8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15 (d) of
The Securities and Exchange Act of 1934

DATE OF REPORT:

July 16, 2004
(Date of Earliest Event Reported)

MASSACHUSETTS
(State or Other Jurisdiction of Incorporation)

1-9047	04-2870273
(Commission File Number)	(I.R.S. Employer Identification No.)

INDEPENDENT BANK CORP.

288 UNION ST., ROCKLAND, MA

(Address of Principal Executive Offices)

02370
(Zip Code)

NOT APPLICABLE
(Former Address of Principal Executive Offices)

(Zip Code)

781-878-6100
(Registrant’s Telephone Number, Including Area Code)

Item 5. Other Events

Exhibit 99.1 Press Release Announcing Hiring of Jane L. Lundquist Dated July 19, 2004

Exhibit 99.2 Employment Agreement Between Jane L. Lundquist and Rockland Trust Company Dated July19, 2004

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits

(a)	Not applicable.
(b)	Not applicable.

(c) The following exhibits are included with this Report:

Exhibit 99.3 Transcript from July 16, 2004 Earnings Conference Call

Item 9. Regulation FD Disclosure

Attached as Exhibit 99.3 hereto is supplemental information filed pursuant to Regulation FD in conjunction with Independent Bank Corp.’s July 16, 2004 earnings conference call.

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned and hereunto duly authorized.

	INDEPENDENT BANK CORP.
DATE: July 19, 2004	BY:	/s/ Denis K. Sheahan
		DENIS K. SHEAHAN CHIEF FINANCIAL OFFICER AND TREASURER

EX-99.1

INDEPENDENT
BANK CORP.
Parent of Rockland Trust Company

Stockholder Relations NEWS RELEASE

288 Union Street, Rockland, MA 02370

Investor Relations Contacts:

Chris Oddleifson
President and
Chief Executive Officer
(781) 982-6660

Denis K. Sheahan
Chief Financial Officer
(781) 982-6341

Media Contact:

Richard A. Hall
Marketing Director
(781) 982-6486

INDEPENDENT BANK CORP. ANNOUNCES HIRING OF JANE L. LUNDQUIST

     Rockland, Massachusetts (July 19, 2004). Independent Bank Corp., (NASDAQ: INDB), parent of Rockland Trust Company, today announced that Jane L. Lundquist has joined Rockland Trust Company to serve as Executive Vice President and Director of Retail Banking and Corporate Marketing.

     Prior to joining Rockland Trust Company, Ms. Lundquist served as President and Chief Operating Officer of Cambridgeport Bank in Cambridge, Massachusetts and President of Port Financial Corp., the holding company for the bank. In 2003, Boston Magazine recognized Ms. Lundquist as one of Boston’s “100 Most Influential Women.” Ms. Lundquist holds a Masters in Business Administration degree from the University of Virginia and a Bachelor of Science Degree in Business Administration and Accounting from the University of North Carolina at Chapel Hill.

     “I am delighted to have someone of Jane Lundquist’s caliber join our management team,” said Christopher Oddleifson, President and Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “I am very pleased to welcome her aboard.”

     Independent Bank Corp.’s sole bank subsidiary, Rockland Trust Company, currently has $2.8 billion in assets, 56 retail branches, seven Commercial Lending Centers, three Investment Management offices and three Residential Lending Centers located in the Plymouth, Barnstable, Norfolk and Bristol counties of Southeastern Massachusetts. To find out more about Rockland Trust Company and its products visit our web site at www.rocklandtrust.com.

     This press release contains certain “forward-looking statements” with respect to the financial condition, results of operations and business of the Company. Actual results may differ from those contemplated by these statements. The Company wishes to caution readers not to place undue reliance on any forward-looking statements. The Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise.

EX-99.2

EMPLOYMENT AGREEMENT

     Agreement, dated and effective as of July 19, 2004 by and between Rockland Trust Company, a Massachusetts trust company (the “Company”) and Jane L. Lundquist of Boxford, 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 Executive Vice President and Director of Retail Banking and Corporate Marketing for the Company and to perform such reasonable duties as may be assigned to her 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 her 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 her 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; it being understood and agreed that the Executive’s continued service on the boards of the non-profit entities

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identified on Schedule A attached hereto and made a part hereof has been approved and shall not be deemed to breech any provision of this Agreement.

               (ii) investing her personal assets in businesses in which her 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, her 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 her in any capacity hereunder, the Company shall pay during the Term an annual base salary at the current rate of Two Hundred and Forty Thousand 00/100 Dollars ($240,000.00) 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. Anything in this Agreement to the contrary notwithstanding, the Executive may, with the written consent of the Chief Executive Officer, work on a reduced work schedule, during all or any part of the Term and during any such period, shall receive a Base Salary on an appropriately pro-rated basis.

     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

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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.

          (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) Supplemental Executive Retirement Plan. The Executive will participate in the Rockland Trust Supplemental Executive Retirement Plan, a non-qualified plan on terms and conditions and with benefits comparable to those applicable and available to similarly situated executives of the Company.

          (j) Independent Bank Corp. Incentive Stock Option Plan. The Executive shall receive stock options for 10,000 shares of Independent bank Corp. common stock on the Commencement Date and for an additional 10,000 shares on the next business day following the three (3) month anniversary of the Commencement Date in accordance with the Independent Bank Corp. Incentive Stock Option Plan (the “Stock Option Plan”).

     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 her 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

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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 her stock options in the event her employment terminates shall be governed by the Independent Bank Corp. 1997 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, in any material respect, to devote her 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 her personal profit as a result of her 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 her employment; or (D) been convicted of any crime which reasonably could affect in a materially 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 her duties hereunder; or (F) evidenced a drug addiction or dependency; or (G) materially breached this Agreement; provided, however, that, the Company shall give the Executive thirty (30) business days’ written notice thereof during which period the Employee, 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 her 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). During such thirty (30) business day notice period, the Executive may at the discretion of the Company be suspended without pay in the case of a pending termination pursuant to clauses (B), (C), or (D) above (with all pay withheld during the suspension period to be reinstated retroactively in the event pending termination is rescinded or is not completed by the end of the notice period) or be placed on administrative leave with pay in the case of a pending termination pursuant to clauses (A), (E), (F), or (G) above.

               (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 in this Agreement to the contrary notwithstanding, any reduction in the Executive’s Base Salary other than a prorated reduction for part time work

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shall be deemed a material breech of this Agreement. 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 her then current Base Salary (or, if greater, an annual amount equal to the Base Salary actually paid during the period of twelve months ending on the date of termination of employment) 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 pre-tax 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 her 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 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

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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 her then current Base Salary (or, greater, as annual amount equal to Base Salary actually paid during the period of twelve months ending on the date of termination of employment) 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, or (c) the calculated Plan award, 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 pre-tax 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 her 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 her 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 her written notice to the company during the period of three months following the termination or resignation date (as the case may be), to purchase her company owned automobile at a purchase

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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 §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 §280G(b)(4) (relating to the exclusion of reasonable compensation from parachute payments) as then in effect. The initial determination of amounts that constitute Parachute Payments shall be made in good faith by the company. 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 §280G(b)(2)(A) as then in effect determined with regard to the provisions of Internal Revenue Code of 1986 §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 §280G(b)(2)(A) as then in effect determined with regard to the provisions of Internal Revenue Code of 1986 §280G(b)(4) as then in effect.

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          (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 her estate for any compensation or benefits hereunder, except to the extent any compensation or benefits are due to the Executive or her estate for any period prior to her death, provided, however, that this Section 5(e)(i) shall not affect in any manner any other benefits to which the Executive or her estate may be entitled or which may vest or accrue upon her 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 her 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 her 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 her 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.

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               (iii) The Executive’s rights to exercise her stock options in the event of termination of her employment by reason of her 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, she 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 her or such other person’s advantage. Accordingly, the Executive hereby agrees that she 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 her 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 or as the Executive reasonable determines to be necessary to defend or enforce her rights under this Agreement.

          (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 her 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 she might be entitled hereunder.

          (c) Non-Solicitation. For a period of one (1) year after the Executive receives any compensation pursuant to this Agreement she will not (i) with the exception of mass mailings or other broad based marketing efforts, directly or indirectly, solicit, divert, or take away any Major Customer of the Affiliated Companies, or other successors and assigns. As used herein, “Major Customer” shall mean any customer of the Affiliated Companies who either has maintained an average deposit balance of at least $100,000 or has maintained or obtained a credit facility of at least $100,000 from the Affiliated Companies during the term of this Agreement, or (ii) directly or indirectly induce or attempt to influence any employee of the Affiliated Companies, or their successors and assigns, to terminate her employment.

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          (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. Subject to Section 7, 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 subject to section 7, 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, 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.

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(e) Notwithstanding the foregoing, the Company shall have the right to apply to any court of competent jurisdiction for a temporary restraining order, preliminary, injunction or other interim equitable relief to which it may be entitled in connection with any alleged violations of Section 6 of this Agreement.

     8. Indemnification.

          (a) 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. During the Term and thereafter for so long as the Executive shall be subject to suit for liability for acts or omissions in connection with service as an officer or director of the company or service in other capacities at its request, the Company shall cause the Executive to be covered under any policy or contract of insurance obtained by it to insure its directors and officers against personal liability for acts or omissions in connection with such service. The coverage provided to the Executive pursuant to this section 8 shall be of the same scope and on the same terms and conditions as the coverage (if any) provided to other officers or directors of then company.

     9. Non-Competition and Non-Disclosure Commitments.

          The Executive hereby represents and warrants that she 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 her professional or personal activities. The Executive further represents and warrants that neither the execution nor delivery of this Agreement nor the performance by the Executive of her duties hereunder will cause any breach of any contract, agreement or arrangement to which she is a party or by which she 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 she has had the opportunity to be represented by legal counsel in connection with this Agreement.

     11. Tax Withholdings.

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          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 her beneficiaries to receive any benefits payable thereunder upon her death or disability, or her 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

          (ii)          To the Executive:  Jane L. Lundquist
21 Appleton Lane
Boxford, MA 01921

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(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:_________________________________   

Its:_________________________________   

INDEPENDENT BANK CORP.

By:_________________________________   

Its:_________________________________   

_________________________________
JANE L. LUNDQUIST

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EX-99.3

MANAGEMENT DISCUSSION SECTION

Operator: Good morning, ladies and gentlemen, and welcome to the Independent Bank Corp. Second-Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the Conference please press *0 on your telephone keypad. As a reminder, this Conference is being recorded. It is now my pleasure to introduce your host, Mr. Denis Sheahan, Chief Financial Officer of Independent Bank Corp. Thank you, Mr. Sheahan, you may begin.

Denis Sheahan, Chief Financial Officer

Thank you. Good morning and thank you for joining us on the call. This morning’s agenda will include my review of the Second Quarter 2004 Earnings Release, followed by comments by Chris Oddleifson, our Chief Executive, regarding our progress on strategic initiatives and the Falmouth Bancorp acquisition. I will then provide earnings guidance and discuss Rockland Trust’s award of New Markets tax credit. We will then wrap up the call with a Q&A period. With me on the call today are Chris Oddleifson, President and Chief Executive of Independent Bank Corp., and Barry Jensen, and Rob Cozzone of our finance department.

Before I review our Second Quarter Earnings Release, I will read the cautionary statement. This Conference Call may contain certain forward-looking statements with respect to the financial condition, results of operation, and business of Independent Bank Corp. Actual results may differ from those contemplated by these statements. Independent Bank Corp. wishes to caution listeners not to place undue reliance on any forward-looking statements. And disclaims any intent to update, publicly any such forward-looking statements whether in response to new information of future events or otherwise.

I will now review the earnings release. Independent Bank Corp. reported net income of $6.6 million, a decrease of 2.6 million from the quarter-ended June 30, 2003. This represents diluted earnings per share of 45 cents for the second quarter of 2004, as compared to 63 cents in the same period a year ago. The second quarter of 2003 was positively impacted by a tax settlement with the Massachusetts Department of Revenue, resulting in a benefit of $2.1 million, or 14 cents per share in that quarter. This benefit is captured entirely in the provision for income taxes in that quarter.

The second quarter of 2003 also includes security gains of $2 million pre-tax recorded in non-interest income. And FHLB borrowing pre-payment penalties of $1.9 million pre-tax, recorded in non-interest expense. The total impact of these non-core items was approximately 15 cents per share in the second quarter of 2003. Moving to 2004; the only non-core item in the second quarter of 2004 is contained in non-interest expense titled Merger and Acquisition Expense, and represents charges associated with the pending acquisition of Falmouth Bancorp, amounting to $221,000 for the quarter, or 1 cent per share.

Balance sheet changes for the quarter. Investments increased by $55 million, or 7.5% since March 31st. Purchases were concentrated in mortgage backed securities collateralized by 15-year mortgages. Loans grew by $70 million, or 4% for the second quarter. Total commercial loans, including construction, increased by $19 million for the quarter, including the impact of a large C&I loan payoff. The remaining loan increase was in the residential and consumer categories, comprised of adjustable residential loans, home equity lines of credit, and indirect auto. Total loan growth year to date is strong at 7%.

Deposits increased by $146 million, or 8% for the quarter, then $204 million, or 11% year to date. All deposit categories showed improvement, particularly the money market and interest checking

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categories. As discussed previously, we are focused on deposit growth and have seen great success in the municipal, business and personal deposit growth due to a combination of increased marketing presence, a new consumer product set that was introduced mid-quarter, and our ability to quickly take advantage of changes in the market due to competitive strategy and merger disruption. The cost of this more aggressive deposit stance is reflected in increased advertising spend, as well as near-term margin pressure, as promotional deposit pricing in the market heads upward.

Net interest income; the net interest margin for the second quarter of 2004 was 3.84%. This represents a contraction of 30 basis points from the first quarter of 2004, 19 basis points of which is due to the re-class of trust-preferred securities from the mezzanine section of the balance sheet to debt, per FIN 46. The additional compression is due to continued contraction of loan yields and increased liability pricing. I will provide an outlook for the net interest margin and the earnings estimate portion of this presentation.

Non-interest income; excluding security gains in the same period last year, non-interest income improved modestly by $130,000, or 2%. Increases in service charge revenue were essentially offset by a decline in mortgage banking revenue. The balance of the mortgage servicing asset, with $3.2 million in loans serviced, amounted to $363 million as of June 30, 2004.

Non-interest expense; excluding a borrowing pre-payment penalty last year, as well as merger and acquisition expense this year, non-interest expense increased by $600,000, or 3% in the second quarter of 2004 as compared to the same period last year. Salaries and benefits decreased $270,000, due to lower levels of performance-based incentive compensation, and other employee benefits, partially offset by a higher pension expense. Other non-interest expense increased by $927,000 or 21%, primarily due to costs associated with our strategic initiatives and increased advertising and business development. Chris will provide an update on the progress of our strategic initiatives, including expense incurred in this second quarter and year-to-date to support those initiatives.

Asset quality; non-performing assets of $3.3 million represented 12 basis points total assets and the reserve for loan losses as a percentage of loans was 1.41% at June 30, 2004. Reserve coverage of non-performing assets was 7 times. And net charge-offs for the quarter were $280,000. I’ll now turn the call over to Chris for a few comments.

Chris Oddleifson, Chief Executive Officer

Thank you, Denis, and good morning. In many respects this year has been remarkable. While we’ve exceeded our asset and deposit generation goals and expectations, our loan growth at 7% and deposit at 11% at the half-year mark is really outstanding. It’s also remarkable that in light of this growth our net interest income has declined after adjusting for the re-class of trust preferred by about $400,000, or 1%, nearly 2 cents a share. And while our fee income did not meet our expectations, we had good expense management especially in light of the investments we are making.

As Denis will discuss later, we see the margins stabilizing and beginning to expand. Nevertheless, all this points to the critical importance of having a disciplined growth plan across the entire enterprise. In previous calls, I’ve outlined our business growth initiatives and provided a status update. And today I would like to continue the practice and let you know where we stand on these initiatives, what we’ve accomplished, and some early business returns.

Collectively, as I’ve said before, these set of actions will lead to top-line growth and to deliberate investment decisions for this year that will become an important contributor to our 2005-2006 earnings growth. At this point, we have some early indicators of progress, but in subsequent

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earnings calls I will be able to increase the specificity of that result. After I review the initiatives, I’ll summarize our investment year to date to and provide you with what we expect to spend for the rest of the year.

The first initiative is focused on commercial lending, and expanding commercial lending, business development capabilities, and investing in process improvement. Specifically, as I’ve mentioned before, we targeted at net 3 commercial lenders. Commercial lending is one of our strengths. We’ve had success adding one good lender at a time. And we have plenty of room to grow, to the North, to the West, and the Southwest. But, of course, there is ramp up period while loans and deposits are generated.

We ended 2003 with 30 lenders and we now have 31. In this number we had 2 expected retirements this year; and we’ve made – had three hires for net of 1. Interesting, we’re seeing a little more movement in the lender market as the mergers begin to move to their implementation stage.

In the commercial lending area, we’re wrapping up our work to evaluate our commercial lending and cash management processes. As I mentioned in the last earnings call, once a commercial lender achieves a portfolio of a certain size, the time available for new business development diminishes greatly. And looking for ways to streamline our process is going to have an effective increase in the business development time. Some of the examples of improvements that we are looking at and examining are consolidating our loan submission process, improving the efficiency of credit committee meetings, the efficiency of loan operations, implementing and improved sales management. As a result of the, the set of recommendations were are currently evaluating, we anticipating that the time our commercial lenders well spend on business development will move from less than 20% today to 30-35% in the future, that’s at least a 50% increase. We expect the evaluation process to be complete in the next 2 months, while we are doing a rolling evaluation, and some actually implementation planning has started for selected improvements.

Business development in commercial lending is strong. At the end of May our pipeline was the highest it’s been in 12 years. And that’s – while we don’t have any records to validate it, validate this claim back that far, that’s from the memory of our senior lender, Ferd Kelley. This has resulted in the best booking month on record, in June. And the average loan size continues to move upward. Our current pipeline is in the top quartile since January of 2000. And while our credit quality remains rock solid, we are seeing pressure on yield as Denis indicated. Our second initiative that we’ve talked about in the past, and I’m going to brief you again today, is establishing a new business banking division. This is one of our most important growth initiatives, and it’s a division focused on smaller businesses. Over the last several years our commercial lenders are focused on larger and larger relationships and loans, and that has been translated into larger loan size, I just mentioned. We believe that we have a tremendous opportunity to increase the number of smaller business customers we serve. That is the really the bedrock and origin of Rockland Trust Company going back all the way to 1907. Our extensive branch network, product capabilities are key building blocks upon which we can build a formidable small business franchise.

Activity to-date in this area as we continue to refine the loan product set – we are in the process of adding the capability of a small mortgage – commercial mortgage loans. We are in the midst of streamlining our processes, we are installing some auto-decisioning, we still have a gray area in our decisioning, but we’ll have some clear yeses, clear nos. We are deep in the process of adding origination capability, underwriting capability. We’re examining our product set, and of course we are working with – the branch network and the business bank division – are working extensively together because they leverage one another.

Our third initiative has been focused on generating core deposits; here we’ve made tremendous headway. So specifically we’ve increased our deposits by $146 million dollars on a linked quarter basis, or over 8%. This is the result, as Denis mentioned, of an aggressive municipal business development program, the introduction of our new consumer product line was well timed to coincide

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with all the merger activity. And we have increased business deposits as well. We have a number of initiatives underway that facilitate deposit growth in the future. We just, on Monday, opened up a branch in North Attleboro. We’re expecting to open a branch in Raynham in August. As I’ve mentioned previously, we’ve invested, and we’re investing in the process of improving the skill sets across our branch network, not only in terms of relationship development skills, but in the coaching and management areas, we have a new scorecard.

Related to deposit gathering, we were looking; we had an extensive evaluation of our branch network. We’re looking for expansion areas and consolidation opportunities and I should – we did close a small school-based branch during the quarter. Now, I should mention that while we’re having success in raising deposits, given the competitive nature of this market, it’s come at a high cost, and higher than we would do with wholesale funding. But we believe that as interest rates rise, and we manage the interest expense down, that that relationship will shift.

Our fourth initiative is expanding our mortgage banking product sets and investor platform. We’ve significantly increased the number of product offerings and product investors. Given our extensive branch network and franchise presence, we found that we were not meeting our customers’ needs, and that we were leaving opportunity on the table. And we believe that we can bring the options of a mortgage company to the market from a local bank you can trust. We are behind on the number of originators that we wanted to have on staff. At the end of the first quarter we were at 21. We’re now at 26. Our goal was to be at 32. I’ll say our production increased by 45%, second quarter over first quarter, and interestingly the production per mortgage originator that we do have on staff is slightly exceeding our expectations, so when we can hire mortgage generators, they are producing at a greater level than what we had planned.

Our mix that we’re originating is a little more portfolio biased than we had anticipated, leading to less fee income but a higher portfolio, of course you earn the income over time rather than more up front. And I’ll say, our mortgage pipeline did decline at the end of the second quarter versus the first quarter. But we’re seeing some pick-up activity now in the beginning of the third quarter. As I mentioned before, we have strengthened our operations and our processes in this area.

Our fifth strategic initiative is enhancing our investment management group. We – in this business division we’ve maintained our staffing levels, but have reallocated how staff certain capabilities. We’ve increased our capabilities in asset allocation and manager selection. We’re – brought in some more analytically based approaches. We have increased our business development staff, and we have reduced the number of trust administration staff, and we have also increased our retirement management capabilities. Our assets under management or custody have crossed the $500 million dollar mark for the first time, and at the end of the quarter it stands at $504 million. And we have, we’re on the cusp of opening up a new office in Cape Cod, an area which we think has tremendous potential; in fact, our first half of the year we have increased our level significantly over our previous levels in that area. And with all the M&A activity there we think it’s very ripe for further business generation.

Our sixth area of strategic initiative areas is technology improvements. Probably the largest initiative we have underway there is finishing up our core processor evaluation, and I expect over the next couple of months we’ll have some news in that respect.

Probably the most timely today is our seventh initiative, which is being opportunistic with acquisitions within which advance our strategic goals and I’m excited today that we are right this minute in the process of closing the Falmouth Bancorp. We are going to convert over the weekend, the signs will be going up; the systems will be converted. The integration process is going very, very well. Denis will give you the details on improved guidance relative to this acquisition. And I’d just like to mention, the work relationship between Rockland and Falmouth has been exceptional. A real esprit des corps has emerged. It’s a great franchise, a great fit. Everything we’ve hoped for

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has really been exceeded, a great customer set and there’s just a lot of positive energy around it on both sides of the table.

You may recall from our last earnings call we discussed how we are tracking very carefully the expenditures associated with this growth agenda versus our core business. Of our total expenses in the first quarter we spent about $550,000 dollars on these initiatives, or about 2.5 cents a share. In addition compared to the first quarter of ‘03 we spent about $200,000 dollars more on marketing and business development expenses, or about a penny a share, for a total of about 3.5 cents in the first quarter. Similarly, during the second quarter, we spent about $600,000 dollars on these initiatives, or about 2 and 3/4 cents per share, and in addition compared to second quarter of 2003 we spent about an additional $300,000 dollars on marketing business development expenses, or about a penny and a quarter; so in total about 4 cents per share on these growth initiative agenda activities in the second quarter. So that’ll be a total of about 7.5 cents this year. And, Denis will be giving some guidance on the expenditures for the third and fourth quarter in this regard.

I believe that we are making significant progress on all of our key initiatives. Some are going better than expected, such as deposit gathering. Some are going not quite as well as expected, such as hiring mortgage and originators. Others are right on track. On balance, I believe we’re proceeding nicely on building our solid set of fundamentals, and I anticipate our increasing levels of performance in future quarters. And in that regard, Denis is going to give us some guidance.

Denis Sheahan, Chief Financial Officer

Thank you Chris; I want like to talk about 3 subjects. The Falmouth acquisition, New Market tax credits, and then formal earnings guidance for the rest of 2004. As Chris mentioned, the acquisition of Falmouth Bancorp will close today. In previous conference calls, we discussed the benefit associated with this acquisition as being between a half a penny, and one penny per share in 2004. We now expect 3 cents accretion in 2004, and this expectation is based upon higher cost saved than originally planned, as well as our ability to restructure the securities portfolio of Falmouth in a higher rate environment. The third quarter of 2004 will include approximate 1 time merger and acquisition charges to the income segment of $250,000 dollars, or an additional penny per share, as well as an increase to the company’s goodwill asset of approximately $20 million dollars.

New Market tax credits. During the second quarter of this year, we announced a receipt of $30 million dollars in New Market tax credits. This program was enacted in December 2000 and is designed to foster job creation and stimulate economic growth in low-income communities across America. A subsidiary of Rockland Trust Company will make loans to qualified businesses and individuals in low-income communities in accordance with New Market Tax Credit Program criteria. Management will quantify the EPS impact later this year as the finalized award details become available. We are confident and that this will represent significant benefit to the company and to borrowers in our market area in 2004 and beyond.

Now, earnings guidance; as discussed in our previous earnings conference call, management anticipated EPS growth for 2004 in the 4 to 7% range. We now expect to report GAAP diluted earnings per share for 2004 of $1.99. This figure includes approximately 2 cents of one-time merger charges. It also includes 4 cents of security gains that we realized in the first quarter of 2004. I also recognize that this 2004 estimate implies material acceleration in EPS from the first half 2004. Why? The primary reason is improved net interest income generated from a larger balance sheet. The balance sheet grew by 10% in the first half of the year and we expect continued growth in the loan portfolio. In addition, non-interest expense has peaked for the year. Non-interest income is expected to show modest improvement, and we expect the net interest margin to improve by 5 basis points by year-end.

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As Chris mentioned I’d give some specific guidance on the incremental initiative spending and incremental advertising in business development. For the third and fourth quarter we anticipate a total for both quarters of $590,000 pre-tax in incremental spending on the strategic initiatives. Advertising, business developments will be consistent with the same levels in the third and fourth quarter of last year, so the majority of our incremental spending in advertising in business development we believe at this point is complete.

This concludes the presentation and I will now open the call for questions.

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QUESTION AND ANSWER SECTION

Operator: Thank you. Ladies and gentlemen, we will now begin a question-and-answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * key; one moment please while we hold for questions.

Our first question comes from Jared Shaw with KBW. Please state your question.

<Q – Jared Shaw>: Good morning.

<A>: Good morning, Jared.

<Q – Jared Shaw>: Sorry there was a time when I had to jump off for one second so if you already went over some of these I apologize. But could you go over the size of the commercial loans you’re putting on the average size of the new relationships?

<A>: Yes. Well, I can’t tell you the average size of the new relationships, Jared, but we can give you some indication of the size of the loan. The relationships – I don’t have the relationship data right at my fingertips.

<A>: I think the loan was at 464 or something?

<A>: Yeah, I have it right here, hold on just a second. The average loan size, and this is in the packet – it’s for June, the second quarter, where the average loan size was just under $0.5 million. And this has trended up from the mid-$300,000 during ‘03 and probably the upper $200,000 in ‘02; sort of by quarter. I wouldn’t sort of say that’s going to be the floor number going forward, Jared, but that’s a good indication over the last couple of years how things have moved from $200,000 to $300,000 and now into the $400,000.

<Q – Jared Shaw>: And that’s just the commercial side?

<A>: Yes. That’s correct.

<Q – Jared Shaw>: And then on the expenses – you said that performance pay had declined – is that mortgage banking related?

<A>: No, it’s overall, the company’s overall incentive compensation program. I mean, we’re looking at the performance year to date as compared both to last year, as compared to peer performance and so we adjusted our incentive compensation accruals accordingly.

<Q – Jared Shaw>: Okay, that’s company-wide and not department specific.

<A>: That’s right.

<Q – Jared Shaw>: Great. And then the – Denis, you just said that the business development expense of 590 – was that for a quarter or for a year?

<A>: Actually, and just to clarify that, Jared, the $590,000, first of all, was for the second half of 2004, so for both the third and fourth quarter a total of 590. And that was incremental spend on the strategic initiatives. Advertising and business development, we’re going to spend at the same level as last year, we believe, in the second half. So there’s no additional incremental spending on advertising and business development.

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<Q – Jared Shaw>: Okay, great, and then, could you just give an update on the asset sensitivity at the end of the quarter? Or the interest rate sensitivity at the end of the quarter?

<A>: Sure. I mean, and I’m glad you said the latter because we use net interest income sensitivity as our primary measure, not a GAAP analysis. We believe that in a rising rate environment, if we were to assume what’s built into Fed Fund futures at the moment, which is an additional 50 to 75 basis points between now and the end of the year, we think we can weather that storm very effectively; that, as you know, we’ve been very disciplined about adding more adjustable rates, assets through this down-rate environment. So up 100, we think we can lag deposit rates effectively, get the assets to re-price, and have a modest improvement, assuming rates go up another 50 to 75 basis points. Up 200, you know, an immediate shock, up 200, we – there’d be greater pressure on deposit pricing so we’d expect a modest contraction, you know, 1 to 2% in net interest income in the first year. The first 100, we think we can weather, another 100, be believe deposit pricing will continue to increase, and we’ll probably see a contraction of 1 to 2% in the first year.

<Q – Jared Shaw>: Okay thanks, and just finally, when you went through on the EPS guidance, is it 206 for operating, EPS guidance of 199 for GAAP? Could you just go through those numbers one more time?

<A>: Sure. The 199 is GAAP – is what we expect to report in GAAP EPS for 2004. That includes 2 cents of M&A expense. So, if you exclude that, you would arrive at a number of 201. Included in the 201 is 4 cents of security gains. We typically, as an organization, have not counted security gains as operating, so if you excluded those 4 cents, you would come to an operating EPS of $1.97. I would point out to you, Jared, that the first call numbers for Independent for 2003 were at, I believe, $1.93. That number includes 3 cents of net security gains.

<Q – Jared Shaw>: Great.

<A>: That’s typically not how we look at ourselves.

<Q – Jared Shaw>: Okay, so when you describe operating you’re excluding all securities.

<A>: Yes.

<Q – Jared Shaw>: Great. Thank you very much.

Operator: Our next question comes from Chris Mutascio with Legg Mason. Please state your question.

<Q – Chris Mutascio>: Good morning, Chris and Denis. How are you?

<A>: Great. Hi, Chris.

<Q – Chris Mutascio>: I have got a couple of quick questions. Chris, given the several strategic initiatives underway over the past couple quarters, and then the implied ramp up in the earnings guidance that Denis gave, can you provide some thoughts on what initiatives will take hold and provide, I guess, tangible benefits to EPS growth first, and then which ones will lag? It might help me out in terms of modeling a little bit, in terms of – you know, those or six or seven different types of initiatives, which ones you’re seeing are material or a pretty good impact right out of the gate and which ones will lag little bit.

<A – Christopher Oddleifson>: Right. I think the – probably the one that is clearest is the 7th initiative, which is the acquisition initiative, with Falmouth Bancorp. I mean, clearly we have seen a – giving you the specific guidance for that it much improved. So I’d probably put that as number

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one. I would say all the work we’ve done on deposit gathering. We have very large deposits that are increasing. Commercial lending, you know it’s interesting, while we’ve done a lot of work in the first half on process improvement, I can’t say that specifically all the process improvement has led to the best – one of the best months we’ve ever had. I think it’s probably loosely connected, but I think that’s sort of indicative of an increase in the business development, in time we’ll be able to have a good commercial lending year this year.

The – I’d say probably mortgage banking, Chris, would – I’m looking at a slower ramp up there. Business banking, I think we can say that we continue to believe they will be slightly dilutive this year and begin to be accretive next year. Let’s see...let me just...Investment Manager Group, while we are making good progress there, I don’t think that’s going to be a material contributor in terms of improved performance this year– that will improve next year.

<Q – Chris Mutascio>: Okay, that’s fair enough – that’ll give me an idea of going forward. Denis, on the operating expenses, and talking about peaking, I guess, in second quarter of this year, that’s on a standalone basis for INDB? Or does that include Falmouth?

<A – Denis Sheahan>: That’s standalone for INDB. If you want I can provide information on Falmouth, but that is standalone for INDB.

<Q – Chris Mutascio>: No, I can figure that out for myself. I just wanted to make sure with some of the initiatives – you know, the expenses on the initiatives somewhat slowing down, I just wanted to make sure I was interpreting you correctly. And then somewhat of a mundane question; the suspending of the 401K matching that I read in the release. Does that provide any type of morale issues at all?

<A – Christopher Oddleifson >: On balance I’d say that we’re dealing with that just fine. I mean, let me give you a little bit of a, and this is a little bit – we’ve had a lot of conversation about this. One of the things that is sort of mitigating for a potential morale issue is that we’ve been very clear about the increased pension expense and we are one of the remaining companies – banks our size that have a defined benefit pension program As we’ve discussed in previous calls that expense level had been zero, over the two years and it’s about $1.8 million this year. So when you compare that to the 401K match I think people in their rational moments will understand that that’s a good trade off.

<Q – Chris Mutascio>: Right.

<A>: I also think overall the morale here is very good because people are really clamoring to be a part of building a franchise and taking it to even greater heights. And there is – when there is a lot of the – quite frankly, when there is a lot of the merger and acquisition activity around you there is a comfort to know that you work for a company that has a point of view on how they’re going to grow and thrive in that marketplace.

<Q – Chris Mutascio>: Okay. I appreciate you taking my questions, and I hope you have a great weekend.

<A>: Thanks, you too. We’re going to be converting all weekend.

<Q – Chris Mutascio>: Ah, that’s true so it won’t be too much fun, will it? Good luck.

<A>: Thanks.

Operator: Our next question comes from Bill McCrystal with McConnell, Budd & Romano. Please state your question.

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<Q – Bill McCrystal>: Good morning, Chris, Denis.

<A>: Morning, Bill. How are you?

<Q – Bill McCrystal>: A couple of things. One, going back to the initiatives; the evaluation of the branch network, what’s the timeframe in terms of when you’re going to be through with that?

<A>: Well, the – let me answer it in 2 ways, Bill. First of all, I think it is an ongoing discipline that we will have here forever. I mean, always evaluating where we – whether our branches are performing and where we need to consolidate, delete and where we need to add. That answers number one. And the second answer is it is true that we are taking a very intensive deliberate approach to sort of get that whole process started. I would anticipate that we would have a fleshed out point of view of what incremental opportunity there is to take some network, or final steps, by the end of the third quarter, so I will be able to share with you some results, I hope, on our third-quarter earnings call.

<Q – Bill McCrystal>: Okay. That’s fair enough. In terms of the growth that you’ve been experiencing, can you give us a sense of whether that – how much is coming from existing customers? And much is coming from your taking market share away?

<A>: The, uh, let me speak anecdotally here for a second and then I’ll look to some folks here to see whether we have a specific answer to that. Anecdotally, what we’re finding is that given some of the mergers that are going into the implementation stage with conversion and selling and sending out information, that is, as we suspected, alerting people as to their new bank and providing us with some, in some cases, material opportunity in some regions when we’re adjacent to some of those branches, to garner new customers. Our account opening levels have accelerated dramatically over the last six weeks and the number of households that we have added between the end of ‘03 and today has increased – I’m doing some mental math here – by about 3%, which is materially good given our historical trends. I would say a 6% growth trend, household growth trend for the year, which is very good.

<A – Denis Sheahan>: Bill, this is Denis. I would add to that, you know, in the municipal banking area we are definitely increasing our emphasis. You know, it is a very competitive market but Chris spoke of the M&A – heightened M&A activity all around us. It leaves us in a rather unique position as being the largest bank headquartered in Massachusetts remaining. So, that has helped us a lot in our municipal business. Some of our competitors in their recent M&A conversions have made some missteps. There are others that are yet to convert, and we are certainly going to be aggressively waiting and aggressively positioning ourselves not just on the municipal deposit area, but also consumer deposits. We have – we are growing market share in each of our markets. We are taking market share away from some of the other competitors with our new consumer deposit product set, and, you know, we’re going to be doing more things in the business deposit product set in the latter part of this year. So things are looking very good in the deposit front. We think strategically it is critical because we all know that liquidity may tighten at some point down the road here and deposit growth with remain a key strategy for us going forward.

<Q – Bill McCrystal>: Okay. Can you give us a sense on the new loans being booked, what kind of pricing you’re getting? Is it very competitive? And how are you – how are things holding up on that side?

<A>: It’s competitive. We’re not get – you know, as evidenced by a little bit of our margin compression it is quite competitive at the moment. You know, Banc of America, Citizens; everybody are calling, and we are calling, on businesses throughout the region. So it is very competitive.

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<Q – Bill McCrystal>: So you are seeing some pressure on that end? But, as I would assume, that you’re not willing to compromise on the underwriting —

<A>: No. No, we are not. I mean we – I think if you look at our trend in non-performing assets, delinquencies, etc., are very good. You know, we’re fortunate that we have a strong underwriting standard, a good workout group, a seasoned commercial-lending staff, and I think those are the things that make a difference for us. And we’re not looking to compromise on credit at all.

<Q – Bill McCrystal>: Okay. And then just finally, going back to the guidance – and this could be just trying to write and do everything all at once here. I’m going back to $1.93 is basically what we were using as the basis —

<A>: Yes.

<Q – Bill McCrystal>: – From last year.

<A>: Yes. If you – that includes 3 cents of security gain.

<Q – Bill McCrystal>: Right.

<A>: I can either give you a number that includes security gains or excludes security gains.

<Q – Bill McCrystal>: Where I’m having the difficulty in, and it’s just – I’m willing to say it could be my inability to do this quickly, is the $1.93 now you’re saying Falmouth is 3 cents? Your 4 to 7 excluded Falmouth earlier, correct? The 4 to 7% increase over ‘03?

<A>: Yes.

<Q – Bill McCrystal>: Included Falmouth, but now we’re getting more out of Falmouth than originally anticipated —

<A>: Yes

<Q – Bill McCrystal>: – and maybe if you can just walk me through that whole scenario?

<A>: Sure, sure. The – starting with – let me just give you – we are giving guidance. I mean we gave a 4 to 7% range. Clearly we are at the lower end of that range now. The guidance for 2004 GAAP, diluted earnings per share, is $1.99. That includes Falmouth at 3 cents. Okay? It also includes 2 cents of merger and acquisition charges from Falmouth.

<Q – Bill McCrystal>: Uh huh.

<A>: Okay? So if you start at $1.99, add back 2 cents for the merger and acquisition charges you get to $2.01.

<Q – Bill McCrystal>: Uh huh.

<A>: That number is a 4% increase from the $1.93 of last year.

<Q – Bill McCrystal>: Correct.

<A>: Okay? That $1.93 of last year included 3 cents of net security gains. If you back the 3 cents out of last year you get to $1.90 of what I would call operating for last year.

<Q – Bill McCrystal>: Okay.

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<A>: If you knock out 4 cents from this year, you get to $1.97 of operating for this year.

<Q – Bill McCrystal>: Uh huh.

<A>: Okay? So, that’s what I’m calling operating earns for this year; $1.97; GAAP $1.99.

<Q – Bill McCrystal>: Okay. That makes it a little clearer for me, very good. Thanks very much.

<A>: Sure, Bill.

<A>: Bill, let me just – can I make a comment? The – I concluded my remarks by talking about how some things are going better than expected and some things are not going as expected. I would put the Falmouth very much in the better than expected: Falmouth deposits, commercial lending. And when we look at our strategic initiatives portfolio, much like I imagine one looks at a stock portfolio, you expect – you don’t expect to be exactly right on every single call. So, we’re looking sort of, our portfolio we believe of initiatives is on balance, on track and will lead us to the results we’re looking for. Although, there are some ups and downs within it.

Operator: Thank you. Our next question comes from Kelly Hinkle with Lycos Capital [ McConnell, Budd & Romano, Inc.]. Please state your question.

<Q – Kelly Hinkle>: Hi, Good Morning.

<A>: Hi, Kelly.

<Q – Kelly Hinkle>: Hi; just one quick question. The company in recent history has de-emphasized the indirect portfolio, and now I’m seeing some growth there. Could you just expand on that a little? Is there kind of a shift in strategy, a greater comfort level?

<A>: Kelly, I wouldn’t characterize it as a shift in strategy. We still would expect that the indirect portfolio is going to be way down from where we’ve been historically. There are some lower finding in the marketplaces, that given all these mergers and acquisitions activities auto dealers like to have several lenders sort of as an option. Some of their options are consolidating. We’re finding that more of our dealers are calling us more frequently. The nature of the portfolio, the characteristics have not changed. We’re not expecting to ramp this up dramatically. However, we believe that given the in-market nature of this business and what we know about the performance, growing a portfolio consistent with our balance sheet is a good thing.

<Q – Kelly Hinkle>: Okay. Thank you.

<A>: Oh, and one thing I just want to point out, the average FICO on our portfolio is going up. And it currently stands at the end of the second quarter at 726, which is very high.

Operator: Just a reminder. To ask a question please press *1 one your touchtone keypad.

Gentleman, there are no further questions at this time.

Company Representative

Thank you, everyone, for joining us for the call, and we look forward to speaking with you once we announce our third quarter 2004 earnings.

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Company Representative

Yes, thank you very much.

Operator: This concludes today’s conference. Thank you for your participation.

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