Hello and welcome to the earnings conference call second quarter 2008. (Operator Instructions) Now I would like to turn the conference over to Mr. Christopher Oddleifson, Chief Executive Officer. Mr. Oddleifson, you may begin, sir.

Thank you, Mike and good morning. I’m Chris Oddleifson, President and CEO of Independent Bank Corp. Thank you all for joining us on the call this morning. Independent Bank Corp. continues to perform well and I’m very pleased with the results up to the past quarter. At a time when many in our industry are not responding well to the many challenges, Independent Bank Corp. is fairing well. We’ve been conservative in our credit decisions and our new business development, we take a discipline approach to managing our balance sheet, and have avoided or de-emphasized asset classes that we don’t find satisfactory. We continue to make decisions that create long term value for our shareholders, our credit portfolio is in good shape, and we still project our earnings to increase from this year from what we accomplished in 2007. I’m going to turn the call over now to Denis, our CFO -- Denis Sheahan, Chief Financial Officer, who will review some of the details of the past quarter with you. When Denis is done, I’ll make some additional comments, and then we’ll end the call with a question and answer period. Denis.

Thank you, Chris, and good morning. Before I review our second quarter 2008 performance, I will read the customary cautionary statement. This conference call may contain certain forward-looking statements with respect to the financial condition, results of operations, 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 in any forward-looking statements and disclaims any intent to update publically any forward-looking statements, whether in response to new information, future events, or otherwise. I will now review our second quarter 2008 performance. Independent Bank Corp. reported GAAP diluted earnings per share of $0.50 for the second quarter of 2008, an increase of 25% from the $0.40 reported in the same period last year. On a year to date basis, GAAP diluted earnings was $0.94, an increase of 9% from the comparable prior year period. There are a number of non-core items in the various periods detailed in a table in the earnings release. Excluding these non-core items, diluted earnings per share on an operating basis were $0.51 for the quarter ended June 30, 2008,consistent with the prior year quarter, and $1.00 for the 6 month period, an increase of 2% from last year. Key take-aways from the second quarter. We are experiencing strong loan demand, particularly in commercial lending. Our commercial and small business portfolio grew at an annualized pace of 14% in the second quarter. A portion of the growth in our small business portfolio arises from a reassignment of $9 million in small credits from commercial to small business following the Slade’s merger we closed on March 1. In addition, home equity showed good growth. We expect the strong growth in commercial lending to continue for the rest of 2008, although…

Thank you, Denis. I would like to first address our credit condition, and then make some general comments. As Denis said, on a consecutive quarter basis, non-performing assets are stable at $12 million, or about 36 basis points of total assets. Our allowance to loan loss to total loan stands at 129 basis points. Our loan loss coverage ratio is about 312%. We continue to be comfortable with our Slade’s loan portfolio. Overall, delinquency stands at 133 basis points which, while up from 104 basis points from last quarter, is still a relatively low level, and we are providing it, as Denis pointed out, in excess of net charge-offs. Regarding, in more detail, our commercial real estate portfolio. Our commercial real estate NPAs dropped this past quarter by just over $1 million to $2.3 million. While our portfolio is largely concentrated in southeastern Massachusetts, it is well diversified across a number of property types. An independent third party reviews different portions of our commercial loan portfolio on a quarterly basis, and that review achieves a 70% to 80% penetration of our overall commercial loans each year. Our construction portfolio, which totals $170 million, is within our market area and is diversified across a number of project types. We finance smaller construction projects by seasoned, reputable developers that have alternative sources of cash flow. It is very rare that we do not have a personal guarantee. We have virtually no delinquencies in our construction loan portfolio. A minority, less than 10% of our construction loans, have any kind of interest reserves and those few instances where interest reserves are established, we consider the use of interest reserves during the underwriting process and subject it to our loan to value restrictions. We recently conducted a thorough review of our construction loan portfolio,…

(Operator instructions) The first question we have comes from the location of Damon Delmonte with KBW.

Hi, good morning guys. How are you?

Good Morning. Hi Damon. Damon DelMonte – KBW: I was wondering, Denis, if you could provide a little color on the margin and, kind of, what you see for the back half of the year.

Sure. We’re hopeful, Damon -- we're very happy that the margin has reached 4%. We’re very hopeful that that will continue and actually expand somewhat in the second half of the year up to as much as the 4 or 5 region. That is certainly contingent upon what happens in terms of deposit pricing in the market. One of the things that has benefitted us on the asset side is, we have had good, strong, commercial loan demand, and there’s improved credit spread coming in commercial pricing, which is, frankly, a good thing versus the past number of years. So, that’s helping, as well as we’re very focus on controlling our cost of funds. And our cost of funds is strong, I think as you know. So if those factors continue we could certainly see some margin expansion in the second half of the year as well.

Ok, great. With regard to capital, how do you guys feel about your capital position? I know the tier 1 last quarter was around 8.55%, it jumped down to 7.7%. Any insight as to what might have led to the decline in that? Or, I guess, what’s your total capital as well?

Total risk-based?

Yes.

Total risk-based is 10.7%. We’re certainly monitoring it very carefully, Damon, and we are growing in 100% risk weighted assets. But, you know, we’re certainly content with our capital level at this point. If we decide to do anything in terms of any kind of a subordinated debt raise, or anything of that nature, we’ll certainly let everyone know. But we have no plans to raise common equity at this point.

Ok, great. And just one technical question with regard to the tax rate going forward. Is this quarter’s level of 27% a good run rate?

Yeah, that will be about right for the rest of the year. One thing that is sort of lingering out there – we do have an application for a new market tax credit award that we’ll likely find out by the end of the year. But chances are, if we are successful in that effort there would be no impact really for the rest of this year. It would be felt in 2009.

Ok, great. Thank you very much.

The next question we have comes from Laurie Hunsicker with Stifel. Laurie Hunsicker – Stifel Nicholas: Yeah, hi, good morning Denis and Chris.

Good morning, how are you? Laurie Hunsicker – Stifel Nicholas: Just to follow up on some of Damon’s questions. The tier 1 core risk based capital ratio, do you have that handy? Was that 9.5% last quarter.

Total risk based, or – Laurie Hunsicker – Stifel Nicholas: Just the tier 1 core risk based

Yeah, I have that. Just one second. These, of course, are drafts until all the regulatory reports are finalized. Bear with me a second. 9.54%. Laurie Hunsicker – Stifel Nicholas: 9.54, ok. Great. And then, to the extent –

I should correct, total risk based is 10.79 and I think I said 10.7. It’s 10.79 Laurie Hunsicker – Stifel Nicholas: Ok, 10.8, great. And then, to the tax rate question. To the extent that you do get the new market tax rate credit next year, what would your effective tax rate drop to?

It’s hard to say, Laurie, because who knows what we would get in terms of an award. I really couldn’t give an estimate of that. That would be so difficult. It depends on the level of award that we got, and how quickly we could invest that award. I certainly couldn’t give guidance on that. I would assume a similar tax rate going in to next year, until we know whether or not we’re successful on that effort. Laurie Hunsicker – Stifel Nicholas: Ok, ok great. And, thanks for some of the detail that you provided in terms of -- you know, to the extent that you don’t own any equity, or that issue by Fannie/Freddie. Obviously we’ve seen kind of a nervous market. What is your OCI mark at the end of June in equity?

I have that here somewhere. $8 million or so, Laurie. I just have a component of it. I don’t have all of it here. Laurie Hunsicker – Stifel Nicholas: $8 million, ok. So that increased really from $5 million, negative 5 -- ok. And then, if you could take us through, on the credit side, just a couple things. I guess starting with charge-offs link quarter is what I’m looking at. You charge-offs went from $1.1 to $1.3 million. Do you have a category breakdown, or do you have a particular category you can point to and say, “This is where charge-offs were higher?”

Well our charge-offs were almost exclusively in consumer. There’s some very modest commercial charge-offs. They’re mostly indirect auto and the micro business category. The micro small business category, that category, our average loan size is about $50,000 and we’re seeing strapped, as you can expect, in the small contractor, the plasterer, the electrician, etc. We’re seeing stress in that area because of the slowdown in residential development. Laurie Hunsicker – Stifel Nicholas: And is that showing up in the business banking category, or in the C&I category?

Business bank Laurie Hunsicker – Stifel Nicholas: In business banking. Ok. And the remainder of it really is indirect auto. We have a modest amount of home equity at this point. You would expect the home equity loss to increase in the second half of the year, but we’re accounted for all that in the forecasts that I gave you. Laurie Hunsicker – Stifel Nicholas: Ok. Ok, great. And then, just sort of backing in to your reserve in terms of what happened. Slade’s Ferry closed in February, yet it looks like the adjustment to the reserve dollars hit this quarter?

No. As of March 31, we had -- you know, it closed March 1, the transaction, so the two reserves came together in the first quarter. Laurie Hunsicker – Stifel Nicholas: Because I guess I’m looking -- maybe something is not updated here, what I’m looking at, but I’ve got a period end reserve at March 26.8 jumping to June of 33.2.

No, our reserve at the end of March was 32.6, I believe. And at the end of December it was 26.8, so you can see – Laurie Hunsicker – Stifel Nicholas: Ok, so that makes sense. So something is off on my model here. Sorry about that. I guess just quickly looking at the non-performing breakdown that you give, just wondering if you could comment on a few things. First of all, your commercial real estate non-performers continue to go down. This is a nice trend. What are you guys doing there.

Well, I think Chris talked to it earlier in terms of -- you know we’re very proactive on the commercial team. We have a very strong work out group. We have a work out team here who are real champions in this organization – the same folks who helped work us out from the issues in the early 1990s are still here, and they’re a big part of the credit administration in this organization and do a fantastic job. And I think that’s just, sort of, bottom line what it is as well as our overall underwriting and credit administration philosophy. You heard Chris talk about the third party that we have, loan review consultants. There’s a discipline that’s here – they report into the audit committee on a quarterly basis, they do about 70% penetration of the commercial portfolio. It’s a disciplined process that we have in commercial that works for us.

We have, Laurie I think we might have shared this with you in the past, we have a multi-layer rating system where we start on a 10 point scale. It starts with the loan officer rating. It goes to credit administration, and if they say it’s something else, they win. It then goes to our third party review at some point and if they adjust it they’re doing a debate. If they win then, of course, if our external regulatory review suggests an adjustment there’s really no debate – it’s adjusted still. So there’s a very, very disciplined, multi-layered, multi-review look at the quality – at a very in depth level – of each of our loans. I think that really is one, sort of, indication of the strength of our commercial portfolio.

Another thing I’d add to that, Chris, is that we have -- most of our lenders have been here for a long time. They know the footprint, they know the people they do business with, and that’s also very important.

Yes. And just to emphasize, underline, one thing Denis said. It’s in the market. We’re not seeing opportunities in Florida and Texas and sending teams down there to originate loans. It’s in the market we know well. Laurie Hunsicker – Stifel Nicholas: Do you know, off the top of your head, what your average LTV is on the commercial real estate.

It’s in the 65% range. Laurie Hunsicker – Stifel Nicholas: I’m sorry, you said the 55 or 65?

65. The top end in commercial is 70 – 75, and the average is in the low 60s – I think 60. That’s approximate. That’s not a -- I don’t have a report in front of me telling me that. That is just some analysis we’ve done in the past. Laurie Hunsicker – Stifel Nicholas: Ok, great.

That makes sense given our top end is 70-75. Laurie Hunsicker – Stifel Nicholas: Ok. And then, just to go back to two portfolios that haven’t quite performed as well. Just to go back to here, the business banking. I noticed link quarter you’re continuing to grow that portfolio.

I hoped you picked up my comment that $9 million of the growth – Laurie Hunsicker – Stifel Nicholas: Oh, was the reclass. I’m sorry. Yes, you’re exactly right. No, I wrote it down but it didn’t register. Ok.

When we brought in the commercial portfolio, we brought it all into commercial, then we looked at it and into smaller credits we pushed – Laurie Hunsicker – Stifel Nicholas: You reclassed into business banking. Perfect. Ok, and if you were to say where that portfolio might go in terms of delinquencies – because it’s now over 1% - what would be your best guess as we look a year out?

Well, one would hope it’s going to stay around this level. It might migrate up another 10 or 20 basis points and hopefully stay there. But there is stress on the smaller end – there’s stress on the consumer end. So when you’re average loan size here is in that $50,000 range, you’re dealing with, in many cases, sole proprietors – and fuel is having an impact, lack of residential development is having an impact. It’s the small retail, as well, small restaurants. General economic conditions are having an impact. So, some modest increase in delinquency, we would hope. Laurie Hunsicker – Stifel Nicholas: Ok. Ok, great. And then, the last question here. If you could you just touch on the specific link quarter increase in the residential non-performers. There was good detail you gave in the residential portfolio, but that portfolio is now up over 1% non-performing. Any other color you can provide there?

Well, when it’s so low, it’s a handful loan. There’s not a whole lot more color commentary other than the –

We can reemphasize what you said, in terms of, we have looked at them. We have looked at the likelihood of loss. And if you go that far –

We’ve taken a look at each one, where we stand on the value side. If they were all not to cure, we’re exposed to about $200,000. So we have good collateral. It ranges from income -- mostly income reduction, job loss, other factors. Laurie Hunsicker – Stifel Nicholas: Ok, and did any of this have to do with – you had mentioned that you had a loan by loan review. Was any of the jump because of reclassification?

No. Laurie Hunsicker – Stifel Nicholas: No, it wasn’t? Ok. And how much of your residential book is in market?

Virtually all of it. Laurie Hunsicker – Stifel Nicholas: Ok, great. Thanks. I really appreciate it.

Oh, Laurie, a pleasure.

The next question we have comes from Bryce Rowe with Robert W. Baird. Bryce Rowe – Robert W. Baird: Good morning.

Good morning, Bryce. How are you? Bryce Rowe – Robert W. Baird: Doing well, thanks. Can you guys just touch on the operating expenses. Is this a good run rate for the operating expenses?

Yeah, it’s also -- if you look at it on a normalized basis, Bryce. Yes, 26.2. We expect to be slightly less than 26 for the rest of the year, in that 28.8, 25.9 range each quarter. That’s a pretty good run rate. Bryce Rowe – Robert W. Baird: Yep, ok, that’s all I’ve got. Thank you.

The next question we have comes from John Stewart with Sandler O’Neill. John Stewart – Sandler O’Neill: Good morning, guys.

Good morning. John Stewart – Sandler O’Neill: Most of my questions have been answered, but I just want to go back to one thing you said. You talked about having reappraised all your residential portfolios in the last 3 months or so. Can you just give us a sense, for pricing, how much those are down from the last time you had done that project. And then, kind of in that explanation, just kind of touch on – you guys had mentioned in prior quarters that there was some negative impact from foreclosures from the national guys. Just kind of talk about what you’re seeing and feeling there.

Yes, why don’t I just give you a little bit of overview of the market in terms of what’s happened here since our peak. Our peak was in -- we peaked earlier than the rest of banking, in the 3rd and 4th quarter of 2005. In our primary, our most dense, county – Plymouth County – for single family homes the decrease has been about 15% so far. The commentary [inaudible] if you look at interesting, that’s the single family home – interestingly in primary county Plymouth at the condominiums, those prices have stayed stable. We’ve seen, from the peak in 2004 to 2005 and then looking at Q2 2008 is actually up a basis point, the average sales price.

Just to add to what you said there, Chris. In Plymouth, which is our primary county, John, the median sales price was actually stable Q1 to Q2. The median sales price for a single family in Plymouth County was $310,00 in Q1 and it was $310,450 in Q2. We believe that we’re down overall, since that peak that Chris mentioned, about 15% in Plymouth County – no change from the last time we spoke.

Moving to Barnstable County, which is in the Cape Cod area, their peak was in the -- the median sales price has actually been stable the last couple of quarters. But if you take a look at the -

Q1 was $358,000, Q2 was $356,000 so down modestly in Q2. But, you know, one would hope that Q2 should be one of your best seasons in terms of selling in this part of the country. So, there certainly is some stability and we welcome that. Barnstable County overall is down also 15% from the peak. Bristol County, which is the territory that Slade’s Ferry Bancorp was in, is down 18% from the peak and Norfolk County down 10%. So, that gives you some flavor. Generally speaking, this quarter there’s been some stability. But one would expect that, given the time of year – the selling season. John Stewart – Sandler O’Neill: Ok, so you’re not seeing, sort of, marginal pressure from foreclosure activity and things like that?

Well, foreclosures are up in all counties – up significantly. And there’s a large inventory of houses that have been foreclosed for sale. That is, I think, one of the primary factors for what we’re seeing in the price reductions.

I mean, there is a great supply. And the length of supply, if you take a look at the sales duration and number of average months of inventory in the market, that’s an average roughly a half a year prior to this environment and so, roughly, about a year now. So the duration has about doubled. The good news about the price decline and foreclosed properties is that it’s actually getting qualified folks who have a lower income into houses and working our way into a more stable housing environment going forward. John Stewart – Sandler O’Neill: Ok. Thank you for that. And then, just, on the construction portfolio – the commercial construction – that’s about $170 million at quarter end. What’s the breakdown between vertical stuff versus land A&D in that portfolio?

Well, it’s mostly raw land lending. Very little, I mean most of it’s vertical buildings, but it’s over a number of project types – medical office buildings and strip malls and so on. John Stewart – Sandler O’Neill: Ok, and what were the LTVs at origination versus what your recent appraisals suggest.

For what? Residential home equity? John Stewart – Sandler O’Neill: I thought you had said you did that on the construction portfolio as well? Did I misunderstand that?

No, we did appraisals to see whether they were still within our bounds. I don’t have the LTVs in my fingertips, but they’re well within acceptable ranges. Our conclusion was, there’s plenty of cash flow to support the loans, the projects are on schedule, the absorption rates are acceptable. We do not have a construction portfolio issue. And that is a hot button out there that we’ve heard. People worry that, for example, interest reserves are masking delinquencies, and banks aren’t really knowing what’s going on in their construction portfolio. My point today was that, in fact, we do know. We’re taking a close look at the amount of interest reserve loans we have, which are very few, and in those cases we’re not masking any issues. The message is, we don’t have a commercial construction portfolio problem. John Stewart – Sandler O’Neill: Great, well thank you very much.

You’re welcome

We show no further questions at this time. I would like to turn the conference back over to Mr. Oddleifson for any closing remarks.

Thank you very much everybody. We look forward to talking to you again for the third quarter conference call. Goodbye.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.