e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 2008


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

Commission file number 000-51194

Benjamin Franklin Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)


Massachusetts (State or Other Jurisdiction of Incorporation or Organization)		04-3336598 (I.R.S. Employer Identification No.)

58 Main Street, Franklin, MA (Address of Principal Executive Offices)		02038 (Zip Code)

Registrant’s telephone number, including area code: (617) 528-7000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “ accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o Noþ

Shares outstanding of the registrant’s common stock (no par value) at August 8, 2008: 7,666,172

PART I. FINANCIAL INFORMATION


Item 1.		Financial Statements

BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


	June 30,			December 31,
	2008			2007
	(Unaudited)			(Audited)
ASSETS
Cash and due from banks	$	12,235		$	12,226
Cash supplied to ATM customers		25,970			42,002
Short-term investments		9,474			10,363

Total cash and cash equivalents		47,679			64,591

Securities available for sale, at fair value		178,920			156,761
Restricted equity securities, at cost		12,908			11,591

Total securities		191,828			168,352

Loans
Residential real estate		224,665			188,654
Commercial real estate		175,135			168,649
Construction		50,307			55,763
Commercial business		179,982			159,233
Consumer		40,453			40,436

Total loans, gross		670,542			612,735
Allowance for loan losses		(6,431	)		(5,789	)

Loans, net		664,111			606,946

Premises and equipment, net		5,156			5,410
Accrued interest receivable		3,641			3,648
Bank-owned life insurance		10,903			10,700
Goodwill		33,763			33,763
Other intangible assets		2,209			2,474
Other assets		7,739			7,394

	$	967,029		$	903,278


LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Regular savings accounts	$	82,219		$	79,167
Money market accounts		126,119			110,544
NOW accounts		65,415			52,000
Demand deposit accounts		118,182			113,023
Time deposit accounts		262,980			262,634

Total deposits		654,915			617,368

Short-term borrowings		1,200			2,500
Long-term debt		191,169			162,784
Deferred gain on sale of premises		3,405			3,531
Other liabilities		10,276			9,651

Total liabilities		860,965			795,834


Common stock, no par value; 75,000,000 shares authorized; 7,840,415 shares issued and 7,666,172 shares outstanding at June 30, 2008; 8,030,415 shares issued and 7,856,172 shares outstanding at December 31, 2007		—			—
Additional paid-in capital		74,985			77,370
Retained earnings		39,663			38,515
Unearned compensation		(6,699	)		(7,094	)
Accumulated other comprehensive loss		(1,885	)		(1,347	)

Total stockholders’ equity		106,064			107,444

	$	967,029		$	903,278

See accompanying notes to condensed consolidated financial statements

BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
	(Unaudited)				(Unaudited)
Interest and dividend income:
Loans, including fees	$	9,962	$	9,712	$	19,853	$	19,418
Debt securities		1,917		1,953		3,924		3,639
Dividends		124		165		284		331
Short-term investments		96		222		338		503

Total interest and dividend income		12,099		12,052		24,399		23,891
Interest expense:
Interest on deposits		3,410		4,308		7,269		8,464
Interest on short-term borrowings		10		18		39		147
Interest on long-term debt		2,183		1,674		4,289		3,402

Total interest expense		5,603		6,000		11,597		12,013

Net interest income		6,496		6,052		12,802		11,878
Provision for loan losses		368		230		682		412

Net interest income, after provision for loan losses		6,128		5,822		12,120		11,466

Other income:
ATM servicing fees		321		622		664		1,319
Deposit servicing fees		475		369		838		709
Other loan-related fees		170		141		423		472
Gain on sale of loans, net		82		193		186		296
Gain on sale of bank-owned premises, net		63		63		126		313
Gain on sale of CSSI customer list		92		100		92		100
Income from bank-owned life insurance		94		99		195		195
Miscellaneous		207		206		458		361

Total other income		1,504		1,793		2,982		3,765

Operating expenses:
Salaries and employee benefits		3,405		3,829		6,636		7,442
Occupancy and equipment		842		836		1,786		1,744
Data processing		569		598		1,169		1,202
Professional fees		182		235		357		472
Marketing and advertising		103		201		181		329
Amortization of intangible assets		161		205		332		422
Other general and administrative		648		521		1,229		1,601

Total operating expenses		5,910		6,425		11,690		13,212

Income before income taxes		1,722		1,190		3,412		2,019
Provision for income taxes		551		361		1,129		599

Net income	$	1,171	$	829	$	2,283	$	1,420

Weighted-average shares outstanding:
Basic		7,271,431		7,663,634		7,306,789		7,739,036
Diluted		7,352,265		7,699,363		7,381,938		7,768,666
Earnings per share:
Basic	$	0.16	$	0.11	$	0.31	$	0.19
Diluted	$	0.16	$	0.11	$	0.31	$	0.18

See accompanying notes to condensed consolidated financial statements

BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in thousands, except per share data)

(Unaudited)


															Accumulated
						Additional									Other			Total
	Common Stock					Paid-in			Retained			Unearned			Comprehensive			Stockholders’
	Shares			Amount		Capital			Earnings			Compensation			Loss			Equity

Balance at December 31, 2006		8,249,802		$	—	$	82,909		$	36,634		$	(7,938	)	$	(2,200	)	$	109,405
Comprehensive income:
Net income		—			—		—			1,420			—			—			1,420
Net unrealized loss on securities available for sale, net of reclassification adjustment and tax effects		—			—		—			—			—			(1,127	)		(1,127	)

Total comprehensive income																			293

Common stock repurchased		(163,850	)		—		(2,449	)		—			—			—			(2,449	)
Restricted stock expense		—			—		—			—			330			—			330
Stock option expense		—			—		413			—			—			—			413
Release of ESOP stock		—			—		27			—			92			—			119
FASB Statement No. 158 tax effect adjustment		—			—		—			—			—			101			101
Dividends declared ($.10 per share)		—			—		—			(844	)		—			—			(844	)

Balance at June 30, 2007		8,085,952		$	—	$	80,900		$	37,210		$	(7,516	)	$	(3,226	)	$	107,368

Balance at December 31, 2007		7,856,172		$	—	$	77,370		$	38,515		$	(7,094	)	$	(1,347	)	$	107,444
Comprehensive income:
Net income		—			—		—			2,283			—			—			2,283
Net unrealized gain on securities available for sale, net of tax effects		—			—		—			—			—			(538	)		(538	)

Total comprehensive income																			1,745

Common stock repurchased		(190,000	)		—		(2,608	)		—			—			—			(2,608	)
Restricted stock expense		—			—		—			—			303			—			303
Stock option expense		—			—		207			—			—			—			207
Release of ESOP stock		—			—		16			—			92			—			108
Dividends declared ($.14 per share)		—			—		—			(1,135	)		—			—			(1,135	)

Balance at June 30, 2008		7,666,172		$	—	$	74,985		$	39,663		$	(6,699	)	$	(1,885	)	$	106,064

See accompanying notes to condensed consolidated financial statements

BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Six Months Ended June 30,
	2008			2007

Cash flows from operating activities:
Net income	$	2,283		$	1,420
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization (accretion) of securities, net		55			(341	)
Amortization of loans, net		167			64
Amortization of deferred gain on sale of premises		(126	)		(126	)
Gain on sale of premises, net		—			(187	)
Provision for loan losses		682			412
Accretion of deposits and borrowing discounts, net		(6	)		(6	)
Amortization of mortgage servicing rights		144			152
Depreciation expense		415			465
Amortization of intangible assets		332			422
Stock-based compensation and ESOP		618			862
Income from bank-owned life insurance		(195	)		(195	)
Gains on sales of loans, net		(186	)		(296	)
Loans originated for sale		(1,353	)		(26,560	)
Proceeds from sales of loans		1,539			26,856
Decrease (increase) in accrued interest receivable		7			(19	)
Other, net		386			(963	)

Net cash provided by operating activities		4,762			1,960


Cash flows from investing activities:
Activity in available-for-sale securities:
Maturities, calls, and principal repayments		56,119			30,224
Purchases		(79,130	)		(56,342	)
Net change in restricted equity securities		(1,317	)		(233	)
Loan originations, net		(58,014	)		(20,036	)
Proceeds from sales of loans held for sale		—			62,122
Proceeds from sales of premises and equipment		—			821
Purchases of identifiable intangible assets		(67	)		(180	)
Additions to premises and equipment		(161	)		(692	)

Net cash provided by (used for) investing activities		(82,570	)		15,684

(Continued)

See accompanying notes to condensed consolidated financial statements

BENJAMIN FRANKLIN BANCORP,INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)

(Dollars in thousands)

(Unaudited)


	Six Months Ended June 30,
	2008			2007
Cash flows from financing activities:
Net increase in deposits		37,559			1,726
Net change in short-term borrowings		(1,300	)		(7,000	)
Proceeds from long-term debt		44,500			10,000
Repayment of long-term debt		(16,120	)		(20,097	)
Common stock repurchased		(2,608	)		(2,449	)
Dividends paid on common stock		(1,135	)		(844	)

Net cash provided by (used for) financing activities		60,896			(18,664	)


Net change in cash and cash equivalents		(16,912	)		(1,020	)
Cash and cash equivalents at beginning of period		64,591			72,595


Cash and cash equivalents at end of period	$	47,679		$	71,575


Supplemental cash flow information:
Interest paid on deposits	$	7,304		$	8,591
Interest paid on borrowings		4,293			3,576
Income taxes paid		2,044			989
Loans held for sale transferred to loans, net		—			1,063
Loans held for sale transferred to other assets		—			545

See accompanying notes to condensed consolidated financial statements

BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.		*Basis of presentation and consolidation*

		The accompanying unaudited consolidated interim financial statements include the accounts of Benjamin Franklin Bancorp, Inc. (the “Company’’) and its wholly-owned subsidiary, Benjamin Franklin Bank (the “Bank’’). These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation have been included.

		The Company operates as one reportable segment for financial reporting purposes. All significant intercompany items are eliminated in consolidation. Certain amounts previously reported have been reclassified to conform to the current year’s presentation.

		These consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2007.

		*Recent Accounting Pronouncements*

		In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement No. 141 (revised), “Business Combinations.” This Statement replaces FASB Statement No. 141, and applies to all business entities, including mutual entities that previously used the pooling-of-interests method of accounting for certain business combinations. Under Statement No. 141 (revised) an acquirer is required to recognize at fair value the assets acquired, liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date. This replaces the cost allocation process under Statement No. 141, which resulted in the non-recognition of some assets and liabilities at the acquisition date and in measuring some assets and liabilities at amounts other than their fair values at the acquisition date. This Statement requires that acquisition costs and expected restructuring costs be recognized separately from the acquisition, and that the acquirer in a business combination achieved in stages recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values. This Statement also requires an acquirer to recognize assets acquired and liabilities assumed arising from contractual contingencies as of the acquisition date, while Statement 141 allowed for the deferred recognition of pre-acquisition contingencies until certain recognition criteria were met, and an acquirer is only required to recognize assets or liabilities arising from all other contingencies if it is more likely than not that they meet the definition of an asset or a liability. Under this Statement, an acquirer is required to recognize contingent consideration at the acquisition date, whereas contingent consideration obligations usually were not recognized at the acquisition date under Statement 141. Further, this Statement eliminates the concept of negative goodwill and requires gain recognition in instances in which the total acquisition-date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred plus any non-controlling interest in the acquiree. This Statement makes significant amendments to other Statements and other authoritative guidance, and applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date.

		In December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.” This Statement establishes accounting and

		reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement is effective for fiscal years beginning on or after December 15, 2008.

2.		*Commitments*

		Outstanding loan commitments totaled $115.0 million at June 30, 2008, compared to $116.4 million as of December 31, 2007. Loan commitments consist of commitments to originate new loans as well as the outstanding undrawn portions of lines of credit.

3.		*Earnings per share*

		Basic earnings per share (“EPS”) excludes dilution and is calculated by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted EPS is computed in a manner similar to that of basic EPS except that the weighted-average number of common shares outstanding is increased to include the number of incremental common shares (computed using the treasury stock method) that would have been outstanding if all potentially dilutive common stock equivalents (such as stock options and unvested restricted stock) were issued during the period. For the three and six month periods ending June 30, 2008, potentially dilutive common stock equivalents totaled 80,834 and 75,149 shares, respectively, representing the effect of dilutive common stock equivalents. For the three and six month periods ending June 30, 2007, potentially dilutive common stock equivalents totaled 35,729 and 29,630 shares, respectively. Unallocated common shares held by the ESOP are shown as a reduction in stockholders’ equity and are not included in the weighted-average number of common shares outstanding for either basic or diluted earnings per share calculations.

4.		*Fair Values of Assets and Liabilities*

		Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157 (“SFAS 157”), “Fair Value Measurements”, which provides a framework for measuring fair value under generally accepted accounting principles.

		The Company also adopted SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115.” SFAS 159 allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. The Company did not elect fair value treatment for any financial assets or liabilities upon adoption.

		In accordance with SFAS 157, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

		Level 1 — Quoted prices in active markets for identical assets or liabilities.

		Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

		Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Assets measured at fair value on a recurring basis are summarized below. There are no liabilities measured at fair value on a recurring basis at June 30, 2008:


	June 30, 2008
							Assets at
	Level 1		Level 2		Level 3		Fair Value
	(Dollars in thousands)
Assets
Securities available for sale	$	—	$	178,920	$	—	$	178,920

Total assets	$	—	$	178,920	$	—	$	178,920

		Securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service that subscribes to multiple third-party pricing vendors. The pricing service conducts a series of quality assurance activities on a monthly basis to select the most appropriate pricing vendor for each sector of the bond market. The fair value measurements consider observable market data that may include, among other data, benchmark yields and spread relationships, cash flows, collateral attributes, market consensus prepayment speeds, and credit risk information as well as terms and conditions relevant to the individual bond (such as issuer, coupon, maturity and credit rating).

		Also, the Company may be required, from time to time, to measure certain other financial assets on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets as of June 30, 2008.


								Quarter ended
	June 30, 2008							June 30, 2008
								Total
	Level 1		Level 2		Level 3			Gains/(Losses)
	(Dollars in thousands)
Assets
Impaired loans	$	—	$	—	$	1,187	(A)	$	(178	)

Total assets	$	—	$	—	$	1,187		$	(178	)


(A)		Represents impaired loans totaling $1,429, net of specific valuation reserves for those loans totaling $242. There were no specific valuation reserves allocated to the remainder of the Bank’s impaired loans ($8.7 million) as of June 30 , 2008.

The amount of loans represents the carrying value (loan balance net of related allocated reserves) for impaired loans, for which adjustments are based on the appraised value of the collateral. Appraised values are typically based on a blend of (a) an income approach using unobservable cash flows to measure fair value, and (b) a market approach using observable market comparables. These appraised values may be discounted based on management’s historical knowledge, expertise or changes in market conditions from the time of valuation. For these reasons, impaired loans are categorized as Level 3 assets.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following analysis discusses the changes in financial position and results of operations of the Company, and should be read in conjunction with the Company’s unaudited consolidated interim financial statements and the notes thereto, appearing in Part I, Item 1 of this document.

Forward-Looking Statements

Certain statements herein constitute “forward-looking statements” and actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged and changes in the securities market.

Critical Accounting Policies

Critical accounting policies are those that involve significant judgments and assessments by management, and which could potentially result in materially different results under different assumptions and conditions. As discussed in the Company’s 2007 Annual Report on Form 10-K, the Company considers its critical accounting policies to be those associated with the allowance for loan losses, the valuation of goodwill and other intangible assets and the valuation of deferred tax assets. The Company’s critical accounting policies have not changed since December 31, 2007.

Comparison of Financial Condition at June 30, 2008 and December 31, 2007

Overview

Total assets increased by $63.8 million, or 7.1%, to $967.0 million at June 30, 2008 from $903.3 million at December 31, 2007. The increase in assets was primarily attributable to increases in net loans (up $57.2 million or 9.4%) and securities (up $23.5 million or 13.9%), offset in part by a decrease in cash and cash equivalents (down $16.9 million or 26.2%, in total). Funding the increase in total assets was growth in deposits, which increased by $37.5 million or 6.1%, and in borrowed funds, which increased by $27.1 million or 16.4%.

Investment Activities

Cash and cash equivalent balances decreased by $16.9 million to $47.7 million at June 30, 2008, compared to $64.6 million at December 31, 2007. That decrease was principally due to a $16.0 million decrease in cash supplied to ATMs owned by ATM customers. The decline in ATM cash was due to seasonal fluctuations as well as to the loss of two customers in the first six months of 2008.

At June 30, 2008, the Company’s securities portfolio amounted to $191.8 million, or 19.8% of total assets. When compared to year-end 2007, securities increased by $23.5 million, or 13.9%. The increase primarily consisted of increases in government-sponsored enterprise insured mortgage-backed securities, which grew by $19.5 million or 28.1% in the first six months of 2008. The following table sets forth certain information regarding the amortized cost and fair values of the Company’s securities at the dates indicated:


	June 30,				December 31,
	2008				2007
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(Dollars in thousands)
Securities available for sale:
Government-sponsored enterprise obligations	$	89,025	$	89,182	$	85,972	$	86,178
Municipal obligations		885		885		1,206		1,202

		89,910		90,067		87,178		87,380
Mortgage-backed securities		91,063		88,853		70,839		69,381


Total debt securities		180,973		178,920		158,017		156,761


Total available for sale securities	$	180,973	$	178,920	$	158,017	$	156,761


Restricted equity securities:
Federal Home Loan Bank of Boston stock	$	10,427	$	10,427	$	9,110	$	9,110
Access Capital Strategies
Community Investment Fund		1,965		1,965		1,965		1,965
SBLI & DIF stock		516		516		516		516


Total restricted equity securities	$	12,908	$	12,908	$	11,591	$	11,591

Lending Activities

The Company’s net loan portfolio aggregated $664.1 million on June 30, 2008, or 68.7% of total assets on that date. As of December 31, 2007, the net loan portfolio totaled $606.9 million, or 67.2% of total assets. The main components of the growth of $57.2 million in the first six months of 2008 were a $36.0 million (19.1%) increase in residential mortgage loans, a $20.7 million (13.0 %) increase in commercial business loans and a $6.5 million (3.8%) increase in commercial real estate loans. Offsetting these increases was a reduction of $5.5 million (9.8%) in construction loans outstanding. The growth in residential loans reflects the Company’s decision in late 2007 to retain most new residential originations (fixed-rate and adjustable-rate) in portfolio, due to the recent widening of market spreads available on most residential mortgage products. Previously, for much of 2006 and 2007, the Company had sold most fixed-rate residential loan production in the secondary market. While demand for commercial business loans remained strong in the first half of 2008, management considers it likely that demand will lessen in future quarters as a result of the economic downturn currently occurring in New England and nationally. The following table sets forth the composition of the loan portfolio at the dates indicated:


	June 30, 2008			December 31, 2007
	(Dollars in thousands)

Non-accrual loans:
Residential mortgage	$	958		$	712
Commercial mortgage		4,980			658
Construction		1,945			—
Commercial		575			—
Consumer and other		173			228

Total non-accrual loans	$	8,631		$	1,598


Loans greater than 90 days delinquent and still accruing:	$	—		$	—

	$	—		$	—


Total non-performing loans and assets	$	8,631		$	1,598


Total restructured loans	$	1,186		$	—


Ratios:
Non-performing loans to total loans		1.29	%		0.26	%
Non-performing assets to total assets		0.89	%		0.18	%

The $7.0 million increase in non-performing loans since year-end 2007 is primarily due to the addition of one $6.4 million loan relationship to non-performing status during the second quarter of 2008. Within this loan relationship, two loans totaling $5.9 million (one for $4.0 million in the commercial mortgage category and one for $1.9 million reported within the construction loan category; construction on the building is complete with the exception of tenant fit-up in some areas) are secured by a mixed-use building located in Boston, MA. The remainder of this relationship consists of two commercial business loans aggregating $492,000, both of which were underwritten under the Massachusetts Capital Access Program (“MCAP”). These loans are secured primarily by equipment and the Bank’s specific reserves accumulated as a result of its participation in the MCAP program. Based on a review of all relevant factors, including the collateral securing these loans, no specific loan loss reserves have been allocated for this loan relationship.

Restructured loans represent performing loans for which concessions (such as extension of repayment terms or reductions of interest rates to below market rates) are granted due to a borrower’s financial condition. The balance in restructured loans at June 30, 2008 represents one residential real estate mortgage loan that was modified to lengthen the borrower’s repayment period. This loan was performing in accordance with its modified terms at June 30, 2008.

Allowance for Loan Losses

In originating loans, the Company recognizes that losses will be experienced on loans and that the risk of loss will vary with many factors, including the type of loan being made, the creditworthiness of the borrower over the term of the loan, general economic conditions and, in the case of a secured loan, the quality of the security for the loan over the term of the loan. The Company maintains an allowance for loan losses to absorb losses inherent in the loan portfolio, and as such, this allowance represents management’s best estimate of the probable known and inherent credit losses in the loan portfolio as of the date of the financial statements.

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 historical experience, portfolio volume and mix, geographic and large borrower concentrations, estimated credit losses based on internal and external portfolio reviews, 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 specific, general and unallocated components. The specific component relates to loans that are impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors. Qualitative factors considered include general business and economic conditions, the level of real estate values in our market area, the tenure and experience of the Company’s lending staff, the seasoning of the loan portfolio, and delinquency trends in the loan portfolio. 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 specific and general losses in the portfolio.

The following tables set forth Benjamin Franklin Bank’s allowance by loan category and the percent of the loans to total loans in each of the categories listed at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories:


	At June 30,							At December 31,
	2008							2007
					Percent							Percent
					of Loans							of Loans
			Loan		in Each					Loan		in Each
	Allowance		Balances		Category to			Allowance		Balances		Category to
	for Loan		by		to Total			for Loan		by		to Total
	Losses		Category		Loans			Losses		Category		Loans
	(Dollars in thousands)
Mortgage loans on real estate:
Residential	$	733	$	223,921		33.45	%	$	499	$	187,991		30.73	%
Commercial		2,085		174,934		26.13	%		1,959		168,463		27.54	%
Construction		854		50,307		7.51	%		850		55,763		9.11	%
Home equity		142		37,988		5.67	%		142		37,768		6.17	%

		3,814		487,150		72.76	%		3,450		449,985		73.55	%

Other loans:
Commercial		2,168		179,982		26.89	%		1,874		159,233		26.03	%
Consumer		63		2,356		0.35	%		80		2,592		0.42	%
Unallocated ⁽¹⁾		386		0		0.00	%		385		0		0.00	%

		2,617		182,338		27.24	%		2,339		161,825		26.45	%


Total	$	6,431	$	669,488		100.00	%	$	5,789	$	611,810		100.00	%


⁽¹⁾		The unallocated portion of the allowance for loan losses is intended to capture the exposure, if any, that may exist as a result of a number of qualitative factors that are difficult to quantify with precision.

The Massachusetts economy has slowed, as labor market conditions and residential real estate values have deteriorated. Default rates are increasing for sub-prime residential mortgages. Residential real estate values in the towns where the Bank’s offices are located have declined on average by nine percent since the market price peak in 2005 (The Warren Group). Unemployment in Massachusetts over the past six months has increased from 4.3%

to 4.9% (Federal Reserve New England Economic Indicators, July 2008). Management monitors these trends closely, as well as many portfolio characteristics, including the level of delinquencies, charge-offs, and other measures of risk within the loan portfolio. Several of the key elements of that analysis are:

	•		Loan delinquency: At June 30, 2008, portfolio delinquency (percentage of total loans greater than 30 days past due) stood at 1.55%, compared to 0.91% at March 31, 2008, and an average of 1.07% for all of 2007. The increase in delinquency at June 30, 2008 was caused by the addition of one $6.4 million commercial relationship, discussed earlier in “Non-performing Assets”. For all other loans, delinquency at June 30, 2008 was 0.63% of total loans.

	•		Level of charge-offs: Net charge-offs are little changed in 2008 to date, compared to 2007. For the three and six months ended June 30, 2008, net charge-offs were $27,000 and $40,000, respectively. For the comparable 2007 periods, net charge-offs were $18,000 and $39,000, respectively. For both the 2007 and 2008 periods, net charge-offs represented a negligible 0.1% (or less) of average loans outstanding.

	•		Real estate collateral values: Management monitors loan-to-value ratios for its residential mortgage loan portfolio, as well as for its construction portfolio, which is a mix of commercial and residential construction credits. At June 30, 2008, the weighted average loan-to-value ratio of the Bank’s construction loan portfolio was approximately 72%. The weighted average loan-to value ratio of the Bank’s residential mortgage loan portfolio on that date was approximately 55%. Loan-to-value ratios are computed using the appraised value of collateral on the date of loan origination.

	•		Underwriting criteria: The Bank has not originated and does not hold any sub-prime mortgages in its loan portfolio.

In the second quarter of 2008, the analysis performed by management did not result in any significant change in the overall level of the allowance for loan losses, which stands at 0.96% of total loans at June 30, 2008 compared to 0.94% at December 31, 2007 and 0.95% at June 30, 2007. Although unemployment has recently increased and residential property values in some areas of Massachusetts have declined, thus far these factors have not had an appreciable effect on the Bank’s loan portfolio, as outlined in the discussion above.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Impairment is measured on a loan-by-loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and home equity loans for impairment disclosures. At June 30, 2008 and December 31, 2007, the Company’s impaired loans totaled $10.1 million and $880,000 respectively. The increase in impaired loans as of June 30, 2008 is primarily the result of the addition of: a) one $6.4 million commercial loan relationship (see “Non-performing Assets” on pages 13-14 for further discussion of this loan), b) one $1.2 million restructured residential mortgage loan that is performing in accordance with its modified terms, and c) several smaller commercial and residential loans that are currently performing, for which management believes there exists some possibility of loss. The specific valuation allowances carried within the allowance for loan losses for impaired loans at June 30, 2008 and December 31, 2007 were $242,000 and $37,000, respectively.

While the Company believes that it has established adequate specific and general allowances for losses on loans, adjustments to the allowance may be necessary if future conditions differ substantially from the information used in making the evaluations. In addition, as an integral part of their examination process, the Company’s regulators periodically review the allowance for loan losses.

The following table sets forth activity in the Company’s allowance for loan losses for the periods indicated:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
	(Dollars in thousands)
Balance at beginning of period	$	6,090		$	5,498		$	5,789		$	5,337

Charge-offs:
Residential mortgage loans		—			—			—			—
Commercial loans		—			(2	)		—			(7	)
Consumer loans		(30	)		(29	)		(67	)		(61	)

Total charge-offs		(30	)		(31	)		(67	)		(68	)


Recoveries:
Commercial loans		—			2			12			4
Consumer loans		3			11			15			25

Total recoveries		3			13			27			29


Net charge-offs		(27	)		(18	)		(40	)		(39	)

Provision for loan losses		368			230			682			412


Balance at end of period	$	6,431		$	5,710		$	6,431		$	5,710


Ratios:
Net (charge-offs)/recoveries to average loans outstanding		0.00	%		0.00	%		-0.01	%		-0.01	%
Allowance for loan losses to non-performing loans at end of period		74.51	%		158.74	%		74.51	%		158.74	%
Allowance for loan losses to total loans at end of period		0.96	%		0.95	%		0.96	%		0.95	%

Deposits

The following table sets forth the Company’s deposit accounts at the dates indicated:


	June 30,		% of			December 31,		% of
	2008		Total			2007		Total
	(Dollars in thousands)
Deposit type:
Demand deposits	$	118,182		18.0	%	$	113,023		18.3	%
NOW accounts		65,415		10.0	%		52,000		8.4	%
Regular and other savings		82,219		12.6	%		79,167		12.8	%
Money market deposits		126,119		19.2	%		110,544		17.9	%

Total non-certificate accounts		391,935		59.8	%		354,734		57.4	%


Term certificates less than $100,000		158,938		24.3	%		159,272		25.8	%
Term certificates of $100,000 or more		104,042		15.9	%		103,362		16.8	%

Total certificate accounts		262,980		40.2	%		262,634		42.6	%


Total deposits	$	654,915		100.0	%	$	617,368		100.0	%

The Company has made significant progress in the first six months of 2008 in growing its “core” deposit accounts (savings, money market, demand and NOW accounts), which increased by $37.2 million or 10.5% during the period. Certificate accounts were essentially flat over that time frame, increasing negligibly by $346,000 or 0.1%. These results with respect to core deposit growth are attributable, in part, to the opening of two new branch locations in the past 18 months. The Bank’s Wellesley, MA branch, opened in September of 2006, had $21.6 million in total deposits ($13.4 million in “core” accounts) as of June 30, 2008, and the Bank’s Watertown, MA branch, opened in August 2007 had $11.4 million in total deposits ($9.6 million in “core” accounts) on that date. Also contributing to “core” account growth over the past six months have been increases in commercial deposits, which have grown in conjunction with growth in commercial business loans during the period.

Borrowed Funds

The Company’s borrowed funds increased by $27.1 million, or 16.4%, to a total of $192.4 million at June 30, 2008, compared to December 31, 2007. These additional borrowed funds (which were primarily a blend of two to seven year Federal Home Loan Bank of Boston term advances) were used principally to fund growth in fixed rate residential mortgage loans during the six-month period.

Stockholder’s Equity

Total stockholders’ equity was $106.1 million as of June 30, 2008, a decrease of $1.4 million when compared to the balance at December 31, 2007. The decrease was primarily attributable to the repurchase of 190,000 shares ($2.6 million), dividends paid ($1.1 million), and a $538,000 decrease in the fair value of securities available for sale (net of tax), offset in part by earnings of $2.3 million and stock-based compensation and ESOP expense ($618,000).

Comparison of Operating Results for the Three and Six Months Ended June 30, 2008 and 2007

The Company earned net income of $1.2 million for the quarter ended June 30, 2008, an increase of $342,000, or 41.3%, compared to net income of $829,000 earned in the second quarter of 2007. The increased earnings largely reflected lower operating expenses and higher net interest income, partially offset by an increase in the provision for loan losses and a drop in other income.

The Company’s net income for the six months ended June 30, 2008 was $2.3 million, an increase of $863,000, or 60.8%, over the $1.4 million earned in the first six months of 2007. Similar to the quarterly results, the increased earnings primarily reflected lower operating expenses and growth in net interest income, partially offset by an increase in the provision for loan losses and a reduction in other income.

Analysis of Net Interest Income

Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income also depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them.

The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. Most average balances are daily average balances. Non-accrual loans are included in the computation of average balances, but are reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense:


	Three Months Ended June 30,
	2008							2007
	Average							Average
	Outstanding							Outstanding
	Balance		Interest		Yield/Rate⁽¹⁾			Balance		Interest		Yield/Rate⁽¹⁾
					(Dollars in thousands)
Interest-earning assets:
Loans	$	659,601	$	9,962		6.00	%	$	604,459	$	9,712		6.38	%
Securities		188,621		2,041		4.33	%		169,543		2,118		5.00	%
Short-term investments		22,504		96		1.69	%		12,891		222		6.81	%

Total interest-earning assets		870,726		12,099		5.53	%		786,893		12,052		6.09	%

Non-interest-earning assets		96,330							109,495

Total assets	$	967,056						$	896,388


Interest-bearing liabilities:
Savings accounts	$	81,338		81		0.40	%	$	83,086		103		0.50	%
Money market accounts		132,152		557		1.70	%		108,825		748		2.76	%
NOW accounts		60,599		265		1.76	%		38,269		217		2.27	%
Certificates of deposit		265,260		2,507		3.80	%		284,314		3,240		4.57	%

Total deposits		539,349		3,410		2.54	%		514,494		4,308		3.36	%
Borrowings		191,849		2,193		4.52	%		140,225		1,692		4.77	%

Total interest-bearing liabilities		731,198		5,603		3.06	%		654,719		6,000		3.66	%

Non-interest bearing liabilities		128,334							132,490

Total liabilities		859,532							787,209
Equity		107,524							109,179

Total liabilities and equity	$	967,056						$	896,388


Net interest income			$	6,496						$	6,052

Net interest rate spread ⁽²⁾						2.47	%						2.43	%
Net interest-earning assets ⁽³⁾	$	139,528						$	132,174

Net interest margin ⁽⁴⁾						3.00	%						3.08	%
Average interest-earning assets to interest-bearing liabilities						119.08	%						120.19	%


⁽¹⁾		Yields and rates for the three months ended June 30, 2008 and 2007 are annualized.

⁽²⁾		Net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities.

⁽³⁾		Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

⁽⁴⁾		Net interest margin represents net interest income divided by average total interest-earning assets.


	Six Months Ended June 30,
	2008							2007
	Average							Average
	Outstanding							Outstanding
	Balance		Interest		Yield/Rate⁽¹⁾			Balance		Interest		Yield/Rate⁽¹⁾
					(Dollars in thousands)
Interest-earning assets:
Loans	$	641,495	$	19,853		6.15	%	$	615,099	$	19,418		6.30	%
Securities		182,189		4,208		4.62	%		160,220		3,970		4.96	%
Short-term investments		28,030		338		2.39	%		17,600		503		5.69	%

Total interest-earning assets		851,714		24,399		5.70	%		792,919		23,891		6.01	%
Non-interest-earning assets		98,935							109,016

Total assets	$	950,649						$	901,935


Interest-bearing liabilities:
Savings accounts	$	80,084		159		0.40	%	$	83,315		205		0.50	%
Money market accounts		124,550		1,178		1.90	%		103,693		1,368		2.66	%
NOW accounts		57,922		560		1.94	%		33,390		307		1.86	%
Certificates of deposit		265,985		5,372		4.06	%		290,765		6,585		4.57	%

Total deposits		528,541		7,269		2.77	%		511,163		8,465		3.34	%
Borrowings		187,551		4,328		4.56	%		149,136		3,548		4.73	%

Total interest-bearing liabilities		716,092		11,597		3.24	%		660,299		12,013		3.65	%
Non-interest bearing liabilities		126,969							132,130

Total liabilities		843,061							792,429
Equity		107,588							109,506

Total liabilities and equity	$	950,649						$	901,935


Net interest income			$	12,802						$	11,878

Net interest rate spread ⁽²⁾						2.46	%						2.36	%
Net interest-earning assets ⁽³⁾	$	135,622						$	132,620

Net interest margin ⁽⁴⁾						3.02	%						3.02	%
Average interest-earning assets to interest-bearing liabilities						118.94	%						120.08	%


⁽¹⁾		Yields and rates for the six months ended June 30, 2008 and 2007 are annualized.

⁽²⁾		Net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities.

⁽³⁾		Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

⁽⁴⁾		Net interest margin represents net interest income divided by average total interest-earning assets.

The following table presents the dollar amount of changes in interest income and interest expense for the major categories of the Company’s interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to changes in volume (i.e., changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.


	Three Months Ended June 30,
	2008 vs. 2007
	Increase (Decrease)						Total
	Due to						Increase
	Volume			Rate			(Decrease)
	(In thousands)
Interest-earning assets:
Loans	$	854		$	(604	)	$	250
Securities		224			(301	)		(77	)
Short-term investments		104			(230	)		(126	)

Total interest-earning assets		1,182			(1,135	)		47

Interest-bearing liabilities:
Savings accounts		(2	)		(20	)		(22	)
Money market accounts		138			(329	)		(191	)
NOW accounts		106			(58	)		48
Certificates of deposit		(207	)		(526	)		(733	)

Total deposits		35			(933	)		(898	)
Borrowings		594			(93	)		501

Total interest-bearing liabilities		629			(1,026	)		(397	)

Change in net interest income	$	553		$	(109	)	$	444


	Six Months Ended June 30,
	2008 vs. 2007
	Increase (Decrease)						Total
	Due to						Increase
	Volume			Rate			(Decrease)
	(In thousands)
Interest-earning assets:
Loans	$	822		$	(387	)	$	435
Securities		520			(282	)		238
Short-term investments		211			(376	)		(165	)

Total interest-earning assets		1,553			(1,045	)		508

Interest-bearing liabilities:
Savings accounts		(8	)		(38	)		(46	)
Money market accounts		243			(433	)		(190	)
NOW accounts		236			17			253
Certificates of deposit		(533	)		(679	)		(1,212	)

Total deposits		(62	)		(1,133	)		(1,195	)
Borrowings		888			(109	)		779

Total interest-bearing liabilities		826			(1,242	)		(416	)

Change in net interest income	$	727		$	197		$	924

Net interest income for the quarter ended June 30, 2008 was $6.5 million, an increase of $444,000 or 7.3% as compared to net interest income of $6.1 million for the three months ended June 30, 2007. The $444,000 increase

was primarily the result of an $83.8 million, or 10.7%, increase in average interest-earning assets between the two quarterly periods. The asset growth helped to offset a decline of eight basis points in the net interest margin between the two periods.

The Company’s net interest margin was 3.00% for the three months ended June 30, 2008, four basis points lower than the first quarter of 2008 and eight basis points less than the 3.08% margin achieved in the year-earlier quarterly period. As market interest rates, particularly short-term rates, declined substantially in the past twelve months, the Company was able to offset much of the ensuing reduction in earning-asset yields with decreases in its deposit costs. However, growth in higher-costing FHLB debt, and the use of $6.4 million in investable funds over the last twelve months to repurchase common shares, were factors in the margin contraction.

Interest income for the quarter ended June 30, 2008 was $12.1 million, a minimal increase of $47,000 or 0.4% compared to the three months ended June 30, 2007. This small increase resulted from an $83.8 million increase in average interest-earning assets between the two periods, offset nearly entirely by a 56 basis point decrease in the yield earned on those assets. The largest growth in average interest-earning assets between the two periods was in loans, at $55.1 million, while securities and short-term investments increased on average by $19.1 million and $9.6 million, respectively. Average loan growth was concentrated in higher-yielding commercial loans, which increased by $42.7 million, or 11.9%. Yield decreases reflected the significant reduction in market interest rates since July 2007, and were more pronounced for assets of shorter duration. The decrease in yield earned on loans totaled 38 basis points when comparing the two quarters, while yields on securities and short-term investments declined by 108 basis points on a combined basis.

Interest expense for the three months ended June 30, 2008 was $5.6 million, a decrease of $397,000 or 6.6% from the $6.0 million incurred in the second quarter of 2007. The decrease arose primarily from a 60 basis point drop in the cost of average interest-bearing liabilities, which more than offset a $76.5 million increase in the average balance of those liabilities ($51.6 million in borrowings and $24.9 million in deposits). However, within the deposit portfolio, the average balances of ‘core’ accounts (money market, NOW and savings accounts) increased on average by $44.0 million, while certificate balances decreased on average by $19.1 million. This favorable change in deposit mix, coupled with the decline in short-term market interest rates, helped to reduce the weighted average rate on interest-bearing deposits by 82 basis points quarter over quarter. Growth in borrowings, while bearing higher interest rates than deposits, have provided longer-term sources of funds that are useful in mitigating the interest-rate risk associated with the Company’s growth in fixed-rate residential mortgage loans and mortgage-backed securities.

Net interest income earned during the first six months of 2008 was $12.8 million, an increase of $924,000, or 7.8%, over the total earned in the first half of 2007. The increase was the result of balance sheet growth and changes in mix, as the net interest margin was unchanged at 3.02% when comparing the two periods.

Interest income for the six months ended June 30, 2008 was $24.4 million, an increase of $508,000 or 2.1% compared to $23.9 million earned during the same six-month period of 2007. The $508,000 increase arose from $58.8 million (or 7.4%) of growth in average interest-earning assets, which more than offset a 31 basis point decline in the yield earned on those assets. Average asset growth included $26.4 million in loans and $32.4 million combined in securities and short-term investments. The decline in average earning-asset yield included decreases of 15 basis points on loans and 71 basis points for securities and short-term investments on a combined basis. A change in mix toward higher-yielding commercial loans helped limit the decline in loan yield, despite the significant decline in market interest rates. On average, commercial loans grew by $43.7 million, or 12.5%, while residential mortgages decreased by $17.6 million, or 7.8%. The decrease in average residential mortgages comparing these two six-month periods was largely the result of the Company’s bulk sale of over $62 million in adjustable-rate mortgages in the first quarter of 2007. The Company also increased its security portfolio allocation in mortgage-backed securities (MBS), which grew on average by $33.8 million when comparing the

two periods. The MBS portfolio has been fairly well-protected from the downward market rate movement, with average yields declining by just four basis points in comparing the two six-month periods.

Interest expense for the six months ended June 30, 2008 was $11.6 million, a decrease of $416,000 or 3.5% from a total of $12.0 million in the comparable period in 2007. The $416,000 decrease resulted from a 41 basis point reduction in the cost of average interest-bearing liabilities (including 57 and 17 basis points in interest-bearing deposits and borrowings, respectively). The cost reduction more than offset a $55.8 million increase in the average balance of those liabilities ($38.4 million in borrowed funds and $17.4 million in deposits). However, within the deposit portfolio, the average balance of savings, NOW, and money market accounts increased by $42.2 million (or 19.1%) while higher-cost certificate accounts dropped by $24.8 million, or 8.5%.

Provision for Loan Losses

The Company’s provision for loan losses was $368,000 for the three months ended June 30, 2008, compared to $230,000 in the comparable quarter of 2007. For the first six months of 2008 and 2007, the provision for loan losses amounted to $682,000 and $412,000, respectively.

Increased provisions in the 2008 periods largely reflected loan portfolio growth and changes in mix. In the first six months of 2008, total gross loans increased by $57.8 million as compared to $21.0 million in the first six months of 2007. There was also a marked difference in the mix of the loan growth when comparing the two periods: In 2008, 62.5% of loan growth has been in residential mortgages, for which the Company reserves a lower estimated loss percentage than for commercial loans. In the first six months of 2007, nearly all loan growth was in commercial loans, and the residential portfolio actually declined by $12.2 million over the six-month period. At June 30, 2008, the allowance for loan losses totaled $6.4 million, or .96% of the loan portfolio, as compared to $5.7 million, or .95% of total loans, at June 30, 2007.

Non-interest Income

Non-interest income of $1.5 million for the three months ended June 30, 2008 was $289,000, or 16.1% less than the $1.8 million earned in the comparable 2007 quarter. Non-interest income of $3.0 million for the six-month period ended June 30, 2008 was $783,000 (or 20.8%) less than the $3.8 million earned in the identical period in 2007.

The most significant decline in both time periods was in ATM servicing fees. ATM servicing fees decreased by $301,000, or 48.4% in comparing the second quarter of 2008 to 2007, and by $655,000, or 49.7%, in comparing the two six-month periods for those years. The Company earns ATM servicing fees based on average cash balances supplied to ATMs owned by independent service organizations, at a variable rate indexed off the prime rate of interest. Since the second quarter of 2007, the prime rate has declined by 325 basis points, and average cash balances supplied have decreased by over 30%. Excluding the ATM servicing fees, non-interest income for the second quarter of 2008 was $12,000 (or 1.0%) higher than the year-earlier quarter. Deposit service fees increased in this time frame by $106,000, or 28.7%, largely from higher fees earned for checking products and cash management services provided to business customers. Offsetting this increase, gains on loan sales dropped $111,000 in comparing the two quarters. In late 2007, management decided to hold most new fixed-rate residential mortgage loan production on its balance sheet rather than sell the loans into the secondary market.

Excluding the ATM servicing fees, non-interest income for the first six months of 2008 was $128,000 (or 5.2%) less than the comparable 2007 period. In large part, this decline can be attributed to an $187,000 non-recurring gain on the sale of land in the first quarter of 2007. Otherwise, deposit service fees increased by $129,000, or 18.2%, while gains on loan sales declined by $110,000, or 37.2%. The volume of fixed-rate residential mortgage loans sold into the secondary market dropped to $1.5 million in the first six months of 2008, or 6% of the 2007 six-month total. However, the Company’s reverse mortgage sales program, which was introduced to market in the second quarter of 2007, contributed a year-over-year increase of $115,000 in gains.

Non-interest Expense

Non-interest expenses totaled $5.9 million for the three-month period ended June 30, 2008, a decrease of $515,000, or 8.0%, from the $6.4 million incurred in the same quarter in 2007. Non-interest expenses were $11.7 million in the first six months of 2008, $1.5 million or 11.5% less than the total for the six months ended June 30, 2007.

The largest contributor to the $515,000 decline in non-interest expenses between the second quarters of 2008 and 2007 was $424,000 (or 11.1%) in salaries and employee benefits. In late June of 2007, the Company reduced its staff by 8% and recorded $148,000 in related severance costs. The Company also instituted a number of benefit cost containment measures in January 2008, resulting in reductions of employee retirement costs and medical insurance. In addition, stock incentive plan expense decreased by $89,000; the Company has recognized stock option expense using an accelerated method, which has resulted in lower expenses as the multi-year vesting periods begin to lapse. Excluding salaries and benefits, all other non-interest expenses for the second quarter of 2008 were $91,000, or 3.5%, less than the second quarter of 2007. Other general and administrative expenses increased by $127,000 year-over-year, primarily resulting from an increase in the reserve for losses on unfunded loan commitments, offset in part by decreases in expenses associated with the Company’s ATM cash management program. However, there were offsetting reductions of $98,000 in marketing and advertising expenses, $53,000 in professional fees and $44,000 in amortization of intangible assets between the two quarterly periods. The Company also reduced its data processing expenses by $29,000 (or 4.8%), pursuant primarily to a re-negotiated contract with its core systems vendor.

Salaries and employee benefits expense represented $806,000 of the total $1.5 million decrease in non-interest expense when comparing the six-month periods ended June 30, 2008 and 2007. In June of 2007, the Company reduced its staff by 8%, contributing significantly to a reduction of 5.5% in base salaries and commissions when comparing the two six-month periods. The Company also instituted a number of benefit cost containment measures in January 2008, including reductions of employee retirement costs and medical insurance. Stock incentive plan expense decreased by $233,000 comparing the two six-month periods; the Company has recognized stock option expense using an accelerated method, which has resulted in lower expenses as the multi-year vesting periods begin to lapse.

Excluding salaries and benefits, all other non-interest expenses for the six months ended June 30, 2008 were $716,000, or 12.4%, less than the first six months of 2007. A $115,000, or 24.4% decrease in professional fees was attributable to declines in audit costs and legal fees. Marketing and advertising expenses declined by 45.0% or $148,000; in 2007, the Company brought to market several new deposit and loan products. Amortization of a core deposit intangible asset created in the 2005 acquisition of Chart Bank fell $111,000 from the comparable six-month period in 2007, and will continue to decline at a lesser pace in future periods. Finally, other general and administrative expense dropped by $372,000 or 23.2% between the two six-month periods. Within this particular category, various costs largely associated with operating the ATM cash management business decreased by $269,000. In addition, the Company absorbed a $176,000 non-recurring charge in the first quarter of 2007 representing the write-off of capitalized debt issuance costs in advance of its November prepayment of $9.0 million of subordinated debt. These savings were offset somewhat by an increase of $222,000 in the provision for losses on unfunded loan commitments.

Income Taxes

Income tax expense of $551,000 recorded for the second quarter of 2008 resulted in an effective tax rate of 32.0%, while the income tax expense of $361,000 in the comparable quarter of 2007 equated to an effective tax rate of 30.3%. Income tax expense of $1.1 million for the six months ended June 30, 2008 resulted in an effective tax rate of 33.1%, while for the same six-month period in 2007 the income tax expense was $599,000, resulting in

an effective tax rate of 29.7%. The lower effective tax rate in the 2007 periods in large part reflected favorable tax treatment of the gain on sale of certain assets, including bank-owned land.

On July 3, 2008, the state of Massachusetts enacted a law that included reducing the tax rate on net income applicable to financial institutions. The rate drops from the current rate of 10.5% to 10% for tax years beginning on January 1, 2010, 9.5% for tax years beginning on or after January 1, 2011, and to 9% for tax years beginning on or after January 1, 2012 and thereafter. The Company continues to analyze the impact of this law and, as a result of revaluing its net deferred tax asset, management estimates that the impact on the consolidated financial statements to be recognized in the third quarter will not be material.

Liquidity and Capital Resources

The Company’s primary sources of funds are from deposits, borrowings, amortization of loans, loan prepayments and the maturity of loans, mortgage-backed securities and other investments, and other funds provided by operations. While scheduled payments from amortization of loans and mortgage-backed securities and maturing loans and investment securities are relatively predictable sources of funds, deposit flows and loan and mortgage-backed security prepayments can be greatly influenced by general interest rates, economic conditions and competition. The Company maintains excess funds in cash and short-term interest-bearing assets that provide additional liquidity. At June 30, 2008, cash and due from banks, short-term investments and debt securities maturing within one year totaled $72.7 million (excluding cash supplied to ATM customers) or 7.5% of total assets.

The Company borrows from the Federal Home Loan Bank of Boston as an additional funding source. As of June 30, 2008, the Company had the ability to borrow an additional $101.4 million from the Federal Home Loan Bank of Boston.

The Company uses its liquidity to fund existing and future loan commitments, to fund maturing certificates of deposit and borrowings, to fund other deposit withdrawals, to invest in other interest-earning assets and to meet operating expenses. The Company anticipates that it will continue to have sufficient funds and alternative funding sources to meet its current commitments.

The following tables present information indicating various contractual obligations and commitments of the Company as of the dates indicated and the respective maturity dates:

Contractual Obligations:


	June 30, 2008
					More than		More than
					One Year		Three Years
			One Year		through Three		through Five		Over Five
	Total		or Less		Years		Years		Years
			(Dollars in thousands)

Federal Home Loan Bank advances⁽¹⁾	$	192,369	$	25,200	$	136,200	$	16,500	$	14,469
Operating leases ⁽²⁾		13,743		1,187		2,324		2,189		8,043
Non-qualified pension ⁽³⁾		11,695		2,842		2,098		1,774		4,981
Other contractual obligations⁽⁴⁾		8,503		2,855		4,746		902		—

Total contractual obligations	$	226,310	$	32,084	$	145,368	$	21,365	$	27,493


⁽¹⁾		Secured under a blanket security agreement on qualifying assets, principally 1-4 family residential mortgage loans. One advance in the amount of $10 million maturing in June, 2010 will become immediately payable if 3-month LIBOR rises above 6.0% (measured on a quarterly basis).

⁽²⁾		Represents non-cancelable operating leases for branch offices.

⁽³⁾		Pension obligations include expected payments under the Company’s Director Fee Continuation Plan and expected contributions to the Company’s supplemental executive retirement plans.

⁽⁴⁾		Represents contracts for technology services and employment agreements.

Loan Commitments:


	June 30, 2008
					More than		More than
					One Year		Three Years
			One Year		through Three		through Five		Over Five
	Total		or Less		Years		Years		Years
					(Dollars in thousands)

Commitments to grant loans ⁽¹⁾	$	8,311	$	8,311	$	—	$	—	$	—
Unused portion of commercial loan lines of credit		37,325		31,233		6,092		—		—
Unused portion of home equity lines of credit ⁽²⁾		45,024		—		—		—		45,024
Unused portion of construction loans ⁽³⁾		20,805		18,505		2,300		—		—
Unused portion of personal lines of credit ⁽⁴⁾		2,451		—		—		—		2,451
Commercial letters of credit		1,038		1,038		—		—		—


Total loan commitments	$	114,954	$	59,087	$	8,392	$	—	$	47,475


General:		Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract, and generally have fixed expiration dates or other termination clauses.

⁽¹⁾		Commitments for loans are extended to customers for up to 180 days after which they expire.

⁽²⁾		Unused portions of home equity lines of credit are available to the borrower for up to 10 years.

⁽³⁾		Unused portions of construction loans are available to the borrower for up to 2 years for development loans and up to 1 year for other construction loans.

⁽⁴⁾		Unused portion of checking overdraft lines of credit are available to customers in “good standing” indefinitely.

Minimum Regulatory Capital Requirements:

As of June 30, 2008, 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. Prompt corrective action provisions are not applicable to bank holding companies. The Company’s and the Bank’s actual capital amounts and ratios as of June 30, 2008 and December 31, 2007 are also presented in this table:


											Minimum
											To Be Well
						Minimum					Capitalized Under
						Capital					Prompt Corrective
	Actual					Requirements					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
June 30, 2008:

Total capital to risk weighted assets:
Consolidated	$	78,547		11.7	%	$	53,854		8.0	%		N/A		N/A
Bank		70,689		10.5			53,804		8.0		$	67,256		10.0	%

Tier 1 capital to risk weighted assets:
Consolidated		71,978		10.7			26,927		4.0			N/A		N/A
Bank		64,120		9.5			26,902		4.0			40,353		6.0

Tier 1 capital to average assets:
Consolidated		71,978		7.7			37,243		4.0			N/A		N/A
Bank		64,120		6.9			37,269		4.0			46,587		5.0

December 31, 2007:

Total capital to risk weighted assets:
Consolidated	$	78,526		12.3	%	$	50,982		8.0	%		N/A		N/A
Bank		71,154		11.2			50,944		8.0		$	63,680		10.0	%

Tier 1 capital to risk weighted assets:
Consolidated		72,554		11.4			25,491		4.0			N/A		N/A
Bank		65,182		10.2			25,472		4.0			38,208		6.0

Tier 1 capital to average assets:
Consolidated		72,554		8.3			34,898		4.0			N/A		N/A
Bank		65,182		7.5			35,006		4.0			43,757		5.0


Item 3.		Quantitative and Qualitative Disclosures about Market Risk.

The Company’s Asset/Liability Committee’s primary method for measuring and evaluating interest rate risk is income simulation analysis. This analysis considers the maturity and re-pricing characteristics of assets and liabilities, as well as the relative sensitivities of these balance sheet components over a range of interest rate scenarios. Interest rate scenarios tested generally include instantaneous rate shocks compared against static (or unchanged) rates. The simulation analysis is used to measure the exposure of net interest income to changes in interest rates over a specified time horizon, usually a two-year period.

The following table sets forth, as of June 30, 2008, the estimated changes in net interest income over the next twelve months comparing an unchanged rate scenario to projected results using various parallel shifts in market interest rates. These computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions and should not be relied upon as being indicative of actual future results.


	Percentage Change in Estimated
	Net Interest Income over 12 months (1)
200 basis point increase in rates		(7.64	)%
100 basis point increase in rates		(3.22	)%
Flat interest rates		—
100 basis point decrease in rates		0.51	%
200 basis point decrease in rates		(3.08	)%


(1)		For purposes of income simulation analysis only, the Company includes cash supplied to ATM customers as an interest-earning asset and related ATM servicing fees as a component of net interest income. ATM servicing income is based on average cash balances outstanding and a floating interest rate that is tied to the prime rate index.

The Company’s income simulation analysis contains important assumptions regarding the rate sensitivity of interest-bearing non-maturity deposit accounts. These assumptions are based on the Company’s past experience with the changes in rates paid on these non-maturity deposits coincident with changes in market interest rates. Rate sensitivities for several product groups are tied to changes in market interest rates and these sensitivities are also assumed to vary between upward and downward rate movements. For example, the Company assumes that rates on certain money market accounts would increase by 36 basis points for each 100 basis point increase in market interest rates, but would decrease by 20 basis points for each 100 basis point decrease in market interest rates. For each major product group, there are also assumptions regarding rate floors below which rates will not fall. There can be no assurance that the deposit pricing assumptions used in the simulation analysis will actually occur.

As indicated in the table above, the result of an immediate 100 basis point parallel increase in interest rates is estimated to decrease net interest income by 3.22% over a 12-month horizon, when compared to the unchanged rate scenario. For an immediate 200 basis point parallel increase in the level of interest rates, net interest income is estimated to decrease by 7.64% over a 12-month horizon, when compared against the unchanged rate scenario. The exposure of net interest income to rising rates as compared to an unchanged rate scenario results from the difference between anticipated increases in asset yields and somewhat more rapid increases in funding costs. The Company assumes that certain premium-rate NOW and money market deposit products, that demonstrated strong growth in 2007 and 2008 and comprise a larger proportion of interest-bearing deposits, bear full sensitivity to increases in market rates for simulation purposes. In addition, much of the Company’s asset growth in 2008 has been in fixed or adjustable rate commercial loans and residential mortgages, which by definition bear constraints to re-pricing opportunities should market rates move upward.

Compared to the unchanged rate scenario, the estimated change in net interest income over a 12-month horizon for a 100 basis point parallel decline in the level of interest rates is an increase of .51%. For an immediate 200

basis point parallel decrease in the level of interest rates, net interest income is estimated to decrease by 3.08% over a 12-month horizon, when compared against the unchanged rate scenario. Often in the past, interest rate decreases have resulted in a modeled favorable change in net interest income over a 12-month time horizon, because the Company’s funding costs tend to re-price more rapidly than do the yields on its earning assets. However, as short-term market interest rates have declined sharply over the past twelve months, Management believes rate floors on many non-maturity deposit accounts would come into effect for simulation purposes. In addition, asset yields may decline more than funding costs as cash flow from prepayments of mortgage-related products, and redemption of callable securities, could increase significantly as market rates fall, exposing the Company to higher re-investment risk.

There are inherent shortcomings in income simulation, given the number and variety of assumptions that must be made in performing the analysis. The assumptions relied upon in making these calculations of interest rate sensitivity include the level of market interest rates, the shape of the yield curve, the degree to which certain assets and liabilities with similar maturities or periods to re-pricing react to changes in market interest rates, the degree to which non-maturity deposits react to changes in market rates, the expected prepayment rates on loans and mortgage-backed securities, the degree to which early withdrawals occur on certificates of deposit and the volume of other deposit flows. As such, although the analysis shown above provides an indication of the Company’s sensitivity to interest rate changes at a point in time, these estimates are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on the Company’s net interest income and will differ from actual results.


Item 4.		Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. The Company’s President and Chief Executive Officer, its Chief Financial Officer, and other members of its senior management team have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on such evaluation, the President and Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this report, were adequate and effective to provide reasonable assurance that information required to be disclosed by the Benjamin Franklin Bancorp, including its consolidated subsidiaries, in reports that are filed or submitted under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

The effectiveness of a system of disclosure controls and procedures is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Due to such inherent limitations, there can be no assurance that any system of disclosure controls and procedures will be successful in preventing all errors or fraud, or in making all material information known in a timely manner to the appropriate levels of management.

(b) Changes in Internal Controls Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2008 that have materially affected, or that are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Benjamin Franklin Bancorp is not involved in any legal proceedings other than routine legal proceedings occurring the ordinary course of business. Management believes that those routine legal proceedings involve, in the aggregate, amounts that are immaterial to the financial condition and results of operations of Benjamin Franklin Bancorp.

Item 1A. Risk Factors That May Affect Future Results

Risk factors that may affect future results were discussed in the Company’s 2007 Annual Report on Form 10-K. The Company’s analysis of its risk factors has not changed since December 31, 2007.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

	(a)		Unregistered Sale of Equity Securities. Not applicable.

	(b)		Use of Proceeds. Not applicable.

	(c)		Repurchases of Our Equity Securities. On November 29, 2007, the Company’s Board of Directors authorized a repurchase plan, permitting the repurchase of up to a maximum of 394,200 shares. As of July 31, 2008, total repurchases under the plan were 219,400 at an average price of $13.62 per share. In the second quarter of 2008, the Company purchased 4,400 shares, as follows:


							(d) Maximum number
							(or approximate
					(c) Total Number of		dollar value) of
					Shares Purchased as		shares that may yet
					Part of Publicly		be purchased under
	(a) Total Number of		(b) Average Price		Announced Plans or		the Plans or
Period	Shares Purchased		Paid per Share		Programs		Programs
April 1-30		4,400	$	13.55		4,400		174,800
May 1-31		—		—		—		174,800
June 1-30		—		—		—		174,800

Total		4,400	$	13.55		4,400		174,800

Item 3. Defaults on Senior Securities.

Not applicable.

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

The Company held its annual meeting of stockholders on May 8, 2008 at which time the four nominees for director, as set forth in the proxy materials for the meeting, were elected with the following votes cast:


Name	For		Withheld
Dr. Mary Ambler		6,559,249		318,749
Richard E. Bolton, Jr.		6,704,427		173,571
Daniel F. O’Brien		6,575,413		302,585
Charles F. Oteri		6,563,987		314,011

In addition, the stockholders approved the ratification of Wolf & Company, P.C. as our independent public accounting firm with the following votes cast:


	Ratification of Wolf & Co.
For		6,816,454
Against		58,489
Abstentions		3,055
Broker Non-Votes		0

Item 5. Other Information.

Not applicable

Item 6. Exhibits.

The following exhibits, required by Item 601 of Regulation S-K, are filed as part of this Quarterly Report on Form 10-Q. Exhibit numbers, where applicable, in the left column correspond to those of Item 601 of Regulation S-K.


Exhibit No.		Description	Footnotes

	2.1	Plan of Conversion of Benjamin Franklin Bancorp.		3

	2.2	Agreement and Plan of Merger among Benjamin Franklin Bancorp, M.H.C., Benjamin Franklin Savings Bank and Chart Bank, a Cooperative Bank, dated as of September 1, 2004.		2

	3.1	Articles of Organization of Benjamin Franklin Bancorp, Inc.		2

	3.2	Bylaws of Benjamin Franklin Bancorp, Inc.		7

	4.1	Form of Common Stock Certificate of Benjamin Franklin Bancorp, Inc.		5

	10.1.1	Form of Amended and Restated Employment Agreement with Thomas R. Venables. *		12

	10.1.2	Form of Amended and Restated Employment Agreement with Claire S. Bean. *		12

	10.2	Form of Amended and Restated Change in Control Agreement with three Executive Officers and two other officers, providing one year’s severance to Michael J. Piemonte and two other officers, and two years’ severance to Mariane E. Broadhurst and Rose M. Buckley. The only differences among the several agreements are the name and contact information of the officer who is party to the agreement and the number of years of severance provided. *		12

	10.3	Form of Benjamin Franklin Bank Benefit Restoration Plan. *		2

	10.4.1	Amended and Restated Supplemental Executive Retirement Agreement between Benjamin Franklin Bank and Thomas R. Venables dated as of March 26, 2008. *		12

	10.4.2	Amended and Restated Supplemental Executive Retirement Agreement between Benjamin Franklin Bank and Claire S. Bean dated as of March 26, 2008. *		12

	10.5	Benjamin Franklin Bancorp Director Fee Continuation Plan. *		4

	10.6	Benjamin Franklin Bancorp Employee Salary Continuation Plan. *		2


Exhibit No.		Description	Footnotes

	10.7.1	Payments and Waiver Agreement among Richard E. Bolton, Jr., Benjamin Franklin Bancorp, M.H.C., Benjamin Franklin Savings Bank and Chart Bank, a Cooperative Bank, dated as of September 1, 2004.*		2

	10.7.2	Consulting and Noncompetition Agreement between Richard E. Bolton, Jr. and Benjamin Franklin Bancorp, M.H.C., dated as of September 1, 2004. *		2

	10.8	Benjamin Franklin Bancorp, Inc. 2006 Stock Incentive Plan *		9

	10.8.1	Form of Incentive Stock Option Agreement *		10

	10.8.2	Form of Non-Statutory Stock Option Agreement (Officer) *		10

	10.8.3	Form of Non-Statutory Stock Option Agreement (Director) *		10

	10.8.4	Form of Restricted Stock Agreement (Officer) *		10

	10.8.5	Form of Restricted Stock Agreement (Director) *		10

	10.9	Purchase and Sale Agreement dated December 19, 2006.		11

	11	See Note 3 to the Condensed Consolidated Financial Statements for a discussion of earnings per share.	—

	21	Subsidiaries of Registrant		8

	31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		1

	31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		1

	32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		1

	32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		1


*		Relates to compensation.

1.		Filed herewith.

2.		Incorporated by reference to the Registrant’s Registration Statement on Form S-1, File No. 333-121154, filed on December 10, 2004.

3.		Incorporated by reference to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1, File No. 333-121154, filed on January 24, 2005.

4.		Incorporated by reference to the Registrant’s Registration Statement on Form S-4, File No. 333-121608, filed on December 23, 2004.

5.		Incorporated by reference to the Registrant’s Registration Statement on Form 8-A, File No. 000-51194, filed on March 9, 2005.

6.		Incorporated by reference to the Registrant’s Annual Report on Form 10-K, filed on March 29, 2005.

7.		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on March 3, 2006.

8.		Incorporated by reference to the Registrant’s Annual Report on Form 10-K, filed on March 28, 2006

9.		Incorporated by reference to Appendix B to the Registrant’s Proxy Statement for the 2006 Annual Meeting of Stockholders, filed on March 28, 2006.


	Benjamin Franklin Bancorp, Inc.
Date: August 11, 2008	By:	/s/ Thomas R. Venables
		Thomas R. Venables
		President and Chief Executive Officer


Date: August 11, 2008	By:	/s/ Claire S. Bean
		Claire S. Bean
		Treasurer and Chief Financial Officer

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	Page
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets at June 30, 2008 and December 31, 2007		3

Consolidated Statements of Income for the three and six months ended June 30, 2008 and 2007		4

Consolidated Statements of Changes in Stockholders’ Equity for the six months ended June 30, 2008 and 2007		5

Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007		6

Notes to Condensed Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11

Item 3. Quantitative and Qualitative Disclosures about Market Risk		28

Item 4. Controls and Procedures		29

PART II — OTHER INFORMATION

Item 1. Legal Proceedings		30

Item 1A Risk Factors		30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		30

Item 3. Defaults on Senior Securities		30

Item 4. Submission of Matters to a Vote of Security Holders		30

Item 5. Other Information		31

Item 6. Exhibits		31

SIGNATURES		34

EX-31.1 SECTION 302 CERTIFICATION OF THE CEO
EX-31.2 SECTION 302 CERTIFICATION OF THE CFO
EX-32.1 SECTION 906 CERTIFICATION OF THE CEO
EX-32.2 SECTION 906 CERTIFICATION OF THE CFO


	June 30, 2008						December 31, 2007
	Amount			Percent			Amount			Percent
				(Dollars in thousands)
Mortgage loans on real estate:
Residential	$	223,921			33.45	%	$	187,991			30.73	%
Commercial		174,934			26.13	%		168,463			27.54	%
Construction		50,307			7.51	%		55,763			9.11	%
Home equity		37,988			5.67	%		37,768			6.17	%

		487,150			72.76	%		449,985			73.55	%

Other loans:
Commercial business		179,982			26.89	%		159,233			26.03	%
Consumer		2,356			0.35	%		2,592			0.42	%

		182,338			27.24	%		161,825			26.45	%


Total loans		669,488			100.00	%		611,810			100.00	%

Other items:
Net deferred loan costs		1,054						925
Allowance for loan losses		(6,431	)					(5,789	)

Total loans, net	$	664,111					$	606,946


Exhibit No.		Item

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.