FORM 10-K/A NO. 1


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

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


          For the Fiscal Year Ended                  Commission File Number
              December 31, 2001                              0-26663
--------------------------------------           -----------------------------

                            Ipswich Bancshares, Inc.
--------------------------------------------------------------------------------
             (Exact Name of registrant as specified in its charter)

                Massachusetts                              04-3459169
----------------------------------------------         -------------------------
(State or other jurisdiction of incorporation)         (I.R.S. Employer
                                                         Identification No.)

             23 Market Street
          Ipswich, Massachusetts                              01938
--------------------------------------------       -----------------------------
  (Address of principal executive offices)                  (Zip Code)

                  Registrant's telephone number: (978) 356-7777
--------------------------------------------------------------------------------

           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

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

                                                  Name of Each Exchange
             Title of Each Class                   on Which Registered
------------------------------------------     ---------------------------------
         Common Stock, $.10 par value            Nasdaq National Market


     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [_]

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

     The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based on the closing price of the Common Stock on March 19, 2002
as reported by the Nasdaq National Market, was approximately $30,735,768.

     As of March 19, 2002, the Registrant had outstanding 1,934,474 shares of
Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE

        THE FOLLOWING ITEMS ARE INCLUDED HEREIN: ITEMS 10, 11, 12 AND 13

<PAGE>


EXPLANATION FOR THIS AMENDMENT:

     The Annual Report on Form 10-K of Ipswich Banshares, Inc. ("Ipswich") for
Ipswich's fiscal year ended December 31, 2001 (the "2001 Form 10-K") is being
amended hereby to include the items and exhibits listed below:

Item           Description

Item  8.       Financial Statements and Supplementary Financial Data

Item 10.       Directors and Executive Officers of the Registrant

Item 11.       Executive Compensation

Item 12.       Security Ownership of Certain Beneficial Owners and Management

Item 13.       Certain Relationships and Related Transactions

     Ipswich's 2001 Form 10-K, as originally filed with the Securities and
Exchange Commission (the "Commission") on March 29, 2002, incorporated into such
form the information required by Items 10, 11, 12 and 13 of Form 10-K by
reference to the Ipswich's Definitive Proxy Statement for its 2002 Annual
Meeting of Stockholders (the "Proxy Statement"). The Proxy Statement will not be
filed with the Commission within 120 days of the close of Ipswich's fiscal year
ended December 31, 2001. In addition, the independent auditors report included
in Ipswich's 2001 Form 10-K did not include the name of their independent
auditors. Accordingly, the 2001 Form 10-K is being amended hereby to include the
information that was originally expected to be incorporated by reference and to
include an auditors' report that identifies Ipswich's independent auditors.

THE AMENDMENT:

Item 8.  Financial Statements and Supplementary Financial Data


               Baker Newman & Noyes Limited Liability Company
                          Certified Public Accountants


                          INDEPENDENT AUDITORS' REPORT

The Board of Director
Ipswich Bancshares, Inc

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

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Ipswich
Bancshares, Inc. and Subsidiaries at December 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America.



                                                      /s/ Baker Newman & Noyes
                                                      ------------------------
                                                      Baker Newman & Noyes
                                                      Limited Liability Company
Portland, Maine
January 25, 2002 (except note 22, as to
       which the date is February 26, 2002)



     Items 10, 11, 12 and 13 in Part III of the 2001 Form 10-K are hereby
amended by deleting the texts thereof in their entirety and substituting
therefor the following:


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information Regarding Directors and Nominees

     The following table sets forth certain information (as of April 16, 2002)
regarding the current directors of Ipswich and the nominees for director.


   Name                       Age        Director Since*      Expiration of Term
   William M. Craft            60              1992                  2003
   Thomas A. Ellsworth         63              1992                  2004
** William E. George           69              1991                  2002
   David L. Grey               48              1989                  2003
   John H. Morrow              69              1990                  2003
** Lawrence J. Pszenny         58              1991                  2002
   William J. Tinti            62              1998                  2004
_____________________

*    Includes service as a trustee of Ipswich Savings Bank ("Ipswich Bank")
     prior to its conversion from the mutual to stock form of ownership on May
     25, 1993 (the "Conversion") and as a director of Ipswich Bank from the date
     of the Conversion to the establishment of Ipswich as the holding company of
     Ipswich Bank on July 1, 1999. All directors of Ipswich are also directors
     of Ipswich Bank.

**   Nominees.


     The principal occupation of each director and nominee for director for at
least the past five years is set forth below.




                                      -2-
<PAGE>

     William M. Craft is Senior Partner at the Eaton Cummings Group, a strategic
planning and management consulting group. From 1973 until 1998, Dr. Craft was
associated with Bunker Hill Community College (Boston, Massachusetts), where he
served as the Vice President for Planning and Development from 1990 until 1998.
Dr. Craft has been a member of the Town of Ipswich Finance Committee since 1976
and served as Chairman from 1986 to 1992. Since April 1996, Dr. Craft has served
as a consultant to the American Management Association. He is also a former
director of the Ipswich Historical Society.

     Thomas A. Ellsworth was with ITT Sheraton Corporation (Boston,
Massachusetts) from 1965 until 1992, serving from 1980 as Senior Vice President
and Director of Real Estate. Currently he is a principal of PKF Hospitality
Investments (Essex, Massachusetts), a consulting and brokerage firm specializing
in hotels and resort real estate. He serves on the Chairman's Committee of the
Trustees of Reservations and the Board of Directors of the Essex County
Greenbelt and is a Trustee of the Massachusetts Land Conservation Trust.

     William E. George held executive sales and marketing positions throughout
his 37-year career in the metal distribution industry. The most extensive part
of this service was with the Zurbach Steel Corp. (Salem, New Hampshire), where
he served as President and a member of the Board of Directors from 1985 until
1987, when this company was sold. He then served in an advisory and sales
capacity both for Zurbach Steel and later for Edgcomb Metals (Nashua, New
Hampshire) until his retirement in 1992. Mr. George has been and continues to be
involved in many civic activities, both public and private. In 1997, he chose
not to run for re-election and retired from the Ipswich Board of Selectmen after
15 years of service, including three years as Chairman of the Board.

     David L. Grey has served as President and Chief Executive Officer of
Ipswich since its formation on February 12, 1999 and of Ipswich Bank since
November 1989. He joined Ipswich Bank as Executive Vice President and Chief
Financial Officer in April 1986 and held that position until elected to his
current positions. Previously, Mr. Grey had been employed at First Colonial Bank
(Lynn, Massachusetts) from 1982 until 1986, where he served as Vice President,
Treasurer and Chief Financial Officer from 1984 to 1986. Mr. Grey is a
Corporator with the Boy's Club (Lynn, Massachusetts) and President of the
Ipswich Savings Bank Educational Foundation.

     John H. Morrow has been Vice President of Hastings-Tapley Insurance Agency
(Cambridge, Massachusetts) since 1984. Mr. Morrow is a past President of the
Rotary Club of Ipswich, and has participated in many community activities
throughout his career.

     Lawrence J. Pszenny has been the Senior Vice President - Finance for
Bickford's Family Restaurants (Boston, Massachusetts) since April 1993. Prior to
that date, he was Vice President - Finance and Treasurer since 1976. Prior to
1976, Mr. Pszenny practiced as a Certified Public Accountant. Mr. Pszenny's
civic and community activities include President, Board of Trustees, Stephen
Caldwell Memorial Convalescent Home; Secretary, Board of Trustees, Friends of
Caldwell Nursing Home; member, Board of Trustees, Ipswich Public Library; and
former member and Chairman, Town of Ipswich Finance Committee. He was also a
member of the Town of Ipswich Board of Selectmen from 1979 through 1987.

     William J. Tinti has been President of the law firm of Tinti, Quinn, Grover
& Frey P.C. (Salem, Massachusetts) since 1982. Prior to that date, Mr. Tinti
served as a legislative assistant to Congressman Michael J. Harrington; served
as City Solicitor of the City of Salem for nine years; and served as
Commissioner of the Massachusetts Historical Commission for six years. Mr.
Tinti's civic activities include service on the Board of Overseers of the
Peabody-Essex Museum; as Clerk of the Essex National Heritage Commission, Inc.;
as Vice President of the Brookhouse Home; on the Executive Committee and Board
of Directors of the Salem Partnership; on the Board of Trustees of the North
Shore Music Theatre; as Co-Chairman of the North of Boston Regional Center at
Salem State College; and on the Steering Committee for North Shore
Transportation Corridor Major Investment Study.


                                      -3-
<PAGE>


Executive Officers

     The names, ages (as of the record date for the annual meeting) and business
experience during at least the last five years of each of the executive officers
of Ipswich and Ipswich Bank is set forth below.

     David L. Grey, age 48, is President and Chief Executive Officer and a
director of both Ipswich and Ipswich Bank. For biographical information
concerning Mr. Grey, see "Election of Directors - Information Regarding
Directors and Nominees" above.

     Kenneth R. Bordewieck, age 47, has held the position of Senior Vice
President/Operations of Ipswich Bank since April 2001. He joined the Bank in
March 2001 as Vice President/Operations. Prior to joining the Bank, Mr.
Bordewieck served as Vice President/Retail at Massachusetts Cooperative Bank
from August 1998 to March 2001. Prior to that time, he was Director of
Operations at DIRECT Federal Credit Union from 1996 to 1998, and Director of MIS
and Secondary Marketing at South Boston Savings Bank from 1993 to 1996.

     Philip J. Bryan, age 37, has held the position of Senior Vice President of
Sales and Marketing since joining Ipswich Bank in November of 2001. Prior to
joining Ipswich Bank, Mr. Bryan served as Vice President and Senior Market
Manager for MetroWest Bank from 1999 to 2001. Prior to that time, he was Vice
President, Business Development Officer for Citizens Bank in Boston from 1996 to
1999 and Assistant Vice President, Business Development Officer at Bank of
Boston from 1994 to 1996.

     Mark E. Foley, age 47, has held the position of Senior Vice President of
Commercial Lending of Ipswich Bank since December 2000. He joined Ipswich Bank
in August of 2000 as Vice President and Senior Commercial Lender. Prior to
joining Ipswich Bank, Mr. Foley served as Vice President and regional commercial
lender of Maine Bank & Trust Company from 1998 to 2000. Prior to that time, he
was Vice President/Small Business Specialist with KeyBank National Association
(successor to Casco Northern Bank) from 1992 to 1998. Mr. Foley serves on the
board of the Ipswich Partnership.

     Francis Kenney, age 43, has held the positions of Senior Vice President,
Chief Financial Officer and Treasurer of Ipswich since its formation on February
12, 1999. He has been Senior Vice President and Chief Financial Officer of
Ipswich Bank since February 1995 and Treasurer since December 1994. Prior to the
latter date, he served as Assistant Vice President and Controller from November
1993 to November 1994. Mr. Kenney is a member of the Boston Chapter of the
Institute of Management Accountants. Mr. Kenney currently serves as a director
of the Ipswich Savings Bank Educational Foundation.

     All executive officers hold office until the first meeting of the board of
directors following the annual meeting of stockholders or special meeting in
lieu thereof and until their successors are chosen and qualified, unless, with
respect to executive officers other than the President and Treasurer, a shorter
term is specified in the vote appointing them.

Compensation of Directors

     Each director receives a retainer of $2,400 per year, payable monthly, and
$300 for each board meeting attended. Directors do not receive additional fees
for attendance at meetings of Ipswich's board that are held immediately prior to
or after a meeting of the Ipswich Bank board of directors. The Executive
Committee meets a minimum of twice each month and each member receives a
retainer of $11,000 per year (in the case of the Chairman, $13,750), payable
monthly, and $375 for each meeting attended. Members of the Audit, Compensation,
Strategic Planning and Asset/Liability Management Committees receive $350 for
each meeting attended. Ipswich has a deferred compensation plan pursuant to
which directors may defer all or a portion of the fees that they receive as
committee or board members. Directors who are employees of Ipswich or Ipswich
Bank do not receive compensation for their services as directors.

     On January 24, 2001, Ipswich granted options to directors at an exercise
price equal to the fair market value of a share of the Ipswich common stock on
the date of grant, to replace an equal number of previously granted options that
were cancelled by Ipswich on July 21, 2000.


                                      -4-
<PAGE>


Compliance with Section 16(a) of the Securities Act of 1934

     Section 16(a) of the Securities Exchange Act of 1934 requires Ipswich's
officers and directors, and persons who own more than 10% of a registered class
of Ipswich's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors, and
greater-than-10% shareholders are required by Commission regulations to furnish
Ipswich with copies of all Section 16(a) forms they file.

     Based solely on review of copies of such forms furnished to Ipswich,
Ipswich believes that during 2001 all Section 16(a) filing requirements
applicable to its officers, directors, and greater-than-10% beneficial owners
were complied with.

ITEM 11.  EXECUTIVE COMPENSATION

Executive Compensation

                           Summary Compensation Table

     The following Summary Compensation Table sets forth certain information
regarding compensation paid or accrued by Ipswich and Ipswich Bank with respect
to the Chief Executive Officer and Ipswich's and Ipswich Bank's most highly
compensated officers other than the Chief Executive Officer who served as
officers at the end of fiscal 2001 and whose annual compensation exceeded
$100,000 for fiscal 2001.

<TABLE>
<CAPTION>
                                                                                              Long-Term             All Other
                                                     Annual Compensation                      Compensation          Compensation (1)
                                         --------------------------------------------------   -------------------   ----------------
Name and                                                                     Other Annual        Securities
Principal Position           Year             Salary         Bonus           Compensation(2)  Underlying Options
------------------           ----             ------         -----           ------------     ------------------
<S>                          <C>            <C>            <C>                   <C>              <C>                  <C>
David L. Grey                2001           $ 239,200      $  95,680              --               30,000               $71,691
      President and Chief    2000             230,000         67,620              --                   --                71,564
      Executive Officer      1999             212,000         84,000              --               50,000                71,564
      of Ipswich
      and Ipswich Bank

Francis Kenney               2001               98,800        24,700              --                5,000                13,067
      Senior Vice            2000               95,000        13,965              --                   --                12,956
      President, Chief       1999               86,500        17,300                               10,000                 3,075
      Financial Officer
      and Treasurer of
      Ipswich and
      Ipswich Bank
_________________
</TABLE>

(1)  For Mr. Grey in 2001, includes premium on a variable life insurance policy
     on Mr. Grey's life in the amount of $60,000 (see description under
     "Retirement Benefit"), payment of life insurance premiums in the amount of
     $1,680, Ipswich Bank's contribution to Mr. Grey's 401(k) retirement plan in
     the amount of $5,100 and payment of supplemental disability insurance
     premiums in the amount of $4,911. For Mr. Kenney in 2001, includes premium
     on a variable life insurance policy on Mr. Kenney's life in the amount of
     $10,000 and Ipswich Bank's contribution to Mr. Kenney's 401(k) retirement
     plan in the amount of $3,067.

(2)  Omitted since amounts are below the threshold required to be disclosed.

                        Option Grants in Last Fiscal Year

     As shown in the table set forth below under the caption "Ten-Year
Option/SAR Repricing" and as described under the caption "Compensation Committee
Report - Report on Repricing of Options," on July 19, 2000, Ipswich agreed to
grant options to the executive officers named in the Summary Compensation Table
at an exercise price equal to the fair market value of the Ipswich common stock
on the date of grant. The grant was conditioned upon the executive officers'
entering into an agreement no later than July 21, 2000 to cancel


                                      -5-
<PAGE>


the same number of previously granted options. Each such officer entered into
such an agreement and the options were re-granted on January 24, 2001. The
cancellation of existing options and the re-grant of new options was previously
disclosed in Ipswich's proxy statement for its 2001 annual meeting.

     The following table sets forth certain information regarding stock options
granted during the fiscal year ended December 31, 2001 by Ipswich to the
executive officers named in the Summary Compensation Table.

<TABLE>
<CAPTION>

                                                                                                 Potential
                                                                                             Realizable Value
                                          Individual Grants
                -----------------------------------------------------------------------         At Assumed
                                                                                              Annual Rates of
                 Number of           Percent of                                                 Stock Price
                 Securities         Total Options                                            Appreciation for
                 Underlying          Granted to           Exercise                            Option Term (2)
                  Options           Employees in            Price           Expiration     ---------------------
Name              Granted            Fiscal Year          ($/Sh)(1)            Date        5%             10%
----              -------            -----------          ---------            ----        --             ---

<S>                  <C>               <C>                  <C>              <C>        <C>               <C>
David L. Grey        10,389            20.95%               $10.5875         1/24/06    $  30,389         $  67,152
                     19,611            39.54%                  9.625         1/24/11      118,708           300,828

Francis Kenney        5,000            10.08%                  9.625         1/24/11       30,266            76,699
_____________________
</TABLE>

(1)  Stock options were granted under Ipswich's 1996 Stock Incentive Plan, at an
     exercise price equal to the fair market value of Ipswich's common stock on
     the date of the grant except that options to purchase 10,389 shares of
     Ipswich's common stock were granted to Mr. Grey at an exercise price of
     110% of fair market value.

(2)  Amounts reported in these columns represent amounts that may be realized
     upon exercise of the options immediately prior to the expiration of their
     term assuming the specified compounded rates of appreciation of Ipswich's
     common stock over the term of the options. These numbers are calculated
     based on rules promulgated by the Securities and Exchange Commission and do
     not reflect Ipswich's estimates of future stock price growth. Actual gains,
     if any, on stock option exercises and common stock holdings are dependent
     on the timing of such exercise and sale of the shares and the future
     performance of Ipswich's common stock. There can be no assurances that the
     rates of appreciation assumed in this table can be achieved or that the
     amounts shown will be received by the individuals.

                 Aggregated Option Exercises in Last Fiscal Year
                        and Fiscal Year-End Option Values

     The following Fiscal Year-End Option Table sets forth certain information
regarding stock options exercised during the fiscal year ended December 31, 2001
and stock options held as of December 31, 2001 by the executive officers named
in the Summary Compensation Table:

<TABLE>
<CAPTION>

                                                                                               Value of Unexercised
                  Shares                            Number of Unexercised                      In-the-Money Options
                  Acquired                          Options at Fiscal Year-End                 at Fiscal Year-End(1)
                  on                Value
Name              Exercise          Realized        Exercisable         Unexercisable          Exercisable           Unexercisable
----              --------          --------        -----------         -------------          -----------           -------------

<S>               <C>               <C>                   <C>                       <C>              <C>
David L. Grey     0                 0                     100,000                   0                $373,751                 --
Francis Kenney    0                 0                      21,000                   0                  87,875                 --
______________
</TABLE>


(1)  Value is based on the last sales price of the Ipswich common stock ($13.00)
     on December 31, 2001 as reported by the Nasdaq National Market, less the
     applicable option exercise price. These values have not been and may never
     be realized. Actual gains, if any, on exercise will depend on the value of
     the Ipswich common stock on the date of the sale of the shares.


                                      -6-
<PAGE>


                        Ten-Year Option/Sar Repricing (1)

<TABLE>
<CAPTION>
                                                                                                             Length of
                                          Number of       Market        Exercise                              Original
                                          Securities     Value at       Price at                            Option Term
                                          Underlying     Time of        Time of                              Remaining
                                         Options/SARs   Repricing      Repricing        New                  at Date of
                                         Repriced or        or             or         Exercise              Repricing or
Name               Date                    Amended      Amendment      Amendment       Price                 Amendment
----               ----                    -------      ---------      ---------       -----                 ---------
<S>               <C>                       <C>         <C>             <C>           <C>          <C>
David L. Grey      January 24, 2001          10,389        $9.625        $12.50        $10.5875     6 years, 10 months
                   January 24, 2001          19,611         9.625         12.50           9.625     6 years, 10 months

Francis Kenney     January 24, 2001           5,000         9.625         12.50           9.625     6 years, 10 months
____________________
</TABLE>

(1)  See discussion under captions "Option Grants" and "Compensation Committee
     Report - Report on Repricing of Options." The information set forth in this
     table was previously disclosed in Ipswich's proxy statement for its 2001
     annual meeting.


Compensation Committee Report

     Set forth below is a report that reflects the work of the Compensation
Committee, a committee comprised of members of the board of directors of
Ipswich. Ipswich's Executive Compensation Program and its stock option plans are
administered by the Committee, which is composed of David L. Grey, Lawrence J.
Pszenny (Chairman), John H. Morrow and William E. George.

Executive Compensation Philosophy

     The Committee's philosophy of executive compensation is (i) to provide
competitive levels of compensation that integrate pay with the individual
executive's performance and Ipswich's annual and long-term performance goals;
(ii) to motivate key executives to achieve strategic business initiatives and
reward them for their achievement; (iii) to provide compensation opportunities
and benefits which are comparable to those offered by other financial
institutions, thus allowing Ipswich to compete for and retain talented
executives, who are critical to Ipswich's long-term success; and (iv) to align
the interests of key executives with the long-term interests of shareholders in
the enhancement of shareholder value through stock option awards that can result
in the ownership of Ipswich common stock.

     At present, compensation of Ipswich's Chief Executive Officer (Mr. Grey)
and its other executive officers is composed of the following elements: annual
base salary, annual performance incentives in the form of cash bonuses and
long-term performance incentives in the form of stock option awards under
Ipswich's stock option plans.

     Each year the Committee reviews the performance of the Chief Executive
Officer and each other executive officer in light of the individual's and
Ipswich's overall performance. The specific measure of corporate performance
that was evaluated by the Committee in making compensation awards for fiscal
2001 for Messrs. Grey and Kenney was Ipswich's return on stockholders' equity as
measured against all publicly held Massachusetts thrifts, including thrifts held
in the holding company form of organization (75% of Mr. Grey's cash bonus and
50% of Mr. Kenney's cash bonus is dependent on this measure). Payment of the
remaining amount of the bonus is measured against written performance objectives
established by the Committee for each individual officer at the beginning of
each year.

Annual Salaries

     The annual base salaries for executives are intended to be competitive with
other Massachusetts financial institutions. The Committee reviews management's
recommendations regarding annual salary,


                                      -7-
<PAGE>


annual bonuses, and other benefits and incentives as part of its overall
planning. With respect to salaries and awards for executive officers, the
Committee also consults with the Chief Executive Officer.

Incentive Programs

     Ipswich's incentive compensation programs combine short-term incentives in
the form of cash bonuses and stock-based long-term incentives in the form of
awards of stock options. Annual bonuses are intended to recognize and reward
individual contributions. Stock options align the interests of executives and
shareholders by providing value to the executive when Ipswich's stock price
increases. Thus, stock option grants provide an incentive for the executive to
manage Ipswich from the perspective of an owner with an equity stake in the
business. Stock options are intended to reward officers for long-term
appreciation in the value of Ipswich's stock. Individual stock option awards are
primarily based upon the recipient's individual performance.

Compensation of the Chief Executive Officer

     Mr. Grey's compensation for fiscal year 2001 consisted of his annual base
salary and a cash bonus. Seventy-five percent of Mr. Grey's cash bonus was based
on Ipswich's return on equity as measured against all other publicly-held
Massachusetts thrifts (including those held in the holding company form of
organization). Mr. Grey's overall compensation was also compared to that of the
chief executive officers of similarly sized institutions.

     The Committee received assistance in formulating Mr. Grey's compensation
plan by an outside compensation consultant. Based upon a review of compensation
at numerous peer institutions and a recommendation by Ipswich's compensation
consultant, it was determined that it was appropriate that Mr. Grey continue to
be provided with supplemental pension benefits to help replace the defined
pension plan that was terminated during 1991 in order to further the
recapitalization of Ipswich Bank.

Compensation of Other Executive Officers

     The 2001 compensation of Ipswich's and Ipswich Bank's other executive
officers was based upon the achievement of both Ipswich and individual
performance goals. As Senior Vice President, Chief Financial Officer and
Treasurer, Mr. Kenney's compensation was based on overall management of the
financial function at Ipswich, including management of Ipswich's interest rate
risk.

Report on Repricing of Options

     On July 19, 2000, based on the recommendation of the Compensation
Committee, the board of directors agreed to grant options to the executive
officers named in the Summary Compensation Table (as well as to certain other
employees, officers and directors) at an exercise price equal to the fair market
value of a share of the Ipswich common stock on the date of grant. The grant was
conditioned upon the executive officers' entering into an agreement no later
than July 21, 2000 to cancel the same number of previously granted options
which, on the date of cancellation, had an exercise price in excess of the fair
market value of Ipswich's common stock. Each such officer entered into such an
agreement and the board of directors approved the re-grant of options on January
24, 2001. The Compensation Committee and the board of directors of Ipswich
determined that the cancellation and re-grant would provide a continuing
incentive for employees, including executive officers, to provide service to
Ipswich.

            Compensation Committee: Lawrence J. Pszenny, Chairman
                                    David L. Grey
                                    John H. Morrow
                                    William E. George


                                      -8-
<PAGE>


Compensation Committee Interlocks and Insider Participation

     William E. George, David L. Grey, John H. Morrow and Lawrence J. Pszenny
served as members of Ipswich's Compensation Committee during 2001. Messrs.
George and Pszenny have no relationships with Ipswich other than their
relationship to Ipswich as Directors entitled to the receipt of standard
compensation as Directors and members of certain committees of the board of
directors and their relationship to Ipswich as shareholders. Mr. Morrow is a
Vice President of an insurance agency through with Ipswich purchases some of its
insurance. See the discussion under "- Certain Transactions with Management and
Others." Mr. Grey is the President and Chief Executive Officer of Ipswich and
Ipswich Bank. He does not participate in deliberations involving his own
compensation, including the grant of options and other benefits. No person
serving on the Compensation Committee or on the board of directors is an
executive officer of another entity for which an executive officer of Ipswich
serves on the board of directors or on that entity's compensation committee.

Performance Graph

     The following Performance Graph compares the performance of Ipswich's
cumulative shareholder return with that of a broad market index (the S&P 500)
and a published industry index (the SNL Securities Thrift Index) for each of the
most recent five fiscal years. The cumulative shareholder return for shares of
Ipswich common stock and each of the indices is calculated assuming that $100
was invested on January 1, 1997. The performance of the indices is shown on a
total return (dividends reinvested) basis. The graph lines merely connect
three-month end dates and do not reflect fluctuations between those dates.


          [GRAPHIC-TOTAL RETURN PERFORMANCE CHART-PLOTTED POINT BELOW]


<TABLE>
<CAPTION>

------------------------ ----------------- ----------------- ----------------- ----------------- ----------------- ----------------
<S>                          <C>               <C>               <C>               <C>               <C>               <C>
Index                        12/31/96          12/31/97          12/31/98          12/31/99          12/31/00          12/31/01
------------------------ ----------------- ----------------- ----------------- ----------------- ----------------- ----------------
Ipswich Bancshares, Inc.      100.00            278.73            183.50            174.13            166.48            247.17
------------------------ ----------------- ----------------- ----------------- ----------------- ----------------- ----------------
S&P 500                       100.00            133.37            171.44            207.52            188.62            166.22
------------------------ ----------------- ----------------- ----------------- ----------------- ----------------- ----------------
SNL Thrift Index              100.00            170.16            149.66            122.25            195.21            208.65
------------------------ ----------------- ----------------- ----------------- ----------------- ----------------- ----------------
</TABLE>


                                      -9-
<PAGE>


Employment and Severance Agreements with Named Executive Officers

     On June 18, 1997, Ipswich Bank entered into a new employment agreement with
David L. Grey, which amended and restated his previous employment and severance
agreement with Ipswich Bank dated November 13, 1989, as amended September 23,
1992. The agreement was amended and restated as of June 17, 1998 to make certain
minor changes and again on May 18, 1999, to reflect the formation of Ipswich as
the holding company of Ipswich Bank, among other things. The initial term of the
agreement is three years, with the term automatically extended by one day for
each day that Mr. Grey is employed by Ipswich and Ipswich Bank. The agreement
provides for an annual base salary that was initially set at $145,000, but is
subject to increase from time to time (which increased amount becomes a floor
below which Mr. Grey's annual base salary may not fall during the term of the
agreement), and certain other benefits, including an automobile allowance and
payment of the annual premiums on certain life insurance and supplemental
disability insurance policies ("Additional Benefits"). If Mr. Grey terminates
his employment for Good Reason (as defined below) or if Ipswich or Ipswich Bank
terminates his employment without cause, Mr. Grey will be entitled to a
severance benefit equal to three times the sum of (i) Mr. Grey's then current
annual base salary, (ii) the highest annual bonus paid to him during the three
fiscal years preceding the termination of employment, and (iii) the highest
annual payments that Ipswich Bank made to Mr. Grey for Additional Benefits
during the three fiscal years preceding the termination of employment. Mr.
Grey's current annual base salary is $249,000.

     "Good Reason" is defined in Mr. Grey's employment agreement to include
failure of the boards of directors of Ipswich and Ipswich Bank to elect Mr. Grey
to the office of President and Chief Executive Officer of Ipswich and Ipswich
Bank, respectively, diminution of Mr. Grey's annual base salary, a significant
change in the nature or scope of Mr. Grey's responsibilities or an uncured
breach by Ipswich Bank of any of the provisions of the agreement. It also
includes the following events if they occur within two years following a change
in control (as defined in the agreement): failure by Ipswich Bank to continue to
provide Mr. Grey with benefits substantially similar to those available to him
prior to the change in control; a reasonable determination by Mr. Grey that, as
a result of a change in control, he is unable to exercise the responsibilities
exercised by him immediately prior to the change in control or that his working
conditions have significantly worsened; or the failure of Ipswich Bank to obtain
a satisfactory agreement from any successor to assume and agree to perform this
agreement. This agreement will be terminated in connection with the merger.

     Ipswich Bank entered into an employment agreement with Francis Kenney on
June 18, 1997, which was amended and restated on June 17, 1998 and again on May
18, 1999, to reflect the formation of Ipswich as the holding company of Ipswich
Bank, among other things. The initial term of the agreement is 18 months, with
the term automatically extended by one day for each day that Mr. Kenney is
employed by Ipswich and Ipswich Bank. The agreement provides for an annual base
salary that was initially set at $65,000, but is subject to increase from time
to time (which increased amount becomes a floor below which Mr. Kenney's annual
base salary may not fall during the term of the agreement), and certain other
benefits in effect for other senior executive officers. If Mr. Kenney terminates
his employment for Good Reason or if Ipswich or Ipswich Bank terminates his
employment without cause, Mr. Kenney will be entitled to a severance benefit
equal to 150% of the sum of (i) the annual bonus paid to him during the fiscal
year preceding the termination of employment and (ii) Mr. Kenney's then current
annual base salary. Good Reason has substantially the same meaning in Mr.
Kenney's agreement as in Mr. Grey's. Mr. Kenney's current annual base salary is
$103,000.


                                      -10-
<PAGE>


Retirement Benefits

     Ipswich Bank has entered into a split dollar agreement with David L. Grey
and has established a related insurance trust for the purpose of providing a
retirement benefit to Mr. Grey. The agreement was entered into in light of
Ipswich Bank's discontinuance of its qualified pension plan as part of its
recapitalization efforts in 1991. Pursuant to the agreement, Ipswich Bank has
purchased a variable life insurance policy on the life of Mr. Grey, with Mr.
Grey as the owner and the beneficiary (the "Policy"). The agreement generally
provides that Ipswich Bank will contribute $60,000 to the trust each year until
2020, an amount necessary to permit the trust to pay the premiums due under the
policy.

     Although Mr. Grey is the owner of the policy, the trust has the right to
receive reimbursement, under certain circumstances, of all or a portion of the
premiums paid under the policy, or, if less, the cash surrender value of the
policy. Mr. Grey has granted to the trust a collateral assignment in the policy
for purposes of such reimbursement. The circumstances under which the Trust
would be entitled to receive all of the premium reimbursement include (i)
termination of Mr. Grey's employment for "cause"; and (ii) appointment of a
conservator or a receiver for Ipswich Bank. "Cause" is defined to include
termination only as a result of Mr. Grey's deliberate dishonesty with respect to
Ipswich Bank that results in his conviction of a crime. The trust is obligated
to pay over to Ipswich Bank any premium reimbursement amounts it receives.

     In the event of termination of Mr. Grey's employment upon retirement or for
any other reason except for "cause," Ipswich Bank's obligation to pay premiums
shall cease, and the trust is required to release the collateral assignment to
Mr. Grey (subject to the trust's right, if any, to receive a premium
reimbursement payment as described above). Following such release, Mr. Grey will
own the policy free of any lien or encumbrance. In the event of Mr. Grey's
death, his beneficiaries would be entitled to receive a death benefit under the
policy of approximately $1.5 million, subject to the trust's right to receive
the portion of the premium reimbursement, if any, that it would otherwise be
entitled to receive.

     In the event of a change-in-control, which would include the merger of
Ipswich with and into Banknorth, Ipswich Bank (or its successor) is obligated to
make an irrevocable contribution to the trust in an amount equal to the
discounted value of future premiums under the policy from the date of the change
in control until December 31, 2020.

     Ipswich Bank has also entered into a split dollar agreement with Francis
Kenney for the purpose of providing a retirement benefit to Mr. Kenney. Pursuant
to the agreement, Ipswich Bank has purchased a variable life insurance policy on
the life of Mr. Kenney, with Mr. Kenney as the owner and the beneficiary. The
agreement generally provides for an annual premium payment to be made by Ipswich
Bank during the term of Mr. Kenney's employment and any period during which
Ipswich Bank is obligated to provide Mr. Kenney with fringe benefits. The
premiums paid by Ipswich Bank are allocated between Mr. Kenney and Ipswich Bank.
Mr. Kenney's share is an amount equal to the value of the personal death benefit
as determined under IRS rules and is paid by Ipswich Bank as agent for Mr.
Kenney and charged to Mr. Kenney as cash compensation.

     Although Mr. Kenney is the owner of his policy, Ipswich Bank has the right
to receive reimbursement, under certain circumstances, of all or a portion of
the premiums paid under the policy (not including Mr. Kenney's share), or, if
less, the cash surrender value of the policy, and also is entitled to receive a
portion of the death benefit payable upon Mr. Kenney's death. Mr. Kenney has
granted to Ipswich Bank a collateral assignment in the policy for purposes of
such reimbursement. Ipswich Bank would be entitled to receive all of the
premiums (not including Mr. Kenney's share) if Mr. Kenney's employment were
terminated for "cause." "Cause" is defined to include conviction of a crime
associated with Ipswich Bank's business or a determination of a vote of 75% of
the board of directors that Mr. Kenney has willfully failed to perform
reasonably assigned tasks.

     If Mr. Kenney's employment is terminated prior to October 2, 2003, Mr.
Kenney is obligated to pay to Ipswich Bank a percentage of the premiums paid by
Ipswich Bank, minus Mr. Kenney's share. Ipswich Bank's right to recover a
portion of the premiums (but not its right to receive a portion of the death
benefit) terminates upon a change-in-control of Ipswich Bank.


                                      -11-
<PAGE>


Retirement Plan

     Ipswich Bank maintains a 401(k) retirement plan with the Savings Bank
Employees Retirement Association of Massachusetts. Any employee of Ipswich Bank
who has attained the age of 21 and has worked for Ipswich Bank for ninety
continuous days may join the plan. A participant may contribute up to 15% of
salary, subject to an annual dollar limitation which is adjusted yearly.
Contributions by highly compensated employees as defined under the plan are
subject to other limits under Federal law. Ipswich Bank will match 50% of any
participant's contribution to a maximum of 3% of such participant's salary after
one continuous year of service.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

                             Principal Stockholders

     The following table sets forth certain information as of April 16, 2002
regarding (i) each person known by Ipswich to own beneficially more than 5% of
Ipswich's common stock, (ii) each director and each nominee for director, (iii)
the executive officers named in the Summary Compensation Table, and (iv) all
directors and executive officers of Ipswich as a group. Except as otherwise
indicated in the footnotes to the table, the beneficial owners have sole voting
and investment power as to all shares beneficially owned by them.

<TABLE>
<CAPTION>

                                                       Amount and Nature
                                                         Of Beneficial        Percent of
            Name and Address                             Ownership (1)          Class
            ----------------                             -------------          -----

<S>                                                         <C>      <C>        <C>
            David L. Grey                                   341,558  (2)        16.8%
                 c/o Ipswich Savings Bank
                 23 Market Street
                 Ipswich, Massachusetts 01938

            Polaris Capital Management, Inc.                126,500  (3)         6.2
                 125 Summer Street
                 Boston, Massachusetts 02110

            William M. Craft                                 29,825  (4)         1.5
            Thomas A. Ellsworth                               8,000  (5)         0.4
            William E. George                                65,300  (6)         3.4
            Francis Kenney                                   34,482  (7)         1.8
            John H. Morrow                                    7,720  (8)         0.4
            Lawrence J. Pszenny                              72,500  (9)         3.7
            William J. Tinti                                 30,000  (10)        1.6

            All executive officers and                      599,762  (11)       28.5
                 directors as a group (11 persons)
___________________
</TABLE>


(1)  For purposes of this table, a person is deemed to be the beneficial owner
     of any shares of Ipswich common stock if he has or shares voting power or
     investment power with respect to such shares, or has the right to acquire
     beneficial ownership of such shares at any time within 60 days of the date
     of this table.

(2)  Includes 35,983 shares held by Mr. Grey's IRA, 105,808 shares held jointly
     with his wife, 50,740 shares held by his wife, 25,921 shares held by his
     wife in her IRA, 1,350 shares held by his wife as custodian for their two
     daughters, 21,756 shares held in his 401(k) retirement plan, and 100,000
     shares subject to currently exercisable options.


                                      -12-
<PAGE>


(3)  Ipswich has received a Schedule 13G, dated March 4, 1999, which states that
     Polaris Capital Management, Inc., a registered investment adviser,
     beneficially owns 142,500 shares of Ipswich common stock in its capacity as
     investment advisor to certain institutional and individual investors who
     have purchased the shares. The Schedule 13G states that Polaris Capital
     Management, Inc. has sole voting and dispositive power over these shares.
     Ipswich has been advised that Polaris Capital sold 16,000 shares of Ipswich
     common stock on January 24, 2001.

(4)  Includes 10,325 shares held by Dr. Craft's IRA, 8,500 shares owned jointly
     with his wife, and 2,000 shares held jointly with each of two sons (4,000
     shares total) and 7,000 shares subject to currently exercisable options.

(5)  Includes 7,000 shares subject to currently exercisable options. Does not
     include 2,891 stock units allocated to Mr. Ellsworth's account pursuant to
     Ipswich's deferred compensation plan for directors.

(6)  Includes 50,000 shares held by Mr. George's IRA, 300 shares owned by his
     wife and 15,000 shares subject to currently exercisable options.

(7)  Includes 11,150 shares owned by Mr. Kenney's wife, 2,332 shares held in Mr.
     Kenney's 401(k) retirement plan and 2,500 shares subject to currently
     exercisable options.

(8)  Includes 720 shares owned jointly by Mr. Morrow with his wife and 7,000
     shares subject to currently exercisable options. Does not include 2,336
     stock units allocated to Mr. Morrow's account pursuant to Ipswich's
     deferred compensation plan for directors.

(9)  Includes 35,500 shares owned jointly by Mr. Pszenny with his wife, 3,000
     shares held by his IRA, 1,000 shares held by his wife, 1,000 shares held as
     custodian for his minor child, 2,000 shares owned by his children as to
     which shares Mr. Pszenny disclaims beneficial ownership and 9,000 shares
     subject to currently exercisable options. Does not include 3,044 stock
     units allocated to his account pursuant to Ipswich's deferred compensation
     plan for directors.

(10) Includes 25,000 shares held by Mr. Tinti's IRA and 5,000 shares subject to
     currently exercisable options.

(11) Includes 155,137 shares subject to currently exercisable options held by
     all directors and executive officers as a group.


ITEM 13:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Some of the directors and principal officers of Ipswich and Ipswich Bank,
as well as members of their immediate families and companies, organizations,
trusts and other entities with which they are associated are, or during 2001
were, customers of Ipswich Bank in the ordinary course of business or had loans
outstanding from Ipswich Bank during 2001, including loans of $60,000 or more.
It is anticipated that such persons and their associates will continue to be
customers of and indebted to Ipswich Bank in the future. All such loans were
made in the ordinary course of business, did not involve more than normal risk
of collectibility or present other unfavorable features, were made on
substantially the same terms, including interest rates and collateral, as
prevailed at the same time for comparable transactions with unaffiliated persons
and, when required by law, were approved by the board of directors prior to
closing. All loans to directors, executive officers or their associates at
December 31, 2001 have performed in accordance with their original terms.

     Ipswich Bank employs the law firm of Tinti, Quinn, Grover & Frey P.C. for
real estate conveyancing and other legal work. William Tinti, a director of
Ipswich and Ipswich Bank, is President of the law firm. Mr. Tinti has estimated
that, in 2001, the firm received legal fees of approximately $56,606 in
connection with legal work it handled for Ipswich Bank, including fees paid
directly by Ipswich Bank and fees paid by borrowers in connection with real
estate closings.

     Ipswich purchases some of its insurance through Hastings Tapley Insurance
Agency, of which John Morrow, a director of Ipswich, is a Vice President.
Ipswich paid approximately $15,315 to the insurance agency in 2001 for insurance
premiums.


                                      -13-
<PAGE>


                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), the Registrant has duly caused this
amendment to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                           IPSWICH BANCSHARES, INC.


Date:  April 30, 2002                      By: /s/ Francis Kenney
                                           --------------------------------
                                                    Francis Kenney
                                                    Chief Financial Officer


                                      -14-
<PAGE>