1,314, $1,150 and $1,093 in 2001, 2000 and 1999, respectively.

(2)

Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average costs of interest-bearing liabilities. Net interest margin represents net interest income as a percent of average interest-earning assets.

23

        The following table presents certain information regarding changes in interest income and interest expense for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes attributable to changes in rate and changes in volume. Changes, which are attributable to both volume and rate, have been consistently allocated to change due to rate.

Volume Rate Analysis

		Year Ended December 31,
		2001 Compared To 2000									2000 Compared To 1999
		Change Due to Rate			Change Due to Volume			Total Change			Change Due to Rate			Change Due to Volume			Total Change
		(In Thousands)
Income on interest-earning assets:
Federal funds sold		$	(279	)	$	298		$	19		$	142		$	(61	)	$	81
Taxable securities			(2,309	)		10,488			8,179			2,091			2,433			4,524
Non-taxable securities (1)			12			88			100			19			(6	)		13
Trading assets			1			0			1			1			—			1
Loans (1)			(3,434	)		12,802			9,368			3,178			7,820			10,998
	Total	$	(6,009	)	$	23,676		$	17,667		$	5,431		$	10,186		$	15,617
Expense of interest-bearing liabilities:
Savings and Interest Checking accounts		$	(2,495	)	$	1,153		$	(1,342	)	$	491		$	612		$	1,103
Money Market and Super Interest Checking account			939			1,838			2,777			(366	)		974			608
Time deposits			(3,694	)		2,928			(766	)		2,194			3,308			5,502
Federal funds purchased and assets sold under repurchase agreements			(1,691	)		(1,600	)		(3,291	)		511			825			1,336
Treasury tax and loan notes			(71	)		(22	)		(93	)		(55	)		87			32
Federal Home Loan Bank borrowings			(2,127	)		3,901			1,774			1,163			(4,503	)		(3,340	)
	Total	$	(9,139	)	$	8,198		$	(941	)	$	3,938		$	1,303		$	5,241
Change in net interest income		$	3,130		$	15,478		$	18,608		$	1,493		$	8,883		$	10,376

(1)

Interest earned on non-taxable investment securities and loans is shown on a fully tax-equivalent basis.

        Interest income on a fully tax-equivalent basis increased by $17.7 million, or 13.7%, to $146.4 million in 2001 as compared to the prior year-end. Interest earned on loans increased by $9.4 million, or 10.1%, reflecting an increase in average loans to $1.2 billion in 2001 from $1.1 billion in 2000. Interest income from taxable securities increased by $8.2 million, or 25.1%, to $40.8 million in 2001 as compared to the prior year attributable to higher average balances.

        Interest expense for the year ended December 31, 2001 decreased to $54.5 million from the $55.4 million recorded in 2000. Interest expense decreased by $9.1 million, or 16.5%, due to a decrease in the average rate paid on deposits and borrowings. Borrowings increased $33.7 million, or 11.1%, from the 2000 balance and interest-bearing deposits increased $197.9 million, or 20.2%. The cost of borrowings decreased to 4.73% in 2001, down 105 basis points from the 2000 cost of 5.78%. The average cost of interest bearing deposits decreased 59 basis points to 3.28% in 2001.

        Total interest income amounted to $128.7 million in 2000, an increase of $15.6 million, or 13.8%, over 1999. This improvement was primarily due to increases in loan income.

        Interest income on loans increased $11.0 million, or 13.5%, to $92.4 million in 2000 from $81.4 million in 1999. The yield on loans increased 29 basis points and the average balance increased $95.3 million, or 9.6%, to $1,086.6 million in 2000. The increase in the average balance was partially due to acquired loans. Interest income on taxable investment securities amounted to $32.6 million in 2000 compared to $28.0 million in 1999. This increase amounts to $4.6 million or 16.6%. The increase resulted from average balances rising $37.7 million to $455.7 million in 2000 from $418.0 million in 1999.

        Interest expense for the year ended December 31, 2000 increased to $55.4 million from the $50.2 million recorded in 1999. Interest expense increased by $5.2 million, or 10.4%, due to an increase in the average balance of interest bearing liabilities to $1,282.4 million as well as a 16

24

basis point increase in the cost of these funds. The increase in the average balance was partially due to acquired deposits. Borrowings decreased $63.5 million, or 17.3%, from the 1999 balance and interest-bearing deposits increased $139.8 million, or 16.7%. The cost of borrowings increased to 5.78% in 2000, up 46 basis points from the 1999 cost of 5.32%. The average cost of interest bearing deposits increased 22 basis points to 3.87% in 2000.

        Asset Quality    As permitted by banking regulations, consumer loans and home equity loans past due 90 days or more continues to accrue interest. In addition, certain commercial and real estate loans that are more than 90 days past due may be kept on an accruing status if the loan is well secured and in the process of collection. As a general rule, a commercial or real estate loan more than 90 days past due with respect to principal or interest is classified as a non-accrual loan. Income accruals are suspended on all non-accrual loans and all previously accrued and uncollected interest is reversed against current income. A loan remains on non-accrual status until it becomes current with respect to principal and interest, when the loan is liquidated, or when the loan is determined to be uncollectible and is charged-off against the reserve for loan losses.

        Non-performing assets are comprised of non-performing loans and Other Real Estate Owned (OREO). Non-performing loans consist of loans that are more than 90 days past due but still accruing interest and non-accrual loans. OREO includes properties held by the Bank as a result of foreclosure or by acceptance of a deed in lieu of foreclosure. As of December 31, 2001, non-performing assets totaled $3.0 million, a decrease of $1.4 million, or 31.7%, from the prior year-end. Non-performing assets represented 0.14% of total assets for the year ending December 31, 2001 and 0.23% for the year ending December 31, 2000. There was no OREO for the period ending December 31, 2001 and December 31, 2000

        The following table sets forth information regarding Non-performing assets held by the Bank at the dates indicated.

	December 31,
	2001			2000			1999			1998			1997
	(Dollars In Thousands)
Loans past due 90 days or more but still accruing	$	508		$	204		$	316		$	1,026		$	737
Loans accounted for on a non-accrual basis (1)		2,507			4,210			3,338			4,330			5,154
Other real estate owned		—			—			—			—			2
Total non-performing loans	$	3,015		$	4,414		$	3,654		$	5,356		$	5,893
Restructured loans	$	503		$	657		$	694		$	1,037		$	1,400
Non-performing loans as a percent of gross loans		0.23	%		0.37	%		0.35	%		0.56	%		0.69	%
Non-performing assets as a percent of total assets		0.14	%		0.23	%		0.23	%		0.34	%		0.43	%

(1)

Includes $0.1 million, of restructured non-accruing loans at December 31, 1997, which were included in non-accrual loans as of such date. There were no restructured, non-accruing loans at December 31, 1998 and 1999. In 2000 and 2001 there were $0.2 million and $0.1 million, respectively, of restructured, non-accruing loans.

25

        In the course of resolving non-performing loans, the Bank may choose to restructure the contractual terms of certain commercial and real estate loans. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status. It is the Bank's policy to maintain restructured loans on non-accrual status for approximately six months before management considers its return to accrual status. At December 31, 2001, the Bank had $0.5 million of restructured loans.

        Real estate acquired by the Bank through foreclosure proceedings or the acceptance of a deed in lieu of foreclosure is classified as OREO. When property is acquired, it is recorded at the lesser of the loan's remaining principal balance or the estimated fair value of the property acquired, less estimated costs to sell. Any loan balance in excess of the estimated fair value less estimated cost to sell on the date of transfer is charged to the reserve for loan losses on that date. All costs incurred thereafter in maintaining the property, as well as subsequent declines in fair value are charged to non-interest expense.

        Gross interest income that would have been recognized for the years ended December 31, 2001, 2000 and 1999, if non-performing loans at the respective dates had been performing in accordance with their original terms approximated $306,000, $346,000, and $375,000, respectively. The actual amount of interest that was collected on these loans during each of those periods and included in interest income was approximately $26,000, $21,000, and $50,000, respectively.

        Provision For Loan Losses    The provision for loan losses represents the charge to expense that is required to maintain an adequate level of reserve for loan losses. Management's periodic evaluation of the adequacy of the reserve considers past loan loss experience, known and inherent risks in the loan portfolio, adverse situations which may affect the borrowers' ability to repay, the estimated value of the underlying collateral, if any, and current and prospective economic conditions. Substantial portions of the Bank's loans are secured by real estate in Massachusetts. Accordingly, the ultimate collectibility of a substantial portion of the Bank's loan portfolio is susceptible to changes in property values within the state.

        The provision for loan losses increased in 2001 to $4.6 million, compared with $2.3 million in 2000. For the year ended December 31, 2001, net loan charge-offs totaled $1.9 million, an increase of $0.2 million from the prior year. As of December 31, 2001, the reserve for loan losses represented 1.40% of loans, as compared to 1.31% at December 31, 2000. The reserve for loan losses at December 31, 2001 was 603.3% of non-performing loans, as compared to 351.0% at the prior year-end. As of December 31, 2001, the total reserve for loan losses (including the "credit quality discount" described below in the discussion for Reserve for Loan Losses) represented 1.46% of loans, as compared to 1.42% at December 31, 2000. The total reserve for loan losses (including the "credit quality discount") at December 31, 2001 represented 630.2% of non-performing loans, as compared to 382.2% at the prior year-end.

        The provision for loan losses is based upon management's evaluation of the level of the reserve for loan losses in relation to the estimate of loss exposure in the loan portfolio. An analysis of individual loans and the overall risk characteristics and size of the different loan portfolios is conducted on an ongoing basis. This managerial evaluation is reviewed periodically by a third-party loan review consultant. As adjustments are identified, they are reported in the earnings of the period in which they become known.

        Reserve for Loan Losses    While management uses available information to recognize losses on loans, future additions to the reserve may be necessary based on increases in non-performing loans, changes in economic conditions, or for other reasons. Various regulatory agencies, as an integral part of their examination process, periodically review the Bank's reserve for loan losses. Federal Reserve regulators examined the Company in the first quarter of 2000 and the Bank was most recently examined by the Federal Deposit Insurance Corporation, "FDIC", in the fourth quarter of 2001. No additional provision for loan losses was required as a result of these examinations.

        The reserve for loan losses is maintained at a level that management considers adequate to provide for potential loan losses based upon evaluation of known and inherent risks in the loan portfolio. The reserve is increased by provisions for loan losses and by recoveries of loans previously charged-off and reduced by loans charged-off. In 2000, the Bank established a separate "credit quality discount" as a reduction of the loan balances acquired from FleetBoston Financial. The level of credit quality discount was $0.8 million at December 31, 2001 ($1.4 million as of December 31, 2000).

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        Including the credit quality discount, the total reserves for loan losses was $19.0 million at December 31, 2001, compared to $16.9 million at December 31, 2000.

        The following table summarizes changes in the reserve for loan losses and other selected statistics for the periods presented:

Reserve For Loan Losses

			Year Ending December 31,
			2001			2000			1999			1998			1997
			(Dollars in Thousands)
Average total loans			$	1,237,230		$	1,086,608		$	991,319		$	884,205		$	757,877
Reserve for loan losses, beginning of year			$	15,493		$	14,958		$	13,695		$	12,674		$	12,221
Charged-off loans:
	Commercial			144			207			415			1,206			1,140
	Real estate—commercial			—			—			—			—			95
	Real estate—residential			63			13			1			241			261
	Real estate—construction			—			—			—			—			—
	Consumer—installment			2,115			2,078			3,060			2,108			771
	Consumer—other			404			278			494			542			639
		Total charged-off loans		2,726			2,576			3,970			4,097			2,906
Recoveries on loans previously charged-off:
	Commercial			194			265			522			630			546
	Real estate—commercial			71			125			67			258			265
	Real estate—residential			—			1			115			2			0
	Real estate—construction			—			—			—			—			—
	Consumer—installment			447			445			603			266			137
	Consumer—other			92			7			(1	)		2			151
		Total recoveries		804			843			1,306			1,158			1,099
Net loans charged-off				1,922			1,733			2,664			2,939			1,807
Provision for loan losses				4,619			2,268			3,927			3,960			2,260
Reserve for loan losses, end of period			$	18,190		$	15,493		$	14,958		$	13,695		$	12,674
Credit quality discount on acquired loans				810			1,375			—			—			—
Total reserves for loan losses, end of year			$	19,000		$	16,868		$	14,958		$	13,695		$	12,674
Net loans charged-off as a percent of average total loans				0.16	%		0.16	%		0.27	%		0.33	%		0.24	%
Reserve for loan losses as a percent of total loans				1.40	%		1.31	%		1.45	%		1.46	%		1.53	%
Reserve for loan losses as a percent of non-performing loans				603.32	%		351.00	%		409.36	%		255.69	%		215.14	%
Total reserves for loan losses as a percent of total loans (including credit quality discount)				1.46	%		1.42	%		1.45	%		1.46	%		1.53	%
Total reserve for loan losses as a percent of non-performing loans (including credit quality discount)				630.18	%		382.15	%		409.36	%		255.69	%		215.14	%
Net loans charged-off as a percent of reserve for loan losses				10.57	%		11.19	%		17.81	%		21.46	%		14.26	%
Recoveries as a percent of charge-offs				29.49	%		32.73	%		32.90	%		28.26	%		37.82	%

        The reserve for loan losses is allocated to various loan categories as part of the Bank's process of evaluating the adequacy of the reserve for loan losses. Allocated reserves increased by approximately $2.2 million to $15.1 million at December 31, 2001. Changes in the distribution of allocated reserves principally occurred due to increases in the reserve allocated to three portfolio components: Real Estate—Construction, Real Estate—Residential, and Consumer—Installment. Combined increases in the amount of allocated reserves in these three portfolio components represented approximately 87% of the total increase in allocated reserves from December 31, 2000.

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        The increase in the reserve allocated to the Real Estate—Construction portfolio component is attributed largely to the re-categorization of five specific loans related to four construction projects undertaken by four different obligors. All of these obligations were performing at December 31, 2001.

        The increase in the reserve allocated to the Real Estate—Residential portfolio component is a direct result of growth in the Residential Mortgage and Home Equity subsets of this component of the loan portfolio. Outstanding balances at December 31, 2001 in each of these subcategories grew by 37.2% and 67.9%, respectively, and by 44.7% combined as a whole, from December 31, 2000.

        The increase in the reserve allocated to the Consumer—Installment portfolio component is the result of changes in the analytical method and subjective assumptions used to determine the amount of required reserve allocation. This new approach, which is described below, has been implemented as a refinement to prior practices.

        The following table summarizes the allocation of the reserve for loan losses for the years indicated:

		2001
		Reserve Amount		Credit Quality Discount		Percent of Loans In Category To Total Loans
		(Dollars In Thousands)
Allocated Reserves:
	Commercial & Industrial	$	3,036	$	27	11.6	%
	Real Estate—Commercial		6,751		634	35.7	%
	Real Estate—Construction		1,140		—	3.6	%
	Real Estate—Residential		602		105	17.6	%
	Consumer—Installment		2,894		38	25.0	%
	Consumer—Other		727		6	6.5	%
	Imprecision Reserve		3,040		—	NA
Total Reserve for Loan Losses		$	18,190	$	810	100.0	%

		2000
		Reserve Amount		Credit Quality Discount		Percent of Loans In Category To Total Loans
		(Dollars In Thousands)
Allocated Reserves:
	Commercial & Industrial	$	2,807	$	52	11.3	%
	Real Estate—Commercial		6,850		1,095	37.3	%
	Real Estate—Construction		581		5	3.8	%
	Real Estate—Residential		380		161	13.6	%
	Consumer—Installment		1,730		55	27.6	%
	Consumer—Other		574		7	6.4	%
	Imprecision Reserve		2,571		—	NA
Total Reserve for Loan Losses		$	15,493	$	1,375	100.0	%

28

		1999
		Reserve Amount		Percent of Loans In Category To Total Loans
		(Dollars In Thousands)
Allocated Reserves:
	Commercial & Industrial	$	2,634	12.3	%
	Real Estate—Commercial		5,504	31.3	%
	Real Estate—Construction		306	3.7	%
	Real Estate—Residential		376	15.3	%
	Consumer—Installment		2,615	31.8	%
	Consumer—Other		538	5.6	%
	Imprecision Reserve		2,985	NA
Total Reserve for Loan Losses		$	14,958	100.0	%

		1998
		Reserve Amount		Percent of Loans In Category To Total Loans
		(Dollars In Thousands)
Allocated Reserves:
	Commercial & Industrial	$	2,555	12.7	%
	Real Estate—Commercial		4,472	27.7	%
	Real Estate—Construction		361	5.4	%
	Real Estate—Residential		364	15.8	%
	Consumer—Installment		2,295	33.2	%
	Consumer—Other		538	5.2	%
	Imprecision Reserve		3,110	NA
Total Reserve for Loan Losses		$	13,695	100.0	%

		1997
		Reserve Amount		Percent of Loans In Category To Total Loans
		(Dollars In Thousands)
Allocated Reserves:
	Commercial & Industrial	$	3,366	15.8	%
	Real Estate—Commercial		4,591	28.9	%
	Real Estate—Construction		267	5.5	%
	Real Estate—Residential		637	18.6	%
	Consumer—Installment		1,039	25.3	%
	Consumer—Other		766	5.9	%
	Imprecision Reserve		2,008	NA
Total Reserve for Loan Losses		$	12,674	100.0	%

        Allocated reserves for loan losses are determined using both a formula-based approach applied to groups of loans and an analysis of certain individual loans for impairment.

        The formula-based approach evaluates groups of loans to determine the allocation appropriate within each portfolio segment. Individual loans within the commercial & industrial, real estate—commercial and real estate—construction loan portfolio segments are assigned internal risk ratings to group them with other loans possessing similar credit risk characteristics. The level of reserve allocable to each group of risk-rated loans is then determined by

29

management applying a loss factor that estimates the amount of probable loss in each category. The assigned loss factor for each risk rating is a formula-based assessment of historical loss data, portfolio characteristics, economic trends, overall market conditions, past experience, and management's analysis of considerations of probable loan loss based on these factors.

        A similar formula-based approach, using a point-in-time credit grade distribution, was recently developed for the consumer—installment segment of the loan portfolio and employed for the first time in 2001. This new method was developed in response to the significance of the balance of this segment of the portfolio and the seasoning of this segment of the portfolio has allowed for a more analytical overview of its inherent risk characteristics. This new method has been combined with subjective factors, which reflect changing environmental conditions in the consumer—installment loan market. The result of this analytical approach was an increase in the reserve allocation for installment loans to $2.9 million at December 31, 2001, compared with $1.7 million at December 31, 2000.

        Allocations for residential real estate and other consumer loan categories are principally determined by applying loss factors that represent management's estimate of inherent losses in those categories. In each segment, inherent losses are estimated, based on a formula-based assessment of historical loss data, portfolio characteristics, economic trends, overall market conditions, past loan loss experience, and management's analysis of considerations of probable loan loss based on these factors.

        The other method used to allocate the reserve for loan losses entails the assignment of reserve amounts to individual loans on the basis of loan impairment. Certain loans are evaluated individually and are judged to be impaired when management believes it is probable that the Bank will not collect all of the contractual interest and principal payments as scheduled in the loan agreement. Under this method loans are selected for evaluation based on a change in internal risk rating, occurrence of delinquency, loan classification or non-accrual status. A specific reserve amount is allocated to an individual loan when such loan has been deemed impaired and when the amount of a probable loss is estimable on the basis of: fair value of collateral, present value of anticipated future cash flows or the loans observable fair market price. Loans with a specific reserve and the amount of such reserve totaled $753,000 and $404,000 at December 31, 2001, respectively.

        A portion of the reserve for loan loss is not allocated to any specific segment of the loan portfolio. This non-specific reserve is maintained for two primary reasons: there exists an inherent subjectivity and imprecision to the analytical processes employed and the prevailing business environment, as it is affected by changing economic conditions and various external factors, which may impact the portfolio in ways currently unforeseen. Moreover, management has identified certain risk factors, which could impact the degree of loss sustained within the portfolio. These include: market risk factors, such as the effects of economic variability on the entire portfolio, and unique portfolio risk factors that are inherent characteristics of the Bank's loan portfolio. Market risk factors may consist of changes to general economic and business conditions that may impact the Bank's loan portfolio customer base in terms of ability to repay and that may result in changes in value of underlying collateral. Unique portfolio risk factors may include industry concentration or covariant industry concentrations, geographic concentrations, or trends that may exacerbate losses resulting from economic events which the Bank may not be able to fully diversify out of its portfolio.

        Due to the imprecise nature of the loan loss estimation process and ever changing conditions, these risk attributes may not be adequately captured in data related to the formula-based loan loss components used to determine allocations in the Bank's analysis of the adequacy of the reserve for loan losses. Management, therefore, has established and maintains a non-specific reserve for loan losses. The amount of this measurement imprecision allocation was $3.0 million at December 31, 2001, compared to $2.6 million at December 31, 2000.

        Management increased the measurement imprecision allocation approximately $0.4 million to $3.0 million at December 31, 2001 primarily based upon concerns over how the overall weakening of the national economy may affect borrowers in its loan portfolio. As 2001 drew to a close, empirical evidence indicated that the nation had entered into a recession. Through December 31, 2001, however, the national economic slowdown had not yet had a significant effect on the overall credit quality or incidence of default within the Bank's loan portfolio. Management, nonetheless, increased the measurement imprecision allocation of the loan loss reserve by $0.4 million, as of

30

December 31, 2001, based upon its belief that some of the Bank's customer base may lag behind larger national firms with respect to the effects of a recession.

        As of December 31, 2001, the reserve for loan losses totaled $18.2 million as compared to $15.5 million at December 31, 2000. Based on the processes described above, management believes that the level of the reserve for loan losses at December 31, 2001 is adequate. The credit quality discount was $0.8 million and $1.4 million for the year-end December 31, 2001 and 2000, respectively.

        Non-Interest Income    The following table sets forth information regarding non-interest income for the periods shown.

Non-Interest Income

		Years Ended December 31,
		2001		2000		1999
		(In Thousands)
Service charges on deposit accounts		$	8,823	$	6,736	$	5,409
Investment management services income			4,423		4,538		4,108
Mortgage banking income			2,449		1,285		1,779
Bank Owned Life Insurance			1,807		1,705		1,609
Securities gains			1,428		163		34
Other non-interest income			2,348		1,991		1,854
	Total	$	21,278	$	16,418	$	14,793

        Non-interest income, which is generated by deposit account service charges, investment management services, mortgage banking activities, and miscellaneous other sources, amounted to $21.3 million in 2001.

        Service charges on deposit accounts, which represented 41.5% of total non-interest income in 2001, increased from $6.7 million in 2000 to $8.8 million in 2001. Investment Management revenue decreased by 2.5% to $4.4 million compared to $4.5 million in 2000. This decrease is a result of the sharp downturn in the equities market, which reduced the fair value of assets under management in 2001.

        Mortgage banking income, $2.4 million in 2001, increased 90.6% over 2000 income of $1.3 million. This increase is due to a declining interest rate environment, which stimulated refinancing activity. The Bank's mortgage banking revenue consists primarily of application fees and origination fees on sold loans, net servicing income, and gains and losses on the sale of loans. Residential mortgage loans are originated as necessary to meet consumer demand. Sales of such loans in the secondary market occur to lend balance to the Bank's interest rate sensitivity. Such sales generate gains or losses at the time of sale, produce future servicing income, and provide funds for additional lending and other purposes. Typically, loans are sold with the Bank retaining responsibility for collecting and remitting loan payments, inspecting properties, making certain insurance and tax payments on behalf of the borrowers, and otherwise servicing the loans and receiving a fee for performing these services.

31

        Non-Interest Expense    The following table sets forth information regarding non-interest expense for the periods shown.

Non-Interest Expense

		Years Ended December 31,
		2001		2000		1999
		(In Thousands)
Salaries and employee benefits		$	36,904	$	28,345	$	23,716
Occupancy expenses			5,790		4,783		3,613
Equipment expenses			3,621		3,452		3,203
Data processing and facilities management			4,182		4,717		4,337
Intangible asset amortization			2,832		1,306		276
Advertising			1,598		1,549		1,197
Consulting fees			1,246		704		732
Legal fees—loan collection			201		511		357
Legal fees—other			334		725		284
FDIC assessment			294		272		140
Office supplies and printing			828		788		457
Postage expense			1,045		765		679
Telephone expense			1,752		1,330		785
Special charges			—		3,608		—
Other non-interest expenses			8,420		6,519		5,674
	Total	$	69,047	$	59,374	$	45,450

        Non-interest expense, excluding special charges in 2000 (see Note 1 of the Notes to the Consolidated Financial Statements included in Item 8 hereof), increased by $13.3 million or 23.8% for the year ended December 31, 2001, as compared to the same period in 2000. Salaries and employee benefits increased by $8.6 million, or 30.2%, attributable to the addition of approximately 100 employees staffing the acquired branches, additions to staff needed to support continued growth (including the introduction of a Call Center and Internet banking), employees' merit increases, performance-based incentive compensation and increases in medical insurance premiums. Occupancy and equipment-related expenses increased by $1.2 million, or 14.3%, during the year ended December 31, 2001, primarily due to the addition of the 16 acquired branches as well as the opening of a de novo branch in Falmouth and a new Technology Center in Plymouth, all in the latter part of 2000. Amortization of intangible assets increased $1.5 million, or 116.8%, for the year ended December 31, 2001, reflecting one full year with the acquired branches. The remaining non-interest expenses increased by $2.0 million, or 11.3%. This was mainly due to increases associated with the branch acquisition, including telephone ($422,000), postage ($280,000), software maintenance ($208,000) and armored car expense ($132,000). Also, consulting fees increased $542,000 primarily due to the refinement of our branch-staffing model.

        Minority Interest    In 1997, Independent Capital Trust I ("Trust I") was formed for the purpose of issuing Trust Preferred Securities. A total of $28.8 million of 9.28% Trust Preferred Securities were issued by Trust I. In 2000, Independent Capital Trust II ("Trust II") was formed for the purpose of issuing Trust Preferred Securities. A total of $25.0 million of 11.00% Trust Preferred Securities were issued by Trust II as capital support for the FleetBoston acquisition. On December 11, 2001 Independent Capital Trust III ("Trust III") was formed for the purpose of issuing Trust Preferred Securities. A total of $25.0 million of 8.625% Trust Preferred Securities were issued by Trust III, the net proceeds of which were used to redeem the Trust II securities on January 31, 2002. The Company recorded distributions payable on the Trust Preferred Securities as minority interest expense totaling $5.7 million, $5.3 million and $2.7 million in 2001, 2000 and 1999, respectively.

        Income Taxes    For the years ended December 31, 2001, 2000 and 1999 the Company recorded combined federal and state income tax provisions of $10.5 million, $6.4 million and $7.5 million respectively. These provisions reflect effective income tax rates of 32.2%, 29.7% and 30.7%, in 2001, 2000, and 1999, respectively, which are less than the

32

Company's combined statutory tax rate of 42%. The lower effective income tax rates are attributable to certain non-taxable interest and dividends and certain tax efficiency strategies employed by the Company.

        The tax effects of all income and expense transactions are recognized by the Company in each year's consolidated statements of income regardless of the year in which the transactions are reported for income tax purposes.

Asset/Liability Management

        The Bank's asset/liability management process monitors and manages, among other things, the interest rate sensitivity of the balance sheet, the composition of the securities portfolio, funding needs and sources, and the liquidity position. All of these factors, as well as projected asset growth, current and potential pricing actions, competitive influences, national monetary and fiscal policy, and the regional economic environment are considered in the asset/liability management process.

        The Asset/Liability Management Committee, whose members comprise the Bank's senior management, develops procedures, consistent with policies established by the Board of Directors, which monitor and coordinate the Bank's interest rate sensitivity and the sources, uses, and pricing of funds. Interest rate sensitivity refers to the Bank's exposure to fluctuations in interest rates and its effect on earnings. If assets and liabilities do not re-price simultaneously and in equal volume, the potential for interest rate exposure exists. It is management's objective to maintain stability in the growth of net interest income through the maintenance of an appropriate mix of interest-earning assets and interest-bearing liabilities and, when necessary, within prudent limits, through the use of off-balance sheet hedging instruments such as interest rate swaps. The Committee employs simulation analyses in an attempt to quantify, evaluate, and manage the impact of changes in interest rates on the Bank's net interest income. In addition, the Bank engages an independent consultant to render advice with respect to asset and liability management strategy.

        The Bank is careful to increase deposits without adversely impacting the weighted average cost of those funds. Accordingly, management has implemented funding strategies that include FHLB advances and repurchase agreement lines. These non-deposit funds are also viewed as a contingent source of liquidity and, when profitable lending and investment opportunities exist, access to such funds provides a means to leverage the balance sheet.

        At December 31, 2001, approximately 27.3% of the Company's total assets consisted of assets, which will re-price or mature within one year. As of that date, the amount of the Company's cumulative hedged gap was a negative $411.1 million, or 18.7% of total assets.

33

        The following table sets forth the Company's cumulative hedged gap as of December 31, 2001:

		Amounts Maturing or Repricing
		Within Three Months			Over Three To Twelve Months			Over One Year through Five Years		Over Five Years through Ten Years		Over Ten Years			Total
		(Dollars In Thousands)
Interest-earning assets:(1)
Federal funds sold		$	6,000												$	6,000
Securities			49,906			74,005			353,940		128,918		113,459			720,228
Loans—fixed rate (2)			67,854			153,144			599,661		122,152		58,265			1,001,076
Loans—floating rate (2)			217,979			30,704			46,116		48		0			294,847
Total interest-earning assets		$	341,739		$	257,853		$	999,717	$	251,118	$	171,724		$	2,022,151
Bank Owned Life Insurance			0			0			0		0		35,233			35,233
Interest-bearing liabilities:
	Savings and Interest Checking accounts (3)		0			0			0		0		413,198			413,198
	Money Market and Super Interest Checking accounts (3)		249,328			0			0		0		0			249,328
	Time deposits		181,999			278,265			76,363		141		3,661			540,429
	Borrowings		140,122			12,160			101,640		133,155		0			387,077
Total interest-bearing liabilities		$	571,449		$	290,425		$	178,003	$	133,296	$	416,859		$	1,590,032
Corporation-obligated mandatorily redeemable trust preferred securities of subsidiary trust holding solely junior subordinated debentures of the Corporation			23,862						51,467							75,329
Net interest sensitivity unhedged gap during the period			(253,572	)		(32,572	)		770,247		117,822		(209,902	)		392,023
Cumulative gap			(253,572	)		(286,144	)		484,103		601,925		392,023
Effect of hedging activities			(100,000	)					100,000
Cumulative hedged gap			(353,572	)		(386,144	)		484,103		601,925		392,023

(1)

Adjustable and floating-rate assets are included in the period in which interest rates are next scheduled to adjust rather than in the period in which they are due, and fixed-rate loans are included in periods in which they are scheduled to be repaid.

(2)

Balances have been reduced for non-performing loans which amounted to $3.0 million at the same date.

(3)

Although the Bank's regular savings accounts generally are subject to immediate withdrawal, management considers most of these accounts to be core deposits having significantly longer effective maturities based on the Bank's experience of retention of such deposits in changing interest rate environments.

        From time to time, the Bank has utilized interest rate swap agreements as hedging instruments against stable or declining interest rates. An interest rate swap is an agreement whereby one party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount for a predetermined period of time from a second party. The assets relating to the notional principal amount are not actually exchanged.

        The Bank had entered into interest rate swap agreements with a total notional value of $125 million at December 31, 2001 and $110 million at December 31, 2000. These swaps were arranged through large international financial institutions and have initial maturities ranging from two months to five years. The Bank receives fixed rate payments and pays a variable rate of interest tied to either 3-month LIBOR or Prime. At December 31, 2001, the weighted average fixed payment rate received was 7.61% and the weighted average rate of the variable interest payments made by the Bank was 4.31%. As a result of these interest rate swaps, the Bank realized net interest income of approximately $1.9 million in 2001 and $0.4 million in 2000. In January 2002, the Bank sold a $50 million notional

34

value interest rate swap with a fair value of $183,000. The gain will be realized in earnings on a straight-line basis over the original remaining life of the swap agreement (approximately 3 years).

Interest Rate Risk

        Interest rate risk is the sensitivity of income to variations in interest rates over both short-term and long-term horizons. The primary goal of interest-rate risk management is to control this risk within limits approved by the Board and narrower guidelines approved by the Asset/Liability Management Committee. These limits and guidelines reflect the Company's tolerance for interest-rate risk by identifying exposures, quantifying and hedging them.

        The Company uses simulation analysis to measure the exposure of net interest income to changes in interest rates over a relatively short time horizon. Simulation analysis involves projecting future interest income and expense from the Company's assets, liabilities and off balance sheet positions under various scenarios.

        The Company's limits on interest rate risk specify that if interest rates were to shift up or down 200 basis points estimated net interest income for the next 12 months should decline by less than 6.0%. The following table reflects the Company's estimated exposure, as a percentage of estimated net interest income for the next 12 months:

Rate Change (Basis Points)	Estimated Exposure as % of Net Interest Income
+200	(2.13	%)
-200	(0.65	%)

Liquidity

        Liquidity, as it pertains to the Company, is the ability to generate cash in the most economical way for the institution to meet its ongoing obligations to pay deposit withdrawals and to fund loan commitments. The Company's primary sources of funds are deposits, borrowings, and the amortization, prepayment, and maturities of loans and investments.

        The Bank utilizes its extensive branch network to access retail customers who provide a stable base of in-market core deposits. These funds are principally comprised of demand deposits, interest checking accounts, savings accounts, and money market accounts. Deposit levels are greatly influenced by interest rates, economic conditions, and competitive factors. The Bank has also established five repurchase agreement lines, with major brokerage firms as potential sources of liquidity. At December 31, 2001, the Company had no advances outstanding under these lines. In addition to these lines, the Bank also had customer repurchase agreements outstanding amounting to $63.9 million at December 31, 2001. As a member of the Federal Home Loan Bank, Rockland has access to approximately $634 million of borrowing capacity. On December 31, 2001, the Bank had $313.9 million outstanding in FHLB borrowings.

        The Company, as a separately incorporated bank holding company, has no significant operations other than serving as the sole stockholder of the Bank. On an unconsolidated basis, the Company's assets include its investment in the Bank and $0.6 million of goodwill. In addition, the Company issued $81.2 million of Junior Subordinated Debentures in conjunction with the issuance of Trust Preferred Securities by direct subsidiaries, Independent Capital Trust I, Independent Capital Trust II and Independent Capital Trust III. The $25.8 million of debentures issued in conjunction with Independent Capital Trust II were redeemed on January 31, 2002. The Company has no employees and no significant liabilities or sources of income. Expenses incurred by the Company relate to its reporting obligations under the Securities Exchange Act of 1934, as amended and related expenses as a publicly traded company. The Company is directly reimbursed by the Bank for virtually all such expenses.

        The Company actively manages its liquidity position under the direction of the Asset/Liability Management Committee. Periodic review under prescribed policies and procedures is intended to ensure that the Company will maintain adequate levels of available funds. At December 31, 2001, the Company's liquidity position was well above policy guidelines. Management believes that the Bank has adequate liquidity available to respond to current and anticipated liquidity demands. See Notes 4 and 8 of the Notes to Consolidated Financial Statements included in Item 8 hereof.

35

Capital Resources

        The Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC), and other regulatory agencies have established capital guidelines for banks and bank holding companies. Risk-based capital guidelines issued by the federal regulatory agencies require banks to meet a minimum Tier 1 risk-based capital ratio of 4.0% and a total risk-based capital ratio of 8.0%. At December 31, 2001, the Company and the Bank substantially exceeded the minimum requirements for Tier 1 risk-based and total risk-based capital.

        A minimum requirement of 4.0% Tier 1 leverage capital is also mandated. On December 31, 2001, the Tier 1 leverage capital ratio for the Company and the Bank was 6.31% and 6.55%, respectively.

        Capital ratios of the Company and the Bank are shown below for the last two year-ends.

	December 31,
	2001		2000
The Company
Tier 1 leverage capital ratio	6.31	%	5.86	%
Tier 1 risk-based capital ratio	9.24	%	8.50	%
Total risk-based capital ratio	12.96	%	10.97	%
The Bank
Tier 1 leverage capital ratio	6.55	%	6.57	%
Tier 1 risk-based capital ratio	9.59	%	9.51	%
Total risk-based capital ratio	10.84	%	10.70	%

Dividends

        The Company declared cash dividends of $.44 per share in 2001 and $.40 per share in 2000. The 2001 and 2000 ratio of dividends paid to earnings was 27.9% and 37.5% respectively.

        Since substantially all of the funds available for the payment of dividends are derived from the Bank, future dividends will depend on the earnings of the Bank, its financial condition, its need for funds, applicable governmental policies and regulations, and other such matters as the Board of Directors deems appropriate. Management believes that the Bank will continue to generate adequate earnings to continue to pay dividends.

Impact of Inflation and Changing Prices

        The consolidated financial statements and related notes thereto presented elsewhere herein have been prepared in accordance with generally accepted accounting principles which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation.

        The financial nature of the Company's consolidated financial statements is more clearly affected by changes in interest rates than by inflation. Interest rates do not necessarily fluctuate in the same direction or in the same magnitude as the prices of goods and services. However, inflation does affect the Company because, as prices increase, the money supply grows and interest rates are affected by inflationary expectations. The impact on the Company is a noted increase in the size of loan requests with resulting growth in total assets. In addition, operating expenses may increase without a corresponding increase in productivity. There is no precise method; however, to measure the effects of inflation on the Company's consolidated financial statements. Accordingly, any examination or analysis of the financial statements should take into consideration the possible effects of inflation.

Recent Accounting Pronouncements

        The Financial Accounting Standards Board (the "FASB") has issued Statement of Financial Accounting Standard ("SFAS") No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS No 140). This Statement replaces SFAS No. 125, "Accounting for Transfers and Servicing of

36

Financial Assets and Extinguishments of Liabilities", and rescinds SFAS No. 127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125." SFAS No. 140, which has subsequently been amended by FASB Technical Bulletin No. 01-1 "Effective Date for Certain Financial Institutions of Certain Provisions of Statement 140 related to Isolation of Transferred Financial Assets", provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. This Statement provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. This Statement as amended is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001 and is effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The Company does not believe the adoption will have a material impact on its financial position or results of operations.

        In June 2001 the FASB issued SFAS No. 141, "Business Combinations" (SFAS No. 141), and SFAS No. 142,"Goodwill and Other Intangible Assets" (SFAS No. 142). SFAS No.141 addressed accounting for business acquisitions occurring after June 30, 2001. SFAS No. 142 addressed the method of identifying goodwill and other intangible assets acquired in a business combination and eliminated further amortization of non-SFAS No. 72 goodwill, subject to a periodic evaluation of goodwill balances for impairment. SFAS No. 142, like SFAS No. 141, took effect for transactions occurring after June 30, 2001. With respect to goodwill and intangible assets acquired prior to June 30, 2001, SFAS No. 142 is effective for the Company beginning on January 1, 2002.

        On October 17, 2001 FASB issued Action Alert No. 01-37. That Action Alert reported a conclusion reached by FASB at its October 10, 2001 meeting regarding the application of SFAS No. 141 and SFAS No. 142 with respect to goodwill accounting for bank branch acquisitions. The conclusion set forth in the October 17^th Action Alert states that paragraph 5 of SFAS No. 72, "Accounting for Certain Acquisitions of Banking or Thrift Institutions", "applies to all acquisitions of financial institutions (or branches thereof) whether "troubled" or not, in which the fair value of the liabilities assumed exceeds the fair value of tangible and intangible assets acquired."

        The October 17^th Action Alert also states that the FASB will reconsider its new guidance during future deliberations. The conclusion reached by the FASB regarding the need to continue amortization of an unidentifiable intangible asset, therefore, may be overturned at a later date. The Company, however, can give no assurance that the FASB will vary from its current position.

        The Company is assessing the impact of the adoption of SFAS No. 141 and SFAS No. 142 in view of the October 17^th Action Alert. Based upon the conclusion set forth in the October 17th Action Alert, however, the Company currently anticipates that it will be required to continue recording approximately $2.6 million in annual unidentifiable intangible asset amortization, an amount primarily attributable to the Company's August 2000 acquisition of 16 bank branches from FleetBoston Financial, Inc., unless FASB issues further guidance with respect to accounting for bank branch acquisitions. Based upon the SFAS No. 141 and No. 142, however, beginning in 2002 the Company will cease amortizing approximately $761,000 in goodwill ($170,000 annually), an amount attributable to older non-branch acquisitions.

        In July 2001, the FASB issued SFAS No. 143 (SFAS No. 143), "Accounting for Asset Retirement Obligations". SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002 with early adoption permitted. Management is currently assessing the impact of SFAS No. 143. The Company does not believe the adoption of this statement will have a material impact on the Company's Consolidated Financial Statements.

        In October 2001, the FASB issued SFAS No. 144 (SFAS No. 144), "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets and does not apply to goodwill or intangible assets that are not being amortized and certain other long-lived assets. This Statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" and the accounting and reporting provisions of APB Opinion No. 30

37

"Reporting Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions", for the disposal of a segment of a business (as previously defined in that Opinion). This Statement also amends Accounting Research Bulletin (ARB) No. 51, "Consolidated Financial Statements", to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 with early adoption encouraged. The Company does not believe the adoption of this Statement will have a material impact on the Company's Consolidated Financial Statements.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

        See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Assets and Liability Management " in Item 7 hereof.

Item 8.    Financial Statements and Supplementary Data

38

Report of Independent Auditors

To the Board of Directors of Independent Bank Corp.:

        We have audited the accompanying consolidated balance sheets of Independent Bank Corp. and subsidiaries (the Company) as of December 31, 2001 and 2000, and the related consolidated statements of income, stockholders' equity, comprehensive income and cash flows for each of the three years in the period ended December 31, 2001. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Independent Bank Corp. and its subsidiaries as of December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

        As explained in Note 1 to the consolidated financial statements, effective January 1, 2001, the Company changed its method of accounting for its derivative instruments and hedging activities.

/s/  ARTHUR ANDERSEN


Arthur Andersen

Boston, Massachusetts
January 18, 2002 (except for Note 20 as to which the date is January 31, 2002)

39

CONSOLIDATED BALANCE SHEETS

		December
		2001			2000
		(Dollars In Thousands)
ASSETS
CASH AND DUE FROM BANKS		$	66,967		$	58,005
FEDERAL FUNDS SOLD & SHORT TERM INVESTMENTS			6,000			—
TRADING ASSETS (Note 3)			1,150			479
SECURITIES AVAILABLE FOR SALE (Notes 1 and 4)			569,288			387,476
SECURITIES HELD TO MATURITY (Notes 1 and 4) (fair value $128,599 and $188,583)			132,754			195,416
FEDERAL HOME LOAN BANK STOCK (Note 8)			17,036			17,036
LOANS (Notes 1 and 5)
	Commercial & Industrial		151,287			134,227
	Commercial Real Estate		463,052			442,120
	Residential Real Estate		229,123			161,675
	Real Estate Construction		47,208			45,338
	Consumer—Installment		324,271			325,227
	Consumer—Other		83,997			76,177
TOTAL LOANS			1,298,938			1,184,764
	LESS: RESERVE FOR LOAN LOSSES		(18,190	)		(15,493	)
	NET LOANS		1,280,748			1,169,271
BANK PREMISES AND EQUIPMENT, Net (Notes 1 and 6)			29,919			30,367
INTANGIBLE ASSETS (Note 1)			36,236			39,068
BANK OWNED LIFE INSURANCE			35,233			33,425
OTHER ASSETS (Notes 1 and 10)			23,857			19,433
	TOTAL ASSETS	$	2,199,188		$	1,949,976
LIABILITIES
DEPOSITS
	Demand Deposits	$	378,663		$	336,755
	Savings and Interest Checking Accounts		413,198			356,504
	Money Market and Super Interest Checking Accounts		249,328			200,831
	Time Certificates of Deposit over $100,000 (Note 7)		132,545			166,732
	Other Time Certificates of Deposits (Note 7)		407,884			428,400
TOTAL DEPOSITS			1,581,618			1,489,222
FEDERAL FUNDS PURCHASED AND ASSETS SOLD UNDER REPURCHASE AGREEMENTS (Note 8)			66,176			76,025
TREASURY TAX AND LOAN NOTES (Note 8)			6,967			7,794
FEDERAL HOME LOAN BANK BORROWINGS (Note 8)			313,934			191,224
OTHER LIABILITIES			21,903			19,681
	TOTAL LIABILITIES	$	1,990,598		$	1,783,946
CORPORATION-OBLIGATED MANDATORILY REDEEMABLE TRUST PREFERRED SECURITIES OF SUBSIDIARY TRUST HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES OF THE CORPORATION Outstanding: 3,150,000 shares in 2001 and 2,150,000 shares in 2000 (Note 15)		$	75,329		$	51,318
STOCKHOLDERS' EQUITY (Notes 1 and 13)
PREFERRED STOCK, $.01 par value Authorized: 1,000,000 Shares Outstanding: None			—			—
COMMON STOCK, $.01 par value Authorized: 30,000,000 Issued: 14,863,821 Shares in 2001 and 2000			149			149
TREASURY STOCK: 536,285 Shares in 2001 and 608,952 Shares in 2000			(8,369	)		(9,495	)
SURPLUS			43,633			44,078
RETAINED EARNINGS			92,779			77,028
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAX (Note 4)			5,069			2,952
	TOTAL STOCKHOLDERS' EQUITY		133,261			114,712
TOTAL LIABILITIES, MINORITY INTEREST IN SUBSIDIARIES, AND STOCKHOLDERS' EQUITY		$	2,199,188		$	1,949,976

The accompanying notes are an integral part of these consolidated financial statements.

40

CONSOLIDATED STATEMENTS OF INCOME

		Years Ended December 31,
		2001		2000		1999
		(Dollars In Thousands, Except Share and Per Share Data)
INTEREST INCOME
Interest on Loans (Notes 1 and 5)		$	101,479	$	92,243	$	81,296
Interest and Dividends on Securities (Note 4)			42,911		34,663		30,132
Interest on Federal Funds Sold and Short-Term Investments			679		660		578
	Total Interest Income		145,069		127,566		112,006
INTEREST EXPENSE
Interest on Deposits			38,550		37,881		30,668
Interest on Borrowings (Notes 1 and 8)			15,928		17,538		19,510
	Total Interest Expense		54,478		55,419		50,178
	Net Interest Income		90,591		72,147		61,828
PROVISION FOR LOAN LOSSES (Notes 1 and 5)			4,619		2,268		3,927
	Net Interest Income After Provision For Loan Losses		85,972		69,879		57,901
NON-INTEREST INCOME
Service Charges on Deposit Accounts			8,823		6,736		5,409
Investment Management Services			4,423		4,538		4,108
Mortgage Banking Income			2,449		1,285		1,779
BOLI Income			1,807		1,705		1,609
Net Gain on Sales of Securities (Note 4)			1,428		163		34
Other Non-Interest Income			2,348		1,991		1,854
	Total Non-Interest Income		21,278		16,418		14,793
NON-INTEREST EXPENSES
Salaries and Employee Benefits (Note 11)			36,904		28,345		23,716
Occupancy and Equipment Expenses (Notes 6 and 14)			9,411		8,235		6,816
Data Processing & Facilities Management			4,182		4,717		4,337
Intangible Assets Amortization (Note 1)			2,832		1,306		276
Special Charges (Note 1)			—		3,608		—
Other Non-Interest Expenses (Note 12)			15,718		13,163		10,305
	Total Non-Interest Expenses		69,047		59,374		45,450
Minority Interest Expense (Note 15)			5,666		5,319		2,668
INCOME BEFORE INCOME TAXES			32,537		21,604		24,576
PROVISION FOR INCOME TAXES (Notes 1 and 10)			10,485		6,414		7,545
NET INCOME		$	22,052	$	15,190	$	17,031
BASIC EARNINGS PER SHARE		$	1.54	$	1.07	$	1.20
DILUTED EARNINGS PER SHARE		$	1.53	$	1.06	$	1.19
Weighted average common shares (Basic) (Notes 1, 9 and 13)			14,290,504		14,238,148		14,213,390
Common stock equivalents			154,739		67,019		152,266
Weighted average common shares (Diluted) (Notes 1, 9 and 13)			14,445,243		14,305,167		14,365,656

The accompanying notes are an integral part of these consolidated financial statements.

41

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

		Common Stock		Treasury Stock			Surplus			Retained Earnings			Other Accumulated Comprehensive Income			Total
		(Dollars in Thousands, Except Share and Per Share Data)
BALANCE DECEMBER 31, 1998		$	149	($	6,431	)	$	45,303		$	56,063		$	764		$	95,848
Net Income											17,031						17,031
Cash Dividends Declared ($.40 per share)											(5,547	)					(5,547	)
Proceeds From Exercise of Stock Options (Note 13)					589			(353	)								236
Treasury Stock Repurchase, 315,355 shares					(4,836	)											(4,836	)
Change in Unrealized Gain on Securities Available For Sale, Net of Tax (Note 4)														(4,603	)		(4,603	)
BALANCE DECEMBER 31, 1999		$	149	($	10,678	)	$	44,950		$	67,547		($	3,839	)	$	98,129
Net Income											15,190						15,190
Cash Dividends Declared ($.40 per share)											(5,709	)					(5,709	)
Proceeds From Exercise of Stock Options (Note 13)					1,183			(904	)								279
Tax Benefit on Stock Option Exercise								32									32
Change in Unrealized Gain on Securities Available For Sale, Net of Tax (Note 4)														6,791			6,791
BALANCE DECEMBER 31, 2000		$	149	($	9,495	)	$	44,078		$	77,028		$	2,952		$	114,712
Net Income											22,052						22,052
Cash Dividends Declared ($.44 per share)											(6,301	)					(6,301	)
Cumulative effect of SFAS 133 adoption, net of tax (Note 1):
	Fair value of derivatives at January 1, 2001													467			467
	Reclassification of securities from HTM to AFS													(96	)		(96	)
Proceeds From Exercise of Stock Options (Note 13)					1,126			(479	)								647
Tax Benefit on Stock Option Exercise								34									34
Increase in fair value of derivatives during period (Note 1)														742			742
Change in Unrealized Gain on Securities Available For Sale, Net of Tax (Note 4)														1,004			1,004
BALANCE DECEMBER 31, 2001		$	149	($	8,369	)	$	43,633		$	92,779		$	5,069		$	133,261

The accompanying notes are an integral part of these consolidated financial statements.

42

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, and 1999

		2001			2000			1999
		(In Thousands)
Net Income		$	22,052		$	15,190		$	17,031
Other Comprehensive Income, Net of Tax:
Cummulative effect of SFAS 133 adoption (Note 1)
	Fair value of derivatives at January 1, 2001		467
	Reclassification of securities from HTM to AFS on January 1, 2001		(96	)
Unrealized gains/(losses) on securities available for sale			1,932			6,897			(4,581	)
Less: reclassification adjustment for realized gains included in net earnings			(928	)		(106	)		(22	)
Net change in unrealized gain/(losses) on securities available for sale			1,004			6,791			(4,603	)
Increase in fair value of derivatives during the period			742
Other Comprehensive Income			2,117			6,791			(4,603	)
Comprehensive Income		$	24,169		$	21,981		$	12,428

The accompanying notes are an integral part of these consolidated financial statements.

43

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Years Ended December 31,
			2001			2000			1999
			(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income			$	22,052		$	15,190		$	17,031
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED FROM OPERATING ACTIVITIES:
	Depreciation and amortization			7,586			5,600			4,544
	Provision for loan losses			4,619			2,268			3,927
	Deferred income taxes			534			287			75
	Loans originated for resale			(116,014	)		(33,699	)		(51,208	)
	Proceeds from mortgage loan sales			115,605			33,533			51,005
	Loss on sale of mortgages			409			166			203
	Gain on sale of investments			(1,428	)		(163	)		(34	)
	Gain recorded from mortgage servicing rights			(163	)		(345	)		(560	)
	Other Real Estate Owned recoveries			—			—			(12	)
	Changes in assets and liabilities (excluding branch acquisition)			—			—			—
		(Increase) decrease in other assets		(6,602	)		2,841			(5,753	)
		Increase (decrease) in other liabilities		2,072			(8,084	)		13,928
TOTAL ADJUSTMENTS				6,618			2,404			16,115
NET CASH PROVIDED FROM OPERATING ACTIVITIES				28,670			17,594			33,146
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of Securities Held to Maturity				5,880			36,086			77,286
Proceeds from maturities and/or sales of Securities Available For Sale				260,455			40,792			43,855
Purchase of Securities Held to Maturity				(46,201	)		(2,761	)		(22,045	)
Purchase of Securities Available For Sale				(336,546	)		(215,664	)		(58,555	)
Purchase of Federal Home Loan Bank Stock				—			—			(1,001	)
Net Cash proceeds from branch acquisition				—			153,155			—
Net increase in Loans (excluding branch acquisition)				(116,097	)		(23,656	)		(90,188	)
Proceeds from sale of Other Real Estate Owned				—			—			138
Investment in Bank Premises and Equipment (excluding branch acquisition)				(4,137	)		(9,313	)		(2,245	)
NET CASH USED IN INVESTING ACTIVITIES				(236,646	)		(21,361	)		(52,755	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in Time Deposits (excluding branch acquisition)				(54,703	)		25,579			33,512
Net (decrease) increase in Other Deposits (excluding branch acquisition)				147,099			45,803			4,977
Net (decrease) increase in Federal Funds Purchased and Assets Sold Under Repurchase Agreements				(9,849	)		(17,341	)		10,990
Net increase (decrease) in Federal Home Loan Bank Borrowings				122,710			(65,000	)		(57,500	)
Net (decrease) increase in Treasury Tax & Loan Notes				(827	)		(2,083	)		9,406
Issuance of corporation-obligated mandatorily redeemable trust preferred securities of subsidiary trust holding solely junior subordinated debentures of the Corporation				24,011			22,568			—
Proceeds from stock issuance				647			279			236
Payments for Treasury stock purchase				—			—			(4,836	)
Dividends Paid				(6,150	)		(5,701	)		(5,706	)
NET CASH PROVIDED FROM (USED IN) FINANCING ACTIVITIES				222,938			4,104			(8,921	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS				14,962			337			(28,530	)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR				58,005			57,668			86,198
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR				72,967			58,005			57,668
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
	Interest on deposits and borrowings		$	58,060		$	54,786		$	50,083
	Minority Interest			5,666			5,319			2,668
	Income taxes			11,292			4,338			8,094
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Cumulative effect of SFAS 133 adoption, net of tax (Note 1)			$	371			—			—
Increase in fair value of derivatives, net of tax				742			—			—
Transfer of securities from HTM to AFS (Note 1)				102,801			—			—
Issuance of shares from Treasury Stock for the exercise of stock options				1,126			1,183			540
Loans transferred to OREO				—			—			126
Assets transferred to Trading from Available-For-Sale				—			—			486
Summary of Branch Acquisition:
	Fair Value of net liabilities assumed			—			(190,000	)		—
	Net cash received			—			153,155			—
	Excess of assumed liabilities over net cash received			—			36,845			—

DISCLOSURE OF ACCOUNTING POLICY:

        For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, and fed funds sold and assets purchased under resale agreements. Generally, federal funds are sold for up to two week periods.

The accompanying notes are an integral part of these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND CONSOLIDATION

        The accompanying consolidated financial statements include the accounts of Independent Bank Corp. ("the Company") and its subsidiaries, Rockland Trust Company ("Rockland" or "the Bank") Independent Capital Trust I ("Trust I"), Independent Capital Trust II ("Trust II") and Independent Capital Trust III ("Trust III"). All material intercompany balances and transactions have been eliminated in consolidation. Certain amounts in prior year financial statements have been reclassified to conform to the current year's presentation.

NATURE OF OPERATIONS

        Independent Bank Corp. is a one-bank holding company whose primary asset is its investment in Rockland Trust Company. Rockland is a state-chartered commercial bank, which operates 51 retail branches, nine commercial lending centers, three investment management offices and three mortgage banking centers, all of which are located in the Plymouth, Barnstable, Norfolk and Bristol counties of Southeastern Massachusetts. The Company's primary source of income is from providing loans to individuals and small-to-medium sized businesses in its market area. Independent Capital Trust I, Independent Capital Trust II and Independent Capital Trust III were formed for the purposes of issuing Trust Preferred Securities and investing the proceeds of these securities in junior subordinated debentures issued by the Company.

USES OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could vary from these estimates. Material estimates that are particularly susceptible to significant changes in the near-term relate to the determination of the reserve for loan losses, and the valuation of foreclosed real estate, deferred tax assets and trading activities.

SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

        Most of the Company's activities are with customers located within Massachusetts. Notes 3 and 4 discuss the types of securities in which the Company invests. Note 5 discusses the types of lending in which the Company engages. The Company believes that it does not have any significant concentrations in any one industry or customer.

CASH AND CASH EQUIVALENTS

        For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash and balances due from banks, federal funds sold and securities purchased under repurchase agreements, all with original maturities of 90 days or less.

SECURITIES

        Securities that are held principally for resale in the near-term and assets placed into Rabbi Trusts used to fund certain deferred compensation arrangements by the Bank are recorded in the trading assets account at fair value with changes in fair value recorded in earnings. Interest and dividends are included in net interest income. Quoted market prices, when available, are used to determine the fair value of trading instruments. If quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of instruments with similar characteristics, or discounted cash flows. At December 31, 2001 and 2000, all assets classified in the trading account relate to the Rabbi Trusts.

45

        Debt securities that management has the positive intent and ability to hold to maturity are classified as "held to maturity" and recorded at amortized cost. Securities not classified as held to maturity or trading, including equity securities with readily determinable fair values, are classified as "available for sale" and recorded at fair value, net of the related tax effect, with unrealized gains and losses excluded from earnings and reported in other comprehensive income.

        Purchase premiums and discounts are recognized in interest income using the effective yield method over the terms of the securities. Declines in the fair value of held to maturity and available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. The Company evaluates individual securities that have fair values below cost for six months or longer to determine if the decline in fair value is other than temporary.

        When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. Neither the Company nor the Bank engages in the active trading of investment securities.

LOANS

        Loans are stated at their principal balance outstanding, with the exception of purchased loans, which are stated at fair value less amortized premium/discount. Interest income for commercial, real estate, and consumer loans, is accrued based upon the daily principal amount outstanding except for loans on non-accrual status. Interest income on installment loans is generally recorded based upon the level-yield method.

        Interest accruals are generally suspended on commercial or real estate loans more than 90 days past due with respect to principal or interest. When a loan is placed on non-accrual status all previously accrued and uncollected interest is reversed against current income. Interest income on non-accrual loans is recognized on a cash basis, when the ultimate collectibility of principal is no longer considered doubtful.

        Loan fees and certain direct origination costs are deferred and amortized into interest income over the expected term of the loan using the level-yield method. Net deferred fees included in loans at December 31, 2001 and December 31, 2000 were $544,000 and $704,000, respectively.

RESERVE FOR LOAN LOSSES

        The reserve for loan losses is established as losses are estimated to have occurred. Loan losses are charged against the reserve when management believes the collectibility of a loan balance is doubtful. Subsequent recoveries, if any, are credited to the reserve.

        The reserve for loan losses is evaluated on a regular basis by management. It is based upon management's systematic periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. Changes in estimates are provided currently in earnings.

        A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

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        Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual, consumer, or residential loans for impairment disclosures.

LOAN SERVICING

        Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets with servicing retained. Capitalized servicing rights are reported in other assets and are amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. Impairment is determined by stratifying rights by predominant characteristics, such as interest rates and terms. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum.

BANK PREMISES AND EQUIPMENT

        Land is carried at cost. Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the lease terms or the estimated useful lives of the improvements.

OTHER REAL ESTATE OWNED

        Other real estate owned ("OREO") is comprised of real estate acquired through loan foreclosure or acceptance of a deed in lieu of foreclosure. OREO is initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Any loan balance in excess of the estimated fair value on the date of transfer is charged to the reserve for loan losses on that date. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets. Subsequent declines in value are charged to other non-interest expense.

SPECIAL CHARGES

        Special charges for the year ended December 31, 2000 totaled $3.6 million. They were comprised of three items: system conversion charges of $1.3 million; expense of $1.3 million associated with the FleetBoston Financial branch acquisition; and, as previously announced and recorded as a $1.0 million pre-tax charge in the second quarter of 2000, an unfavorable judgment entered against the Bank in Plymouth Superior Court concerning a proposed commercial loan transaction that was never consummated.

INTANGIBLE ASSETS

Goodwill

        In connection with the acquisition of Middleboro Trust Company in January 1986, the Company allocated $3.0 million of the purchase price to goodwill. This amount is being amortized over a 20-year period using the straight-line method. The balance at December 31, 2001 is $0.6 million.

        In May 1994, Rockland purchased approximately $50 million of trust assets from the Pawtucket Trust Company. The Bank allocated $350,000 of the purchase price of this transaction to goodwill, which is being amortized over a 15-year period using the straight-line method. The balance at December 31, 2001 is $171,000.

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Unidentifiable Intangibles

        In March 1994, Rockland purchased $21.6 million of deposits from the Resolution Trust Corporation. The Bank allocated $1.6 million of the purchase price of this transaction to unidentifiable intangibles, which is being amortized over a 15-year period using the straight-line method. The balance at December 31, 2001 is $0.8 million.

        In August 2000, Rockland acquired 16 branches, $336 million of deposits and $134.3 million of loans from FleetBoston Financial. Four of these sixteen branches, acquired in a simultaneous transaction through Sovereign Bank, were originally scheduled to be sold to Sovereign as part of the divestment package which was required of Fleet by the U.S. Department of Justice. The Bank allocated $38.3 million of the purchase price to unidentifiable intangibles, which is being amortized over a 15-year period using the straight-line method. The balance at December 31, 2001 is $34.7 million.

        The Company periodically evaluates goodwill and intangible assets for impairment on the basis of whether these assets are recoverable from projected undiscounted net cash flows of the related acquired entity. See Recent Accounting Pronouncements for discussion of SFAS No.'s 141 and 142 relating to the future accounting treatment of goodwill and intangible assets.

INCOME TAXES

        Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax basis of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.

INVESTMENT MANAGEMENT GROUP

        Assets held in a fiduciary or agency capacity for customers are not included in the accompanying consolidated balance sheets, as such assets are not assets of the Company. The Investment Management Group income is recorded on an accrual basis.

FINANCIAL INSTRUMENTS

Credit related financial instruments—In the ordinary course of business, the Bank enters into commitments to extend credit. These financial instruments are recorded when they are funded.

Derivative financial instruments—As part of asset/liability management, the Bank utilizes interest rate swap agreements, caps, or floors to hedge various exposures or to modify interest rate characteristics of various balance sheet accounts. The Bank also has commitments to fund residential mortgages with the intent to sell the mortgage upon funding.

        Swaps are accounted for on the "accrual" method. The interest component associated with the contract is recognized over the life of the contract in net income. Upon adoption of SFAS No. 133, the Company recorded the fair value of the contract as an asset/liability. Subsequent changes in fair value are recorded as an adjustment to accumulated other comprehensive income (see "Derivatives and Hedging Activities").

        When a contract is terminated the resulting gain is deferred and amortized into net interest income based upon the life of the contract and losses are recognized currently.

        Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

        From time to time, the Bank uses written put and call option strategies in which it receives a cash premium for entering into options on investment securities. These options are derivative financial instruments and are marked to fair value through non-interest income and included in Other Liabilities in the accompanying consolidated statement of financial condition. In 2001, the Bank did not enter into any options on investment securities and no option income was recognized. In 2000 and 1999 the Bank recognized option income of $50,000 and $30,000, respectively.

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TRANSFERS OF FINANCIAL ASSETS

        Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

STOCK-BASED COMPENSATION

        Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standard ("SFAS") No. 123, "Accounting for Stock-Based Compensation", encourages all entities to adopt a fair value based method of accounting for employee stock compensation plans, whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. However, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", whereby compensation cost is the excess, if any, of the quoted market price of the stock at the grant date (or other measurement date) over the amount an employee must pay to acquire the stock. Stock options issued under the Company's stock option plan have no intrinsic value at the grant date, and under APB Opinion No. 25 no compensation cost is recognized for them. The Company has elected to continue with the accounting methodology in APB Opinion No. 25 and, as a result, has provided pro forma disclosures of net income and earnings per share, and other disclosures as if the fair value based method of accounting had been applied. The pro forma disclosures include the effects of all awards granted on or after January 1, 1995 and are included in Note 13.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

        Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133). This statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative's fair value be recognized currently in income unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the statement of income and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. If a derivative qualifies as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in the fair value of assets, liabilities, or firm commitments through earnings or are recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value is to be immediately recognized in earnings. Also, when a hedged item or derivative is terminated, sold or matures, any remaining value would be recognized in earnings either immediately or over the remaining life of the contract.

        As of January 1, 2001, the Company had interest rate swaps that qualified as derivatives under SFAS No. 133. Interest rate swaps are used primarily by the Company to hedge certain operational exposures resulting from changes in interest rates. Such exposures result from portions of the Company's assets and liabilities that earn or pay interest at a fixed or floating rate. The Company measures the effectiveness of these hedges by modeling the impact on the exposures under various interest rate scenarios. At December 31, 2001 the Company had swaps, designated as "cash flow" hedges, with total notional values of $100.0 million. The purpose of these swaps is to hedge the variability in the cash inflows of prime based loans attributable to changes in interest rates. Under these swap agreements the Company pays a variable rate of interest tied to prime and receives a fixed rate of interest. In addition, the Company had a $25.0 million notional value swap at December 31, 2001, which was designated as a "fair value" hedge. The objective of the fair value hedge was to convert the fixed rate payments related to the trust preferred issuance to variable rate payments.

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        In addition, the Company had entered into commitments to fund residential mortgage loans with the intention of selling them in the secondary markets. The Company had also entered into forward sales agreements for certain funded loans and loan commitments. The Company records unfunded commitments based upon their fair value as a charge through earnings. The Company also records the undesignated forward sales agreements at fair value with charges to earnings. When a commitment is funded, the Company designates the forward sale agreement as a hedge of the loan held for sale and records both instruments at fair value with changes recorded in earnings.

        As allowed under SFAS No. 133, the Bank reclassified $102.8 million of treasury, agency and mortgage backed securities from "held to maturity" to "available for sale" upon adoption.

        The adoption of SFAS No. 133 resulted in an increase of $371,000 in Other Comprehensive Income with no material cumulative effect on earnings as of January 1, 2001. The increase in Other Comprehensive Income was made up of two components. The fair value of the Company's swaps treated as "cash flow" hedges net of tax ($467,000 net unrealized gain) and the impact of reclassifying securities from "held to maturity" to "available for sale" ($96,000 net unrealized loss). The increase in fair value of the swaps during 2001, subsequent to the adoption, was $0.7 million net of tax, and was also recorded in Other Comprehensive Income.

RECENT ACCOUNTING PRONOUNCEMENTS

        The Financial Accounting Standards Board ("the FASB") has issued Statement of Financial Accounting Standard ("SFAS") SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS No. 140). This Statement replaces SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", and rescinds SFAS No. 127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125." SFAS No. 140, which has subsequently been amended by FASB Technical Bulletin No. 01-1 "Effective Date for Certain Financial Institutions of Certain Provisions of Statement 140 related to Isolation of Transferred Financial Assets", provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. This Statement provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. This Statement as amended is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001 and is effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The Company does not believe the adoption will have a material impact on its financial position or results of operations.

        In June 2001 the FASB issued SFAS No. 141, "Business Combinations" (SFAS No. 141), and SFAS No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142). SFAS No. 141 addressed accounting for business acquisitions occurring after June 30, 2001. SFAS No. 142 addressed the method of identifying goodwill and other intangible assets acquired in a business combination and eliminated further amortization of non-SFAS No. 72 goodwill, subject to a periodic evaluation of goodwill balances for impairment. SFAS No. 142, like SFAS No. 141, took effect for transactions occurring after June 30, 2001. With respect to goodwill and intangible assets acquired prior to June 30, 2001, SFAS No. 142 is effective for the Company beginning on January 1, 2002.

        On October 17, 2001 FASB issued Action Alert No. 01-37. That Action Alert reported a conclusion reached by the FASB at its October 10, 2001 meeting regarding the application of SFAS No. 141 and SFAS No. 142 with respect to goodwill accounting for bank branch acquisitions. The conclusion set forth in the October 17^th Action Alert states that paragraph 5 of SFAS No. 72, "Accounting for Certain Acquisitions of Banking or Thrift Institutions", applies to all acquisitions of financial institutions (or branches thereof) whether "troubled" or not, in which the fair value of the liabilities assumed exceeds the fair value of tangible and intangible assets acquired.

        The October 17^th Action Alert also states that the FASB will reconsider its new guidance during future deliberations. The conclusion reached by the FASB regarding the need to continue amortization of an unidentifiable intangible asset, therefore, may be overturned at a later date. The Company, however, can give no assurance that the FASB will vary from its current position.

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        The Company is assessing the impact of the adoption of SFAS No. 141 and SFAS No. 142 in view of the October 17^th Action Alert. Based upon the conclusion set forth in the October 17^th Action Alert, however, the Company currently anticipates that it will be required to continue recording approximately $2.6 million in annual unidentifiable intangible asset amortization, an amount primarily attributable to the Company's August 2000 acquisition of sixteen bank branches from FleetBoston Financial, unless FASB issues further guidance with respect to accounting for bank branch acquisitions. Based upon SFAS No. 141 and No. 142, however, beginning in 2002 the Company will cease amortizing approximately $761,000 in goodwill ($170,000 annually), an amount attributable to older non-branch acquisitions.

        In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" (SFAS No. 143). SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002 with early adoption permitted. Management is currently assessing the impact of SFAS No. 143. The Company does not believe the adoption of this statement will have a material impact on the Company's Consolidated Financial Statements.

        In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144). SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets and does not apply to goodwill or intangible assets that are not being amortized and certain other long-lived assets. This Statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" and the accounting and reporting provisions of APB Opinion No. 30 "Reporting Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions", for the disposal of a segment of a business (as previously defined in that Opinion). This Statement also amends Accounting Research Bulletin (ARB) No. 51, "Consolidated Financial Statements", to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 with early adoption encouraged. The Company does not believe the adoption of this Statement will have a material impact on the Company's Consolidated Financial Statements.

(2)   FAIR VALUE OF FINANCIAL INSTRUMENTS

        SFAS No. 107 "Disclosures about Fair Value of Financial Instruments" (SFAS No. 107), requires disclosure of fair value information about financial instruments for which it is practicable to estimate that value, whether or not recognized on the balance sheet. In cases where quoted fair values are not available, fair values are based upon estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.

        The carrying amount reported on the balance sheet for cash, federal funds sold and assets purchased under resale agreements, and interest-bearing deposits approximates those assets' fair values. SFAS No. 107 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

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        The following table reflects the book and fair value of financial instruments, including on-balance sheet and off-balance sheet instruments as of December 31, 2001 and 2000.

	2001				2000
	Book Value		Fair Value		Book Value		Fair Value
	(In Thousands)				(In Thousands)
FINANCIAL ASSETS
Cash and Due From Banks	$	66,967	$	66,967	$	58,005	$	58,005	(a)
Federal Funds Sold		6,000		6,000		—		—	(a)
Securities Held To Maturity		132,754		128,599		195,416		188,583	(b)
Securities Available For Sale		569,288		569,288		387,476		387,476	(b)
Trading Assets		1,150		1,150		479		479	(b)
Federal Home Loan Bank Stock		17,036		17,036		17,036		17,036	(c)
Net Loans		1,273,653		1,276,608		1,166,639		1,169,664	(d)
Loans Held For Sale		7,095		7,095		2,632		2,632	(b)
Mortgage Servicing Rights		1,538		1,538		1,377		1,377	(f)
Bank Owned Life Insurance		35,233		35,233		33,425		33,425	(b)
Interest Rate Swap Agreements		2,046		2,046		—		1,990	(b)
FINANCIAL LIABILITIES
Demand Deposits		378,663		378,663		336,755		336,755	(e)
Savings and Interest Checking Accounts		413,198		413,198		356,504		356,504	(e)
Money Market and Super Interest Checking Accounts		249,328		249,328		200,831		200,831	(e)
Time Deposits		540,429		542,840		595,132		597,028	(f)
Federal Funds Purchased and Assets Sold Under Repurchase Agreements		2,325		2,325		76,025		76,025	(f)
Treasury Tax and Loan Notes		6,967		6,967		7,794		7,794	(a)
Federal Home Loan Bank Borrowings		313,934		309,603		191,224		190,802	(f)
Corporation-obligated mandatorily redeemable trust preferred securities of subsidiary trust holding solely junior subordinated debentures of the Corporation		75,329		76,139		51,318		51,287	(f)
UNRECOGNIZED FINANCIAL INSTRUMENTS
Standby Letters of Credit		—		24		—		15	(g)

(a)

Book value approximates fair value due to short term nature of these instruments.

(b)

Fair value was determined based on market prices or dealer quotes.

(c)

Federal Home Loan Bank stock is redeemable at cost.

(d)

The fair value of loans was estimated by discounting anticipated future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

(e)

Fair value is presented as equaling book value. SFAS No. 107 requires that deposits which can be withdrawn without penalty at any time be presented at such amount without regard to the inherent value of such deposits and the Bank's relationship with such depositors.

(f)

The fair value of these instruments is estimated by discounting anticipated future cash payments using rates currently available for instruments with similar remaining maturities.

(g)

The fair value of these instruments was estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of customers.

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(3)  TRADING ASSETS

        Trading assets, at fair value, consist of the following:

	2001		2000
	Fair Value
	(In Thousands)
Cash equivalents	$	762	$	34
Marketable equity securities		388		445
Total	$	1,150	$	479

        The Company realized a loss on trading activities of $53,000 in 2001, $12,000 in 2000 and $15,000 in 1999.

(4)  SECURITIES

        The amortized cost, gross unrealized gains and losses, and fair value of securities held to maturity at December 31, 2001 and 2000 were as follows:

	2001									2000
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)									(In Thousands)
U.S. Treasury and U.S. Government Agency Securities	$	999	$	1	$	0		$	1,000	$	21,712	$	81	($	374	)	$	21,419
Mortgage-Backed Securities		—		—		—			—		77,524		662		(596	)		77,590
Collateralized Mortgage Obligations		—		—		—			—		3,563		18		(6	)		3,575
State, County, and Municipal Securities		54,268		368		(1,141	)		53,495		38,284		368		(565	)		38,087
Corporate Debt Securities		77,487		875		(4,258	)		74,104		54,333		266		(6,687	)		47,912
Total	$	132,754	$	1,244	($	5,399	)	$	128,599	$	195,416	$	1,395	($	8,228	)	$	188,583

        The amortized cost, gross unrealized gains and losses, and fair value of securities available for sale at December 31, 2001 and 2000 were as follows:

	2001									2000
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)									(In Thousands)
U.S. Treasury and U.S. Government Agency Securities	$	77,831	$	1,918	($	10	)	$	79,739	$	43,965	$	1,381	($	104	)	$	45,242
Mortgage-Backed Securities		300,551		4,994		(1,374	)		304,171		262,200		3,629		(551	)		265,278
Collateralized Mortgage Obligations		184,284		2,441		(1,347	)		185,378		76,168		1,414		(626	)		76,956
Total	$	562,666	$	9,353	($	2,731	)	$	569,288	$	382,333	$	6,424	($	1,281	)	$	387,476

        The Bank realized gross gains of $1.4 million, $163,000 and $34,000 on the sale of available for sale securities in 2001, 2000 and 1999, respectively. There were no gross losses realized during 2001, 2000, or 1999 on the sale of

53

securities. A schedule of the contractual maturities of securities held to maturity and securities available for sale as of December 31, 2001 is presented below.

		Held to Maturity				Available for Sale
		Amortized Cost		Fair Value		Amortized Cost		Fair Value
		(In Thousands)				(In Thousands)
Due in one year or less		$	3,589	$	3,596	$	8	$	8
Due from one year to five years			20,616		20,759		54,502		54,503
Due from five to ten years			2,937		2,855		72,624		75,409
Due after ten years			105,612		101,389		435,532		439,368
	Total	$	132,754	$	128,599	$	562,666	$	569,288

        The actual maturities of mortgage-backed securities, collateralized mortgage obligations and corporate debt securities will differ from the contractual maturities due to the ability of the issuers to prepay underlying obligations.

        As allowed under SFAS No. 133, the Bank reclassified $102.8 million of held to maturity securities to available for sale. As a result of this transfer the Company recorded $96,000 of unrealized losses, net of taxes, in accumulated other comprehensive income.

        On December 31, 2001 and 2000, investment securities carried at $222.9 million and $227.5 million, respectively, were pledged to secure public deposits, assets sold under repurchase agreements, treasury tax and loan notes, and for other purposes as required by law.

        At year-end 2001 and 2000, the Company had no investments in obligations of individual states, counties, or municipalities, which exceed 10% of stockholders' equity.

(5)  LOANS AND RESERVE FOR LOAN LOSSES

        The composition of loans at December 31, 2001 and 2000 were as follows:

	2001		2000
	(In Thousands)
Commercial	$	151,287	$	134,227
Real Estate—Commercial Mortgage		463,052		442,120
Real Estate—Residential Mortgage		229,123		161,675
Real Estate—Construction		47,208		45,338
Consumer—Installment		324,271		325,227
Consumer—Other		83,997		76,177
Loans	$	1,298,938	$	1,184,764

        In connection with the acquisition of the FleetBoston Financial and Sovereign Bank loans, the Company recorded a fair value adjustment of $0.5 million associated with the interest rates on these loans. In addition, the Company recorded a credit quality discount of $1.4 million, which reflects management's estimate of the uncollectible portion of the original amounts of such loans.

        In addition to the loans noted above, at December 31, 2001 and December 31, 2000, the Company serviced approximately $291.1 million and $259.7 million, respectively, of loans sold to investors in the secondary mortgage market and other financial institutions.

        At December 31, 2001 and 2000, loans held for sale amounted to approximately $7.1 million and $2.6 million, respectively, and are included in residential mortgages above. Prior to the adoption of SFAS No. 133 loans held for sale were valued at lower of the recorded balance or fair value. No fair value adjustments were required at December 31, 2000. Upon adoption of SFAS No. 133 the Company designates forward loan sale contracts as a fair value hedge against loans held for sale. Accordingly, loans held for sale and the forward sale agreement are recorded at fair value. This resulted in a increase in earnings of $37,000 in 2001.

54

        As of December 31, 2001, and 2000, the Bank's recorded investment in impaired loans and the related valuation allowance calculated under SFAS No. 114 was as follows:

		2001				2000
		Recorded Investment		Valuation Allowance		Recorded Investment		Valuation Allowance
		(In Thousands)
Impaired loans:
	Valuation allowance required	$	885	$	471	$	1,186	$	427
	No valuation allowance required		805		—		803		—
	Total	$	1,690	$	471	$	1,989	$	427

        The valuation allowance is included in the reserve for loan losses on the consolidated balance sheet. The average recorded investment in impaired loans for the years ended December 31, 2001 and 2000 was $2.1 million and $1.8 million, respectively. Interest payments received on impaired loans are recorded as interest income unless collection of the remaining recorded investment is doubtful, at which time payments received are recorded as reductions of principal. The Bank recognized interest income on impaired loans of approximately $62,000, $68,000 and $56,000 for the years ended December 31, 2001, 2000 and 1999, respectively. At December 31, 2001, the Bank had $0.5 million of restructured loans.

        At December 31, 2001 and 2000, accruing loans 90 days or more past due totaled $509,000 and $204,000, respectively, and non-accruing loans totaled $2.5 million and $4.2 million respectively. Troubled debt restructurings were $503,000 and $657,000 at December 31, 2001 and 2000, respectively, and were included in impaired loans. Gross interest income that would have been recognized for the years ended December 31, 2001, 2000 and 1999, if non-performing loans at the respective dates had been performing in accordance with their original terms approximated $306,000, $346,000, and $375,000, respectively. The actual amount of interest that was collected on these loans during each of those periods and included in interest income was approximately $26,000, $21,000, and $50,000, respectively.

        The aggregate amount of loans in excess of $60,000 outstanding to directors, principal officers, and principal security holders at December 31, 2001 and 2000 and for the years then ended is as follows:

	(In Thousands)
Balance, January 1, 2000	$	12,673
New loans		29,772
Loan repayments		28,431
Balance, December 31, 2000	$	14,014
New loans		48,229
Loan repayments		47,170
Balance, December 31, 2001	$	15,073

        All such loans were made in the ordinary course of business on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with other persons, and do not involve more than the normal risk of collectibility or present other unfavorable features.

55

        An analysis of the total reserves for loan losses for each of the three years in the period ended December 31, 2001 is as follows:

		2001			2000			1999
		(In Thousands)
Reserve for loan losses, beginning of year		$	15,493		$	14,958		$	13,695
Loans charged off			(2,725	)		(2,576	)		(3,970	)
Recoveries on loans previously charged off			803			843			1,306
	Net charge-offs		(1,922	)		(1,733	)		(2,664	)
Provision charged to expense			4,619			2,268			3,927
Reserve for loan losses, end of year			18,190			15,493			14,958
Credit quality discount on acquired loans			810			1,375			—
Total reserves available for loan losses, end of year		$	19,000		$	16,868		$	14,958

        Allocated reserves for loan losses are determined using both a formula-based approach applied to groups of loans and an analysis of certain individual loans for impairment.

        The formula-based approach evaluates groups of loans to determine the allocation appropriate within each portfolio segment. Individual loans within the commercial & industrial, real estate—commercial and real estate—construction loan portfolio segments are assigned internal risk ratings to group them with other loans possessing similar credit risk characteristics. The level of reserve allocable to each group of risk-rated loans is then determined by management applying a loss factor that estimates the amount of probable loss in each category. The assigned loss factor for each risk rating is a formula-based assessment of historical loss data, portfolio characteristics, economic trends, overall market conditions, past experience, and management's analysis of considerations of probable loan loss based on these factors.

        A similar formula-based approach, using a point-in-time credit grade distribution, was recently developed for the consumer—installment segment of the loan portfolio and employed for the first time in 2001. This new method was developed in response to the significance of the balance of this segment of the portfolio and the seasoning of this segment of the portfolio has allowed for a more analytical overview of its inherent risk characteristics. This new method has been combined with subjective factors, which reflect changing environmental conditions in the consumer—installment loan market. The result of this analytical approach was an increase in the reserve allocation for installment loans to $2.9 million at December 31, 2001, compared with $1.7 million at December 31, 2000.

        Allocations for residential real estate and other consumer loan categories are principally determined by applying loss factors that represent management's estimate of inherent losses in those categories. In each segment, inherent losses are estimated, based on a formula-based assessment of historical loss data, portfolio characteristics, economic trends, overall market conditions, past loan loss experience, and management's subjective analysis of considerations of probable loan loss based on these factors.

        The other method used to allocate the reserve for loan losses entails the assignment of reserve amounts to individual loans on the basis of loan impairment. Certain loans are evaluated individually and are judged to be impaired when management believes it is probable that the Bank will not collect all of the contractual interest and principal payments as scheduled in the loan agreement. Under this method loans are selected for evaluation based on a change in internal risk rating, occurrence of delinquency, loan classification or non-accrual status. A specific reserve amount is allocated to an individual loan when such loan has been deemed impaired and when the amount of a probable loss is estimable on the basis of: fair value of collateral, present value of anticipated future cash flows or the loans observable market price. Loans with a specific reserve and the amount of such reserve totaled $753,000 and $404,000 at December 31, 2001, respectively.

        A portion of the reserve for loan loss is not allocated to any specific segment of the loan portfolio. This non-specific reserve is maintained for two primary reasons: there exists an inherent subjectivity and imprecision to the analytical processes employed and the prevailing business environment, as it is affected by changing economic conditions and various external factors, which may impact the portfolio in ways currently unforeseen. Moreover,

56

management has identified certain risk factors, which could impact the degree of loss sustained within the portfolio. These include: market risk factors, such as the effects of economic variability on the entire portfolio, and unique portfolio risk factors that are inherent characteristics of the Bank's loan portfolio. Market risk factors may consist of changes to general economic and business conditions that may impact the Bank's loan portfolio customer base in terms of ability to repay and that may result in changes in value of underlying collateral. Unique portfolio risk factors may include industry concentration or covariant industry concentrations, geographic concentrations, or trends that may exacerbate losses resulting from economic events which the Bank may not be able to fully diversify out of its portfolio.

        Due to the imprecise nature of the loan loss estimation process and ever changing conditions, these risk attributes may not be adequately captured in data related to the formula-based loan loss components used to determine allocations in the Bank's analysis of the adequacy of the reserve for loan losses. Management, therefore, has established and maintains a non-specific reserve for loan losses. The amount of this measurement imprecision allocation was $3.0 million at December 31, 2001, compared to $2.6 million at December 31, 2000.

        Management increased the measurement imprecision allocation by approximately $0.4 million to $3.0 million at December 31, 2001 primarily based upon concerns over how the overall weakening of the national economy may affect borrowers in its loan portfolio. As 2001 drew to a close, empirical evidence indicated that the nation had entered into a recession. Through December 31, 2001, however, the national economic slowdown had not yet had a significant effect on the overall credit quality or incidence of default within the Bank's loan portfolio. Management, nonetheless, increased the measurement imprecision allocation of the loan loss reserve by $0.4 million, as of December 31, 2001, based upon its belief that some of the Bank's customer base may lag behind larger national firms with respect to the effects of a recession.

        As of December 31, 2001, the reserve for loan losses totaled $18.2 million as compared to $15.5 million at December 31, 2000. Based on the processes described above, management believes that the level of the reserve for loan losses at December 31, 2001 is adequate. The credit quality discount was $0.8 million and $1.4 million for the year-end December 31, 2001 and 2000, respectively.

(6)  BANK PREMISES AND EQUIPMENT

        Bank premises and equipment at December 31, 2001 and 2000 were as follows:

		2001			2000			Estimated Useful Life
		(In Thousands)						(In Years)
Cost:
Land		$	3,011		$	2,711		N/A
Bank Premises			24,222			23,564		39
Leasehold Improvements			7,718			7,750		5 - 15
Furniture and Equipment			31,806			30,598		3 - 7
Total Cost			66,757			64,623
	Accumulated Depreciation		(36,838	)		(34,256	)
Net Bank Premises and Equipment		$	29,919		$	30,367

        Depreciation and amortization expense related to bank premises and equipment was $4.6 million in 2001, $3.9 million in 2000 and $3.4 million in 1999.

57

(7)  DEPOSITS

        The following is a summary of original maturities of time deposits as of December 31, 2001:

Year		Balance of Time Deposits Maturing
		(In Thousands)
2002		$	463,925
2003			69,754
2004			6,609
2005			141
	Total	$	540,429

(8)  BORROWINGS

        Short-term borrowings consist of federal funds purchased, assets sold under repurchase agreements, and treasury tax and loan notes. Information on the amounts outstanding and interest rates of short-term borrowings for each of the three years in the period ended December 31 are as follows:

	2001			2000			1999
	(In Thousands)
Balance outstanding at end of year	$	73,143		$	83,819		$	103,243
Average daily balance outstanding		76,314			106,973			88,215
Maximum balance outstanding at any month end		90,046			140,162			103,248
Weighted average interest rate for the year		2.94	%		5.26	%		4.83	%
Weighted average interest rate at end of year		1.27	%		5.15	%		4.86	%

        The Bank has established two federal funds lines. Borrowings under these lines are classified as federal funds purchased. The Company has established five repurchase agreements with major brokerage firms. Borrowings under these agreements are classified as assets sold under repurchase agreements. At December 31, 2001, the Bank had no advances outstanding under these lines, while at December 31, 2000, there was $19.7 million outstanding. The Bank also utilizes customer repurchase agreements as an additional source of funds. The balance outstanding was $63.9 million and $51.8 million at December 31, 2001 and 2000, respectively.

        Federal Home Loan Bank ("FHLB") borrowings are collateralized by a blanket pledge agreement on the Bank's FHLB stock, certain qualified investment securities, deposits at the Federal Home Loan Bank, and residential mortgages held in the Bank's portfolio. The Bank's borrowing capacity at the Federal Home Loan Bank was approximately $634 million at December 31, 2001. A schedule of the maturity distribution of FHLB advances with the weighted average interest rates at December 31, 2001 and 2000 follows:

	2001				2000
	Amount		Weighted Average Rate		Amount		Weighted Average Rate
	(Dollars In Thousands)
Due in one year or less	$	71,224	2.93	%	$	65,000	6.43	%
Due in greater than one year to five years		98,306	5.45	%		66,224	5.93	%
Due in greater than five years		144,404	4.78	%		60,000	5.04	%
	$	313,934	4.59	%	$	191,224	5.82	%

58

(9)  EARNINGS PER SHARE

        Earnings per share consisted of the following components for 2001, 2000 and 1999:

	Net Income						Weighted Average Shares			Net Income Per Share
	2001		2000		1999		2001	2000	1999	2001		2000		1999
	(In Thousands, Except Per Share Data)
Basic EPS	$	22,052	$	15,190	$	17,031	14,290	14,238	14,214	$	1.54	$	1.07	$	1.20
Effect of dilutive Securities		—		—		—	155	67	152		0.01		0.01		0.01
Diluted EPS	$	22,052	$	15,190	$	17,031	14,445	14,305	14,366	$	1.53	$	1.06	$	1.19

        Options to purchase 104,641, 352,148, and 248,395 shares of common stock as of December 31, 2001, 2000, and 1999, respectively, were excluded from the calculation of diluted EPS because the options' exercise price was greater than the average market price of the common shares for the year and their inclusion would have been anti-dilutive.

(10) INCOME TAXES

        The provision for income taxes is comprised of the following components:

	Years Ended December
	2001		2000		1999
	(In Thousands)
Current Provision
Federal	$	9,461	$	5,934	$	6,419
State		490		193		1,051
TOTAL CURRENT PROVISION		9,951		6,127		7,470
Deferred Provision (Benefit)
Federal		394		278		391
State		140		9		(285	)
Change in Valuation Allowance		0		0		(31	)
TOTAL DEFERRED PROVISION		534		287		75
TOTAL PROVISION	$	10,485	$	6,414	$	7,545

        The income tax provision shown in the consolidated statements of income differs from the expected amount, determined by applying the statutory federal tax rate of 35% to income before income taxes. The following summary reconciles the differences between these amounts.

	Years Ended December
	2001			2000			1999
	(In Thousands)
Computed statutory federal income tax provision	$	11,388		$	7,561		$	8,602
Nontaxable interest, net		(673	)		(742	)		(662	)
State taxes, net of federal tax benefit		409			131			498
Low-income housing credits		(214	)		(214	)		(161	)
Bank Owned Life Insurance		(633	)		(597	)		(563	)
Change in valuation allowance		0			0			(31	)
Other, net		208			275			(138	)
TOTAL PROVISION	$	10,485		$	6,414		$	7,545

59

        The net deferred tax liability that is included in other liabilities amounted to approximately $2.5 million and $0.7 million at December 31, 2001 and 2000, respectively. The tax-effected components of the net deferred tax liability at December 31, 2001 and 2000 are as follows:

		Years Ended December
		2001			2000
		(In Thousands)
Reserve for loan losses		$	6,159		$	5,293
Tax depreciation			475			994
Mark to market adjustment			(6,479	)		(5,224	)
Accrued expenses not deducted for tax purposes			919			767
Deferred income			(9	)		19
State taxes			202			342
Securities and derivatives fair value adjustment			(3,502	)		(2,182	)
Other, net			(313	)		(702	)
	TOTAL DEFERRED TAX (LIABILITY) ASSET	$	(2,548	)	$	(693	)

(11) EMPLOYEE BENEFITS

PENSION

        The Bank has a noncontributory pension plan that covers substantially all employees of the Bank. The plan provides pension benefits that are based upon the employee's highest base annual salary during five consecutive years of employment. The Bank's funding policy, prior to January 1, 1997 was to contribute an amount within the range permitted by applicable regulations on an annual basis. In 1997, the Bank's pension plan joined a multiple employer structure under the Financial Institutions Retirement Fund ("the Fund"). All plan assets were contributed to the Fund. The Bank records required contributions as pension expense. No contributions were required in 2001, 2000 or 1999.

POST-RETIREMENT BENEFITS

        Employees retiring from the Bank on or after attaining age 65 and who have rendered at least 10 years of continuous service to the Bank are entitled to have a portion of the premium for post-retirement health care benefits and a $5,000 death benefit paid by the Bank. These benefits are subject to deductibles, co-payment provisions and other limitations. The Bank may amend or change these benefits periodically.

        Effective January 1, 1993, the Company adopted SFAS No. 106, "Employers' Accounting for Post-Retirement Benefits Other Than Pensions," which requires the recognition of post-retirement benefits over the service lives of the employees rather than on a cash basis. The Bank elected to recognize its accumulated benefit obligation of approximately $678,000 at January 1, 1993 prospectively on a straight-line basis over the average life expectancy of current retirees, which is anticipated to be less than 20 years.

        Post-retirement benefit expense was $152,000, $79,000 and $107,000 in 2001, 2000 and 1999, respectively. The total cost of all post-retirement benefits charged to income was $200,000, $148,000 and $73,000 in 2001, 2000, and 1999, respectively. The increase in 2001 is attributable to the plan amendment, which changed the eligibility requirement for medical benefits from age 65 with 20 years of service to age 65 with 10 years of service.

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        The following table illustrates the status of the post-retirement benefit plan at December 31 for the years presented:

	Post-Retirement Benefits
	2001			2000			1999
	(Dollar Amounts In Thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	640		$	770		$	774
Service cost		53			14			14
Interest cost		60			43			53
Other		253			(110	)		0
Benefits paid		(79	)		(77	)		(71	)
Benefit obligation at end of year		927			640			770
Funded Status		(927	)		(640	)		(770	)
Unrecognized net actuarial gain		0			(143	)		(45	)
Unrecognized net transition liability		368			401			435
Unrecognized prior service cost		103			—			—
Accrued benefit cost	$	(456	)	$	(382	)	$	(380	)
Weighted-average assumptions
Discount rate		7.00	%		7.00	%		7.00	%
Expected return on plan assets		—			—			—
Rate of compensation increase		—			—			—
Components of net periodic benefit cost
Service cost	$	53		$	14		$	14
Interest cost		59			43			53
Expected return on plan assets		—			—			—
Amortization of transition obligation		34			34			34
Amortization of prior service cost		6			—			—
Recognized net actuarial (gain) loss		0			(12	)		6
Net periodic benefit cost	$	152		$	79		$	107

OTHER EMPLOYEE BENEFITS

        In 1994, the Bank implemented an incentive compensation plan in which senior management, officers, and non-officer employees are eligible to participate at varying levels. The plan provides for awards based upon the attainment of a combination of Bank, divisional, and individual performance objectives. The expense for this plan amounted to $2.6 million, $1.6 million and $1.4 million in 2001, 2000 and 1999, respectively.

        Also, in 1994, the Bank amended its Profit Sharing Plan by converting it to an Employee Savings Plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the Employee Savings Plan, participating employees may defer a portion of their pre-tax earnings, not to exceed the Internal Revenue Service annual contribution limits. The Bank matches 50% of each employee's contributions up to 6% of the employee's earnings. In 2001, 2000 and 1999, the expense for this plan amounted to $526,000, $452,000 and $393,000, respectively.

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        In 1998 and 1999 the Bank entered into agreements to provide post-retirement benefits to two executive officers. The Bank has established and funded Rabbi Trusts to aid in its accumulation of amounts necessary to satisfy the contractual liability to pay such benefits. These agreements provide for the Bank to pay all benefits thereunder from its general assets, and the establishments of these trust funds does not reduce or otherwise affect the Bank's continuing liability to pay benefits from such assets except that the Bank's liability shall be offset by actual benefit payments made from the Trusts. The related trust assets totaled $1,150,000 and $479,000 at December 31, 2001 and 2000, respectively. The liability associated with these agreements is being recorded over the remaining service period of the executive officers. At December 31, 2001 and 2000 the Bank's liability was $660,000 and $388,000, respectively. The amount of expense recognized related to this plan amounted to $272,000 in 2001 and 2000 and $92,000 in 1999.

        The Bank maintains a supplemental retirement plan for six current and two former executive officers. In connection with this plan, the Bank has purchased split dollar life insurance policies for each of the individuals. The Bank's cash surrender value of the insurance policies as of December 31, 2001 and 2000 was $2.4 million and $2.0 million respectively. The impact of this plan on the income statement was an expense of $45,000 in 2001 and $10,000 in 2000 and a benefit of $57,000 for 1999.

        In 1998, the Bank purchased $30.0 million of Bank Owned Life Insurance. The value of this life insurance was $35.2 million and $33.4 million at December 31, 2001 and 2000, respectively, and were recorded in other assets. The Bank recorded income from Bank Owned Life Insurance of $1.8 million, $1.7 million and $1.6 million in 2001, 2000 and 1999, respectively.

(12) OTHER NON-INTEREST EXPENSES

        Included in other non-interest expenses for each of the three years in the period ended December 31, 2001, 2000 and 1999 were the following:

		2001		2000		1999
		(In Thousands)
Advertising		$	1,598	$	1,549	$	1,197
Consulting fees			1,246		704		732
Legal fees—loan collection			201		511		357
Legal fees—other			334		725		284
FDIC assessment			294		272		140
Office supplies and printing			828		788		457
Postage expense			1,045		765		679
Telephone expense			1,752		1,330		785
Other non-interest expenses			8,420		6,519		5,674
	Total	$	15,718	$	13,163	$	10,305

(13) COMMON STOCK PURCHASE AND OPTION PLANS

        The Company maintains a Dividend Reinvestment and Stock Purchase Plan. Under the terms of the plan, stockholders may elect to have cash dividends reinvested in newly issued shares of common stock at a 5% discount from the market price on the date of the dividend payment. Stockholders also have the option of purchasing additional new shares, at the full market price, up to the aggregate amount of dividends payable to the stockholder during the calendar year.

        The Company has three stock option plans; the Amended and Restated 1987 Incentive Stock Option Plan ("The 1987 Plan"), the 1996 Non-employee Directors' Stock Option Plan ("The 1996 Plan") and the 1997 Employee Stock Option Plan ("The 1997 Plan"). The Company accounts for these plans under APB Opinion No. 25, under which no compensation cost has been recognized. Had compensation cost for these plans been determined consistent with

62

SFAS No. 123, the Company's net income and earnings per share would have been reduced to the following pro forma amounts:

		2001		2000		1999
Net Income:	As Reported (000's)	$	22,052	$	15,190	$	17,031
	Pro Forma (000's)	$	21,757	$	14,974	$	16,809
Basic EPS:	As Reported	$	1.54	$	1.07	$	1.20
	Pro Forma	$	1.52	$	1.05	$	1.18
Diluted EPS:	As Reported	$	1.53	$	1.06	$	1.19
	Pro Forma	$	1.51	$	1.05	$	1.17

        Because the SFAS No. 123 method of accounting has not been applied to options granted prior to January 1, 1995, the resulting pro forma compensation cost may not be representative of that to be expected in future years.

        The Company may grant options for up to 1,100,000, 300,000 and 800,000 shares under the 1997, 1996 and 1987 plans respectively. The Company has cumulatively granted options from each plan, net of cancellations, on 564,452, 167,000 and 586,813 shares, respectively, through December 31, 2001.

        No shares were available for grant under the 1987 Plan due to the plan's expiration in 1997. Under each plan the option exercise price equals the market price on date of grant. All options vest between six months and two years and all expire between 2001 and 2011.

        A summary of the status of the Company's three stock option plans at December 31, 2001 and December 31, 2000 and changes during the years then ended is presented in the table and narrative below:

	2001				2000				1999
	Shares		Wtd Avg. Ex. Price		Shares		Wtd Avg. Ex. Price		Shares		Wtd Avg. Ex. Price
Balance, January 1	678,027		$	12.48	683,561		$	11.73	610,457		$	11.40
Granted	157,350		$	19.68	161,525		$	11.86	152,000		$	12.55
Exercised	(77,064	)	$	9.38	(105,459	)	$	5.64	(37,530	)	$	6.27
Canceled	(8,723	)	$	12.07	(61,600	)	$	14.35	(41,366	)	$	14.76
Balance, December 31	749,590		$	14.31	678,027		$	12.48	683,561		$	11.73
Exercisable at December 31	500,191				444,919				466,192
Weighted average fair value of options granted			$	5.42			$	3.08			$	2.70

        At December 31, 2001, 131,282 of the 749,590 options outstanding have exercise prices between $7.31 and $9.38, with a weighted average exercise price of $8.34 and a weighted average remaining contractual life of 4.47 years. Of these options, 131,282 are exercisable; their weighted average exercise price is $8.34. In addition, 300,758 options have exercise prices between $10.25 and $15.10, with a weighted average exercise price of $12.21 and a weighted average remaining contractual life of 8.34 years. Of these options, 194,709 are exercisable; their weighted average exercise price is $12.30. The remaining 317,550 options have exercise prices between $17.25 and $20.13, with a weighted average exercise price of $18.77 and a weighted average remaining contractual life of 8.05 years. Of these options, 174,200 are exercisable; their weighted average exercise price is $17.66.

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        The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants under the 1997 and 1996 plans:

		1997 Plan		1996 Plan
Risk Free Interest Rate	2001	4.45	%	4.98	%
	2000	4.94	%	6.27	%
	1999	6.33	%	5.02	%
Expected Dividend Yields	2001	2.34	%	3.12	%
	2000	3.36	%	3.48	%
	1999	3.22	%	2.99	%
Expected Lives	2001	4 years		4 years
	2000	4 years		4 years
	1999	4 years		4 years
Expected Volatility	2001	35	%	35	%
	2000	35	%	35	%
	1999	25	%	25	%

(14) COMMITMENTS AND CONTINGENCIES

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

        The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the consolidated balance sheets. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

        Off-balance sheet financial instruments whose contractual amounts present credit risk include the following at December 31, 2001 and 2000.

		2001		2000
		(In Thousands)
Commitments to extend credit:
	Fixed Rate	$	22,850	$	32,092
	Adjustable Rate		18,015		10,705
Unused portion of existing credit lines			214,196		189,662
Unadvanced construction loans			24,962		25,214
Standby letters of credit			8,314		6,496
Interest rate swaps—notional value			125,000		110,000

        The Company's exposure to credit loss in the event of non-performance by the other party for commitments to extend credit and standby letters of credit is represented by the contractual amounts of those instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. The Bank evaluates each customer's creditworthiness on an individual basis. The amount of collateral obtained upon extension of the credit is based upon management's credit evaluation of the customer. Collateral varies but may include accounts receivable; inventory; property, plant and equipment and income-producing commercial real estate. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

        Standby letters of credit are conditional commitments issued by the Bank to guarantee performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending

64

loans to customers. The collateral supporting those commitments is essentially the same as for other commitments. Most guarantees extend for one year.

        As a component of its asset/liability management activities intended to control interest rate exposure, the Bank has entered into certain off-balance sheet hedging transactions. Interest rate swap agreements represent transactions, which involve the exchange of fixed and floating rate interest payment obligations without the exchange of the underlying principal amounts. The weighted average fixed payment rates received were 7.61% and 7.81% at December 31, 2001 and 2000, respectively, while the weighted average rates of variable interest payments paid were 4.31% and 7.34% at December 31, 2001 and 2000, respectively. As a result of these interest rate swaps, the Bank realized income of $1.7 million, $0.4 million and $0.1 million for the years ended December 31, 2001, 2000 and 1999, respectively. There was no impact on income as a result of hedge ineffectiveness associated with interest rate swaps.

        Entering into interest rate swap agreements involves both the credit risk of dealing with counterparties and their ability to meet the terms of the contracts and interest rate risk. While notional principal amounts are generally used to express the volume of these transactions, the amounts potentially subject to credit risk are small due to the structure of the agreements. The Bank is a direct party to these agreements that provide for net settlement between the Bank and the counterparty on a monthly, quarterly or semiannual basis. Should the counterparty fail to honor the agreement, the Bank's credit exposure is limited to the net settlement amount. The Bank had net receivables on interest rate swaps of $1.3 million and $1.6 million at December 31, 2001 and 2000, respectively.

LEASES

        The Company leased equipment, office space and certain branch locations under non-cancelable operating leases. The following is a schedule of minimum future lease commitments under such leases as of December 31, 2001:

Year		Lease Commitments
		(In Thousands)
2002		$	2,432
2003			2,430
2004			2,314
2005			1,978
2006			1,616
	Thereafter		7,566
Total future minimum rentals		$	18,336

        Rent expense incurred under operating leases was approximately $2.5 million in 2001, $2.1 million in 2000 and $1.7 million in 1999. Renewal options ranging from 3 to 10 years exist for several of these leases. The Company has entered into lease agreements with related third parties on substantially the same terms as those prevailing at the time for comparable transactions with unrelated parties. Rent expense incurred under related party leases was approximately $0.6 million in 2001 and 2000 and $0.5 million in 1999.

OTHER CONTINGENCIES

        At December 31, 2001, there were lawsuits pending that arose in the ordinary course of business. Management has reviewed these actions with legal counsel and has taken into consideration the view of counsel as to the outcome of the litigation. In the opinion of management, final disposition of these lawsuits is not expected to have a material adverse effect on the Company's financial position or results of operations.

        The Bank is required to maintain certain reserve requirements of vault cash and/or deposits with the Federal Reserve Bank of Boston. The amount of this reserve requirement included in cash and due from banks, was $4.5 million and $33.0 million at December 31, 2001 and 2000, respectively.

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        On October 16, 2001 and October 1, 2001, the Company entered into master commitments to deliver or sell $25.0 million (of which $12.5 million is mandatory) and $40.0 million (all of which is optional) of residential mortgage loans to federal agencies on or before September 30, 2002. As of December 31, 2001, the unfulfilled portion that remained to be delivered under the $25.0 million commitment was approximately $7.3 million. The unfulfilled portion under the $40.0 million was approximately $22.6 million.

(15) CORPORATION-OBLIGATED MANDATORILY REDEEMABLE TRUST PREFERRED SECURITIES

        In 1997, Independent Capital Trust I was formed for the purpose of issuing trust preferred securities (the "Trust I Preferred Securities") and investing the proceeds of the sale of these securities in $29.64 million of 9.28% junior subordinated debentures issued by the Company. A total of $28.75 million of 9.28% Trust I Preferred Securities were issued by Trust I and are scheduled to mature in 2027, callable at the option of the Company on or after May 19, 2002. Distributions on these securities are payable quarterly in arrears on the last day of March, June, September and December, such distributions can be deferred at the option of the Company for up to five years. The Trust I Preferred Securities can be prepaid in whole or in part on or after May 19, 2002 at a redemption price equal to $25 per Trust I Preferred Security plus accumulated but unpaid distributions thereon to the date of the redemption. In 1997, Trust I also issued $0.9 million in common stock to the Company.

        In 2000, Independent Capital Trust II was formed for the purpose of issuing trust preferred securities (the "Trust II Preferred Securities") and investing the proceeds of the sale of these securities in $25.8 million of 11% junior subordinated debentures issued by the Company. A total of $25 million of 11% Trust II Preferred Securities were issued by Trust II and are scheduled to mature in 2030, callable at the option of the Company on or after January 31, 2002. Distributions on these securities are payable quarterly in arrears on the last day of March, June, September and December, such distributions can be deferred at the option of the Company for up to five years. The Trust II Preferred Securities can be prepaid in whole or in part on or after January 31, 2002 at a redemption price of $25 per Trust II Preferred Security plus accumulated but unpaid distributions thereon to the date of the redemption. In 2000, Trust II also issued $0.8 million in common stock to the Company.

        On December 11, 2001 Independent Capital Trust III was formed for the purpose of issuing trust preferred securities (the "Trust III Preferred Securities") and investing the proceeds of the sale of these securities in $25.8 million of 8.625% junior subordinated debentures issued by the Company. A total of $25 million of 8.625% Trust III Preferred Securities were issued by Trust III and are scheduled to mature in 2031, callable at the option of the Company on or after December 31, 2006. Distributions on these securities are payable quarterly in arrears on the last day of March, June, September and December, such distributions can be deferred at the option of the Company for up to five years. The Trust III Preferred Securities can be prepaid in whole or in part on or after December 31, 2006 at a redemption price equal to $25 per Trust III Preferred Security plus accumulated but unpaid distributions thereon to the date of the redemption. On December 11, 2001, Trust III also issued $0.8 million in common stock to the Company.

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        The trust preferred securities collectively (Trust I, Trust II and Trust III Preferred Securities), are presented in the consolidated balance sheets of the Company entitled " Corporation-Obligated Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures of the Corporation." The Company records distributions payable on the trust preferred securities as a Minority Interest Expense in its consolidated statements of income. In 2001, 2000 and 1999, the Company paid $5.7 million, $5.3 million and $2.7 million, respectively, of trust preferred security distributions. The cost of issuance of the trust preferred securities are being amortized over the life of the securities on a straight-line basis. Additional costs associated with issuance are added on a periodic basis. The amortized costs and the amortization for the years ended December 31, 2001, 2000 and 1999, as well as the costs at issuance were as follows:

ISSUANCE COSTS
(Dollars in Thousands)

	2001				2000				1999				Balance At Issuance
	Balance		Amortization		Balance		Amortization		Balance		Amortization
Trust I	$	1,207	$	81	$	1,254	$	72	$	1,301	$	72	$	1,420
Trust II		1,139		44		1,178		58		—		—		1,230
Trust III		1,075		3		—		—		—		—		1,077
	$	3,421	$	128	$	2,432	$	130	$	1,301	$	72	$	3,727

        The Company unconditionally guarantees all of Trust I, Trust II, and Trust III obligations under the trust preferred securities.

(16) REGULATORY CAPITAL REQUIREMENTS

        The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company's and the Bank's assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

        Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Total and Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2001 that the Company and the Bank met all capital adequacy requirements to which they are subject.

        As of December 31, 2001, the most recent notification from the Federal Deposit Insurance Corporation, and the Commonwealth of Massachusetts relating to the Bank, categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized an insured depository institution must maintain minimum Total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank's category.

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        The Company's and the Bank's actual capital amounts and ratios are also presented in the table.

														To Be Well Capitalized Under Prompt Corrective Action Provisions
								For Capital Adequacy Purposes
			Actual
As of December 31, 2001:
			Amount		Ratio			Amount			Ratio			Amount			Ratio
			(Dollars In Thousands)
Company: (consolidated)
	Total capital (to risk weighted assets)		$	188,846	12.96	%	>	$	116,572	>	8.0	%			N/A		N/A
		Tier 1 capital (to risk weighted assets)		134,671	9.24		>		58,286	>	4.0				N/A		N/A
		Tier 1 capital (to average assets)		134,671	6.31		>		86,868	>	4.0				N/A		N/A
Bank:
	Total capital (to risk weighted assets)		$	157,893	10.84	%	>	$	116,525	>	8.0	%	>	$	145,656	>	10.0	%
		Tier 1 capital (to risk weighted assets)		139,740	9.59		>		58,262	>	4.0		>		87,394	>	6.0
		Tier 1 capital (to average assets)		139,740	6.55		>		85,274	>	4.0		>		106,592	>	5.0
As of December 31, 2000:
Company: (consolidated)
	Total capital (to risk weighted assets)		$	141,864	10.97	%	>	$	103,478	>	8.0	%			N/A		N/A
		Tier 1 capital (to risk weighted assets)		109,946	8.50		>		51,739	>	4.0				N/A		N/A
		Tier 1 capital (to average assets)		109,946	5.86		>		75,070	>	4.0				N/A		N/A
Bank:
	Total capital (to risk weighted assets)		$	138,713	10.70	%	>	$	103,727	>	8.0	%	>	$	129,658	>	10.0	%
		Tier 1 capital (to risk weighted assets)		123,257	9.51		>		51,863	>	4.0		>		77,795	>	6.0
		Tier 1 capital (to average assets)		123,257	6.57		>		75,068	>	4.0		>		93,835	>	5.0

(17) SEGMENT REPORTING

        The Company has identified its reportable operating business segment as community banking, based on how the business is strategically managed. The Company's community banking business segment consists of commercial banking, retail banking and investment management. The community banking business segment is managed as a single strategic unit which derives its revenues from a wide range of banking services, including lending activities, acceptance of demand, savings and time deposits, trust and investment management and mortgage servicing income from investors. The Company does not have a single external customer from which it derives ten percent or more of its revenues and operates in Southeastern Massachusetts.

        Non-reportable operating segments of the Company's operations that do not have similar characteristics to the community banking operations and do not meet the quantitative thresholds requiring disclosure, are included in the Other category in the disclosure of business segments below. These non-reportable segments include the Parent Company (Note19), Independent Capital Trust I, Independent Capital Trust II and Independent Capital Trust III financial information (Note15).

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        Information about reportable segments, and reconciliation of such information to the consolidated financial statements as of and for the years ended December 31, follows:

		Community Banking		Other		Elimination			Consolidated
December 31, 2001
	Net Interest Income	$	90,494	$	97	$	—		$	90,591
	Non-Interest Income		21,278		25,669		(25,669	)		21,278
	Net Income		25,498		22,223		(25,669	)		22,052
	Total Assets		2,198,597		295,018		(294,427	)		2,199,188

		Community Banking		Other		Elimination			Consolidated
December 31, 2000
	Net Interest Income	$	70,689	$	1,458	$	—		$	72,147
	Non-Interest Income		16,418		18,021		(18,021	)		16,418
	Net Income		17,861		15,350		(18,021	)		15,190
	Total Assets		1,949,239		224,817		(224,080	)		1,949,976

		Community Banking		Other		Elimination			Consolidated
December 31, 1999
	Net Interest Income	$	61,086	$	742	$	—		$	61,828
	Non-Interest Income		14,792		18,890		(18,889	)		14,793
	Net Income		18,806		17,114		(18,889	)		17,031
	Total Assets		1,586,797		158,841		(155,582	)		1,590,056

Non-eliminating amounts included in the Other categories are as follows:

		2001			2000			1999
Net Interest Income
	Parent Company	$	(5,612	)	$	(3,892	)	$	(2,009	)
	Independent Capital Trust I		2,751			2,751			2,751
	Independent Capital Trust II		2,835			2,599			—
	Independent Capital Trust III		123			—			—
	Total Net Interest Income	$	97		$	1,458		$	742
Parent Company operating expenses, net of miscellaneous income		$	25,475		$	17,831		$	18,634
Income Taxes not allocated to segments Parent Company		$	(2,316	)	$	(1,380	)	$	(406	)

        The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on profit or loss from operations before income taxes not including nonrecurring gains or losses.

        The Company derives a majority of its revenues from interest income and the chief operating decision-maker relies primarily on net interest revenue to assess the performance of the segment and make decisions about resources to be allocated to the segment. Therefore, the segment is reported above using net interest income.

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(18) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	2001		2000		2001		2000		2001		2000		2001		2000
	(Dollars in Thousands, Except Share and Per Share Data)
INTEREST INCOME	$	35,708	$	29,288	$	35,669	$	30,012	$	36,973	$	32,943	$	36,719	$	35,323
INTEREST EXPENSE		15,410		12,750		14,095		13,172		13,285		14,283		11,688		15,214
NET INTEREST INCOME	$	20,298	$	16,538	$	21,574	$	16,840	$	23,688	$	18,660	$	25,031	$	20,109
PROVISION FOR LOAN LOSSES		650		717		864		451		1,273		450		1,832		650
NON-INTEREST INCOME		4,441		3,582		5,215		3,898		4,742		4,421		5,452		4,354
NET GAIN ON SECURITIES		1,149		51		53		112		226		—		—		—
NON-INTEREST EXPENSES		16,018		12,227		17,425		12,791		17,906		15,223		17,698		15,523
SPECIAL CHARGES		—		—		—		2,998		—		545		—		65
MINORITY INTEREST		1,383		1,149		1,383		1,391		1,391		1,390		1,509		1,390
PROVISION FOR INCOME TAXES		2,460		1,847		2,251		979		2,619		1,587		3,155		2,002
NET INCOME	$	5,377	$	4,231	$	4,919	$	2,240	$	5,467	$	3,886	$	6,289	$	4,833
BASIC EARNINGS PER SHARE	$	0.38	$	0.30	$	0.34	$	0.16	$	0.38	$	0.27	$	0.44	$	0.34
DILUTED EARNINGS PER SHARE	$	0.37	$	0.30	$	0.34	$	0.16	$	0.38	$	0.27	$	0.43	$	0.34
Weighted average common shares (Basic)		14,261,015		14,215,268		14,272,386		14,239,037		14,300,654		14,248,881		14,323,404		14,253,194
Common stock equivalents		108,016		76,053		148,556		62,144		160,418		77,123		187,455		53,862
Weighted average common shares (Diluted)		14,369,031		14,291,321		14,420,942		14,301,181		14,461,072		14,326,004		14,510,859		14,307,056

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(19) PARENT COMPANY FINANCIAL STATEMENTS

        Condensed financial information relative to the Company's balance sheets at December 31, 2001 and 2000 and the related statements of income and cash flows for the years ended December 31, 2001, 2000, and 1999 are presented below.

BALANCE SHEETS

			December 31,
			2001			2000
			(In Thousands)
Assets:
	Cash*		$	30,166		$	2,423
	Investments in subsidiaries*			182,945			166,237
	Other investments			0			0
	Other assets			590			738
		Total assets	$	213,701		$	169,398
Liabilities and Stockholders' Equity:
	Dividends Payable		$	1,576		$	1,425
	Junior Subordinated Debt			81,317			55,420
	Deferred Stock Issuance Costs			(3,421	)		(2,432	)
	Accrued Federal Income Taxes			965			269
	Accrued State Income Taxes			3			4
		Total liabilities		80,440			54,686
Stockholders' equity				133,261			114,712
		Total liabilities and stockholders' equity	$	213,701		$	169,398

*

eliminated in consolidation

STATEMENTS OF INCOME

			Years Ended December 31,
			2001			2000			1999
			(In Thousands)
Income:
	Dividend received from subsidiaries		$	11,875		$	10,238		$	9,279
	Interest income			97			1,458			743
		Total income		11,972			11,696			10,022
Expenses:
	Interest expense			5,709			5,349			2,751
	Other expenses			322			320			255
		Total expenses		6,031			5,669			3,006
Income before income taxes and equity in undistributed income of subsidiaries				5,941			6,027			7,016
Equity in undistributed income of subsidiaries				13,795			7,783			9,609
Income Tax Provision				(2,316	)		(1,380	)		406
Net income			$	22,052		$	15,190		$	17,031

71

STATEMENTS OF CASH FLOWS

				Years Ended December 31,
				2001			2000			1999
				(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	22,052		$	15,190		$	17,031
	ADJUSTMENTS TO RECONCILE NET INCOME TO CASH PROVIDED FROM OPERATING ACTIVITIES:
		Amortization			277			278			220
		Deferred Issuance Costs on Trust Preferred Securities			(1,117	)		(1,254	)		(31	)
		(Increase)Decrease in other assets			(24	)		3			9
		Increase(Decrease) in other liabilities			852			(80	)		353
		Equity in income of subsidiaries			(13,794	)		(7,783	)		(9,609	)
		TOTAL ADJUSTMENTS			(13,806	)		(8,836	)		(9,058	)
			NET CASH PROVIDED FROM OPERATING ACTIVITIES		8,246			6,354			7,973
CASH FLOWS FROM INVESTING ACTIVITIES:
	Downstream of Capital to RTC							(43,068	)		—
	Capital Investment in subsidiary—Independent Capital Trust II							(773	)		—
	Capital Investment in subsidiary—Independent Capital Trust III				(773	)		—			—
		NET CASH USED IN INVESTING ACTIVITIES			(773	)		(43,841	)		—
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from stock issued and stock options exercised				647			311			236
	Issuance of junior subordinated debentures				25,773			25,773			—
	Treasury Stock Repuchase				—			—			(4,836	)
	Dividends paid				(6,150	)		(5,701	)		(5,706	)
		NET CASH PROVIDED FROM (USED IN) FINANCING ACTIVITIES			20,270			20,383			(10,306	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					27,743			(17,104	)		(2,333	)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR					2,423			19,528			21,861
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR				$	30,166		$	2,424		$	19,528
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
	Income taxes			$	383		$	27		$	81
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
	Issuance of shares from Treasury Stock for the exercise of stock options				1,126			1,183			540

(20) SUBSEQUENT EVENTS

Redemption of Trust II Securities

        The Trust II, scheduled to mature in 2030, were called by the Company on January 31, 2002 at a redemption price of $25 per trust preferred security plus accumulated but unpaid distributions. The Company used the net proceeds from the sale of the debentures issued in December of 2001 to fund this redemption. The unamortized issuance costs of $1.1 million associated with the redemption of the Trust II securities were charged to surplus net of tax and will reduce the net income available to common shareholders in 2002.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        None

72

PART III

Item 10.    Directors and Executive Officers of the Registrant

        The information required herein is incorporated by reference from the Company's proxy statement (the "Definitive Proxy Statement") relating to its April 11, 2002, Annual Meeting of Stockholders that will be filed with the Commission within 120 days following the fiscal year end December 31, 2001.

Item 11.    Executive Compensation

        The information required herein is incorporated by reference to "Executive Compensation" in the Definitive Proxy Statement.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

        The information required herein is incorporated by reference to "Beneficial Ownership of Common Stock by Certain Owners and Management" in the Definitive Proxy Statement.

Item 13.    Certain Relationships and Related Transactions

        The information required herein is incorporated by reference to "Executive Compensation—Certain Relationships and Related Transactions" in the Definitive Proxy Statement.

PART IV

Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)

Documents Filed as Part of this Report

(1)

The following financial statements are incorporated herein by reference from Item 8 hereto:

Report of Independent Public Accountants

Consolidated balance sheets as of December 31, 2001 and 2000.

Consolidated statements of income for each of the years in the three-year period ended December 31, 2001.

Consolidated statements of stockholders' equity for each of the years in the three-year period ended December 31, 2001.

Consolidated statements of comprehensive income for each of the years in the three-year period ended December 31, 2001

Consolidated statements of cash flows for each of the years in the three-year period ended December 31, 2001.

Notes to Consolidated Financial Statements

(2)

All schedules for which provision is made in the applicable accounting regulations of the SEC are omitted because of the absence of conditions under which they are required or because the required information is included in the consolidated financial statements and related notes thereto.



(3)

The following exhibits are filed as part of this Form 10-K, and this list includes the Exhibit Index.

73

EXHIBIT INDEX

Exhibit Index
3.	(i)	Restated Articles of Organization, as amended to date, incorporated by reference to the Company's annual report on Form 10-K for the year ended December 31, 1993.
3.	(ii)	Bylaws of the Company, as amended to date, incorporated by reference to the Company's annual report on Form 10-K for the year ended December 31, 2000. On September 14, 2000, section 2 of the Company's By-Laws were amended so as to require an agreement of at least two thirds (rather than a majority) of shareholders to call a special shareholders meeting.
4.1		Specimen Common Stock Certificate, incorporated by reference to the Company's annual report on Form 10-K for the year ended December 31, 1992.
4.2		Specimen Preferred Stock Purchase Rights Certificate, incorporated by reference to the Company's Form 8-A Registration Statement filed by the Company on November 5, 2001.
4.3		Amended and Restated Independent Bank Corp. 1987 Incentive Stock Option Plan ("Stock Option Plan"). (Management contract under Item 601(10)(iii)(A)). Incorporated by reference to the Company's annual report on Form 10-K for the year ended December 31, 1994.
4.4		Independent Bank Corp. 1996 Non-Employee Directors' Stock Option Plan (Management contract under Item 901(10)(iii)(A)). Incorporated by reference to the Company's Definitive Proxy Statement for the 1996 Annual Meeting of Stockholders filed with the Commission on March 19, 1996.
4.5		Independent Bank Corp. 1997 Employee Stock Option Plan (Management contract under Item 601 (10)(iii)(A)). Incorporated by reference to the Company's Definitive Proxy Statement for the 1997 Annual Meeting of Stockholders filed with the Commission on March 20, 1997.
4.7		Renewal Rights Agreement noted as of September 14, 2000 by and between the Company and Rockland, as Rights Agent (Exhibit to Form 8-K filed on October 23, 2000). Incorporated by reference to the Company's Definitive Proxy Statement for the 1997 Annual Meeting of Stockholders filed with the Commission on March 20, 1997.
10.1		Amendment No. 1 to Third Amended and Restated Employment Agreement by and among the Company, Rockland and Douglas H. Philipsen, dated June 25, 1997 ("Philipsen Employment Agreement"). (Management contract under Item 601(10)(iii)(A)). Incorporated by reference to the Company's annual report on Form 10-K for the year ended December 31, 1998.
10.2		Amendment No. 1 to Second Amended and Restated Employment Agreement by and between Rockland Trust Company and Richard F. Driscoll, dated January 19, 1996 (the "Driscoll Agreement"). (Management contract under Item 601 (10)(iii)(A)). Incorporated by reference to the Company's annual report on Form 10-K for the year ended December 31, 1998. Employment Agreements by and between Rockland Trust Company and Edward H. Seksay, Ferdinand T. Kelley, Denis K. Sheahan and Raymond G. Fuerschbach, respectively, are filed herewith.
10.3		Independent Bank Corp. Deferred Compensation Program for Directors (restated as amended as of December 1, 2000). Incorporated by to the Company's annual report on Form 10-K for the year ended December 31, 2000.
10.4		Master Securities Repurchase Agreement, incorporated by reference to Form S-1 Registration Statement filed by the Company on September 18, 1992.
10.5		Purchase and Assumption Agreement, dated as of September 27, 1999, by and between Rockland Trust Company and Fleet Financial Exhibit to Form 8-K filed on October 1, 1999.
13		Annual Report to Stockholders.
21		Subsidiaries of the Registrant, incorporated by reference to Form S-3 Registration Statement filed by the Company on October 28, 1999.
23		Consent of Independent Public Accountants.

(b)

One report on Form 8-K was filed by the Company in 2001; on December 19 related to redemption of 1,000,000 of Independent Capital Trust II Trust Preferred Securities.

(c)

See (a)(3) above for all exhibits filed herewith and the Exhibit Index.

(d)

All schedules are omitted as the required information is not applicable or the information is presented in the Consolidated Financial Statements or related notes.

74

SIGNATURES

        Pursuant to the requirements of Section 13 or 8(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INDEPENDENT BANK CORP.
February 14, 2002	By:	/s/  DOUGLAS H. PHILIPSEN Douglas H. Philipsen Chairman of the Board, Chief Executive Officer and President

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Each person whose signature appears below hereby makes, constitutes and appoints Douglas H. Philipsen and Denis K. Sheahan and each of them acting individually, his true and lawful attorneys, with full power to sign for such person and in such person's name and capacity indicated below any and all amendments to this Form 10-K, hereby ratifying and confirming such person's signature as it may be signed by said attorneys to any and all amendments.

Name	Title	Date
/s/  RICHARD S. ANDERSON Richard S. Anderson	Director	February 14, 2002
/s/  PAUL CLARK Paul Clark	Director	February 14, 2002
/s/  ROBERT L. CUSHING Robert L. Cushing	Director	February 14, 2002
/s/  ALFRED L. DONOVAN Alfred L. Donovan	Director	February 14, 2002
/s/  E. WINTHROP HALL E. Winthrop Hall	Director	February 14, 2002
/s/  KEVIN J. JONES Kevin J. Jones	Director	February 14, 2002
/s/  RICHARD H. SGARZI Richard H. Sgarzi	Director	February 14, 2002

75

/s/  WILLIAM J. SPENCE William J. Spence	Director	February 14, 2002
/s/  JOHN H. SPURR, JR. John H. Spurr, Jr.	Director	February 14, 2002
/s/  ROBERT D. SULLIVAN Robert D. Sullivan	Director	February 14, 2002
/s/  THOMAS J. TEUTEN Thomas J. Teuten	Director	February 14, 2002
/s/  DENIS K. SHEAHAN Denis K. Sheahan	Chief Financial Officer and Treasurer (principal financial and accounting officer)	February 14, 2002

76

QuickLinks

DOCUMENTS INCORPORATED BY REFERENCE
INDEPENDENT BANK CORP.
2001 ANNUAL REPORT ON FORM 10-K
SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Loan Portfolio Composition
Loan Maturity Schedule
Amortized Cost of Securities Held to Maturity
Fair Value of Securities Available for Sale
Average Balances of Bank's Deposits
Large Certificate of Deposit Maturity Schedule (In Millions)
Borrowings
RESULTS OF OPERATIONS
Volume Rate Analysis
Reserve For Loan Losses
Non-Interest Income
Non-Interest Expense
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, and 1999
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ISSUANCE COSTS (Dollars in Thousands)
BALANCE SHEETS
STATEMENTS OF INCOME
STATEMENTS OF CASH FLOWS
SIGNATURES

EX-10.2

                                                                    EXHIBIT 10.2


                              EMPLOYMENT AGREEMENT


Agreement, dated and effective as of October 4, 2000 by and between Rockland
Trust Company, a Massachusetts trust company (the "Company") and Edward H.
Seksay of Cohasset, Massachusetts (the "Executive), (the "Employment
Agreement").

                               W I T N E S S E T H

         WHEREAS, the Executive is willing to serve in such executive capacity
for the Company as is hereinafter described and the Company desires to retain
the Executive in such capacity;

         NOW THEREFORE, in consideration of mutual covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:


     1. EMPLOYMENT; POSITION AND DUTIES; EXCLUSIVE SERVICES.


     (a) EMPLOYMENT. The Company agrees to employ the Executive, and the
Executive agrees to be employed by the Company, for the Term provided in Section
2 hereof and upon the other terms and conditions hereinafter provided.

     (b) POSITION AND DUTIES/COMPANY. During the Term as defined in Section 2
hereof, the Executive (i) agrees to act as in-house legal counsel for the
Company and Independent Bank Corp. ("IBC") and hold the title of General Counsel
of the Company and of IBC and to perform such reasonable duties as may be
assigned to him from time to time by the President and Chief Executive Officer
of the Company, and (ii) shall report to the President and Chief Executive
Officer of the Company.

     (c) EXCLUSIVE SERVICES. During the Term, and except for illness or
incapacity, the Executive shall devote all of his business time, attention,
skill and efforts exclusively to the business and affairs of the Company, and
it's affiliates, shall not engage in any other business activity, and shall
perform and discharge well and faithfully the duties which may be assigned to
him from time to time by the President and Chief Executive; provided, however,
that nothing in this Agreement shall preclude the Executive from devoting
reasonable time during reasonable periods required for any or all of the
following:

          (i) serving, in accordance with the Company's policies and with the
prior approval of the President and Chief Executive Officer of the Company, as a
director or member of a committee of any other company or organization involving
no actual or potential conflict of interest with the Company, or any of its
subsidiaries or affiliates;


                                       1



          (ii) investing his personal assets in businesses in which his
participation is solely that of a passive investor in such form or manner as
will not require any services on the part of the Executive in the operation or
affairs of such businesses and in such form or manner which will not create any
conflict of interest with or create the appearance of any conflict of interest
with, his duties at the Company;

          (iii) acting as Executor under a will or as Attorney In Fact
pursuant to any Power Of Attorney;

          (iv) acting as counsel to the plaintiff Phillip St. Germain in the
case commonly known as PHILLIP M ST GERMAIN v. THE BOSTON POPCORN COMPANY, INC.,
Middlesex Superior Court Civil Action No. 96-2404-F;

provided, however, that such activities in the aggregate shall not materially
adversely affect or interfere with the performance of the Executive's duties and
obligations to the Company hereunder.

     2. TERM OF EMPLOYMENT.

     The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to accept such employment in the capacity set forth herein, for a period
commencing on the date hereof ("Commencement Date") and ending "at will" by
either party upon written notice of termination by one party given to the other
at least fourteen (14) days prior to the termination date specified in such
notice, except as provided by Section 5 hereof. The term of this Agreement, as
the same may be terminated pursuant to Section 5, shall hereinafter be referred
to as the "Term."

     3. CASH COMPENSATION. As compensation to the Executive for all services to
be rendered by him in any capacity hereunder, the Company shall pay during the
Term an annual base salary at the current rate of One Hundred Seventy-five
Thousand and 00/100 Dollars ($175,000.00) per annum, payable no less frequently
than bi-weekly ("Base Salary"). The Board of Directors (the "Board") may from
time to time at its discretion review the compensation provisions of this
Agreement and shall have the authority to pay an increased base salary, or bonus
or other additional compensation to the Executive.

     4. BENEFITS.

     (a) TRAVEL AND BUSINESS-RELATED EXPENSES. During the Term, the Executive
shall be reimbursed in accordance with the policies of the Company as in effect
from time to time for travel and other reasonable expenses incurred in the
performance of the business of the Company.

     (b) GROUP LIFE INSURANCE. The Company agrees to include the Executive under
the Company's group life insurance policy in accordance with the policies of the
Company as in effect from time to time. The Company shall pay all premiums for
such coverage.


                                       2



     (c) SICK LEAVE/DISABILITY. The Executive will enjoy the same sick leave and
short term and long term disability coverage as in effect from time to time for
employees of the Company generally.


     (d) RETIREMENT PLANS. The Executive will be eligible to participate in the
Company's retirement benefit plans each in accordance with the terms of such
plans as in effect from time to time.


     (e) VACATION/HOLIDAYS. The Executive will receive four (4) weeks paid
vacation, on an "as earned" basis each year and will receive ten (10) holidays
each year.

     (f) INSURANCE. During the Term, the Executive shall participate in all
insurance programs (medical, dental, surgical, hospital) adopted by the Company,
including dependent coverage, to the same extent as other executives of the
Company from time to time.

     (g) INCENTIVE COMPENSATION PLAN. The Executive shall be eligible to
participate in the Company's Executive Incentive Compensation Plan, in
accordance with the terms of such plan as in effect from time to time.

     (h) TAXES. Except as otherwise specifically provided herein, the Executive
recognizes that some or all of the foregoing benefits and those set forth in
Section 3 may give rise to a federal and/or state income tax liability, and
agrees to be responsible for such liability.

     (i) SPLIT DOLLAR AGREEMENT. The Company agrees to use all reasonable
efforts to obtain life insurance on the life of the Executive and enter into
either, at the option of the Company, a split dollar insurance agreement (the
"Split Dollar Agreement") or another non-qualified plan for the Executive with
respect thereto on terms and conditions and with benefits comparable to those
applicable and available to similarly situated executives of the Company. The
Executive agrees to cooperate with the Company, its representatives and agents
and any insurance companies and their respective agents and representatives, in
order to execute such an agreement or plan and obtain such insurance.
Notwithstanding the foregoing, the Company shall not be required to expend
amounts in excess of 125 percent of the average premium cost for a person of the
Executive's gender and age in order to obtain such insurance. Notwithstanding
anything to the contrary contained herein, in the event a Split Dollar Agreement
is entered into by the parties, the Company agrees to gross-up the compensation
of the Executive in an amount determined by the Company's accountants as
necessary to reimburse the Executive for (A) the sum of federal and
Massachusetts income tax incurred by the Executive on account of the P.S.- 58
benefit in the insurance policy described under a Split Dollar Agreement, and
(B) the cost of any rider that the Executive purchases on the insurance policy
described in such Split Dollar Agreement for the waiver of premiums in the event
of his disability, and (C) the tax effect of the reimbursements set


                                       3



forth in (A) and (B) hereof, and to pay such amounts to the Executive in a lump
sum payment no later than three (3) business days prior to the earliest date on
which any federal or Massachusetts income taxes are due on account of such
P.S.-58 benefit and/or the cost for the waiver of premiums. This clause (i) of
Section 4 shall remain in full force and effect and shall survive any
termination of this Agreement by reason of the disability of the Executive.

     5. TERMINATION OF EMPLOYMENT.

     (a) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON.

          (i) If the Executive's employment is terminated by the Company for
Cause or if the Executive resigns from his employment for any reason other
than for Good Reason, as defined below in Section 5(a)(iii), the Executive
shall have no right to receive compensation or other benefits for any period
after such Termination for Cause or resignation for any reason other than for
Good Reason, except as may be required by law and except that the Executive's
rights to exercise his stock options in the event his employment terminates
shall be governed by the Independent Bank Corp. 1987 Incentive Stock Option
Plan and/or any other relevant stock option plan, as appropriate (the
"Plans") and the relevant stock option agreement.

          (ii) Termination for "Cause" shall refer to the Company's termination
of the Executive's service with the Company at any time because the Executive
has: (A) refused or failed to devote his full normal working time, skills,
knowledge, and abilities to the business of the Company, its subsidiaries and
affiliates, and in promotion of their respective interests pursuant to Section 1
hereof; or (B) engaged in (1) activities involving his personal profit as a
result of his dishonesty, incompetence, willful misconduct, willful violation of
any law, rule or regulation or breach of fiduciary duty, or (2) dishonest
activities involving the Executive's relations with the Company, its
subsidiaries and affiliates or any of their respective employees, customers or
suppliers; or (C) committed larceny, embezzlement, conversion or any other act
involving 1l1e misappropriation of Company or customer funds in the course of
his employment; or (D) been convicted of any crime which reasonably could affect
in an adverse manner the reputation of the Company or the Executive's ability to
perform the duties required hereunder; or (E) committed an act involving gross
negligence on the part of the Executive in the conduct of his duties hereunder;
or (F) evidenced a drug addiction or dependency; or (G) materially breached this
Agreement; provided, however, that, in the case of any termination pursuant to
clauses (A), (E), (F), or (G) above, the Company shall give the Executive thirty
(30) business days' written notice thereof during which period the Employee, at
the discretion of the Company, may be placed on administrative leave, and the
Company shall give the Executive an opportunity to cure within such thirty-day
period, and a reasonable opportunity to be heard by the Compensation Committee
of the Board to show just cause for his actions, and to have the Compensation
Committee of the Board, in its discretion, reverse or rescind the prior action
of the Company under the clause(s).

          (iii) Resignation for "Good Reason" shall mean the resignation of the
Executive after (A) the Company without the express written consent of the
Executive, materially breaches this Agreement to the substantial detriment of
the Executive; or (B) the Board or the President and Chief Executive Officer,
without Cause (as defined in Section 5(a)(ii) above), substantially changes the
Executive's core duties or removes the Executive's responsibility for those core
duties, so as to effectively cause the Executive to no longer be performing the
duties of an executive in the capacity for which the


                                       4



Executive was hired; provided, however, that, in the case of resignation
pursuant to this subsection (iii), the Executive shall give the Company thirty
(30) business days' written notice thereof and, during such thirty day period,
an opportunity to cure. Anything to the contrary in this Agreement
notwithstanding, a termination by the Executive for any reason during the 30-day
period immediately following the first anniversary of the effective date of a
Change of Control (as defined in Section 5(c) hereof) shall be deemed to be a
resignation for Good Reason for all purposes of this Agreement.

          (iv) The date of termination of employment by the Company for purposes
of Section 5 hereof shall be the date that the written notice of termination
from the Company to the Executive is written, and the Company agrees to use all
good faith efforts to deliver the written notice to the Executive as soon as
possible after the notice is written. The date of a resignation by the Executive
for purposes of Section 5 hereof shall be the date specified in the written
notice of resignation from the Executive to the Company.

     (b) TERMINATION WITHOUT CAUSE; RESIGNATION FOR GOOD REASON. If during the
term of this Agreement, either (A) the Executive's employment with the Company
and/or any of its parent, subsidiaries or affiliates is terminated for any
reason other than death, disability (as defined in Section 5(e) hereof) or for
Cause (as such term is defined in Section 5(a)(ii) hereof), or (B) the Executive
resigns for Good Reason (as such term is defined in Section 5(a)(iii) hereof)
from employment with the Company and/or any of its parent, subsidiaries or
affiliates, the Executive shall be entitled (C)(x) to receive his then current
Base Salary for a period of twelve (12) months from the termination or
resignation date, payable at such times as such Base Salary would be payable as
if no such termination or resignation had occurred, (C)(y)(1) to continue
participation in the plans and arrangements described in clauses (b) and (f) of
Section 4 hereof (to the extent permissible by law and the terms of such plans
and arrangements) for a period of twelve (12) months after such termination or
resignation (the "Continuation Period"), or (C)(y)(2) to the extent at any time
following termination of this Agreement and during the Continuation Period that
the plans and arrangements described in clauses (b) and (f) of Section 4 hereof
are discontinued or terminated and no comparable plans in which the Executive is
permitted to continue participation are established in their place, then to
receive a gross bonus payment in an amount which after payment therefrom of all
applicable federal and state income and employment taxes, will equal the cost to
the Company at the time of the termination, resignation or discontinuation of
any such plans, attributable to the Executive's participation in the plans and
arrangements described in clauses (b) and (f) of Section 4 hereof for the
Continuation Period less any portion thereof in which the Executive has
continued his participation in such plans and arrangements described in clauses
(b) and (f) of Section 4 hereof in accordance with subsection 5(b)(C)(y)(l)
above; which payment shall be due following termination or resignation of the
Executive's employment immediately upon the date of termination, resignation or
discontinuation of any such plan, and (C)(z) to have all stock options which
have been granted to the Executive to immediately become fully exercisable and
to remain exercisable for a period of three (3) months after the employment
termination date in accordance with the terms of the Plans and the relevant
stock options agreement, provided, however, that if the provisions of Section
5(c) are applicable to such termination or resignation of employment, the
Executive's rights shall be governed by Section 5(c).


                                       5



     (c) CHANGE IN CONTROL.

          (i) If during the term of this Agreement, any of the events
constituting a Change of Control (as such term is defined in Section 5(c)(ii)
hereof), shall be deemed to have occurred, and following such Change of Control,
either (A) the Executive's employment with the Company and/or any of its parent,
subsidiaries, affiliates, or successors by merger or otherwise as a result of
the Change of Control, is terminated for any reason other than death, disability
(as defined in Section 5(e) hereof) or for Cause (as such term is defined in
Section 5(a)(ii) hereof), or (B) the Executive resigns for Good Reason (as such
term is defined in Section 5(a)(iii) hereof) from employment with the Company
and/or any of its parent, subsidiaries, affiliates, or successors by merger or
otherwise as a result of the Change of Control, the Executive shall be entitled
(C)(x) to receive his then current Base Salary for a period of twenty four (24)
months from the date of termination of this Agreement without Cause or
resignation for Good Reason and to receive an amount equal to two (2) times the
greater of (a) the aggregate amount of payments made to the Executive during the
twelve (12) months preceding the date of termination of this Agreement without
Cause or resignation for Good Reason, or (b) the aggregate amount of payments
made to the Executive during the twelve (12) months preceding the Change of
Control, in each case pursuant to any bonus or incentive compensation plan,
including without limitation, the Rockland Trust Company Officer and Executive
Incentive Compensation Plan, as amended from time to time, in each case payable
in a lump sum cash payment immediately following such termination, and (C)(y)(l)
to continue participation in the plans and arrangements described in clauses (b)
and (f) of Section 4 hereof (to the extent permissible by law and the terms of
such plans and arrangements) for the period of twenty four (24) months after
such termination or resignation (the "Benefits Period"), or (C)(y)(2) at the
election of the Executive at any time following termination of this Agreement
and during the Benefits Period, to receive a gross bonus payment in an amount
which after payment therefrom of all applicable federal and state income and
employment taxes, will equal the cost to the Company at the time of the
Executive's election, attributable to the Executive's participation in the plans
and arrangements described in clauses (b) and (f) of Section 4 hereof for the
Benefits Period less any portion thereof in which the Executive has continued
his participation in such plans and arrangements described in clauses (b) and
(f) of Section 4 hereof in accordance with subsection 5(c)(i)(C)(y)(1) above;
which payment shall be due following termination or resignation of the
Executive's employment immediately upon the Executive's delivery of written
notice to the Company of his election pursuant to subsection 5(c)(i)(C)(y)(2),
and (C)(z) to have all stock options which have been granted to the Executive to
immediately become fully exercisable and to remain exercisable for a period of
three (3) months after the termination or resignation date (as the case may be),
in accordance with the terms of the Plan and the relevant stock option
agreement.

          (ii) A "Change of Control" shall be deemed to have occurred if,
subsequent to the date hereof and during the term of this Agreement (A) any
"person" (as such term is defined in Section 13(d) of the Securities Exchange
Act of 1934, as amended) is or becomes the beneficial owner, directly or
indirectly, of either (x) a majority of the outstanding common stock of IBC or
the Company, or (y) securities of either IBC or the Company representing a
majority of the combined voting power of the then outstanding voting securities
of either IBC or the Company, respectively, or (B) during any period of two
consecutive years following the date hereof, individuals who at the beginning of
any such two year period constitute the Board of Directors of IBC cease, at any
time after the beginning of such period, for any reason to constitute a majority
of the Board of Directors of IBC, unless the election of each new director was
nominated or approved by at least two thirds of the directors of the Board then
still in office who were either directors at the beginning of such two year
period or whose election or whose nomination for election was previously so
approved.


                                       6



          (iii) In the event any amount payable as compensation to the Executive
under this Agreement when aggregated with any other amounts payable as
compensation to the Executive other than pursuant to this Agreement would
constitute a Parachute Payment (as hereinafter defined), the amount payable as
compensation under Section 5(c)(i) of this Agreement shall be reduced (but not
below zero) to the largest amount which is not a Parachute Payment (as
hereinafter defined) when aggregated with any other amounts payable as
compensation to the Executive other than pursuant to this Agreement. For
purposes hereof, the term Parachute Payment shall have the meaning given to
parachute payments set out in Internal Revenue Code of 1986 Section
280G(b)(2)(A) (relating to the quantification of parachute payments) as then in
effect determined without regard to the provisions of Internal Revenue Code of
1986 Section 280G(b)(4) (relating to the exclusion of reasonable compensation
from parachute payments) as then in effect. Notwithstanding the foregoing, if
the Executive proves to the satisfaction of the Compensation Committee of the
Company's Board of Directors (if no such Compensation Committee then is in
existence, then any other committee of the Board of Directors of Company then
performing the functions of a compensation committee) with clear and convincing
evidence that all or any portion of the amount of the reduction provided in the
preceding sentence would not constitute a parachute payment within the meaning
of such term as defined in Internal Revenue Code of 1986 Section 280G(b)(2)(A)
as then in effect determined with regard to the provisions of Internal Revenue
Code of 1986 Section 280G(b)(4) as then in effect and that the Company's tax
reporting position in regard to the payment is overwhelmingly likely to be
sustained, then the reduction provided in the preceding sentence shall be
adjusted to permit payment of so much of such reduction as the said Compensation
Committee determines will result in the largest amount which would not
constitute a parachute payment within the meaning of such term as defined in
Internal Revenue Code of 1986 Section 280G(b)(2)(A) as then in effect
determined with regard to the provisions of Internal Revenue Code of 1986
Section 280G(b)(4) as then in effect.

     (d) MITIGATION; LEGAL FEES. The Executive shall not be required to mitigate
the amount of any payment provided for in either Section 5(b) or Section 5(c)(i)
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in Section 5(b) or Section 5(c)(i) be reduced by any
compensation earned by the Executive as a result of self-employment or
employment by another employer, by retirement benefits or by offset against any
amount claimed to be owed by the Executive to the Company or otherwise.
Following a Change of Control, the Company agrees to pay, as incurred, all legal
fees and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement) plus in each case interest on any delayed payment at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986 as then in effect.


                                       7



     (e) TERMINATION BY REASON OF DEATH OR DISABILITY.

          (i) Notwithstanding anything to the contrary contained in this
Agreement, the employment hereunder of the Executive shall be automatically
terminated upon the death of the Executive after which time the Company shall
have no further obligation to the Executive or his estate for any compensation
or benefits hereunder, except to the extent any compensation or benefits are due
to the Executive or his estate for any period prior to his death, provided,
however, that this Section 5(e)(i) shall not affect in any manner any other
benefits to which the Executive or his estate may be entitled or which may vest
or accrue upon his death under any arrangement, plan or program (other than this
Agreement) with the Company, by law or otherwise.

          (ii) Notwithstanding anything to the contrary contained in this
Agreement, the employment hereunder of the Executive may be terminated by reason
of disability, upon written notice to the Executive, in the event of the
inability of the Executive to perform his duties hereunder by reason of
disability, whether by reason of injury (physical or mental), illness (physical
or mental) or otherwise, incapacitating the Executive for a continuous period
exceeding one hundred and eighty (180) days, as certified by a physician
selected by the Company in good faith, and the Company shall have no further
obligation under this Agreement to the Executive for any compensation or
benefits hereunder, except to the extent any compensation or benefits are due to
the Executive for any period prior to his termination by reason of disability,
provided, however, that this Section 5(e)(ii) shall not affect in any manner
other benefits to which the Executive may be entitled or which may accrue or
vest upon his disability and the Executive shall be entitled to receive such
compensation and benefits during and after such period of disability as the
Company's policies and procedures in effect from time to time provide for
similarly situated executives, as if the Executive and the Company had not
entered into this Agreement.

          (iii) The Executive's rights to exercise his stock options in the
event of termination of his employment by reason of his death or disability
shall be governed by the Plans and the relevant stock option agreement.

     6. CONFIDENTIALITY AND NON-COMPETITION.

     (a) CONFIDENTIALITY. The Executive recognizes and acknowledges as an
employee of the Company, he will have access to, become acquainted with, and
obtain financial information and knowledge relating to the business, financial
condition, methods of operation and other aspects of the Company, its parent,
subsidiaries and affiliates ("Affiliated Companies") and their customers,
employees and suppliers, some of which information and knowledge is confidential
and proprietary and that the Executive could substantially detract from the
value and business prospects of the Affiliated Companies in the event, while
employed by the Company or any time thereafter, the Executive were to disclose
to any person not related to the Affiliated Companies or use such information
and knowledge for his or such other person's advantage. Accordingly, the
Executive hereby agrees that he will not disclose to any person, other than
directors, officers, employees, accountants, lawyers, consultants, advisors,
agents and


                                       8



representative of, or other persons related to, the Affiliated Companies on a
need to know basis in the course of carrying out his duties hereunder, any
knowledge or information of a confidential nature pertaining to the Affiliated
Companies, or their successors and assigns, including without limitation, all
unpublished matters relating to the business, properties, accounts, books and
records, business plan and customers of the said corporations, or their
successors and assigns, except with the prior written approval of the Board, or
except as may be required by law.

     (b) EQUITABLE RELIEF. The Executive acknowledges and agrees (i) that the
provisions of this Section 6 are reasonable and necessary for the protection of
the Company, its subsidiaries and affiliates or its or their successors and
assigns, and (ii) that the remedy at law for any breach by him of the provisions
of this Section 6 will be inadequate and, accordingly, the Executive hereby
agrees that in the case of any such breach (x) the Company or its successors and
assigns shall be entitled to injunctive relief, in addition to any other remedy
they may have, and (y) the Executive shall forfeit any future payments or
benefits to which he might be entitled hereunder.

     (c) NON-SOLICITATION. For a period of one (1) year after the Executive
receives any compensation pursuant to this Agreement he will not (i) solicit,
divert or take away, directly or indirectly, any Major Customer of the Company,
its parent, subsidiaries or affiliates, or its or their successors and assigns,
or (ii) directly or indirectly induce or attempt to influence any employee of
the Company, its parent or any of its subsidiaries, or affiliates, or their
successors and assigns, to terminate his employment with the Company, its parent
or ally of its subsidiaries or affiliates or their successors or assigns. As
used herein, "Major Customer" shall mean any customer of the Company who has
maintained an average deposit balance of at least $100,000 during the last six
months of the Term or who has maintained or obtained a credit facility of at
least $100,000 from the Company during the last six months of the Term.

     (d) ENFORCEABILITY. The covenants on the part of the Executive contained in
this Section 6 shall be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim or cause of action
by the Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
said covenants. This Section shall survive the termination of this Agreement.
The period, geographical area and the scope of the restrictions on the Executive
set forth herein are divisible so that if any provision of this Section 6 is
invalid, that provision shall be automatically modified to the extent necessary
to make it valid.

     (e) JURISDICTION. Employee hereby submits to the exclusive jurisdiction of
the courts of Massachusetts and the Federal courts of the United States of
America located in such state in respect to the interpretation and enforcement
of the provisions of this Section 6, and Employee hereby waives, and agrees not
to assert, as a defense in any action, suit or proceeding for the interpretation
or enforcement of this Section 6, that Employee is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
said courts or that this Agreement may not be enforced in or by said courts or
that Employee's property is exempt or immune from execution, that the suit,
action or proceeding is brought in an inconvenient forum, or that venue is
improper.


                                       9



     7. DISPUTES.

     (a) Any dispute relating to this Agreement, or to the breach of this
Agreement, except such as may concern Section 6, arising between the Executive
and the Company shall be settled by arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association ("AAA"),
which arbitration may be initiated by any party hereto by written notice to the
other of such party's desire to arbitrate the dispute. The arbitration
proceedings, including the rendering of an award, shall take place in Boston,
Massachusetts, and shall be administered by the AAA.

     (b) The arbitrator shall be appointed within thirty (30) days of the notice
of dispute, and shall be chosen by the parties from the names of available
arbitrators furnished to the parties in list form by the AAA. The parties may
review and reject names of available arbitrators from up to an aggregate of
three lists furnished to the parties by the AAA. If, after having been furnished
three lists of arbitrators, the parties cannot agree on one available
arbitrator, either party may request that the AAA appoint an arbitrator to
arbitrate the dispute.

     (c) The award of the arbitrator shall be final except as otherwise provided
by the laws of the Commonwealth of Massachusetts and the federal laws of the
United States, to the extent applicable. Judgment upon such award may be entered
by the prevailing party in any state or federal court sitting in Boston,
Massachusetts.

     (d) No arbitration proceedings hereunder shall be binding upon or in any
way affect the interests of any party other than the Company, or its successors
and the Executive, with respect to such arbitration.

     8. INDEMNIFICATION.

     The Company shall indemnify the Executive to the fullest extent permitted
by Massachusetts law, which indemnification may require the advance of expenses
to the Executive, if and to the extent permitted by such law. In the event of
any claim for indemnification by the Executive, the Executive shall deliver
written notice of any such claim promptly upon such a claim being made known to
the Executive, which notice shall set forth the basis for such claim. The
Company shall have the right to undertake the defense of such claim with counsel
of its choice.

     9. NON-COMPETITION AND NON-DISCLOSURE COMMITMENTS.

     The Executive hereby represents and warrants that he is not a party to or
otherwise bound by any contracts, agreements or arrangements which contain
covenants limiting the freedom of the Executive to compete in any line of
business or with any person or entity, or which provide that the Executive must
maintain the confidentiality of, or prohibit the Executive from using, any
information in the context of his professional or personal activities. The
Executive further represents and warrants that neither the execution or delivery
of this Agreement nor the performance by the Executive of his duties hereunder
will cause any breach of any contract, agreement or arrangement to which he is a
party or by which he is bound.


                                       10



     10. ARM'S LENGTH NEGOTIATIONS; REPRESENTATION BY COUNSEL.

     The parties to this Agreement further agree that this Agreement has been
negotiated by each in an arm's length transaction. The Executive acknowledges
that he has had the opportunity to be represented by legal counsel in connection
with this Agreement.

     11. TAX WITHHOLDINGS.

     Payments to the Executive of all compensation contemplated under this
Agreement shall be subject to all applicable legal requirements with respect to
the withholding of taxes and other deductions required by law.

     12. NON-ASSIGNABILITY; BINDING AGREEMENT.

     Neither this Agreement nor any right, duty, obligation or interest
hereunder shall be assignable or delegable by the Executive without the
Company's prior written consent; provided, however, that (i) nothing in this
Section shall preclude the Executive from designating any of his beneficiaries
to receive any benefits payable thereunder upon his death or disability, or his
executors, administrators, or other legal representatives, from assigning any
rights hereunder to the person or persons entitled thereto, and (ii) any
successor to the Company pursuant to any merger or consolidation involving the
Company, and any purchaser of all or substantially all the assets of the
Company, shall succeed to the rights and assume the obligations of the Company
under this Agreement, and the Company covenants that it will not enter into or
consummate any such transaction which does not make express provision for such
succession and assumption. Subject to the foregoing, this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto, any successors to
or assigns of the Company, the Executive's heirs and the personal
representatives of the Executive's estate.

     13. AMENDMENT; WAIVER.

     This Agreement may not be mollified, amended or waived in any manner except
by an instrument in writing signed by the parties hereto. The waiver by any
party of compliance with any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any provision of this Agreement


                                       11



     14. NOTICES.

     Any notice hereunder by either party to the other shall be given in writing
by personal delivery, telex, telecopy or certified mail, return receipt
requested, to the applicable address set forth below:

                (i)    To the Company:     Rockland Trust Company
                                           288 Union Street
                                           Rockland, MA 02370
                                           Attn.: President

                (ii)   To the Executive:   Edward H. Seksay, Esquire
                                           11 Cedar Acres Lane
                                           Cohasset, MA 02025

(or such other address as may from time to time be designated by notice by
either party hereto for such purpose). Notice shall be deemed given, if by
personal delivery, on the date of such delivery or, if by telex or telecopy, on
the business day following receipt of answer back or telecopy confirmation or if
by certified mail, on the date shown on the applicable return receipt.

     15. GOVERNING LAW.

     This Agreement is to be governed by and interpreted in accordance with the
laws of The Commonwealth of Massachusetts. If, under such law, any portion of
this Agreement is at any time deemed to be in conflict with any applicable
statute, rule, regulation or ordinance, such portion shall be deemed to be
modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement, and the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion thereof.

     16. SUPERSEDES PREVIOUS AGREEMENTS.

     This Agreement constitutes the entire understanding between the Company and
the Executive relating to the employment of the Executive by the Company and
supersedes and cancels all prior written and oral agreements and understandings
with respect to the subject matter of this Agreement.

     17. COUNTERPARTS.

     This Agreement may be executed by the parties hereto in counterparts, each
of which shall be deemed to be an original, but such counterparts shall together
constitute one and the same instrument.



                                       12




     IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the date first above written.

                                               ROCKLAND TRUST COMPANY


                                               By:  /s/ Douglas H. Philipsen
                                                    -------------------------
                                               Its: Chairman, President & CEO


                                               INDEPENDENT BANK CORP.


                                               By:  /s/ Douglas H. Philipsen
                                                    -------------------------
                                               Its: Chairman, President & CEO


                                               /s/  Edward H. Seksay
                                                    -------------------------
                                               Edward H. Seksay



                        AMENDMENT NO. 1 TO SECOND AMENDED
                        AND RESTATED EMPLOYMENT AGREEMENT

     Reference is made to the Agreement dated and effective as of February 1,
1993 by and between Rockland Trust Company, a Massachusetts trust company (the
"Company") and Ferdinand T. Kelley of Duxbury, Massachusetts (the "Executive"),
as amended and restated as of October 31, 1994 and as further amended and
restated as of January 19, 1996 (the "Employment Agreement"). Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed to such
terms in the Employment Agreement.


                               W I T N E S S E T H

     WHEREAS, the Executive and the Company are desirous of amending certain
provisions of the Employment Agreement to provide that certain additional
benefits be paid to the Executive upon the occurrence of a change of control of
Independent Bank Corp. ("IBC"), the parent bank holding company of the Company,
where such occurrence


                                       13




is followed by a termination of the Executive's employment without cause or the
Executive's resignation with good reason as such terms are defined in the
Employment Agreement;

     WHEREAS, the Executive and the Company are desirous of amending the
Employment Agreement as set forth above.


     NOW THEREFORE, in consideration of mutual covenants herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     1. Section 5(c)(i) of the Employment Agreement is hereby amended and
restated to read as follows:

     (c) CHANGE IN CONTROL.

         (i) If during the term of this Agreement, any of the events
constituting a Change of Control (as such term is defined in Section 5(c)
(ii) hereof), shall be deemed to have occurred and following such Change of
Control, either (A) the Executive's employment with the Company and/or any of
its parent, subsidiaries, affiliates, or successors by merger or otherwise as
a result of the Change of Control, is terminated for any reason other than
death, disability (as defined in Section 5(e) hereof) or for Cause (as such
term is defined in Section 5(a)(ii) hereof), or (B) the Executive resigns for
Good Reason (as such term is defined in Section 5(a)(iii) hereof) from
employment with the Company and/or any of its parent, subsidiaries,
affiliates, or successors by merger or otherwise as a result of the Change of
Control, the Executive shall be entitled (C)(x) to receive

                                       14




his then current Base Salary for a period of twenty four (24) months from the
date of termination of this Agreement without Cause or resignation for Good
Reason and to receive an amount equal to two (2) times the greater of (a) the
aggregate amount of payments made to the Executive during the twelve (12) months
preceding the date of termination of this Agreement without Cause or resignation
for Good Reason, or (b) the aggregate amount of payments made to the Executive
during the twelve (12) months preceding the Change of Control, in each case
pursuant to any bonus or incentive compensation plan, including without
limitation, the Rockland Trust Company Officer and Executive Incentive
Compensation Plan, as amended from time to time, in each case payable in a lump
sum cash payment immediately following such termination, and (C)(y)(1) to
continue participation in the plans and arrangements described in clauses (b)
and (f) of Section 4 hereof (to the extent permissible by law and the terms of
such plans and arrangements) for the period of twenty-four (24) months after
such termination or resignation (the "Benefits Period"), or (C)(y)(2) at the
election of the Executive at any time following termination of this Agreement
and during the Benefits Period, to receive a gross bonus payment in an amount
which after payment therefrom of all applicable federal and state income and
employment taxes, will equal the cost to the Company at the time of the
Executive's election, attributable to the Executive's participation in the plans
and arrangements described in clauses (b) and (f) of Section 4 hereof for the
Benefits Period less any portion thereof in which the Executive has continued
his participation in such plans and arrangements described in clauses (b) and
(f) of Section 4 hereof in accordance with subsection 5(c)(i)(C)(y)(1) above;
which payment shall be due following termination or resignation of the
Executive's employment immediately upon the Executive's delivery of written
notice to the Company of his election pursuant to subsection 5(c)(i)(C)(y)(2) ,
and (C)(z) to have all stock options which have been granted to the Executive to
immediately become fully exercisable and to remain exercisable for a period of
three (3) months after the termination or resignation date (as the case may be),
in accordance with the terms of the Plan and the relevant stock


                                       15



option agreement, and (C)(zz) upon his written notice to the Company during a
period of three months following the termination or resignation date (as the
case may be), to purchase his Company owned automobile at a purchase price equal
to the book value of said automobile as carried on the books and records of the
Company, plus all applicable excise taxes.

     2. RATIFICATION.

     All other provisions of the Employment Agreement shall remain unchanged and
in full force and effect, and are hereby ratified and confirmed by the parties
hereto.

     3. COUNTERPARTS.

     This Agreement may be executed by the parties hereto in counterparts, each
of which shall be deemed to be an original, but such counterparts shall together
constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties have executed this Amendment No.1 to Second
Amended and Restated Employment Agreement as of July 9, 1998.


                                             ROCKLAND TRUST COMPANY


                                             By: /S/ DOUGLAS H. PHILIPSEN
                                                 -------------------------
                                                 CEO
                                                 -------------------------


                                             INDEPENDENT BANK CORP.


                                             By: /S/ DOUGLAS H. PHILIPSEN
                                                 -------------------------
                                             Its: CEO
                                                  ------------------------

                                             /S/ FERDINAND T. KELLEY
                                             -----------------------------

                                             FERDINAND T. KELLEY




                                       16




                SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT


     Agreement dated and effective as of February 1, 1993 by and between
Rockland Trust Company, a Massachusetts trust company (the "Company") and
Ferdinand T. Kelley of Duxbury, Massachusetts (the "Executive"), as amended and
restated as of October 31, 1994 and as further amended and restated as of this
19th day of January, 1996 (the "Employment Agreement").



                               W I T N E S S E T H

     WHEREAS, the Executive and the Company are desirous of amending certain
provisions of the Employment Agreement to provide that certain additional
benefits be paid to the Executive upon (a) the occurrence of a change of
control of Independent Bank Corp. ("IBC"), the parent bank holding company of
the Company, where such occurrence is followed by a termination of the
Executive's employment without cause or the Executive's resignation with good
reason as such terms are defined herein, or (b) termination of the
Executive's employment for any reason during a thirty (30) day period
following the one year anniversary of a change of control, on the terms and
conditions herein set forth;

     WHEREAS, the Executive and the Company are desirous of amending certain
provisions of the Employment Agreement to provide for certain additional
compensation benefits to the Executive; and

     WHEREAS, the Executive and the Company are desirous of amending the
Employment Agreement as set forth above and restating the amended Employment
Agreement as herein set forth.

     NOW THEREFORE, in consideration of mutual covenants herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     1. EMPLOYMENT; POSITION AND DUTIES; EXCLUSIVE SERVICES.

     (a) EMPLOYMENT. The Company agrees to employ the Executive, and the
Executive agrees to be employed by the Company, for the Term provided in Section
2 hereof and upon the other terms and conditions hereinafter provided.



                                       17



     (b) POSITION AND DUTIES/COMPANY. During the Term as defined in Section 2
hereof, the Executive (i) agrees to oversee and manage all the operations and
functions of the Company's commercial loan division and hold the title of
Executive Vice President of the Company and to perform such reasonable duties as
may be assigned to him from time to time by the President and Chief Executive
Officer of the Company, and (ii) shall report to the President and Chief
Executive Officer of the Company.

     (c) Exclusive Services. During the Term, and except for illness or
incapacity, the Executive shall devote all of his business time, attention,
skill and efforts exclusively to the business and affairs of the Company, and
its affiliates, shall not be engaged in any other business activity, and shall
perform and discharge well and faithfully the duties which may be assigned to
him from time to time by the President and Chief Executive; provided, however,
that nothing in this Agreement shall preclude the Executive from devoting
reasonable time during reasonable periods required for any or all of the
following:

          (i) serving, in accordance with the Company's policies and with the
prior approval of the President and Chief Executive Officer of the Company, as a
director or member of a committee of any other company or organization involving
no actual or potential conflict of interest with the Company, or any of its
subsidiaries or affiliates;

          (ii) investing his personal assets in businesses in which his
participation is solely that of a passive investor in such form or manner as
will not require any services on the part of the Executive in the operation or
affairs of such businesses and in such form or manner which will not create any
conflict of interest with or create the appearance of any conflict of interest
with, his duties at the Company;

     provided, however, that such activities in the aggregate shall not
materially adversely affect or interfere with the performance of the Executive's
duties and obligations to the Company hereunder.

     2. TERM OF EMPLOYMENT.

     The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to accept such employment in the capacity set forth herein, for a period
commencing on the date hereof ("Commencement Date") and ending "at will" by
either party upon written notice of termination by one party given to the other
at least fourteen (14) days prior to the termination date



                                       18



specified in such notice, except as provided by Section 5 hereof. The term of
this Agreement, as the same may be terminated pursuant to Section 5, shall
hereinafter be referred to as the "Term."

     3. CASH COMPENSATION.

     As compensation to the Executive for all services to be rendered by him in
any capacity hereunder, the Company shall pay during the Term an annual base
salary at the current rate of One Hundred Fifty Eight Thousand Six Hundred and
00/lOO Dollars ($158,600.00) per annum, payable no less frequently than bi-
weekly ("Base Salary"). The Board of Directors (the "Board") may from time to
time at its discretion review the compensation provisions of this Agreement and
shall have the authority to pay an increased base salary, or bonus or other
additional compensation to the Executive.

     4. BENEFITS.

     (a) TRAVEL AND BUSINESS-RELATED EXPENSES. The Executive shall be provided
with a Company owned automobile in accordance with the policies of the Company
regarding automobiles as in effect from time to time. During the Term, the
Executive shall be reimbursed in accordance with the policies of the Company as
in effect from time to time for travel and other reasonable expenses incurred in
the performance of the business of the Company.

     (b) GROUP LIFE INSURANCE. The Company agrees to include the Executive under
the Company's group term life insurance policy in accordance with the policies
of the Company as in effect from time to time. The Company shall pay all
premiums for such coverage.

     (c) SICK LEAVE/DISABILITY. The Executive will enjoy the same sick leave and
short term and long term disability coverage as in effect from time to time for
employees of the Company generally.

     (d) RETIREMENT PLANS. The Executive will be eligible to participate in the
Company's retirement benefit plans each in accordance with the terms of such
plans as in effect from time to time.

     (e) VACATION/HOLIDAYS. The Executive will receive four (4) weeks paid
vacation, on an "as earned" basis each year and will receive ten (10) holidays
each year.



                                       19



     (f) INSURANCE. During the Term, the Executive shall participate in all
insurance programs (medical, dental, surgical, hospital) adopted by the Company,
including dependent coverage, to the same extent as other executives of the
Company from time to time.

     (g) INCENTIVE COMPENSATION PLAN. The Executive shall be eligible to
participate in the Company's Executive Incentive Compensation Plan, in
accordance with the terms of such plan as in effect from time to time.

     (h) TAXES. Except as otherwise specifically provided herein, the Executive
recognizes that some or all of the foregoing benefits and those set forth in
Section 3 may give rise to a federal and/or state income tax liability, and
agrees to be responsible for such liability.

     (i) SPLIT DOLLAR AGREEMENT. Notwithstanding anything to the contrary
contained herein, the Company agrees to gross-up the compensation of the
Executive in an amount determined by the Company as necessary to reimburse the
Executive for (A) the sum of federal and state income and employment tax
incurred by the Executive on account of the P.S.-58 benefit in the insurance
policy described under a Split Dollar Agreement dated as of January 19. 1996 by
and between the Company and the Executive (the "Split Dollar Agreement"), and
(B) the cost of any rider that the Executive purchases on the insurance policy
described in the Split Dollar Agreement for the waiver of premiums in the event
of his disability, and (C) the tax effect of the reimbursements set forth in (A)
and (B) hereof, and to pay such amounts to the Executive in a lump sum payment
no later than three (3) business days prior to the earliest date on which any
federal or state income and employment taxes are due on account of such P.S.-58
benefit and/or the cost for the waiver of premiums.

     5. TERMINATION OF EMPLOYMENT.

     (a) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON.

          (i) If the Executive's employment is terminated by the Company for
Cause or if the Executive resigns from his employment for any reason other than
for Good Reason, as defined below in Section 5(a)(iii), the Executive shall have
no right to receive compensation or other benefits for any period after such
Termination for Cause or resignation for any reason other than



                                       20



for Good Reason, except as may be required by law and except that the
Executive's rights to exercise his stock options in the event his employment
terminates shall be governed by the Independent Bank Corp. 1987 Incentive Stock
Option Plan and/or any other relevant stock option plans, as appropriate (the
"Plans") and the relevant stock option agreement.

          (ii) Termination for "Cause" shall refer to the Company's termination
of the Executive's service with the Company at any time because the Executive
has: (A) refused or failed to devote his full normal working time, skills,
knowledge, and abilities to the business of the Company, its subsidiaries and
affiliates, and in promotion of their respective interests pursuant to Section 1
hereof; or (B) engaged in (1) activities involving his personal profit as a
result of his dishonesty, incompetence, willful misconduct, willful violation of
any law, rule or regulation or breach of fiduciary duty, or (2) dishonest
activities involving the Executive's relations with the Company, its
subsidiaries and affiliates or any of their respective employees, customers or
suppliers; or (C) committed larceny, embezzlement, conversion or any other act
involving the misappropriation of Company or customer funds in the course of his
employment; or (D) been convicted of any crime which reasonably could affect in
an adverse manner the reputation of the Company or the Executive's ability to
perform the duties required hereunder; or (E) committed an act involving gross
negligence on the part of the Executive in the conduct of his duties hereunder;
or (F) evidenced a drug addiction or dependency; or (G) materially breached this
Agreement; provided, however, that, in the case of any termination pursuant to
clauses (A), (E), (F), or (G) above, the Company shall give the Executive thirty
(30) business days' written notice thereof, an opportunity to cure within such
thirty-day period, and a reasonable opportunity to be heard by the Board to show
just cause for his actions, and to have the Board, in its discretion, reverse or
rescind the prior action of the Company under the clause(s).

          (iii) Resignation for "Good Reason" shall mean the resignation of the
Executive after (A) the Company without the express written consent of the
Executive, materially breaches this Agreement to the substantial detriment of
the Executive; or (B) the Board or the President and Chief Executive Officer,
without Cause (as defined in Section 5(a) (ii) above), substantially changes the
Executive's core duties or removes the Executive's responsibility for those core
duties, so as to effectively cause the Executive to no longer be performing the
duties of an executive in the capacity for which the Executive was hired;
provided, however, that, in the case of resignation pursuant to this subsection
(iii), the Executive shall give the Company thirty (30) business days' written
notice thereof and, during such thirty-day period, an opportunity to cure.
Anything to the contrary in this Agreement notwithstanding, a termination by the
Executive for any reason




                                       21





during the 30-day period immediately following the first anniversary of the
effective date of a Change of Control (as defined in Section 5(c) hereof)
shall be deemed to be a resignation for Good Reason for all purposes of this
Agreement.

          (iv) The date of termination of employment by the Company for purposes
of Section 5 hereof shall be the date that the written notice of termination
from the Company to the Executive is written, and the Company agrees to use all
good faith efforts to deliver the written notice to the Executive as soon as
possible after the notice is written. The date of a resignation by the Executive
for purposes of Section 5 hereof shall be the date specified in the written
notice of resignation from the Executive to the Company.

     (b) TERMINATION WITHOUT CAUSE; RESIGNATION FOR GOOD REASON. If during
the term of this Agreement; either (A) the Executive's employment with the
Company and/or any of its parent, subsidiaries or affiliates is terminated
for any reason other than death, disability (as defined in Section 5(e)
hereof) or Cause (as such term is defined in Section 5(a)(ii) hereof), or (B)
the Executive resigns for Good Reason (as such term is defined in Section
5(a)(iii) hereof) from employment with the Company and/or any of its parent,
subsidiaries or affiliates, the Executive shall be entitled (C)(x) to receive
his then current Base Salary for a period of twelve (12) months from the
termination or resignation date, payable at such times as such Base Salary
would be payable as if no such termination or resignation had occurred, and
(C)(y)(1) to continue participation in the plans and, arrangements described
in clauses (b) and (f) of Section 4 hereof (to the extent permissible by law
and the terms of such plans and arrangements) for a period of twelve (12)
months after such termination or resignation (the "Continuation Period"), or
(C)(y)(2) to the extent at any time following termination of this Agreement
and during the Continuation Period that the plans and arrangements described
in clauses (b) and (f) of Section 4 hereof are discontinued or terminated and
no comparable plans in which the Executive is permitted to continue
participation are established in their place, then to receive a gross bonus
payment in an amount which after payment therefrom of all applicable federal
and state income and employment taxes, will equal the cost to the Company at
the time of the termination, resignation or discontinuation of any such
plans, attributable to the Executive's participation in the plans and
arrangements described in clauses (b) and (f) of Section 4 hereof for the
Continuation Period less any portion thereof in which the Executive has
continued his participation in such plans and arrangements described in
clauses (b) and (f) of Section 4 hereof in accordance with subsection
5(b)(G)(y)(1) above; which payment shall be due following termination or
resignation of the Executive's employment immediately upon the date

                                       22




of termination, resignation or discontinuation of any such plan, and (C) (z) to
have all stock options which have been granted to the Executive to immediately
become fully exercisable and to remain exercisable for a period of three (3)
months after the employment termination date in accordance with the terms of the
Plans and the relevant stock option agreement, provided, however, that if the
provisions of Section 5(c) are applicable to such termination or resignation of
employment, the Executive's rights shall be governed by Section 5 (c).

     (c) CHANGE IN CONTROL.

          (i) If during the term of this Agreement any of the events
constituting a Change of Control (as such term is defined in Section 5(c)(ii)
hereof), shall be deemed to have occurred, and following such Change of
Control, either (A) the Executive's employment with the Company and/or any of
its parent, subsidiaries, affiliates, or successors by merger or otherwise as
a result of the Change of Control, is terminated for any reason other than
death, disability (as defined in Section 5(e) hereof) or for Cause (as such
term is defined in Section 5(a)(ii) hereof), or (B) the Executive resigns for
Good Reason (as such term is defined in Section 5(a)(iii) hereof) from
employment with the Company and/or any of its parent, subsidiaries,
affiliates, or successors by merger or otherwise as a result of the Change of
Control, the Executive shall be entitled (C)(x) to receive his then current
Base Salary for a period of twenty four (24) months from the date of
termination of this Agreement without Cause or resignation for Good Reason,
payable in a lump sum cash payment immediately following such termination or
resignation, and (C)(y)(1) to continue participation in the plans and
arrangements described in clauses (b) and (f) of Section 4 hereof (to the
extent permissible by law and the terms of such plans and arrangements) for
the period of twenty four (24) months after such termination or resignation
(the "Benefits Period"), or (C)(y)(2) at the election of the Executive at any
time following termination of this Agreement and during the Benefits Period,
to receive a gross bonus payment in an amount which after payment therefrom
of all applicable federal and state income and employment taxes, will equal
the cost to the Company at the time

                                       23






of the Executive's election, attributable to the Executive's participation in
the plans and arrangements described in clauses (b) and (f) of section 4 hereof
for the Benefits Period less any portion thereof in which the Executive has
continued his participation in such plans and arrangements described in clauses
(b) and (f) of Section 4 hereof in accordance with subsection 5(c)(i)(C)(y)(1)
above; which payment shall be due following termination or resignation of the
Executive's employment immediately upon the Executive's delivery of written
notice to the Company of his election pursuant to subsection 5(c)(i)(C)(y)(2),
and (C)(z) to have all stock options which have been granted to the Executive to
immediately become fully exercisable and to remain exercisable for a period of
three (3) months after the termination or resignation date (as the case may be)
in accordance with the terms of the Plans and the relevant stock option
agreement, and (C)(zz) upon his written notice to the Company during a period of
three (3) months following the termination or resignation date (as the case may
be), to purchase his Company owned automobile at a purchase price equal to the
book value of said automobile as carried on the books and records of the
Company, plus all applicable excise taxes.

          (ii) A "Change of Control" shall be deemed to have occurred if,
subsequent to the date hereof and during the term of this Agreement (A) any
"person" (as such term is defined in Section 13(d) of the Securities Exchange
Act of 1934, as amended) is or becomes the beneficial owner, directly or
indirectly, of either (x) a majority of the outstanding common stock of IBC
or the Company, or (y) securities of either IBC or the Company representing a
majority of the combined voting power of the then outstanding voting
securities of either IBC or the Company, respectively, or (B) during any
period of two consecutive years following the date hereof, individuals who at
the beginning of any such two year period constitute the Board of Directors
of IBC cease, at any time after the beginning of such period, for any reason
to constitute a majority of the Board of Directors of IBC, unless the
election of each new director was nominated or approved by at least two
thirds of the directors of the Board then still in office who were either
directors at the beginning of such two year period or whose election or whose
nomination for election was previously so approved.

          (iii) In the event any amount payable as compensation to the Executive
under this Agreement when aggregated with any other amounts payable as
compensation to the Executive other than pursuant to this Agreement would
constitute a Parachute Payment (as hereina(pound)ter defined), the amount
payable as compensation under Section 5(c)(i) of this Agreement shall be reduced
(but not below zero) to the largest




                                       24





amount which is not a Parachute Payment (as hereinafter defined) when aggregated
with any other amounts payable as compensation to the Executive other than
pursuant to this Agreement. For purposes hereof, the term Parachute Payment
shall have the meaning given to parachute payments set out in Internal Revenue
Code of 1986 Section 280G(b)(2)(A) (relating to the quantification of parachute
payments) as then in effect determined without regard to the provisions of
Internal Revenue Code of 1986 Section 280G(b)(4) (relating to the exclusion of
reasonable compensation from parachute payments) as then in effect.
Notwithstanding the foregoing, if the Executive proves to the satisfaction of
the Compensation Committee of the Company's Board of Directors (if no such
Compensation Committee then is in existence, then any other committee of the
Board of Directors of Company then performing the functions of a compensation
committee) with clear and convincing evidence that all or any portion of the
amount of the deduction provided in the preceding sentence would not constitute
a parachute payment within the meaning of such term as defined in Internal
Revenue Code of 1986 Section 280G(b)(2)(A) as then in effect determined with
regard to the provisions of Internal Revenue Code of 1986 Section 280G(b)(4) as
then in effect and that the Company's tax reporting position in regard to the
payment is overwhelmingly likely to be sustained, then the reduction provided in
the preceding sentence shall be adjusted to permit payment of so much of such
reduction as the said Compensation Committee determines will result in the
largest amount which would not constitute a parachute payment within the meaning
of such term as defined in Internal Revenue Code of 1986 Section 280G(b)(2)(A)
as then in effect determined with regard to the provisions of Internal Revenue
Code of 1986 Section 280G(b)(4) as then in effect.

     (d) MITIGATION; LEGAL FEES. The Executive shall not be required to mitigate
the amount of any payment provided for in either Section 5(b) or Section 5(c)(i)
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided fot in Section 5(b) or Section 5(c)(i) be reduced by any
compensation earned by the Executive as a result of self-employment or
employment by another employer, by retirement benefits or by offset against any
amount claimed to be owed by the Executive to the Company or otherwise.
Following a Change of Control, the Company agrees to pay, as incurred, all legal
fees and expenses which the Executive may reasonable incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement) plus in each case interest on any delayed payment at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986 as then in effect.




                                       25




     (e) TERMINATION BY REASON OF DEATH OR DISABILITY.

          (i) Notwithstanding anything to the contrary contained in this
Agreement, the employment hereunder of the Executive shall be automatically
terminated upon the death of the Executive after which time the Company shall
have no further obligation to the Executive or his estate for any compensation
or benefits hereunder, except to the extent any compensation or benefits are due
to the Executive or his estate for any period prior to his death, provided,
however, that this Section 5(e)(i) shall not affect in any manner any other
benefits to which the Executive or his estate may be entitled or which may vest
or accrue upon his death under any arrangement, plan or program (other than this
Agreement) with the Company, by law or otherwise.


          (ii) Notwithstanding anything to the contrary contained in this
Agreement, the employment hereunder of the Executive may be terminated by reason
of disability, upon written notice to the Executive, in the event of the
inability of the Executive to perform his duties hereunder by reason of
disability, whether by reason of injury (physical or mental), illness (physical
or mental) or otherwise, incapacitating the Executive for a continuous period
exceeding one hundred and eighty (180) days, as certified by a physician
selected by the Company in good faith, and the Company shall have no further
obligation under this Agreement to the Executive for any compensation or
benefits hereunder, except to the extent any compensation or benefits are due to
the Executive for any period prior to his disability termination by reason of
disability, provided, however, that this Section 5(e)(ii) shall not affect in
any manner other benefits to which the Executive may be entitled or which may
accrue or vest upon his disability and the Executive shall be entitled to
receive such compensation and benefits during and after such period of
disability as the Company's policies and procedures in effect from time to time
provide for similarly situated executives, as if the Executive and the Company
had not entered into this Agreement.

          (iii) The Executive's rights to exercise his stock options in the
event of termination of his employment by reason of his death or disability
shall be governed by the Plans and the relevant stock option agreement.




                                       26




     6. CONFIDENTIALITY AND NON-COMPETITION.

     (a) CONFIDENTIALITY. The Executive recognizes and acknowledges as an
employee of the Company, he will have access to, become acquainted with, and
obtain financial information and knowledge relating to the business, financial
condition, methods of operation and other aspects of the Company, its parent,
subsidiaries and affiliates ("Affiliated Companies") and their customers,
employees and suppliers, some of which information and knowledge is confidential
and proprietary and that the Executive could substantially detract from the
value and business prospects of the Affiliated Companies in the event, while
employed by the Company or anytime thereafter, the Executive were to disclose to
any person not related to the Affiliated Companies or use such information and
knowledge for his or such other person's advantage. Accordingly, the Executive
hereby agrees that he will not disclose to any person, other than directors,
officers, employees, accountants, lawyers, consultants, advisors, agents and
representative of, or other persons related to, the Affiliated Companies on a
need to know basis in the course of carrying out his duties hereunder, any
knowledge or information of a confidential nature pertaining to the Affiliated
Companies, or their successors and assigns, including without limitation, all
unpublished matters relating to the business, properties, accounts, books and
records, business plan and customers of the said corporations, or their
successors and assigns, except with the prior written approval of the Board, or
except as may be required by law.

     (b) EQUITABLE RELIEF. The Executive acknowledges and agrees (i) that the
provisions of this Section 6 are reasonable and necessary for the protection of
the Company, its subsidiaries and affiliates or its or their successors and
assigns, and (ii) that the remedy at law for any breach by him of the provisions
of this Section 6 will be inadequate and, accordingly, the Executive hereby
agrees that in the case of any such breach (x) the Company or its successors and
assigns shall be entitled to injunctive relief, in addition to any other remedy
they may have, and (y) the Executive shall forfeit any future payments or
benefits to which he might be entitled hereunder.

     (c) NON-SOLICITATION. For a period of one (1) year after the Executive
receives any compensation pursuant to this Agreement he will not (i) solicit,
divert or take away, directly or indirectly, any Major Customer of the Company,
its parent, subsidiaries or affiliates, or its or their successors and assigns,
or (ii) directly or indirectly induce or attempt to influence any employee of
the Company, its parent or any of its



                                       27



subsidiaries or affiliates, or their successors and assigns, to terminate his
employment with the Company, its parent or any of its subsidiaries or affiliates
or their successors or assigns. As used herein, "Major Customer" shall mean any
customer of the Company who has maintained an average deposit balance of at
least $100,000 during the last six months of the Term or who has maintained or
obtained a credit facility of at least $100,000 from the Company during the last
six months of the Term.

     (d) ENFORCEABILITY. The covenants on the part of the Executive contained in
this Section 6 shall be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim or cause of action
by the Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
said covenants. This Section shall survive the termination of this Agreement.
The period, geographical area and the scope of the restrictions on the Executive
set forth herein are divisible so that if any provision of this Section 6 is
invalid, that provision shall be automatically modified to the extent necessary
to make it valid.

     (e) JURISDICTION. Employee hereby submits to the exclusive jurisdiction of
the courts of Massachusetts and the Federal courts of the United States of
America located in such state in respect to the interpretation and enforcement
of the provisions of this Section 6, and Employee hereby waives, and agrees not
to assert, as a defense in any action, suit or proceeding for the interpretation
or enforcement of this Section 6, that Employee is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
said courts or that this Agreement may not be enforced in or by said courts or
that Employee's property is exempt or immune from execution, that the suit,
action or proceeding is brought in an inconvenient forum, or that venue is
improper.

     7. DISPUTES.

     (a) Any dispute relating to this Agreement, or to the breach of this
Agreement, except such as may concern Section 6, arising between the Executive
and the Company shall be settled by arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association ("AAA"),
which arbitration may be initiated by any party hereto by written notice to the
other of such party's desire to arbitrate the dispute. The arbitration
proceedings, including the rendering of an award, shall take place in Boston,
Massachusetts, and shall be administered by the AAA.


                                       28




     (b) The arbitrator shall be appointed within thirty (30) days of the
notice of dispute, and shall be chosen by the parties from the names of
available arbitrators furnished to the parties in list form by the AAA. The
parties may review and reject names of available arbitrators from up to an
aggregate of three lists furnished to the parties by the AAA. If, after
having been furnished three lists of arbitrators, the parties cannot agree on
one available arbitrator, either party may request that the AAA appoint an
arbitrator to arbitrate the dispute.

     (c) The award of the arbitrator shall be final except as otherwise provided
by the laws of The Commonwealth of Massachusetts and the federal laws of
the-United States, to the extent applicable. Judgment upon such award may be
entered by the prevailing party in any state or federal court sitting in Boston,
Massachusetts.

     (d) No arbitration proceedings hereunder shall be binding upon or in any
way affect the interests of any party other than the Company, or its successors
and the Executive, with respect to such arbitration.

     8. INDEMNIFICATION.

     The Company shall indemnify the Executive to the fullest extent permitted
by Massachusetts law, which indemnification may require the advance of expenses
to the Executive, if and to the extent permitted by such law. In the event of
any claim for indemnification by the Executive, the Executive shall deliver
written notice of any such claim promptly upon such a claim being made known to
the Executive, which notice shall set forth the basis for such claim. The
Company shall have the right to undertake the defense of such claim with counsel
of its choice.

     9. NON-COMPETITION AND NON-DISCLOSURE COMMITMENTS.


     The Executive hereby represents and warrants that he is not a party to or
otherwise bound by any contracts, agreements or arrangements which contain
covenants limiting the freedom of the Executive to compete in any line of
business or with any person or entity, or which provide that the Executive must
maintain the confidentiality of, or prohibit the Executive from using, any
information in the context of his professional or personal activities. The
Executive further



                                       29




represents and warrants that neither the execution or delivery of this Agreement
nor the performance by the Executive of his duties hereunder will cause any
breach of any contract, agreement or arrangement to which he is a party or by
which he is bound.

     10. ARM'S LENGTH NEGOTIATIONS; REPRESENTATION BY COUNSEL.

     The parties to this Agreement further agree that this Agreement has been
negotiated by each in an arm's length transaction. The Executive acknowledges
that he has had the opportunity to be represented by legal counsel in connection
with this Agreement.

     11. TAX WITHHOLDINGS.

     Payments to the Executive of al1 compensation contemplated under this
Agreement shall be subject to all applicable legal requirements with respect to
the withholding of taxes and other deductions required by law.

     12. NON-ASSIGNABILITY; BINDING AGREEMENT.

     Neither this Agreement nor any right, duty, obligation or interest
hereunder shall be assignable or delegable by the Executive without the
Company's prior written consent; provided, however, that (i) nothing in this
Section shall preclude the Executive from designating any of his beneficiaries
to receive any benefits payable thereunder upon his death or disability, or his
executors, administrators, or other legal representatives, from assigning any
rights hereunder to the person or persons entitled thereto, and (ii) any
successor to the Company pursuant to any merger or consolidation involving the
Company, and any purchaser of all or substantially all the assets of the
Company, shall succeed to the rights and assume the obligations of the Company
under this Agreement, and the Company covenants that it will not enter into or
consummate any such transaction which does not make express provision for such
succession and assumption. Subject to the foregoing, this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto, any successors to
or assigns of the Company, the Executive's heirs and the personal
representatives of the Executive's estate.

     13. AMENDMENT; WAIVER.

     This Agreement may not be modified, amended or waived in any manner except
by an instrument in writing signed by the parties hereto. The waiver by any
party of compliance with any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any provision of this
Agreement.



                                       30



     14. NOTICES.

     Any notice hereunder by either party to the other shall be given in writing
by personal delivery, telex, telecopy or certified mail, return receipt
requested, to the applicable address set forth below:

          (i) To the Company:    Rockland Trust Company
                                 288 Union Street
                                 Rockland, MA 02370
                                 Attn: President

          (ii) To the Executive: Ferdinand T. Kelley
                                 78 Heritage Lane
                                 Duxbury, MA 02332

(or such other address as may from time to time be designated by notice by
either party hereto for such purpose). Notice shall be deemed given, if by
personal delivery, on the date of such delivery or, if by telex or telecopy,
on the business day following receipt of answer back or telecopy confirmation
or if by certified mail, on the date shown on the applicable return receipt.

     15. GOVERNING LAW.

     This Agreement is to be governed by and interpreted in accordance with the
laws of the Commonwealth of Massachusetts. If, under such law, any portion of
this Agreement is at any time deemed to be in conflict with any applicable
statute, rule, regulation or ordinance, such portion shall be deemed to be
modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement, and the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion thereof.

     16. SUPERSEDES PREVIOUS AGREEMENTS.

     This Agreement and the Split Dollar Agreement and related collateral
assignment constitute the entire understanding between the Company and the
Executive relating to the employment of the Executive by the Company and
supersede and cancel all prior written and oral agreements and understandings
with respect to the subject matter of this Agreement. Except as otherwise
specifically provided herein, all amounts payable to the



                                       31




Executive or the Company under the Split Dollar Agreement shall be
exclusively governed by the terms of the Split Dollar Agreement and related
collateral assignment.

     17. COUNTERPARTS.

     This Agreement may be executed by the parties hereto in counterparts, each
of which shall be deemed to be an original, but such counterparts shall together
constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties have executed this Second Amended and
Restated Employment Agreement as of the date first above written.

                                               ROCKLAND TRUST COMPANY

                                               By: /s/ DOUGLAS H. PHILIPSEN
                                                       --------------------
/S/ LINDA M. CAMPION, CLERK                    Its: PRESIDENT & CEO
- ---------------------------                         ---------------
Linda M. Campion, Clerk

                                               INDEPENDENT BANK CORP.

                                               By: /s/ Douglas H. Philipsen
                                               Its: PRESIDENT
                                                    ---------


                                               /S/ FERDINAND T. KELLY
                                                   ------------------
                                               Ferdinand T. Kelley



                              EMPLOYMENT AGREEMENT

     Agreement, dated and effective as of April 14, 2000 by and between Rockland
Trust Company, a Massachusetts trust company (the "Company") and Denis K.
Sheahan of Brighton, Massachusetts (the "Executive), (the "Employment
Agreement").

                               W I T N E S S E T H

     WHEREAS, the Executive is willing to serve in such executive capacity for
the Company as is hereinafter described and the Company desires to retain the
Executive in such capacity;

     NOW THEREFORE, in consideration of mutual covenants herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:



                                       32



     1. EMPLOYMENT; POSITION AND DUTIES; EXCLUSIVE SERVICES.

     (a) EMPLOYMENT. The Company agrees to employ the Executive, and the
Executive agrees to be employed by the Company, for the Term provided in Section
2 hereof and upon the other terms and conditions hereinafter provided.

     (b) POSITION AND DUTIES/COMPANY. During the Term as defined in Section 2
hereof, the Executive (i) agrees to oversee and manage all financial, accounting
and bookkeeping operations and functions of the Company and Independent Bank
Corp. ("IBC") and hold the titles of Chief Financial Officer and Treasurer of
the Company and of IBC and to perform such reasonable duties as may be assigned
to him from time to time by the President and Chief Executive Officer of the
Company and IBC, and (ii) shall report to the President and Chief Executive
Officer of the Company and IBC.

     (c) EXCLUSIVE SERVICES. During the Term, and except for illness or
incapacity, the Executive shall devote all of his business time, attention,
skill and efforts exclusively to the business and affairs of the Company, and
its affiliates, shall not be engaged in any other business activity, and shall
perform and discharge well and faithfully the duties which may be assigned to
him from time to time by the President and Chief Executive; provided, however,
that nothing in this Agreement shall preclude the Executive from devoting
reasonable time during reasonable periods required for any or all of the
following:

          (i) serving, in accordance with the Company's policies and with the
prior approval of the President and Chief Executive Officer of the Company, as a
director or member of a committee of any other company or organization involving
no actual or potential conflict of interest with the Company, or any of its
subsidiaries or affiliates;

          (ii) investing his personal assets in businesses in which his
participation is solely that of a passive investor in such form or manner as
will not require any services on the part of the Executive in the operation or
affairs of such businesses and in such form or manner which will not create any
conflict of interest with or create the appearance of any conflict of interest
with, his duties at the Company;

          (iii) completing the program of education at Boston University leading
to the degree of Executive Master of Business Administration.

provided however, that such activities in the aggregate shall not materially
adversely affect or interfere with the performance of the Executive's duties and
obligations to the Company hereunder .



                                       33




     2. TERM OF EMPLOYMENT.

     The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to accept such employment in the capacity set forth herein, for a period
commencing on the date hereof ("Commencement Date") and ending "at will" by
either party upon written notice of termination by one party given to the other
at least fourteen (14) days prior to the termination date specified in such
notice, except as provided by Section 5 hereof. The term of this Agreement, as
the same may be terminated pursuant to Section 5, shall hereinafter be referred
to as the "Term."

     3. CASH COMPENSATION.

     As compensation to the Executive for all services to be rendered by him in
any capacity hereunder, the Company shall pay during the Term an annual base
salary at the current rate of One Hundred Forty Thousand and 00/l00 Dollars
($140,000.00) per annum, payable no less frequently than bi-weekly ("Base
Salary"). The Board of Directors (the "Board") may from time to time at its
discretion review the compensation provisions of this Agreement and shall have
the authority to pay an increased base salary, or bonus or other additional
compensation to the Executive.

     4. BENEFITS.

     (a) TRAVEL AND BUSINESS-RELATED EXPENSES. The Executive shall be provided
with a Company owned automobile in accordance with the policies of the Company
regarding automobiles as in effect from time to time. During the Term, the
Executive shall be reimbursed in accordance with the policies of the Company as
in effect from time to time for travel and other reasonable expenses incurred in
the performance of the business of the Company.

     (b) GROUP LIFE INSURANCE. The Company agrees to include the Executive under
the Company's group term life insurance policy in accordance with the policies
of the Company as in effect from time to time. The Company shall pay all
premiums for such coverage.


     (c) SICK LEAVE/DISABILITY. The Executive will enjoy the same sick leave and
short term and long term disability coverage as in effect from time to time for
employees of the Company generally.


     (d) RETIREMENT PLANS. The Executive will be eligible to participate in the
Company's retirement benefit plans each in accordance with the terms of such
plans as in effect from time to time.



                                       34




     (e) VACATION/HOLIDAYS. The Executive will receive four (4) weeks paid
vacation, on an "as earned" basis each year and will receive ten (10) holidays
each year.

     (f) INSURANCE. During the Term, the Executive shall participate in all
insurance programs (medical, dental, surgical, hospital) adopted by the Company,
including dependent coverage, to the same extent as other executives of the
Company from time to time.

     (g) INCENTIVE COMPENSATION PLAN. The Executive shall be eligible to
participate in the Company's Executive Incentive Compensation Plan, in
accordance with the terms of such plan as in effect from time to time.

     (h) TAXES. Except as otherwise specifically provided herein, the
Executive recognizes that some or all of the foregoing benefits and those set
forth in Section 3 may give rise to a federal and/or state income tax
liability, and agrees to be responsible for such liability .

     (i) SPLIT DOLLAR AGREEMENT. The Company agrees to use all reasonable
efforts to obtain life insurance on the life of the Executive and enter into
either, at the option of the Company, a split dollar insurance agreement (the
"Split Dollar Agreement") or another non-qualified plan for the Executive with
respect thereto on terms and conditions and with benefits comparable to those
applicable and available to similarly situated executives of the Company. If
life insurance is utilized by the company, the Executive agrees to cooperate
with the Company, its representatives and agents and any insurance companies and
their respective agents and representatives, in order to execute such an
agreement or plan and obtain such insurance. Notwithstanding the foregoing, the
Company shall not be required to expend amounts in excess of 125 percent of the
average premium cost for a person of the Executive's gender and age in order to
obtain such insurance. Notwithstanding anything to the contrary contained
herein, in the event a Split Dollar Agreement is entered into by the parties,
the Company agrees to gross-up the compensation of the Executive in an amount
determined by the Company's accountants as necessary to reimburse the Executive
for (A) the sum of federal and Massachusetts income tax incurred by the
Executive on account of the P.S.-58 benefit in the insurance policy described
under a Split Dollar Agreement, and (B) the cost of any rider that the Executive
purchases on the insurance policy described in such Split Dollar Agreement for
the waiver of premiums in the event of his disability, and (C) the tax effect of
the reimbursements set forth in (A) and (B) hereof, and to pay such amounts to
the Executive in a lump sum payment no later than three (3) business days prior
to the earliest date on which any federal or Massachusetts income taxes are due
on account of such P.S.-58 benefit and/or the cost for the waiver of premiums.
This clause (i) of Section 4 shall remain in full force and effect and shall
survive any termination of this Agreement by reason of the disability of the
Executive.



                                       35



     5. TERMINATION OF EMPLOYMENT.

     (a) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON.

          (i) If the Executive's employment is terminated by the Company for
Cause or if the Executive resigns from his employment for any reason other than
for Good Reason, as defined below in Section 5(a)(iii), the Executive shall have
no right to receive compensation or other benefits for any period after such
Termination for Cause or resignation for any reason other than for Good Reason,
except as may be required by law and except that the Executive's rights to
exercise his stock options in the event his employment terminates shall be
governed by the Independent Bank Corp. 1987 Incentive Stock Option Plan and/or
any other relevant stock option plan, as appropriate (the "Plans") and the
relevant stock option agreement.

          (ii) Termination for "Cause" shall refer to the Company's termination
of the Executive's service with the Company at any time because the Executive
has: (A) refused or failed to devote his full normal working time, skills,
knowledge, and abilities to the business of the Company, its subsidiaries and
affiliates, and in promotion of their respective interests pursuant to Section 1
hereof; or (B) engaged in (1) activities involving his personal profit as a
result of his dishonesty, incompetence, willful misconduct, willful violation of
any law, rule or regulation or breach of fiduciary duty, or (2) dishonest
activities involving the Executive's relations with the Company, its
subsidiaries and affiliates or any of their respective employees, customers or
suppliers; or (C) committed larceny, embezzlement, conversion or any other act
involving the misappropriation of Company or customer funds in the course of his
employment; or (D) been convicted of any crime which reasonably could affect in
an adverse manner the reputation of the Company or the Executive's ability to
perform the duties required hereunder; or (E) committed an act involving gross
negligence on the part of the Executive in the conduct of his duties hereunder;
or (F) evidenced a drug addiction or dependency; or (G) materially breached this
Agreement; provided, however, that, in the case of any termination pursuant to
clauses (A), (E), (F), or (G) above, the Company shall give the Executive thirty
(30) business days' written notice thereof during which period the Employee, at
the discretion of the Company, may be placed on administrative leave, the
Company shall give the Executive an opportunity to cure within such thirty-day
period, and a reasonable opportunity to be heard by the Compensation Committee
of the Board to show just cause for his actions, and to have the Compensation
Committee of the Board, in its discretion, reverse or rescind the prior action
of the Company under the clause(s).

          (iii) Resignation for "Good Reason" shall mean the resignation of the
Executive after (A) the Company without the express written consent of the
Executive materially breaches this Agreement to the substantial detriment of the
Executive; or (B) the Board or the President and Chief Executive Officer,
without Cause (as defined in



                                       36




Section 5(a)(ii)above), substantially changes the Executive's core duties or
removes the Executive's responsibility for those core duties, so as to
effectively cause the Executive to no longer be performing the duties of an
executive in the capacity for which the Executive was hired; provided, however,
that, in the case of resignation pursuant to this subsection (iii), the
Executive shall give the Company thirty (30) business days' written notice
thereof and, during such thirty day period, an opportunity to cure. Anything to
the contrary in this Agreement not withstanding, a termination by the Executive
for any reason during the 30-day period immediately following the first
anniversary of the effective date of a Change of Control (as defined in Section
5(c) hereof) shall be deemed to be a resignation for Good Reason for all
purposes of this Agreement.


          (iv) The date of termination of employment by the Company for purposes
of Section 5 hereof shall be the date that the written notice of termination
from the Company to the Executive is written, and the Company agrees to use all
good faith efforts to deliver the written notice to the Executive as soon as
possible after the notice is written. The date of a resignation by the Executive
for purposes of Section 5 hereof shall be the date specified in the written
notice of resignation from the Executive to the Company.

     (b) TERMINATION WITHOUT CAUSE; RESIGNATION FOR GOOD REASON. If during the
term of this Agreement, either (A) the Executive's employment with the Company
and/or any of its parent, subsidiaries or affiliates is terminated for any
reason other than death, disability (as defined in Section 5(e) hereof) or for
Cause (as such term is defined in Section 5(a)(ii) hereof), or (B) the Executive
resigns for Good Reason (as such term is defined in Section 5 (a)(iii) hereof)
from employment with the Company and/or any of its parent, subsidiaries or
affiliates, the Executive shall be entitled (C)(x) to receive his then current
Base Salary for a period of twelve (12) months from the termination or
resignation date, payable at such times as such Base Salary would be payable as
if no such termination or resignation had occurred, (C)(y)(1) to continue
participation in the plans and arrangements described in clauses (b) and (f) of
Section 4 hereof (to the extent permissible by law and the terms of such plans
and arrangements) for a period of twelve (12) months after such termination or
resignation (the "Continuation Period"), or (C)(y)(2) to the extent at any time
following termination of this Agreement and during the Continuation Period that
the plans and arrangements described in clauses (b) and (f) of Section 4 hereof
are discontinued or terminated and no comparable plans in which the Executive is
permitted to continue participation are established in their place, then to
receive a gross bonus payment in an amount which after payment therefrom of all
applicable federal and state income and employment taxes, will equal the cost to
the Company at the time of the termination, resignation or discontinuation of
any such plans, attributable to the Executive's participation in the plans and
arrangements described in clauses (b) and (f) of Section 4 hereof for the
Continuation Period less any portion thereof in which the Executive has
continued his participation in such plans and



                                       37



arrangements described in clauses (b) and (f) of Section 4 hereof in accordance
with subsection 5(b)(C)(y)(1) above; which payment shall be due following
termination or resignation of the Executive's employment immediately upon the
date of termination, resignation or discontinuation of any such plan, and (C)(z)
to have all stock options which have been granted to the Executive to
immediately become fully exercisable and to remain exercisable for a period of
three (3) months after the employment termination date in accordance with the
terms of the Plans and the relevant stock option agreement, provided, however,
that if the provisions of Section 5(c) are applicable to such termination or
resignation of employment, the Executive's rights shall be governed by Section
5(c).

     (c) CHANGE IN CONTROL.

          (i) If during the term of this Agreement, any of the events
constituting a Change of Control (as such term is defined in Section 5(c)(iii)
hereof), shall be deemed to have occurred, and following such Change of Control,
either (A) the Executive's employment with the Company and/or any of its parent,
subsidiaries, affiliates, or successors by merger or otherwise as a result of
the Change of Control, is terminated for any reason other than death, disability
(as defined in Section 5(e) hereof) or for Cause (as such term is defined in
Section 5(a)(ii) hereof), or (B) the Executive resigns for Good Reason (as such
term is defined in Section 5 (a)(iii) hereof) from employment with the Company
and/or any of its parent, subsidiaries, affiliates, or successors by merger or
otherwise as a result of the Change of Control, the Executive shall be entitled
(C)(x) to receive his then current Base Salary for a period of twenty four (24)
months from the date of termination of this Agreement without Cause or
resignation for Good Reason and to receive an amount equal to two (2) times the
greater of (a) the aggregate amount of payments made to the Executive during the
twelve (12) months preceding the date of termination of this Agreement without
Cause or resignation for Good Reason, or (b) the aggregate amount of payments
made to the Executive during the twelve (12) months preceding the Change of
Control, in each case pursuant to any bonus or incentive compensation plan,
including without limitation, the Rockland Trust Company Officer and Executive
Incentive Compensation Plan, as amended from time to time, in each case payable
in a lump sum cash payment immediately following such termination, and (C)(y)(l)
to continue participation in the plans and arrangements described in clauses (b)
and (f) of Section 4 hereof (to the extent permissible by law and the terms of
such plans and arrangements) for the period of twenty four (24) months after
such termination or resignation (the "Benefits Period"), or (C)(y)(2) at the
election of the Executive at any time following termination of this Agreement
and during the Benefits Period, to receive a gross bonus payment in an amount
which after payment therefrom of all applicable federal and state income and
employment taxes, will equal the cost to the Company at the time of the
Executive's election, attributable to the Executive's participation in the plans
and arrangements described in clauses (b) and (f) of Section 4 hereof for the
Benefits Period less any portion thereof in which the Executive has continued
his participation in such plans and arrangements described in clauses (b) and
(f) of Section 4 hereof in


                                       38



accordance with subsection 5(c)(i)(C)(y)(1) above; which payment shall be due
following termination or resignation of the Executive's employment immediately
upon the Executive's delivery of written notice to the Company of his election
pursuant to sub-section 5(c)(i)(C)(y)(2), and (C)(z) to have all stock options
which have been granted to the Executive to immediately become fully exercisable
and to remain exercisable for a period of three (3) months after the termination
or resignation date (as the case may be), in accordance with the terms of the
Plan and the relevant stock option agreement, and (C)(zz) upon his written
notice to the Company during a period of three months following the termination
or resignation date (as the case may be), to purchase his Company owned
automobile at a purchase price equal to the book value of said automobile as
carried on the books and records of the Company, plus all applicable excise
taxes.

          (ii) A "Change of Control" shall be deemed to have occurred if,
subsequent to the date hereof and during the term of this Agreement (A) any
"person" (as such term is defined in Section 13(d) of the Securities Exchange
Act of 1934, as amended) is or becomes the beneficial owner, directly or
indirectly, of either (x) a majority of the outstanding common stock of IBC
or the Company, or (y) securities of either IBC or the Company representing a
majority of the combined voting power of the then outstanding voting
securities of either IBC or the Company, respectively, or (B) during any
period of two consecutive years following the date hereof, individuals who at
the beginning of any such two year period constitute the Board of Directors
of IBC cease, at any time after the beginning of such period, for any reason
to constitute a majority of the Board of Directors of IBC, unless the
election of each new director was nominated or approved by at least two
thirds of the directors of the Board then still in office who were either
directors at the beginning of such two year period or whose election or whose
nomination for election was previously so approved.

          (iii) In the event any amount payable as compensation to the Executive
under this Agreement when aggregated with any other amounts payable as
compensation to the Executive other than pursuant to this Agreement would
constitute a Parachute Payment (as hereinafter defined), the amount payable as
compensation under Section 5(c)(i) of this Agreement shall be reduced (but not
below zero) to the largest amount which is not a Parachute Payment (as
hereinafter defined) when aggregated with any other amounts payable as
compensation to the Executive other than pursuant to this Agreement. For
purposes hereof, the term Parachute Payment shall have the meaning given to
parachute payments set out in Internal Revenue Code of 1986 Section
280G(b)(2)(A) (relating to the quantification of parachute payments) as then in
effect determined without regard to the provisions of Internal Revenue Code of
1986 Section 280G(b)(4) (relating to the exclusion of reasonable compensation
from parachute payments) as then in effect. Notwithstanding the foregoing, if
the Executive proves to the satisfaction of the Compensation Committee of the
Company's Board of Directors (if no such Compensation Committee then is in
existence, then any other committee of the Board of Directors of Company then
performing the functions of a compensation committee) with clear and convincing
evidence that all or any portion of the amount of the reduction provided in the
preceding sentence would not constitute a parachute payment within the meaning
of such term as defined in Internal Revenue Code of 1986 Section 280G(b)(2)(A)
as then in effect determined with regard to the provisions of Internal Revenue
Code of 1986 Section 280G(b)(4) as then in



                                       39



effect and that the Company's tax reporting position in regard to the payment is
overwhelmingly likely to be sustained, then the reduction provided in the
preceding sentence shall be adjusted to permit payment of so much of such
reduction as the said Compensation Committee determines will result in the
largest amount which would not constitute a parachute payment within the meaning
of such term as defined in Internal Revenue Code of 1986 Section 280G(b)(2)(A)
as then in effect determined with regard to the provisions of Internal Revenue
Code of 1986 Section 280G(b)(4) as then in effect.

     (d) MITIGATION; LEGAL FEES. The Executive shall not be required to mitigate
the amount of any payment provided for in either Section 5(b) or Section 5(c)(i)
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in Section 5(b) or Section 5(c)(i) be reduced by any
compensation earned by the Executive as a result of self-employment or
employment by another employer, by retirement benefits or by offset against any
amount claimed to be owed by the Executive to the Company or otherwise.
Following a Change of Control, the Company agrees to pay, as incurred, all legal
fees and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement) plus in each case interest on any delayed payment at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986 as then in effect.

     (e) TERMINATION BY REASON OF DEATH OR DISABILITY.

          (i) Notwithstanding anything to the contrary contained in this
Agreement, the employment hereunder of the Executive shall be automatically
terminated upon the death of the Executive after which time the Company shall
have no further obligation to the Executive or his estate for any compensation
or benefits hereunder, except to the extent any compensation or benefits are due
to the Executive or his estate for any period prior to his death, provided,
however, that this Section 5(e)(i) shall not affect in any manner any other
benefits to which the Executive or his estate may be entitled or which may vest
or accrue upon his death under any arrangement, plan or program (other than this
Agreement) with the Company, by law or otherwise.

          (ii) Notwithstanding anything to the contrary contained in this
Agreement, the employment hereunder of the Executive may be terminated by reason
of disability, upon written notice to the Executive, in the event of the
inability of the Executive to perform his duties hereunder by reason of
disability, whether by reason of injury (physical or mental), illness (physical
or mental) or otherwise, incapacitating the Executive for a continuous period
exceeding one hundred and eighty (180) days, as certified by a physician
selected by the Company in good faith, and the Company shall



                                       40




have no further obligation under this Agreement to the Executive for any
compensation or benefits hereunder, except to the extent any compensation or
benefits are due to the Executive for any period prior to his termination by
reason of disability, provided, however, that this Section 5(e)(ii) shall not
affect in any manner other benefits to which the Executive may be entitled or
which may accrue or vest upon his disability and the Executive shall be entitled
to receive such compensation and benefits during and after such period of
disability as the Company's policies and procedures in effect from time to time
provide for similarly situated executives, as if the Executive and the Company
had not entered into this Agreement.

          (iii) The Executive's rights to exercise his stock options in the
event of termination of his employment by reason of his death or disability
shall be governed by the Plans and the relevant stock option agreement.

     6. CONFIDENTIALITY AND NON-COMPETITION.

     (a) CONFIDENTIALITY. The Executive recognizes and acknowledges as an
employee of the Company, he will have access to, become acquainted with, and
obtain financial information and knowledge relating to the business, financial
condition, methods of operation and other aspects of the Company, its parent,
subsidiaries and affiliates ("Affiliated Companies") and their customers,
employees and suppliers, some of which information and knowledge is confidential
and proprietary and that the Executive could substantially detract from the
value and business prospects of the Affiliated Companies in the event, while
employed by the Company or any time thereafter, the Executive were to disclose
to any person not related to the Affiliated Companies or use such information
and knowledge for his or such other person's advantage. Accordingly, the
Executive hereby agrees that he will not disclose to any person, other than
directors, officers, employees, accountants, lawyers, consultants, advisors,
agents and representative of, or other persons related to, the Affiliated
Companies on a need to know basis in the course of carrying out his duties
hereunder, any knowledge or information of a confidential nature pertaining to
the Affiliated Companies, or their successors and assigns, including without
limitation, all unpublished matters relating to the business, properties,
accounts, books and records, business plan and customers of the said
corporations, or their successors and assigns, except with the prior written
approval of the Board, or except, as may be required by law.

     (b) EQUITABLE RELIEF. The Executive acknowledges and agrees (i) that the
provisions of this Section 6 are reasonable and necessary for the protection of
the Company, its subsidiaries and affiliates or its or their successors and
assigns, and (ii) that the remedy at law for any breach by him of the provisions
of this Section 6 will be inadequate and, accordingly, the Executive hereby
agrees that in the case of any such breach (x) the Company or its successors and
assigns shall be entitled to injunctive relief, in addition to any



                                       41


other remedy they may have, and (y) the Executive shall forfeit any future
payments or benefits to which he might be entitled hereunder .

     (c) NON-SOLICITATION. For a period of one (1) year after the Executive
receives any compensation pursuant to this Agreement he will not (i) solicit,
divert or take away, directly or indirectly, any Major Customer of the Company,
its parent, subsidiaries or affiliates, or its or their successors and assigns,
or (ii) directly or indirectly induce or attempt to influence any employee of
the Company, its parent or any of its subsidiaries or affiliates, or their
successors and assigns, to terminate his employment with the Company, its parent
or any of its subsidiaries or affiliates or their successors or assigns. As used
herein, "Major Customer" shall mean any customer of the Company who has
maintained an average deposit balance of at least $100,000 during the last six
months of the Term or who has maintained or obtained a credit facility of at
least $100,000 from the Company during the last six months of the Term.

     (d) ENFORCEABILITY. The covenants on the part of the Executive contained in
this Section 6 shall be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim or cause of action
by the Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
said covenants. This Section shall survive the termination of this Agreement.
The period, geographical area and the scope of the restrictions on the Executive
set forth herein are divisible so that if any provision of this Section 6 is
invalid, that provision shall be automatically modified to the extent necessary
to make it valid.

     (e) JURISDICTION. Employee hereby submits to the exclusive jurisdiction
of the courts of Massachusetts and the Federal courts of the United States of
America located in such state in respect to the interpretation and enforcement
of the provisions of this Section 6, and Employee hereby waives, and agrees not
to assert, as a defense in any action, suit or proceeding for the interpretation
or enforcement of this Section 6, that Employee is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
said courts or that this Agreement may not be enforced in or by said courts or
that employee's property is exempt or immune from execution, that the suit,
action or proceeding is brought in an inconvenient forum, or that venue is
improper.

     7. DISPUTES.

     (a) Any dispute relating to this Agreement, or to the breach of this
Agreement, except such as may concern Section 6, arising between the Executive
and the Company shall be settled by arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association ("AAA"),
which arbitration may be initiated by any party hereto by written notice to the
other of such party's desire to arbitrate the dispute. The arbitration
proceedings, including the rendering of an award, shall take place in Boston,
Massachusetts, and shall be administered by the AAA.



                                       42




     (b) The arbitrator shall be appointed within thirty (30) days of the notice
of dispute, and shall be chosen by the parties from the names of available
arbitrators furnished to the parties in list form by the AAA. The parties may
review and reject names of available arbitrators from up to an aggregate of
three lists furnished to the parties by the AAA. If, after having been furnished
three lists of arbitrators, the parties cannot agree on one available
arbitrator, either party may request that the AAA appoint an arbitrator to
arbitrate the dispute.

     (c) The award of the arbitrator shall be final except as otherwise provided
by the laws of the Commonwealth of Massachusetts and the federal laws of the
United States, to the extent applicable. Judgment upon such award may be entered
by the prevailing party in any state or federal court sitting in Boston,
Massachusetts.

     (d) No arbitration proceedings hereunder shall be binding upon or in any
way affect the interests of any party other than the Company, or its successors
and the Executive, with respect to such arbitration.

     8. INDEMNIFICATION.

     The Company shall indemnify the Executive to the fullest extent permitted
by Massachusetts law, which indemnification may require the advance of expenses
to the Executive, if and to the extent permitted by such law. In the event of
any claim for indemnification by the Executive, the Executive shall deliver
written notice of any such claim promptly upon such a claim being made known to
the Executive, which notice shall set forth the basis for such claim. The
Company shall have the right to undertake the defense of such claim with counsel
of its choice.

     9. NON-COMPETITION AND NON-DISCLOSURE COMMITMENTS.

     The Executive hereby represents and warrants that he is not a party to or
otherwise bound by any contracts, agreements or arrangements which contain
covenants limiting the freedom of the Executive to compete in any line of
business or with any person or entity, or which provide that the Executive must
maintain the confidentiality of, or prohibit the Executive from using, any
information in the context of his professional or personal activities. The
Executive further represents and warrants that neither the execution or delivery
of this Agreement nor the performance by the Executive of his duties hereunder
will cause any breach of any contract, agreement or arrangement to which he is a
party or by which he is bound.



                                       43



     10. ARM'S LENGTH NEGOTIATIONS; REPRESENTATION BY COUNSEL.

     The parties to this Agreement further agree that this Agreement has been
negotiated by each in an arm's length transaction. The Executive acknowledges
that he has had the opportunity to be represented by legal counsel in connection
with this Agreement.

     11. TAX WITHHOLDINGS.

     Payments to the Executive of all compensation contemplated under this
Agreement shall be subject to all applicable legal requirements with respect to
the withholding of taxes and other deductions required by law.

     12. NON-ASSIGNABILITY; BINDING AGREEMENT.

     Neither this Agreement nor any right, duty, obligation or interest
hereunder shall be assignable or delegable by the Executive without the
Company's prior written consent; provided, however, that (i) nothing in this
Section shall preclude the Executive from designating any of his beneficiaries
to receive any benefits payable thereunder upon his death or disability, or his
executors, administrators, or other legal representatives, from assigning any
rights hereunder to the person or persons entitled thereto, and (ii) any
successor to the Company pursuant to any merger or consolidation involving the
Company, and any purchaser of all or substantially all the assets of the
Company, shall succeed to the rights and assume the obligations of the Company
under this Agreement, and the Company covenants that it will not enter into or
consummate any such transaction which does not make express provision for such
succession and assumption. Subject to the foregoing, this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto, any successors to
or assigns of the Company, the Executive's heirs and the personal
representatives of the Executive's estate.

     13. AMENDMENT; WAIVER.

     This Agreement may not be modified, amended or waived in any manner except
by an instrument in writing signed by the parties hereto. The waiver by any
party of compliance with any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any provision of this
Agreement.

     14. NOTICES.

     Any notice hereunder by either party to the other shall be given in writing
by personal delivery, telex, telecopy or certified mail, return receipt
requested, to the applicable address set forth below:

          (i) To the Company:     Rockland Trust Company
                                  288 Union Street
                                  Rockland, MA 02370
                                  Attn.: President



                                       44




          (ii) To the Executive:  Denis K. Sheahan
                                  137 Murdock Street
                                  Brighton, MA 02135

(or such other address as may from time to time be designated by notice by
either party hereto for such purpose). Notice shall be deemed given, if by
personal delivery, on the date of such delivery or, if by telex or telecopy, on
the business day following receipt of answer back or telecopy confirmation or if
by certified mail, on the date shown on the applicable return receipt.

     15. GOVERNING LAW.

     This Agreement is to be governed by and interpreted in accordance with the
laws of The Commonwealth of Massachusetts. If, under such law, any portion of
this Agreement is at any time deemed to be in conflict with any applicable
statute, rule, regulation or ordinance, such portion shall be deemed to be
modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement, and the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion thereof.

     16. SUPERSEDES PREVIOUS AGREEMENTS.

     This Agreement constitutes the entire understanding between the Company and
the Executive relating to the employment of the Executive by the Company and
supersedes and cancels all prior written and oral agreements and understandings
with respect to the subject matter of this Agreement.

     17. COUNTERPARTS.

     This Agreement may be executed by the parties hereto in counterparts, each
of which shall be deemed to be an original, but such counterparts shall together
constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the date first above written.

                                    ROCKLAND TRUST COMPANY



                                    By: /s/ DOUGLAS H. PHILIPSEN
                                            --------------------
                                    Its: CHAIRMAN, PRESIDENT & CEO
                                         -------------------------



                                       45


                                    INDEPENDENT BANK CORP.


                                    By: /s/ DOUGLAS H. PHILIPSEN
                                    Its: CHAIRMAN, PRESIDENT & CEO


                                    /s/ DENIS K. SHEAHAN
                                    --------------------
                                    Denis K. Sheahan



       AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     Reference is made to the Agreement dated and effective as of October 31,
1994 by and between Rockland Trust Company, a Massachusetts trust company (the
"Company") and Raymond G. Fuerschbach of North Marshfield, Massachusetts (the
"Executive"), as amended and restated as of January 19, 1996 and as further
amended and restated as of March 12, 1998 (the "Employment Agreement").
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Employment Agreement.

                               W I T N E S S E T H

     WHEREAS, the Executive and the Company are desirous of amending certain
provisions of the Employment Agreement to provide that certain additional
benefits be paid to the Executive upon the occurrence of a change of control of
Independent Bank Corp. ("IBC"), the parent bank holding company of the Company,
where such occurrence is followed by a termination of the Executive's employment
without cause or the Executive's resignation with good reason as such terms are
defined in the Employment Agreement;

     WHEREAS, the Executive and the Company are desirous of amending the
Employment Agreement as set forth above.

     NOW THEREFORE, in consideration of mutual covenants herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     1. Section 5(c) (i) of the Employment Agreement is hereby amended and
restated to read as follows:

     (c) CHANGE IN CONTROL.

          (i) If during the term of this Agreement, any of the events
constituting a Change of Control (as such term is defined in Section 5(c)(ii)
hereof), shall be deemed to have occurred, and following such Change of
Control, either (A) the Executive's employment with the Company and/or any of
its parent, subsidiaries, affiliates, or successors by merger or otherwise as
a result of the Change of Control, is terminated for any reason other than
death, disability (as defined in Section 5 (e) hereof) or for Cause (as such
term is defined in Section 5(a)(ii) hereof), or (B) the Executive resigns for

                                       46





Good Reason (as such term is defined in Section 5 (a) (iii) hereof) from
employment with the Company and/or any of its parent, subsidiaries,
affiliates, or successors by merger or otherwise as a result of the Change of
Control, the Executive shall be entitled (C)(x) to receive his then current
Base Salary for a period of twenty four (24) months from the date of
termination of this Agreement without Cause or resignation for Good Reason
and to receive an amount equal to two (2) times the greater of (a) the
aggregate amount of payments made to the Executive during the twelve (12)
months preceding the date of termination of this Agreement without Cause or
resignation for Good Reason, or (b) the aggregate amount of payments made to
the Executive during the twelve (12) months preceding the Change of Control,
in each case pursuant to any bonus or incentive compensation plan, including
without limitation, the Rockland Trust Company Officer and Executive
Incentive Compensation Plan, as amended from time to time, in each case
payable in a lump sum cash payment immediately following such termination,
and (C)(y)(1) to continue participation in the plans and arrangements
described in clauses (b) and (f) of Section 4 hereof (to the extent
permissible by law and the terms of such plans and arrangements) for the
period of twenty four (24) months after such termination or resignation (the
"Benefits Period"), or (C)(y)(2) at the election of the Executive at any time
following termination of this Agreement and during the Benefits Period, to
receive a gross bonus payment in as amount which after payment therefrom of
all applicable federal and state income and employment taxes, will equal the
cost to the Company at the time of the Executive's election, attributable to
the Executive's participation in the plans and arrangements described in
clauses (b) and (f) of Section 4 hereof for the Benefits Period less any
portion thereof in which the Executive has continued his participation in
such plans and arrangements described in clauses (b) and (f) of Section 4
hereof in accordance with subsection 5(c)(i)(C)(y)(1) above; which payment
shall be due following termination or resignation of the Executive's
employment immediately upon the Executive's delivery of written notice to the
Company of his election pursuant to subsection 5(c)(i)(C)(y)(2), and (C)(z)
to have all stock options which have been granted to the Executive to
immediately become fully exercisable and to remain exercisable for a period
of three (3) months after the termination or resignation date (as the case
may be), in accordance with the terms of the Plan and the relevant stock
option agreement, and (C)(zz) upon his written notice to the Company during a
period of three months following the termination or resignation date (as the
case may be), to purchase his Company owned automobile at a purchase price
equal to the book value of said automobile as carried on the books and
records of the Company, plus all applicable excise taxes.

     2. RATIFICATION.

     All other provisions of the Employment Agreement shall remain unchanged and
in full force and effect, and are hereby ratified and confirmed by the parties
hereto.

     3. COUNTERPARTS.

     This Agreement may be executed by the parties hereto in counterparts, each
of which shall be deemed to be an original, but such counterparts shall together
constitute one and the same instrument.



                                       47




     IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
Second Amended and Restated Employment Agreement as of July 9, 1998.



                                             ROCKLAND TRUST COMPANY




                                             By: /S/ DOUGLAS H. PHILIPSEN
                                                -------------------------

                                             Its: CEO
                                                  ---



                                             INDEPENDENT BANK CORP.





                                             By: /S/ DOUGLAS H. PHILIPSEN
                                                 ------------------------

                                             Its: CEO
                                                  ---




                                             /S/ RAYMOUND G. FUERSCHBACH
                                                 -----------------------
                                                 RAYMOND G. FUERSCHBACH



                                       48




                SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     AGREEMENT, dated and effective as of October 31, 1994 by and between
Rockland Trust Company, a Massachusetts trust company (the "Company") and
Raymond G. Fuerschbach of North Marshfield, Massachusetts (the "Executive"), as
first amended and restated as of the 19th day of January, 1996 and amended and
restated for the second time as of this 12th day of March, 1998 (the "Employment
Agreement").

                               W I T N E S S E T H

     The Executive and the Company are desirous of amending certain provisions
of the Employment Agreement to provide that the Executive be granted an
additional employee benefit in the form of a company car, on the terms and
conditions herein set forth.

     WHEREAS, the Executive and the Company are desirous of amending the
Employment Agreement as set forth above and restating the amended Employment
Agreement as herein set forth.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:

     1. EMPLOYMENT; POSITION AND DUTIES; EXCLUSIVE SERVICES.

     (a) EMPLOYMENT. The Company agrees to employ the Executive, and the
Executive agrees to be employed by the Company, for the Term provided in Section
2 hereof and upon the other terms and conditions hereinafter provided.

     (b) POSITION AND DUTIES/COMPANY. During the Term as defined in Section 2
hereof, the Executive (i) agrees to oversee and manage all the operations and
functions of the Company's human resources department and hold the titles of
Senior Vice President and Director of Human Resources of the Company and to
perform such reasonable duties as may be assigned to him from time to time by
the President and Chief Executive Officer of the Company, and (ii) shall report
to the President and Chief Executive Officer of the Company.

     (c) EXCLUSIVE SERVICES. During the Term, and except for illness or
incapacity, the Executive shall devote all of his business time, attention,
skill and efforts exclusively to the business and affairs of the Company, and
its affiliates, shall not be engaged in any other business activity, and shall
perform and discharge well and faithfully the duties which may be assigned to
him from time to time by the President and Chief Executive; provided, however,
that nothing in this Agreement shall preclude the Executive from devoting
reasonable time during reasonable periods required for any or all of the
following:

          (i) serving in accordance with the Company's policies and with the
prior approval of the President and Chief Executive Officer of the Company, as a
director or member of a committee of any other company or organization involving
no actual or potential conflict of interest with the Company, or any of its
subsidiaries or affiliates;

          (ii) investing his personal assets in businesses in which his
participation is solely that of a passive investor in such form or manner as
will not require any services on the part of the Executive in the operation or
affairs of such businesses and in such form



                                       49




or manner which will not create any conflict of interest with or create the
appearance of any conflict of interest with, his duties at the Company;
provided, however, that such activities in the aggregate shall not materially
adversely affect or interfere with the performance of the Executive's duties and
obligations to the Company hereunder.

     2. TERM OF EMPLOYMENT.

     The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to accept such employment in the capacity set forth herein, for a period
commencing on the date hereof ("Commencement Date") and ending "at will" by
either party upon written notice of termination by one party given to the other
at least fourteen (14) days prior to the termination date specified in such
notice, except as provided by Section 5 hereof. The term of this Agreement, as
the same may be terminated pursuant to Section 5, shall hereinafter be referred
to as the "Term."

     3. CASH COMPENSATION.

     As compensation to the Executive for all services to be rendered by him
in any capacity hereunder, the Company shall pay during the Term an annual
base salary at the current rate of Eighty Four Thousand Six Hundred and
00/100 Dollars ($84,600) per annum, payable no less frequently than bi-weekly
("Base Salary"). The Board of Directors (the "Board") may from time to time
at its discretion review the compensation provisions of this Agreement and
shall have the authority to pay an increased base salary or bonus of other
additional compensation to the Executive.

     4. BENEFITS.

     (a) TRAVEL AND BUSINESS-RELATED EXPENSES. The Executive shall be provided
with a Company owned automobile in accordance with the policies of the Company
regarding automobiles as in effect from time to time. During the Term, the
Executive shall be reimbursed in accordance with the policies of the Company as
in effect from time to time for travel and other reasonable expenses incurred in
the performance of the business of the Company.

     (b) GROUP LIFE INSURANCE. The Company agrees to include the Executive under
the Company's group term life insurance policy in accordance with the policies
of the Company as in effect from time to time. The Company shall pay all
premiums for such coverage.

     (c) SICK LEAVE/DISABILITY. The Executive will enjoy the same sick leave and
short term and long term disability coverage as in effect from time to time for
employees of the Company generally.

     (d) RETIREMENT PLANS. The Executive will be eligible to participate in the
Company's retirement benefit plans each in accordance with the terms of such
plans as in effect from time to time.

     (e) VACATION/HOLIDAYS. The Executive will receive four (4) weeks paid
vacation, on an "as earned" basis each year and will receive ten (10) holidays
each year.

     (f) INSURANCE. During the Term, the Executive shall participate in all
insurance programs (medical, dental, surgical, hospital) adopted by the Company,
including dependent coverage, to the same extent as other executives of the
Company from time to time.

     (g) INCENTIVE COMPENSATION PLAN. The Executive shall be eligible to
participate in the Company's Executive Incentive Compensation Plan, in
accordance with the terms of such plan as in effect from time to time.



                                       50



     (h) TAXES. Except as otherwise specifically provided herein, the Executive
recognizes that some or all of the foregoing benefits and those set forth in
Section 3 may give rise to a federal and/or state income tax liability, and
agrees to be responsible for such liability.

     (i) SPLIT DOLLAR AGREEMENT. Notwithstanding anything to the contrary
contained herein, the Company agrees to gross-up the compensation of the
Executive in an amount determined by the Company accountants as necessary to
reimburse the Executive for (A) the sum of federal and state income and
employment tax incurred by the Executive on account of the P.S.-58 benefit in
the insurance policy described under a Split Dollar Agreement dated as of
January 19, 1996 by and between the Company and the Executive (the "Split Dollar
Agreement"), and (B) the cost of any rider that the Executive purchases for the
waiver on the insurance policy described in the Split Dollar Agreement for the
waiver of premiums in the event of his disability, and (C) the tax effect of the
reimbursements set forth in (A) and (B) hereof, and to pay such amounts to the
Executive in a lump sum payment no later than three (3) business days prior to
the earliest date on which any federal or state income or employment taxes are
due on account of such P.S.-58 benefit and/or the cost for the waiver of
premiums.

     5. TERMINATION OF EMPLOYMENT.

     (a) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON.


          (i) If the Executive's employment is terminated by the Company for
Cause or if the Executive resigns from his employment for any reason other than
for Good Reason, as defined below in Section 5(a)(iv), the Executive shall have
no right to receive compensation or other benefits for any period after such
Termination for Cause or resignation for any reason other than for Good Reason,
except as may be required by law and except that the Executive's rights to
exercise his stock options in the event his employment terminates shall be
governed by the Independent Bank Corp. 1987 Incentive Stock Option Plan and/or
any other relevant stock option plan, as appropriate (the "Plans") and the
relevant stock option agreement.

          (ii) Termination for "Cause" shall refer to the Company's termination
of the Executive's service with the Company at any time because the Executive
has: (A) refused or failed to devote his full normal working time, skills,
knowledge, and abilities to the business of the Company, its subsidiaries and
affiliates, and in promotion of their respective interests pursuant to Section 1
hereof; or (B) engaged in (1) activities involving his personal profit as a
result of dishonesty, incompetence, willful misconduct, willful violation of any
law, rule or regulation or breach of fiduciary duty, or (2) dishonest activities
involving the Executive's relations with the Company, its subsidiaries and
affiliates or any of their respective employees, customers or suppliers; or (C)
committed larceny, embezzlement, conversion or any other act involving the
misappropriation of Company or customer funds in the course of his employment;


                                       51




or (D) been convicted of any crime which reasonably could affect in an adverse
manner the reputation of the Company or the Executive's ability to perform the
duties required hereunder; or (E) committed an act involving gross negligence on
the part of the Executive in the conduct of his duties hereunder; or (F)
evidenced a drug addiction or dependency; or (G) materially breached this
Agreement; provided, however, that, in the case of any termination pursuant to
clauses (A), (E), (F), or (G) above, the Company shall give the Executive thirty
(30) business days' written notice thereof, an opportunity to cure within such
thirty-day period, and a reasonable opportunity to be heard by the Board to show
just cause for his actions, and to have the Board, in its discretion, reverse or
rescind the prior action of the Company under the clause(s).

          (iii) Resignation for "Good Reason" shall mean the resignation of the
Executive after (A) the Company without the express written consent of the
Executive, materially breaches this Agreement to the substantial detriment of
the Executive; or (B) the Board or the President and Chief Executive Officer,
without Cause (as defined in Section 5(a)(ii) above), substantially changes the
Executive's core duties or removes the Executive's responsibility for those core
duties, so as to effectively cause the Executive to no longer be performing the
duties of an executive in the capacity for which the Executive was hired;
provided, however, that, in the case of resignation pursuant to this subsection
(iii), the Executive shall give the Company thirty (30) business days' written
notice thereof and, during such thirty day period, an opportunity to cure.
Anything to the contrary in this Agreement notwithstanding, a termination by the
Executive for any reason during the 30-day period immediately following the
first anniversary of the effective date of a Change of Control (as defined in
Section 5(c) hereof) shall be deemed to be a resignation for Good Reason for all
purposes of this Agreement.

          (iv) The date of termination of employment by the Company for purposes
of Section 5 hereof shall be the date that the written notice of termination
from the Company to the Executive is written, and the Company agrees to use all
good faith efforts to deliver the written notice to the Executive as soon as
possible after the notice is written. The date of a resignation by the Executive
for purposes of Section 5 hereof shall be the date specified in the written
notice of resignation from the Executive to the Company.

     (b) TERMINATION WITHOUT CAUSE; RESIGNATION FOR GOOD REASON.

     If during the term of this Agreement, either (A) the Executive's employment
with the Company and/or any of its parent, subsidiaries or affiliates is
terminated for any reason other than death, disability (as defined in Section 5
(e) hereof) or for Cause (as such term is defined in Section 5(a)(ii) hereof),
or (B) the Executive resigns for Good Reason (as such term is defined in Section
5 (a)(iii) hereof) from employment with the Company and/or its parent,
subsidiaries or affiliates, the Executive shall be entitled (C)(x) to receive
his then current Base Salary for a period of twelve (12) months from the
termination or resignation date, payable at such times as such Base Salary would
be payable as if no such termination or resignation had occurred, (C)(y)(1) to


                                       52



continue participation in the plans and arrangements described in clauses (b)
and (f) of Section 4 hereof (to the extent permissible by law and the terms of
such plans and arrangements) for a period of twelve (12) months after such
termination or resignation (the "Continuation Period"), or (C)(y)(2) to the
extent at any time following termination of this Agreement and during the
Continuation Period that the plans and arrangements described in clauses (b) and
(f) of Section 4 hereof are discontinued or terminate and no comparable plans in
which the Executive is permitted to continue participation are established in
their place, then to receive a gross bonus payment in an amount which after
payment therefrom of all applicable federal and state income and employment
taxes, will equal the cost to the Company at the time of the termination,
resignation or discontinuation of any such plans, attributable to the
Executive's participation in the plans and arrangements described in clauses (b)
and (f) of Section 4 hereof for the Continuation Period less any portion thereof
in which the Executive has continued his participation in such plans and
arrangements described in clauses (b) and (f) of Section 4 hereof in accordance
with subsection 5 (b)(C)(y)(1) above; which payment shall be due following
termination or resignation of the Executive's employment immediately upon the
date of termination, resignation or discontinuation of any such plan, and (C)(z)
to have all stock options which have been granted to the Executive to
immediately become fully exercisable and to remain exercisable for a period of
three (3) months after the employment termination date in accordance with the
terms of the Plans and the relevant stock option agreement, provided, however,
that if the provisions of Section 5(c) are applicable to such termination or
resignation of employment, the Executive's rights shall be governed by Section
5(c).

     (c) CHANGE IN CONTROL.

          (i) If during the term of this Agreement, any of the events
constituting a Change of Control (as such term is defined in Section 5(c)(ii)
hereof), shall be deemed to have occurred, and following such Change of Control,
either (A) the Executive's employment with the Company and/or any of its parent,
subsidiaries, affiliates, or successors by merger or otherwise as a result of
the Change of Control, is terminated for any reason other than death, disability
(as defined in Section 5(e) hereof) or for Cause (as such term is defined in
Section 5(a)(ii) hereof), or (B) the Executive resigns for Good Reason (as such
term is defined in Section 5(a)(iii) hereof) from employment with the Company
and/or any of its parent, subsidiaries, affiliates, or successors by merger or
otherwise as a result of the Change of Control, the Executive shall be entitled
(C)(x) to receive his then current Base Salary for a period of twenty four (24)
months from the date of termination of this Agreement without Cause or
resignation for Good Reason, payable in a lump sum cash payment immediately
following such termination, and (C)(y)(1) to continue participation in the plans
and arrangements described in clauses (b) and (f) of Section 4 hereof (to the
extent permissible by law and the terms of such plans and arrangements) for the
period of twenty four (24) months after such termination or resignation (the
"Benefits Period"), or (C)(y)(2) at the election of the Executive at any time
following termination of this Agreement, and during the Benefits Period, to
receive a gross bonus payment in an amount which after payment therefrom of all
applicable federal and state income and employment taxes, will equal the cost to
the Company at the time of the Executive's election, attributable to the
Executive's participation in the plans and arrangements described in clauses (b)
and (f) of Section 4 hereof for the Benefits Period less any portion thereof in
which the Executive has continued his participation in such plans and
arrangements described in clauses (b) and (f) of Section 4 hereof in accordance
with subsection 5(c)(i)(C)(y)(1) above; which payment shall be due following
termination or resignation of the Executive's employment immediately upon the


                                       53



Executive's delivery of written notice to the Company of his election pursuant
to subsection 5(c)(i)(C)(y)(2), and (C)(z) to have all stock options which have
been granted to the Executive to immediately become fully exercisable and to
remain exercisable for a period of three (3) months after the termination or
resignation date (as the case may be), in accordance with the terms of the Plans
and the relevant stock option agreement.

          (ii) A "Change of Control" shall be deemed to have occurred if,
subsequent to the date hereof and during the term of this Agreement (A) any
"person" (as such term is defined in Section 13(d) of the Securities Exchange
Act of 1934, as amended) is or becomes the beneficial owner, directly or
indirectly, of either (x) a majority of the outstanding common stock of IBC or
the Company, or (y) securities of either IBC or the Company representing a
majority of the combined voting power of the then outstanding voting securities
of either IBC or the Company, respectively, or (B) during any period of two
consecutive years following the date hereof, individuals who at the beginning of
any such two year period constitute the Board of Directors of IBC cease, at any
time after the beginning of such period, for any reason to constitute a majority
of the Board of Directors of IBC, unless the election of each new director was
nominated or approved by at least two thirds of the directors of the Board then
still in office who were either directors at the beginning of such two year
period or whose election or whose nomination for election was previously so
approved.

          (iii) In the event any amount payable as compensation to the Executive
under this Agreement when aggregated with any other amounts payable as
compensation to the Executive other than pursuant to this Agreement would
constitute a Parachute Payment (as hereinafter defined), the amount payable as
compensation under Section 5(c)(i) of this Agreement shall be reduced (but not
below zero) to the largest amount which is not a Parachute Payment (as
hereinafter defined) when aggregated with any other amounts payable as
compensation to the Executive other than pursuant to this Agreement. For
purposes hereof, the term Parachute Payment shall have the meaning given to
parachute payments set out in Internal Revenue Code of 1986 Section
280G(b)(2)(A) (relating to the quantification of parachute payments) as then in
effect determined without regard to the provisions of Internal Revenue Code of
1986 Section 280G(b)(4) (relating to the exclusion of reasonable compensation
from parachute payments) as then in effect. Notwithstanding the foregoing, if
the Executive proves to the satisfaction of the Compensation Committee of the
Company's Board of Directors (if no such Compensation Committee then is in
existence, then any other committee of the Board of Directors of Company then
performing the functions of a compensation committee) with clear and convincing
evidence that all or any portion of the amount of the reduction provided in the
preceding sentence would not constitute a parachute payment within the meaning
of such term as defined in Internal Revenue Code of 1986 Section 280G(b)(2)(A)
as then in effect determined with regard to the provisions of Internal Revenue
Code of 1986 Section 280G(b)(4) as then in effect and that the Company's tax
reporting position in regard to the payment is overwhelmingly likely to be
sustained, then the reduction provided in the preceding sentence shall be
adjusted to permit


                                       54



payment of so much of such reduction as the said Compensation Committee
determines will result in the largest amount which would not constitute a
parachute payment within the meaning of such term as defined in Internal Revenue
Code of 1986 Section 280G(b)(2) (A) as then in effect determined with regard to
the provisions of Internal Revenue Code of 1986 Section 280G(b)(4) as then in
effect.

     (d) MITIGATION; LEGAL FEES. The Executive shall not be required to mitigate
the amount of any payment provided for in either Section 5(b) or Section 5(c)(i)
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in Section 5(b) or Section 5(c) (i) be reduced by any
compensation earned by the Executive as a result of self-employment or
employment by another employer, by retirement benefits or by offset against any
amount claimed to be owed by the Executive to the Company or otherwise.
Following a Change of Control, the Company agrees to pay, as incurred, all legal
fees and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement) plus in each case interest on any delayed payment at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986 as then in effect.

     (e) TERMINATION BY REASON OF DEATH OR DISABILITY.

          (i) Notwithstanding anything to the contrary contained in this
Agreement, the employment hereunder of the Executive shall be automatically
terminated upon the death of the Executive after which time the Company shall
have no further obligation to the Executive or his estate for any compensation
or benefits hereunder, except to the extent any compensation or benefits are due
to the Executive or his estate for any period prior to his death, provided,
however, that this Section 5 (e)(i) shall not affect in any manner any other
benefits to which the Executive or his estate may be entitled or which may vest
or accrue upon his death under any arrangement, plan or program (other than this
Agreement) with the Company, by law or otherwise.

          (ii) Notwithstanding anything to the contrary contained in this
Agreement, the employment hereunder of the Executive may be terminated by reason
of disability, upon written notice to the Executive, in the event of the
inability of the Executive to perform his duties hereunder by reason of
disability, whether by reason of injury (physical or mental), illness (physical
or mental) or otherwise, incapacitating the Executive for a continuous period
exceeding one hundred and eighty (180) days, as certified by a physician
selected by the Company in good faith, and the Company shall have no further
obligation under this Agreement to the Executive for any compensation or
benefits hereunder, except to the extent any compensation or benefits are due to
the Executive for any period prior to his termination by reason of disability,
provided, however, that this Section 5 (e)(ii) shall not affect in any manner
other benefits to which the Executive may be entitled or which may accrue or
vest upon his disability and the Executive shall be entitled to receive such
compensation and benefits during and after such period of disability as the
Company's policies and procedures in effect from time to time provide for
similarly situated executives, as if the Executive and the Company had not
entered into this Agreement.

          (iii) The Executive's rights to exercise his stock options in the
event of termination of his employment by reason of his death or disability
shall be governed by the Plans and the relevant shock option agreement.


                                       55





     6. CONFIDENTIALITY AND NON-COMPETITION.

     (a) CONFIDENTIALITY. The Executive recognizes and acknowledges as an
employee of the Company, he will have access to, become acquainted with, and
obtain financial information and knowledge relating to the business, financial
condition, methods of operation and other aspects of the Company, its parent,
subsidiaries and affiliates ("Affiliated Companies") and their customers,
employees and suppliers, some of which information and knowledge is confidential
and proprietary and that the Executive could substantially detract from the
value and business prospects of the Affiliated Companies in the event, while
employed by the Company or any time thereafter, the Executive were to disclose
to any person not related to the Affiliated Companies or use such information
and knowledge for his or such other person's advantage. Accordingly, the
Executive hereby agrees that he will not disclose to any person, other than
directors, officers, employees, accountants, lawyers, consultants, advisors,
agents and representative of, or other persons related to, the Affiliated
Companies on a need to know basis in the course of carrying out his duties
hereunder, any knowledge or information of a confidential nature pertaining to
the Affiliated Companies, or their successors and assigns, including without
limitation, all unpublished matters relating to the business, properties,
accounts, books and records, business plan and customers of the said
corporations, or their successors and assigns, except with the prior written
approval of the Board, or except as may be required by law.

     (b) EQUITABLE RELIEF. The Executive acknowledges and agrees (i) that the
provisions of this Section 6 are reasonable and necessary for the protection of
the Company, its subsidiaries and affiliates or its or their successors and
assigns, and (ii) that the remedy at law for any breach by him of the provisions
of this Section 6 will be inadequate and, accordingly, the Executive hereby
agrees that in the case of any such breach (x) the Company or its successors and
assigns shall be entitled to injunctive relief, in addition to any other remedy
they may have, and (y) the Executive shall forfeit any future payments or
benefits to which he might be entitled hereunder.

     (c) NON-SOLICITATION. For a period of one (1) year after the Executive
receives any compensation pursuant to this Agreement he will not (i) solicit,
divert or take away, directly or indirectly, any Major Customer of the Company,
its parent, subsidiaries or affiliates, or its or their successors and assigns,
or (ii) directly or indirectly induce or attempt to influence any employee of
the Company, its parent or any of its subsidiaries or affiliates, or their
successors and assigns, to terminate his employment with the Company, its parent
or any of its subsidiaries or affiliates or their successors or assigns. As used
herein, "Major Customer" shall mean any customer of the Company who has
maintained an average deposit balance of at least $100,000 during the last six
months of the Term or who has maintained or obtained a credit facility of at
least $100,000 from the Company during the last six months of the Term.

     (d) ENFORCEABILITY. The covenants on the part of the Executive contained in
this Section 6 shall be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim or cause of action
by the Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
said covenants. This Section shall survive the termination of this Agreement.
The period, geographical area and the scope of the restrictions on the Executive
set forth herein are divisible so that if any provision of this Section 6 is
invalid, that provision shall be automatically modified to the extent necessary
to make it valid.

     (e) JURISDICTION. Employee hereby submits to the exclusive jurisdiction of
the courts of Massachusetts and the Federal courts of the United States of
America located in such state in respect to the interpretation and enforcement
of the provisions of this Section 6, and Employee hereby waives, and agrees not
to assert, as a defense in any action, suit or proceeding for the interpretation
or enforcement of this Section 6, that Employee is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
said courts or that this Agreement may not be enforced in or by said courts or
that Employee's property is exempt or immune from execution, that the suit,
action or proceeding is brought in an inconvenient forum, or that venue is
improper.


                                       56



     7. DISPUTES.

     (a) Any dispute relating to this Agreement, or to the breach of this
Agreement, except such as may concern Section 6, arising between the Executive
and the Company shall be settled by arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association ("AAA"),
which arbitration may be initiated by any party hereto by written notice to the
other of such party's desire to arbitrate the dispute. The arbitration
proceedings, including the rendering of an award, shall take place in Boston,
Massachusetts, and shall be administered by the AAA.

     (b) The arbitrator shall be appointed within thirty (30) days of the notice
of dispute, and shall be chosen by the parties from the names of available
arbitrators furnished to the parties in list form by the AAA. The parties may
review and reject names of available arbitrators from up to an aggregate of
three lists furnished to the parties by the AAA. If, after having been furnished
three lists of arbitrators, the parties cannot agree on one available
arbitrator, either party may request that the AAA appoint an arbitrator to
arbitrate the dispute.

     (c) The award of the arbitrator shall be final except as otherwise provided
by the laws of The Commonwealth of Massachusetts and the federal laws of the
United States, to the extent applicable. Judgment upon such award may be entered
by the prevailing party in any state or federal court sitting in Boston,
Massachusetts.

     (d) No arbitration proceedings hereunder shall be binding upon or in any
way affect the interests of any party other than the Company, or its successors
and the Executive, with respect to such arbitration.

     8. INDEMNIFICATION.

     The Company shall indemnify the Executive to the fullest extent permitted
by Massachusetts law, which indemnification may require the advance of expenses
to the Executive, if and to the extent permitted by such law. In the event of
any claim for indemnification by the Executive, the Executive shall deliver
written notice of any such claim promptly upon such a claim being made known to
the Executive, which notice shall set forth the basis for such claim. The
Company shall have the right to undertake the defense of such claim with counsel
of its choice.

     9. NON-COMPETITION AND NON-DISCLOSURE COMMITMENTS.

     The Executive hereby represents and warrants that he is not a party to or
otherwise bound by any contracts, agreements or arrangements which contain
covenants


                                       57



limiting the freedom of the Executive to compete in any line of business or with
any person or entity, or which provide that the Executive must maintain the
confidentiality of, or prohibit the Executive from using, any information in the
context of his professional or personal activities. The Executive further
represents and warrants that neither the execution or delivery of this Agreement
nor the performance by the Executive of his duties hereunder will cause any
breach of any contract, agreement or arrangement to which he is a party or by
which he is bound.

     10. ARM'S LENGTH NEGOTIATIONS; REPRESENTATION BY COUNSEL.

     The parties to this Agreement further agree that this Agreement has been
negotiated by each in an arm's length transaction. The Executive acknowledges
that he has had the opportunity to be represented by legal counsel in connection
with this Agreement.

     11. TAX WITHHOLDINGS.

     Payments to the Executive of all compensation contemplated under this
Agreement shall be subject to all applicable legal requirements with respect to
the withholding of taxes and other deductions required by law.

     12. NON-ASSIGNABILITY; BINDING AGREEMENT.

     Neither this Agreement nor any right, duty, obligation or interest
hereunder shall be assignable or delegable by the Executive without the
Company's prior written consent; provided, however, that (i) nothing in this
Section shall preclude the Executive from designating any of his beneficiaries
to receive any benefits payable thereunder upon his death or disability, or his
executors, administrators, or other legal representatives, from assigning any
rights hereunder to the person or persons entitled thereto, and (ii) any
successor to the Company pursuant to any merger or consolidation involving the
Company, and any purchaser of all or substantially all the assets or the
Company, shall succeed to the rights and assume the obligations of the Company
under this Agreement, and the Company covenants that it will not enter into or
consummate any such transaction which does not make express provision for such
succession and assumption. Subject to the foregoing, this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto, any successors to
or assigns of the Company, the Executive's heirs and the personal
representatives of the Executive's estate.

     13. AMENDMENT; WAIVER.

     This Agreement may not be modified, amended or waived in any manner except
by an instrument in writing signed by the parties hereto. The waiver by any
party of compliance with any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any provision of this
Agreement.


                                       58



     14. NOTICES.

     Any notice hereunder by either party to the other shall be given in writing
by personal delivery, telex, telecopy or certified mail, return receipt
requested, to the applicable address set forth below:

          (i) To the Company:     Rockland Trust Company
                                  288 Union Street
                                  Rockland, MA 02370
                                  Attn.: President

          (ii) To the Executive:  Raymond G. Fuerschbach
                                  Post Office Box 284
                                  284 Highland Street
                                  N. Marshfield, MA 02059

(or such other address as may from time to time be designated by notice by
either party hereto for such purpose) .Notice shall be deemed given, if by
personal delivery, on the date of such delivery or, if by telex or telecopy, on
the business day following receipt of answer back or telecopy confirmation or if
by certified mail, on the date shown on the applicable return receipt.

     15. GOVERNING LAW.

     This Agreement is to be governed by and interpreted in accordance with the
laws of The Commonwealth of Massachusetts. If, under such law, any portion of
this Agreement is at any time deemed to be in conflict with any applicable
statute, rule, regulation or ordinance, such portion shall be deemed to be
modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement, and the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion thereof.

     16. SUPERSEDES PREVIOUS AGREEMENTS.

     This Agreement and the Split Dollar Agreement and related collateral
assignment constitute the entire understanding between the Company and the
Executive relating to the employment of the Executive by the Company and
supersede and cancel all prior written and oral agreements and understandings
with respect to the subject matter of this Agreement. Except as otherwise
specifically provided herein, all amounts payable to the Executive or the
Company under the Split Dollar Agreement shall be exclusively governed by the
terms of the Split Dollar Agreement and related collateral assignment.



                                       59




     17. COUNTERPARTS.

     This Agreement may be executed by the parties hereto in counterparts, each
of which shall be deemed to be an original, but such counterparts shall together
constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties have executed this Second Amended and
Restated Employment Agreement as of the date first above written.



                                   ROCKLAND TRUST COMPANY







                                   By: /S/ DOUGLAS H. PHILIPSEN
                                       ------------------------

                                   Its: CEO
                                        ---




                                   /S/ RAYMOND G. FUERSCHBACH
                                       Raymond G. Fuerschbach





                                       60

EX-13

                                                                      Exhibit 13


A Management Perspective

INDEPENDENT BANK CORP. HAD A BANNER YEAR IN 2001. The Company's 2001 financial
performance was outstanding, with net income increasing by 45% and diluted
earnings per share increasing 44%. For a variety of reasons, including our own
strong performance as well as favorable investor opinion of the industry segment
to which Independent Bank Corp. belongs, there was a dramatic increase in the
value of the Company's common stock during the year. On December 31, 2001, the
Company's stock closed at $21.49 per share, a 72% increase from the $12.50 per
share closing price on December 29, 2000 (that year's last trading day). The
Company's strong performance in 2001 can be attributed to the following factors:

         o        The continuing, seamless integration of the sixteen branches
                  (acquired from FleetBoston Financial in August 2000)
                  solidified our expansion on to Cape Cod and deepened our
                  already strong presence in Brockton;

         o        Significant growth in our core deposits contributed to our
                  lower cost of funds;

         o        We managed our sources of funds in such a manner as to
                  decrease our over-all cost of funds somewhat faster than the
                  market-driven yield on our earning assets;

         o        Our loan portfolio grew in spite of a slowing economy;

         o        Prudent management of our loan portfolio (coupled with
                  conservative underwriting of new loans) helped the Company
                  maintain asset quality and avoid serious non-performing loan
                  problems, a condition which plagued many other institutions;

         o        The structure of the Company's balance sheet was
                  well-positioned to take advantage of the Federal Reserve
                  Board's eleven interest rate cuts during 2001; and

         o        The high degree of personalized service, which is consistently
                  delivered by the employees of Rockland Trust Company (the
                  Company's sole banking subsidiary), strengthened relationships
                  with existing customers while simultaneously attracting new
                  customers.

Now I'd like to touch upon the highlights of our success in 2001 and what I
anticipate to be some of the opportunities and challenges that lay ahead:

                        SUPERLATIVE OPERATING PERFORMANCE

Excluding after-tax securities gains of $0.9 million, net operating earnings
were $21.1 million and diluted earnings per share on an operating basis were
$1.46 in 2001. Compared to the prior year (which also excludes one-time special
charges mostly related




to the acquisition), the year-over-year growth in net operating earnings and
diluted earnings per share amounts to +21.2% and +19.7%, respectively.

Total assets increased by $249.2 million (+12.8%) from year-end 2000 to a total
of $2.2 billion as of December 31, 2001. The loan portfolio increased by $114.2
million (+9.6%) to $1.3 billion and the investment portfolio increased by $119.2
million (+19.9%) to $719.1 million. The Company's net interest margin also
increased to 4.84% for the year ended December 31, 2001 from 4.60% the previous
year.

             Cape Cod: A Year of Success and Great Opportunity Ahead

It has been almost eighteen months since our acquisition of sixteen former
FleetBoston Financial branches (including four branches in a simultaneous
transaction through Sovereign Bank) as well as associated deposits and loans.
Fourteen of the acquired branches were on Cape Cod.

While that acquisition is by now old news, the process of taking full advantage
of our entry to Cape Cod continues to this day and will be one of our key areas
of focus in the future. At December 31, 2001, the acquired deposits in the
branches on the Cape totaled $294.2 million, an 11.5% increase over December 31,
2000. We believe that Cape Cod has significant potential for additional growth
in part because the deposit balances in the acquired branches experienced a high
rate of decay while under Fleet's management, falling by $108 million between
June 1995 and June 2000.

Also, the permanent and seasonal residents of Cape Cod provide an exceptional
opportunity for our investment management services. The small business community
on the Cape represents another potential source of customers for the Bank's
suite of commercial services.

             STRONG CUSTOMER RELATIONSHIPS AND CORE DEPOSIT GROWTH:
                         THE FOUNDATIONS OF OUR SUCCESS

The strength of our customer relationships derives from the dedicated, well
trained staff that is prudently empowered to make decisions. As a result of this
"high touch" approach towards banking, we benefit from tremendous loyalty and
support in the communities where we do business.

To reach new customers, we successfully launched several aggressive
marketing campaigns that contributed to our core deposit growth of 16.5% in
2001. As a result of our success in terms of increased core deposits, time
deposits were intentionally managed downward by $54.7 million (-9.2%) to $540.4
million at year-end. Overall, total deposits increased by $92.4 million (+6.2%)
from year-end 2000.

            Sustained Loan Growth without Compromising Asset Quality

The Company experienced strong loan growth during 2001, particularly in the
residential and commercial real estate mortgage categories. While the Company
sells the majority of its residential real estate loan production, some
adjustable rate and 15-year "jumbo" fixed residential mortgages were added to
the Company's loan portfolio. However, there were




a number of payoffs in the seasoned commercial real estate loan portfolio that
had been acquired in 2000 from BankBoston. While the credit quality of that
portfolio has been excellent, the out-of-market locations of many of those
borrowers made refinancing their loans difficult in a declining rate
environment. This factor served to dampen overall commercial real estate loan
growth. Credit quality remains a high priority. We have continued to apply
strong underwriting standards and conservative lending practices. As a
consequence, during 2001 we had historically low levels of delinquency and
non-performing loans. The Company's ongoing attention to asset quality and
diligent credit management is made evident by the decrease in non-performing
assets which totaled $3.0 million at December 31, 2001, $1.4 million (31.7%),
lower than the $4.4 million reported a year earlier. In this uncertain
environment, we intend to continue to repeat our historical emphasis on credit
quality and will proceed with care to ensure that we do not deviate from our
customary credit discipline. However, we will not be forever immune from the
serious deterioration of the national economy and, therefore, decided to
substantially increase the provision for loan loss, to $4.6 million in 2001, up
$2.4 million from the prior year.

                 THE ROCKLAND TRUST INVESTMENT MANAGEMENT GROUP:
            SIGNIFICANT PROGRESS DESPITE UNCERTAIN MARKET CONDITIONS

The Rockland Trust Investment Management Group, formerly known as our Asset
Management & Trust Services Division, continued to make progress in 2001 despite
the most challenging market environment in 27 years. While many major
"stand-alone" investment firms experienced negative revenue growth in 2001 of
15% or worse, our fee revenue declined only 2% due to competitive investment
performance and an aggressive new business effort. We added $87 million in new
assets under management in 2001, a 14.5% increase over the prior year, and our
account retention rate increased for the third year in a row.

Most importantly, our outstanding long-term track record of superior investment
performance was maintained in 2001. Over the last five years, the combined
equity portfolios managed by our Investment Management Group have grown at a
compound annual rate of 12.5%, a level which exceeds the Standard & Poor's 500
benchmark that has returned 10.7% annually over the same time period.

              THE ENIGMA OF OUR ECONOMY, IN A WORLD FOREVER CHANGED

The Federal Reserve Board cut the Federal Funds and Discount rates eleven times
in 2001; seven times before the tragic events of September 11th and four times
afterward. It was clear at the beginning of 2001 that the country was headed
toward a recession, if indeed it was not already in one. There is no doubt that
the deteriorating situation was significantly amplified by the events of that
terrible day.

A little over one year ago, we as a nation were celebrating the fact that we had
enjoyed the longest period of sustained economic growth since World War II.
Today, we are suddenly experiencing the lowest short-term interest rate
environment since 1961, over 40 years ago! There is not a single leader, in
government or business, that has any experience in governing or managing in this
rate environment, to say nothing about the




additional uncertainties posed by trained terrorists awaiting opportunities to
magnify the events of September 11th.

One thing, however, remains certain. At some point, there will be an
economic recovery. Our country has managed to overcome adversity for over 200
years. Each crisis has seemed worse than the one before; yet the citizens of
this nation have prospered like no other.

Economic recovery will undoubtedly be accompanied by higher interest rates, at
least, higher short term rates. It is unclear when this transition will occur
but, when it does, the financial services industry will be challenged to
maintain earnings. Those institutions that are successful in doing so will have
figured out how to keep revenue growing in the face of increasing funding costs.
Obviously, in today's low interest rate environment, everyone wants to borrow
long term.

This Company has long had in place a sophisticated asset and liability
management process that has served us well to date. I expect that this process
will serve us well in the future. No institution, however, is immune from the
impact of a changing interest rate environment.

                     SOUTHEASTERN MASSACHUSETTS AND CAPE COD

Rockland Trust has enjoyed steady growth by taking advantage of being in some of
the fastest growing and stable Massachusetts communities.

U.S. Census Bureau Information




                                                                                (Cape Cod)
                                                              Plymouth          Barnstable
                                            Massachusetts     County            County
                                                                       
Population, percent change, 1990 to 2000    5.5%              8.6%              19.1%
Homeownership rate, 2000                    61.7%             75.6%             77.8%
Median household money income,
     1997 model-based estimate              $43,015           $49,165           $40,791


The largest population center in Plymouth County, the City of Brockton,
continues to undergo a transformation that is truly remarkable.

I have said many times that financial institutions are mirrors of their local
economies. Although Rockland Trust is by no means immune to national trends, we
continue to believe that Southeastern Massachusetts and Cape Cod should fare
better in this economic downturn and in the coming recovery. Southeastern
Massachusetts features small and mid-size firms in a diverse mix of industries
that is not heavily weighted toward any single industry. Therefore, our region
is insulated from being confronted with huge layoffs like those that have been
all too common in other regions of the U.S.

The Kingston/Plymouth and Middleborough lines of the renovated former Old Colony
Railroad resumed operations in late 1997, opening our region to commuters from,
as well




as to, Boston. Businesses and prospective residents will continue to take
advantage of the open space in Southeastern Massachusetts and relocate out of
the crowded and expensive metropolitan Boston area. The Scituate Branch of the
former Old Colony Railroad is finally due to begin construction in 2003 and
start operating in 2005. Once again, this will facilitate the expansion of a
sizable portion of our market.

                  STAYING UP-TO-DATE: IMPROVING OUR FACILITIES

During the second quarter of 2001, our Pembroke Branch was relocated from a
tired, nondescript building to a nearby location. We incorporated a historic
building, which had been a community landmark, into the design of our new
facility.

During the third quarter of 2001, Rockland Trust announced that it had signed a
lease for construction of a building at 100 Belmont Street in downtown Brockton
that will accommodate a bank branch, a commercial lending center, a residential
mortgage origination office and an investment management office.

At the same time an old, oversized, high-maintenance building acquired from
FleetBoston Financial was sold to a new owner and it will now become part of the
revitalization of downtown Brockton. Rockland Trust, furthermore, will continue
to maintain a small branch in that building, located directly across from
Brockton City Hall.

In the fourth quarter of 2001, our North Plymouth Branch was relocated from a
dated structure to a newly constructed building about one mile north of the
original location, close to the Plymouth/Kingston line.

                     GIVING BACK TO THE COMMUNITIES WE SERVE

Throughout its long history in Southeastern Massachusetts, Rockland Trust has
strived to understand and address the needs of its customers. Over the years, we
have not lost sight of our founding principle of making a positive difference in
the communities we serve.

In 2001, my colleagues pledged more than $100,000 to the Old Colony United Way
as well as the United Way of Cape Cod and the Islands, an increase of 21% over a
year ago.

When terrorism struck our nation, my colleagues once again felt the need to
help; they initiated a branch-wide fundraising effort for the Red Cross 9/11
Relief Fund. Throughout our 51 locations, employees and customers contributed
nearly $40,000.

One of our enduring initiatives, The Rockland Trust Company Charitable
Foundation, continues to invest in our common future through a scholarship
program serving students in every community where we operate a branch. We are
proud to expand this program into the towns where we have recently added
branches.

                               STRATEGY FOR GROWTH

Over a year ago, we established a three-year strategic plan for 2001-2003 and
are now engaged in the process of updating the plan that will now include 2004.
We will continue to be opportunistic and take advantage of unforeseen events
that coincide with our




established strategy. At the same time, we intend to maintain the controlled
risk profile that has served us well for ten years. Our ultimate goal remains
the same; to meet the financial expectations of our shareholders while offering
the best banking and financial services to the communities we serve. Our
industry clearly continues to evolve, and we have proven that our organization
can effectively adapt to these changing market conditions.

Douglas H. Philipsen
Chairman of the Board, President,
And Chief Executive Officer

                             Directors and Officers

Directors of Independent Bank Corp. and Rockland Trust Company

Richard S. Anderson
President and Treasurer
Anderson-Cushing Insurance Agency, Inc.

W. Paul Clark
President and General Manager
Paul Clark, Inc.

Robert L. Cushing*
President
Hannah B.G. Shaw Home for the Aged, Inc.

Alfred L. Donovan
Independent Consultant

Benjamin A. Gilmore, II
Owner and President
Gilmore Cranberry Co., Inc.

E. Winthrop Hall
Chairman and President
F. L. & J. C. Codman Company

Kevin J. Jones
Treasurer
Plumbers' Supply Company

Lawrence M. Levinson*
Partner
Burns and Levinson LLP




Douglas H. Philipsen
Chairman of the Board, President and
Chief Executive Officer

Richard H. Sgarzi
President and Treasurer
Black Cat Cranberry Corp.

William J. Spence
President
Massachusetts Bay Lines, Inc.

John H. Spurr, Jr.
Executive Vice President and Treasurer
A. W. Perry, Inc.

Robert D. Sullivan
President
Sullivan Tire Co., Inc.

Brian S. Tedeschi
Chairman
Tedeschi Realty Corp.

Thomas J. Teuten
President
A. W. Perry, Inc.

o  IBC Director Only

Honorary Directors of
Rockland Trust Company

John B. Arnold
Retired, Former President and Treasurer
H.H. Arnold Co., Inc.

Donald K. Atkins
Retired, Former President and
Chief Executive Officer
Winthrop-Atkins Co., Inc.

Theresa J. Bailey
Retired, Former Senior Vice President and Clerk
Rockland Trust Company




Robert L. Cushing
President
Hannah B.G. Shaw Home for the Aged, Inc.

Ann M. Fitzgibbons
Volunteer

Donald A. Greenlaw
Retired, Former President
Rockland Trust Company

Lawrence M. Levinson
Partner
Burns and Levinson LLP

Nathan Shulman
Retired, Former President
Best Chevrolet, Inc.

John F. Spence, Jr.
Retired, Former Chairman
of the Board
Rockland Trust Company

Robert J. Spence
President
Albert Culver Company

Officers of Independent
Bank Corp.

Douglas H. Philipsen
Chairman of the Board, President and
Chief Executive Officer

Denis K. Sheahan
Chief Financial Officer and Treasurer

Edward H. Seksay
General Counsel

Edward F. Jankowski
Chief Internal Auditor

Linda M. Campion
Clerk




Tara M. Villanova
Assistant Clerk

Officers of Rockland Trust
Company

Douglas H. Philipsen
Chairman of the Board, President and
Chief Executive Officer

Denis K. Sheahan
Chief Financial Officer and Treasurer

Richard F. Driscoll
Executive Vice President
Retail and Operations

Ferdinand T. Kelley
Executive Vice President
Commercial Lending and Investment Management

Edward H. Seksay
General Counsel

Raymond G. Fuerschbach
Senior Vice President
Human Resources

Edward F. Jankowski
Chief Internal Auditor

Linda M. Campion
Clerk

Tara M. Villanova
Assistant Clerk


Stockholder Information

                                 Annual Meeting

The Annual Meeting of Stockholders will be held at 3:30 P. M. on Thursday, April
11, 2002 at Plimoth Plantation, Plymouth, Massachusetts.




                                  Common Stock

Independent Bank Corp. common stock trades on the Nasdaq Stock Market under the
symbol INDB.


                             Stockholders Relations

Inquiries should be directed to:
Denis K. Sheahan, Chief Financial Officer and Treasurer, or
Michelle Newcomb, Shareholder Relations
Independent Bank Corp.
288 Union Street
Rockland, MA 02370
(781) 878-6100


                                    Form 10-K

Additional information about the Company may be obtained from the Annual Report
on Form 10-K filed with the Securities and Exchange Commission for fiscal year
2001. A copy of the Company's Form 10-K for 2001, without its attached exhibits,
has been provided herein. A complete copy of the Company's Form 10-K for 2001,
with its attached exhibits, may be obtained without charge upon written request
submitted to:

Michelle Newcomb, Shareholder Relations
Independent Bank Corp.
288 Union Street
Rockland, MA 02370


                          Transfer Agent and Registrar

Transfer Agent and Registrar for the Company is:
EquiServe Trust Company, N.A.
P.O. Box 43011
Providence, RI 02940-3011
1-800-426-5523


ROCKLAND TRUST
COMPANY OFFICES
Attleboro
21 North Main Street

Braintree
400 Washington Street

Bridgewater
Route 18, Broad Street




Brockton
1670 S. Main Street
100 Belmont Street
(Anticipated opening 4/02)
485 Belmont Street
34 School Street
836 N. Main Street

Carver
Carver Square, Rte. 58

Centerville
1195 Falmouth Road

Chatham
655 Main Street

Cohasset
Shaw's Cushing Plaza, Rte. 3A

Duxbury
Hall's Corner, 27 Bay Road
The Village at Duxbury*

Falmouth
763 Main Street

Halifax
Plymouth Street, Rte. 106

Hanover
272 Columbia Road, Rte. 53

Hanson
Hanson Shopping Center, Liberty Street

Harwichport
336 Rte. 28

Hingham
Lincoln Plaza, Rte. 3A

Hull
264 Nantasket Avenue

Hyannis
442 Main Street
375 Lyanough Road




Kingston
Kingsbury Square,
Rts. 3A & 53

Manomet
728 State Road

Marshfield
Webster Square

Mashpee
Mashpee Rotary

Middleboro
8B Station Street
Middleboro Plaza
135 So. Main Street

North Eastham
75 Brackett Road

North Plymouth
438 Court Street

Norwell
Queen Anne's Plaza,
Rts. 228 & 53

Orleans
70 Main Street & Rte. 28

Osterville
22 Wianno Avenue

Pembroke
147 Center Street

Plymouth
1 Pilgrim Hill Road, Rte. 44 / Samoset Street
32 Long Pond Road
South High School*

Pocasset
301 Barlows Landing Road




Randolph
84 North Main Street

Rockland
Main Office, 288 Union Street
Rockland Plaza
Market Street

Sandwich
95 Rte. 6A

Scituate
Front Street

South Yarmouth
1123 Main Street
428 Station Avenue

Stoughton
608 Washington Street

Wareham
Cranberry Plaza, Rts. 6 & 28

West Dennis
932 Rte. 28

Weymouth
104 Main Street, Rte. 18

Whitman
692 Bedford Street
Whitman/Hanson High School*

*Limited Service

COMMERCIAL LENDING CENTERS
Attleboro
8 North Main Street

Braintree
400 Washington Street

Brockton
942 West Chestnut Street
(Relocating 4/02)
34 School Street




Hyannis
442 Main Street

Middleboro
8A Station Street

Plymouth
One Pilgrim Hill Road

Randolph
84 North Main Street

Rockland
288 Union Street

INVESTMENT MANAGEMENT GROUP OFFICES

Attleboro
8 North Main Street

Hanover
2036 Washington Street

Hyannis
442 Main Street

MORTGAGE BANKING
CENTERS

Braintree
400 Washington Street

Hyannis
442 Main Street

Middleboro
8A Station Street

EX-23

                                                                  Exhibit 23


CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this Form 10-K of our report dated January 18, 2002 (except for
Note 20 as to which the date is January 31, 2002) included in Registration
Statements File Nos. 33-27999, 333-25999, 333-89835, 33-13158, 33-50770,
33-65114, 33-75530, 33-60293, 333-04259, 333-27169, 333-31107, and 333-82998.


                                              /s/ Arthur Andersen
                                              --------------------
                                              Arthur Andersen

Boston, Massachusetts
March 1, 2002