Independent Bank Corp.

Please also note that today’s event is being recorded. I would now like to turn the conference over to Mr.

Oddleifson, President and CEO. Please go ahead.

Good morning, everyone, and thank you for joining us today. With me as always is Denis Sheahan, our Chief Financial Officer, who’ll elaborate on our financial results and talk about our outlook following my comments.

Well, we really get off to a terrific start in 2012 with an excellent first quarter. Our net income rose for the quarter to $12.2 million, which translates to $0.56 per share.

This healthy increase -- this is a really healthy increase over $0.52 per share in the prior quarter and $0.53 per share a year ago.

Once again solid fundamentals and organic growth really lead the way. Clearly, our marketing, sales and high quality customer relationships are paying big dividends for us, excuse me.

Our value proposition continues to resonate with businesses and consumers alike, fueling strong customer growth.

As you’ve seen in previous quarters, our commercial banking franchise is a major growth engine -- a major engine of growth for us and commercial loan growth continued at a high single-digit annualized rate.

Specifically, the C&I portfolio has been a key driver as we continue to add high quality clients. We have diligently pursued this sector and built up our expertise and product sophistication over the past few years.

On the real estate side, there has been a pick up in commercial construction activity in our market and we’re getting our fair share of attractive deals. Success in the commercial business reached further success, as we continue to advance our reputation as reliable, full service lender to small and midsized businesses.

For example, our recent expansion efforts are beginning to gain traction, such as our expanded asset based lending effort, along with our new office in providence. These and other related moves are expected to help us sustain strong growth in a portfolio.

Our home equity offerings have been another consistent source of quality loan growth. Portfolio has been steadily growing at a high double-digit rate.

Ongoing response to express mortgage product offering has been superb and we’re supporting it with mail and advertising.

I like to remind everybody the vast majority of our home equity growth is driven by first positioned refi loans with very solid LTV and FICOs. Core deposit trends continue to be strong and reflect our emphasis on full core relationships.

Looking at our quarter financials, you’ll note that the underlying deposit growth rates has really kept pace with our robust loan growth rate and core deposit levels have risen to 84% of total deposits, up from 81% a year ago.

I also want to point out that the growth in our commercial business has also provided a really nice source of low cost deposits, as we continue to cultivate full service relationships and the consumer side our progress has been very encouraging. Household growth is strong and new checking accounts are 23% ahead of last year’s pace.

I’m often asked by investors, how we’re able to achieve such strong loan and deposit growth, and whether it’s sustainable. I’ll answer the customer growth momentum question with a number of points.

First of all, Rockland Trust has always enjoyed really strong loyalty from our customers. We really value our knowledgeable and committed bankers, and quality service.

I’d say much of this is attributable to my highly motivated and energized colleagues that continually deliver a lot of what I call discretionary efforts that gets noticed by our customers and prospective customers alike.

In some ways, we’ve really been the best kept secret in the local banking circles but that’s really changed, because we’ve really stepped up our marketing posture, bringing us much greater recognition.

Another major catalyst for the deposit growth momentum and the loan growth momentum has been the financial crisis. We’ve been -- we really been a major beneficiary of the competitive fall that really suit.

Businesses and consumers alike began leaving the bigger banks and we became the bank of choice for many, and that really continues today. What’s encouraging is that our growth is coming from both new customers and deepening of the existing relationships.

In the first quarter, our core households grew at an annualized rate of 7% and what’s notable here is that we haven’t opened a single new branch in the last 12 months. So this really is tremendous organic growth.

So our strategy is to remain consistent, build the kind of bank that attract the best employees and give the kind of advice and service that customers want. And then make sure the world knows about it with really intelligent marketing.

Now I’d like to sort of turn to the balance sheet for a moment. Now our overall risk profile is really rock solid.

The credit picture remains in excellent shape. Net charge-offs continued at low levels in the first quarter, non-performers are up a bit, but were well-contained and below industry peers around 80 basis points of total loans, delinquency trends are fine as well and declined during the quarter.

So our capital position is continues to be a source of this considerable strength. All our capital ratios continue to move upward and exceed regulatory guidelines by a very comfortable margin, as I have always point out, this is totally driven by internal capital generation.

Tangible book value continues to grow and ended the quarter at 9% where it was a year ago, and on the liquidity front, the strength of our core deposit growth headed by Denis and his Treasury team to redeploy our excess cash position more profitably and have further reduced higher cost wholesale borrowings.

So, wrapping up my comments on performance, so while there are very real headwinds so facing our industry especially the pressure on net interest margins and certain fee revenues, we really demonstrated the strength of our franchise in the first quarter.

I usually provide all the colors on the macro environment on these calls, but there is really not whole lot to add that’s new. The local Massachusetts economy continues to fair more favorably than the nation at large.

So housing sales are improving, unemployment in Massachusetts overall of 6.9% much stronger in the Boston area versus a 8.2% rate nation, that’s a big delta and it means a lot in the strength of our local economy.

Of course the mixed bag of economic statistics that brought each week provide enough conflicting signals to keep the optimist and pessimist grounded in their opinions. So we -- we’re really focusing our operating game plan that has really worked well for us.

So we’re really staying aggressive on our customer outreach and branding efforts or investing in our competitive strengths, or keeping an eye on overall expenses, very importantly or sticking to our knitting on the credit front, and we are pursuing organic growth across our footprint.

We remained very, very confident that we’re on the right path and I think testimony to the strength and the stability of our franchise and our commitment to shareholder return is 11% increase and our quarterly dividend to $0.21 per share that was approved last month by the Board of Directors.

Speaking about our Board, I would like to conclude by thanking Tom Teuten for his many years of devoted Board service and stewardship as our Chairman. Tom is stepping down in accordance with our mandatory retirement age guidelines for directors and he has really been a terrific and valued partner to me.

In like fashion, we’re very excited to welcome Donna Abelli as our new Chairman. Donna is serving our Board since 2005 and really brings a very strong financial background and business acumen to this role.

So, with that, I’d like to thank you and I’ll turn it over to Denis.

Thank you, Chris, and good morning, everyone. As Chris stated, we kicked off the year in fine fashion.

Independent Bank Corp. reported net income of $12.2 million and GAAP diluted per share of $0.56 in the first quarter of 2012, as compared to net income of $11.2 million and diluted earnings per share of $0.52 in the fourth quarter of last year.

The prior quarter included the occurrence of prepayment penalties on borrowings equating to $0.02 per diluted share as we deployed some of our excess cash to pay down both higher cost borrowings.

On the key topics in the quarter, the first quarter maintained our disciplined momentum and resulted in strong growth in loans, deposits and the investment management business. Asset quality remains solid and expense growth was well-contained.

Key performance ratios were excellent in the first quarter with return on assets at 1%, return on equity at 10.31% and the net interest margin at 3.82%. The margin came in generally in target as we deployed excess cash into higher yielding loans and securities, the latter to bolster our collateral positions.

Loans grew at 8% on an annualized basis with continued strong growth in both the commercial and home equity lending categories. The home equity portfolio grew 23% on an annualized basis, benefiting from demand for first position mortgage refinancing.

As added disclosure, we’ve begun breaking out first position loans on the balance sheet accompanying the release. The quality of the home equity portfolio was strong with 58% of outstanding balances in first position and current average FICO and LTVs of 762% and 55%, respectively.

The commercial loan portfolio grew nicely in both the commercial and industrial, and construction categories. C&I growth came from both our enhanced asset-based lending initiatives, as well as expansion of borrowing activity from existing customers, a positive sign of economic activity.

The positive growth in construction generally came from rehab projects and student accommodation, mixed-use development and residential sectors. The outlook remains bright for commercial loan growth.

The approved pipeline at the end of the quarter ranks third highest in the last 12 months.

Securities increased $44 million during the quarter, primarily to improve our securities collateral position and to deploy excess cash. Frankly, we’d rather not be buying securities at these rates but we left the portfolio drop to a level where we needed to build back our collateral position.

That said, we concentrated the purchases in agency MBS including CMOs with an average life of three to five years.

Deposits also grew nicely in the first quarter at 7% on an annualized basis. This bank has a powerful deposit engine and we’ve able to fund our balance sheet expansion in a very consistent fashion with loan growth genuinely funded by like amount deposit generation, thus avoiding the need for significant levels of wholesale funding.

Importantly, the mix of deposits continued to improve as core deposits crept up to 84% of total deposits and demand deposits now account for 26% of total deposits. Total cost of deposits declined yet again to 29 basis points in the first quarter.

Asset quality trends remain excellent. Net charge-offs were very low 16 basis points on an annualized basis.

Nonperforming assets increased to $41 million in the quarter with overall levels quite manageable at 82 basis points of total assets.

Loan delinquency remained very strong at 92 basis points at March 31st and early stage delinquency that’s the 30 to 89-day bucket decreased to 41 basis points of loans. We continue to feel really good about the state of our credit profile.

The net interest margin improved as anticipated to 3.82% from 3.78% in the fourth quarter due to a lower borrowing position, as well as lower excess liquidity. We continue to expect it to drift lower from here due to the ongoing pressure on earning asset yields facing our industry.

Noninterest income decreased by 3% largely due to seasonality and service charges, and lower mortgage refinancing activity. However, this was partially offset by higher debit card revenue driven by promotions and higher investment management revenue.

Investment management revenue grew by 11% in the quarter as assets under management hit the $2 billion mark.

Noninterest expense grew by 3%, excluding the borrowing prepayment penalty in the prior quarter and this increase is largely due to payroll taxes, which tend to be greater in the first quarter of the year, as well as seasonally higher occupancy costs due to the winter period.

The tax rate was positively impacted by the recent announcement of our latest new market tax credit award related to our community development support. Our expectation is we will lend approximately $20 million in this year associated with the award.

The tax rate is now expected to be 27.5% for 2012 versus the original projection of 29%.

I will now turn to earnings guidance for the remainder of the year. At our last conference call, we anticipated diluting -- diluted earnings per share performance of between $2.05 and $2.15, based upon a strong first quarter and lower than expected tax rate, we now anticipate being in the upper end of that range.

Key assumptions in our outlook for the remainder of the year include; importantly, while loan net charge-offs were particularly low in this first quarter, we expect the full year guidance to remain the same.

The provision for loan losses is anticipated to stay in the range of $10 million to $14 million and loan net charge-offs at $9 million to $12 million. Of particular note, we anticipate the peak for charge-offs to be in the second quarter at $3 million to $3.5 million.

The remainder of the guidance is essentially the same. Loan growth 6% to 7% and I’ll make a quick comment on this, competition is really heating up and our antennae are definitely raised for the reemergence of loose underwriting practices.

We’ve no problem pulling back as we’ve done before if this becomes more pronounced.

Deposit growth 5%, the net interest margin will decrease to around 3.7% towards the latter part of the year better than the 3.65% we previously expected. So, all in all, we expect a continuation of solid fundamentals and quality performances.

And that concludes my comments. Chris?

Right. Thanks Denis.

We’re ready for questions, operator.

Hi. Good morning, guys.

How are you?

Good morning.

Good morning.

I guess, could you guys first start off by talking little bit about the home equity growth that you saw this quarter and I think in your comments you made reference to just some refinancing activities, but do you guys have some promotional activities going on to try to drive business with that?

We have an attractive product called an express mortgage product is essentially a refi product where we offer through our branches, 92% of them are first, 84% have originations in home equity who were actually the express mortgages and 85% of it was 725 plus. This is all supported by some direct mail -- targeted direct mail and advertising.

Okay. And how does the pipeline looks for that category since we head in the second quarter?

It’s strong, I mean, it’s not sort of, it’s consistent with the production you’re seeing in the growth in the portfolio. So we expect it to continue to grow.

Damon, this is Denis. Just to understand, these are typically smaller balance loans that borrowers that don’t need to go through the lengthy process with the traditional residential mortgage sold in the secondary market.

They are seasoned loans, smaller balance typically and it’s very convenient process for them to go through with this express mortgage. I think that’s part of the attraction to the consumer.

Okay. Denis, you had mentioned a FICO like 762% and LTV of 55%.

Is that on the new production you are putting out now or is that with the entire portfolio looks like?

I think that’s the entire portfolio. We can give you production as well, production here, I might have…

Production is pretty consistent.

…pretty consistent with that, if I don’t have it here, it’s pretty consistent, Damon. I can provide you that off-line, but it’s very consistent with this -- with what we’ve talked about for the portfolio.

Okay. Great.

And then with regard to C&I lending, could you talk a little bit about the pipeline there?

Yeah. I can give you pipeline information overall.

I don’t think I have it split out by C&I. But I can give you total commercial.

Just bear with me for a second. I think I mentioned earlier, it’s third of the last -- it’s the third highest in the last 12 months, yeah.

So the total approved but not closed pipeline is $211 million at March 31st.

Okay. Great.

And I guess just quickly, we look on the liability side of the balance sheet. I think you have around $370 or so million of borrowings that are coming due during the course of the year?

What’s your, I guess, what does it look like for the next couple of quarters as far as potential pickup and reducing the total cost of the borrowings?

Well, keep in mind Damon the vast, vast majority of those borrowings, while they might appear just that the borrowing themselves might be variable they are swap to fixed rate. So there is little that we have coming due on the borrowing side for the remainder of the year, so unless we were to prepay borrowings, you’re not going to see a whole lot of change there, you all agree with that and we don’t anticipate doing more prepayment at least at this point.

Okay. All right.

That’s helpful. I’ll jump out now and come back in if I have a chance after.

Thank you.

Yeah. Sure.

Good morning, guys. This is actually [Matt] filling in for Mark.

Hi, Matt.

Hi. Just a quick question here on capital.

Clearly, strong organic capital generation in the quarter, were you guys surprised by the linked-quarter increase, are you still managing towards 71 in 2012?

Well, I, no, we weren’t surprised by the increase, Matt. I mean, it was certainly a good quarter, but as you know, we’ve been steadily growing capital, we’re very, very comfortable with our capital level.

Our current projections have us being close to 720 by the end of the year on an unadjusted basis. And then when you adjust for the goodwill of deductible for tax purposes will be closer to 750 by the end of the year.

So we’re feeling really good about our capital position.

Okay. Okay.

And just, I think last quarter you also said that having capital at that level gave you flexibility? If in fact, loan growth in your market hits up and people start doing silly things and you slow down loan growth.

How should we think about capital deployment at that point, where do you look, the dividend or how you thinking into that?

So we increased the dividend here, just we announced that there last quarter and we think that’s an appropriate dividend for us. We don’t have plans to increase the dividend further for the rest of this year.

So in this scenario that like the ‘05, ‘06 timeframe when we pulled in the reigns on loan growth because we didn’t like some of the things we were seeing. If that -- if we have that situation again then we would likely look to repurchase shares.

But that’s a -- there’s a lot of ifs in that. But certainly we are not comfortable with our capital position that we believe we have access capital now.

Perfect. That’s great.

Thank you very much.

Thanks Matt.

Hi. Good morning.

Good morning.

Good morning.

Just a couple questions, Denis, you mentioned some promotions drove, stronger debt revenue, could you give any clarity there?

Yeah. We had some promotions in the fourth quarter and I think into the first quarter on debt card related to rewards associated with debit cards, like fairly competitively there’s a lot happening at the companies above $10 billion in terms of debit card revenue or less than $10 billion.

So we are going to try and do what we can to win over those customers from the larger institutions.

And that’s why we have had very, very good consumer check-in growth. Our growth year-to-date is up 23% in new consumer transaction accounts versus a year ago.

So more accounts with some promotional activity has driven that interchange revenue certainly somewhat higher.

So it’s likely not a one time type event, it’s just an ongoing effort of probably.

Must be, yeah, the Q1 was very strong some of it probably season with the shopping, et cetera. It may not be that big in Q2.

But certainly, if you look at even versus a year ago, of that $2.1 million level we had in the fourth quarter that’s probably more $2.1, $2.2, probably more of the normal run rate still up significantly versus Q1 over year ago.

Okay. And on the credit guidance, just really I think not much of a revision there.

Is it really based on your belief that first quarter asset quality was in credit costs, I guess were so good. It’s unlikely that you could keep them at this level, that’s why you’ve not adjusted it down materially?

That’s a fair statement Mac. We’d like to hear it develop a little bit further before we brought down the guidance.

We are feeling pretty confident that Q2 is likely going to be a peak for us in terms of charge-offs. So that’s why we’re guiding you to, we don’t want folks to get too far out ahead of us here in terms of guidance, that’s why we’re guiding you to $3 million to $3.5 million for the second quarter.

I guess, if you look at the different components of our asset quality metrics, very, very positive in terms of delinquency, early stage delinquency at 41 basis points, total delinquency down on a linked quarter basis. That’s very good.

But on the other hand, non-performers have crept up a little bit. We think that will ultimately lead to some charge-offs here in the second quarter.

So our realistic projection is $3 million to $3.5 million of charge-offs for Q2. But full year and then that will be the peak Q3 and Q4 likely less than that, but we certainly see Q2 as being the peak.

Okay. Great.

Appreciate the color and just one final one on the loan growth comments. Denis and Chris, you mentioned competition heated up and you sound like you tempered even though not materially, I think your prior guidance was 7% loan growth for the year and now 6% to 7%, even though first quarter was pretty strong?

Is it based on your belief that competition is peaking up, so you might have to pass on stuff or not win some deals you would have previously won. So you’re somewhat more cautious on growth?

Well, we feel good about Q2 loan growth and on the commercial side unlike you talked about home equity area, it will probably continue into Q2. We already are losing opportunities.

We’re passing up opportunities today, but there’s enough demand out there, enough good new business generation by our lenders that we’re still able to show very good growth. But we absolutely are losing opportunities on underwriting terms and pricing.

So, we don’t know where it’s going to go in the second half of the year but we’ve been through this before.

Got you. Okay.

I appreciate your thoughts. Thanks.

Hey. Good morning.

Good morning.

On the relative reserve and your outlook for charge-offs. Do you have any specific reserves that you recruit for anticipated charge-offs?

Sure. Yeah.

Absolutely we do. We do like everyone else loan impairment review and if the reserves is required, we would establish that reserve.

I don’t know if they are specifically at the end of March, but absolutely we do.

Okay. So to that result…

That will be in our 10-Q filing if anyway, David.

Okay. Would that result in your maybe provisioning being under the charge-off guidance for the second quarter?

No, no. We don’t, we don’t have plans -- we don’t have plans to do that this year.

We think we’re adequately reserves. We don’t have plans to recapture reserves and provide less than charge-offs, I won’t say never but that’s not how we typically think.

Okay. And then, could you walk through some of the AUA growth in the wealth management business, give us ideas of how much of that was related to market appreciation, and how much was related to new business, and maybe some insight on what your new business pipeline and the wealth management business looks like?

The -- we don’t have this. I don’t have the split.

This is Chris, splitting up between market and production. I will say that we have a pipeline consisting with our past growth in the area.

But the large uptick this quarter was due to an existing cline that went from one sort of class of management to another.

So somewhat of -- a portion of that was a reclassification. But I would say, overall, we have really cracked the code on getting really solid referrals from our branch network, bank bankers and our commercial bankers because of the capability we have in our investment management group, which is staffed by real investment management professionals from the name brand firms in New England and nationally.

I think it’s fair to say, Chris, we’re running bigger mandates now too in the employee benefits arena, which has been a really growing area for us. It’s not just individual high net worth anymore and that’s a very, very important component of the business for us.

But we’ve had a couple of big mandates coming here this past quarter in the employee benefit arena. So that does helpful.

And David, your question is good one. I’ll try in future quarters to have the information available if you so wanted in terms of market appreciation and that sort of stuff.

We just -- we haven’t typically broken it out that way.

Yeah. I mean, I think, it wouldn’t be necessary unless you had in other words event, but thank you.

And then could you comment on your outlook for mortgage banking. I think previously you’d expected to see that decline over the course of the year, is anything changing?

Yeah. We think, actually, we’ve been pleasantly surprised with mortgage banking in the first quarter.

We think it will continue into certainly at the beginning of the second quarter, but we’re assuming in the back half of the year it’s going to fall off pretty significantly. We hope we’re wrong on that but that’s our current thinking.

Okay. And then do you have a value of the accruing TDRs?

Yeah. Yeah.

I do, and okay, here we go. The TDRs in total didn’t change a whole lot quarter-over-quarter.

So total TDRs at March 31st $47.2 million, the non-accruing TDRs are 9.2, that’s pretty similar to the prior quarter.

Okay. Great.

Thanks. Good Job.

Sure.

No more questions, [Jamie]?

Thank you very much everybody for joining us. And we look forward to reporting second quarter earnings in three months.

Thank you.

Thank you.

Good bye.