Form 10-Q
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                { X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR
                 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.

                  For the Quarterly Period Ended June 30, 1999.

                                       OR

                { } TRANSACTION REPORT PURSUANT TO SECTION 13 OR
                 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.

                         Commission File Number: 0-26663

                            IPSWICH BANCSHARES, INC.
             (Exact name of Registrant as specified in its charter)

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

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

                                 (978) 356-7777
              (Registrant's telephone number, including area code)


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
requirement for the past 90 days.

Yes ( X )     No (    )

The number of shares  outstanding of the Registrant's  common stock as of August
2, 1999 is:

Common stock, par value $.10 per share                                 2,524,902
--------------------------------------------------------------------------------
(Class)                                                            (Outstanding)

<PAGE>
                    IPSWICH BANCSHARES, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                  (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                             June 30,          December 31,
                                                                               1999               1998
                                                                               ----               ----
                                 Assets                                    (unaudited)          (unaudited)
<S>                                                                           <C>                  <C>
Cash and due from banks                                                       $6,418               $7,079
Interest-bearing deposits and federal funds sold                               5,626                5,016
Investment securities available for sale                                      29,917               29,085
Investment securities held to maturity                                        19,336               10,196
Loans held for sale                                                            6,588               24,000

Loans:
     Residential                                                             165,898              161,840
     Home equity                                                              21,056               19,772
     Commercial                                                                5,047                6,191
     Consumer                                                                  1,102                1,188
                                                                        -------------        -------------
          Total gross loans                                                  193,103              188,991

Allowance for possible loan losses                                            -1,830               -1,742
                                                                        -------------        -------------

      Net loans                                                              191,273              187,249
                                                                        -------------        -------------

Stock in FHLB of Boston                                                        3,977                2,905
Savings Bank Life Insurance Company stock                                        253                  253
Banking premises and equipment, net                                            3,245                3,298
Other real estate owned, net                                                     718                  718
Accrued interest receivable                                                    1,254                1,053
Deferred premium on loans sold/mortgage servicing rights, net                    922                  229
Other assets                                                                     230                  247
                                                                        -------------        -------------

      Total assets                                                          $269,757             $271,328
                                                                        =============        =============

                   Liabilities and Stockholders' Equity
                   ------------------------------------
Liabilities:
  Deposits:
     Non-interest-bearing checking accounts                                  $16,502              $18,656
     Interest-bearing checking accounts                                       28,661               22,954
     Savings accounts                                                         36,038               37,768
     Money market accounts                                                    56,961               55,418
     Certificates of deposit                                                  64,047               64,961
                                                                        -------------        -------------
          Total deposits                                                     202,209              199,757


  Borrowed funds                                                              48,000               53,000
  Mortgagors' escrow accounts                                                    977                1,043
  Deferred income tax liability, accrued expenses and other liabilities        2,986                3,305
                                                                        -------------        -------------

      Total liabilities                                                      254,172              257,105
                                                                        -------------        -------------


Equity capital                                                                15,393               14,038
Unrealized gain on investment securities available for sale, net                 192                  185
                                                                        -------------        -------------
      Total stockholders' equity                                              15,585               14,223
                                                                        -------------        -------------

      Total liabilities and stockholders' equity                            $269,757             $271,328
                                                                        =============        =============

Shares outstanding                                                         2,524,902            2,392,286
</TABLE>
<PAGE>
                    IPSWICH BANCSHARES, INC. AND SUBSIDIARIES
                        Consolidated Statements of Income
                  (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
                                                             Three Months Ended                   Six Months Ended
                                                                  June 30,                            June 30,
                                                         1999                1998              1999               1998
                                                     -------------      --------------    --------------     -------------
                                                      (unaudited)        (unaudited)        (unaudited)       (unaudited)
<S>                                                        <C>                 <C>               <C>               <C>
Interest and dividend income:
   Loans                                                   $3,417              $3,508            $7,229            $6,903
   Investment securities available for sale                   524                 207             1,073               415
   Investment securities held to maturity                     291                 360               459               827
   Interest-bearing deposits and federal funds sold            57                  31                72                46
                                                     -------------      --------------    --------------     -------------

      Total interest and dividend income                    4,289               4,106             8,833             8,191
                                                     -------------      --------------    --------------     -------------

Interest expense:
   Deposits                                                 1,576               1,509             3,221             3,055
   Borrowed funds                                             666                 716             1,448             1,368
                                                     -------------      --------------    --------------     -------------

      Total interest expense                                2,242               2,225             4,669             4,423
                                                     -------------      --------------    --------------     -------------

      Net interest and dividend income                      2,047               1,881             4,164             3,768

Provision for possible loan losses                             45                  45                90                90
                                                     -------------      --------------    --------------     -------------

      Net interest and dividend income after
        provision for possible loan losses                  2,002               1,836             4,074             3,678
                                                     -------------      --------------    --------------     -------------

Non-interest income:
   Mortgage banking revenues, net                             267                 317               762               682
   Retail banking fees                                        385                 295               723               543
   Net gain on sales of securities                             16                   0                65                16
   Other                                                       -2                   3                 7                 4
                                                     -------------      --------------    --------------     -------------

      Total non-interest income                               666                 615             1,557             1,245
                                                     -------------      --------------    --------------     -------------

      Net interest, dividend and non-interest income        2,668               2,451             5,631             4,923
                                                     -------------      --------------    --------------     -------------

Non-interest expenses:
   Salaries and employee benefits                             790                 662             1,562             1,269
   Occupancy and equipment expenses                           229                 162               450               302
   Data processing services                                   187                 136               359               266
   Marketing expense                                          124                 189               266               290
   Professsional fees                                          95                  86               160               140
   Office expense                                              95                 101               194               180
   Other                                                      158                 158               329               263
                                                     -------------      --------------    --------------     -------------

      Total non-interest expenses                           1,678               1,494             3,320             2,710
                                                     -------------      --------------    --------------     -------------

Expenses from Holding Company & REIT formation                  0                   0               380                 0

Income before income taxes                                    990                 957             1,931             2,213

Income tax expense                                            297                 345               579               797
                                                     -------------      --------------    --------------     -------------

      Net income                                             $693                $612            $1,352            $1,416
                                                     =============      ==============    ==============     =============

Weighted average common shares outstanding (basic)      2,462,742           2,389,648         2,427,708         2,388,734
Weighted average common shares outstanding (diluted)    2,544,482           2,470,235         2,533,987         2,563,822

Basic earnings per share                                    $0.28               $0.26             $0.56             $0.59
Diluted earnings per share                                  $0.27               $0.24             $0.53             $0.55
</TABLE>
<PAGE>
                    IPSWICH BANCSHARES, INC. AND SUBSIDIARIES
           Consolidated Statements of Changes in Stockholders' Equity
                     Six Months Ended June 30, 1999 and 1998
                  (Dollars in thousands, except for share data)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                               Accumulated
                                                               Additional                 Other       Total
                                         Shares      Common      paid-in    Retained  comprehensive stockholders'
                                       outstanding   stock       capital    earnings     income      equity
                                        ---------   ---------   ---------   ---------   ---------   ---------
<S>                                     <C>         <C>         <C>         <C>         <C>         <C>
Balance at December 31, 1997            2,385,076   $     239   $   1,969   $   9,559   $      66   $  11,833

Comprehensive income:
  Net income                                    0           0           0       1,416           0       1,416
  Change in net unrealized gain/
      (loss) on investment securities
      available for sale                        0           0           0           0         -38         -38
                                        ---------   ---------   ---------   ---------   ---------   ---------
Total comprehensive income                      0           0           0       1,416         -38       1,378

Cash dividends ($.08 per share)                 0           0           0        -191           0        -191
Stock options exercised                     4,660           0          13           0           0          13
Issuance of stock rights                        0           0          11           0           0          11
                                        ---------   ---------   ---------   ---------   ---------   ---------
Balance at June 30, 1998                2,389,736         239       1,993      10,784          28      13,044

Comprehensive income:
  Net income                                    0           0           0       1,222           0       1,222
Change in net unrealized gain/
    (loss) on investment securities
    available for sale                          0           0           0           0         157         157
                                        ---------   ---------   ---------   ---------   ---------   ---------
Total comprehensive income                      0           0           0       1,222         157       1,379

Cash dividends ($.09 per share)                 0           0           0        -216           0        -216
Stock options exercised                     2,550           0           5           0           0           5
Issuance of stock rights                        0           0          11           0           0          11
                                        ---------   ---------   ---------   ---------   ---------   ---------
Balance at December 31, 1998            2,392,286         239       2,009      11,790         185      14,223

Comprehensive income:
  Net income                                    0           0           0       1,352           0       1,352
Change in net unrealized gain/
    (loss) on investment securities
    available for sale                          0           0           0           0           7           7
                                        ---------   ---------   ---------   ---------   ---------   ---------
Total comprehensive income                      0           0           0       1,352           7       1,359

Cash dividends ($.10 per share)                 0           0           0        -246           0        -246
Stock options exercised                   132,616          13         224           0           0         237
Issuance of stock rights                        0           0          12           0           0          12
                                        ---------   ---------   ---------   ---------   ---------   ---------
Balance June 30, 1999                   2,524,902   $     252   $   2,245   $  12,896   $     192   $  15,585
                                        =========   =========   =========   =========   =========   =========
</TABLE>
<PAGE>
                     IPSWICH BANCSHARES, INC. AND SUBSIDIARIES

                       Consolidated Statements of Cash Flows
                      Six Months Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
                              (Dollars in thousands)
                                    (unaudited)
                                                                                          1999                  1998
                                                                                    ------------------    ------------------
<S>                                                                                            <C>                   <C>
Net cash flows from operating activities:
  Net income                                                                                   $1,352                $1,416

  Adjustments  to reconcile net income to net cash provided  (used) by operating
  activities:

       Provision for possible loan losses                                                          90                    90
       Depreciation expense                                                                       167                   102
       Amortization of premiums on investment securities, net                                      80                    37
       (Gain) on sale of loans, net                                                              -762                  -857
       (Gain) on sale of real estate acquired by foreclosure                                        0                   -80
       (Gain) on investment securities available for sale, net                                    -65                   -16
       Origination of loans held for sale                                                     -47,609               -77,266
       Proceeds from sale of loans                                                              7,981                12,340
       Proceeds from sale of securitized loans                                                 57,802                56,939
       (Increase) decrease in loan origination fees                                              -206                   107
       (Decrease) in loan discounts                                                                -1                     0
       (Increase) in deferred premium on loans sold and mortgage servicing rights                -693                  -574
       (Increase) in accrued interest receivable                                                 -201                   -41
       Increase (decrease) in other assets, net                                                    17                    -4
       (Decrease) in accrued expenses and other liabilities                                      -324                  -649
                                                                                    ------------------    ------------------

  Net cash provided (used) by operating activities                                             17,628                -8,456

Net cash flows from investing activities:

  Purchase of investment securities available for sale                                        -13,380                -5,696
  Principal paydowns on investment securities available for sale                                7,680                 3,379
  Proceeds from the sale of investment securities available for sale                            4,860                 1,474
  Purchase of investment securities held to maturity                                           -9,579                     0
  Principal paydowns on investment securities held to maturity                                    444                 2,442
  Principal from the call of investment securities held to maturity                                 0                 5,000
  Purchases of stock in FHLB of Boston                                                         -1,072                  -861
  Net (increase) in loans                                                                      -3,907                -3,238
  Proceeds from sale of real estate acquired by foreclosure                                         0                    90
  Purchases of equipment, net                                                                    -114                  -248
                                                                                    ------------------    ------------------
  Net cash (used) provided by investing activities                                            -15,068                 2,342

Cash flows from financing activities:
  Net proceeds from the issuance of common stock                                                  249                    25
  Cash dividends                                                                                 -246                  -192
  Net increase in deposits                                                                      2,452                 4,532
  Proceeds from Federal Home Loan Bank advances                                               156,100                95,213
  Repayment of Federal Home Loan Bank advances                                               -161,100               -94,005
  (Decrease) increase in mortgagors' escrow accounts                                              -66                   116
                                                                                    ------------------    ------------------

  Net cash (used) provided by financing activities                                             -2,611                 5,689
                                                                                    ------------------    ------------------
Net (decrease) in cash and cash equivalents                                                       -51                  -425
Cash and cash equivalents at beginning of year                                                 12,095                 6,798
                                                                                    ------------------    ------------------
Cash and cash equivalents at end of year                                                      $12,044                $6,373
                                                                                    ==================    ==================

Supplemental disclosure of cash flow information: Cash paid for:

       Interest on deposit accounts                                                            $3,221                $3,056
       Interest on borrowed funds                                                               1,448                 1,368
       Income tax expense, net                                                                    417                   797
</TABLE>



<PAGE>

                    IPSWICH BANCSHARES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                             June 30, 1999 and 1998

Basis of Presentation
The  consolidated   financial   statements   include  the  accounts  of  Ipswich
Bancshares,  Inc. and its wholly  owned  subsidiary,  Ipswich  Savings Bank (the
"Bank") and the Bank's  wholly owned  subsidiaries,  Ipswich  Preferred  Capital
Corporation, Ipswich Securities Corporation, Historic Ipswich, Inc., North Shore
Financial Services,  Inc. and Rowley Investment Corporation (Ipswich Bancshares,
Inc.  and  its  subsidiaries  are  sometimes  collectively  referred  to as  the
Company).  All  significant  intercompany  accounts and  transactions  have been
eliminated in consolidation.

Ipswich  Preferred  Capital  Corporation  was formed as a mortgage  real  estate
investment  trust to hold  residential  mortgages as a  subsidiary  of the Bank.
Ipswich Securities  Corporation was formed to exclusively transact in securities
on its own behalf as a wholly-owned  subsidiary of the Bank.  Historic  Ipswich,
Inc. and North Shore Financial Services,  Inc. were incorporated for the purpose
of holding  direct  investments  in real  estate  and  foreclosed  real  estate,
respectively.  Rowley Investment  Corporation was incorporated to facilitate the
holding and permitting of certain bank-owned real estate.

The  consolidated  financial  statements  have been prepared in conformity  with
generally accepted accounting principles. In preparing the financial statements,
management  is  required  to make  estimates  and  assumptions  that  affect the
reported  amounts of assets and  liabilities as of the date of the balance sheet
and  revenues  and  expenses  for  the  period.   Actual  results  could  differ
significantly from those estimates.

Material  estimates that are particularly  susceptible to significant  change in
the  near-term  relate to the  determination  of the allowance for possible loan
losses,  the valuation of real estate acquired by foreclosure,  the valuation of
the  deferred  premium on loans sold and the  valuation of  originated  mortgage
servicing rights.

A substantial portion of the Company's loans are secured by real estate in Essex
County in Massachusetts. In addition, other real estate owned is located in that
market. Accordingly, the ultimate collectibility of a substantial portion of the
Company's loan  portfolio and the recovery of the carrying  amount of other real
estate owned are  susceptible to changes in market  conditions in its geographic
area.

Earnings Per Share
The  computation  of basic  earnings per share is based on the weighted  average
number of shares of common stock outstanding during each period. The computation
of diluted  earnings per share is based on the weighted average number of shares
of common stock  outstanding  and dilutive  potential  common stock  equivalents
outstanding during each period. Stock option grants are included only in periods
when the results are dilutive.

Components of Accumulated Other Comprehensive Income
Accumulated   other   comprehensive   income   consists   solely  of  unrealized
appreciation on investment securities available for sale, net of taxes.




ITEM 2
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS
Certain statements in this Form 10-Q constitute "forward looking statements", as
that term is defined under the Private Securities Litigation Reform Act of 1995.
The words "believe",  "expect",  "anticipate",  "intend",  "plan", "assume", and
other similar expressions which are predictions of or indicate future events and
trends and which do not relate to historical  matters  identify  forward looking
statements.  Reliance should not be placed on forward looking statements because
they involve known and unknown risks, uncertainties and other factors, which are
in some  cases  beyond  the  control  of the  Company  and may cause the  actual
results,  performance,  or achievements of the Company to differ materially from
anticipated future results,  performance or achievements expressed or implied by
such forward looking statements.
<PAGE>
Certain factors that may cause such differences  include, but are not limited to
the following:  interest rates may increase,  adversely affecting the ability of
borrowers to repay  adjustable rate loans and the Company's  earnings and income
which derive in significant  part from loans to borrowers;  unemployment  in the
Company's  market  area  may  increase,   adversely  affecting  the  ability  of
individual  borrowers to re-pay loans;  property  values may decline,  adversely
affecting  the ability of borrowers to re-pay loans and the value of real estate
securing  repayment  of loans;  general  economic and market  conditions  in the
Company's market area may decline,  adversely affecting the ability of borrowers
to re-pay  loans,  the value of real  estate  securing  payment of loans and the
Company's  ability to make profitable loans;  adverse  legislation or regulatory
requirements may be adopted;  competitive pressure among depository institutions
may increase; and the impact of the Year 2000 issue may be more significant than
currently  anticipated.  Any of the  above  may also  result  in lower  interest
income, increased loan losses, additional charge-offs and write-downs and higher
operating  expenses.  The Company  disclaims  any intent or obligation to update
publicly any of the forward looking  statements  herein,  whether in response to
new information, future events or otherwise.

GENERAL
Ipswich  Bancshares,  Inc. (the "Company") is a Massachusetts  corporation whose
primary business is serving as the holding company for Ipswich Savings Bank (the
"Bank"). On July 1, 1999, in connection with the formation of the Company as the
holding company for the Bank,  each share of the Bank's common stock  previously
outstanding  was converted  automatically  into one share of common stock of the
Company,  and the Bank became a wholly  owned  subsidiary  of the  Company.  The
reorganization had no impact on the consolidated financial statements.

The Company's operating results for the three and six months ended June 30, 1999
reflect the operations of the Company and its direct and indirect  subsidiaries,
Ipswich Savings Bank, Ipswich Preferred Capital  Corporation  ("IPCC"),  Ipswich
Securities  Corporation,  North  Shore  Financial  Services,  Rowley  Investment
Corporation and Historic Ipswich,  Inc. The Company is in the business of making
residential mortgage loans, while attracting deposits from the general public to
fund those  loans.  The Company  operates  out of its main office  located at 23
Market Street, Ipswich, Essex County, Massachusetts,  and its seven full-service
retail branch offices,  located in Beverly,  Essex,  Marblehead,  North Andover,
Rowley, Reading and Salem, Massachusetts.  The Company operates Automatic Teller
Machines at its Main Office and each of its full-service  retail branch offices.
As a bank holding company, the Company is subject to regulation, supervision and
examination by the Board of Governors of the Federal Reserve  (Federal  Reserve)
and the Bank is  subject  to  regulation,  supervision  and  examination  by the
Federal  Deposit   Insurance   Corporation  (the  FDIC)  and  the  Massachusetts
Commissioner of Banks (the Commissioner).

ASSET / LIABILITY MANAGEMENT
A  primary  objective  of the  Asset/Liability  Management  Policy  is to manage
interest rate risk over time to achieve a prudent  level of net interest  income
in changing interest rate environments.  Management's strategies are intended to
be responsive to changes in interest  rates and to recognize  market demands for
particular types of deposit and loan products. The strategies are overseen by an
internal Asset/Liability Management Committee.
<PAGE>
Assets and  liabilities are classified as interest rate sensitive if they have a
remaining  term to maturity  of 0-12  months,  or are  subject to interest  rate
adjustment  in those time  periods.  Adjustable  rate loans and mortgage  backed
securities  are shown as if the entire  balance came due on the repricing  date.
Estimates of fixed rate loan  amortization  prepayments  are included  with rate
sensitive  assets.  Because  regular  savings,  demand  deposits,  money  market
accounts  and NOW  accounts  may be  withdrawn  at any time and are  subject  to
interest rate  adjustments  at any time,  they are presented  based upon assumed
maturity structures.  As a results of this analysis,  the static GAP position in
the 0 to 12 months  range is a negative  $21.7  million at April 30,  1999,  the
latest assessment period.

Interest rate sensitivity statistics are static measures that do not necessarily
take into  consideration  external  factors which may affect the  sensitivity of
assets and  liabilities,  and  consequently can not be used alone to predict the
operating results of a financial institution in a changing environment. However,
these measurements do reflect major trends and thus the Company's sensitivity to
interest rate changes over time.

LIQUIDITY
The Company seeks to ensure that sufficient  liquidity is available to meet cash
requirements  while  earning a return on liquid  assets.  The  Company  uses its
liquidity  primarily to fund loans and  investment  commitments,  to  supplement
deposit flows and to meet operating  expenses.  The primary sources of liquidity
are  interest  and  amortization  from loans,  mortgage  backed  securities  and
investments,  sales and maturities of  investments,  loan sales,  deposits,  and
Federal Home Loan Bank of Boston (FHLBB) advances, which includes a $3.2 million
overnight line of credit. The Company also uses longer term borrowed  facilities
within its total available  credit line with the FHLBB.  Advances from the FHLBB
were $48.0 million at June 30, 1999.

During 1999 the primary  sources of liquidity  were $65.8 million in loan sales,
principal  amortization  from mortgage backed securities of $8.1 million and the
sale of a fixed rate mortgage backed security of $4.9 million.  The primary uses
of funds were $73.1 million in residential  mortgage loan  originations  and $23
million in investment purchases.

CAPITAL ADEQUACY
Total  stockholders'  equity at June 30, 1999 was $15.6 million,  an increase of
$1.4 million from $14.2  million at the end of 1998.  Included in  stockholders'
equity at June 30, 1999 is an unrealized gain on marketable securities available
for sale,  net of taxes,  of  $192,000,  an  increase  of $7,000 as  compared to
$185,000 at December 31, 1998.  At June 30,  1999,  neither the Federal  Reserve
Board  nor the  FDIC  permitted  the  unrealized  gain or loss to be used in the
calculation  of the Tier 1 leverage  capital (see below).  Future  interest rate
increases  could  reduce  the  market  value  of  these  securities  and  reduce
stockholders'  equity. As a percentage of total assets,  stockholders equity was
5.78% at June 30, 1999, compared to 5.24% at December 31, 1998.

The Federal Reserve's and the FDIC's capital  guidelines require the Company and
the Bank, respectively,  generally to maintain a minimum Tier 1 leverage capital
ratio of at least 4% (5% for a bank to be classified as "well-capitalized").  At
June 30, 1999, the Bank's Tier 1 leverage  capital ratio was 5.90%  (compared to
5.55% at December 31, 1998).

The  Federal  Reserve  and  the  FDIC  have  also  imposed   risk-based  capital
requirements  on the Company and the Bank,  respectively,  which give  different
risk  weightings  to  assets  and to off  balance  sheet  assets,  such  as loan
commitments.  The Federal Reserve's and the FDIC's risk-based capital guidelines
require  the  Company and the Bank,  respectively,  to maintain a minimum  total
risk-based capital ratio of 8% (10% to be classified as "well-capitalized")  and
a  Tier  1   risk-based   capital   ratio  of  4%  (6%  to  be   classified   as
"well-capitalized").  At June 30,  1999,  the Bank's total and Tier 1 risk-based
capital ratios were 12.96% and 11.70% (compared to 11.70% and 10.45% at December
31, 1998).
<PAGE>
As of June 30, 1999, the Bank was considered "well-capitalized" under applicable
regulatory capital guidelines.

YEAR 2000
The Year 2000 issue (commonly  referred to as "Y2K"),  is the result of computer
programs being written using two digits,  rather than four digits, to define the
applicable year. The Y2K issue, which is common to most corporations,  including
banks,  concerns  the  inability  of  information  systems,  primarily  (but not
exclusively)  computer  software  programs,  to properly  recognize  and process
date-sensitive   information  as  the  Year  2000   approaches.   The  following
constitutes  the  Company's  Y2K  readiness   disclosure  under  the  Year  2000
Information and Readiness Disclosure Act.

Since the  Company's  information  systems  functions  are either  outsourced to
service  bureaus or processed  in-house using programs  developed by third-party
vendors,  the direct effort to correct Y2K issues will be undertaken  largely by
third parties and will therefore not be within the company's direct control. The
Company expects to bring its mission critical  operating systems into compliance
with Y2K requirements  through  installation of updated or replacement  programs
developed by third parties.

Bank regulators have recently  issued  additional  guidance under which they are
assessing Year 2000 readiness.  The failure of a financial institution,  such as
the Company,  to address  deficiencies in the Year 2000 management process could
result in (I) enforcement  actions that could have a material  adverse effect on
the  institution;  (ii) the  imposition of civil money  penalties;  or (iii) the
delay of receipt of regulatory approval for certain activities or acquisitions.

Awareness Phase
This phase  consists of  defining  the Y2K  problem;  developing  the  resources
necessary to perform  compliance work,  establishing a Y2K program committee and
developing  an overall  strategy  that  encompasses  in-house  systems,  service
bureaus for systems  that are  outsourced,  vendors,  auditors,  customers,  and
suppliers  (including  correspondents).  Currently  all of the  Company's  major
computer processing functions are outsourced to third party vendors.  This phase
has been completed by the Company's Y2K committee (see below).

Assessment Phase
The Company has organized a Y2K committee,  comprised of senior officers,  staff
employees and a consultant, to research,  develop and implement a plan that will
correct the issue within the time lines established by the Company's regulators.
The committee has  substantially  completed an  assessment,  identified  mission
critical  systems,  and created a formal tracking  system  identifying all third
party  vendors  and their Y2K  compliant  version of systems.  Mission  critical
systems include hardware,  software,  program  interfaces,  operating systems as
well as other mechanical systems. Based upon the results of the assessment,  the
Company has established  internal time frames to upgrade or replace its existing
hardware and software  systems.  During  1998,  the Company  replaced its teller
system hardware and software in its retail branch network.

The assessment phase has been materially  completed but is considered an ongoing
phase  for  the  Company.  The  Company  is in the  process  of  developing  its
contingency plan. The Company has currently estimated the total costs associated
with the Y2K  issues  to be  $140,000.  As of June 30,  1999,  the  Company  has
incurred  approximately  $60,000  of Y2K  expenses.  The  Company  continues  to
evaluate the estimated costs  associated with achieving Y2K readiness based upon
its experience to date.  However, no assurances can be given that the Company or
the third party vendors to whom the Company  outsources it  information  systems
will solve all the issues in a successful  and timely  fashion or that the costs
of such efforts will not exceed current estimates.
<PAGE>
Renovation Phase
This phase includes hardware and software upgrades, system replacements,  vendor
certification,  and other associated changes. Work has been prioritized based on
information  gathered during the assessment phase. The Company relies on outside
servicers for its data  processing and third party vendors for certain  in-house
processing  functions.  Each  servicer and vendor has been  contacted and has or
will provide  information to the Company concerning their efforts to comply with
the Y2K issue.

Validation Phase
Testing is a  multifaceted  process  that is  critical  to the Y2K  project  and
inherent in each phase of the project management plan. This process includes the
testing of incremental changes to hardware and software components.  In addition
to testing upgraded components, connections with other systems must be verified,
and all changes  should be accepted by internal and external  users.  Management
will work with its service bureau and third-party  software vendors to establish
controls to assure the  effective  and timely  completion  of all  hardware  and
software testing prior to final  implementation.  As with the renovation  phase,
the Company  will be in ongoing  discussions  with its vendors on the success of
their validation efforts.

Implementation Phase
In this phase,  systems  should be validated as Y2K compliant and be accepted by
the Company. For any system failing  certification,  the business effect must be
assessed  clearly  and  the  organization's  Y2K  contingency  plans  should  be
implemented.  Any  potentially  noncompliant  mission-critical  system should be
brought to the attention of executive management immediately for resolution.  In
addition,  this phase must ensure that any new systems or subsequent  changes to
verified systems are compliant with Y2K requirements.

In  summary,  the  Company  recognizes  Y2K as a global  issue with  potentially
catastrophic  results if not  addressed.  The Company  has and will  continue to
undertake all the necessary steps to protect itself and its customers concerning
the Y2K issue. If the Company does not solve such issues, or does not do so in a
timely  manner,  the Y2K  issue  could  have a  material  adverse  impact on the
Company's business, future operating results and financial condition.

FINANCIAL CONDITION
The  Company's  total assets  decreased to $269.8  million at June 30, 1999 from
$271.3  million at December 31, 1998.  The decrease was  principally  due to the
securitization  and delivery of loans held for sale which were originated in the
fourth  quarter of 1998 and the first quarter of 1999. The Company also incurred
a small run-off in its portfolio of  certificates  of deposit which  declined to
$64.0 million at June 30, 1999 from $65 million at year-end  1998.  This run-off
was principally in high rate CDs.

Investment and Mortgage-Backed Securities
Investments  and mortgage  backed  securities  available  for sale  increased by
$832,000 to $29.9 million at June 30, 1999 primarily as a result of the purchase
of $13.4  million  of  mortgage-backed  securities,  offset  by the sale of $4.9
million of  securities  and  amortization  of $7.7  million.  The  portfolio  of
investment and  mortgage-backed  securities held to maturity  increased to $19.3
million,  an  increase  of $9.1  million,  as a result of the  purchase  of $9.6
million of mortgage-backed securities.  Future increases in interest rates could
reduce the value of these investments.

Loans and Loans Held for Sale
Loans held for sale decreased by $17.4 million during the first half of 1999, as
a result of the decrease in fixed rate loan production  during the first half of
1999.  Total  mortgage loan  production for the first six months of 1999 totaled
$73.1 million.
<PAGE>
The permanent loan portfolio increased by $4.1 million to $193.1 million at June
30, 1999. The increase was primarily in residential first mortgage loans.

CREDIT QUALITY
Non-Performing Loans
Non-accrual  loans were $249,000 at June 30, 1999.  Accrual of interest on loans
is  discontinued  either when a reasonable  doubt exists as to the full,  timely
collection of principal and interest or when a loan becomes  contractually  past
due by ninety (90) days or more, unless the loan is adequately secured and is in
the process of collection.

When a loan is placed on non-accrual  status, all interest  previously  accrued,
but not collected is reversed against current period interest income.  Income on
such loans is  recognized  to the extent that cash is received  and the ultimate
collection  of  principal  and  interest  is  probable.   Following   collection
procedures the Company generally institutes  appropriate action to foreclose the
property.

Real Estate Acquired by Foreclosure
Real estate acquired by foreclosure  totaled $718,000 at June 30, 1999, the same
as at December 31, 1998. Real estate acquired by foreclosure is reflected at the
lower of the net  carrying  value or fair value of the property  less  estimated
costs of disposition.  These properties consist mainly of land and single family
and  multi-family  dwellings.  The Company  currently  has one piece of property
totaling $650,000,  which is a 98 acre parcel of land in Rowley,  Massachusetts,
which has been permitted to create a 40-lot detached  single family  residential
subdivision and 10 commercial  building lots. There remains  outstanding a title
claim to a portion of the property. The claim is being defended by the Company's
title  insurance  company on behalf of Historic  Ipswich,  Inc., the owner.  The
Company  anticipates  that the title issue will be resolved in Land Court during
1999; however, the ultimate resolution cannot be predicted.  The residential and
commercial  portions of the property are currently  under  agreement to purchase
for more than the book value of the entire parcels.  One of the  stipulations in
the purchase  agreement on the residential  side is favorable  resolution of the
title issue.

Allowance for Loan Loss
The  allowance  for loan loss was $1.8 million at June 30, 1999 and $1.7 million
at December  31,  1998.  The entire  allowance  for loan losses is  available to
absorb charge-offs in any category of loans. Loan losses are charged against the
allowance when management believes that the collectibility of the loan principal
is unlikely. The allowance for possible loan losses is established by management
to absorb future  charge-offs of loans deemed  uncollectible.  This allowance is
increased by provisions  charged to operating expense and by recoveries on loans
previously charged off. In evaluating  current  information and events regarding
borrowers' ability to repay their obligations,  management  considers commercial
loans over  $200,000 to be impaired when it is probable that the Company will be
unable to collect all amount due according to the contractual  terms of the note
agreement; other loans are evaluated collectively for impairment. When a loan is
considered to be impaired, the amount of the impairment is measured based on the
present value of expected future cash flows  discounted at the loan's  effective
interest   rate   or  the   fair   value   of   collateral,   if  the   loan  is
collateral-dependent.  Impairment  losses are included in the allowance for loan
losses  through a charge to the provision for loan losses.  Management  believes
that the allowance for possible loan losses is adequate.  While  management uses
available  information  to recognize  losses on loans,  future  additions to the
allowance may be necessary.
<PAGE>
Liabilities
Deposits  increased  by $2.5  million to $202.2  million  at June 30,  1999 from
$199.8  million at December  31,  1998.  The  increase  took place  primarily in
interest-bearing  checking  accounts  as a result  of the  Company's  continuing
program to attract transaction account balances.

Federal  Home Loan Bank of Boston  advances  decreased  by $5.0 million to $48.0
million at June 30, 1999 from $53.0  million at December  31, 1998 as a function
of cash and liquidity management.
<PAGE>
         RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999
                COMPARED TO THE THREE MONTHS ENDED JUNE 30, 1998

General
The Company  reported net income of $693,000 or $.27 per fully diluted share for
the second  quarter  of 1999.  This  compares  with  $612,000  or $.24 per fully
diluted share for the second quarter of 1998.  This represents a 13% increase in
net income  compared to the same period last year.  The second quarter return on
equity was 18.18% which  compared to 19.03% in the second  quarter of 1998.  The
second  quarter  return on assets was 1.05% which compares to 1.03% for the same
period in 1998.

Net Interest and Dividend Income
Compared to the second quarter of 1998, net interest  income grew $166,000 or 9%
as a result of $24.7 million growth in earning assets. For the second quarter of
1999, net interest  margin was 3.19% compared to 3.25% for the second quarter of
1998.

Non-interest Income
The second quarter non-interest income of $666,000 is an increase of $51,000, or
8% from the second  quarter of 1998.  This  increase is  principally  due to the
growth in retail  banking  fees as a result of the  Company's  effort to attract
transaction accounts. This growth was realized as a result of the opening of two
new Bank  branches  in the  second  half of 1998 and the  corresponding  deposit
balances  generated from those openings.  Net mortgage banking revenues declined
by $50,000 in the second  quarter of 1999 versus the same  quarter of 1998.  The
level of mortgage loan  production  declined $11.8 million from $47.8 million in
1998 to $36 million in 1999.  The decline in loan volume  translates  into lower
mortgage banking fees and gains on sale of loans.

Non-interest Expense
Total  non-interest  expenses  were $1.7 million for the second  quarter of 1999
versus $1.5 million for the same quarter in 1998. This represents a 12% increase
in expenses.  The increase is principally  the result of the addition of two new
branches in the second half of 1998 which  resulted in a higher  level of salary
and benefit costs and occupancy and equipment costs.  Additionally,  the Company
added support level  operational  staff in the second half of 1998 as a means to
support potential future expansion.

Income Tax Expense
The second  quarter  effective  tax rate was 30%  compared to 36% for the second
quarter of 1998. A lower tax rate for 1999 was due primarily to the formation of
a  residential  mortgage  REIT which  resulted in the Company  realizing a lower
state tax expense.
<PAGE>
          RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999
                 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1998

General
The Company  reported  net income for the six months ended June 30, 1999 of $1.4
million,  or $.53 per fully diluted share compared to $1.4 million,  or $.55 per
fully diluted  share for the same period last year.  Return on equity was 18.13%
and 22.6% for the six months ended June 30, 1999 and 1998, respectively.  Return
on average assets was 1.00% and 1.21% for the six months ended June 30, 1999 and
1998, respectively.

Net Interest and Dividend Income
Total net interest and dividend income was $4.1 million for the six months ended
June 30, 1999 versus $3.7 million for the same time frame in 1998. This reflects
the  Company's  growth in its average  earning  assets of $33.9  million for the
first half of 1999  versus the same time  frame in 1998.  The 1999 net  interest
margin  was  3.23%  compared  to 3.37%  for the same  time  frame in 1998.  This
reflects the declining interest rate environment  experienced in the second half
of 1998 and the interest rates on loans placed in the portfolio during that time
frame.  Additionally,  the  Company  experienced  significant  amortization  and
pre-payment  in its  investment  portfolio,  which  is  primarily  comprised  of
mortgage-backed securities. The pre-payments resulted in the Company realizing a
decline for the interest rate earned on those investments.

Non-Interest Income
Non-interest  income for the first half of 1999 was $1.6  million,  versus  $1.2
million for the same time frame in 1998. The Company continued to realize strong
growth in its retail banking fees,  which  increased by 33% in 1999 versus 1998.
This was a result of the Company's  continuing efforts to generated  transaction
accounts and corresponding fees generated from those accounts.  Mortgage banking
revenues increased by $80,000,  or 12% in 1999 versus 1998. In the first half of
1998, the Company  created a reserve for a write-down on its mortgage  servicing
rights of $140,000 as a result of declining  interest rates. The Company created
a reserve of $153,000 in the first half of 1999.

Non-Interest Expenses
Non-interest  expenses for the first six months of 1999  excluding  the one-time
charge for the holding company and REIT formations, was $3.3 million versus $2.7
million for the first six months of 1998. The increase in expenses  reflects the
addition of two new  branches  which were added in the second half of 1998.  The
line items  affected by these  branches were salary and benefits,  occupancy and
data  processing  costs.  Additionally,  the  Company  realized  an  increase in
operating  expenses  as a result  of the  addition  of  support  staff to manage
potential future expansion.

Income Tax Expense
The six-month  1999 effective tax rate was 30% compared to 36% for the six-month
time frame ended June 30, 1998. The lower rate for 1999 was due primarily to the
establishment of the REIT, which will allow the Company to realize a lower state
tax expense.
<PAGE>
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss in a financial  instrument  arising from adverse
changes in market rates/prices such as interest rates, foreign currency exchange
rates,  commodity prices,  and equity prices.  The Company's primary market risk
exposure is interest rate risk.  The ongoing  monitoring  and management of this
risk is an  important  component  of the  Company's  asset/liability  management
process which is governed by policies of the Asset/Liability  Committees (ALCO).
In this capacity ALCO develops guidelines and strategies impacting the Company's
asset/liability  management  related activities based upon estimated market risk
sensitivity, policy limits and overall market interest rate levels/trends.

Interest Rate Risk
Interest rate risk  represents the  sensitivity of earnings to changes in market
interest  rates.  As interest  rates  change,  the  interest  income and expense
streams associated with the Company's financial  instruments also change thereby
impacting  net interest  income  (NII),  the primary  component of the Company's
earnings. ALCO utilizes the results of a simulation model and static GAP reports
to quantify the  estimated  exposure of NII to sustained  interest rate changes.
ALCO monitors simulated NII sensitivity over a rolling two-year horizon to gauge
its interest rate risk.

The  simulation  model  captures  the impact of changing  interest  rates on the
interest income received and interest expense paid on all assets and liabilities
reflected  on the  Company's  balance  sheet.  A parallel and pro forma shift in
rates of 200 basis  points (bp) upward and  downward on a static  balance  sheet
over a 12 month period is assumed.  The  following  reflects the  Company's  NII
sensitivity analysis as of the most recently reviewed time frame, April 30, 1999
versus December 31, 1998.

           Rate Change                        Estimated NII Sensitivity
                                                  1999          1998
                                                  ------------------
            +200pb                                (5.60%)    (13.3%)
            -200pb                                 5.59%       8.5%

The preceding sensitivity analysis does not represent the Company's forecast and
should not be relied upon as being  indicative  of expected  operating  results.
These hypothetical estimates are based upon numerous assumptions including:  the
nature  and  timing  of  interest  rate  levels  including  yield  curve  shape,
prepayments on loans and securities,  deposit decay rates,  pricing decisions on
loans and deposits,  investment/  replacement of asset and liability cash-flows,
and others.  While  assumptions  are developed  based upon current  economic and
local  market  conditions,  the  Company  cannot make any  assurances  as to the
predictive  nature of these  assumptions  including how customer  preferences or
competitor influences might change.

Also, as market conditions vary from those assumed in the sensitivity  analysis,
actual  results will also differ due to:  prepayment/refinancing  levels  likely
deviating from those assumed, the varying impact of interest rate change caps or
floors on adjustable rate assets,  the potential effect of changing debt service
levels on customers with adjustable rate loans,  depositor early withdrawals and
product preference changes, and other internal/external variables.  Furthermore,
the  sensitivity  analysis  does not  reflect  actions  that ALCO  might take in
responding to or anticipating changes in interest rates.
<PAGE>
                    IPSWICH BANCSHARES, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 1.                      Legal Proceedings
None

Item 2.                      Changes in Securities
None

Item 3.                      Defaults Upon Senior Securities
None

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

a.             The Bank's  Annual  Meeting of Stockholders was held on April 28,
               1999.

b.             The following is a brief description of the matters voted upon at
               the Annual Meeting, including the tabulation of votes:
               1. Approval of the  reorganization  of Ipswich  Savings Bank into
the holding company form of ownership by approving a Plan of Reorganization  and
Acquisition  pursuant to which  Ipswich  Savings  Bank has become a wholly owned
subsidiary of the Company and each outstanding share of common stock of the Bank
was exchanged for one share of the common stock of the Company.
<TABLE>
               <S>           <C>
                             Votes For   Votes Against  Abstentions   Broker Non-Votes
                             -----------------------------------------------------------
                             1,805,069      35,302        7,170          400,808

               2.            Approval of the Ipswich Savings Bank 1998 Stock Incentive Plan.
                             Votes For      Votes Against Abstentions   Broker Non-Votes
                             2,017,135         202,914      28,300

               3.            Election of two Directors, each for a three-year term

                                                   Votes For     Votes Withheld
                             William E. George     2,104,505     143,844
                             Lawrence J. Pszenny   2,109,755     138,594

               4.            Election of the Clerk of the Bank for a one-year term
                                            Votes For                    Votes Withheld Abstentions
                             Mariell Lyons  2,103,051                    134,000                      10,632

Item 5.                      Other Information
None

Item 6.                      Exhibits and Reports on Form 8-K
a.             Exhibits

b.             Reports on Form 8-K
               1.            The Company filed a Current Report on Form 8-K (Item 5) on July 9, 1999.
</TABLE>
<PAGE>
<TABLE>
c.             Exhibits
<S>            <C>           <C>
               2.1           Plan of Reorganization and Acquisition dated as of February 17, 1999 between the Company and Ipswich
                                Savings Bank incorporated by reference to the Company's Form 8-K filed on July 9, 1999.

               3.1           Articles of Organization of the Company.
               3.2           By-laws of the Company.

               4.1           Specimen stock certificate for the Company's Common Stock

               10.1          Lease dated August 10, 1992 for premises located at Route 133 and Route 1, Rowley, Massachusetts.
               10.2          Lease dated April 25, 1994 for premises located at 451 Andover Street, North  Andover, Massachusetts.
               10.3          Lease dated March 4, 1996 for premises located at 588 Cabot Street, Beverly, Massachusetts.
               10.4          Lease dated July 27, 1997 for premises located at 600 Loring Avenue, Salem, Massachusetts.
               10.5          Lease dated February 27, 1998 for premises located at 89 Pleasant Street, Marblehead, Massachusetts
               10.6          Lease dated June 12, 1998 for premises located at 470 Main Street, Reading, Massachusetts.
               10.7*         Incentive Compensation Plan for Senior Management and certain other officers
                                dated September 15, 1995.
               10.8*         Director  Recognition and Retirement Plan adopted as of May  18,  1999.
               10.9*         Merger and  Severance  Benefits  Program  dated February 18, 1998.
               1010*         Amended and Restated Employment and Severance Agreement dated May 18, 1999
                                between Ipswich Savings Bank and David L. Grey.
               10.11*        Amended and Restated Employment and Severance Agreement dated May 18, 1999
                                between Ipswich Savings Bank and Francis Kenney
               10.12*        Amended and Restated Severance Agreement dated May 18, 1999 between Ipswich Savings Bank and
                                 Thomas R. Girard
               10.13*        Employment Agreement dated June 18, 1998 between Ipswich Savings Bank
                                and Richard P. Duffett.
               10.14(a)*     Amended and Restated Split Dollar Agreement dated May 18, 1999 among
                                Ipswich Savings Bank, Eastern Bank and David L. Grey.
               10.14(b)*     Amended and Restated Ipswich Irrevocable Insurance Trust dated as of May 18, 1999 by and between
                                Ipswich Savings Bank and Eastern Bank.
               10.15         Contract  with Bank's data  processor  dated  February 14,  1997.
               10.16*        1992 Incentive and Non-qualified Stock Option Plan incorporated by reference to the
                                Company's Registration Statement on Form S-8 filed on July 22, 1999.
               10.17*        1996 Stock Incentive Plan incorporated by reference to the Company's Registration Statement on Form
                                S-8 filed on July 22, 1999.
               10.18*        1998 Stock Incentive Plan incorporated by reference to the Company's Registration Statement on Form
                                S-8 filed on July 22, 1999.
               10.19*        Deferred Stock Compensation Plan for Directors incorporated by reference to the Company's Form S-8
                             filed on July 22, 1999.

               10.20*        Savings Bank Employees Retirement Associations 401 (k) Plan as adopted by Ipswich Savings Bank
                             incorporated by the Company's Registration Statement on Form S-8 filed on July 22, 1999.

               11.           A statement regarding the computation of earnings per share is included in the Notes to Consolidated
                             Financial Statements.

               12.           Not applicable.

               27.           Financial Data Schedule.

*              Denotes Management Contract or Compensation Plan.
</TABLE>
<PAGE>

                                   SIGNATURES
                                   ----------

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

IPSWICH BANCSHARES, INC.


By:   /s/           David L. Grey               Date: August 12, 1999
      -------------------------------------     -----
      David L. Grey
      President and Chief Executive Officer


By:   /s/           Francis Kenney              Date: August 12, 1999
      -------------------------------------     -----
      Francis Kenney
      Treasurer
      (Principal Financial Officer and Principal Accounting Officer)