Benjamin Franklin Bancorp, Inc.

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QnDsSTgy3SLRKR8G6TPnQZ53hARJLYVo51H95d4bHZBPufw44C26aDPlTOMGwx2O U6g7Dq9K/8qqw9R9lIEzWw== 0000950135-05-003394.txt : 20050620 0000950135-05-003394.hdr.sgml : 20050617 20050620161047 ACCESSION NUMBER: 0000950135-05-003394 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050404 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050620 DATE AS OF CHANGE: 20050620 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Benjamin Franklin Bancorp, Inc. CENTRAL INDEX KEY: 0001302176 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 043336598 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-51194 FILM NUMBER: 05905952 BUSINESS ADDRESS: STREET 1: 58 MAIN STREET STREET 2: P.O. BOX 309 CITY: FRANKLIN STATE: MA ZIP: 02038 BUSINESS PHONE: (508) 528-7000 MAIL ADDRESS: STREET 1: 58 MAIN STREET STREET 2: P.O. BOX 309 CITY: FRANKLIN STATE: MA ZIP: 02038 FORMER COMPANY: FORMER CONFORMED NAME: Benjamin Franklin Bancorp, M.H.C. DATE OF NAME CHANGE: 20040901 8-K/A 1 b55459bfe8vkza.htm BENJAMIN FRANKLIN BANCORP, INC. Benjamin Franklin Bancorp, Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K/A

Amendment No. 1 to CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 4, 2005

BENJAMIN FRANKLIN BANCORP, INC.

(Exact Name of Registrant as Specified in Charter)


Massachusetts	000-51194	04-3336598

(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)


58 Main Street, Franklin, Massachusetts		02038

(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (508) 528-7000

Benjamin Franklin Bancorp, M.H.C.

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

On April 7, 2005, Benjamin Franklin Bancorp, Inc. (the “Company”) filed a Current Report on Form 8-K under Item 2.01 to report that it had closed its acquisition of Chart Bank, A Co-operative Bank. In response to parts (a) and (b) of Item 9.01 of such Form 8-K, the Company stated that it would file by amendment the required historical financial statements for Chart Bank and the required pro forma financial information, as permitted by paragraphs (a)(4) and (b)(2) to Item 9.01 to Form 8-K. This Form 8-K/A is being filed to provide the required historical financial statements and pro forma financial information.

TABLE OF CONTENTS


Item 9.01. Financial Statements and Exhibits
SIGNATURES
Exhibit Index
Ex-99.2 Financial Statements of Charter Bank
Ex-99.3 Unaudited ProForma Condensed Combined Financial Information

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

The required historical financial statements for Chart Bank are attached hereto as Exhibit 99.2.

(b) Pro Forma Financial Information.

The required pro forma financial information is attached hereto as Exhibit 99.3.


Number		Title
2.1		Agreement and Plan of Merger dated as of September 1, 2004 (incorporated by reference from Benjamin Franklin Bancorp’s Registration Statement on Form S-1, No. 333-121154, filed on December 10, 2004)

99.1		Press release dated April 5, 2005 (previously filed)

99.2		Audited Consolidated Financial Statements of Chart Bank, A Cooperative Bank as of and for the years ended December 31, 2004 and 2003

99.3		Unaudited Pro Forma Condensed Combined Financial Information as of and for the year ended December 31, 2004.

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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 hereunto duly authorized.

BENJAMIN FRANKLIN BANCORP, INC.

Date: June 20, 2005 By: /s/ Claire S. Bean
Claire S. Bean
Executive Vice President, Chief Financial Officer and Treasurer

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Exhibit Index


Number		Title
99.2		Audited Consolidated Financial Statements of Chart Bank, A Cooperative Bank as of and for the years ended December 31, 2004 and 2003

99.3		Unaudited Pro Forma Condensed Combined Financial Information as of and for the year ended December 31, 2004.

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EX-99.2 2 b55459bfexv99w2.txt EX-99.2 FINANCIAL STATEMENTS OF CHARTER BANK EXHIBIT 99.2 CHART BANK, A COOPERATIVE BANK CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2004 and 2003 TABLE OF CONTENTS

INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Chart Bank, A Cooperative Bank Waltham, Massachusetts We have audited the accompanying consolidated balance sheets of Chart Bank, A Cooperative Bank and subsidiaries, as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in stockholders' equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Bank's management. Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Chart Bank, A Cooperative Bank and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ WOLF & COMPANY, P.C. Boston, Massachusetts February 18, 2005 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2004 AND 2003

See accompanying notes to consolidated financial statements. 2 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2004 AND 2003

See accompanying notes to consolidated financial statements. 3 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2004 AND 2003

See accompanying notes to consolidated financial statements. 4 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2004 AND 2003

(continued) See accompanying notes to consolidated financial statements. 5 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONCLUDED) YEARS ENDED DECEMBER 31, 2004 AND 2003

See accompanying notes to consolidated financial statements. 6 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2004 AND 2003 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION AND CONSOLIDATION The consolidated financial statements include the accounts of Chart Bank, A Cooperative Bank (the "Bank") and its wholly-owned subsidiaries, Creative Strategic Solutions, Inc. ("CSSI"), which provides electronic commerce, electronic funds transfer, automated teller machine services and related consulting services, and Weston Street Securities Corporation, which buys, sells and holds securities. All significant intercompany balances and transactions have been eliminated in consolidation. BUSINESS The Bank is a full service community bank that provides financial services, through its three offices in Waltham and Newton, including a complete line of personal and consumer accounts as well as an extensive line of commercial loan services to accounts in eastern Massachusetts. In addition, the Bank, through its subsidiary CSSI, provides electronic commerce, electronic funds transfer, automated teller machine services and related consulting services to the financial services industry, while offering services and specific products to third parties throughout the United States. USE OF ESTIMATES In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A material estimate that is particularly susceptible to significant change in the near term relates to the determination of the allowance for loan losses. RECLASSIFICATIONS Certain amounts in the 2003 consolidated financial statements have been reclassified to conform to the 2004 presentation. 7 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CASH AND CASH EQUIVALENTS Cash equivalents include amounts due from banks and short-term investments, which consist of federal funds sold and investment in the Bank Investment Liquidity Fund. The Bank is required to maintain average balances on hand or with the Federal Reserve Bank. At December 31, 2004 and 2003, the required reserve balance amounted to $1,193,000 and $1,160,000, respectively. SECURITIES Securities that management has the positive intent and ability to hold to maturity are classified as held to maturity and recorded at amortized cost. All other securities are classified as available for sale and recorded at fair value, with unrealized gains and losses excluded from income and reported in other comprehensive income/loss. Discounts and premiums are recognized in income over the term of the securities, by the interest method. Declines in the value of securities that are deemed to be other than temporary are reflected in earnings when identified. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on disposition of securities are computed by the specific identification method. LOANS The Bank grants mortgage and consumer loans to customers and a substantial portion of the loan portfolio is represented by mortgage loans in the Waltham and Newton areas. The ability of the Bank's debtors to honor their contracts is dependent upon the real estate and economic sectors. Loans are reported at their outstanding principal balances, adjusted for charge-offs, the allowance for loan losses, deferred loan origination fees or costs and loan purchase premiums. Interest is not accrued on loans, including impaired loans, ninety days or more past due, unless the loan is well-secured and in process of collection. Past due status is based on contractual terms of the loan. Interest income previously accrued on such loans is reversed against current period income. In addition, interest collected is applied to principal when management is uncertain as to the collectibility of the principal balance. Net deferred loan costs/fees and purchase premiums are amortized over the life of the related loan on the interest method. 8 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) LOANS (CONCLUDED) Loans are considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impairment is measured on a loan by loan basis by the fair value of the collateral. ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to operations. Loan losses, including loan losses on impaired loans, are charged against the allowance when management believes the uncollectibility of the loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectibility of the loans in light of known and inherent risks in the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of allocated, general and unallocated components. The allocated component relates to loans that are classified as either substandard or loss. For such loans that are also classified as impaired, an allowance is established when the collateral value of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating losses in the portfolio. BANKING PREMISES AND EQUIPMENT Land is carried at cost. Building, leasehold improvements and equipment are stated at cost, less accumulated depreciation and amortization, computed principally on the straight-line method over the estimated useful lives of the assets or the anticipated term of the lease, if shorter. 9 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INCOME TAXES Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted accordingly through the provision for income taxes. TRANSFERS OF FINANCIAL ASSETS Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Bank, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. ADVERTISING AND MARKETING COSTS Advertising and marketing costs are expensed as incurred. STOCK COMPENSATION PLAN In accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," the Bank has elected to measure compensation cost for its stock option plan using the intrinsic value based method of accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees," whereby compensation cost is the excess, if any, of the quoted market price of the stock at the grant date (or other measurement date) over the amount an employee must pay to acquire the stock. Stock options issued under the Bank's stock option plan have no intrinsic value at the grant date, and under Opinion No. 25 no compensation cost is recognized for them. The pro forma impact of accounting for stock options granted in accordance with SFAS No. 123 was not material. (See Recent Accounting Pronouncements.) 10 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) COMPREHENSIVE INCOME Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale, are reported as a separate component of the stockholders' equity section of the consolidated balance sheet, such items, along with net income, are components of comprehensive income. The components of other comprehensive income/loss and related tax effects are as follows:

RECENT ACCOUNTING PRONOUNCEMENTS On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123R, "Share-Based Payment," which is an Amendment of SFAS Nos. 123 and 95. SFAS No. 123R changes, among other things, the manner in which share-based compensation, such as stock options, will be accounted for by both public and non-public companies. SFAS No. 123R allows nonpublic entities, such as the Bank, to elect to measure compensation cost of awards of equity share options and similar instruments at intrinsic value through the date of settlement and therefore, is not expected to have a material impact on the Bank's consolidated financial statements. 11 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONCLUDED) RECENT ACCOUNTING PRONOUNCEMENTS (CONCLUDED) On September 30, 2004, the FASB issued FASB Staff Position ("FSP") Emerging Issues Task Force ("EITF") Issue No. 03-1-1 delaying the effective date of paragraphs 10-20 of EITF 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments", which provides guidance for determining the meaning of "other-than-temporarily impaired" and its application to certain debt and equity securities within the scope of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities", and investments accounted for under the cost method. The guidance requires that investments which have declined in value due to credit concerns or solely due to changes in interest rates must be recorded as other-than-temporarily impaired unless the Bank can assert and demonstrate its intention to hold the security for a period of time sufficient to allow for a recovery of fair value up to or beyond the cost of the investment which might mean maturity. The delay of the effective date of EITF 03-1 will be superceded concurrent with the final issuance of proposed FSP Issue 03-1-a. Proposed FSP Issue 03-1-a is intended to provide implementation guidance with respect to all securities analyzed for impairment under paragraphs 10-20 of EITF 03-1. Management continues to closely monitor and evaluate how the provisions of EITF 03-1 and proposed FSP Issue 03-1-a will affect the Bank. 2. SECURITIES The amortized cost, gross unrealized gains and losses and fair value of securities follows. At December 31, 2003, all securities consisted of federal agency obligations.

12 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SECURITIES (CONTINUED)

The carrying value and estimated fair value of debt securities by contractual maturity at December 31, 2004, follows. Expected maturities may differ from contractual maturities because the issuer may have the right to call or prepay obligations with or without call or prepayment penalties.

Proceeds from the sales of securities for the year ended December 31, 2004 amounted to $722,000, which realized gross gains of $71,000 and gross losses of $4,000. There were no sales of securities in 2003. 13 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SECURITIES (CONCLUDED) At December 31, 2004 and 2003, securities with a fair value of $5,010,000 and $5,775,000, respectively, were pledged to secure municipal deposits, the Bank's treasury, tax and loan account and funds advanced under the Federal Reserve borrowing agreement. (See Note 6.) Information pertaining to securities with gross unrealized losses at December 31, 2004 and 2003, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

At December 31, 2004, four marketable equity securities had unrealized losses of 6% from the Bank's cost. These unrealized losses have existed for less than twelve months and relate principally to the financial services industry. No credit issues have been identified that cause management to believe the declines are other-than-temporary. At December 31, 2004, forty-four securities held to maturity had unrealized losses of 1% from the Bank's amortized cost. The declines in value are due principally to the effect that rising interest rates have on the value of the securities. The securities are issued by government agencies, therefore impairment is not deemed to be other-than-temporary. 14 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 3. LOANS The composition of the balance of loans at December 31, 2004 and 2003, follows:

An analysis of the allowance for loan losses for the years ended December 31, 2004 and 2003 follows:

15 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LOANS (CONCLUDED) At December 31, 2004, impaired and non-accrual loans amounted to $119,000. For the year ended December 31, 2004, the average balance of impaired loans was $119,000 and $5,000 in interest income was recognized on impaired loans on the cash basis during the period they were impaired. At December 31, 2003, impaired and non-accrual loans amounted to $120,000. For the year ended December 31, 2003, the average balance of impaired loans was $40,000 and $1,000 in interest income was recognized on impaired loans on the cash basis during the period they were impaired. At December 31, 2004 and 2003, accruing loans past due greater than ninety days amounted to $136,000 and $93,000, respectively. Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others was $13,208,000 and $10,553,000 at December 31, 2004 and 2003, respectively. Loans sold did not contain recourse provisions. 4. BANKING PREMISES AND EQUIPMENT A summary of the cost and accumulated depreciation and amortization of banking premises and equipment follows:

Depreciation and amortization expense for the years ended December 31, 2004 and 2003 amounted to $388,000 and $429,000, respectively. 16 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS) 5. DEPOSITS A summary of deposit balances by type follows:

A summary of term certificates by maturity at December 31, 2004 and 2003, follows:

17 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 6. BORROWED FUNDS Borrowed funds consist of advances from the Federal Home Loan Bank of Boston ("FHLB"). Short-term advances mature within one year and have a weighted average interest rate of 2.34% and 1.24% at December 31, 2004 and 2003, respectively. Long-term advances at December 31, 2004 and 2003 are as follows:

At December 31, 2004 and 2003, the Bank's unadvanced Ideal Way line of credit available from the FHLB amounted $2,389,000 and $187,000, respectively, at an interest rate that adjusts daily. All FHLB borrowings are secured primarily by a blanket lien on the Bank's unencumbered residential real estate loan portfolio and at December 31, 2004 and 2003, $34,409,000 and $27,793,000, respectively, in commercial real estate loans in accordance with the FHLB's products policy. The Bank also maintains a borrowing agreement with the Federal Reserve Bank of Boston at an interest rate that adjusts daily. Advances are limited to the amount of collateral pledged. At December 31, 2004 and 2003, certain federal agency obligations are pledged as collateral under this agreement and no advances are outstanding. 18 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 7. INCOME TAXES The allocation of income taxes between current and deferred portions is as follows:

The reasons for the differences between the statutory federal income tax rate and the effective tax rates for the years ended December 31, 2004 and 2003 are summarized as follows:

The components of the net deferred tax asset are as follows:

19 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) INCOME TAXES (CONCLUDED) The tax effects of each item that gives rise to deferred taxes are as follows:

A summary of the change in the net deferred tax asset is as follows:

There was no valuation reserve required years ended December 31, 2004 and 2003. 20 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 8. EMPLOYEE BENEFIT PLAN The Bank has a 401(k) Plan whereby each employee reaching the age of 21 and having completed six months of service automatically becomes a participant in the Plan. Employees may contribute up to 15% of their compensation subject to certain limits based on federal tax laws. The Bank may make discretionary matching contributions each Plan year proportionate to the employee's contribution up to 4% of the employee's compensation. The Bank's contributions vest 20% per year of service and are fully vested after five years. For the years ended December 31, 2004 and 2003, expense attributable to the Plan amounted to $84,000 and $78,000, respectively. 9. MINIMUM REGULATORY CAPITAL REQUIREMENTS The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes December 31, 2004 and 2003, that the Bank met all capital adequacy requirements to which it is subject. 21 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) MINIMUM REGULATORY CAPITAL REQUIREMENTS (CONCLUDED) As of December 31, 2004, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since the notification that management believes have changed the Bank's category. The Bank's actual capital amounts and ratios as of December 31, 2004 and 2003 are also presented in the table.

10. STOCK OPTION PLAN During 1996 and amended in 2000, the Bank adopted a stock option plan for the benefit of employees of the Bank covering 142,000 shares of common stock, all of which were granted by the end of 2000. At December 31, 2004 and 2003, there were 137,000 options outstanding. The exercise period for all options is ten years and the exercise price is $10 per share, adjusted for stock splits and dividends in stock. The options vest over periods up to five years from the date of grant. At December 31, 2004 and 2003, 128,600 and 120,200 options, respectively, were exercisable. At December 31, 2004, the weighted average remaining contractual life of outstanding options was 3.6 years. (See Note 13.) 22 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 11. COMMITMENTS AND CONTINGENCIES GENERAL In the ordinary course of business, various legal claims arise from time to time and, in the opinion of management, these claims will have no material effect on the Bank's consolidated financial statements. EMPLOYMENT AND CONSULTING AGREEMENTS The Bank has entered into an employment and consulting agreement with the former Chief Executive Officer of the Bank and an employment agreement with the current Chief Executive Officer for periods of not less than three years. The agreements generally provide for a specified minimum annual salary, which may be increased at the discretion of the Bank's Board of Directors, and continuation of benefits currently received. The agreements provide for certain lump sum severance payments within a one-year period following a "change in control," as defined in the agreements. (See Note 13.) In addition, in 2004 the Bank entered into a termination agreement with another executive of the Bank, whereby the executive will continue to receive base salary and benefits for eighteen months following a change in control or terminating event, as defined in the agreement. LOAN COMMITMENTS The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and advance funds on home equity and commercial lines-of-credit and construction loans and standby letters-of-credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Bank's exposure to credit loss is represented by the contractual amount or unpaid principal balance of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. The contract amount of financial instruments which represent credit risk are as follows:

23 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) COMMITMENTS AND CONTINGENCIES (CONCLUDED) LOAN COMMITMENTS (CONCLUDED) Commitments to grant loans are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for home equity and commercial lines-of-credit may expire without being drawn upon, therefore, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer's credit worthiness on a case-by-case basis and these financial instruments are generally collateralized by real estate or other assets. Standby letters-of-credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those letters-of-credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of credit issued are reviewable annually. The credit risk involved in issuing letters-of-credit is essentially the same as that involved in extending loan facilities to customers. The Bank collateralizes those commitments for which collateral is deemed necessary. LEASE COMMITMENTS Pursuant to the terms of lease agreements in effect at the dates noted, pertaining to banking premises, future minimum rent commitments are as follows:

In addition to the minimum rental payments, the leases contain renewal options for up to forty years. The cost of such options is not included above. Rent expense for the years ended December 31, 2004 and 2003 amounted to $318,000 and $320,000, respectively. The Bank leases an office from a director of the Bank. At December 31, 2004 and 2003, future minimum rent commitments, included in the table above, total $447,000 and $584,000, respectively, through 2008. The lease contains renewal options for four additional ten year periods. Rent expense under this lease for both years ended December 31, 2004 and 2003 amounted to $139,000. 24 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 12. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Bank's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Certain financial instruments and all nonfinancial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Bank. The following methods and assumptions were used by the Bank in estimating fair value disclosures for financial instruments: Cash and cash equivalents: The carrying amounts of cash, due from banks and short-term investments approximate fair values. Securities: Fair values are based on quoted market prices. FHLB stock: The carrying value of FHLB stock approximates fair value based on the redemption provisions of the Federal Home Loan Bank of Boston. Loans: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms, adjusted for credit risk. Accrued interest: The carrying amounts of accrued interest approximate fair values. Deposits: The fair values for non-certificate accounts are, by definition, equal to the amount payable on demand at the reporting date which is the carrying amount. Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits. FHLB advances: The fair value of FHLB advances is estimated using discounted cash flow analyses based on the Bank's current incremental borrowing rates for similar types of borrowing arrangements. 25 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FAIR VALUE OF FINANCIAL INSTRUMENTS (CONCLUDED) Off-balance-sheet instruments: Fair values for off-balance-sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The estimated fair values of off-balance-sheet instruments are immaterial. The estimated fair values, and related carrying amounts, of the Bank's financial instruments are as follows:

13. MERGER AGREEMENT On September 1, 2004, the Bank signed an Agreement and Plan of Merger with Benjamin Franklin Bancorp, MHC ("Benjamin Franklin Bancorp"), a Massachusetts-chartered mutual holding company, and Benjamin Franklin Savings Bank ("Benjamin Franklin Bank"), a Massachusetts-chartered savings bank and wholly-owned subsidiary of Benjamin Franklin Bancorp. Benjamin Franklin Bancorp and Benjamin Franklin Bank are located in Franklin, Massachusetts. Benjamin Franklin Bancorp will convert from mutual to stock form pursuant to a plan of conversion. The Bank will merge with Benjamin Franklin Bank, with Benjamin Franklin Bank as the surviving bank. Each share of the Bank's common stock issued and outstanding immediately prior to the merger shall be converted into, and shall be cancelled in exchange for, the right to receive 3.075 shares of Benjamin Franklin Bancorp common stock or a cash amount equal to $30.75 per share of the Bank's common stock. The per share stock consideration assumes a $10 per share price for Benjamin Franklin Bancorp's common stock to be sold in the mutual-to-stock conversion. 26 CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED) MERGER AGREEMENT (CONCLUDED) In addition, each option to purchase Chart Bank stock outstanding at the effective date of the merger becomes fully vested and may be exercised. If the options are not exercised, they shall be terminated and each grantee thereof shall be entitled to receive an amount of cash equal to the excess of the $30.75 per share cash consideration over the option exercise price of $10.00. The Bank's employment agreements with the former and current Chief Executive Officer will terminate upon completion of the merger. The merger is subject to completion of Benjamin Franklin Bank's stock conversion, approval by Chart Bank's stockholders and satisfaction of certain closing conditions. Merger expenses incurred through December 31, 2004 amounted to $637,000. 27 EX-99.3 3 b55459bfexv99w3.txt EX-99.3 UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION EXHIBIT 99.3 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following pro forma unaudited consolidated balance sheet and income statement at December 31, 2004 and explanatory notes present how the combined financial statements of Benjamin Franklin Bancorp and Chart Bank may have appeared had the businesses actually been combined, and had the Benjamin Franklin Bancorp stock offering been consummated, at the beginning of the period presented. The pro forma unaudited condensed financial statements give effect to the stock conversion and the acquisition using purchase accounting as required by accounting principles generally accepted in the United States. The pro forma unaudited condensed financial information is provided for informational purposes only. The pro forma financial information presented is not necessarily indicative of the actual results that would have been achieved had the conversion and the acquisition been consummated on December 31, 2004 or at the beginning of the period presented, and is not indicative of future results. BENJAMIN FRANKLIN BANCORP, INC. AND CHART BANK PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED) The following unaudited pro forma condensed combined balance sheet combines the historical balance sheets of Benjamin Franklin Bancorp and Chart Bank, assuming the companies had been combined on December 31, 2004, on a purchase accounting basis:

BENJAMIN FRANKLIN BANCORP, INC. AND CHART BANK PRO FORMA CONDENSED COMBINED INCOME STATEMENT (UNAUDITED) The following unaudited pro forma condensed combined statement of income combines the historical statements of income of Benjamin Franklin Bancorp and Chart Bank assuming the companies had been combined on January 1, 2004, on a purchase accounting basis:

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION BASIS OF PRO FORMA PRESENTATION The unaudited pro forma condensed combined financial information related to the merger is presented as of and for the year ended December 31, 2004. The pro forma adjustments included herein reflect the $46.6 million purchase price paid for the 1.4 million shares of Chart Bank common stock outstanding at April 4, 2005. The total merger consideration consisted of approximately $21.5 million in cash and 2.5 million shares of Benjamin Franklin Bancorp common stock. The pro forma adjustments also include the conversion of Benjamin Franklin Bancorp, a Massachusetts-chartered mutual holding company, to a Massachusetts-chartered business corporation and stock holding company and simultaneous stock offering of 5,577,419 shares of common stock at $10.00 per share to eligible account holders. An additional 400,000 shares were issued and contributed to the Benjamin Franklin Bank Charitable Foundation as part of the conversion. The merger has been accounted for using the purchase method of accounting; and accordingly, Benjamin Franklin's cost to acquire Chart Bank has been allocated to the assets and liabilities at their respective fair values as of the date the merger was completed. The unaudited pro forma condensed combined financial information includes estimated adjustments to record the assets and liabilities of Chart Bank at their respective fair values and represents management's estimates based on available information. The pro forma adjustments included herein may be revised as additional information becomes available and as additional analyses are performed. The final allocation of the purchase price will be determined after completion of a final analysis to determine the fair values of Chart Bank's tangible and identifiable intangible assets and liabilities as of the completion date. Accordingly, the final purchase accounting adjustments and integration charges may be materially different from the pro forma adjustments presented in this document. Increases or decreases in the fair value of the assets and liabilities of Chart Bank as compared to the information shown in this document may change the amount of the purchase price allocated to goodwill and other assets and liabilities and may impact the statement of income due to adjustments in yield and/or amortization of the adjusted assets or liabilities. The unaudited pro forma condensed combined financial information presented in this document does not necessarily indicate the results of operations or the combined financial position that would have resulted had the merger been completed at the beginning of the applicable period presented, nor is it indicative of the results of operations in future periods or the future financial position of the combined company. PRO FORMA ADJUSTMENTS The unaudited pro forma condensed combined financial information for the merger includes the pro forma balance sheet as of December 31, 2004 assuming the merger was completed on December 31, 2004. The pro forma statement of income for the year ended December 31, 2004 was prepared assuming the merger was completed on January 1, 2004. The pro forma adjustments included in the unaudited pro forma condensed combined financial information are as follows: (1) Shows the effect of the mutual-to-stock conversion of Benjamin Franklin Bancorp, with gross proceeds of $55.8 million, offering expenses of $2.1 million, a contribution to the Benjamin Franklin Bank Charitable Foundation of $4.0 million of common stock, the establishment of an employee stock ownership plan that is in the process of acquiring, in the open market, 478,194 shares representing 8% of the shares issued in the conversion (including shares contributed to the Benjamin Franklin Bank Charitable Foundation), and the stock-based incentive plan that is expected to acquire 4.0% of the number of shares issued in the offering including the shares issued to the Benjamin Franklin Bank Charitable Foundation (239,097 shares). It is assumed that Benjamin Franklin Bancorp will purchase shares in the open market, for grant as restricted stock under the stock-based incentive plan, after receiving stockholder approval to adopt the plan. Future open market purchases by the employee stock ownership plan and stock-based incentive plan are assumed at $10.30 per share, the closing bid price of the stock on June 14, 2005. As of June 14, 2005, the employee stock ownership plan has purchased 300,000 shares at an average cost of $10.15 per share. The reduction in retained earnings reflects the one-time expense of funding the Benjamin Franklin Bank Charitable Foundation net of a deferred tax asset. (2) Reflects the purchase accounting and acquisition adjustments related to the acquisition of Chart Bank for a price of $30.75 per share in cash and newly issued common stock. (3) Calculate as follows:

(4) Deferred tax asset resulting from the expense of funding the Benjamin Franklin Bank Charitable Foundation with a contribution of 400,000 shares of common stock at $10 per share, based on marginal tax rate of 34.0%. (5) The employee stock ownership plan is being funded with a loan from Benjamin Franklin Bancorp, thus no borrowing liability is recorded on the consolidated balance sheet of Benjamin Franklin Bancorp. (6) No par value common stock. (7) Calculate as follows:

(8) After-tax impact to retained earnings from the $4.0 million expense for funding the Benjamin Franklin Bank Charitable Foundation based on a marginal tax rate of 34.0%. (9) Contra-equity account established to reflect the unallocated shares in the employee stock ownership plan, which is in the process of acquiring, in the open market, 478,194 shares, representing 8.0% of the shares issued in the offering (including shares contributed to the Benjamin Franklin Bank Charitable Foundation). As of June 14, 2005, 300,000 shares had been purchased at an average price of $10.15 per share. It is assumed that the remaining 178,194 shares to be purchased will be acquired at a cost of $10.30, the closing bid price of the stock on June 14, 2005. (10) Contra-equity account established to reflect the unvested shares of restricted stock under the stock-based incentive plan equal to 4.0% of shares issued in the offering, including shares contributed to the Foundation (239,097 shares). The cost of the unvested shares is assumed to be $10.30 per share, the closing bid price of the stock on June 14, 2005. (11) Includes the cash portion of the merger consideration paid to Chart Bank, non-tax deductible transaction costs incurred, tax deductible one time transaction expenses, and one time expenses that will be incurred by Benjamin Franklin Bancorp to consolidate Chart Bank, net of cash received from return of the Chart Bank Cooperative Central Bank deposit.

(12) Reflects the difference between market values and net book values of securities held to maturity acquired in the acquisition. (13) Yield adjustment to reflect the difference between portfolio yields and market rates as of April 4, 2005 for loans acquired in the acquisition. Yield adjustments were calculated using present value analysis as follows: (a) the acquired loan portfolio was segregated into pools of similar loans; (b) cash flow projections were prepared for each loan pool based interest rates, balances, remaining terms to maturity, and estimated prepayment speeds for each pool; (c) cash flows were discounted to present value using risk adjusted discount rates for comparable loans; and (d) the resulting difference between the present value of future cash flows for each pool and the corresponding principal balance was the yield adjustment. Yield adjustments on acquired loans are amortized into interest income using the interest method over the estimated lives of the acquired loans. (14) Reflects the difference between market values and net book values of fixed assets acquired in the acquisition. (15) Goodwill is an intangible asset that is not subject to amortization. The goodwill balance will be tested annually for impairment. Goodwill is calculated as:

(16) Core deposit intangible is an identifiable intangible asset representing the economic value of the acquired Chart Bank deposit base, calculated as the present value benefit of funding operations with the acquired deposit base versus using an alternative wholesale funding source. The core deposit intangible asset is amortized into expense on an accelerated basis using the double declining balance method over 15 years. (17) Calculate as follows:

(18) Yield adjustment to reflect the difference between portfolio yields and market rates as of April 4, 2005 for time deposits acquired in the acquisition. Yield adjustment is calculated as the difference between the current portfolio balances for time deposits and the present value of projected cash flows related to the time deposits discounted using current market rates. Current market rates were based on average rates paid by institutions competing in the regional market area based on rate surveys on or around April 4, 2005. The yield adjustment for time deposits will be accreted into income using the interest method over the lives of the acquired time deposits based on their monthly maturities (4.5 years). (19) Yield adjustment to reflect the difference between portfolio yields and market rates as of April 4, 2005 for borrowings acquired in the acquisition. Yield adjustment is calculated as the difference between the current portfolio balance for borrowings and the present value of projected cash flows related to the borrowings discounted using current market rates. Current market rates were based on rates offered by the Federal Home Loan Bank of Boston as of April 4, 2005. The yield adjustment for borrowings will be amortized into expense using the interest method over the lives of the acquired borrowings based on their monthly maturities (3 years). (20) Eliminate Chart Bank common stock par value. Newly issued shares of Benjamin Franklin Bancorp have no par value. (21) Calculate as follows:

(22) Eliminate Chart Bank retained earnings:

(23) Calculate to eliminate the capital account entries of Chart Bank pursuant to purchase accounting. (24) Shows the effect of the mutual-to-stock conversion of Benjamin Franklin Bancorp, with gross proceeds of $55.8 million, offering expenses of $2.1 million, a contribution to the Benjamin Franklin Bank Charitable Foundation of $4.0 million of common stock, and establishment of an employee stock ownership plan that is in the process of acquiring, in the open market, 8.0% of the number of shares issued in the offering including the shares issued to the Benjamin Franklin Bank Charitable Foundation (478,194 shares in total). As of June 14, 2005, 300,000 shares had been purchased at an average price of $10.15 per share. It is assumed that the remaining 178,194 shares to be purchased will be acquired at a cost of $10.30, the closing bid price of the stock on June 14, 2005. The loan taken down by the employee stock ownership plan will be amortized over 30 years on a straight-line basis. The employee stock ownership plan expense shown reflects the estimated amortization expense on a pretax basis for the period shown. Benjamin Franklin Bancorp also intends to adopt a stock-based incentive plan that will award shares of restricted stock in the amount of 4.0% of the number of shares issued in the offering, including the shares issued to the Benjamin Franklin Bank Charitable Foundation (a total of 239,097 shares). The shares expected to be granted under the stock-based incentive plan as restricted stock are assumed to be purchased in the open market after receiving stockholder approval for the plan. Open market purchases for the stock-based incentive plan are assumed at $10.30 per share, the closing bid price of the stock on June 14, 2005. Also under the stock-based incentive plan, Benjamin Franklin Bancorp intends to grant options to purchase 10.0% of the number of shares issued in the offering, including shares issued to the Benjamin Franklin Bank Charitable Foundation. Adjustments to record estimated stock-based incentive plan expenses, including expenses of the restricted stock awards and option grants, and interest income to be earned on net proceeds of the offering, will be recorded as incurred. Since these estimates are non-recurring, they are not reflected in the calculations of pro forma income. Further, no expenses are included for the shares issued to the Benjamin Franklin Bank Charitable Foundation or other merger-related charges, all of which are one-time expenses. Employee stock ownership plan shares are assumed to be released at $10.30 per share, the closing bid price of the stock as of June 14, 2005. Taxes are calculated on an assumed marginal rate of 36.0%. (25) The expense of the employee stock ownership plan represents the number of shares to be released to participants (15,940 shares per year) times the average price of the stock for the year (assumed to be $10.30 per share). (26) Chart Bank operating results for the year ended December 31, 2004 include $637,000 of merger-related expenses. (27) Reflects the purchase accounting and acquisition adjustments related to the acquisition of Chart Bank for a price of $30.75 per share in cash and newly issued common stock. (28) Adjustment to interest income is the accretion of the discounts on the Chart Bank loans and investment securities resulting from purchase accounting. Accretion of the loan discount in the first year is estimated to amount to $513,000. Accretion of the discount on investment securities is estimated at $377,000 in the first year following the acquisition. Adjustments to record estimated interest income to be foregone as a result of funding the cash portion of the merger consideration paid to stockholders of Chart Bank and the expense of the acquisition will be recorded as incurred. Since these estimates are non-recurring, they are not reflected in the pro forma income statement (29) Adjustment to interest expense is calculated as follows:

(30) Adjustment to non-interest expense is calculated as follows: Amortization of new core deposit intangible.......................................................... $(1,656) Depreciation adjustment for market value of fixed assets............................................. (9) -------- Adjustment to non-interest expense................................................................... $(1,665) --------

~~(31) Marginal tax rate of 36.0%.~~ ~~-----END PRIVACY-ENHANCED MESSAGE-----~~

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	BENJAMIN FRANKLIN BANCORP, INC.
Date: June 20, 2005	By:	/s/ Claire S. Bean
		Claire S. Bean
		Executive Vice President, Chief Financial Officer and Treasurer