SB-2

As filed with the Securities and Exchange Commission on June 30, 2006

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM SB-2

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

BEN FRANKLIN FINANCIAL, INC.

(Name of Small Business Issuer in Its Charter)

Federal	6712	To be applied for
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

14 North Dryden Place

Arlington Heights, Illinois 60004

(847) 398-0990

(Address and Telephone Number of

Principal Executive Offices)

14 North Dryden Place

Arlington Heights, Illinois 60004

(Address of Principal Place of Business)

C. Steven Sjogren

14 North Dryden Place

Arlington Heights, Illinois 60004

(847) 398-0990

(Name, Address and Telephone Number of Agent for Service)

Copies to:

Kip A. Weissman, Esq.

Benjamin M. Azoff, Esq.

Luse Gorman Pomerenk & Schick, P.C.

5335 Wisconsin Avenue, N.W., Suite 400

Washington, D.C. 20015

(202) 274-2000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:  x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

If the delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box:  ¨

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Amount to be registered	Proposed maximum offering price per share		Proposed maximum aggregate offering price			Amount of registration fee
Common Stock, $0.01 par value per share	892,688 shares	$	10.00	$	8,926,800	(1)	$	956

(1) Estimated solely for the purpose of calculating the registration fee.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Ben Franklin Financial, Inc.

Proposed Holding Company for Ben Franklin Bank of Illinois

776,250 Shares of Common Stock

Ben Franklin Financial, Inc. is offering shares of its common stock for sale in connection with the reorganization of Ben Franklin Bank of Illinois into the mutual holding company form of ownership. After the offering, 55% of our outstanding common stock will be owned by Ben Franklin Financial, MHC, our federally chartered mutual holding company parent. We have never issued stock. Following the completion of the reorganization, we expect that the common stock of Ben Franklin Financial, Inc. will be quoted on the OTC Bulletin Board.

We are offering 776,250 shares of the common stock on a best efforts basis. The shares being offered represent 45% of the shares of common stock of Ben Franklin Financial, Inc. that will be outstanding following the reorganization. Depositors who had accounts at Ben Franklin Bank of Illinois with aggregate balances of at least $50 on March 31, 2005 will have first priority to purchase shares of common stock of Ben Franklin Financial, Inc. We must sell a minimum of 573,750 shares in order to complete the offering and we will terminate the offering if we do not sell the minimum number of shares. We may sell up to 892,688 shares because of regulatory considerations or changes in market or economic conditions without resoliciting subscribers. The offering is scheduled to terminate on [EXPIRATION DATE]. We may extend the termination date without notice to you, until [EXTENSION DATE #1], unless the Office of Thrift Supervision approves a later date, which may not be beyond [EXTENSION DATE #2].

The minimum purchase is 25 shares of common stock. The maximum purchase that an individual may make through a single deposit account is 10,000 shares, and no person by himself, or with an associate or group of persons acting in concert may purchase more than 30,000 shares. Once submitted, orders are irrevocable unless the offering is terminated or extended beyond [EXTENSION DATE #1]. If the offering is extended beyond [EXTENSION DATE #1], subscribers will have the right to modify or rescind their purchase orders. Funds received prior to the completion of the offering will be held in a segregated account at Ben Franklin Bank of Illinois or at another federally insured depository institution. Funds held at Ben Franklin Bank of Illinois will bear interest at our passbook savings rate, which is currently 0.75% per annum. If the offering is terminated, subscribers will have their funds returned promptly, with interest.

Keefe, Bruyette & Woods, Inc. will use its best efforts to assist us in selling our common stock, but is not obligated to purchase any of the common stock that is being offered for sale. In addition, officers and directors may participate in the solicitation of offers to purchase common stock in reliance upon Rule 3a4-1 under the Securities Exchange Act of 1934, as amended. Subscribers will not pay any commissions to purchase shares of common stock in the offering.

This investment involves a degree of risk, including the possible loss of principal.

Please read the “Risk Factors” beginning on page 20.

OFFERING SUMMARY

Price: $10.00 per share

	Minimum		Maximum		Adjusted Maximum
Number of shares		573,750		776,250		892,688
Estimated offering expenses	$	530,000	$	530,000	$	530,000
Underwriting commissions and expenses		165,000		165,000		165,000
Estimated net proceeds.		5,042,500		7,067,500		8,231,880
Estimated net proceeds per share.		8.79		9.10		9.22

These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.

None of the Securities and Exchange Commission, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, nor any state securities regulator has approved or disapproved of these securities or has determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

KEEFE, BRUYETTE & WOODS

The date of this prospectus is August     , 2006

[MAP]

TABLE OF CONTENTS

SUMMARY	4
RISK FACTORS	20
A WARNING ABOUT FORWARD LOOKING STATEMENTS	28
SELECTED FINANCIAL AND OTHER DATA	30
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING	32
OUR POLICY REGARDING DIVIDENDS	34
MARKET FOR THE COMMON STOCK	34
REGULATORY CAPITAL COMPLIANCE	36
CAPITALIZATION	37
PRO FORMA DATA	38
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF BEN FRANKLIN FINANCIAL, INC.	45
BUSINESS OF BEN FRANKLIN FINANCIAL, INC.	63
BUSINESS OF BEN FRANKLIN BANK OF ILLINOIS	64
FEDERAL, STATE AND LOCAL TAXATION	92
SUPERVISION AND REGULATION	94
MANAGEMENT	104
THE REORGANIZATION AND THE STOCK OFFERING	114
RESTRICTIONS ON THE ACQUISITION OF BEN FRANKLIN FINANCIAL, INC. AND BEN FRANKLIN BANK OF ILLINOIS	137
DESCRIPTION OF CAPITAL STOCK OF BEN FRANKLIN FINANCIAL, INC.	139
TRANSFER AGENT AND REGISTRAR	141
LEGAL AND TAX MATTERS	141
EXPERTS	141
WHERE YOU CAN FIND MORE INFORMATION	142
REGISTRATION REQUIREMENTS	142
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	F-1

SUMMARY

The following summary explains selected information regarding the reorganization, the offering of common stock by Ben Franklin Financial, Inc. and the business of Ben Franklin Bank of Illinois. The summary may not contain all the information that is important to you. For additional information, you should read this prospectus carefully, including the financial statements and the notes to the financial statements of Ben Franklin Bank of Illinois.

The Companies

Ben Franklin Financial, MHC

Upon completion of the reorganization and offering, Ben Franklin Financial, MHC will become the federally chartered mutual holding company parent of Ben Franklin Financial, Inc. Ben Franklin Financial, MHC is not currently an operating company and has not engaged in any business to date. Ben Franklin Financial, MHC will be formed upon completion of the reorganization. So long as Ben Franklin Financial, MHC exists, it will own a majority of the voting stock of Ben Franklin Financial, Inc.

Ben Franklin Financial, Inc.

Ben Franklin Financial, Inc. will be the mid-tier stock holding company for Ben Franklin Bank of Illinois following the reorganization and stock offering. Ben Franklin Financial, Inc. is not currently an operating company. Ben Franklin Financial, Inc. will be formed upon completion of the reorganization. Ben Franklin Financial, Inc. will be chartered under Federal law and will own 100% of the common stock of Ben Franklin Bank of Illinois. Our executive office will be located at 14 North Dryden Place, Arlington Heights, Illinois 60004, and our telephone number will be (847) 398-0990.

Ben Franklin Bank of Illinois

Ben Franklin Bank of Illinois is a federally chartered savings bank headquartered in Arlington Heights, Illinois. Ben Franklin Bank of Illinois was originally founded in 1893 as a building and loan association. We conduct our business from our main office and two branch offices. All of our offices are located in the northwestern corridor of the Chicago metropolitan area. The telephone number at our main office is (847) 398-0990.

At March 31, 2006, we had total assets of $110.2 million, total deposits of $99.2 million and total equity of $8.4 million. Our net income for the year ended December 31, 2005 was $388,000. Our principal business activity is the origination and purchase of mortgage loans secured by one- to four-family residential real estate. We also invest in commercial real estate, multi-family, construction, land and home equity loans. Ben Franklin Bank of Illinois offers a variety of deposit accounts, including checking, money market savings and certificates of deposit, and it emphasizes personal and efficient service for its customers. Since 2001, we have restructured our board and management. In particular, since that date, we have hired a new chief executive officer, chief financial officer and chief lending officer. Also, four of our six directors joined the Board in 2001 or later.

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Our Reorganization into a Mutual Holding Company and the Stock Offering

We do not have stockholders in our current mutual form of ownership. Our depositors currently have the right to vote on certain matters such as the election of directors and the proposed mutual holding company reorganization. The reorganization is a series of transactions by which we will convert our corporate structure from our current status as a mutual savings bank to the mutual holding company form of ownership. Following the reorganization, Ben Franklin Bank of Illinois will become a federal stock savings bank subsidiary of Ben Franklin Financial, Inc. Ben Franklin Financial, Inc. will be a majority-owned subsidiary of Ben Franklin Financial, MHC. After the reorganization, our depositors will become members of Ben Franklin Financial, MHC, and will continue to have the same voting rights in Ben Franklin Financial, MHC as they have in Ben Franklin Bank of Illinois prior to the reorganization. As a federal stock savings bank, we will continue to be subject to the regulation and supervision of the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. Also, upon consummation of the reorganization and offering, Ben Franklin Financial, MHC and Ben Franklin Financial, Inc. will be registered with the Office of Thrift Supervision as savings and loan holding companies, and will be subject to Office of Thrift Supervision regulations, supervision and reporting requirements.

As part of the stock offering, we are offering between 573,750 and 776,250 shares of Ben Franklin Financial, Inc. common stock. The purchase price will be $10.00 per share. All investors will pay the same price per share in the offering. We may increase the amount of stock to be sold to 892,688 shares without any further notice to you.

The primary reasons for our decision to reorganize into a mutual holding company and conduct the offering are to establish an organizational structure that will enable us to (1) compete more effectively in the financial services marketplace, (2) offer our depositors, employees, management and directors an equity ownership interest in Ben Franklin Bank of Illinois and thereby obtain an economic interest in its future success, and (3) increase our capital to support future growth and profitability.

Our new structure will permit us to issue capital stock, which is a source of capital not available to a mutual savings bank.

The reorganization and the capital raised in the offering are expected to:

• increase our capital base which will provide us greater flexibility to invest in longer-term, higher yielding assets;

• increase our lending capacity by providing us with additional capital to support new loans and higher lending limits; and

• support the implementation of a controlled growth strategy, including the modernization and if practicable, expansion of our branch network.

The reorganization and offering also will allow us to establish stock benefit plans for management and employees which will permit us to attract and retain qualified personnel.

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Unlike a standard conversion transaction in which all of the common stock issued by the converting savings bank is sold to the public, in a mutual holding company reorganization only a minority of our stock is sold to the public. A majority of the outstanding common stock must be held by the mutual holding company. Consequently, the shares that we are permitted to sell in the offering represent a minority of our outstanding shares. As a result, a mutual holding company offering raises less than half the capital that would be raised in a standard conversion offering. Based on these restrictions and an evaluation of our capital needs, our board of directors has decided to offer 45% of our outstanding shares of common stock for sale in the offering, and 55% of our shares will be retained by Ben Franklin Financial, MHC. The board of directors has determined that offering 45% of our outstanding shares of common stock for sale in the offering would enable management to more effectively invest the capital raised in the offering. See “Possible Conversion of Ben Franklin Financial, MHC to Stock Form.”

The following chart shows our corporate structure following the reorganization and offering:

Business Strategy

Since 2001, we have substantially restructured our Board and management including the election of four new directors (out of a total of six) and the appointment of a new chief executive officer, a chief financial officer and a chief lending officer. Since such date, we have focused on improving the execution of our community oriented retail banking strategy. Highlights of our current strategy include the following:

• Continuing our emphasis on residential lending;

• increasing our originations of multi-family and commercial real estate loans and home equity lines-of-credit;

• implementing a controlled growth strategy;

• managing our interest rate risk; and

• maintaining strong asset quality.

A full description of our business strategy can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Ben Franklin Financial,

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Inc.—Business Strategy” and a description of our products and services can be found under “Business of Ben Franklin Bank of Illinois.”

Terms of the Offering

We are offering between 573,750 and 776,250 shares of common stock of Ben Franklin Financial, Inc. to qualified depositors, tax-qualified employees plans and to the public to the extent shares remain available. The maximum number of shares that we sell in the offering may increase by up to 15%, to 892,688 shares, as a result of regulatory considerations, strong demand for the shares of common stock in the offering, or positive changes in financial markets in general and with respect to financial institution stocks in particular. Unless the pro forma market value of Ben Franklin Financial, Inc. decreases below $12,750,000 or increases above $19,837,500, or the offering is extended beyond                     , 2006, you will not have the opportunity to change or cancel your stock order. The offering price of the shares of common stock is $10.00 per share. All investors will pay the same $10.00 purchase price per share. Investors will not be charged a commission to purchase shares of common stock. Keefe, Bruyette & Woods, Inc., our financial advisor in connection with the reorganization and offering, will use its best efforts to assist us in selling our shares of common stock, but Keefe, Bruyette & Woods, Inc. is not obligated to purchase any shares in the offering.

Persons Who May Order Stock in the Offering

We are offering the shares of common stock of Ben Franklin Financial, Inc. in a “subscription offering” in the following descending order of priority:

(1) Depositors who had accounts at Ben Franklin Bank of Illinois with aggregate balances of at least $50 on March 31, 2005;

(2) The tax-qualified employee benefit plans of Ben Franklin Bank of Illinois (including our employee stock ownership plan);

(3) Depositors who had accounts at Ben Franklin Bank of Illinois with aggregate balances of at least $50 on June 30, 2006; and

(4) Other depositor members of Ben Franklin Bank of Illinois on [VOTING RECORD DATE].

If any shares of our common stock remain unsold in the subscription offering, we will offer such shares for sale in a community offering. Natural persons residing in Cook County, Illinois will have a purchase preference in any community offering. Shares also may be offered to the general public. The community offering, if any, may commence concurrently with, during or promptly after, the subscription offering. We also may offer shares of common stock not purchased in the subscription offering or the community offering through a syndicate of brokers in what is referred to as a syndicated community offering managed by Keefe, Bruyette & Woods, Inc. We have the right to accept or reject, in our sole discretion, any orders received in the community offering or the syndicated community offering.

To ensure proper allocation of stock, each eligible account holder must list on his or her stock order form all deposit accounts in which he or she had an ownership interest at March 31,

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2005, June 30, 2006 or [VOTING RECORD DATE] as applicable. Failure to list an account or providing incorrect information could result in the loss of all or part of a subscriber’s stock allocation. We will attempt to identify your ownership in all accounts but cannot guarantee we will identify all accounts in which you had an ownership interest. Our interpretations of the terms and conditions of the stock issuance plan and of the acceptability of the order forms will be final.

How We Determined to Offer Between 573,750 Shares and 776,250 Shares and the $10.00 Price Per Share

Our decision to offer between 573,750 shares and 776,250 shares, which is our offering range, is based on an independent appraisal of our pro forma market value prepared by RP Financial, LC., a firm experienced in appraisals of financial institutions. RP Financial, LC. is of the opinion that as of June 16, 2006, the estimated pro forma market value of the common stock of Ben Franklin Financial, Inc. on a fully converted basis was between $12,750,000 and $17,250,000, with a midpoint of $15,000,000.

In preparing its appraisal, RP Financial, LC. considered the information contained in this prospectus, including Ben Franklin Bank of Illinois’ financial statements. RP Financial, LC. also considered the following factors, among others:

• our present and projected operating results and financial condition and the economic and demographic conditions in our existing marketing area;

• historical, financial and other information relating to Ben Franklin Bank of Illinois;

• a comparative evaluation of the operating and financial statistics of Ben Franklin Bank of Illinois with those of other similarly situated publicly traded savings bank and mutual holding companies;

• the impact of the stock offering on our consolidated net worth and earnings potential; and

• the trading market for securities of comparable institutions and general conditions in the market for such securities.

In reviewing the appraisal prepared by RP Financial, LC., the board of directors considered the methodologies and the appropriateness of the assumptions used by RP Financial, LC. in addition to the factors listed above, and the board of directors believes that these assumptions were reasonable.

The board of directors determined that the common stock should be sold at $10.00 per share and that 45% of the shares of Ben Franklin Financial, Inc. common stock should be offered for sale in the offering, and 55% should be held by Ben Franklin Financial, MHC. The board of directors determined that offering 45% of our outstanding shares of common stock for sale in the offering allowed for an efficient use of net proceeds for the Company and the Bank in the short-term and the near-term. See “Possible Conversion of Ben Franklin Financial, MHC to Stock Form.” Based on the estimated valuation range and the purchase price, the number of shares of

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Ben Franklin Financial, Inc. common stock that will be outstanding upon completion of the stock offering will range from 1,275,000 to 1,725,000, and the number of shares of Ben Franklin Financial, Inc. common stock that will be sold in the stock offering will range from 573,750 shares to 776,250 shares (subject to adjustment to 892,688 shares), with a midpoint of 675,000 shares. The number of shares that Ben Franklin Financial, MHC will own after the offering will range from 701,250 to 948,750 (subject to adjustment to 1,091,062 shares). The estimated valuation range may be amended with the approval of the Office of Thrift Supervision, if required, or if necessitated by subsequent developments in the financial condition of Ben Franklin Bank of Illinois or market conditions generally, or to fill the order of the employee stock ownership plan.

The appraisal will be updated before we complete the reorganization and stock offering. If the pro forma market value of the common stock at that time is either below $12,750,000 or above $19,837,500, then Ben Franklin Financial, Inc., after consulting with the Office of Thrift Supervision, may terminate the plan of reorganization and return all funds promptly with interest; extend or hold a new subscription or community offering, or both; establish a new offering range and commence a resolicitation of subscribers; or take such other actions as may be permitted by the Office of Thrift Supervision. Under such circumstances, we will notify you, and you will have the opportunity to change or cancel your order.

Two measures investors use to analyze an issuer’s stock are the ratio of the offering price to the issuer’s book value and the ratio of the offering price to the issuer’s annual net income. RP Financial, LC. considered these ratios, among other factors, in preparing its appraisal. Book value is the same as total equity, and represents the difference between the issuer’s assets and liabilities. The following table presents the ratio of the offering price to Ben Franklin Financial, Inc.’s pro forma book value and earnings per share for the periods indicated. See “Pro Forma Data” for a description of the assumptions we used in making these calculations.

The following table presents a summary of selected pricing ratios for the peer group companies and for us on a non-fully converted basis. These figures are from the RP Financial, LC. appraisal report, and they thus do not correspond exactly to the ratios presented in the Pro Forma Data section of this prospectus which are presented on a fully converted basis. Compared to the average pricing ratios of the peer group, our pro forma pricing ratios at the maximum of the offering range, indicated a premium of 55.8% on a price-to-earnings basis and a discount of 27.7% on a price-to-book basis. At the minimum and maximum of the valuation range a share of common stock is priced at 36.04 times and 46.06 times our earnings. The peer group companies, as of June 16, 2006, traded on average at 29.57 times earnings. The median trading price of the peer group common stock was at 26.42 times earnings. At the minimum and maximum of the valuation range, the common stock is valued at 101.73% and 120.63%, respectively, of our pro forma book value. This represents a discount to the average trading price to book value of peer group companies, which as of June 16, 2006 averaged 166.79%. As of June 16, 2006, the median trading price of peer group companies was 163.96% of the book value of these companies. Our board of directors, in reviewing and accepting the valuation considered the range of price-to-earnings multiples and the range of the price-to-book value ratios at the different amounts of shares to be sold in the offering. The appraisal did not consider one valuation approach to be more important than the other. Instead, the appraisal concluded that these ranges represented the appropriate balance of the two approaches to valuing Ben Franklin Financial, Inc. and the number of shares to be sold, in comparison to the identified peer group

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institutions. The estimated appraised value and the resulting discounts took into consideration the potential financial impact of the reorganization and offering and the appraiser’s conclusions regarding Ben Franklin Financial, Inc.’s financial condition and operation after the offering in comparison to the peer group companies.

	Non-Fully Converted Pro Forma Price to Earnings Multiple(1)	Non-Fully Converted Pro Forma Price to Book Value Ratio
Ben Franklin Financial, Inc.
Maximum	46.06x	120.63	%
Minimum	36.04x	101.73	%
Valuation of peer group companies as of June 16, 2006
Averages	29.57x	166.79	%
Medians	26.42x	163.96	%

(1) Based on earnings for the twelve months ended March 31, 2006.

The following table presents a summary of selected pricing ratios for the peer group companies, with such ratios adjusted to their fully-converted equivalent basis, and the resulting pricing ratios for Ben Franklin Financial, Inc. on a fully-converted equivalent basis (i.e., the pro forma market value of Ben Franklin Bank of Illinois assuming that 100% of the shares of Ben Franklin Bank of Illinois were sold in a public offering). Compared to the average fully- converted pricing ratios of the peer group, Ben Franklin Financial, Inc.’s pro forma fully- converted pricing ratios at the maximum of the offering range indicated a premium of 21.4% on a price-to-earnings basis and a discount of 15.0% on a price-to-book basis.

	Fully Converted Equivalent Pro Forma Price to Earnings Multiple	Fully Converted Equivalent Pro Forma Price to Book Value Ratio
Ben Franklin Financial, Inc.
Maximum	34.51x	76.08	%
Minimum	28.15x	67.32	%
Valuation of peer group companies as of June 16, 2006
Averages	28.43x	89.54	%
Medians	28.94x	91.33	%

In preparing the fully converted pricing ratio analysis, RP Financial, LC. assumed offering expenses equal to 5.0% of the gross proceeds, a pre-tax reinvestment rate of 4.82% of the net proceeds of the offering, a tax rate of 34.0%, purchases by the employee stock ownership plan equal to 8.0% of the issued shares funded with a loan from Ben Franklin Financial, Inc. with a 15 year-term, purchases by the stock-based incentive plan equal to 4.0% of the issued shares with a five year vesting schedule and option grants under the stock-based incentive plan equal to 10.0% of the issued shares. Shares of common stock purchased by the stock-based incentive plan were assumed at $10.00 per share. The stock options were assumed to be granted with an exercise price of $10.00 per share, vest over a five-year period and have a term of 10 years.

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The independent appraisal does not indicate market value. Do not assume or expect that Ben Franklin Financial, Inc.’s valuation as indicated above means that the common stock will trade at or above the $10.00 purchase price after the stock offering.

After-Market Performance Information Provided by Independent Appraiser

The following table, which presents stock price performance information for all mutual holding company IPOs completed between January 1, 2005 and June 16, 2006.

		Price Performance from Initial Trading Date
Transaction	Closing Date	One day		One week		One month		Through 16-Jun-06
Georgetown Bancorp, Inc. (GTWN)	01/06/05	2.0	%	(0.5	)%	0.5	%	(11.5	)%
BV Financial, Inc. (BVFL)	01/14/05	(6.5	)%	(5.0	)%	(0.7	)%	(12.5	)%
Home Federal Bancorp, Inc. of LA (HFBL)	01/21/05	(1.0	)%	0.5	%	(0.8	)%	3.0	%
Kearny Financial Corp. (KRNY)	02/24/05	13.9	%	15.0	%	11.3	%	41.5	%
Kentucky First Federal Bancorp (KFFB)	03/03/05	7.9	%	12.0	%	12.4	%	8.0	%
Prudential Bancorp, Inc. (PBIP)	03/30/05	(1.5	)%	(6.5	)%	(12.5	)%	31.5	%
Brooklyn Federal Bancorp, Inc. (BFSB)	04/06/05	(0.5	)%	(1.0	)%	(5.0	)%	20.0	%
FedFirst Financial Corp. (FFCO)	04/07/05	(6.6	)%	(9.3	)%	(14.5	)%	8.0	%
Rockville Financial, Inc. (RCKB)	05/23/05	4.8	%	10.5	%	20.0	%	42.6	%
North Penn Bancorp, Inc. (NPEN)	06/02/05	10.0	%	2.5	%	1.5	%	12.0	%
Colonial Bankshares, Inc. (COBK)	06/30/05	6.0	%	9.9	%	7.5	%	24.0	%
Heritage Financial Group (HBOS)	06/30/05	7.5	%	7.5	%	9.3	%	33.5	%
United Financial Bancorp, Inc. (UBNK)	07/13/05	17.5	%	16.0	%	17.0	%	19.8	%
Ottawa Savings Bancorp, Inc. (OTTW)	07/14/05	4.0	%	5.0	%	7.0	%	15.0	%
Wauwatosa Holdings, Inc. (WAUW)	10/05/05	12.5	%	7.3	%	9.5	%	57.2	%
Investors Bancorp, Inc. (ISBC)	10/12/05	0.2	%	1.0	%	5.2	%	33.2	%
Equitable Financial Corp.(EQFC)	11/09/05	0.0	%	(5.5	)%	(5.5	)%	(6.5	)%
Greenville Federal Financial Corp.(GVFF)	01/05/06	3.8	%	2.5	%	0.0	%	(3.0	)%
Magyar Bancorp, Inc.(MGYR)	01/24/06	6.5	%	5.5	%	6.0	%	15.9	%
United Community Bancorp (UCBA)	03/31/06	8.0	%	7.0	%	5.5	%	5.0	%
Lake Shore Bancorp, Inc.	04/04/06	7.0	%	4.8	%	1.5	%	(0.8	)%
Mutual Federal Bancorp, Inc. (MFDB)	04/06/06	11.3	%	10.0	%	14.0	%	10.0	%
Average		4.9	%	4.1	%	4.1	%	15.7	%
Median		5.4	%	4.9	%	5.4	%	13.5	%

This table is not intended to be indicative of how our stock price may perform. Furthermore, this table presents only short-term price performance with respect to companies that only recently completed their initial public offerings and may not be indicative of the longer-term stock price performance of these companies.

Stock price performance is affected by many factors, including, but not limited to: general market and economic conditions; the interest rate environment; the amount of proceeds a company raises in its offering; and numerous factors relating to the specific company, including the experience and ability of management, historical and anticipated operating results, the nature and quality of the company’s assets, and the company’s market area. The companies listed in the table above may not be similar to Ben Franklin Financial, Inc., the pricing ratios for their stock offerings may be different from the pricing ratios for Ben Franklin Financial, Inc. common stock and the market conditions in which these offerings were completed may be different from current market conditions. Any or all of these differences may cause our stock to perform differently from these other companies.

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Before you make an investment decision, we urge you to carefully read this prospectus, including, but not limited to, the “Risk Factors,” beginning on page 20.

You should be aware that, in certain market conditions, stock prices of initial public offerings by thrift institutions have decreased below their initial offering prices. For example, as the above table illustrates, the stocks of five companies were trading at or below their initial offering price at June 16, 2006. We can give you no assurance that our stock will not trade below the $10.00 purchase price or that our stock will perform similarly to other recent first-step mutual holding company offerings. See “Risk Factors-Risks Related to this Offering-The Future Price of the Shares of Common Stock May Be Less Than the Purchase Price in the Offering.”

As part of its appraisal of our pro forma market value, RP Financial, LC. considered the after-market performance of mutual-to-stock conversions completed in the three months before June 16, 2006 which is the date of its appraisal report. RP Financial, LC. considered information regarding the new issue market for converting thrifts as part of its consideration of the market for thrift stocks.

Ben Franklin Financial, Inc. Does Not Initially Intend to Pay Cash Dividends on its Common Stock

We do not initially intend to pay dividends on the common stock. Any future payment of dividends will depend upon the board of directors’ consideration of a number of factors, including the amount of net proceeds retained by us in the offering, investment opportunities available to us, capital requirements, our financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions. No assurances can be given that any dividends will be paid, or that if paid, they will not be reduced or eliminated in future periods.

Limits on the Amount of Common Stock You May Purchase

The minimum purchase is 25 shares of common stock. Generally, no individual, or individuals through a single account, may purchase more than $100,000 (10,000 shares of common stock). If any of the following persons purchase shares of common stock, their purchases when combined with your purchases cannot exceed $300,000 (30,000 shares):

• your spouse, or relatives of you or your spouse living in your house;

• companies, trusts or other entities in which you have an interest or hold a position; or

• other persons who may be acting together with you (including, but not limited to, persons who file jointly a Schedule 13-G or Schedule 13-D Beneficial Ownership Report with the Securities and Exchange Commission).

Subject to Office of Thrift Supervision approval, we may increase or decrease the purchase limitations in the offering at any time. A detailed discussion of the limitations on purchases of common stock by an individual and persons acting together is set forth under the caption “The Reorganization and the Stock Offering—Limitations on Purchase of Shares.”

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Our employee stock ownership plan is authorized to purchase up to 10% of the total shares of common stock of Ben Franklin Financial, Inc. issued in the reorganization and offering, excluding shares issued to Ben Franklin Financial, MHC, without regard to these purchase limitations. It is expected that the employee stock ownership plan will purchase 3.92% of the shares to be issued in the offering (including shares issued to Ben Franklin Financial, MHC). Therefore, our employee stock ownership plan may purchase up to 57,350 and 77,625 shares of common stock, respectively, at the minimum and maximum of the offering range.

How You May Pay for Your Shares

In the subscription offering and the community offering you may pay for your shares only by:

(1) personal check, bank check or money order; or

(2) authorizing us to withdraw money from your deposit account(s) maintained with Ben Franklin Bank of Illinois.

If you wish to use your Ben Franklin Bank of Illinois individual retirement account to pay for your shares, please be aware that Federal law requires that such funds first be transferred to a self-directed retirement account with a trustee other than Ben Franklin Bank of Illinois. The transfer of such funds to a new trustee takes time, so please make arrangements as soon as possible. Also, please be aware that Ben Franklin Bank of Illinois is not permitted to lend funds to anyone for the purpose of purchasing shares of common stock in the offering.

You can subscribe for shares of common stock in the offering by delivering a signed and completed original stock order form, together with full payment, provided we receive the stock order form before the expiration date of the subscription offering. We will pay interest at Ben Franklin Bank of Illinois’s passbook rate from the date funds are received until completion or termination of the offering. Withdrawals from certificates of deposit at Ben Franklin Bank of Illinois for the purpose of purchasing common stock in the offering may be made without incurring an early withdrawal penalty. All funds authorized for withdrawal from deposit accounts with Ben Franklin Bank of Illinois must be in the deposit accounts at the time the stock order form is received. However, funds will not be withdrawn from the accounts until the offering is completed and will continue to earn interest at the applicable deposit account rate until the completion of the offering. A hold will be placed on those funds when your stock order is received, making the designated funds unavailable to you. After we receive an order, the order cannot be revoked or changed, except with our consent. In addition, we are not required to accept copies or facsimiles of order forms.

You May Not Sell or Transfer Your Subscription Rights

If you order shares of common stock in the subscription offering, you will be required to state that you are purchasing the shares of common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights. We intend to take legal action, including reporting persons to Federal or state regulatory agencies, against anyone who we believe sells or gives away his or her subscription rights. We will not accept your stock order if we have reason to believe that you sold or transferred your subscription rights. In addition, joint stock registration will only be allowed if the qualified account is so registered.

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Deadline for Orders of Common Stock

If you wish to purchase shares of common stock, we must receive your properly completed stock order form, together with payment for the shares, no later than 12:00 noon, Illinois time, on [EXPIRATION DATE] unless we extend this deadline. You may submit your stock order form by mail using the return envelope provided, by overnight courier to the indicated address on the stock order form, or by bringing your stock order form to one of our offices. Once submitted, your stock order is irrevocable unless the offering is terminated or extended beyond [EXTENSION DATE #1].

Termination of the Offering

The subscription offering will terminate at 12:00 noon, Illinois time, on [EXPIRATION DATE]. We expect that the community offering would terminate at the same time. We may extend this expiration date without notice to you, until [EXTENSION DATE #1], unless regulators approve a later date. If the subscription offering and/or community offerings extend beyond [EXTENSION DATE #1], we will be required to resolicit subscriptions before proceeding with the offering. In such event, all subscribers will be afforded the opportunity to increase, decrease or cancel their subscription. If you choose not to subscribe for the common stock or do not respond to the resolicitation notice, your funds will be promptly returned to you with interest. All further extensions, in the aggregate, may not last beyond [EXTENSION DATE #2], which is two years after the special meeting of members of Ben Franklin Bank of Illinois to be held on                     , 2006 to vote on the Plan of Reorganization.

Steps We May Take If We Do Not Receive Orders for the Minimum Number of Shares

If we do not receive orders for at least 573,750 shares of common stock, we may take several steps in order to sell the minimum number of shares of common stock in the offering range. Specifically, we may (i) increase the purchase limitations and/or (ii) seek regulatory approval to extend the offering beyond the [EXTENSION DATE #1] expiration date, provided that any such extension will require us to resolicit subscriptions received in the offering and provide subscribers with the opportunity to increase, decrease or cancel their subscription. If a subscriber determines to cancel his or her subscription or does not respond to the resolicitation notice, his or her subscription funds will be refunded with interest.

Market for the Common Stock

We anticipate that the common stock sold in the offering will be traded and quoted on the OTC Bulletin Board. Keefe, Bruyette & Woods, Inc. currently intends to make a market in the shares of common stock, but it is under no obligation to do so.

How We Intend to Use the Proceeds We Raise from the Offering

Assuming we sell 776,250 shares of common stock in the offering, and we have net proceeds of $7.1 million, we intend to distribute the net proceeds as follows:

• $4.1 million (58.0% of the net proceeds) will be contributed to Ben Franklin Bank of Illinois, plus such additional amount so that, upon completion of the offering, Ben Franklin Bank of Illinois will have a tangible capital to assets ratio of at least 10%;

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• $2.9 million (40.6% of the net proceeds) will be retained by us and, from such amount, we will loan up to $676,000 of the net proceeds to our employee stock ownership plan to fund its purchase of an amount of the common stock equal to up to 3.92% of our outstanding shares; and

• as a part of our formation of a mutual holding company, $100,000 will be contributed to Ben Franklin Financial, MHC.

We may use the net proceeds of the offering to invest in securities, to finance the possible acquisition of other financial institutions or financial service businesses, to pay dividends or for other general corporate purposes, including repurchasing shares of our common stock. Ben Franklin Bank of Illinois may use the proceeds it receives to make loans, to purchase securities, to expand its banking franchise internally or through acquisitions, and for general corporate purposes. See “How We Intend to Use the Proceeds from the Offering.” Neither Ben Franklin Bank of Illinois nor Ben Franklin Financial, Inc. has any plans or agreements for any specific acquisition transactions at this time.

Our Officers, Directors and Employees Will Receive Additional Compensation and Benefit Programs After the Reorganization and Offering, Which Will Reduce Earnings

We intend to establish an employee stock ownership plan, and we may implement a stock-based incentive plan that will provide for grants of stock options and restricted stock.

Employee Stock Ownership Plan. The board of directors of Ben Franklin Bank of Illinois has adopted an employee stock ownership plan, which will award shares of our common stock to eligible employees primarily based on their compensation. Our board of directors will, at the completion of the offering, ratify the loan to the employee stock ownership plan and the issuance of the common stock to the employee stock ownership plan. Our tax-qualified employee benefit plans, including our employee stock ownership plan, may purchase up to 10% of the shares sold in the offering. However, it is expected that our employee stock ownership plan will purchase an amount of shares equal to 3.92% of our outstanding shares (including shares held by Ben Franklin Financial, MHC); provided that if Ben Franklin Bank of Illinois’ tangible capital at the time of the stock issuance is less than 10% of its assets, then our employee stock ownership plan will purchase in the offering an amount of shares equal to only 3.43% of our outstanding shares.

Stock-Based Incentive Plan. In addition to shares purchased by the employee stock ownership plan, we may grant options and awards under a stock-based incentive plan. The number of options granted and restricted shares awarded under the stock-based incentive plan may not exceed 4.90% and 1.96%, respectively, of our total outstanding shares, including shares issued to Ben Franklin Financial, MHC; provided that if Ben Franklin Bank of Illinois’ tangible capital at the time of the adoption of a stock-based incentive plan is less than 10% of its assets, then the amount of restricted shares awarded (exclusive of stock options) under such plan will not exceed 1.47% of our outstanding shares. The number of options granted or restricted shares awarded under the stock-based incentive plan, when aggregated with any subsequently adopted

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stock-based benefit plans (exclusive of any shares held by any employee stock ownership plan), may not exceed 25% of the number of shares of common stock held by persons other than Ben Franklin Financial, MHC.

The stock-based incentive plan will comply with all applicable regulations of the Office of Thrift Supervision. The stock-based incentive plan cannot be established sooner than six months after the offering and would require the approval of our stockholders by a majority of the outstanding votes of Ben Franklin Financial, Inc. eligible to be cast (excluding votes eligible to be cast by Ben Franklin Financial, MHC), unless we obtain a waiver from the Office of Thrift Supervision which would allow the approval of the stock-based benefit plan by our stockholders by a majority of votes cast (excluding shares voted by Ben Franklin Financial, MHC). We currently intend to seek such a waiver from the Office of Thrift Supervision. Unless a waiver is obtained from the Office of Thrift Supervision, the following additional Office of Thrift Supervision restrictions would apply to our stock-based incentive plan:

• non-employee directors in the aggregate may not receive more than 30% of the options and restricted stock awards authorized under the plan;

• any one non-employee director may not receive more than 5% of the options and restricted stock awards authorized under the plan;

• any officer or employee may not receive more than 25% of the options and restricted stock awards authorized under the plan;

• the options and restricted stock awards may not vest more rapidly than 20% per year, beginning on the first anniversary of stockholder approval of the plan; and

• accelerated vesting is not permitted except for death, disability or upon a change in control of Ben Franklin Bank of Illinois or Ben Franklin Financial, Inc.

In the event the Office of Thrift Supervision changes its regulations or policies regarding stock-based incentive plans, including any regulations or policies restricting the size of awards and vesting of benefits as described above, the restrictions described above may not be applicable.

Incentive Plan Expenses. The implementation of an employee stock ownership plan and a stock-based incentive plan will increase our future compensation costs, thereby reducing our earnings. For instance, we will be required to recognize an expense each year under our employee stock ownership plan equal to the fair market value of the shares committed to be released for that year to the employees. Similarly, if we issue restricted stock awards under a stock-based incentive plan, we would be required to recognize an expense based on the fair market value of the shares on the grant date as they vest. Finally, if we issue restricted stock options, we would be required to recognize expense based on the estimated value of such options on the grant date, as they vest. See “Risk Factors—Our Stock-Based Incentive and Benefit Plans Will Increase Our Costs, Which Will Reduce Our Income” and “Management—Stock Benefit Plans.”

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Benefits to Management. The following table summarizes the stock benefits that our officers, directors and employees may receive following the reorganization and offering, at the maximum of the offering range and assuming that we implement a stock-based incentive plan granting options to purchase 4.90% of the total shares of common stock of Ben Franklin Financial, Inc. issued in the stock offering (including shares issued to Ben Franklin Financial, MHC) and awarding shares of common stock equal to 1.96% of the total shares of common stock of Ben Franklin Financial, Inc. issued in the stock offering (including shares issued to Ben Franklin Financial, MHC).

Plan	Individuals Eligible to Receive Awards	% of Outstanding Shares		Value of Benefits Based on Maximum of Offering Range
Employee stock ownership plan	All employees	3.92	%	$	676,200
Stock awards	Directors, officers and employees	1.96	%	$	338,100
Stock options	Directors, officers and employees	4.90	%	$	331,338	(1)

⁽¹⁾ The fair value of stock options has been estimated at $3.92 per option using the Black-Scholes option pricing model with the following assumptions: a grant-date share price and option exercise price of $10.00; dividend yield of zero; expected option life of 10 years; risk free interest rate of 4.86%; and a volatility rate of 10.14% based on an index of publicly traded mutual holding company institutions.

The value of the shares of common stock issued under the stock-based incentive plan will be based on the fair market value of Ben Franklin Financial, Inc.’s common stock at the time those shares are awarded, which, subject to stockholder approval, cannot be implemented until at least six months after the offering. The following table presents the total value of all shares to be available for award and issuance under the stock-based incentive plan, assuming the shares for the plan are purchased or issued in a range of market prices from $8.00 per share to $14.00 per share. The value of shares to be granted under the stock-based incentive plan ranges from $200,000 to $544,000, depending on the number of shares awarded and the assumed market price on the date the shares are granted.

Share Price		24,990 Shares Awarded at Minimum of Range		29,400 Shares Awarded at Midpoint of Range		33,810 Shares Awarded at Maximum of Range		38,882 Shares Awarded at Maximum of Range, As Adjusted
		(In thousands, except share data)
$	8.00	$	200	$	235	$	270	$	311
$	10.00	$	250	$	294	$	338	$	389
$	12.00	$	300	$	353	$	406	$	467
$	14.00	$	350	$	412	$	473	$	544

The grant-date fair value of the options granted under the stock-based incentive plan will be based in part on the price of Ben Franklin Financial, Inc.’s common stock at the time the options are granted, which, subject to stockholder approval, cannot be implemented until at least six months after the offering. The value will also depend on the various assumptions utilized in

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estimating the value using the Black-Scholes option pricing model. The following table presents the total estimated value of the options to be available for grant under the stock-based incentive plan, assuming the market price and exercise price for the stock options are equal and the range of market prices for the shares are $8.00 per share to $14.00 per share. The grant-date fair value of the options granted under the stock option plan ranges from $196,000 to $534,000, depending on the number of options granted and the assumed market price on the date the options are granted.

Market/Exercise Price		Grant- Date Fair Value Per Option		62,475 Options at Minimum of Range		73,500 Options at Midpoint of Range		84,525 Options at Maximum of Range		97,204 Options at Maximum of Range, As Adjusted
		(In thousands, except share data)
$	8.00	$	3.14	$	196	$	231	$	265	$	305
$	10.00	$	3.92	$	245	$	288	$	331	$	381
$	12.00	$	4.70	$	294	$	345	$	397	$	457
$	14.00	$	5.49	$	343	$	404	$	464	$	534

Ben Franklin Bank of Illinois intends to enter into three year employment agreements with two of our executive officers and one year agreements with two other officers. See “Management—Benefit Plans—Employment Agreements” for a discussion of the employment agreements.

Once Submitted, Your Purchase Order May Not Be Revoked Unless the Offering is Terminated or Extended Beyond [EXTENSION DATE #1].

Funds that you use to purchase shares of our common stock in the offering will be held in an interest bearing account until the termination or completion of the offering, including any extension of the expiration date. The Office of Thrift Supervision approved the reorganization on August     , 2006; however, because completion of the reorganization and offering will be subject to an update of the independent appraisal, among other factors, there may be one or more delays in the completion of the reorganization. Any orders that you submit to purchase shares of our common stock in the offering are irrevocable, and you will not have access to subscription funds unless the stock offering is terminated, or extended beyond [EXTENSION DATE #1]

Restrictions on the Acquisition of Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois

Federal regulations, as well as provisions contained in the charter and bylaws of Ben Franklin Bank of Illinois, restrict the ability of any person, firm or entity to acquire Ben Franklin Financial, Inc., Ben Franklin Bank of Illinois, or their respective capital stock. These restrictions include the requirement that a potential acquirer of common stock obtain the prior approval of the Office of Thrift Supervision before acquiring in excess of 10% of the voting stock of Ben Franklin Financial, Inc. or Ben Franklin Bank of Illinois. Because a majority of the shares of outstanding common stock of Ben Franklin Financial, Inc. must be owned by Ben Franklin Financial, MHC, any acquisition of Ben Franklin Financial, Inc. must be approved by Ben Franklin Financial, MHC. Furthermore, Ben Franklin Financial, MHC would not be required to pursue or approve a sale of Ben Franklin Financial, Inc. even if such sale were favored by a majority of Ben Franklin Financial, Inc.’s public stockholders. Finally, although a mutual holding company may be acquired by a mutual institution or another mutual holding company in

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a remutualization transaction, current Office of Thrift Supervision policy makes such transactions unlikely because of the special regulatory scrutiny given to the structure and pricing of such transactions.

Possible Conversion of Ben Franklin Financial, MHC to Stock Form

In the future, Ben Franklin Financial, MHC may convert from the mutual to capital stock form, in a transaction commonly known as a “second-step conversion.” In a second-step conversion, members of Ben Franklin Financial, MHC would have subscription rights to purchase common stock of Ben Franklin Financial, Inc. or its successor, and the public stockholders of Ben Franklin Financial, Inc. would be entitled to exchange their shares of common stock for an equal percentage of shares of the converted Ben Franklin Financial, MHC. This percentage may be adjusted to reflect any assets owned by Ben Franklin Financial, MHC.

The Board of Directors has no current plans to undertake a second-step conversion transaction. Any second-step conversion transaction would require the approval of holders of a majority of the outstanding shares of Ben Franklin Financial, Inc. common stock (excluding shares held by Ben Franklin Financial, MHC) and the approval of a majority of the votes held by Ben Franklin Bank of Illinois’ depositors, with depositors entitled to cast one vote per $100 on deposit at Ben Franklin Bank of Illinois (up to a maximum of 1,000 votes).

Proposed Stock Purchases by Management

Ben Franklin Financial, Inc.’s directors and executive officers and their associates are expected to purchase approximately 86,000 shares of common stock in the offering, which represents 15.0%, 12.7%, 11.1% and 9.6% of the shares sold to the public and 6.7%, 5.7%, 5.0% and 4.3% of the total shares to be outstanding after the offering at the minimum, midpoint, maximum and maximum, as adjusted, of the offering range, respectively. Directors and executive officers will pay the same $10.00 per share price paid by all other persons who purchase shares in the offering. These shares will be counted in determining whether the minimum of the range of the offering is reached.

How You May Obtain Additional Information Regarding the Reorganization and Offering

If you have any questions regarding the reorganization and offering, please call the Stock Information Center at (847)                 , Monday through Friday between 10:00 a.m. and 4:00 p.m., Illinois time.

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RISK FACTORS

You should consider carefully the following risk factors in evaluating an investment in the common stock.

Risks Related to Our Business

We Are Increasing Our Multi-Family and Commercial Real Estate Loan Originations, Increasing the Risk in our Loan Portfolio.

In order to enhance the yield and shorten the term-to-maturity of our loan portfolio, we have expanded our multi-family and commercial real estate lending during recent years. Multi-family lending has increased as a percentage of our total loan portfolio from 0.3% at December 31, 2002 to 16.5% at March 31, 2006. Commercial real estate lending has increased as a percentage of our total loan portfolio from 4.1% at December 31, 2002 to 13.5% at March 31, 2006. Given their larger balances and the complexity of the underlying collateral, multi-family and commercial real estate loans generally expose a lender to greater credit risk than loans secured by owner occupied one- to four-family real estate. In addition, our multi-family and commercial real estate loan portfolios are not as seasoned as the loan portfolios of some of our competitors. Should the local real estate market or economy weaken, we may begin to experience higher levels of non-performing loans. For additional information, see “Business of Ben Franklin Bank of Illinois-Lending Activities.”

Future Changes in Interest Rates Could Reduce Our Profits and Equity.

Our ability to make a profit largely depends on our net interest income, which could be negatively affected by changes in interest rates. Net interest income is the difference between:

• the interest income we earn on our interest-earning assets, such as loans and securities; and

• the interest expense we pay on our interest-bearing liabilities, such as deposits and borrowings.

Although interest rates have recently been at historically low levels, since June 30, 2004, the U.S. Federal Reserve has steadily increased its target for the federal funds. While these short-term market interest rates (which we use as a guide to price our deposits) have increased, longer-term market interest rates (which we use as a guide to price our longer-term loans) have not increased to the same degree. This “flattening” of the market yield curve has had a negative impact on our interest rate spread and net interest margin, and if short-term interest rates continue to rise, and if rates on our deposits and borrowings continue to reprice upwards faster than the rates on our long-term loans and investments, we would continue to experience compression of our interest rate spread and net interest margin, which would have a negative effect on our profitability. For the three months ended March 31, 2006 and the years ended December 31, 2005 and 2004, our net interest margin was 2.95%, 3.20% and 2.68% and our interest rate spread was 2.71%, 3.02% and 2.56%, respectively.

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Changes in interest rates also affect the current market value of our interest-earning securities portfolio. Generally, the value of securities moves inversely with changes in interest rates. At March 31, 2006, the fair value of our securities classified as available- for-sale totaled $6.7 million. Unrealized net losses on available-for-sale securities totaled $161,000 at March 31, 2006 and are reported, net of tax, as a separate component of total equity. A continued rise in interest rates could cause a further decrease in the fair value of securities available-for-sale in future periods, which would have an adverse effect on total equity.

We have an asset/liability management policy which focuses on maximizing our net interest margin while managing our interest rate risk. Depending on market conditions, we often place more emphasis on enhancing our net interest margin rather than matching the interest rate sensitivity of our assets and liabilities. In particular, we believe that the increased net interest income resulting from a mismatch in the maturity of our asset and liabilities portfolios can, during periods of stable or declining interest rates provide high enough returns to justify increased exposure to sudden and unexpected increases in interest rates. As a result, our results of operations and the economic value of our equity will remain vulnerable to increases in interest rates and to declines in the difference between long- and short-term interest rates.

We evaluate interest rate sensitivity using an Office of Thrift Supervision model that estimates the change in Ben Franklin Bank of Illinois’ net portfolio value over a range of interest rate scenarios. Net portfolio value is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts. At March 31, 2006, in the event of an immediate 200 basis point increase in interest rates, the Office of Thrift Supervision model projects that we would experience a $2.1 million, or 17.0%, decrease in our net portfolio value. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Management of Market Risk” on page    .

Our Growth Strategy Will Increase Our Expenses and May Not Be Successful.

Following the completion of the reorganization, we may attempt to increase the size of our franchise by establishing one or more new branch offices, although we have made no specific commitments to do so as of this date. Building branch offices and hiring new employees to staff these offices would significantly increase our non-interest expense. Moreover, new branch offices generally operate at losses for many years until they generate sufficient levels of deposit and loan growth to offset the applicable non-interest expense. Achieving profitability may also be hampered by the interest rate spread that we will be able to achieve from yields available on loans and rates that must be paid on deposits in the current interest rate environment. We cannot assure you that we will be successful in increasing the volume of loans and deposits at acceptable risk levels and upon acceptable terms while managing the costs and implementation risks associated with our growth strategy. For all these reasons, in the event that we are unable to execute our strategy of de novo branching, our earnings could be affected adversely.

Strong Competition Within Our Market Area May Limit Our Growth and Profitability.

Competition in the banking and financial services industry, and more specifically in the metropolitan Chicago area, is intense. In our market area and the metropolitan Chicago area generally, we compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and

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investment banking firms operating locally and elsewhere. Most of these competitors have substantially greater resources and lending limits than we have and offer certain services that we do not or cannot provide. Our profitability depends upon our continued ability to successfully compete in our market area. The greater resources and broader range of deposit and loan products offered by our competition may limit our ability to increase our interest-earning assets and profitability. For additional information see “Business of Ben Franklin Bank of Illinois-Competition.”

If Economic Conditions Deteriorate, Particularly in the Metropolitan Chicago Area, Our Results of Operations and Financial Condition Could Be Adversely Affected as Borrowers’ Ability to Repay Loans Declines and the Value of the Collateral Securing Our Loans Decreases.

Our financial results may be adversely affected by changes in prevailing economic conditions, particularly in the metropolitan Chicago area, including decreases in real estate values, changes in interest rates which may cause a decrease in interest rate spreads, adverse employment conditions, the monetary and fiscal policies of the Federal government and other significant external events. At March 31, 2006, loans secured by real estate represented 88.8% of our total loans, with substantially all such loans being made in the Chicago metropolitan area. In recent years, real estate values within the Chicago metropolitan area have increased substantially. Decreases in local real estate values would adversely affect the value of property used as collateral for our loans. Adverse changes in the economy also may have a negative effect on the ability of our borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings. As of December 31, 2005, the unemployment rate in Cook county, Illinois was approximately 5.7%, respectively, compared to the unemployment rate in the state of Illinois of approximately 5.7% and the national rate of approximately 4.9%.

If Our Allowance for Loan Losses Is Not Sufficient to Cover Actual Loan Losses, Our Earnings Could Decrease or be Eliminated.

We make various assumptions and judgments about the collectibility of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for loan losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions. If our assumptions are incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in additions to our allowance. Material additions to our allowance would materially decrease our net income.

In addition, bank regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further loan charge-offs. Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory authorities may have a material adverse effect on our financial condition and results of operations.

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We Will Need to Implement Additional Finance and Accounting Systems, Procedures and Controls in Order to Satisfy Our New Public Company Reporting Requirements. This Will Increase Our Operating Expenses.

Upon completion of the stock offering, we will become a public reporting company. The federal securities laws and regulations of the Securities and Exchange Commission require that we file annual, quarterly and current reports and that we maintain effective disclosure controls and procedures and internal controls over financial reporting. We expect that the obligations of being a public company, including substantial public reporting obligations, will require significant expenditures and place additional demands on our management team. These obligations will increase our operating expenses and could divert our management’s attention from our operations. Compliance with the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the Securities and Exchange Commission will require us to certify the adequacy of our internal controls and procedures, which will require us to upgrade our accounting systems, which will increase our operating costs. In addition, such requirements may cause us to hire additional accounting, internal audit and/or compliance personnel.

We Operate in a Highly Regulated Environment and May Be Adversely Affected by Changes in Laws and Regulations.

We are subject to extensive regulation, supervision and examination by the Office of Thrift Supervision, our chartering authority, and by the Federal Deposit Insurance Corporation, as insurer of deposits. Such regulation and supervision govern the activities in which a financial institution and its holding company may engage and are intended primarily for the protection of the insurance fund and depositors. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by the institution and the adequacy of an institution’s allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, or legislation, may have a material impact on our operations.

We Rely on Our Management Team for the Successful Implementation of Our Business Strategy.

The future success of Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois will be largely due to the efforts of our senior management team consisting of C. Steven Sjogren, President and Chief Executive Officer, Glen A. Miller, Vice President and Chief Financial Officer, Robin L. Jenkins, Senior Vice President and Chief Lending Officer and Angie Plesiotis, Vice President and Chief Operations Officer. The loss of services of one or more of these individuals may have a material adverse effect on our ability to implement our business plan. We intend to enter into three-year employment agreements with Messrs. Sjogren and Miller and one-year employment agreements with Mr. Jenkins and Ms. Plesiotis. Such agreements have one-year covenants not to compete if the subject executive voluntarily resigns under certain circumstances. See “Management—Benefit Plans—Employment Agreements.”

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Risks Related to this Offering

The Future Price of the Shares of Common Stock May Be Less Than the Purchase Price in the Offering.

We cannot assure you that if you purchase shares of common stock in the offering you will later be able to sell them at or above the purchase price in the offering. The purchase price in the offering is determined by an independent, third-party appraisal, which is determined pursuant to federal banking regulations and subject to review and approval by the Office of Thrift Supervision. The appraisal is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock. The Office of Thrift Supervision attempts to ensure that the aftermarket appreciation of standard conversion and mutual holding company stocks is not excessive. In recent years, the final independent valuation as approved by the Office of Thrift Supervision has often been 30% or more above the initial midpoint of the valuation range. However, you will generally not be permitted to change your subscription order unless the final valuation is above the adjusted maximum of our valuation range. You should be aware that our aggregate pro forma market value as reflected in the final, approved independent appraisal may exceed the market price of our shares of common stock after the completion of the offering, which may result in our stock trading below the initial offering price of $10.00 per share.

Between January 1, 2005 and June 16, 2006, based on market trading data, seven of the 22 mutual holding company initial public offerings traded below their initial offering price within the first 30 days of trading.

After our shares begin trading, the trading price of our common stock will be determined by the marketplace, and may be influenced by many factors, including prevailing interest rates, the overall performance of the economy, investor perceptions of Ben Franklin Financial, Inc. and the outlook for financial institutions in general.

There Will be a Limited Trading Market in Our Common Stock, Which Will Hinder Your Ability to Sell Our Common Stock and May Lower the Market Price of the Stock.

Ben Franklin Financial, Inc. has never issued stock and, therefore, there is no current trading market for the shares of common stock. In any event, our public “float,” which is the total number of our outstanding shares less the shares held by Ben Franklin Financial, MHC, our employee stock ownership plan and our directors and senior officers, is likely to be quite limited.

We expect that our common stock will trade on the OTC Bulletin Board. It is unlikely that an active and liquid trading market in shares of our common stock will develop. Persons purchasing shares may not be able to sell their shares when they desire if a liquid trading market does not develop or sell them at a price equal to or above the initial purchase price of $10.00 per share even if a liquid trading market develops. This limited trading market for our common stock may reduce the market value of the common stock and make it difficult to buy or sell our shares on short notice. For additional information see “Market for the Common Stock.”

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Our Return on Equity Will Be Low Compared to Other Financial Institutions. This Could Negatively Affect the Trading Price of Our Common Stock.

Net income divided by average equity, known as “return on equity,” is a ratio many investors use to compare the performance of a financial institution to its peers. We expect our return on equity to remain below the industry average until we are able to leverage our increased equity from the offering as well as improve our overall profitability. Our return on equity will be reduced by the capital raised in the offering, higher expenses from the costs of being a public company, and added expenses associated with our employee stock ownership plan and any stock-based incentive plan that we may adopt in the future. Until we can increase our net interest income and non-interest income, we expect our return on equity to be below the industry average, which may reduce the value of our common stock. For the three months ended March 31, 2006, our return on average equity was 2.3%. On a pro forma basis the ratio would be even lower. This compares to a return on average equity of 7.1% for all publicly traded savings banks. Following the offering we expect our consolidated equity to increase from $8.4 million to between $12.5 million at the minimum and $15.3 million at the adjusted maximum of the offering range.

Our Stock Benefit Plans Will Increase Our Costs, Which Will Reduce Our Income.

We anticipate that our employee stock ownership plan will purchase an amount of shares of our common stock equal to up to 3.92% of our outstanding shares (including the shares held by Ben Franklin Financial, MHC). The cost of acquiring the shares of common stock for the employee stock ownership plan will be between $499,800 at the minimum of the offering range and $777,630 at the adjusted maximum of the offering range, assuming that Ben Franklin Bank of Illinois’ ratio of tangible capital to assets at the time of the stock issuance is at least 10%. We will record annual employee stock ownership plan expenses in an amount equal to the fair value of shares of common stock committed to be released to employees. If shares of common stock appreciate in value over time, compensation expense relating to the employee stock ownership plan will increase.

We also intend to adopt a stock-based incentive plan after the offering under which plan participants would be awarded restricted shares of our common stock (at no cost to them) and/or options to purchase shares of our common stock. Under Office of Thrift Supervision regulations, we are authorized to grant awards of stock or options under one or more stock-based incentive plans in an amount up to 25% of the number of shares of common stock held by persons other than Ben Franklin Financial, MHC. The number of shares of common stock or options granted under any initial stock-based incentive plan may not exceed 1.96% and 4.90%, respectively, of our total outstanding shares, including shares issued to Ben Franklin Financial, MHC.

The shares of restricted common stock granted under the stock-based incentive plan will be expensed by us over their vesting period based on the fair market value of the shares on the date they are awarded. If the shares of restricted common stock to be granted under the stock-based incentive plan are repurchased in the open market (rather than issued directly from authorized but unissued shares by Ben Franklin Financial, Inc.) and cost the same as the purchase price in the offering, the reduction to stockholders’ equity due to the plan would be between $249,900 at the minimum of the offering range and $388,820 at the adjusted maximum of the offering range, assuming that Ben Franklin Bank of Illinois’ tangible capital ratio at the

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date of adoption of such plan is at least 10%. To the extent we repurchase shares of common stock in the open market to fund the grants of restricted shares under the plan, and the price of such shares exceeds the offering price of $10.00 per share, the reduction to stockholders’ equity would exceed the range described above. Conversely, to the extent the price of such shares is below the offering price of $10.00 per share, the reduction to stockholders’ equity would be less than the range described above.

We will recognize in our income statement the grant-date fair value of stock options as such options vest. When we record an expense related to the grant of options using the fair value method, we will incur significant compensation and benefits expense. As discussed in the Management’s Discussion and Analysis section of this prospectus, and based on certain assumptions discussed there, we estimate this annual expense would be approximately $70,000 on an aftertax basis, assuming the adjusted maximum number of shares is sold in the offering.

The Implementation of a Stock-Based Incentive Plan May Dilute Your Ownership Interest.

We intend to adopt a stock-based incentive plan following the reorganization and offering. This stock-based incentive plan will be funded through either open market purchases, if permitted, or from the issuance of authorized but unissued shares. Stockholders would experience a reduction in ownership interest (including shares held by Ben Franklin Financial, MHC) totaling 6.4% in the event newly issued shares are used to fund stock options and stock awards in an amount equal to 4.90% and 1.96%, respectively, of the total shares issued in the reorganization and offering.

We Have Broad Discretion in Allocating the Proceeds of the Offering. Our Failure to Effectively Utilize Such Proceeds Could Reduce Our Profits.

Ben Franklin Financial, Inc. intends to retain up to 50% of the net proceeds from the offering and contribute the remainder of the net proceeds of the offering to Ben Franklin Bank of Illinois. Ben Franklin Financial, Inc. will use a portion of the net proceeds to fund the employee stock ownership plan and may use the remaining net proceeds to pay dividends to stockholders, repurchase shares of common stock, purchase investment securities or acquire other financial services companies, although we do not have any specific plans or commitments to do so as of this date. Ben Franklin Bank of Illinois may use the proceeds it receives to fund new loans, establish or acquire new branches, purchase investment securities, or for general corporate purposes. We have not, however, allocated specific amounts of proceeds for any of these purposes and we will have significant flexibility in determining the amount of net proceeds we apply to different uses and the timing of such applications. Our failure to utilize these funds effectively could reduce our profitability.

Persons Who Purchase Stock in the Offering Will Own a Minority of Ben Franklin Financial, Inc.’s Common Stock and Will Not Be Able To Exercise Voting Control Over Most Matters Put To a Vote of Stockholders.

Public stockholders will own a minority of the outstanding shares of Ben Franklin Financial, Inc.’s common stock. As a result, stockholders other than Ben Franklin Financial, MHC will not be able to exercise voting control over most matters put to a vote of stockholders. Ben Franklin Financial, MHC, will own a majority of Ben Franklin Financial, Inc.’s common stock after the offering and, through its board of directors, will be able to exercise voting control

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over most matters put to a vote of stockholders. The same directors and officers who manage Ben Franklin Bank of Illinois will also manage Ben Franklin Financial, Inc. and Ben Franklin Financial, MHC. The only matters as to which stockholders other than Ben Franklin Financial, MHC will be able to exercise voting control include any proposal to implement a stock-based incentive plan within one year of the offering or a “second-step” conversion. In addition, Ben Franklin Financial, MHC may exercise its voting control to prevent a sale or merger transaction in which stockholders could receive a premium for their shares.

Our Stock Value May be Negatively Affected by our Mutual Holding Company Structure and Federal Regulations Restricting Takeovers.

The Mutual Holding Company Structure May Impede Takeovers. Ben Franklin Financial, MHC, as the majority stockholder of Ben Franklin Financial, Inc., will be able to control the outcome of virtually all matters presented to stockholders for their approval, including a proposal to acquire Ben Franklin Financial, Inc. Accordingly, Ben Franklin Financial, MHC may prevent the sale of control or merger of Ben Franklin Financial, Inc. or its subsidiaries even if such a transaction were favored by a majority of the public stockholders of Ben Franklin Financial, Inc. The Board of Ben Franklin Bank of Illinois has decided to form a mutual holding company rather than undertake a standard conversion to stock form in part because the mutual holding company structure will allow the Board to control the future of Ben Franklin Financial, MHC and its subsidiaries.

Federal Regulations Restricting Takeovers. For three years following the offering, Office of Thrift Supervision regulations prohibit any person from acquiring or offering to acquire more than 10% of our common stock without the prior written approval of the Office of Thrift Supervision. Moreover, current Office of Thrift Supervision policy prohibits the acquisition of a mutual holding company subsidiary by any person or entity other than a mutual holding company or a mutual institution, and restricts the terms of permissible acquisitions. See “Restrictions on the Acquisition of Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois” on page 138 for a discussion of applicable Office of Thrift Supervision Regulations regarding acquisitions.

The Corporate Governance Provisions in Our Charter and Bylaws May Prevent or Impede the Holders of a Minority of Our Common Stock from Obtaining Representation on Our Board of Directors and May Also Prevent or Impede a Change in Control.

Provisions in our charter and bylaws may prevent or impede holders of a minority of our common stock from obtaining representation on our board of directors. For example, our board of directors is divided into three staggered classes. A classified board makes it more difficult for stockholders to change a majority of the directors because it generally takes at least two annual elections of directors for this to occur. Second, our charter provides that there will not be cumulative voting by stockholders for the election of our directors which means that Ben Franklin Financial, MHC, as the holder of a majority of the shares eligible to be voted at a meeting of stockholders, may elect all of our directors to be elected at that meeting. Third, our bylaws contain procedures and timetables for a stockholder wanting to make a nomination for the election of directors or a proposal for new business at a meeting of stockholders, the effect of which may be to give our management time to solicit its own proxies in an attempt to defeat any dissident slate of nominations if management thinks it is in the best interests of stockholders generally.

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In addition, our charter imposes limitations on the voting rights of beneficial owners of more than 10% of our common stock for a period of five years following completion of the stock issuance. Also, we have the ability to issue preferred stock with voting rights to third parties who may be friendly to our board of directors. All of these provisions may prevent the sale of control or merger of Ben Franklin Financial, Inc., even if such transaction is favored by a majority of our public stockholders.

A WARNING ABOUT FORWARD LOOKING STATEMENTS

This prospectus contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include:

• statements of our goals, intentions and expectations;

• statements regarding our business plans and prospects and growth and operating strategies;

• statements regarding the asset quality of our loan and investment portfolios; and

• estimates of our risks and future costs and benefits.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events:

• our ability to manage the increased risk from our multi-family and commercial real estate lending;

• significantly increased competition among depository and other financial institutions;

• our ability to execute our plan to grow our assets on a profitable basis;

• our ability to execute on a favorable basis any plan we may have to acquire other institutions or branches or establish new offices;

• changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments and inflation;

• general economic conditions, either nationally or in our market area;

• adverse changes in the securities and national and local real estate markets (including real estate values);

• legislative or regulatory changes that adversely affect our business;

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• our ability to enter new markets successfully and take advantage of growth opportunities;

• changes in consumer spending, borrowing and savings habits;

• changes in accounting policies and practices, as may be adopted by the bank regulatory agencies and the authoritative accounting and auditing bodies; and

• changes in our organization, compensation and benefit plans.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. We discuss these and other uncertainties in “Risk Factors” beginning on page 20.

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SELECTED FINANCIAL AND OTHER DATA

The summary information presented below at each date or for each of the periods presented is derived in part from the financial statements of Ben Franklin Bank of Illinois. The financial condition data at December 31, 2005 and 2004, and the operating data for the years ended December 31, 2005 and 2004 are derived from the audited financial statements of Ben Franklin Bank of Illinois included herein. The information at December 31, 2003 and for the year ended December 31, 2003 was derived in part from audited financial statements that are not included in this prospectus. The information at and for the three months ended March 31, 2006 and 2005 is unaudited. However, in the opinion of management of Ben Franklin Bank of Illinois, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the unaudited periods have been made. The selected operating data presented below for the three months ended March 31, 2006, are not necessarily indicative of the results that may be expected for future periods. The following information is only a summary, and should be read in conjunction with our financial statements and notes beginning on page F-1 of this prospectus.

	At March 31, 2006		At December 31,
			2005		2004		2003
	(In thousands)
Selected Financial Condition Data:
Total assets	$	110,247	$	107,769	$	114,228	$	116,451
Cash and cash equivalents		8,880		7,039		5,941		6,213
Loans receivable, net		91,100		89,982		90,255		80,279
Securities		6,663		7,163		9,869		15,092
Deposits		99,240		96,160		98,271		100,017
FHLB advances		2,000		2,000		7,000		7,000
Equity		8,356		8,334		8,011		7,762

	For the Three Months Ended March 31,				For the Year Ended December 31,
	2006		2005		2005		2004		2003
	(In thousands)
Selected Operating Data:
Interest and dividend income	$	1,489	$	1,442	$	5,764	$	5,404	$	5,631
Interest expense		712		558		2,349		2,368		2,953
Net interest income		777		884		3,415		3,036		2,678
Provision for loan losses		1		6		17		19		(108	)
Net interest income after provision for loan losses		776		878		3,398		3,017		2,786
Non-interest income		43		41		196		242		453
Non-interest expense		746		744		3,006		2,940		3,005
Income before income tax expense		73		175		588		319		234
Income tax expense		25		59		200		108		80
Net income	$	48	$	116	$	388	$	211	$	154

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	At or For the Three Months Ended March 31,				At or For the Years Ended December 31,
	2006		2005		2005		2004		2003
Selected Financial Ratios and Other Data:
Performance Ratios:
Return on assets (ratio of net income to average total assets)	0.18	%	0.41	%	0.35	%	0.18	%	0.12	%
Return on equity (ratio of net income to average equity)	2.34	%	5.37	%	4.72	%	2.68	%	1.98	%
Interest rate spread (1)	2.71	%	3.08	%	3.02	%	2.56	%	2.14	%
Net interest margin (2)	2.95	%	3.24	%	3.20	%	2.68	%	2.21	%
Efficiency ratio (3)	90.98	%	80.52	%	84.04	%	89.99	%	104.52	%
Non-interest expense to average total assets	2.76	%	2.65	%	2.74	%	2.50	%	2.38	%
Average interest-earning assets to average interest-bearing liabilities	108.71	%	107.43	%	108.20	%	105.44	%	102.99	%
Loans to deposits	92.31	%	92.96	%	94.10	%	92.34	%	80.74	%
Asset Quality Ratios:
Non-performing assets to total assets	0.38	%	—	(4)	—	(4)	—	(4)	—	(4)
Non-performing loans to total loans	0.46	%	—	(4)	—	(4)	—	(4)	—	(4)
Allowance for loan losses to non-performing loans	121.14	%	NM	(5)	NM	(5)	NM	(5)	NM	(5)
Allowance for loan losses to total loans	0.56	%	0.55	%	0.56	%	0.54	%	0.59	%
Capital Ratios:
Equity to total assets at end of period	7.58	%	7.44	%	7.73	%	7.01	%	6.67	%
Average equity to average assets	7.57	%	7.17	%	7.50	%	6.67	%	6.16	%
Other Data:
Number of full service offices	3		3		3		3		3

(1) Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.

(2) Represents net interest income as a percent of average interest-earning assets for the period.

(3) Represents non-interest expense divided by the sum of net interest income and non-interest income excluding net gains (losses) on the sale of loans and securities.

(4) There were no non-performing assets during such periods.

(5) Ratio not meaningful.

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HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING

Although we will not be able to determine the amount of actual net proceeds we will receive from the sale of shares of common stock until the offering is completed, we anticipate that the net proceeds will be between $5.0 million and $7.1 million, or $8.2 million if the offering is increased by 15%.

Ben Franklin Financial, Inc. intends to distribute the net proceeds from the offering as follows:

	573,790 Shares at Minimum of Offering Range				675,000 Shares at Midpoint of Offering Range				776,250 Shares at Maximum of Offering Range				892,688 Shares at Adjusted Maximum of Offering Range
	Amount		Percent of Net Proceeds		Amount		Percent of Net Proceeds		Amount		Percent of Net Proceeds		Amount		Percent of Net Proceeds
	(Dollars in thousands)
Offering proceeds	$	5,738			$	6,750			$	7,763			$	8,927
Less: offering expenses		695				695				695				695
Net offering proceeds		5,043	100.0	%		6,055	100.0	%		7,068	100.0	%		8,232	100.0	%
Less:
Proceeds contributed to Ben Franklin Bank of Illinois		3,832	76.0			3,996	66.0			4,099	58.0			4,281	52.0
Proceeds used for loan to employee stock ownership plan		500	9.9	(1)		588	9.7	(1)		676	9.6	(1)		778	9.5	(1)
Amount contributed to Ben Franklin Financial, MHC		100	2.0			100	1.7			100	1.4			100	1.2
Proceeds retained by Ben Franklin Financial, Inc.	$	611	12.1	%	$	1,371	22.6	%	$	2,193	31.0	%	$	3,073	37.3	%

(1) The proceeds used for the loan to the employee stock ownership plan, based on gross proceeds, would be 8.71% at each of the minimum, midpoint, maximum and adjusted maximum.

The net proceeds may vary because total expenses relating to the reorganization and offering may be more or less than our estimates. For example, our expenses would increase if a syndicated community offering were used to sell shares of common stock not purchased in the subscription offering and any community offering. Payments for shares made through withdrawals from existing deposit accounts will not result in the receipt of new funds for investment but will result in a reduction of Ben Franklin Bank of Illinois’s deposits. Ben Franklin Bank of Illinois will receive at least 50% of the net proceeds of the offering, provided that we may provide more than 50% of the net proceeds to Ben Franklin Bank of Illinois to the extent necessary so that upon completion of the reorganization and offering, Ben Franklin Bank of Illinois’ ratio of tangible capital to total assets is at least 10%.

We are undertaking the reorganization and offering at this time in order to increase our capital and have the capital resources available to support and expand our business. For further information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Ben Franklin Financial, Inc.—Business Strategy.” As a part of our formation of a mutual holding company, $100,000 will be contributed to Ben Franklin Financial, MHC. The offering proceeds will increase our capital resources and the amount of funds available to us for lending and investment purposes. The proceeds will also give us greater flexibility to diversify operations and expand the products and services we offer to our customers.

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Ben Franklin Financial, Inc. may use the proceeds it retains from the offering:

• to invest in mortgage-backed and other securities;

• to make a loan to the employee stock ownership plan;

• to allow us to pay cash dividends and repurchase shares of our common stock;

• to finance acquisitions of financial institutions, branch offices or other financial services businesses, or to expand through de novo branching, although no specific transactions are being considered at this time; or

• for general corporate purposes.

Under current Office of Thrift Supervision regulations, we may not repurchase shares of our common stock during the first year following the reorganization and offering, except to fund stock-based benefit plans or when extraordinary circumstances exist and with prior regulatory approval. The loan that will be used to fund the purchases by the employee stock ownership plan will accrue interest.

Ben Franklin Bank of Illinois may use the proceeds it receives from the offering:

• to increase our lending capacity by providing us with additional capital to support new loans and higher lending limits;

• to fund new loans, including one- to four-family mortgage loans, multi-family real estate loans, commercial real estate loans and home equity lines-of-credit;

• to increase our capital base which will provide greater flexibility to invest in longer-term, higher yielding assets;

• to support new products and services;

• to increase our capacity to invest in securities, including mortgage-backed securities;

• to expand our retail banking franchise, by establishing or acquiring new branches or by acquiring other financial institutions, or other financial services companies, although no such transactions are specifically being considered at this time; or

• for general corporate purposes.

The use of the proceeds outlined above may change based on changes in interest rates, equity markets, laws and regulations affecting the financial services industry, our relative position in the financial services industry, the attractiveness of potential acquisitions to expand our operations, and overall market conditions.

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OUR POLICY REGARDING DIVIDENDS

We do not intend initially to pay dividends on our common stock. Any future payment of dividends will depend upon a number of factors, including the amount of net proceeds retained by us following the offering, investment opportunities available to us, regulatory capital requirements, our financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions.

We cannot assure you that we will pay dividends, or that if paid, we will not reduce or eliminate dividends in the future. In addition, since we intend to infuse a sufficient amount of net proceeds so that Ben Franklin Bank of Illinois’ ratio of tangible capital to total assets is at least 10%, the amount of net proceeds retained by Ben Franklin Financial, Inc. which would be available to pay dividends may be limited.

If Ben Franklin Financial, Inc. pays dividends to its stockholders, it also will be required to pay dividends to Ben Franklin Financial, MHC, unless Ben Franklin Financial, MHC elects to waive the receipt of dividends. We anticipate that Ben Franklin Financial, MHC will waive any dividends paid by Ben Franklin Financial, Inc. Any decision to waive dividends will be subject to regulatory approval. Under Office of Thrift Supervision regulations, public stockholders would not be diluted for any dividends waived by Ben Franklin Financial, MHC in the event Ben Franklin Financial, MHC converts to stock form. See “Regulation – Holding Company Regulation.”

Dividends from Ben Franklin Financial, Inc. will depend, in part, upon receipt of dividends from Ben Franklin Bank of Illinois, because Ben Franklin Financial, Inc. initially will have no source of income other than dividends from Ben Franklin Bank of Illinois, earnings from the investment of proceeds it retains from the sale of shares of common stock, and interest payments with respect to Ben Franklin Financial, Inc.’s loan to the employee stock ownership plan. A regulation of the Office of Thrift Supervision imposes limitations on “capital distributions” by savings institutions such as Ben Franklin Bank of Illinois. Ben Franklin Financial, Inc., however, will not be subject to Office of Thrift Supervision regulatory restrictions on the payment of dividends. See “Supervision and Regulation—Federal Banking Regulation—Capital Distributions.”

Additionally, we have committed to the Office of Thrift Supervision that, during the three-year period following the completion of the reorganization and offering, we will not take any action to declare an extraordinary dividend to our stockholders that would be treated by such stockholders as a tax-free return of capital for Federal income tax purposes, without prior approval of the Office of Thrift Supervision.

MARKET FOR THE COMMON STOCK

Ben Franklin Financial, Inc. is a newly formed company and has never issued capital stock. Ben Franklin Bank of Illinois, as a mutual institution, has never issued capital stock. Ben Franklin Financial, Inc. anticipates that its common stock will be traded in the over-the-counter market and quoted on the OTC Bulletin Board. Keefe, Bruyette & Woods, Inc. has advised us that it intends to make a market in our common stock following the reorganization and offering, but it is under no obligation to do so.

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The development of an active trading market depends on the existence of willing buyers and sellers, the presence of which is not within our control, or that of any market maker. The number of active buyers and sellers of the shares of common stock at any particular time may be limited. Under such circumstances, you could have difficulty selling your shares of common stock on short notice, and, therefore, you should not view the shares of common stock as a short-term investment. In addition, our public “float,” which is the total number of our outstanding shares less the shares held by Ben Franklin Financial, MHC, our employee stock ownership plan and our directors and senior officers, is likely to be quite limited. As a result, it is unlikely that an active trading market for the common stock will develop or that, if it develops, it will continue. Furthermore, we cannot assure you that, if you purchase shares of common stock, you will be able to sell them at or above $10.00 per share.

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REGULATORY CAPITAL COMPLIANCE

At March 31, 2006, Ben Franklin Bank of Illinois exceeded all regulatory capital requirements. The following table sets forth our compliance, as of March 31, 2006, with the regulatory capital standards, on a historical and pro forma basis assuming that (i) the indicated number of shares of common stock were sold as of such date at $10.00 per share, (ii) Ben Franklin Bank of Illinois received 50% of the net proceeds of the offering plus such additional amount as may be necessary so that the ratio of its tangible capital to its total assets upon the completion of the offering is at least 10%, (iii) an employee stock ownership plan and stock-based incentive plan are implemented on the basis set forth herein with the related expense amounts reflected in regulatory capital and (iv) the remaining net proceeds are retained by Ben Franklin Financial, Inc. Accordingly, proceeds received by Ben Franklin Bank of Illinois have been assumed to equal $3.8 million, $4.0 million, $4.1 million and $4.3 million at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively. For a discussion of the applicable capital requirements, see “Supervision and Regulation—Federal Banking Regulation—Capital Requirements.”

					Pro Forma at March 31, 2006, Based Upon the Sale of
	Historical at March 31, 2006				573,750 Shares at Minimum of Offering Range				675,000 Shares at Midpoint of Offering Range				776,250 Shares at Maximum of Offering Range				892,688 Shares at Adjusted Maximum of Offering Range(1)
	Amount		Percent of Assets(2)		Amount		Percent of Assets(2)		Amount		Percent of Assets(2)		Amount		Percent of Assets(2)		Amount		Percent of Assets(2)
	(Dollars in thousands)
GAAP capital	$	8,356	7.58	%	$	11,439	10.05	%	$	11,470	10.07	%	$	11,441	10.04	%	$	11,470	10.05	%
Tangible capital:
Tangible capital	$	8,333	7.56	%	$	11,416	10.03	%	$	11,447	10.04	%	$	11,418	10.01	%	$	11,447	10.03	%
Requirement		1,654	1.50			1,708	1.50			1,710	1.50			1,711	1.50			1,713	1.50
Excess	$	6,679	6.06	%	$	9,708	8.53	%	$	9,737	8.54	%	$	9,707	8.51	%	$	9,734	8.53	%
Core capital:
Core capital(3)	$	8,333	7.56	%	$	11,416	10.03	%	$	11,447	10.04	%	$	11,418	10.01	%	$	11,447	10.03	%
Requirement(4)		4,411	4.00			4,555	4.00			4,560	4.00			4,562	4.00			4,567	4.00
Excess	$	3,922	3.56	%	$	6,861	6.03	%	$	6,887	6.04	%	$	6,856	6.01	%	$	6,880	6.03	%
Risk-based capital:
Tier 1 risk-based	$	8,333	10.83	%	$	11,416	14.50	%	$	11,447	14.53	%	$	11,418	14.49	%	$	11,447	14.51	%
Requirement		3,077	4.00			3,149	4.00			3,151	4.00			3,153	4.00			3,155	4.00
Excess	$	5,256	6.83	%	$	8,267	10.50	%	$	8,296	10.53	%	$	8,265	10.49	%	$	8,292	10.51	%
Total risk-based capital(3)(5)	$	8,843	11.49	%	$	11,926	15.15	%	$	11,957	15.18	%	$	11,928	15.13	%	$	11,957	15.16	%
Requirement		6,155	8.00			6,298	8.00			6,303	8.00			6,305	8.00			6,311	8.00
Excess	$	2,688	3.49	%	$	5,628	7.15	%	$	5,654	7.18	%	$	5,623	7.13	%	$	5,646	7.16	%

(1) As adjusted to give effect to a 15% increase in the number of shares of common stock outstanding after the offering which could occur due to an increase in the maximum of the independent valuation as a result of regulatory considerations, demand for the shares of common stock, or changes in market conditions or general financial and economic conditions following the commencement of the offering.

(2) Tangible capital levels are shown as a percentage of tangible assets. Core capital levels are shown as a percentage of total adjusted assets. Risk-based capital levels are shown as a percentage of risk-weighted assets.

(3) Pro forma capital levels assume that Ben Franklin Financial, Inc. funds restricted stock awards under the stock-based incentive plan with purchases in the open market of 1.96% of the shares of common stock sold in the offering at a price equal to the price for which the shares of common stock are sold in the offering, and that the employee stock ownership plan purchases 3.92% of the shares of common stock issued in the reorganization (including shares issued to Ben Franklin Financial, MHC) with funds borrowed from Ben Franklin Financial, Inc. The Bank’s pro forma GAAP and regulatory capital has been reduced by the amount required to fund both of these plans. See “Management” for a discussion of the stock-based incentive plan and employee stock ownership plan.

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(4) The current core capital requirement for savings associations that receive the highest supervisory rating for safety and soundness is 3% of total adjusted assets and 4% to 5% of total adjusted assets for all other savings associations. See “Supervision and Regulation—Federal Banking Regulation — Standards for Safety and Soundness”—Capital Requirements.”

(5) Assumes net proceeds are invested in assets that carry a 50% risk-weighting.

CAPITALIZATION

The following table presents the historical consolidated capitalization of Ben Franklin Bank of Illinois at March 31, 2006, and the pro forma consolidated capitalization of Ben Franklin Financial, Inc. after giving effect to the offering, based upon the sale of the number of shares of common stock indicated in the table and the other assumptions set forth under “Pro Forma Data.”

	Pro Forma Consolidated Capitalization of Ben Franklin Financial, Inc. Based Upon the Sale for $10.00 Per Share of
	Ben Franklin Bank of Illinois Historical Capitalization			573,750 Shares at Minimum of Offering Range			675,000 Shares at Midpoint of Offering Range			776,250 Shares at Maximum of Offering Range			892,688 Shares at Adjusted Maximum of Offering Range(1)
	(Dollars In thousands)
Deposits(2)	$	99,240		$	99,240		$	99,240		$	99,240		$	99,240
Borrowings		2,000			2,000			2,000			2,000			2,000
Total interest-bearing liabilities	$	101,240		$	101,240		$	101,240		$	101,240		$	101,240
Stockholders’ equity:
Preferred Stock, $0.01 par value per share, 1,000,000 shares authorized; none to be issued	$	—		$	—		$	—		$	—		$	—
Common Stock, $0.01 par value per share: 20,000,000 shares authorized; shares to be issued as reflected		—			13			15			17			20
Additional paid-in capital(3)		—			5,030			6,040			7,050			8,212
Retained earnings		8,458			8,458			8,458			8,458			8,458
Accumulated comprehensive loss		(102	)		(102	)		(102	)		(102	)		(102	)
Less:
Assets retained by the MHC(4)		—			(100	)		(100	)		(100	)		(100	)
Common Stock acquired by employee stock ownership plan(5)		—			(500	)		(588	)		(676	)		(778	)
Common Stock acquired by the stock-based incentive plan(6)		—			(250	)		(294	)		(338	)		(389	)
Total stockholders’ equity	$	8,356		$	12,549		$	13,429		$	14,309		$	15,321
Pro forma shares outstanding:
Total shares outstanding					1,275,000			1,500,000			1,725,000			1,983,750
Shares issued to Ben Franklin Financial, MHC					701,250			825,000			948,750			1,091,062
Shares offered for sale					573,750			675,000			776,250			892,688
Total stockholders’ equity as a percentage of pro forma total assets		7.58	%		10.97	%		11.64	%		12.31	%		13.07	%

(1) As adjusted to give effect to a 15% increase in the number of shares of common stock outstanding after the offering which could occur due to an increase in the maximum of the independent valuation as a result of regulatory considerations, demand for the shares of common stock, or changes in market conditions or general financial and economic conditions following the commencement of the offering.

(2) Does not reflect withdrawals from deposit accounts for the purchase of shares of common stock in the offering. Such withdrawals would reduce pro forma deposits by the amount of such withdrawals.

(3) The sum of the par value and additional paid-in capital equals the net conversion proceeds. No effect has been given to the issuance of additional shares of common stock pursuant to stock options under the stock-based incentive plan that Ben Franklin Financial, Inc. expects to adopt. The plan of reorganization permits Ben Franklin Financial, Inc. to adopt one or more stock benefit plans, subject to stockholder approval, in an amount up to 25% of the number of shares of common stock held by persons other than Ben Franklin Financial, MHC.

(4) Pro forma stockholders’ equity reflects a $100,000 initial capitalization of Ben Franklin Financial, MHC.

(5) Assumes that 3.92% of the shares of common stock outstanding following the offering will be purchased by the employee stock ownership plan and that the funds used to acquire the employee stock ownership plan shares will be borrowed from Ben Franklin Financial, Inc. The common stock acquired by the employee stock ownership plan is reflected as a reduction of stockholders’ equity. Ben Franklin Bank of Illinois will provide the funds to repay the employee stock ownership plan loan. See “Management—Benefit Plans.”

(6) Assumes that subsequent to the offering, 1.96% of the shares of common stock issued in the reorganization and offering (including shares of common stock issued to Ben Franklin Financial, MHC) are purchased by Ben Franklin Financial, Inc. for stock awards under the stock-based incentive plan in the open market. The shares of common stock to be purchased by the stock-based incentive plan are reflected as a reduction of stockholders’ equity. See “Pro Forma Data” and “Management.” The plan of reorganization permits Ben Franklin Financial, Inc. to adopt one or more stock benefit plans that award stock or stock options, in an aggregate amount up to 25% of the number of shares of common stock held by persons other than Ben Franklin Financial, MHC. The stock-based incentive plan will not be implemented for at least six months after the reorganization and offering and until it has been approved by stockholders.

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PRO FORMA DATA

We cannot determine the actual net proceeds from the sale of the common stock until the offering is completed. However, we estimate that net proceeds will be between $5.0 million and $7.1 million, or $8.2 million if the offering range is increased by 15%, based upon the following assumptions:

• we will sell all shares of common stock in the subscription offering;

• expenses of the offering, other than fees and expenses to be paid to Keefe, Bruyette & Woods, Inc., are estimated to be $530,000;

• 86,000 shares of common stock will be purchased by our officers and directors, and their immediate families; and

• Keefe, Bruyette & Woods, Inc. will receive a fee equal to $100,000 plus expenses of $65,000.

We calculated the pro forma consolidated net income and stockholders’ equity of Ben Franklin Financial, Inc. for the year ended December 31, 2005 and the three months ended March 31, 2006 as if the shares of common stock had been sold at the beginning of those periods and the net proceeds had been invested at 4.82% for the three months ended March 31, 2006 and 4.38% for the year ended December 31, 2005, which assumes reinvestment of the net proceeds at a rate equal to the one year United States Treasury yield for those periods. We believe these rates more accurately reflect a pro forma reinvestment rate than the arithmetic average method, which assumes reinvestment of the net proceeds at a rate equal to the average of the yield on interest-earning assets and the cost of deposits for those periods. We assumed a tax rate of 34.0% for those periods. This results in an annualized after-tax yield of 3.18% for the three months ended March 31, 2006 and 2.89% for the year ended December 31, 2005.

We calculated historical and pro forma per share amounts by dividing historical and pro forma amounts of consolidated net income and stockholders’ equity by the indicated number of shares of common stock. We adjusted these figures to give effect to the shares of common stock purchased by the employee stock ownership plan. We computed per share amounts for each period as if the common stock was outstanding at the beginning of the periods, but we did not adjust per share historical or pro forma stockholders’ equity to reflect the earnings on the estimated net proceeds.

The pro forma data gives effect to the implementation of an employee stock ownership plan that will purchase an amount of shares equal to 3.92% of our outstanding shares, including shares held by Ben Franklin Financial, MHC, with a loan from Ben Franklin Financial, Inc., provided that if Ben Franklin Bank of Illinois’ tangible capital at the time of the stock issuance is less than 10% of its assets, then our employee stock ownership plan will purchase in the stock offering an amount of shares equal to only 3.43% of our outstanding shares. The loan will be repaid in substantially equal principal payments over a period of 15 years.

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The pro forma tables give effect to the implementation of a stock-based incentive plan. Subject to the receipt of stockholder approvals, we have assumed that the stock-based incentive plan will acquire an amount of common stock equal to 1.96% of our outstanding shares of common stock, including shares issued to Ben Franklin Financial, MHC, at the same price for which they were sold in the offering. We assume that shares of common stock are granted under the plan in awards that vest over a five-year period. The stock issuance plan provides that we may grant awards of restricted stock or options under one or more stock benefit plans in an aggregate amount up to 25% of the number of shares of common stock held by persons other than Ben Franklin Financial, MHC. However, any awards of restricted stock in excess of 1.96% of the outstanding shares, including shares issued to Ben Franklin Financial, MHC, currently would require prior approval of the Office of Thrift Supervision. In addition, if Ben Franklin Bank of Illinois’ tangible capital at the time of the adoption of the stock-based benefit plan is less than 10% of its assets, then the amount of restricted stock awards is not expected to exceed 1.47% of our outstanding shares.

The pro forma tables give effect to the implementation of a stock-based incentive plan. Subject to receipt of stockholder approval, we have assumed that the stock-based incentive plan will grant options to acquire common stock equal to 4.90% of our outstanding shares of common stock (including shares of common stock issued to Ben Franklin Financial, MHC). In preparing the tables below, we also assumed that stockholder approval was obtained, that the exercise price of the stock options and the market price of the stock at the date of grant were $10.00 per share and that the stock options had a term of ten years and vested over five years. We applied the Black-Scholes option pricing model to estimate a grant-date fair value of $3.92 for each option. In addition to the terms of the options described above, the Black-Scholes option pricing model incorporated an estimated volatility rate of 10.14% for the common stock based on an index of publicly traded mutual holding companies, a dividend yield of zero, an expected option life of 10 years and a risk free interest rate of 4.86%. The plan of reorganization provides that we may grant awards of stock options under one or more stock benefit plans in an amount up to 25% of the number of shares of common stock held by persons other than Ben Franklin Financial, MHC. However, any awards of options in excess of 4.90% of our outstanding shares, including shares issued to Ben Franklin Financial, MHC, would require prior approval of the Office of Thrift Supervision.

As discussed under “How We Intend to Use the Proceeds from the Offering,” Ben Franklin Financial, Inc. intends to retain not more than $3.2 million (some or all of which will be used to make a loan to the employee stock ownership plan) and to contribute the remaining net proceeds from the offering to Ben Franklin Bank of Illinois. Ben Franklin Financial, Inc. will use a portion of the proceeds it retains for the purpose of making a loan to the employee stock ownership plan, and retain the rest of the proceeds for future use.

The pro forma tables do not give effect to:

• withdrawals from deposit accounts for the purpose of purchasing shares of common stock in the offering;

• Ben Franklin Financial, Inc.’s results of operations after the offering; or

39

• changes in the market price of the common stock after the offering.

The following pro forma information may not represent the financial effects of the offering at the date on which the offering actually occurs and you should not use the tables to indicate future results of operations. Pro forma stockholders’ equity represents the difference between the stated amount of assets and liabilities of Ben Franklin Financial, Inc., computed in accordance with generally accepted accounting principles. We did not increase or decrease stockholders’ equity to reflect the difference between the carrying value of loans and other assets and their market value. Pro forma stockholders’ equity is not intended to represent the fair market value of the common stock, and may be different than the amounts that would be available for distribution to stockholders if we liquidated. Pro forma stockholders’ equity does not give effect to the impact of intangibles and tax bad debt reserves in the event we are liquidated.

40

	At or For the Three Months Ended March 31, 2006 Based Upon the Sale at $10.00 Per Share of
	573,750 Shares Minimum of Estimated Offering Range			675,000 Shares Midpoint of Estimated Offering Range			776,250 Shares Maximum of Estimated Offering Range			892,688 Shares 15% Above Maximum of Estimated Offering Range(1)
	(Dollars in thousands, except per share amounts)
Gross proceeds	$	5,738		$	6,750		$	7,763		$	8,927
Expenses		(695	)		(695	)		(695	)		(695	)
Estimated net proceeds		5,043			6,055			7,068			8,232
Common stock acquired by employee stock ownership plan(2)		(500	)		(588	)		(676	)		(778	)
Common stock acquired by stock-based incentive plan(4)		(250	)		(294	)		(338	)		(389	)
Ben Franklin Financial, MHC capitalization		(100	)		(100	)		(100	)		(100	)
Estimated net proceeds after adjustment for stock benefit plans and capitalization to Ben Franklin Financial, MHC	$	4,193		$	5,073		$	5,954		$	6,965
For the three months ended March 31, 2006
Net income:
Historical	$	48		$	48		$	48		$	48
Pro forma adjustments:
Income on adjusted net proceeds		33			40			47			56
Employee stock ownership plan(2)		(6	)		(7	)		(8	)		(9	)
Options granted under stock-based incentive plan(3)		(11	)		(13	)		(15	)		(18	)
Shares granted under stock-based incentive plan(4)		(8	)		(10	)		(11	)		(13	)
Pro forma net income	$	56		$	58		$	61		$	64
Net income per share:
Historical	$	0.04		$	0.03		$	0.03		$	0.03
Pro forma adjustments:
Income on net proceeds		0.03			0.03			0.03			0.03
Employee stock ownership plan(2)		0.00			0.00			0.00			0.00
Options granted under stock-based incentive plan(3)		(0.01	)		(0.01	)		(0.01	)		(0.01	)
Shares granted under stock-based incentive plan(4)		(0.01	)		(0.01	)		(0.01	)		(0.01	)
Pro forma net income per share(2)(3)(4)	$	0.05		$	0.04		$	0.04		$	0.04
Offering price to pro forma net income per share		50.00	x		62.50	x		62.50	x		62.50	x
Shares considered outstanding in calculating pro forma net income per share		1,225,853			1,442,180			1,658,507			1,907,283
At March 31, 2006
Stockholders’ equity:
Historical	$	8,356		$	8,356		$	8,356		$	8,356
Estimated net proceeds		5,043			6,055			7,068			8,232
Less: Capitalization of Ben Franklin Financial, MHC		(100	)		(100	)		(100	)		(100	)
Common stock acquired by employee stock ownership plan (2)		(500	)		(588	)		(676	)		(778	)
Common stock acquired by stock-based incentive plan (4)		(250	)		(294	)		(338	)		(389	)
Pro forma stockholders’ equity (5)	$	12,549		$	13,429		$	14,310		$	15,321
Stockholders’ equity per share:
Historical	$	6.55		$	5.57		$	4.84		$	4.21
Estimated net proceeds		3.95			4.04			4.10			4.15
Less: Capitalization of Ben Franklin Financial, MHC		(0.08	)		(0.07	)		(0.06	)		(0.05	)
Common stock acquired by employee stock ownership plan (2)		(0.39	)		(0.39	)		(0.39	)		(0.39	)
Common stock acquired by stock-based incentive plan (4)		(0.20	)		(0.20	)		(0.20	)		(0.20	)
Pro forma stockholders’ equity per share (4) (5)	$	9.83		$	8.95		$	8.29		$	7.72
Offering price as percentage of pro forma stockholders’ equity per share		101.73	%		111.73	%		120.63	%		129.53	%
Shares considered outstanding in calculating offering price as a percentage of pro forma stockholders’ equity per share		1,275,000			1,500,000			1,725,000			1,983,750
Minority ownership		45.00	%		45.00	%		45.00	%		45.00	%

(Footnotes on following page)

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(1) As adjusted to give effect to a 15% increase in the number of shares outstanding after the offering which could occur due to an increase in the maximum of the independent valuation as a result of regulatory considerations, demand for the shares, or changes in market conditions or general financial and economic conditions following the commencement of the offering.

(2) It is assumed that 3.92% of the shares outstanding following the stock offering will be purchased by the employee stock ownership plan. For purposes of this table, the funds used to acquire such shares are assumed to have been borrowed by the employee stock ownership plan from Ben Franklin Financial, Inc. The amount to be borrowed is reflected as a reduction of stockholders’ equity. Ben Franklin Bank of Illinois intends to make annual contributions to the employee stock ownership plan in an amount at least equal to the principal and interest requirement of the debt. Ben Franklin Bank of Illinois’s total annual payment of the employee stock ownership plan debt is based upon 15 equal annual installments of principal and interest. The pro forma net earnings information makes the following assumptions: (i) Ben Franklin Bank of Illinois’s contribution to the employee stock ownership plan is equivalent to the debt service requirement for the period presented and was made at the end of the period; (ii) the employee stock ownership plan acquires 49,980, 58,800, 67,620 and 77,763 shares at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively; (iii) 833, 980, 1,127 and 1,296 shares at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively, (based on a fifteen year loan term) were committed to be released during the quarter ended March 31, 2006, at an average fair value equal to the price for which the shares are sold in the stock offering in accordance with Statement of Position 93-6; and (iv) only the employee stock ownership plan shares committed to be released were considered outstanding for purposes of the net earnings per share calculations.

(3) Gives effect to the stock-based incentive plan expected to be adopted following the stock offering. We have assumed that options will be granted to acquire common stock equal to 4.90% of the shares of common stock issued in the reorganization and offering (including shares of common stock issued to Ben Franklin Financial, MHC). In calculating the pro forma effect of the stock options, it is assumed that the exercise price of the stock options and the trading price of the stock at the date of grant were $10.00 per share, the estimated grant-date fair value pursuant to the application of the Black-Scholes option pricing model was $3.92 for each option, the aggregate grant-date fair value of the stock options was amortized to expense on a straight-line basis over a five year vesting period of the options, and that 25% of the amortization expense (or the assumed portion relating to options granted to directors) resulted in a tax benefit using an assumed tax rate of 34.0%. Under the above assumptions, the adoption of the stock-based incentive plan will result in no additional shares under the treasury stock method for purposes of calculating earnings per share. There can be no assurance that the actual exercise price of the stock options will be equal to the $10.00 price per share. If a portion of the shares issued to satisfy the exercise of options under the stock-based incentive plan are obtained from the issuance of authorized but unissued shares, our net income per share and stockholders’ equity per share will decrease. This will also have a dilutive effect of up to 4.7% on the ownership interest of persons who purchase common stock in the offering.

(4) Gives effect to the stock-based incentive plan expected to be adopted following the stock offering. We have assumed that this plan acquires a number of shares of common stock equal to 1.96% of the shares issued in the reorganization and offering (including shares issued to Ben Franklin Financial, MHC) either through open market purchases or from authorized but unissued shares of common stock or treasury stock of Ben Franklin Financial, Inc., if any. Funds used by the stock-based incentive plan to purchase the shares will be contributed to the plan by Ben Franklin Financial, Inc. In calculating the pro forma effect of the stock-based incentive plan, it is assumed that the shares were acquired by the plan in open market purchases at the beginning of the period presented for a purchase price equal to the price for which the shares are sold in the stock offering, and that 20% of the amount contributed was an amortized expense (based upon a five-year vesting period) during the three months ended March 31, 2006. There can be no assurance that the actual purchase price of the shares granted under the stock-based incentive plan will be equal to the subscription price of $10.00 per share. If shares are acquired from the issuance of authorized but unissued shares of common stock or from treasury shares of Ben Franklin Financial, Inc., there would be a dilutive effect of up to 1.9% on the ownership interest of persons who purchase common stock in the offering. The above table shows pro forma net income per share and pro forma stockholders’ equity per share, assuming all the shares to fund the stock-based incentive plan are obtained from authorized but unissued shares.

(5) The retained earnings of Ben Franklin Bank of Illinois will continue to be substantially restricted after the stock offering. See “Supervision and Regulation—Federal Banking Regulation.”

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	At or For the Year Ended December 31, 2005 Based Upon the Sale at $10.00 Per Share of
	573,750 Shares Minimum of Estimated Offering Range			675,000 Shares Midpoint of Estimated Offering Range			776,250 Shares Maximum of Estimated Offering Range			892,688 Shares 15% Above Maximum of Estimated Offering Range(1)
	(Dollars in thousands, except per share amounts)
Gross proceeds	$	5,738		$	6,750		$	7,763		$	8,927
Expenses		695			695			695			695
Estimated net proceeds		5,043			6,055			7,068			8,232
Common stock acquired by employee stock ownership plan(2)		(500	)		(588	)		(676	)		(778	)
Common stock acquired by stock-based incentive plan(4)		(250	)		(294	)		(338	)		(389	)
Ben Franklin Financial, MHC capitalization		(100	)		(100	)		(100	)		(100	)
Estimated net proceeds after adjustment for stock benefit plans and capitalization to Ben Franklin Financial, MHC	$	4,193		$	5,073		$	5,954		$	6,965
For the year ended December 31, 2005
Net income:
Historical	$	388		$	388		$	388		$	388
Pro forma adjustments:
Income on adjusted net proceeds		121			147			172			201
Employee stock ownership plan(2)		(22	)		(26	)		(30	)		(34	)
Options granted under stock-based incentive plan(3)		(45	)		(53	)		(61	)		(70	)
Shares granted under stock-based incentive plan(4)		(33	)		(39	)		(45	)		(51	)
Pro forma net income	$	409		$	417		$	424		$	434
Net income per share:
Historical	$	0.32		$	0.27		$	0.23		$	0.20
Pro forma adjustments:
Income on net proceeds		0.10			0.10			0.10			0.11
Employee stock ownership plan(2)		(0.02	)		(0.02	)		(0.02	)		(0.02	)
Options granted under stock-based incentive plan(3)		(0.04	)		(0.04	)		(0.04	)		(0.04	)
Shares granted under stock-based incentive plan(4)		(0.03	)		(0.03	)		(0.03	)		(0.03	)
Pro forma net income per share(2)(3)(4)	$	0.33		$	0.28		$	0.24		$	0.22
Offering price to pro forma net income per share		30.30	x		35.71	x		41.67	x		45.45	x
Shares considered outstanding in calculating pro forma net income per share		1,228,352			1,445,120			1,661,888			1,911,171
At December 31, 2005
Stockholders’ equity:
Historical	$	8,334		$	8,334		$	8,334		$	8,334
Estimated net proceeds		5,043			6,055			7,068			8,232
Less: Capitalization of Ben Franklin Financial, MHC		(100	)		(100	)		(100	)		(100	)
Common stock acquired by employee stock ownership plan(2)		(500	)		(588	)		(676	)		(778	)
Common stock acquired by stock-based incentive plan(4)		(250	)		(294	)		(338	)		(389	)
Pro forma stockholders’ equity(5)	$	12,527		$	13,407		$	14,288		$	15,299
Stockholders’ equity per share:
Historical	$	6.54		$	5.56		$	4.83		$	4.20
Estimated net proceeds		3.95			4.04			4.10			4.15
Less: Capitalization of Ben Franklin Financial, MHC		(0.08	)		(0.07	)		(0.06	)		(0.05	)
Common stock acquired by employee stock ownership plan(2)		(0.39	)		(0.39	)		(0.39	)		(0.39	)
Common stock acquired by stock-based incentive plan(4)		(0.20	)		(0.20	)		(0.20	)		(0.20	)
Pro forma stockholders’ equity per share(4)(5)	$	9.82		$	8.94		$	8.28		$	7.71
Offering price as percentage of pro forma stockholders’ equity per share		101.73	%		111.73	%		120.63	%		129.53	%
Shares considered outstanding in calculating offering price as a percentage of pro forma stockholders’ equity per share		1,275,000			1,500,000			1,725,000			1,983,750
Minority ownership		45.00	%		45.00	%		45.00	%		45.00	%

(Footnotes on following page)

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(1) As adjusted to give effect to a 15% increase in the number of shares outstanding after the offering which could occur due to an increase in the maximum of the independent valuation as a result of regulatory considerations, demand for the shares, or changes in market conditions or general financial and economic conditions following the commencement of the offering.

(2) It is assumed that 3.92% of the shares outstanding following the stock offering will be purchased by the employee stock ownership plan. For purposes of this table, the funds used to acquire such shares are assumed to have been borrowed by the employee stock ownership plan from Ben Franklin Financial, Inc. The amount to be borrowed is reflected as a reduction of stockholders’ equity. Ben Franklin Bank of Illinois intends to make annual contributions to the employee stock ownership plan in an amount at least equal to the principal and interest requirement of the debt. Ben Franklin Bank of Illinois’s total annual payment of the employee stock ownership plan debt is based upon 15 equal annual installments of principal and interest. The pro forma net earnings information makes the following assumptions: (i) Ben Franklin Bank of Illinois’s contribution to the employee stock ownership plan is equivalent to the debt service requirement for the period presented and was made at the end of the period; (ii) the employee stock ownership plan acquires 49,980, 58,800, 67,620 and 77,763 shares at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively; (iii) 3,332, 3,920, 4,508 and 5,184 shares at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively, (based on a fifteen year loan term) were committed to be released during the year ended December 31, 2005, at an average fair value equal to the price for which the shares are sold in the stock offering in accordance with Statement of Position 93-6; and (iv) only the employee stock ownership plan shares committed to be released were considered outstanding for purposes of the net earnings per share calculations.

(3) Gives effect to the stock-based incentive plan expected to be adopted following the stock offering. We have assumed that options will be granted to acquire common stock equal to 4.90% of the shares of common stock issued in the reorganization and offering (including shares of common stock issued to Ben Franklin Financial, MHC). In calculating the pro forma effect of the stock-based incentive plan, it is assumed that the exercise price of the stock options and the trading price of the stock at the date of grant were $10.00 per share, the estimated grant-date fair value pursuant to the application of the Black-Scholes option pricing model was $3.92 for each option, the aggregate grant-date fair value of the stock options was amortized to expense on a straight-line basis over a five year vesting period of the options, and that 25% of the amortization expense (or the assumed portion relating to options granted to directors) resulted in a tax benefit using an assumed tax rate of 34.0%. Under the above assumptions, the adoption of the stock-based incentive plan will result in no additional shares under the treasury stock method for purposes of calculating earnings per share. There can be no assurance that the actual exercise price of the stock options will be equal to the $10.00 price per share. If a portion of the shares issued to satisfy the exercise of options under the stock-based incentive plan are obtained from the issuance of authorized but unissued shares, our net income per share and stockholders’ equity per share will decrease. This will also have a dilutive effect of up to 4.7% on the ownership interest of persons who purchase common stock in the offering.

(4) Gives effect to the stock-based incentive plan expected to be adopted following the stock offering. We have assumed that this plan acquires a number of shares of common stock equal to 1.96% of the shares issued in the reorganization and offering (including shares issued to Ben Franklin Financial, MHC) either through open market purchases or from authorized but unissued shares of common stock or treasury stock of Ben Franklin Financial, Inc., if any. Funds used by the stock-based incentive plan to purchase the shares will be contributed to the plan by Ben Franklin Financial, Inc. In calculating the pro forma effect of the stock-based incentive plan, it is assumed that the shares were acquired by the plan in open market purchases at the beginning of the period presented for a purchase price equal to the price for which the shares are sold in the stock offering, and that 20% of the amount contributed was an amortized expense (based upon a five-year vesting period) during the year ended December 31, 2005. There can be no assurance that the actual purchase price of the shares granted under the stock-based incentive plan will be equal to the subscription price of $10.00 per share. If shares are acquired from the issuance of authorized but unissued shares of common stock or from treasury shares of Ben Franklin Financial, Inc., there would be a dilutive effect of up to 1.9% on the ownership interest of persons who purchase common stock in the offering. The above table shows pro forma net income per share and pro forma stockholders’ equity per share, assuming all the shares to fund the stock-based incentive plan are obtained from authorized but unissued shares.

(5) The retained earnings of Ben Franklin Bank of Illinois will continue to be substantially restricted after the stock offering. See “Supervision and Regulation—Federal Banking Regulation.”

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS OF BEN FRANKLIN BANK OF ILLINOIS

This section is intended to help potential investors understand the financial performance of Ben Franklin Bank of Illinois through a discussion of the factors affecting our financial condition at March 31, 2006 and December 31, 2005 and our results of operations for the three months ended March 31, 2006 and 2005 and for the years ended December 31, 2005 and 2004. This section should be read in conjunction with the financial statements and notes to the financial statements that appear elsewhere in this prospectus.

Overview

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, consisting primarily of loans, investment securities (including mortgage-backed and other securities) and other interest-earning assets primarily interest-earning deposits, and the interest paid on our interest-bearing liabilities, consisting primarily of savings and transaction accounts, certificates of deposit, and Federal Home Loan Bank of Chicago advances. Our results of operations also are affected by our provisions for loan losses, non-interest income and non-interest expense. Non-interest income currently consists primarily of deposit and loan origination services for other financial institutions, gains and losses on the sale of loans and securities and miscellaneous other income. Non-interest expense currently consists primarily of compensation and employee benefits, occupancy and equipment expenses, data processing, professional fees, and other operating expenses. Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Anticipated Increase in Non-Interest Expense Due to Stock Benefit Plans

Following the completion of the reorganization and offering, we anticipate that our non-interest expense will increase as a result of increased compensation expenses associated with the implementation of our employee stock ownership plan and the adoption of the stock-based incentive plan if approved by our stockholders.

Assuming that the adjusted maximum number of shares is sold in the offering:

• the employee stock ownership plan will acquire 67,620 shares of common stock with a $676,200 loan that is expected to be repaid over 15 years, resulting in an annual expense (after-tax) of approximately $30,000 (assuming that the common stock maintains a value of $10.00 per share; the actual expense would be higher if the stock price is higher);

• the stock-based incentive plan would grant options to purchase shares equal to 4.90% of the total outstanding shares, or 84,525 shares to eligible participants, which would result in compensation expense over the vesting period of the options. Assuming the market price of the common stock is $10.00 per share; the options are granted with an exercise price of $10.00 per share; the dividend yield

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on the stock is zero; the expected option life is 10 years; the risk free interest rate is 4.86% (based on the 10-year Treasury rate) and the volatility rate on the common stock is 10.14% (based on an index of publicly traded mutual holding company institutions), the estimated grant-date fair value of the options utilizing the Black-Scholes option pricing model is $3.92 per option granted. Assuming this value is amortized over a five-year vesting period, the corresponding annual expense (after-tax) associated with the stock options would be approximately $61,000; and

• the stock-based incentive plan would award a number of restricted shares of common stock equal to 1.96% of the outstanding shares, 33,810 shares, to eligible participants, which would be expensed as the awards vest. Assuming that all shares awarded under the stock-based incentive plan have a value of $10.00 per share, and that the awards vest over a five-year period, the corresponding annual expense (after-tax) associated with restricted shares awarded under the stock-based incentive plan would be approximately $45,000.

These estimates are subject to change. The actual expense that will be recorded for the employee stock ownership plan will be determined by the market value of the shares of common stock as they are released to employees over the term of the loan, and whether the loan is repaid faster than its contractual term. Accordingly, increases in the stock price above $10.00 per share will increase the total employee stock ownership plan expense, and any accelerated repayment of the loan will increase the annual employee stock ownership plan expense. Further, the actual expense of the stock awards issued under the stock-based incentive plan will be determined by the fair market value of the stock on the grant date, which might be greater than $10.00 per share. The actual expense of the stock options issued under the stock-based incentive plan will be determined by the grant-date fair value of the options which will depend on a number of factors, including the valuation assumptions used in the Black-Scholes option pricing model.

Critical Accounting Policies

We consider accounting policies that require management to exercise significant judgment or discretion or make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income, to be critical accounting policies. We consider the following to be our critical accounting policies:

Allowance for Loan Losses. Our allowance for loan losses is the estimated amount considered necessary to reflect probable incurred credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses which is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this policy as one of the most critical for Ben Franklin Bank of Illinois. The methodology for determining the allowance for loan losses is considered a critical accounting policy by management due to the high degree of judgment involved, the subjectivity of the assumptions utilized and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses.

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As a substantial amount of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans and discounted cash flow valuations of properties are critical in determining the amount of the allowance required for specific loans. Assumptions for appraisals and discounted cash flow valuations are instrumental in determining the value of properties. Overly optimistic assumptions or negative changes to assumptions could significantly impact the valuation of a property securing a loan and the related allowance determined. The assumptions supporting such appraisals and discounted cash flow valuations are carefully reviewed by management to determine that the resulting values reasonably reflect amounts realizable on the related loans.

Management performs a quarterly evaluation of the allowance for loan losses. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the value of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision based on changes in economic and real estate market conditions.

The analysis of the allowance for loan losses has two components: specific and general allocations. Specific allocations are made for loans that are determined to be impaired. Impairment loss is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. The general allocation is determined by segregating special mention and classified loans from the remaining loans, and then categorizing each group by type of loan. Loans within each type exhibit common characteristics including terms, collateral type, and other risk characteristics. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis establishes factors that are applied to the loan groups to determine the amount of the general allocations. Actual loan losses may be significantly more than the allowance for loan losses we have established which could have a material negative effect on our financial results.

Deferred Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. If current available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. These judgments and estimates are reviewed on a continual basis as regulatory and business factors change.

Business Strategy

During the period from 1998 until early 2003, Ben Franklin Bank of Illinois experienced poor operating results and other operating issues resulting, in part, from a Title I home improvement loan purchase program which was terminated in 1998. As a result of these issues, we restructured our Board and management. In particular, since 2001, we have replaced four of our six directors and hired a new chief executive officer, a new chief financial officer, a new chief lending officer and a new chief commercial lending officer.

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Since the date of our management and Board restructuring, we have focused primarily on improving the execution of our community oriented retail banking strategy. Highlights of our current business strategy include the following:

• Focus on Residential Lending. We have been and will continue to be primarily a one- to four-family residential lender. However, in order to reduce our interest rate risk, we are attempting to increase our portfolio of adjustable-rate one- to four-family residential loans and floating-rate home equity lines-of-credit and sell most of our long-term, fixed-rate, one- to four-family residential loans.

• Increase Multi-Family and Commercial Real Estate Lending. In order to increase the yield of, and reduce the term to repricing of our loan portfolio, we are increasing our originations and, to a lesser extent, purchases of multi-family and commercial real estate loans.

• Implement Controlled Growth Strategy. Management believes that in order to offset the increased technology, compliance and other costs that are necessary to compete in today’s financial services market, we must increase our asset base. However, during recent years, such growth has been constrained due to our limited capital base and limited size of our lending staff. However, we have recently increased the size of our lending department and, in the future, intend to implement a controlled growth strategy, subject to market conditions and the maintenance of a reasonable level of profitability. In particular, we may consider acquiring or opening a new branch office in one of the faster growing areas in the northern or western suburbs of the Chicago area or perhaps an acquisition of another institution, although we have no specific plans or arrangements with respect to any such transaction at this time.

• Manage Interest Rate Risk. We believe that it is difficult to achieve satisfactory levels of profitability in the financial services industry without assuming some level of interest rate risk. However, we believe that such risk must be carefully managed to avoid undue exposure to changes in interest rates. Accordingly, we seek to manage to the extent practical our interest rate risk.

• Maintain Strong Asset Quality. We seek to maintain strong asset quality while following conservative underwriting criteria. We intend to continue to adhere to such standards even as we increase our non-residential real estate lending.

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Comparison of Financial Condition at March 31, 2006 and December 31, 2005

Assets. Total assets at March 31, 2006 were $110.2 million compared to $107.8 million at December 31, 2005, an increase of $2.4 million or 2.2%. This increase reflects a $1.1 million increase in the loan portfolio balance and a $1.8 million increase in cash and cash equivalents.

The first three months of 2006 showed growth in our construction loan portfolio which increased $1.0 million or 20.7% to $6.3 million at March 31, 2006 compared to $5.3 million at December 31, 2005. Similarly, our multi-family real estate, commercial real estate, and land loans increased by $902,000 or 3.2% to $29.3 million at March 31, 2006 compared to $28.4 million at December 31, 2005. These increases reflect our strategy of increasing our originations of loans with shorter durations and/or higher yields than traditional one- to four-family residential loans. These increases were offset by a net decrease in all remaining loans of $524,000 during the three months ended March 31, 2006 due to regular payments and payoffs and slower residential loan origination activity during the period. We expect to continue to increase the percentage of our real estate loan portfolio consisting of loans other than long-term fixed rate one- to four-family residential loans.

Securities balances decreased $500,000 for the three months ended March 31, 2006 due to payments on mortgage-backed securities. The increase in other interest-earning assets reflects our decision to moderately increase liquidity in a rising interest rate environment pending reinvestment at higher rates.

Liabilities. Deposit balances increased during the three months ended March 31, 2006 by $3.0 million or 3.2% to $99.2 million at March 31, 2006 from $96.2 million at December 31, 2005. The increase was primarily due to a $3.7 million or 6.1% increase in certificates of deposit offset by a decrease in non-certificate deposit accounts of $575,000. The increase in certificates of deposit was due to promotional rates offered during the first quarter of 2006 to retain $16.4 million of maturing deposits, which resulted in additional funds deposited. The decrease in non-certificate deposits consisted of a decline in savings and demand accounts of $381,000 and $627,000, respectively, offset by an increase in money market accounts of $433,000. The decrease in non-certificate deposits reflects management’s decision to conservatively price our non-time deposit accounts as well as the increased attractiveness to customers of competitively priced certificates of deposit in a higher interest rate environment.

Equity. Total equity at March 31, 2006 increased $22,000 or 0.3% to $8.4 million from $8.3 million at December 31, 2005. The increase was the result of net income of $48,000 partially offset by an increase in the unrealized loss on securities available-for-sale of $26,000.

Comparison of Financial Condition at December 31, 2005 and December 31, 2004

Assets. Total assets at December 31, 2005 were $107.8 million compared to $114.2 million at December 31, 2004. Total loans at December 31, 2005 declined $273,000 to $90.0 million from $90.3 million at December 31, 2004. During 2005, we continued our strategy of expanding our multi-family real estate, commercial real estate and land lending to increase yields and reduce asset duration. Our multi-family real estate, commercial real estate, and land loans increased $6.9 million to $28.4 million at December 31, 2005, and represented 30.7% of the loan

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portfolio, compared to $21.5 million and 23.2% of the loan portfolio at December 31, 2004. This increase was offset by decreases in our one- to four-family real estate loans of $4.6 million, home equity lines-of-credit of $1.1 million, and construction loans of $1.5 million due to normal amortization and payoffs and slower origination activity during a period of rising interest rates.

Securities balances declined during 2005 by $2.7 million to $7.2 million from $9.9 million in 2004 primarily due to payments on mortgage-backed securities. Cash and cash equivalents increased $1.1 million to $7.0 million at December 31, 2005 from $5.9 million at December 31, 2004. This increase reflects our decision to increase our liquidity moderately in a rising interest rate environment pending reinvestment at higher rates.

Liabilities. Deposit balances decreased during 2005 by $2.1 million or 2.1% to $96.2 million at December 31, 2005 compared to $98.3 million at December 31, 2004. Non-certificate deposits decreased $6.8 million during 2005 with $5.0 million of that decrease from money market accounts as management withheld rate increases paid on these deposits and many customers shifted their liquid funds to certificates of deposit, which became more attractive in a higher interest rate environment. Certificates of deposit increased by $4.7 million as we priced these deposits competitively in a rising interest rate environment.

We reduced our borrowings at the Federal Home Loan Bank of Chicago by $5.0 million to $2.0 million at December 31, 2005 from $7.0 million at December 31, 2004 as part of management’s liquidity and capital strategy. Management determined that we could fund our operations in the current interest rate environment more effectively using deposits.

Equity. Total equity at December 31, 2005 increased $323,000 or 4.0% to $8.3 million from $8.0 million at December 31, 2004. The increase was the result of net income of $388,000 which was partially offset by an increase in the unrealized loss on securities available-for-sale of $65,000.

Comparison of Operating Results for the Three Months Ended March 31, 2006 and March 31, 2005

General. Net income decreased 58.6% to $48,000 for the three months ended March 31, 2006 compared to $116,000 for the three months ended March 31, 2005. The primary reasons for the decline were the higher interest rates paid on deposits during a period of rising short-term interest rates, significant certificates of deposit maturities and lower dividend income from Federal Home Loan Bank of Chicago stock due to redemptions and a lower dividend rate. These factors contributed to an increase in yield of 37 basis points on interest-earning assets offset by a 74 basis point increase in yield on interest-bearing liabilities.

Interest Income. Interest income increased $47,000 for the three months ended March 31, 2006 or 3.3% to $1.5 million from $1.4 million for the three months ended March 31, 2005. Interest income from loans increased $169,000 or 14.5% to $1.3 million for the three months ended March 31, 2006 from $1.2 million for the three months ended March 31, 2005 due primarily to an increase in yield. The average yield on loans for the three months ended March 31, 2006 increased to 5.98% compared to 5.27% for the three months ended March 31, 2005 due primarily to an increase in market rates and a change in the mix of our loan portfolio. The average loan balance increased $915,000 to $90.3 million for the three months ended March 31, 2006 compared to $89.3 million for the three months ended March 31, 2005.

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The average balance of our multi-family real estate, commercial real estate and land loans increased $7.6 million or 36.2% to $28.7 million. Average yield on such loans was 6.66% for the three months ended March 31, 2006 compared to 6.17% for the three months ended March 31, 2005. These factors resulted in an increase of interest income of $150,000. This was offset by a decrease in the average balance of the other loans of $6.7 million to $61.6 million. Average yield on such loans was 5.66% at March 31, 2006 compared to 4.99% at March 31, 2005, resulting in an increase of interest income of $19,000.

Interest income from securities decreased $157,000 or 65.1% to 84,000 for the three months ended March 31, 2006 from $241,000 for three months ended March 31, 2005. Dividend income from Federal Home Loan Bank of Chicago stock declined $137,000 or 89.8% due to a reduction in volume and a reduction in the dividend rate paid from 5.50% for the three months ended March 31, 2005 to 3.00% for the three months ended March 31, 2006. The average balance of our securities decreased $5.2 million to $9.2 million for the three months ended March 31, 2006 compared to $14.4 million for three months ended March 31, 2005 including the average balance of Federal Home Loan Bank of Chicago stock which decreased $2.7 million or 56.6%. This reduction reflects our disposition of Federal Home Loan Bank of Chicago stock not needed to support borrowings as well as pay down our mortgage-backed securities. The yield on securities for the three months ended March 31, 2006 was 3.66% compared to 6.72% for the three months ended March 31, 2005 due primarily to the lower dividend rate on Federal Home Loan Bank of Chicago stock.

Interest from other interest-earning assets for the three months ended March 31, 2006 increased $35,000 or 109.4% to $67,000 from $32,000 for the three months ended March 31, 2005 due to higher balances and higher interest rates. The average balance for the three months ended March 31, 2006 was $6.1 million with an average yield of 4.40%. For the three months ended March 31, 2005, the average balance was $5.5 million with an average yield of 2.35%. This increase in balance reflects our decision to moderately increase liquidity in a rising interest rate environment pending reinvestment at higher rates.

Interest Expense. Interest expense for the three months ended March 31, 2006 was $712,000, an increase of $154,000 or 27.6% from $558,000 for the three months ended March 31, 2005. Interest expense on deposit accounts increased $206,000 or 42.7% to $689,000 from $483,000 for the prior year period due primarily to an increase in average cost to 2.94% for the three months ended March 31, 2006 compared to 2.03% for the prior year period. This increase was due to an increase in general interest rates, a highly competitive market for certificates of deposit combined with a higher number of our certificates of deposit maturing during the first quarter of 2006. The average balance of deposit accounts was $95.1 million for the three months ended March 31, 2006 compared to $96.6 million for the three months ended March 31, 2005. For the three months ended March 31, 2006, average certificates of deposit increased $5.3 million to $61.6 million from $56.3 million for the three months ended March 31, 2005 and average non-certificates of deposit decreased $6.8 million to $33.5 million for the three months ended March 31, 2006 from $40.3 million for the three months ended March 31, 2005. The changes in deposit balances were the result of our decision to withhold rate increases on non-time deposit accounts and customer preference for higher yielding instruments in a higher interest rate environment.

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Interest expense on Federal Home Loan Bank of Chicago advances was $23,000 for the three months ended March 31, 2006, a decrease of $52,000 or 69.3% from $75,000 from the prior year period. The average balance of advances outstanding during the three months ended March 31, 2006 was $2.0 million compared to $5.1 million for the three months ended March 31, 2005. During the first quarter of 2005, we repaid $5.0 million of our Federal Home Loan Bank of Chicago advances and extended the remaining $2.0 million advance for five years. The average cost for advances decreased to 4.64% for the three months ended March 31, 2006 from 6.00% for the three months ended March 31, 2005.

Net Interest Income. Net interest income for the three months ended March 31, 2006 was $777,000 compared to $884,000 for the prior year period, a decrease of $107,000 or 12.1%. The average yield on interest-earning assets for the three months ended March 31, 2006 was 5.68% compared to 5.31% for the three months ended March 31, 2005. The average cost of interest-bearing liabilities increased to 2.97% for the three months ended March 31, 2006 from 2.23% for the three months ended March 31, 2005. The net interest rate spread decreased to 2.71% for the three months ended March 31, 2006 compared to 3.08% for the three months ended March 31, 2005. In view of the possibility of continued increases in short term interest rates and the significant number of our certificates of deposit which will mature this year, we may experience further margin compression during 2006.

Provision for Loan Losses. Our allowance for loan losses is the estimated amount considered necessary to reflect probable incurred losses in the loan portfolio at the balance sheet date. Our analysis includes a review of identified problem loans for which a specific allowance is required as well as a general allowance for the remainder of the portfolio.

A provision of $1,000 for loan losses was recorded for the three months ended March 31, 2006 compared to a provision for loan losses of $6,000 for the three months ended March 31, 2005. While our methodology takes into account higher risk factors for multi-family real estate, commercial real estate and land lending, other factors including our experience with our borrowers and community, our underwriting standards and the repayment performance of our portfolio loans may offset these risks. The 2006 provision reflects the continued low level of non-performing and past due loans in our portfolio.

Non-interest Income. Non-interest income remained relatively unchanged from a year ago. For the three months ended March 31, 2006, non-interest income was $43,000 compared to $41,000, a 4.9% increase from the three months ended March 31, 2005.

Non-interest Expense. For the three months ended March 31, 2006, non-interest expense totaled $746,000 compared to $744,000 for the prior year period, a 0.3% increase. Compensation and benefits expense increased $12,000 or 2.8% for the three months ended March 31, 2006 from the three months ended March 31, 2005 due to normal salary increases. All other components of non-interest expense decreased $10,000 or 3.1%.

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Income Tax Provision. The provision for income taxes was $25,000 for the three months ended March 31, 2006 compared to $59,000 for the prior year period. The decrease in the provision was due to the decrease in pretax income of $102,000.

Comparison of Operating Results for the Years Ended December 31, 2005 and December 31, 2004

General. Net income increased $177,000 or 83.9% to $388,000 for the year ended December 31, 2005 compared to $211,000 for the year ended December 31, 2004. The primary reasons for this increase were rising interest rates during 2005 which resulted in a 63 basis point increase in yield on interest-earning assets resulting from higher interest rates and an increase in loans other than one- to four-family residential loans. This was offset in part by a 17 basis point increase in interest-bearing deposits and other borrowed funds, primarily from the repricing of maturing certificates of deposit in a higher interest rate environment. Non-interest income declined in 2005 by $46,000 or 19.0% to $196,000 from $242,000 in 2004 due to lower service fee and other fee income. Non-interest expense increased for the year ended December 31, 2005 by $66,000 or 2.2% to $3.0 million from $2.9 million for the year ended December 31, 2004 primarily due to compensation and benefit expense.

Interest Income. Interest income for the year ended December 31, 2005 increased $360,000 or 6.7% to $5.8 million from $5.4 million for the year ended December 31, 2004. Interest income from loans increased $850,000 or 20.4% to $5.0 million for 2005 from $4.2 million in 2004. This increase was due to an increase in average loan balances and an increase in loan yields resulting from higher market rates and an increased emphasis on higher yielding multi-family real estate, commercial real estate and land loans. Our average loan balance increased $5.0 million or 5.9% in 2005 to $90.0 million from $85.0 million in 2004. The increase in loan activity was primarily due to a $6.3 million or 34.9% increase in the average balance of the multi-family real estate, commercial real estate and land portfolios to $24.5 million for 2005 compared to $18.2 million for 2004. This was offset by a decrease in the average balance of the other loans in our portfolio of $1.3 million to $65.5 million compared to $66.8 million for 2004. The average yield on loans for the year ended December 31, 2005 was 5.57% compared to 4.90% for the prior year as higher market interest rates resulted in originations at higher rates and caused our variable rate loans to reprice at higher rates. The change in our portfolio mix also contributed to the increase in yield.

Interest income from securities declined $616,000 or 51.5% to $581,000 for the year ended December 31, 2005 from $1.2 million for the year ended December 31, 2004. The average balance of securities for the year ended December 31, 2005 was $11.3 million compared to $24.5 million for the prior year due to the redemption of Federal Home Loan Bank of Chicago stock and the pay down of mortgage-backed securities. Our Federal Home Loan Bank of Chicago stock dividends decreased $530,000 or 66.9% to $262,000 for 2005 from $792,000 in 2004 due to an average balance decrease of $9.8 million or 78.3% related to the redemption of excess stock as well as a continual decline in the dividend rate paid on such stock from 6.50% in the first quarter of 2004 to 3.75% in the fourth quarter of 2005. Despite the decrease in Federal Home Loan Bank of Chicago dividends, the yield on our securities for the year ended December 31, 2005 was 5.13% compared to 4.89% for the year ended December 31, 2004 as a result of the increase in interest rates.

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For the year ended December 31, 2005, interest from other interest-earning assets increased $126,000 to $169,000 from $43,000 for the year ended December 31, 2004 due to higher balances. During this period of rising interest rates, management increased liquidity somewhat pending reinvestment into higher yielding loans and other investments. The average balance increased during 2005 by $1.6 million to $5.4 million from $3.8 million in 2004. For the year ended December 31, 2005, the yield on interest-earning deposits increased to 3.14% from 1.16% in the prior year reflecting changes in general interest rates.

Interest Expense. Interest expense for the year ended December 31, 2005 was $2.3 million, a decrease of $19,000 or 0.8% from the prior year. Interest expense on deposit accounts increased $276,000 to $2.2 million for the year ended December 31, 2005 from $1.9 million for the year ended December 31, 2004. The increase was due to an increase in the average cost of deposits to 2.30% in 2005 from 1.92% in 2004 due to an increase in market rates. The average balance of deposit accounts was $95.9 million in 2005, a decrease of $4.5 million or 4.5% from $100.4 million the prior year. A decrease in the average balance of checking and money market accounts of $4.5 million or 15.1% accounted for the overall decline in the balance of deposit accounts. This decline resulted from our decision to withhold rate increases on non-certificate deposit accounts and customer preference for higher yielding certificates of deposit in a higher interest rate environment.

Interest expense on Federal Home Loan Bank of Chicago advances was $145,000 for the year ended December 31, 2005 a decrease of $295,000 or 67.0% from $440,000 for the prior year. During 2005, we paid off $5.0 million of the $7.0 million advance that matured and extended the balance for five years. The average cost for Federal Home Loan Bank of Chicago advances decreased to 5.26% for the year ended December 31, 2005 from 6.28% for the prior year as we paid down our higher cost borrowings.

Net Interest Income. Net interest income for the year ended December 31, 2005 increased $379,000 or 12.5% to $3.4 million from $3.0 million for the prior year. The average yield on interest-earning assets for 2005 was 5.40% compared to 4.77% for the prior year. The average cost of interest-bearing liabilities increased to 2.38% in 2005 from 2.21% in 2004. The result was a net interest rate spread of 3.02% for the year ended December 31, 2005 compared to 2.56% for the prior year.

Provision for Loan Losses. Our allowance for loan losses is the estimated amount considered necessary to reflect probable incurred losses in the loan portfolio at the balance sheet date. Our analysis includes a review of identified problem loans for which a specific allowance is required as well as a general allowance for the remainder of the portfolio.

A provision of $17,000 for loan losses was recorded for the year ended December 31, 2005 compared to a provision for loan losses of $19,000 for the year ended December 31, 2004. The provision for the year ended December 31, 2005 reflected the continued low level of non-performing and past due loans in our portfolio.

Non-interest Income. Non-interest income declined $46,000 or 19.0% to $196,000 for the year ended December 31, 2005 compared to $242,000 for the prior year. Fees for deposit and loan related services were $130,000 for the year ended December 31, 2005 compared to

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$175,000 for the prior year, a 25.7% decline. This reduction was primarily due to a $20,000 decline in fees received from providing origination services for other financial institutions. It was also due to lower overall residential lending and a $25,000 reduction in fees from prepayment penalties and service charges from deposit related activity. These declines were offset by a $23,000 increase in the gain on sale of loans. Other income for the year ended December 31, 2004 also included nonrecurring income of $35,000 related to a legal judgment.

Non-interest Expense. Non-interest expense totaled $3.0 million for the year ended December 31, 2005, an increase of $66,000 or 2.2% from $2.9 million for the prior year. The largest component of non-interest expenses, compensation and benefits expense, increased $44,000 or 2.7% primarily due to an increase in salaries of $42,000 due to the hiring of a lending officer and normal salary increases. All other components of non-interest expense increased $22,000 or 1.7%.

Income Tax Provision. The provision for income taxes was $200,000 for the year ended December 31, 2005 compared to $108,000 for the prior year. The increase in the provision was due to the increase in pretax income of $269,000.

Analysis of Net Interest Income

Net interest income represents the difference between the income we earn on interest-earning assets and the interest expense we pay 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.

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The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated, as well as balances and average yields and costs as of March 31, 2006. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been 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.

	At March 31, 2006				Three Months Ended March 31,
					2006						2005
	Outstanding Balance(1)		Yield/Rate		Average Outstanding Balance		Interest		Yield/Cost		Average Outstanding Balance		Interest		Yield/Cost
	(Dollars in thousands)
Assets:
One- to four-family	$	47,838	5.06	%	$	47,838	$	597	4.99	%	$	52,508	$	634	4.83	%
Multi-family, commercial real estate and land		28,473	6.35			28,658		470	6.66			21,037		320	6.17
Construction		3,907	9.90			3,244		88	10.94			4,637		79	6.92
Commercial business		2,730	8.07			2,260		46	8.31			1,658		25	6.07
Home equity lines-of-credit		8,092	7.43			8,102		134	6.73			9,370		109	4.71
Other		60	7.53			152		3	6.73			129		2	6.17
Total loans		91,100	5.97			90,254		1,338	5.98			89,339		1,169	5.27
Securities		8,900	3.80			9,158		84	3.66			14,381		241	6.72
Other interest-earning assets		7,694	4.71			6,149		67	4.40			5,472		32	2.35
Total interest-earning assets		107,694	5.70			105,561	$	1,489	5.68			109,192	$	1,442	5.31
Non-interest-earning assets		2,553				2,782						3,325
Total assets	$	110,247			$	108,343					$	112,517
Liabilities and retained earnings:
Savings deposits	$	11,034	0.85		$	11,246	$	23	0.84		$	12,637	$	25	0.80
Money market/NOW accounts		22,537	1.56			22,288		83	1.50			27,640		80	1.17
Certificates of deposit		63,868	4.16			61,571		583	3.84			56,284		378	2.73
Total deposits		97,439	3.18			95,105		689	2.94			96,561		483	2.03
FHLB advances		2,000	4.58			2,000		23	4.64			5,078		75	6.00
Total interest-bearing liabilities		99,439	3.21			97,105		712	2.97			101,639		558	2.23
Non-interest-bearing deposits		1,801				1,862						1,825
Other liabilities		651				1,172						981
Total liabilities		101,891				100,139						104,445
Retained earnings		8,356				8,204						8,072
Total liabilities and retained earnings	$	110,247			$	108,343					$	112,517
Net interest income							$	777					$	884
Net interest rate spread			2.49	%					2.71	%					3.08	%
Net interest-earning assets	$	8,256			$	8,456					$	7,553
Net interest margin									2.95	%					3.24	%
Average of interest-earning assets to interest-bearing liabilities			108.30	%					108.71	%					107.43	%

(1) Net of allowance for loan losses, loans in process, loan costs and discounts and premiums.

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	Years Ended December 31,
	2005						2004
	Average Outstanding Balance		Interest		Yield/Cost		Average Outstanding Balance		Interest		Yield/Cost
	(Dollars in thousands)
Assets:
One- to four-family	$	50,402	$	2,460	4.88	%	$	53,804	$	2,544	4.73	%
Multi-family, commercial real estate, and land		24,542		1,564	6.37			18,200		1,077	5.92
Construction		3,828		340	8.87			2,612		142	5.42
Commercial business		1,973		141	7.13			1,331		73	5.50
Home equity lines-of-credit		9,119		500	5.49			8,944		323	3.61
Other		141		9	6.45			75		5	5.98
Total loans		90,005		5,014	5.57			84,966		4,164	4.90
Securities		11,336		581	5.13			24,476		1,197	4.89
Other interest-earning assets		5,375		169	3.14			3,765		43	1.16
Total interest-earning assets		106,716	$	5,764	5.40			113,207	$	5,404	4.77
Non-interest-earning assets		3,044						4,623
Total assets	$	109,760					$	117,830
Liabilities and retained earnings:
Savings deposits	$	12,364	$	103	0.83		$	13,095	$	103	0.79
Money market/NOW accounts		25,305		322	1.27			29,815		338	1.13
Certificates of deposit		58,197		1,779	3.06			57,456		1,487	2.59
Total deposits		95,866		2,204	2.30			100,366		1,928	1.92
FHLB advances		2,759		145	5.26			7,000		440	6.28
Total interest-bearing liabilities		98,625		2,349	2.38			107,366		2,368	2.21
Non-interest-bearing liabilities		1,760						1,614
Other liabilities		1,148						996
Total liabilities		101,533						109,976
Retained earnings		8,227						7,854
Total liabilities and retained earnings	$	109,760					$	117,830
Net interest income			$	3,415					$	3,036
Net interest rate spread					3.02	%					2.56	%
Net interest-earning assets	$	8,091					$	5,841
Net interest margin					3.20	%					2.68	%
Average of interest-earning assets to interest-bearing liabilities					108.20	%					105.44	%

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Rate/Volume Analysis

The following table presents the dollar amount of changes in interest income and interest expense for the major categories of Ben Franklin Bank of Illinois’ 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 March 31, 2006 vs. 2005									Years Ended December 31, 2005 vs. 2004
	Increase (Decrease) Due to						Total Increase (Decrease)			Increase (Decrease) Due to						Total Increase (Decrease)
	Volume			Rate						Volume			Rate
	(Dollars in thousands)
Interest-earning assets:
Loans:
One- to four-family	$	(58	)	$	21		$	(37	)	$	(163	)	$	79		$	(84	)
Multi-family, commercial real estate, and land		123			27			150			400			87			487
Construction		(29	)		38			9			84			114			198
Commercial business		11			10			21			42			26			68
Home Equity lines-of-credit		(17	)		42			25			6			171			177
Other		1			—			1			4			—			4
Total loans		31			138			169			373			477			850
Securities		(70	)		(87	)		(157	)		(671	)		55			(616	)
Interest-earning deposits		4			31			35			25			101			126
Total interest-earning assets		(35	)		82			47			(273	)		633			360
Interest-bearing liabilities:
Savings deposits		(3	)		1			(2	)		(5	)		5			—
Money market/NOW accounts		(17	)		20			3			(54	)		38			(16	)
Certificates of deposit		38			167			205			19			273			292
Total deposits		18			188			206			(40	)		316			276
FHLB Advances		(38	)		(14	)		(52	)		(233	)		(62	)		(295	)
Total interest-bearing Liabilities		(20	)		174			154			(273	)		254			(19	)
Change in net interest income	$	(15	)	$	(92	)	$	(107	)	$	—		$	379		$	379

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Management of Market Risk

Our asset/liability management strategy attempts to manage the impact on net interest income, our primary source of earnings, of changes in interest rates.

Historically, we have relied on funding longer term higher interest-earning assets with shorter term lower interest-bearing deposits to earn a favorable net interest rate spread. As a result, we have been vulnerable to adverse changes in interest rates. Over the past several years, management has implemented an asset/liability strategy to manage, subject to our profitability goals, our interest rate risk. Among the techniques we use to manage interest rate risk are: (i) increasing our holdings of adjustable-rate one- to four-family residential mortgage loans; (ii) selling long-term fixed-rate one- to four-family residential loans as they are originated to help lower asset duration and generate fee income; and (iii) expanding our multi-family, commercial real estate, and home equity loans as they generally reprice more quickly than residential mortgage loans. Management also employs strategies to lengthen the duration of our liabilities primarily through the promotion of longer-term certificates of deposit.

While this strategy has helped reduce our interest rate exposure, it does pose risks. For instance, the prepayment options embedded in adjustable-rate, one- to four-family residential mortgage loans which allows for early repayment at the borrower’s discretion may, in a rising rate environment, result in prepayment before the loan reaches the fully indexed rate. Conversely, in a falling interest rate environment, borrowers may refinance to fixed rate loans to lock in the then lower rates. In addition, multi-family and commercial real estate lending generally present higher credit risks than residential one- to four-family lending.

Our Board of Directors is responsible for the review and oversight of management’s asset/liability strategies. Our Asset/Liability Committee is charged with developing and implementing an asset/liability management plan. This committee meets monthly to review pricing and liquidity needs and assess our interest rate risk. We currently utilize the Office of Thrift Supervision net portfolio value model, which is prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates. In addition, on a monthly basis, the committee and the Board review an analysis of the gaps between the terms to repricing of our assets and liabilities at different time intervals as an early indicator of the potential impact a mismatch between interest-earning assets and interest-bearing liabilities may have on our net interest income.

Depending on market conditions, we often place more emphasis on enhancing net interest margin rather than matching the interest rate sensitivity of our assets and liabilities. In particular, we believe that the increased net interest income resulting from a mismatch in the maturity of our asset and liabilities portfolios can, during periods of stable or declining interest rates, provide high enough returns to justify increased exposure to sudden and unexpected increasing in interest rates. As a result of this philosophy, our results of operations and the economic value of our equity will remain vulnerable to increases in interest rates and to declines in the difference between long- and short-term interest rates.

An important measure of interest rate risk is the amount by which the net present value of an institution’s cash flow from assets, liabilities and off balance sheet items (the institution’s net portfolio value or “NPV”) changes in the event of a range of assumed changes in market interest

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rates. We have utilized the Office of Thrift Supervision net portfolio value model (“NPV”) to provide an analysis of estimated changes in our NPV under the assumed instantaneous changes in the United States treasury yield curve. The financial model uses a discounted cash flow analysis and an option-based pricing approach to measuring the interest rate sensitivity of the NPV. Set forth below is an analysis of the changes that would occur to our NPV as of March 31, 2006 in the event of designated changes in the United States treasury yield curve.

Change in Interest Rates (basis points) (1)	Estimated NPV (2)		Estimated Increase (Decrease) in NPV					NPV as a Percentage of Present Value of Assets (3)
								NPV Ratio (4)		Change in Basis Points
			Amount			Percent
	(Dollars in thousands)
+300	$	8,692	$	(3,318	)	(28	)%	8.05	%	(255	)
+200		9,950		(2,060	)	(17	)	9.06		(154	)
+100		11,081		(929	)	(8	)	9.92		(68	)
0		12,010		—		—		10.60		—
-100		12,631		621		5		11.02		42
-200		12,831		821		7		11.10		50

(1) Assumes an instantaneous uniform change in interest rates at all maturities.

(2) NPV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4) NPV Ratio represents NPV divided by the present value of assets.

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in net portfolio value requires making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net portfolio value table presented assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net portfolio value table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.

Liquidity and Capital Resources

Our primary source of funds are deposits and the proceeds from principal and interest payments on loans and mortgage-backed securities. While maturities and scheduled amortization of loans and securities are predicable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. We generally manage the pricing of our deposits to be competitive within our market and to increase core deposit relationships.

Our cash flows are comprised of three primary classifications: (i) cash flows from operating activities, (ii) investing activities, and (iii) financing activities. Net cash flows from operating activities were $(287,000) for the three months ended March 31, 2006 and $723,000 for the year ended December 31, 2005. Net cash from investing activities consisted primarily of

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disbursements for loan originations and the purchase of securities, offset by principal collections on loans, proceeds from maturation and sales of securities. Net cash flows from investing activities were $(711,000) for the three months ended March 31, 2006 and $7.4 million for the year ended December 31, 2005. Net cash from financing activities consisted primarily of activity in deposits, borrowings, and escrow accounts. Net cash flows from financing activities were $2.8 million for the three months ended March 31, 2006 and $(7.0) million for the year ended December 31, 2005. The changes in net cash flows from investing and financing activities over the periods were primarily due to the repayment of advances and redemption of Federal Home Loan Bank of Chicago stock.

Our most liquid assets are cash and short-term investments. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period. At March 31, 2006, cash and short-term investments totaled $8.9 million. We may also utilize the sale of securities available-for-sale, federal funds purchased, Federal Home Loan Bank of Chicago advances and other borrowings as sources of funds.

At March 31, 2006, we had outstanding commitments to originate loans of $1.0 million. We anticipate that we will have sufficient funds available to meet our current loan commitments. Loan commitments have, in recent periods, been funded through liquidity and normal deposit flows. Certificates of deposit scheduled to mature in one year or less from March 31, 2006 totaled $34.4 million. Management believes, based on past experience, that a significant portion of such deposits will remain with us. Based on the foregoing, in addition to our level of core deposits and capital, we consider our liquidity and capital resources sufficient to meet our outstanding short-term and long-term needs.

Liquidity management is both a daily and long-term responsibility of management. We adjust our investments in liquid assets based upon management’s assessment of (i) expected loan demand, (ii) expected deposit flows, (iii) yields available on interest-earning deposits and investment securities, and (iv) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest-earning overnight deposits, Federal funds sold, and short and intermediate-term U.S. Government and agency obligations and mortgage-backed securities of short duration. If we require funds beyond our ability to generate them internally, we have additional borrowing capacity with the Federal Home Loan Bank of Chicago. It is anticipated that immediately upon completion of the reorganization and offering, Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois’ liquid assets will be increased. See “Use of Proceeds.”

We are subject to various regulatory capital requirements. At March 31, 2006, we were in compliance with all applicable capital requirements. See “Regulation - Regulatory Capital Requirements” and “Pro Forma Regulatory Capital Analysis” and Note 8 of the Notes to our Financial Statements.

Off-Balance Sheet Arrangements. In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit. For information about our loan commitments and unused lines of credit, see note 10 of the notes to the financial statements.

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For fiscal year 2005, we did not engage in any off-balance-sheet transactions other than loan origination commitments in the normal course of our lending activities.

Recent Accounting Pronouncements

In December 2004, SFAS No. 123R, Share-Based Payments, was issued. SFAS No. 123R requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. This Statement establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees except for equity instruments held by employee share ownership plans. This statement is effective, (i) for public entities that do not file as small business issuers—as of the beginning of the first interim or annual reporting period that begins after June 15, 2005, (ii) for public entities that file as small business issuers—as of the beginning of the first interim or annual reporting period that begins after December 15, 2005, (iii) for nonpublic entities—as of the beginning of the first annual reporting period that begins after December 15, 2005. Because Ben Franklin Financial, Inc. has never issued stock nor adopted a stock-based incentive plan, management is currently unable to evaluate the impact on the results of operations or financial condition of this standard.

In May 2005, FAS No. 154, Accounting Changes and Error Corrections a replacement of APB Opinion No. 20 and FASB Statement No. 3, was issued. FAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. This Statement also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. This statement is effective for fiscal years that begin after December 15, 2005. Management does not believe the adoption of SFAS No. 154 will have a material impact on the results of operations or financial condition of Ben Franklin Financial, Inc.

In February 2006, SFAS No. 155, Accounting for Certain Hybrid Financial Instruments an amendment of FASB Statements No. 133 and 140, was issued. FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, establishes, among other things, the accounting for certain derivatives embedded in other financial instruments. The primary objectives of this Statement with respect to Statement 133 are to: a. Simplify accounting for certain hybrid financial instruments by permitting fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation and eliminate the interim guidance in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets,” which provides that beneficial interests in securitized financial assets are not subject to the provisions of Statement 133. The primary objective of this Statement with respect to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of

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Liabilities, is to eliminate a restriction on the passive derivative instruments that a qualifying special-purpose entity (SPE) may hold. This statement is effective for fiscal years that begin after September 15, 2006. Management does not believe the adoption of SFAS No. 155 will have a material impact on the results of operations or financial condition of Ben Franklin Financial, Inc.

In March 2006, SFAS No. 156, Accounting for Servicing of Financial Assets an amendment of FASB Statement No. 140, was issued. FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, establishes, among other things, the accounting for all separately recognized servicing assets and servicing liabilities. This Statement amends Statement 140 to require that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. This Statement permits, but does not require, the subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value. An entity that uses derivative instruments to mitigate the risks inherent in servicing assets and servicing liabilities is required to account for those derivative instruments at fair value. This statement is effective for fiscal years that begin after September 15, 2006. Management does not believe the adoption of SFAS No. 156 will have a material impact on the results of operations or financial condition of Ben Franklin Financial, Inc.

Impact of Inflation and Changing Prices

The financial statements and related data presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

BUSINESS OF BEN FRANKLIN FINANCIAL, INC.

We have not engaged in any business to date. Upon completion of the reorganization and offering, we will own all of the issued and outstanding common stock of Ben Franklin Bank of Illinois. We will retain up to 50% of the net proceeds from the offering. A portion of the net proceeds we retain will be used to make a loan to fund the purchase of our shares of common stock by the Ben Franklin Bank of Illinois employee stock ownership plan. We will contribute the remaining net proceeds to Ben Franklin Bank of Illinois as additional capital. We intend to invest our capital as discussed in “How We Intend to Use the Proceeds from the Offering.”

In the future, Ben Franklin Financial, Inc., as the holding company of Ben Franklin Bank of Illinois, will be authorized to pursue other business activities permitted by applicable laws and regulations for savings and loan holding companies, which may include the acquisition of banking and financial services companies. We have no plans for any mergers or acquisitions, or other diversification of the activities of Ben Franklin Financial, Inc. at the present time.

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Our cash flow will depend on earnings from the investment of the net proceeds we retain, and any dividends received from Ben Franklin Bank of Illinois. Initially, Ben Franklin Financial, Inc. will neither own nor lease any property, but will instead use the premises, equipment and furniture of Ben Franklin Bank of Illinois. At the present time, we intend to employ only persons who are officers of Ben Franklin Bank of Illinois to serve as officers of Ben Franklin Financial, Inc. We will however, use the support staff of Ben Franklin Bank of Illinois from time to time. These persons will not be separately compensated by Ben Franklin Financial, Inc. Ben Franklin Financial, Inc. may hire additional employees, as appropriate, to the extent it expands its business in the future.

BUSINESS OF BEN FRANKLIN BANK OF ILLINOIS

General

Our principal business consists of attracting retail deposits from the general public in our market and investing those deposits, together with funds generated from operations and to a lesser extent borrowings in one- to four-family residential mortgage loans and, to a lesser extent, multi-family real estate loans, commercial real estate loans, construction and land loans, home equity lines-of-credit and other loans. We also invest in mortgage-backed and other securities. Our revenues are derived principally from the interest on loans and securities, loan origination, brokerage and servicing fees and fees levied on deposit accounts. Our primary sources of funds are deposits and principal and interest payments on loans and securities.

Our website address is www.benfrankbank.com. Information on our website should not be considered a part of this prospectus.

Competition

We face intense competition within our market area both in making loans and attracting deposits. The Chicago metropolitan area has a high concentration of financial institutions including large money center and regional banks, community banks and credit unions. Some of our competitors offer products and services that we currently do not offer, such as trust services and private banking. As of March 31, 2006 our market share of deposits represented less than 1% of deposits in Cook County, Illinois.

Our competition for loans and deposits comes principally from commercial banks, savings institutions, mortgage banking firms and credit unions. We face additional competition for deposits from short-term money market funds, brokerage firms, mutual funds and insurance companies. Our primary focus is to develop and build profitable customer relationships across all lines of business while maintaining our role as a community bank.

Market Area

We conduct business through our main office located at 14 N. Dryden Place, Arlington Heights, Illinois and branch offices located at 360 E. Northwest Highway, Arlington Heights, Illinois and at 3148 Kirchoff Road, Rolling Meadows, Illinois. We are in the process of relocating into a new home office facility in the same strip mall where our current home office is presently located in connection with a redevelopment of such mall. When our new home office

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facility is completed (which we anticipate will occur in early 2007), we intend to consolidate the operations of our Northwest Highway office, which is located three blocks away, into our new home office facility.

Our offices are located in relatively affluent suburban communities located approximately 15 miles to the northwest of Chicago, Illinois. Over the last 20 years, these communities have experienced per capita income levels which are well above the state and national averages. However, we believe that Arlington Heights and, to a lesser extent, Rolling Meadows may be classified as “mature” suburbs and that more rapid growth is occurring further to the northwest of Chicago.

Lending Activities

The principal lending activity of Ben Franklin Bank of Illinois is originating and acquiring one- to four-family residential mortgage loans, commercial real estate loans, multi-family real estate loans, home equity lines-of-credit, construction and land loans, and other loans. Since 2002, we have expanded our multi-family and commercial real estate lending in an effort to diversify our overall loan portfolio, increase the yield of our loans and shorten asset duration. In addition, over the same period, we have increase the size of our lending unit, and in 2005, hired a new Chief Lending Officer.

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Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated.

	March 31,					December 31,
	2006					2005					2004
	Amount			Percent		Amount			Percent		Amount			Percent
	(Dollars in thousands)
Real Estate:
One- to four-family	$	47,790		50.83	%	$	48,820		52.72	%	$	53,441		57.46	%
Multi-family		15,511		16.50			15,219		16.43			12,865		13.83
Commercial		12,718		13.52			12,504		13.50			8,521		9.16
Construction		6,349		6.75			5,259		5.68			6,744		7.25
Land		1,087		1.16			691		0.75			163		0.18
Total real estate		83,455		88.76			82,493		89.08			81,734		87.88
Consumer and other loans:
Home equity lines-of-credit		8,061		8.57			8,263		8.92			9,393		10.10
Commercial business		2,458		2.61			1,748		1.89			1,823		1.96
Other		60		0.06			104		0.11			56		0.06
Total consumer and other loans		10,579		11.24			10,115		10.92			11,272		12.12
Total loans		94,034		100.00	%		92,608		100.00	%		93,006		100.00	%
Premiums and net deferred loan costs		46					70					128
Loans in process		(2,470	)				(2,187	)				(2,387	)
Allowance for loan losses		(510	)				(509	)				(492	)
Total loans, net	$	91,100				$	89,982				$	90,255

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Loan Portfolio Maturities and Yields. The following table summarizes the scheduled repayments of our loan portfolio at December 31, 2005. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. Loans are presented net of loans in process.

	One- to Four-Family				Multi-Family, Commercial Real Estate, and Land				Construction				Home Equity Lines-of- Credit and Other				Commercial Business				Total
	Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate
	(Dollars in thousands)
Due During the Years Ending December 31,
2006	$	2,189	5.93	%	$	3,226	7.93	%	$	2,709	10.19	%	$	945	7.19	%	$	883	7.97	%	$	9,952	8.04	%
2007		1,945	5.61			2,471	5.78			464	7.85			1,485	7.26			107	5.80			6,472	6.22
2008		1,870	5.51			8,209	5.76			—	—			1,892	7.20			320	4.77			12,291	5.92
2009 to 2010		3,850	5.49			6,002	6.12			—	—			804	7.30			—	—			10,656	5.98
2011 to 2015		8,919	5.33			8,405	6.15			—	—			3,241	6.97			438	9.00			21,003	5.99
2016 to 2020		7,033	5.13			—	—			—	—			—	—			—	—			7,033	5.13
2020 and beyond		23,014	4.85			—	—			—	—			—	—			—	—			23,014	4.85
Total	$	48,820	5.13	%	$	28,313	6.20	%	$	3,173	9.85	%	$	8,367	7.13	%	$	1,748	7.51	%	$	90,421	5.86	%
Loans in process																						2,187
Total gross loans																					$	92,608

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The following table sets forth our fixed- and adjustable-rate loans at December 31, 2005 that are contractually due after December 31, 2006. Loans are presented net of loans in process.

	Due After December 31, 2006
	Fixed		Adjustable		Total
	(In thousands)
Real Estate:
One- to four-family	$	12,770	$	33,861	$	46,631
Multi-family, commercial real estate and land		15,551		9,536		25,087
Construction		—		464		464
Total real estate loans		28,321		43,861		72,182
Consumer and other loans:
Home equity lines-of-credit and other		7,371		51		7,422
Commercial business		427		438		865
Total consumer and other loans		7,798		489		8,287
Total	$	36,119	$	44,350	$	80,469

Loan Approval Procedures and Authority. Pursuant to Federal law, the aggregate amount of loans that Ben Franklin Bank of Illinois is permitted to make to any one borrower or a group of related borrowers is generally limited to 15% of Ben Franklin Bank of Illinois’ unimpaired capital and surplus (25% if the amount in excess of 15% is secured by “readily marketable collateral” or 30% for certain residential development loans). At March 31, 2006, based on the 15% limitation, Ben Franklin Bank of Illinois’ loans-to-one-borrower limit was approximately $1.3 million. On the same date, Ben Franklin Bank of Illinois had no borrowers with outstanding balances in excess of this amount. As of March 31, 2006, the largest dollar amount outstanding to one borrower, or group of related borrowers, was $1.1 million and was secured by single-family and multi-family real estate. These loans were all performing in accordance with their terms at March 31, 2006.

Our lending is subject to written underwriting standards and origination procedures. Decisions on loan applications are made on the basis of detailed applications submitted by the prospective borrower and property valuations (consistent with our appraisal policy) prepared by outside independent licensed appraisers approved by our board of directors. The loan applications are designed primarily to determine the borrower’s ability to repay the requested loan, and the more significant items on the application are verified through use of credit reports, financial statements, tax returns and/or confirmations.

Under our loan policy, the individual processing an application is responsible for ensuring that all documentation is obtained prior to the submission of the application to an officer for approval. An officer then reviews these materials and verifies that the requested loan meets our underwriting guidelines described below.

Our senior officers have approval authority for real estate loans of up to $350,000 and home equity loans of up to $250,000. Real estate loans and home equity loans above those amounts require the approval of our President. Our senior officers have approval authority for secured commercial loans up to $300,000, construction loans up to $350,000 and secured consumer loans of up to $250,000. Secured commercial loans, construction loans and secured consumer loans above those amounts require approval of our President. Real estate loans over

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$500,000, home equity, secured commercial and secured consumer loans over $400,000, and construction loans over $500,000 each require the approval of our Board Loan Committee. Loans in excess of $1.0 million require approval by our Board of Directors. In addition, all loans are ratified by our board of directors.

Generally, we require title insurance or abstracts on our mortgage loans as well as fire and extended coverage casualty insurance in amounts at least equal to the principal amount of the loan or the value of improvements on the property, depending on the type of loan. We also require flood insurance to protect the property securing our interest when the property is located in a flood plain. In addition, we require escrow for property taxes, insurance and flood insurance (where appropriate) on our conventional one- to four-family mortgage loans. For loans exceeding an 80% loan-to-value ratio, we require private mortgage insurance in amounts intended to reduce our exposure to 80% or less.

One- to Four-Family Residential Real Estate Lending. The cornerstone of our lending program has long been the origination or purchase of long-term permanent loans secured by mortgages on owner-occupied one- to four-family residences. At March 31, 2006, $47.8 million, or 50.8% of our loan portfolio consisted of permanent loans on one- to four-family residences. At that date, our average outstanding one- to four-family residential loan balance was $132,000 and our largest outstanding residential loan had a principal balance of $486,000. Virtually all of the residential loans we originate are secured by properties located in our market area. See “—Originations, Sales and Purchases of Loans.”

Due to consumer demand, many of our current originations are 15- to 30-year fixed-rate loans secured by one- to four-family residential real estate. We generally originate our fixed-rate one- to four-family loans in accordance with secondary market standards to permit their sale. We monitor the volume and rate of our fixed-rate loans to ensure compliance with our asset/liability management policy and sell most of our long-term fixed-rate one- to four-family loan production. Depending on asset/liability management considerations and market conditions, we also may take applications for long-term, fixed-rate residential loans made by larger national mortgage lenders in order to earn fee income and maintain a relationship with our customers. At March 31, 2006, we had $1.9 million of fixed-rate residential loans with original contractual maturities of 10 years or less, $7.5 million of fixed-rate residential loans with original contractual maturities between 10 and 20 years and $4.2 million of fixed-rate residential loans with original contractual maturities in excess of 21 years in our portfolio.

In order to reduce the term to repricing of our loan portfolio, we also originate and purchase adjustable-rate one- to four-family mortgage loans. Our current adjustable-rate mortgage loans carry interest rates which adjust annually at a margin (generally 295 basis points) over the yield on one year U.S. Treasury securities. Such loans carry terms to maturity of up to 30 years. The adjustable-rate mortgage loans currently offered by us generally provide for a 200 basis point annual interest rate change cap and a lifetime cap of 600 basis points over the initial rate. The initial interest rate on such loans is often fixed for a period of up to seven years. Substantially all of our one- to four-family residential mortgage loan originations are secured by properties located in our market area.

Over the past three years, we have found it difficult to acquire adjustable-rate one- to four-family residential mortgage loans in quantities sufficient to meet asset/liability management objectives. Accordingly, we have purchased pools of loans from local institutions. As of March 31, 2006, $27.1 million of our one- to four-family mortgage loans were acquired from other institutions.

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Although adjustable-rate mortgage loans may reduce to an extent our vulnerability to changes in market interest rates because they periodically reprice, as interest rates increase, the required payments due from the borrower also increase (subject to rate caps), increasing the potential for default by the borrower. At the same time, the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustments of the contractual interest rate are also limited by the maximum periodic and lifetime rate adjustments permitted by our loan documents. Also, many of our adjustable-rate one- to four-family residential loans have fixed rates of interest for an initial period of up to seven years. As a result, the effectiveness of adjustable-rate mortgage loans may be limited during periods of rapidly rising interest rates. At March 31, 2006, $34.3 million, or 71.6% of our one- to four-family residential loans, had adjustable rates of interest.

We evaluate both the borrower’s ability to make principal, interest and escrow payments and the value of the property that will secure the loan. Residential mortgage loans do not currently include prepayment penalties, are non-assumable and do not produce negative amortization. Our residential mortgage loans customarily include due-on-sale clauses giving us the right to declare the loan immediately due and payable in the event that, among other things, the borrower sells the property subject to the mortgage. We currently originate residential mortgage loans for our portfolio with loan-to-value ratios of up to 80% for owner-occupied one- to four-family homes and up to 75% for non-owner occupied homes.

We are currently refining our one- to four-family residential loan products and upgrading our residential loan department (including our servicing function) and hope to increase our activity in this area in the future.

Multi-Family Real Estate Lending. During recent years, we have increased our multi-family real estate lending. Most of our originated loans are located in our primary market area. At March 31, 2006, we had $15.5 million in multi-family real estate loans, representing 16.5% of the gross loan portfolio.

The multi-family real estate loans we originate generally have a maximum term of 10 years and are secured by apartment buildings located within the greater Chicago area. The interest rates on these loans are generally fixed for an initial period of three to five years and then adjust every one to five years based on the relevant Constant Maturity Treasury Bill Index, plus a margin. These loans are generally made in amounts of up to 80% of the lesser of the appraised value or the purchase price of the property with a projected debt service coverage ratio of at least 120%. Most of our multi-family loans have principal balances of less than $1 million.

Appraisals on properties securing multi-family real estate loans are performed by an outside independent appraiser designated by us at the time the loan is made. All appraisals on multi-family real estate loans are reviewed by our management. Our underwriting procedures include considering the borrower’s expertise and require verification of the borrower’s credit history, income and financial statements, banking relationships, references and income projections for the property. Where feasible, we seek to obtain personal guarantees on these loans.

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The borrower’s financial information on multi-family loans is monitored on an ongoing basis by requiring periodic financial statement updates, payment history reviews and periodic face-to-face meetings with the borrower. We require such borrowers to provide annually updated financial statements and federal tax returns. These requirements also apply to the principals of our corporate borrowers. We also require borrowers with rental investment property to provide an annual report of income and expenses for the property, including a tenant list and copies of leases, as applicable.

At March 31, 2006, our largest multi-family loan had a balance of $1.0 million and was secured by a twelve-unit apartment building. At March 31, 2006, this loan was performing in accordance with its terms.

Multi-family real estate loans generally present a higher level of risk than loans secured by one- to four-family residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income producing properties and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by multi-family residential real estate is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced (for example, if leases are not obtained or renewed), the borrower’s ability to repay the loan may be impaired. At March 31, 2006, we had no multi-family loans which were 90 days or more delinquent.

We intend to continue to stress permanent multi-family lending in the future.

Commercial Real Estate Lending. In recent years, we have sought to increase our commercial real estate loans. Commercial real estate loans are secured by office buildings, mixed-use and other commercial properties. At March 31, 2006, we had $12.7 million in commercial real estate loans, representing 13.5% of the gross loan portfolio.

Our commercial real estate loans generally have interest rates which are fixed for the first five years and then adjust at one to five year intervals thereafter. While such loans may have amortization schedules of up to 25 years, most of such loans have maturities of ten years or less. The maximum loan-to-value ratio of our commercial real estate loans is generally 75%. At March 31, 2006, our largest commercial real estate loan totaled $996,000 and was secured by an office building. At March 31, 2006, this loan was performing in accordance with its terms.

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Set forth below is information regarding our commercial real estate loans at March 31, 2006.

Type of Loan	Number of Loans	Balance
	(Dollars in thousands)
Office	6	$	3,311
Industrial	3		1,774
Retail	6		3,297
Mixed use	9		3,438
Other	3		898
Total	27	$	12,718

We consider a number of factors in originating commercial real estate loans. We evaluate the qualifications and financial condition of the borrower, including credit history, profitability and expertise, as well as the value and condition of the mortgaged property securing the loan. When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar property and the borrower’s payment history with us and other financial institutions. In evaluating the property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the mortgaged property and the debt service coverage ratio (the ratio of net operating income to debt service) to ensure that it is at least 120% of the monthly debt service. All commercial real estate loans are appraised by outside independent appraisers approved by the board of directors. Personal guarantees are obtained from commercial real estate borrowers although we will consider waiving this requirement based upon the loan-to-value ratio of the proposed loan.

Loans secured by commercial real estate generally are larger than one- to four-family residential loans and involve greater credit risk. Commercial real estate loans often involve large loan balances to single borrowers or groups of related borrowers. Repayment of these loans depends to a large degree on the results of operations and management of the properties securing the loans or the businesses conducted on such property, and may be affected to a greater extent by adverse conditions in the real estate market or the economy in general. Accordingly, the nature of these loans makes them more difficult for management to monitor and evaluate. At March 31, 2006, we had $421,000 of non-performing commercial real estate loans.

We intend to continue to stress commercial real estate lending in the future.

Construction and Land Lending. We make construction loans to individuals for the construction of their primary or secondary residences and loans to builders and developers for the construction of one- to four- and multi-family residential units. We also make a limited amount of land loans to developers, primarily for the purpose of developing residential subdivisions. At March 31, 2006, our construction loans totaled $6.3 million representing 6.8% of the gross loan portfolio and our land loans totaled $1.1 million representing 1.2% of the gross loan portfolio.

Loans to individuals for the construction of their residences typically run for up to 12 months and then convert to permanent loans. These construction loans have rates and terms comparable to one- to four-family loans offered by us. During the construction phase the borrower pays interest only. The maximum loan-to-value ratio of owner-occupied single-family construction loans is 80%. Residential construction loans are generally underwritten pursuant to the same guidelines used for originating permanent residential loans.

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At March 31, 2006, our largest outstanding residential construction loan commitment was for $1.0 million of which $537,000 was outstanding. This loan was performing according to its terms at March 31, 2006.

The application process includes a submission to Ben Franklin Bank of Illinois of accurate plans, specifications and costs of the project to be constructed or developed. These items are used as a basis to determine the appraised value of the subject property. Loans are based on the lesser of current appraised value and/or the cost of construction (land plus building). Our construction loan agreements generally provide that loan proceeds are disbursed in increments as construction progresses. Outside independent licensed appraisers inspect the progress of the construction of the dwelling before disbursements are made.

We also make loans to builders and developers “on speculation” to finance the construction of residential property where an independent appraisal shows that a ready market exists for the property as completed. Such loans generally have adjustable interest rates based upon the prime rate as published in the Wall Street Journal with terms from six months to two years. The proceeds of the loan are advanced during construction based upon the percentage of completion as determined by an inspection. The loan amount normally does not exceed 80% of projected completed value for homes that have been pre-sold to the ultimate occupant. For loans to builders for the construction of homes not pre-sold, which may carry a higher risk, the loan-to-value ratio is generally limited to 75%. Whether we are willing to provide permanent takeout financing to the purchaser of the home is determined independently of the construction loan by a separate underwriting process. At March 31, 2006, we had construction loans with outstanding aggregate balances of $1.7 million secured by one- to four-family residential property built on speculation.

From time to time we also make construction loans for commercial development projects such as multi-family, apartment and small retail and office buildings. These loans generally have an interest-only phase during construction then convert to permanent financing. Disbursements of construction loan funds are at our discretion based on the progress of construction. The maximum loan-to-value ratio limit applicable to these loans is generally 75%. At March 31, 2006, we had construction loans with an outstanding aggregate balance of $2.3 million and $1.8 million of undrawn commitments which were secured by multi-family residential or commercial property.

We also make loans to builders and developers for the development of one- to four-family lots in our market area. All of our land loans have been originated with adjustable rates of interest tied to the prime rate of interest and have terms of five years or less. Land loans are generally made in amounts up to a maximum loan-to-value ratio of 65% on raw land and up to 75% on developed building lots based upon an independent appraisal. When feasible, we obtain personal guarantees for our land loans.

The table below sets forth, by type of security property, the number and amount of our construction and land loans at March 31, 2006, all of which are secured by properties located in our market area.

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	Number of Loans	Loans in Process		Net Principal Balance		Non-Performing or of Concern
	(Dollars in thousands)
One- to four-family construction	5	$	607	$	1,653	$	—
Multi-family construction	5		1,762		2,327		—
Residential land	4		—		1,087		—
Total construction and land loans	14	$	2,369	$	5,067	$	—

Construction and land lending generally affords us an opportunity to receive higher origination and other loan fees. In addition, such loans are generally made for relatively short terms. Nevertheless, construction and land lending to persons other than owner-occupants is generally considered to involve a higher level of credit risk than one- to four-family residential lending due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on construction projects, real estate developers and managers. In addition, the nature of these loans is such that they are more difficult to evaluate and monitor. Our risk of loss on a construction or land loan is dependent largely upon the accuracy of the initial estimate of the property’s value upon completion of the project and the estimated cost (including interest) of the project. If the estimate of value proves to be inaccurate, we may be confronted, at or prior to the maturity of the loan, with a project with a value which is insufficient to assure full repayment and/or the possibility of having to make substantial investments to complete and sell the project. Because defaults in repayment may not occur during the construction period, it may be difficult to identify problem loans at an early stage. When loan payments become due, the cash flow from the property may not be adequate to service the debt. In such cases, we may be required to modify the terms of the loan.

Home Equity Lending. We originate variable-rate home equity lines-of-credit and, to a lesser extent, fixed and variable-rate loans secured by a lien on the borrowers’ primary residence. Our home equity products are limited to 80% of the property value less any other mortgages. We use the same underwriting standards for home equity lines-of-credit and loans as we use for one-to four-family residential mortgage loans. Our home equity line-of-credit product carries an interest rate tied to the prime rate published in the Wall Street Journal with a margin that ranges from plus 50 basis points to minus 50 basis points. The product has a rate ceiling of 17.5%. We currently offer home equity loans with terms that amortize over a period of up to ten years. Our home equity lines-of-credit provide for an initial draw period of up to seven years, with monthly payments of interest calculated on the outstanding balance. At the end of the initial seven years, the line may be paid in full or restructured at our then current home equity program.

At March 31, 2006, Ben Franklin Bank of Illinois had $8.1 million, or 8.6% of total loans in home equity loans and outstanding advances under home equity lines and an additional $12.2 million of funds committed, but not advanced, under the home equity lines-of-credit. We are currently refining our home equity line-of-credit product and hope to expand originations of this product in the future.

Commercial Business Loans. From time to time, we originate or purchase secured or unsecured loans to professionals, sole proprietorships and small businesses for commercial, corporate and business purposes. Commercial business lending products include term loans, revolving lines of credit and leases. We also make commercial business loans under certain programs of the U.S. Small Business Administration. Our commercial business loans are generally used for working capital purposes or for acquiring equipment, inventory or furniture.

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Commercial business loans are made with terms usually less than five years with either variable or fixed rates of interest. Variable rates are based on the prime rate, as published in The Wall Street Journal, plus a margin. Fixed rate commercial business loans are set at a margin above prime rate. At March 31, 2006, Ben Franklin Bank of Illinois had $2.5 million of commercial business loans outstanding, representing 2.6% of the total loan portfolio.

When making commercial business loans, we consider the financial statements of the borrower, the lending history of the borrower, the debt service capabilities of the borrower, the projected cash flows of the business, the value of the collateral, if any, and whether the loan is guaranteed by the principals of the borrower. Commercial business loans are generally secured by accounts receivable, inventory and equipment. Depending on the amount of the loan and the collateral used to secure the loan, commercial business loans are made in amounts of up to 80% of the value of the collateral securing the loan.

Commercial business loans generally have a greater credit risk than residential mortgage loans. Unlike residential mortgage loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment and other income, and which are secured by real property whose value tends to be more easily ascertainable, commercial business loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial business loans may be substantially dependent on the success of the business itself. Further, the collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business. We seek to minimize these risks through our underwriting standards.

At March 31, 2006, our largest commercial business loan relationship was a $687,000 loan with a commercial leasing company. At March 31, 2006, this loan was performing in accordance with its terms. We intend to remain an active commercial business lender in the future.

Consumer Lending. To date, our consumer lending apart from home equity lines-of-credit has been quite limited. However, we may increase our consumer lending including automobile lending in the future. Consumer loans, may entail greater credit risk than residential mortgage loans, particularly in the case of consumer loans which are unsecured or are secured by rapidly depreciable assets, such as automobiles. In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans. At March 31, 2006, we had no consumer loans that were non-performing. However, in view of the possible increase in the amount and scope of our consumer lending activities, there can be no assurance that delinquencies in our consumer loan portfolio will not increase in the future.

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Originations, Purchases and Sales of Loans

We originate real estate and other loans through marketing efforts, our customer base, walk-in customers and referrals from real estate brokers, builders and attorneys. We currently offer incentives to employees for loan referrals. We also employ commissioned loan originators to assist in the process of obtaining loans.

We sell loans based on asset/liability, risk sharing and regulatory considerations. For instance, we currently sell most of our fixed-rate one- to four-family residential loan mortgages. Also, we often sell participation interests in our large, multi-family and commercial read estate loans in order to diversify our risk. At March 31, 2006, we serviced $4.9 million of mortgage loans for others.

We purchase loans from third parties to supplement loan production. In particular, we may purchase loans of a type which are not available to us with favorable terms in our own market area. For instance, during 2004, in accordance with our asset/liability policy, we purchased several large pools of adjustable-rate one- to four-family mortgage loans. In addition, we have purchased participations in income producing property and other loans from other lenders on a regular basis. We generally use the same underwriting and approval standards in evaluating loan purchases as we do in originating loans. At March 31, 2006, approximately $35.6 million of our loan portfolio was serviced by others.

The following table shows our loan origination, sale and principal repayment activity during the periods indicated. Loans are presented net of loans in process.

	Three Months Ended March 31,					Years Ended December 31,
	2006		2005			2005			2004
	(In thousands)
Total loans at beginning of period	$	89,982	$	90,255		$	90,255		$	80,279
Loans originated:
Real estate:
One-to four-family		849		1,217			7,309			2,907
Multi-family		436		4,200			8,113			6,489
Commercial		837		922			5,169			4,986
Construction		2,178		1,834			2,539			1,214
Land		—		—			916			163
Consumer and other loans:
Commercial business		820		260			1,569			2,432
Other		9		6			85			109
Total loans originated		5,129		8,439			25,700			18,300
Loans purchased (1)		—		—			3,819			17,993
Deduct:
Principal repayments		2,557		5,984			22,805			24,584
Loan sales (2)		1,228		2,516			5,778			2,344
Home equity lines-of-credit net		201		(11	)		1,131			(868	)
Net other		25		53			78			257
Net loan activity		1,118		(103	)		(273	)		9,976
Total loans at end of period	$	91,100	$	90,152		$	89,982		$	90,255

(1) Consists of adjustable-rate loans on single-family residences located within the Chicago metropolitan area.

(2) Consists of individual fixed-rate loans in single-family residences and participation interests in commercial real estate.

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Delinquencies and Non-Performing Assets

Delinquency Procedures. When a borrower fails to make a required payment on a loan, we attempt to cause the delinquency to be cured by contacting the borrower. A late notice is generated and is sent to all mortgage loans 15 days delinquent and to all consumer loans 10 days delinquent. The borrower is contacted by the collections officer 20 days after the due date of all loans. Another late notice along with any required demand letters as set forth in the loan contract are sent 30 days after the due date. Additional written and verbal contacts may be made with the borrower between 30 and 60 days after the due date.

If the delinquency is not cured by the 60th day, the customer is normally provided 30 days written notice that the account will be referred to counsel for collection and foreclosure, if necessary. If it becomes necessary to foreclose, the property is sold at public sale and we may bid on the property to protect our interest.

All loan charge offs are recommend by the collections officer and approved by either our President or the Chief Loan Officer. Our procedure for repossession and sale of collateral are subject to various requirements under Illinois state consumer protection laws.

When we acquire real estate as a result of foreclosure or by deed in lieu of foreclosure it is classified foreclosed real estate until it is sold. The real estate is recorded at estimated fair value at the date of acquisition, and any write-down resulting from the acquisition is charged to the allowance for loan losses. Subsequent decreases in the value of the property are charged to operations through the creation of a valuation allowance. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell.

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Delinquent Loans. The following table sets forth our loan delinquencies by type and amount at the dates indicated.

	Loans Delinquent For										Total
	30-59 Days			60-89 Days			90 Days and Over
	Number	Amount		Number	Amount		Number	Amount			Number	Amount
	(Dollars in thousands)
At March 31, 2006
Real estate:
One- to four-family	—	$	—	—	$	—	—	$	—		—	$	—
Multi-family	—		—	—		—	1		421	(1)	1		421
Commercial	1		589	—		—	—		—		1		589
Construction	—		—	—		—	—		—		—		—
Land	—		—	—		—	—		—		—		—
Consumer and other loans:
Home equity lines-of-credit	1		125	—		—	—		—		1		125
Commercial business	—		—	—		—	—		—		—		—
Other	—		—	—		—	—		—		—		—
Total	2	$	714		$		1	$	421		3	$	1,135
At December 31, 2005
Real estate:
One- to four-family	—	$	—	—	$	—	—	$	—		—	$	—
Multi-family	—		—	—		—	—		—		—		—
Commercial	—		—	—		—	—		—		—		—
Construction	1		910	—		—	—		—		1		910
Land	—		—	—		—	—		—		—		—
Consumer and other loans:
Home equity lines-of-credit	1		74	—		—	—		—		1		74
Commercial business	—		—	—		—	—		—		—		—
Other	—		—	—		—	—		—		—		—
Total	2	$	984	—	$	—	—	$	—		2	$	984

(1) This loan was repaid in full subsequent to March 31, 2006.

Classified Assets. Federal regulations provide for the classification of loans and other assets, such as debt and equity securities considered by the Office of Thrift Supervision to be of lesser quality, as “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as “special mention” by our management. Special mention assets at March 31, 2006 consisted of residential loans which were either current or less than 90 days delinquent where the collateral was considered adequate to cover the loan but management had concerns regarding the borrowers because of failure to file real estate taxes, personal bankruptcy, chronic late payments or other reasons.

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When an insured institution classifies problem assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover probable accrued losses. General allowances represent loss allowances which have been established to cover probable accrued losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, who may order the establishment of additional general or specific loss allowances.

In connection with the filing of our periodic reports with the Office of Thrift Supervision and in accordance with our classification of assets policy, we regularly review the problem loans in our portfolio to determine whether any loans require classification in accordance with applicable regulations.

On the basis of this review of our assets, our classified or special mention assets at the dates indicated were as follows:

	At March 31, 2006		At December 31,
			2005		2004
	(In thousands)
Substandard	$	—	$	—	$	—
Doubtful		—		—		—
Loss		—		—		—
Special mention		—		—		342
Total classified and special mention assets	$	—	$	—	$	342

Non-Performing Assets. We cease accruing interest on our loans when contractual payments of principal or interest have become 90 days past due or management has serious doubts about further collectibility of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income is reversed. Interest received on nonaccrual loans generally is applied against principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectibility of the total contractual principal and interest is no longer in doubt.

The table below sets forth the amounts and categories of our non-performing assets at the dates indicated. At each date presented, we had no troubled debt restructurings (loans for which a portion of interest or principal has been forgiven and loans modified at interest rates materially less than current market rates).

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	At March 31, 2006			At December 31,
				2005			2004
	(Dollars in thousands)
Non-accrual loans:
Real estate:
One- to four-family	$	—		$	—		$	—
Multi-family		—			—			—
Commercial		—			—			—
Construction		—			—			—
Land		—			—			—
Consumer and other loans:
Home equity lines-of-credit		—			—			—
Commercial business		—			—			—
Other		—			—			—
Total consumer and other loans		—			—			—
Total non-accrual loans	$	—		$	—		$	—
Loans greater than 90 days delinquent and still accruing:
Real estate:
One- to four-family	$	—		$	—		$	—
Multi-family		421	(1)		—			—
Commercial		—			—			—
Construction		—			—			—
Land		—			—			—
Total real estate loans	$	421		$	—		$	—
Consumer and other loans:
Home equity lines-of-credit		—			—			—
Commercial business		—			—			—
Other		—			—			—
Total consumer and other loans		—			—			—
Total non-performing loans	$	421		$	—		$	—
Foreclosed assets:
One- to four-family	$	—		$	—		$	—
Multi-family		—			—			—
Commercial		—			—			—
Construction		—			—			—
Land		—			—			—
Consumer		—			—			—
Business assets		—			—			—
Total foreclosed assets		—			—			—
Total non-performing assets	$	421		$	—		$	—
Ratios:
Non-performing loans to total loans		0.46	%		—	%		—	%
Non-performing assets to total assets		0.38	%		—	%		—	%

(1) This loan was repaid in full subsequent to March 31, 2006.

At March 31, 2006, there were no other loans or other assets that are not disclosed on the table or disclosed as classified or special mention, where known information about the possible credit problems of borrowers caused us to have serious doubts as to the ability of the borrowers to comply with present loan repayment terms and which may result in disclosure of such loans in the future.

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Allowance for Loan Losses

Analysis and Determination of the Allowance for Loan Losses. Our allowance for loan losses is the amount considered necessary to reflect probable incurred losses in our loan portfolio. We evaluate the need to establish allowances against losses on loans on a quarterly basis. When additional allowances are necessary, a provision for loan losses is charged to earnings.

Our methodology for assessing the appropriateness of the allowance for loan losses consists of three key elements: (1) specific allowances for identified problem loans; (2) a general valuation allowance on certain identified problem loans; and (3) a general valuation allowance on the remainder of the loan portfolio. Although we determine the amount of each element of the allowance separately, the entire allowance for loan losses is available for the entire portfolio.

Specific Allowances for Identified Problem Loans. We establish a specific allowance when loans are determined to be impaired. Loss is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. Factors in identifying a specific problem loan include: (1) the strength of the customer’s personal or business cash flows; (2) the availability of other sources of repayment; (3) the amount due or past due; (4) the type and value of collateral; (5) the strength of our collateral position; (6) the estimated cost to sell the collateral; and (7) the borrower’s effort to cure the delinquency. In addition, for loans secured by real estate, we consider the extent of any past due and unpaid property taxes applicable to the property serving as collateral on the mortgage.

General Valuation Allowance on Certain Identified Problem Loans. We also establish a general allowance for loans classified as special mention or substandard that do not have an individual allowance. We segregate these loans by loan category and assign allowance percentages to each category based on inherent losses associated with each type of lending and consideration that these loans, in the aggregate, represent an above-average credit risk and that more of these loans will prove to be uncollectible compared to loans in the general portfolio.

General Valuation Allowance on the Remainder of the Loan Portfolio. We establish a general allowance for loans that are not classified as special mention or substandard to recognize the inherent losses associated with lending activities, but which, unlike specific allowances, has not been allocated to particular problem assets. This general valuation allowance is determined by segregating the loans by loan category and assigning allowance percentages based on our historical loss experience, delinquency trends and management’s evaluation of the collectibility of the loan portfolio. The allowance may be adjusted for significant factors that, in management’s judgment, affect the collectibility of the portfolio as of the evaluation date. These significant factors may include changes in lending policies and procedures, changes in existing general economic and business conditions affecting our primary market area, credit quality trends, collateral value, loan volumes and concentrations, seasoning of the loan portfolio, recent loss experience in particular segments of the portfolio, duration of the current business cycle and bank regulatory examination results. The applied loss factors are re-evaluated quarterly to ensure their relevance in the current real estate environment.

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In addition, as an integral part of their examination process, the Office of Thrift Supervision will periodically review our allowance for loan losses. Such agency may require that we recognize additions to the allowance based on their judgments of information available to them at the time of their examination.

Allowance for Loan Losses. The following table sets forth activity in our allowance for loan losses for the periods indicated.

	At or For the Three Months Ended March 31,						At or For the Years Ended December 31,
	2006			2005			2005			2004
	(Dollars in thousands)
Balance at beginning of period	$	509		$	492		$	492		$	473
Total charge-offs		—			—			—			—
Total recoveries		—			—			—			—
Provision for loan losses		1			6			17			19
Balance at end of year	$	510		$	498		$	509		$	492
Ratios:
Net charge-offs to average loans outstanding (annualized)		—	%		—			—			—
Allowance for loan losses to non-performing loans at end of period		121.14	%		NM	(1)		NM	(1)		NM	(1)
Allowance for loan losses to total loans at end of period		0.56	%		0.55	%		0.56	%		0.54	%

(1) Ratio not meaningful because there were no non-performing loans during such periods.

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Allocation of Allowance for Loan Losses. The following table sets forth the allowance for loan losses allocated by loan category, the total loan balances by category (including loans held for sale), and the percent of loans in each category to total loans 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 March 31,						At December 31,
	2006						2005						2004
	Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans		Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans		Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
Real Estate:
One- to four-family	$	49	$	47,790	50.83	%	$	51	$	48,820	52.72	%	$	69	$	53,441	57.46	%
Multi-family		135		15,511	16.50			142		15,219	16.43			176		12,865	13.83
Commercial		156		12,718	13.52			179		12,504	13.50			72		8,521	9.16
Construction		55		6,349	6.75			41		5,259	5.68			83		6,744	7.25
Land		19		1,087	1.16			13		691	0.75			3		163	0.18
Total Real Estate		414		83,455	88.76			426		82,493	89.08			403		81,734	87.88
Consumer and other:
Home equity lines-of-credit		34		8,061	8.57			36		8,263	8.92			47		9,393	10.10
Commercial business		61		2,458	2.61			46		1,748	1.89			41		1,823	1.96
Other		1		60	0.06			1		104	0.11			1		56	0.06
Total consumer and other		96		10,579	11.24			83		10,115	10.92			89		11,272	12.12
Total loans	$	510	$	94,034	100.00	%	$	509	$	92,608	100.00	%	$	492	$	93,006	100.00	%

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At March 31, 2006, our allowance for loan losses represented 0.56% of total gross loans and 121.1% of nonperforming loans. The allowance for loan losses increased to $510,000 at March 31, 2006 from $509,000 at December 31, 2005, due to the provision for loan losses of $1,000.

Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Furthermore, while we believe we have established our allowance for loan losses in conformity with accounting principles generally accepted in the United States of America, there can be no assurance that regulators, in reviewing our loan portfolio, will not request us to increase our allowance for loan losses. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that increases will not be necessary should the quality of any loan deteriorate as a result of the factors discussed above. Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations.

Investment Activities

General. We utilize mortgage-backed and other securities in our asset/liability management. In making investment decisions, management considers, among other things, our yield and interest rate objectives, our interest rate risk and credit risk position, our loan volume, and our liquidity and cash flow. In the future, we may, subject to market conditions, reduce the percentage or our assets consisting of securities and increase the percentage of our assets consisting of loans. However, following the completion of the offering, we anticipate a short-term increase in our securities pending reinvestment into loans.

We maintain minimum levels of liquid assets to ensure we have adequate cash to fund anticipated needs. Liquidity may increase or decrease depending upon the availability of funds and comparative yields on investments in relation to the return on loans. Cash flow projections are reviewed and updated regularly to assure that adequate liquidity is maintained. Our level of liquidity is a result of management’s asset/liability strategy. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Interest Rate Risk Management.”

Mortgage-Backed Securities. We invest in mortgage-backed pass-through securities in order to supplement loan production and achieve our asset/liability management goals. All of these securities owned by us are issued, insured or guaranteed either directly or indirectly by a Federal agency, a government sponsored enterprise or are rated “AA” or higher. The Government National Mortgage Association (“GNMA”) is a corporation wholly owned by the United States Government and, as a result, all securities issued by it are backed by the full faith and credit of the United States. In contrast, the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FHLMC”) are government sponsored enterprises, the obligations of which are neither backed by, nor explicitly guaranteed by, the United States government.

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While a Federal agency, government sponsored enterprise guarantee or a high credit rating may indicate a high degree of protection against default, such guarantees and ratings do not protect the securities from declines in value based on changes in interest rates or prepayment speeds. Reflecting our policy of maintaining a substantial portfolio of investments having short to medium terms to repricing or maturity, our mortgage-backed pass-through securities portfolio at March 31, 2006 included $3.6 million of adjustable-rate mortgage-backed securities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Interest Rate Risk Management.”

Mortgage-Backed Securities Portfolio Composition. The following table sets forth the composition of our mortgage-backed securities portfolio at the dates indicated.

	At March 31, 2006				At December 31,
					2005				2004
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Mortgage-backed securities available for sale:
Pass-through securities:
FNMA	$	4,110	$	3,999	$	4,338	$	4,253	$	5,729	$	5,699
FHLMC		1,123		1,082		1,132		1,103		1,169		1,162
GNMA		1,591		1,582		1,814		1,807		2,994		3,008
Total mortgage-backed securities available for sale	$	6,824	$	6,663	$	7,284	$	7,163	$	9,892	$	9,869

Mortgage-Backed Securities Activity. The following table sets forth mortgage-backed securities purchases, sales and principal repayments for the periods indicated.

	For the Three Months Ended March 31,						For the Years Ended December 31,
	2006			2005			2005			2004
	(In thousands)
Total at beginning of period	$	7,284		$	9,892		$	9,892		$	11,980
Mortgage-backed securities purchased:
Pass-through		—			—			—			2,682
Principal repayments		(447	)		(646	)		(2,546	)		(3,306	)
Sales		—			—			—			1,374
(Amortization) Accretion		(13	)		(16	)		(62	)		(90	)
Net activity		(460	)		(662	)		(2,608	)		(2,088	)
Total at end of period	$	6,824		$	9,230		$	7,284		$	9,892

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Mortgage-Backed Securities Portfolio Maturities and Yields. The following table sets forth the contractual maturities and weighted average yields of our mortgage-backed securities portfolio at March 31, 2006. Mortgage-backed securities are anticipated to be repaid in advance of their contractual maturities as a result of projected mortgage loan prepayments.

	One Year or Less				More than One Year through Five Years				More than Five Years through Ten Years				More than Ten Years				Total Securities
	Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Fair Value		Weighted Average Yield
	(Dollars in thousands)
Mortgage-backed securities available for sale:
Pass-through securities:
FNMA	$	—	—	%	$	—	—	%	$	—	—	%	$	4,110	3.98	%	$	4,110	$	3,999	3.98	%
FHLMC		—	—			—	—			—	—			1,123	4.35			1,123		1,082	4.35
GNMA		—	—			—	—			—	—			1,591	3.85			1,591		1,582	3.85
Total mortgage-backed securities available for sale		—	—	%		—	—	%		—	—	%		6,824	4.01	%		6,824		6,663	4.01	%

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Federal agency and government sponsored enterprise mortgage-backed securities carry a yield generally lower than that of the corresponding type of residential loan due to a guarantee fee and the retention of a servicing spread by the loan servicer. Accordingly, if the proportion of our assets consisting of mortgage-backed securities increases, our asset yields would likely be somewhat adversely affected. We will evaluate mortgage-backed securities purchases in the future based on its asset/liability objectives, market conditions and alternative investment opportunities.

Other Securities. During recent years, our investment in securities other than mortgage- backed securities, cash and cash equivalents, and Federal Home Loan Bank of Chicago stock have been quite limited. However, in the future, depending on asset/liability management considerations and market considerations, we may determine to invest in other securities including U.S. treasury and agency securities, corporate debt securities and, to a lesser extent, corporate equity securities.

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Sources of Funds

General. Deposits have traditionally been our primary source of funds for use in lending and investment activities. We also use borrowings, primarily Federal Home Loan Bank of Chicago advances, to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and to manage the cost of funds. In addition, we receive funds from scheduled loan payments, investment maturities, loan prepayments, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition.

Deposits. Our deposits are generated primarily from residents within our primary market area. We offer a selection of deposit accounts, including demand accounts, NOW accounts, money market accounts, savings accounts and certificates of deposit. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. We have not accepted brokered deposits in the past, although we have the authority to do so.

Interest rates paid, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals. Personalized customer service and long-standing relationships with customers are relied upon to attract and retain deposits.

The flow of deposits is influenced significantly by general economic conditions, changes in interest rates and competition. Our ability to gather deposits is impacted by the competitive market in which we operate which includes numerous financial institutions of varying sizes offering a wide range of products. We often use promotional rates to meet asset/liability and market segment goals.

The variety of deposit accounts offered allows us to be competitive in obtaining funds and responding to changes in consumer demand. Based on our experience, we believe that statement savings, demand and NOW accounts may be somewhat more stable sources of deposits than certificates of deposits. However, it can be difficult to attract and maintain such deposits at favorable interest rates under current market conditions.

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The following table sets forth the distribution of total deposits by account type, at the dates indicated.

	At March 31, 2006						At December 31,
							2005						2004
	Balance		Percent		Weighted Average Rate		Balance		Percent		Weighted Average Rate		Balance		Percent		Weighted Average Rate
	(Dollars in thousands)
Demand and NOW deposits	$	9,249	9.32	%	0.60	%	$	9,876	10.27	%	0.79	%	$	10,585	10.77	%	0.65	%
Money market deposits		15,089	15.20		1.97			14,656	15.24		1.81			19,683	20.03		1.34
Regular and other savings		11,034	11.12		0.85			11,415	11.87		0.84			12,491	12.71		0.79
Total transaction and savings accounts		35,372	35.64		1.26			35,947	37.38		1.22			42,759	43.51		1.01
Certificates of deposit		63,868	64.36		4.16			60,213	62.62		3.63			55,512	56.49		2.67
Total deposits	$	99,240	100.00	%	3.13		$	96,160	100.00	%	2.73		$	98,271	100.00	%	1.95

The following table sets forth our deposit activities for the periods indicated.

	Three Months Ended March 31,					Years Ended December 31,
	2006		2005			2005			2004
	(In thousands)
Beginning balance	$	96,160	$	98,271		$	98,271		$	100,017
Net deposits (withdrawals) before interest credited		2,376		(1,197	)		(4,165	)		(3,608	)
Interest credited		704		439			2,054			1,862
Net increase (decrease) in deposits		3,080		(759	)		(2,111	)		(1,746	)
Ending balance	$	99,240	$	97,513		$	96,160		$	98,271

As of March 31, 2006, the aggregate amount of our outstanding certificates of deposit in amounts greater than or equal to $100,000 was approximately $10.9 million. The following table sets forth the maturity of these certificates as of March 31, 2006.

	At March 31, 2006
	(In thousands)
Three months or less	$	1,091
Over three months through six months		207
Over six months through one year		4,293
Over one year		5,269
Total	$	10,860

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The following table sets forth the time deposits in the Bank classified by interest rate as of the dates indicated.

	At March 31, 2006		At December 31,
			2005		2004
	(In thousands)
INTEREST RATE:
Less than 2%	$	228	$	645	$	10,141
2.00% - 2.99%		3,271		8,981		34,769
3.00% - 3.99%		24,223		34,541		4,856
4.00% - 4.99%		25,260		15,614		4,067
5.00% - 5.99%		10,886		329		368
6.00% and over		—		103		1,311
Total	$	63,868	$	60,213	$	55,512

The following table sets forth the amount and maturities of time on deposits at March 31, 2006.

	Less Than One Year		Over One Year to Two Years		Over Two Years to Three Years		Over Three Years		Total		Percentage of Total Certificate Accounts
	(Dollars in thousands)
INTEREST RATE:
Less than 2%	$	228	$	—	$	—	$	—	$	228	0.36	%
2.00% - 2.99%		3,083		131		57		—		3,271	5.12
3.00% - 3.99%		15,227		7,879		975		142		24,223	37.93
4.00% - 4.99%		15,809		7,240		256		1,955		25,260	39.55
5.00% - 5.99%		31		10,855		—		—		10,886	17.04
6.00% and over		—		—		—		—		—	—
Total	$	34,378	$	26,105	$	1,288	$	2,097	$	63,868	100.00	%

Borrowings. We may obtain advances from the Federal Home Loan Bank of Chicago upon the security of our capital stock in the Federal Home Loan Bank of Chicago and certain of our mortgage loans and mortgage-backed securities. Such advances may be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities. To the extent such borrowings have different terms to repricing than our deposits, they can change our interest rate risk profile.

From time to time during recent years we have utilized short-term borrowings to fund loan demand. We have also used borrowings where market conditions permit to purchase securities of a similar duration in order to increase our net interest income by the amount of the spread between the asset yield and the borrowing cost. Finally, from time to time, we have obtained advances with terms of three years or more to extend the term of our liabilities.

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Our borrowings consist solely of advances from the Federal Home Loan Bank of Chicago. At March 31, 2006, we had access to additional Federal Home Loan Bank advances of up to $30.0 million. The following table sets forth information concerning balances and interest rates on our Federal Home Loan Bank advances with terms of one year or less at the dates and for the periods indicated.

	At or For the Three Months Ended March 31,						At or For the Years Ended December 31,
	2006			2005			2005			2004
	(Dollars in thousands)
Balance at end of period	$	2,000		$	2,000		$	2,000		$	7,000
Average balance during period		2,000			5,078			2,759			7,000
Maximum outstanding at any month end		2,000			7,000			7,000			7,000
Weighted average interest rate at end of period		4.58	%		4.58	%		4.58	%		6.18	%
Average interest rate during period		4.64			6.00			5.26			6.28

Properties

As of March 31, 2006, the net book value of our properties was $430,000. The following is a list of our offices:

Location	Leased or Owned	Year Acquired or Leased	Square Footage	Net Book Value of Real Property
				(In thousands)
Main Office:
14 N. Dryden Place, Arlington Heights, Illinois	Leased	1976	8,345	$	—
Branch Offices:
3148 Kirchoff Road, Rolling Meadows, Illinois	Leased	1991	3,300		—
360 E. Northwest Highway, Arlington Heights, Illinois	Owned	2001	2,625		430

We plan to build a new main office in a better location within the strip mall in which we now operate. Unlike our current main office, our new main office will accommodate drive up facilities. When the renovation is completed later this year, we will close our branch office located three blocks away and consolidate its activities into our new main office.

We believe that current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion.

Our depositor and customer records are maintained by an outside data processing firm. The net book value of our data processing and computer equipment at March 31, 2006 was $104,000.

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Subsidiary and Other Activities

Ben Franklin Bank of Illinois has no subsidiaries.

Legal Proceedings

We are not involved in any pending legal proceedings as a defendant other than routine legal proceedings occurring in the ordinary course of business. At March 31, 2006, we were not involved in any legal proceedings, the outcome of which would be material to our financial condition or results of operations.

Expense and Tax Allocation

Ben Franklin Bank of Illinois will enter into an agreement with Ben Franklin Financial, Inc. and Ben Franklin Financial, MHC to provide them with certain administrative support services for compensation not less than the fair market value of the services provided. In addition, Ben Franklin Bank of Illinois and Ben Franklin Financial, Inc. entered into an agreement to establish a method for allocating and for reimbursing the payment of their consolidated tax liability.

Personnel

As of March 31, 2006, we had 28 full-time employees and one part-time employee. Our employees are not represented by any collective bargaining group. Management believes that we have good relations with our employees.

FEDERAL, STATE AND LOCAL TAXATION

Federal Taxation

General. Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois will be subject to Federal income taxation in the same general manner as other corporations, with some exceptions discussed below. Ben Franklin Bank of Illinois’s tax returns have not been audited during the past five years. The following discussion of Federal taxation is intended only to summarize certain pertinent Federal income tax matters and is not a comprehensive description of the tax rules applicable to Ben Franklin Financial, Inc. or Ben Franklin Bank of Illinois.

Method of Accounting. For Federal income tax purposes, Ben Franklin Bank of Illinois currently reports its income and expenses on the accrual method of accounting and uses a tax year ending December 31 for filing its Federal income tax returns.

Bad Debt Reserves. Prior to the Small Business Protection Act of 1996 (the “1996 Act”), Ben Franklin Bank of Illinois was permitted to establish a reserve for bad debts and to make annual additions to the reserve. These additions could, within specified formula limits, be deducted in arriving at our taxable income. Ben Franklin Bank of Illinois was required to use the specific charge off method in computing its bad debt deduction beginning with its 1997 Federal tax return. Savings institutions were required to recapture any excess reserves established after December 31, 1987. The reserve balance as of December 31, 1987 is referred to as the base year reserve.

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Taxable Distributions and Recapture. Prior to the 1996 Act, Federal tax bad debt reserves created prior to January 1, 1988 were subject to recapture into taxable income if the thrift institution failed to meet certain thrift asset and definitional tests. Federal legislation has eliminated these thrift-related recapture rules.

At March 31, 2006, our total federal and Illinois pre-1988 base year tax bad debt reserve was approximately $397,000. Under current law, pre-1988 Federal base year reserves remain subject to recapture if a thrift institution makes certain non-dividend distributions, repurchases any of its stock, pays dividends in excess of tax earnings and profits, or ceases to maintain a thrift or bank charter.

Alternative Minimum Tax. The Internal Revenue Code of 1986, as amended (the “Code”) imposes an alternative minimum tax (“AMT”) at a rate of 20% on a base of regular taxable income plus certain tax preferences (“alternative minimum taxable income” or “AMTI”). The AMT is payable to the extent such AMTI is in excess of an exemption amount and the AMT exceeds the regular income tax. Net operating losses can offset no more than 90% of AMTI. Certain payments of AMT may be used as credits against regular tax liabilities in future years. Ben Franklin Bank of Illinois has not been subject to the AMT and has no such amounts available as credits for carryover.

Net Operating Loss Carryovers. A financial institution may carry federal back net operating losses to the preceding two taxable years and forward to the succeeding 20 taxable years. At March 31, 2006, Ben Franklin Bank of Illinois had no net operating loss carryforwards for Federal income tax purposes.

Corporate Dividends-Received Deduction. Ben Franklin Financial, Inc. may exclude from its income 100% of dividends received from Ben Franklin Bank of Illinois as a member of the same affiliated group of corporations. The corporate dividends-received deduction is 80% in the case of dividends received from corporations with which a corporate recipient does not file a consolidated return, and owns more than 20% of the stock of a corporation distributing a dividend may deduct only 70% of dividends received or accrued on their behalf.

State and Local Taxation

Illinois State Taxation. Ben Franklin Financial, Inc., and Ben Franklin Bank of Illinois will be required to file Illinois income tax returns and pay tax at a stated tax rate of 7.30% of Illinois taxable income. For these purposes, Illinois taxable income generally means federal taxable income subject to certain modifications, primarily the exclusion of interest income on United States obligations. As of March 31, 2006, Ben Franklin Bank of Illinois had State of Illinois net operating losses of approximately $1.6 million which are being carried forward and available to reduce future taxable income. These carryforwards expire through 2021.

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SUPERVISION AND REGULATION

General

Ben Franklin Bank of Illinois is examined and supervised by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. This regulation and supervision establishes a comprehensive framework of activities in which an institution may engage and is intended primarily for the protection of the Federal Deposit Insurance Corporation’s deposit insurance funds and depositors. Under this system of Federal regulation, financial institutions are periodically examined to ensure that they satisfy applicable standards with respect to their capital adequacy, assets, management, earnings, liquidity and sensitivity to market interest rates. Following completion of its examination, the Federal agency critiques the institution’s operations and assigns its rating (known as an institution’s CAMELS rating). Under Federal law, an institution may not disclose its CAMELS rating to the public. Ben Franklin Bank of Illinois also is a member of and owns stock in the Federal Home Loan Bank of Chicago, which is one of the twelve regional banks in the Federal Home Loan Bank System. Ben Franklin Bank of Illinois also is regulated to a lesser extent by the Board of Governors of the Federal Reserve System, governing reserves to be maintained against deposits and other matters. The Office of Thrift Supervision examines Ben Franklin Bank of Illinois and prepares reports for the consideration of its board of directors on any operating deficiencies. Ben Franklin Bank of Illinois’s relationship with its depositors and borrowers also is regulated to a great extent by both Federal and state laws, especially in matters concerning the ownership of deposit accounts and the form and content of Ben Franklin Bank of Illinois’s mortgage documents.

Any change in these laws or regulations, whether by the Federal Deposit Insurance Corporation, the Office of Thrift Supervision or Congress, could have a material adverse impact on Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois and their operations.

Federal Banking Regulation

Business Activities. A federal savings bank derives its lending and investment powers from the Home Owners’ Loan Act, as amended, and the regulations of the Office of Thrift Supervision. Under these laws and regulations, Ben Franklin Bank of Illinois may originate mortgage loans secured by residential and commercial real estate, commercial business loans and consumer loans, and it may invest in certain types of debt securities and certain other assets. Certain types of lending, such as commercial and consumer loans, are subject to an aggregate limit calculated as a specified percentage of Ben Franklin Bank of Illinois’s capital assets. Ben Franklin Bank of Illinois also may establish subsidiaries that may engage in activities not otherwise permissible for Ben Franklin Bank of Illinois, including real estate investment and securities and insurance brokerage.

Capital Requirements. Office of Thrift Supervision regulations require savings banks to meet three minimum capital standards: a 1.5% tangible capital ratio, a 4% leverage ratio (3% for savings banks receiving the highest CAMELS rating) and an 8% risk-based capital ratio. The prompt corrective action standards discussed below, in effect, establish a minimum 2% tangible capital standard.

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The risk-based capital standard for savings banks requires the maintenance of Tier 1 (core) and total capital (which is defined as core capital and supplementary capital) to risk-weighted assets of at least 4% and 8%, respectively. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, are multiplied by a risk-weight factor of 0% to 100% assigned by the Office of Thrift Supervision based on the risks believed inherent in the type of asset. Core capital is defined as common stockholders’ equity (including retained earnings), certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries, less intangibles other than certain mortgage servicing rights and credit card relationships. The components of supplementary capital currently include cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated debt and intermediate preferred stock, the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. Overall, the amount of supplementary capital included as part of total capital cannot exceed 100% of core capital.

At March 31, 2006, Ben Franklin Bank of Illinois’s capital exceeded all applicable requirements.

Loans to One Borrower. A federal savings bank generally may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. As of March 31, 2006, Ben Franklin Bank of Illinois was in compliance with the loans-to-one borrower limitations.

Qualified Thrift Lender Test. As a federal savings bank, Ben Franklin Bank of Illinois is subject to a qualified thrift lender, or “QTL,” test. Under the QTL test, Ben Franklin Bank of Illinois must maintain at least 65% of its “portfolio assets” in “qualified thrift investments” in at least nine months of the most recent 12-month period. “Portfolio assets” generally means total assets of a savings institution, less the sum of specified liquid assets up to 20% of total assets, goodwill and other intangible assets, and the value of property used in the conduct of the savings bank’s business.

“Qualified thrift investments” includes various types of loans made for residential and housing purposes, investments related to such purposes, including certain mortgage-backed and related securities, and loans for personal, family, household and certain other purposes up to a limit of 20% of portfolio assets. “Qualified thrift investments” also include 100% of an institution’s credit card loans, education loans and small business loans. Ben Franklin Bank of Illinois also may satisfy the QTL test by qualifying as a “domestic building and loan association” as defined in the Internal Revenue Code.

A savings bank that fails the qualified thrift lender test must either convert to a bank charter or operate under specified restrictions. At March 31, 2006, Ben Franklin Bank of Illinois qualified under the thrift lender test.

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Capital Distributions. Office of Thrift Supervision regulations govern capital distributions by a federal savings bank, which include cash dividends, stock repurchases and other transactions charged to the capital account. A savings bank must file an application for approval of a capital distribution if:

• the total capital distributions for the applicable calendar year exceed the sum of the savings bank’s net income for that year to date plus the savings bank’s retained net income for the preceding two years;

• the savings bank would not be at least adequately capitalized following the distribution;

• the distribution would violate any applicable statute, regulation, agreement or Office of Thrift Supervision-imposed condition; or

• the savings bank is not eligible for expedited treatment of its filings.

Even if an application is not otherwise required, every savings bank that is a subsidiary of a holding company must still file a notice with the Office of Thrift Supervision at least 30 days before the board of directors declares a dividend or approves a capital distribution.

The Office of Thrift Supervision may disapprove a notice or application if:

• the savings bank would be undercapitalized following the distribution;

• the proposed capital distribution raises safety and soundness concerns; or

• the capital distribution would violate a prohibition contained in any statute, regulation or agreement.

In addition, the Federal Deposit Insurance Act provides that an insured depository institution shall not make any capital distribution, if after making such distribution the institution would be undercapitalized.

Liquidity. A federal savings institution is required to maintain a sufficient amount of liquid assets to ensure its safe and sound operation.

Community Reinvestment Act and Fair Lending Laws. All savings banks have a responsibility under the Community Reinvestment Act and related regulations of the Office of Thrift Supervision to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. In connection with its examination of a federal savings bank, the Office of Thrift Supervision is required to assess the savings bank’s record of compliance with the Community Reinvestment Act. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes. A savings bank’s failure to comply with the provisions of the Community Reinvestment Act could result in denial of certain corporate applications, such as branches or mergers, or restrictions on its activities. The failure to comply with the Equal

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Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the Office of Thrift Supervision, as well as other Federal regulatory agencies and the Department of Justice. Ben Franklin Bank of Illinois received a satisfactory Community Reinvestment Act rating in its most recent Federal examination.

Transactions with Related Parties. A federal savings bank’s authority to engage in transactions with its “affiliates” is limited by Office of Thrift Supervision regulations and by Sections 23A and 23B of the Federal Reserve Act. The term “affiliate” for these purposes generally means any company that controls or is under common control with an institution or a financial subsidiary or depository institution subsidiary of an institution. Ben Franklin Financial, Inc. will be an affiliate of Ben Franklin Bank of Illinois. In general, transactions with affiliates must be on terms that are as favorable to the savings bank as comparable transactions with non-affiliates. In addition, certain types of these transactions are restricted to an aggregate percentage of the savings bank’s capital. Collateral in specified amounts must usually be provided by affiliates in order to receive loans from the savings bank. In addition, Office of Thrift Supervision regulations prohibit a savings bank from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary.

Ben Franklin Bank of Illinois’s authority to extend credit to its directors, executive officers and 10% shareholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board. Among other things, these provisions require that extensions of credit to insiders (i) be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features, and (ii) not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of Ben Franklin Bank of Illinois’s capital. In addition, Ben Franklin Bank of Illinois’s board of directors must approve extensions of credit in excess of certain limits.

Enforcement. The Office of Thrift Supervision has primary enforcement responsibility over federal savings institutions and has the authority to bring enforcement action against all “institution-affiliated parties,” including stockholders, and attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an insured institution. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of the institution, receivership, conservatorship or the termination of deposit insurance. Civil penalties cover a wide range of violations and actions, and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1 million per day. The Federal Deposit Insurance Corporation also has the authority to recommend to the Director of the Office of Thrift Supervision that enforcement action be taken with respect to a particular savings institution. If the Director does not take action, the Federal Deposit Insurance Corporation has authority to take action under specified circumstances.

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Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions. These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, compensation, and other operational and managerial standards as the agency deems appropriate. The federal banking agencies adopted Interagency Guidelines Prescribing Standards for Safety and Soundness to implement the safety and soundness standards required under federal law. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. The guidelines address internal controls and information systems, internal audit systems, credit underwriting, loan documentation, interest rate risk exposure, asset growth, compensation, fees and benefits. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these standards, the appropriate federal banking agency may require the institution to submit a compliance plan.

Prompt Corrective Action Regulations. Under the prompt corrective action regulations, the Office of Thrift Supervision is required and authorized to take supervisory actions against undercapitalized savings banks. For this purpose, a savings bank is placed in one of the following five categories based on the savings bank’s capital:

• well-capitalized (at least 5% leverage capital, 6% Tier 1 risk-based capital and 10% total risk-based capital);

• adequately capitalized (at least 4% leverage capital, 4% Tier 1 risk-based capital and 8% total risk-based capital);

• undercapitalized (less than 8% total risk-based capital, 4% Tier 1 risk-based capital or 3% leverage capital);

• significantly undercapitalized (less than 6% total risk-based capital, 3% Tier 1 risk-based capital or 3% leverage capital); and

• critically undercapitalized (less than 2% tangible capital).

Generally, the banking regulator is required to appoint a receiver or conservator for a savings bank that is “critically undercapitalized” within specific time frames. The regulations also provide that a capital restoration plan must be filed with the Office of Thrift Supervision within 45 days of the date a savings bank receives notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” the performance of which must be guaranteed by any company controlling the savings bank up to specified limits. In addition, numerous mandatory supervisory actions become immediately applicable to the savings bank, including, but not limited to, restrictions on growth, investment activities, capital distributions and affiliate transactions. The Office of Thrift Supervision may also take any one of a number of discretionary supervisory actions against undercapitalized savings banks, including the issuance of a capital directive and the replacement of senior executive officers and directors.

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At March 31, 2006, Ben Franklin Bank of Illinois met the criteria for being considered “well-capitalized.”

Insurance of Deposit Accounts. Deposit accounts at Ben Franklin Bank of Illinois are insured by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation. Ben Franklin Bank of Illinois’s deposits, therefore, are subject to Federal Deposit Insurance Corporation deposit insurance assessments and the Federal Deposit Insurance Corporation has adopted a risk-based system for determining deposit insurance assessments.

On February 15, 2006, federal legislation to reform federal deposit insurance was signed into law. This new legislation requires, among other things, an increase in the amount of federal deposit insurance coverage from $100,000 to $130,000 (with a cost of living adjustment to become effective in five years), and the reserve ratio to be modified to provide for a range between 1.15% and 1.50% of estimated insured deposits. The Federal Deposit Insurance Corporation is authorized to raise the assessment rates as necessary to maintain the required ratio of reserves. If the Deposit Insurance Fund’s reserves exceed the designated reserve ratio, the Federal Deposit Insurance Corporation is required to pay out all or, if the reserve ratio is less than 1.5%, a portion of the excess as a dividend to insured depository institutions based on the percentage of insured deposits held on December 31, 1996 adjusted for subsequently paid premiums. Insured depository institutions that were in existence on December 31, 1996 and paid assessments prior to that date (or their successors) are entitled to a one-time credit against future assessments based on their past contributions to the Bank Insurance Fund or Savings Association Insurance Fund.

Effective March 31, 2006, the Federal Deposit Insurance Corporation merged the Bank Insurance Fund and the Savings Association Insurance Fund into a single fund called the Deposit Insurance Fund. As a result of merger, the Bank Insurance Fund and the Savings Association Insurance Fund were abolished. The merger of the Bank Insurance Fund and the Savings Association Insurance Fund into the Deposit Insurance Fund does not affect the authority of the Financing Corporation to impose and collect, with the approval of the Federal Deposit Insurance Corporation, assessments for anticipated payments, issuance costs and custodial fees on bonds issued by the Financing Corporation in the 1980s to recapitalize the Federal Savings and Loan Insurance Corporation. The bonds issued by the Financing Corporation are due to mature in 2017 through 2019. For the quarter ended March 31, 2006, the Financing Corporation assessment was equal to 1.28 basis points for each $100 in domestic deposits maintained at the institution.

Prohibitions Against Tying Arrangements. Federal savings banks are prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

Federal Home Loan Bank System. Ben Franklin Bank of Illinois is a member of the Federal Home Loan Bank System, which consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank System provides a central credit facility primarily for member

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institutions. As a member of the Federal Home Loan Bank of Chicago, Ben Franklin Bank of Illinois is required to acquire and hold shares of capital stock in the Federal Home Loan Bank in an amount at least equal to 1% of the aggregate principal amount of its unpaid residential mortgage loans and similar obligations at the beginning of each year, or 1/20 of its borrowings from the Federal Home Loan Bank, whichever is greater. As of March 31, 2006, Ben Franklin Bank of Illinois was in compliance with this requirement.

Federal Reserve System

The Federal Reserve Board regulations require savings banks to maintain non-interest-earning reserves against their transaction accounts, such as negotiable order of withdrawal (NOW) and regular checking accounts. At March 31, 2006, Ben Franklin Bank of Illinois was in compliance with these reserve requirements.

The USA PATRIOT Act

The USA Patriot Act of 2001 gives the federal government new powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. The USA Patriot Act also requires the federal banking agencies to take into consideration the effectiveness of controls designed to combat money laundering activities in determining whether to approve a merger or other acquisition application of a member institution. Accordingly, if we engage in a merger or other acquisition, our controls designed to combat money laundering would be considered as part of the application process. We have established policies, procedures and systems designed to comply with these regulations.

Sarbanes-Oxley Act

The Sarbanes-Oxley Act of 2002 was enacted in response to public concerns regarding corporate accountability in connection with certain accounting scandals. The stated goals of the Sarbanes-Oxley Act are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. The Sarbanes-Oxley Act generally applies to all companies that file or are required to file periodic reports with the Securities and Exchange Commission, under the Securities Exchange Act of 1934.

The Sarbanes-Oxley Act includes specific additional disclosure requirements, requires the Securities and Exchange Commission and national securities exchanges to adopt extensive additional disclosure, corporate governance and other related rules, and mandates further studies of certain issues by the Securities and Exchange Commission. The Sarbanes-Oxley Act represents significant federal involvement in matters traditionally left to state regulatory systems, such as the regulation of the accounting profession, and to state corporate law, such as the relationship between a board of directors and management and between a board of directors and its committees.

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We expect to incur additional expense in complying with the provisions of the Sarbanes-Oxley Act and the regulations that have been promulgated to implement the Sarbanes-Oxley Act, particularly those regulations relating to the establishment of internal controls over financial reporting.

Holding Company Regulation

General. Upon completion of the reorganization, Ben Franklin Financial, MHC and Ben Franklin Financial, Inc. will be nondiversified savings and loan holding companies within the meaning of the Home Owners’ Loan Act. As such, Ben Franklin Financial, MHC and Ben Franklin Financial, Inc. are registered with the Office of Thrift Supervision and are subject to Office of Thrift Supervision regulations, examinations, supervision and reporting requirements. In addition, the Office of Thrift Supervision has enforcement authority over Ben Franklin Financial, Inc. and Ben Franklin Financial, MHC, and their subsidiaries. Among other things, this authority permits the Office of Thrift Supervision to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings institution. As federal corporations, Ben Franklin Financial, Inc. and Ben Franklin Financial, MHC are generally not subject to state business organization laws.

Permitted Activities. Pursuant to Section 10(o) of the Home Owners’ Loan Act and Office of Thrift Supervision regulations and policy, a mutual holding company and a federally chartered mid-tier holding company such as Ben Franklin Financial, Inc. may engage in the following activities: (i) investing in the stock of a savings bank; (ii) acquiring a mutual savings bank through the merger of such savings bank into a savings bank subsidiary of such holding company or an interim savings bank subsidiary of such holding company; (iii) merging with or acquiring another holding company, one of whose subsidiaries is a savings bank; (iv) investing in a corporation, the capital stock of which is available for purchase by a savings bank under Federal law or under the law of any state where the subsidiary savings bank or savings banks share their home offices; (v) furnishing or performing management services for a savings bank subsidiary of such company; (vi) holding, managing or liquidating assets owned or acquired from a savings subsidiary of such company; (vii) holding or managing properties used or occupied by a savings bank subsidiary of such company; (viii) acting as trustee under deeds of trust; (ix) any other activity (A) that the Federal Reserve Board, by regulation, has determined to be permissible for bank holding companies under Section 4(c) of the Bank Holding Company Act of 1956, unless the Director, by regulation, prohibits or limits any such activity for savings and loan holding companies; or (B) in which multiple savings and loan holding companies were authorized (by regulation) to directly engage on March 5, 1987; (x) any activity permissible for financial holding companies under Section 4(k) of the Bank Holding Company Act, including securities and insurance underwriting; and (xi) purchasing, holding, or disposing of stock acquired in connection with a qualified stock issuance if the purchase of such stock by such savings and loan holding company is approved by the Director of the Office of Thrift Supervision. If a mutual holding company acquires or merges with another holding company, the holding company acquired or the holding company resulting from such merger or acquisition

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may only invest in assets and engage in activities listed in (i) through (xi) above, and has a period of two years to cease any nonconforming activities and divest of any nonconforming investments.

The Home Owners’ Loan Act prohibits a savings and loan holding company, including Ben Franklin Financial, Inc. and Ben Franklin Financial, MHC, directly or indirectly, or through one or more subsidiaries, from acquiring more than 5% of another savings institution or holding company thereof, without prior written approval of the Office of Thrift Supervision. It also prohibits the acquisition or retention of, with certain exceptions, more than 5% of a nonsubsidiary company engaged in activities other than those permitted by the Home Owners’ Loan Act; or acquiring or retaining control of an institution that is not federally insured. In evaluating applications by holding companies to acquire savings institutions, the Office of Thrift Supervision must consider the financial and managerial resources, future prospects of the company and institution involved, the effect of the acquisition on the risk to the insurance fund, the convenience and needs of the community and competitive factors.

The Office of Thrift Supervision is prohibited from approving any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions: (i) the approval of interstate supervisory acquisitions by savings and loan holding companies, and (ii) the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisitions.

Waivers of Dividends by Ben Franklin Financial, MHC. Office of Thrift Supervision regulations require Ben Franklin Financial, MHC to notify the Office of Thrift Supervision of any proposed waiver of its receipt of dividends from Ben Franklin Financial, Inc. The Office of Thrift Supervision reviews dividend waiver notices on a case-by-case basis, and, in general, does not object to any such waiver if:

(i) the waiver would not be detrimental to the safe and sound operation of the subsidiary savings bank; and

(ii) the mutual holding company’s Board of Directors determines that such waiver is consistent with such directors’ fiduciary duties to the mutual holding company’s members.

We anticipate that Ben Franklin Financial, MHC will waive any dividends paid by Ben Franklin Financial, Inc. Under Office of Thrift Supervision regulations, our public stockholders would not be diluted because of any dividends waived by Ben Franklin Financial, MHC (and waived dividends would not be considered in determining an appropriate exchange ratio) in the event Ben Franklin Financial, MHC converts to stock form.

Conversion of Ben Franklin Financial, MHC to Stock Form. Office of Thrift Supervision regulations permit Ben Franklin Financial, MHC to convert from the mutual form of organization to the capital stock form of organization (a “Conversion Transaction”). There can be no assurance when, if ever, a Conversion Transaction will occur, and the board of directors has no current intention or plan to undertake a Conversion Transaction. In a Conversion Transaction a new holding company would be formed as the successor to Ben Franklin

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Financial, Inc. (the “New Holding Company”), Ben Franklin Financial, MHC’s corporate existence would end, and certain depositors of Ben Franklin Bank of Illinois would receive the right to subscribe for additional shares of the New Holding Company. In a Conversion Transaction, each share of common stock held by stockholders other than Ben Franklin Financial, MHC (“Minority Stockholders”) would be automatically converted into a number of shares of common stock of the New Holding Company determined pursuant to an exchange ratio that ensures that Minority Stockholders own the same percentage of common stock in the New Holding Company as they owned in Ben Franklin Financial, Inc. immediately prior to the Conversion Transaction. Under Office of Thrift Supervision regulations, Minority Stockholders would not be diluted because of any dividends waived by Ben Franklin Financial, MHC (and waived dividends would not be considered in determining an appropriate exchange ratio), in the event Ben Franklin Financial, MHC converts to stock form. The total number of shares held by Minority Stockholders after a Conversion Transaction also would be increased by any purchases by Minority Stockholders in the stock offering conducted as part of the Conversion Transaction.

Any Conversion Transaction would require the approval of a majority of the outstanding shares of common stock of Ben Franklin Financial, Inc. held by Minority Stockholders and by two thirds of the total outstanding shares of common stock of Ben Franklin Financial, Inc. Any Conversion Transaction also would require the approval of a majority of the eligible votes of members of Ben Franklin Financial, MHC.

Federal Securities Laws

Ben Franklin Financial, Inc. has filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 for the registration of the shares of common stock to be issued pursuant to the offering. Upon completion of the offering, Ben Franklin Financial, Inc. common stock will be registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934. Ben Franklin Financial, Inc. will continue to be subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.

The registration under the Securities Act of 1933 of shares of common stock to be issued in the offering does not cover the resale of those shares. Shares of common stock purchased by persons who are not affiliates of Ben Franklin Financial, Inc. may be resold without registration. Shares purchased by an affiliate of Ben Franklin Financial, Inc. will be subject to the resale restrictions of Rule 144 under the Securities Act of 1933. If Ben Franklin Financial, Inc. meets the current public information requirements of Rule 144 under the Securities Act of 1933, each affiliate of Ben Franklin Financial, Inc. that complies with the other conditions of Rule 144, including those that require the affiliate’s sale to be aggregated with those of other persons, would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month period, the greater of 1% of the outstanding shares of Ben Franklin Financial, Inc., or the average weekly volume of trading in the shares during the preceding four calendar weeks. In the future, Ben Franklin Financial, Inc. may permit affiliates to have their shares registered for sale under the Securities Act of 1933.

MANAGEMENT

Shared Management Structure

The directors of Ben Franklin Financial, Inc. will be those same persons who are the directors of Ben Franklin Bank of Illinois. In addition, each executive officer of Ben Franklin Financial, Inc.

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will also be an executive officer of Ben Franklin Bank of Illinois. Although there are no present plans to do so, both Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois may choose to appoint additional or different persons as directors and executive officers in the future. We expect that Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois will continue to have common executive officers until there is a business reason to establish separate management structures. To date, directors and executive officers have been compensated for their services to Ben Franklin Bank of Illinois. These individuals may receive additional compensation for their services to Ben Franklin Financial, Inc.

Directors of Ben Franklin Financial, Inc.

The board of directors of Ben Franklin Financial, Inc. will initially consist of six members. Directors will serve three-year staggered terms so that approximately one-third of the directors will be elected at each annual meeting of stockholders. The class of directors whose term of office expires at the first annual meeting of stockholders following completion of the reorganization and offering will consist of Directors Dziedzic and Raino. The class of directors whose term expires at the second annual meeting of stockholders following completion of the reorganization and offering will consist of Directors DeCelles and Perkins. The class of directors whose term of office expires at the third annual meeting of stockholders following the completion of the reorganization and offering will consist of Directors Reninger and Sjogren.

Executive Officers of Ben Franklin Financial, Inc.

The following individuals will be the executive officers of Ben Franklin Financial, Inc. and will hold the offices set forth below opposite their names.

Name	Age(1)	Position
C. Steven Sjogren	60	President and Chief Executive Officer
Glen A. Miller	48	Vice President and Chief Financial Officer
Robin L. Jenkins	51	Senior Vice President and Chief Lending Officer
Angie Plesiotis	41	Vice President and Chief Operations Officer

(1) As of March 31, 2006.

The executive officers of Ben Franklin Financial, Inc. will be elected annually and will hold office until their respective successors have been elected or until death, resignation, retirement or removal by the board of directors.

Directors of Ben Franklin Bank of Illinois

Composition of our Board. We have six directors. Directors of Ben Franklin Bank of Illinois will be elected annually by Ben Franklin Financial, Inc. as its sole stockholder.

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The following table states our directors’ names, their ages as of March 31, 2006, and the calendar years when they began serving as directors:

Directors	Age	Position	Director Since
C. Steven Sjogren	60	Chairman of the Board, President and Chief Executive Officer	2001
Robert E. DeCelles	73	Director	1996
Bernadine V. Dziedzic	66	Director	1998
John R. Perkins	61	Director	2002
Nicholas J. Raino	73	Director	2001
James M. Reninger	60	Director	2001

The Business Background of Our Directors and Executive Officers. The business experience for the past five years of each of our directors and executive officers is set forth below. Unless otherwise indicated, directors and executive officers have held their positions for the past five years.

Directors

C. Steven Sjogren has been the Chairman, President and Chief Executive Officer of Ben Franklin Bank of Illinois since 2002. Mr. Sjogren has extensive banking experience and served as President and Chief Executive Officer of HomeBanc, Rockford, Illinois from 1981 until 1998 and Regional President of FirstStar Bank until 2000.

Robert E. DeCelles is a senior property supervisor with Community Specialist, Inc. He has been employed in the real estate management and development industries for most of his career. From 1999 to 2002, Mr. DeCelles was the President and Chief Executive Officer of Ben Franklin Bank of Illinois. Mr. DeCelles currently serves as Trustee of the S.E.I.U. Local No. 1 Welfare and Pension Fund.

Bernadine V. Dziedzic is currently the compliance officer and corporate secretary for Ben Franklin Bank of Illinois. She has been with Ben Franklin Bank of Illinois since 1998.

John R. Perkins is President of Perkins & Associates, LLC, Rockford, Illinois which provides structured legal settlements for personal injury, wrongful death and workers compensation claims. Mr. Perkins has approximately 25 years of banking experience in various positions including as Executive Vice President of HomeBanc, Rockford, Illinois until 1998 and as Senior Vice President of FirstStar Bank until 2000. He is a certified public accountant.

Nicholas J. Raino is currently retired. He is Chairman of the Board of Dale, Smith & Associates, an advertising and marketing firm specializing in financial institutions. Mr. Raino has served on the boards of three other depository institutions, two of which were publicly traded.

James M. Reninger is the owner of Whitfield & Reninger, Ltd., a public accounting firm located in Arlington Heights. He is a certified public accountant with over 30 years experience.

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Executive Officers Who Are Not Directors

Glen A. Miller has been the Vice President and Chief Financial Officer of Ben Franklin Bank of Illinois since 2001. Previously, he was the Assistant Vice President, Financial Reporting and Analysis with Liberty Federal Savings Bank, located in Hinsdale, Illinois from 1997 to 2001.

Robin L. Jenkins has been the Senior Vice President and Chief Lending Officer of Ben Franklin Bank of Illinois since 2006. Prior to joining Ben Franklin Bank of Illinois, he was Vice President of Mortgage Banking for Norstates Bank.

Angie Plesiotis has been the Chief Operations Officer and Vice President of Ben Franklin Bank of Illinois since 2000. Previously, she was Assistant Vice President and Branch Manager at St. Paul Federal Bank.

Meetings of the Board of Directors and Committees

Our board of directors meets on a monthly basis and may hold additional special meetings. During the year ended December 31, 2005, the board of directors of Ben Franklin Bank of Illinois held 12 regular meetings and 2 special meetings.

Committees of Ben Franklin Financial, Inc.

Ben Franklin Financial, Inc. will have standing Audit, Nominating and Compensation Committees.

The Audit Committee will be responsible for supervising Ben Franklin Financial, Inc.’s accounting, financial reporting and financial control processes. Generally, the Audit Committee will review the quality and integrity of our financial information and reporting functions, the adequacy and effectiveness of our system of internal accounting and financial controls, and the independent audit process, and will annually review the qualifications and approve the engagement of the independent public accountants. We intend that each member of the Audit Committee will be deemed “independent” as defined under the rules of the NASDAQ. The Audit Committee will be comprised of Directors Reninger, Perkins, Raino and DeCelles. Beginning in 2006, the Audit Committee will have sole responsibility for engaging our auditors. At this time, we expect Director Reninger will be an “Audit Committee financial expert” as defined by SEC regulations.

The Nominating Committee will meet annually in order to nominate candidates for membership on the board of directors. The Nominating Committee will be comprised of Directors Perkins, Reninger and Raino. This committee is expected to be comprised of the Board members who are not standing for election.

The Compensation Committee will establish Ben Franklin Financial, Inc.’s compensation policies and will review compensation matters. The Compensation Committee will be comprised of Directors Perkins, Raino and Reninger. It is expected that the Compensation Committee will consist of Ben Franklin Financial, Inc.’s non-employee directors.

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Corporate Governance Policies and Procedures

In addition to establishing committees of the board of directors, Ben Franklin Financial, Inc. will adopt several policies to govern the activities of both Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois, including corporate governance policies and a code of business conduct and ethics. The corporate governance policies are expected to cover such matters as the following:

• the composition, responsibilities and operation of the board of directors;

• the establishment and operation of board committees, including audit, nominating and compensation committees;

• convening executive sessions of independent directors; and

• the board of directors’ interaction with management and third parties.

The code of business conduct and ethics, which is expected to apply to all employees and directors, will address conflicts of interest, the treatment of confidential information, general employee conduct and compliance with applicable laws, rules and regulations. In addition, the code of business conduct and ethics will be designed to deter wrongdoing and to promote honest and ethical conduct, the avoidance of conflicts of interest, full and accurate disclosure and compliance with all applicable laws, rules and regulations.

Director Compensation

Director Fees. Ben Franklin Bank of Illinois pays each director a fee of $600 for each meeting attended and a fee of $125 for each committee meeting attended. Employee directors do not receive fees for committee meetings attended.

Executive Officer Compensation

Summary Compensation Table. The following table sets forth for the year ended December 31, 2005, certain information as to the total remuneration paid by Ben Franklin Bank of Illinois to its Chief Executive Officer, as well as to the other executive officer of Ben Franklin Bank of Illinois who received salary and bonus in excess of $100,000.

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Name and Principal Position	Year	Annual Compensation(1)						All Other Compensation
		Salary($)		Bonus($)		Other Annual Compensation ($)(2)	LTIP Payouts
C. Steven Sjogren, President and Chief Executive Officer	2005	$	150,000	$	10,000	—	—	$	12,500	(3)
Glen A. Miller, Vice President and Chief Financial Officer	2005	$	95,534	$	5,000	—	—	$	3,016	(4)

(1) Summary compensation information is excluded for the years ended December 31, 2004 and December 31, 2003, as Ben Franklin Bank of Illinois was not a public company during those periods.

(2) Does not include the aggregate amount of perquisites or other benefits, which was less than 10% of the aggregate salary and annual bonus reported for him in the Summary Compensation Table.

(3) Consists of $7,700 received in Board fees and $4,500 in matching contributions under the Ben Franklin Bank of Illinois Simple IRA.

(4) Amount represents matching contributions under the Ben Franklin Bank of Illinois Simple IRA.

Benefit Plans

Employment Agreements. Ben Franklin Bank of Illinois plans to enter into similar employment agreements with each of Messrs. Sjogren and Miller. Each of these agreements will have an initial term of up to three years. Commencing on the date of consummation of the reorganization and continuing on each anniversary of such date thereafter, the agreements for Messrs. Sjogren and Miller will be renewed for an additional year so that the remaining term will be three years, subject to termination on notice as provided in the agreements. Under the agreements, the initial base salaries for Messrs. Sjogren and Miller are expected to be $160,000 and $100,534, respectively. In addition to the base salary, each agreement provides for, among other things, participation in bonus programs and other employee pension benefit and fringe benefit plans applicable to executive employees. The executive’s employment may be terminated for cause at any time, in which event the executive would have no right to receive compensation or other benefits for any period after termination.

Certain events resulting in the executive’s termination or resignation entitle the executive to payments of severance benefits following termination of employment. In the event the executive’s employment is terminated for reasons other than for cause, disability or retirement, or in the event the executive resigns during the term of the agreement following (i) failure to elect or reelect or to appoint or reappoint the executive to his executive position, or if the executive is also a director for the Bank, the failure to nominate or re-nominate the executive as a director, (ii) a material change in the nature or scope of the executive’s authority resulting in a reduction of the responsibility, scope, or importance of executive’s position, (iii) relocation of executive’s office by more than 45 miles, (iv) a material reduction in the benefits or perquisites paid to the executive unless such reduction is employer-wide, (vi) the liquidation or dissolution of Ben Franklin Bank of Illinois, or (vi) a material breach of the employment agreement by Ben Franklin Bank of Illinois, then the executive would be entitled to a severance payment in the form of a cash lump sum equal to (a) the remaining base salary and bonus that the executive would have earned under the agreement if the executive had continued employment through the end of the term of the agreement and had earned the maximum bonus or incentive award in each calendar year that ends during the remaining term of the agreement, plus (b) the value of the amount that would have been contributed to any employee benefit plan for the benefit of the executive during the remaining period of the agreement (but note that Internal Revenue Code Section 409A may require that the payment cannot be made until six months after termination of

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employment, if the executive is a “key employee” under IRS rules). In addition, the executive would be entitled, at no expense to the executive, to the continuation of medical coverage for the remaining period of the agreement. In the event of a change in control of Ben Franklin Bank of Illinois or Ben Franklin Financial, Inc., for the purposes of calculating benefits under the above agreements, the remaining term of the agreements should be deemed to be three years.

Not withstanding the above, any severance payments (including payments made in the event of a change in control) to which executive would be entitled, to the extent necessary to comply with Office of Thrift Supervision regulations, shall not exceed three times his average annual compensation over the most recent five taxable years. Accordingly, in the event that their employment has terminated for a reason entitling them to severance payments, Messrs. Sjogren and Miller would receive an aggregate severance payment of approximately $             million and $            , respectively, pursuant to their employment agreements based upon current levels of compensation. Upon the occurrence of a change in control, Messrs. Sjogren and Miller would receive an aggregate severance payment of approximately $             million and $            , respectively, pursuant to their employment agreements based upon current levels of compensation. In the event payments to the executive include an “excess parachute payment” as defined in Section 280G of the Internal Revenue Code, payments under the employment agreements with Ben Franklin Bank of Illinois would be reduced in order to avoid this result.

Under each employment agreement, if an executive becomes disabled or incapacitated within the meaning of the Ben Franklin Bank of Illinois’ long-term disability plan, or if no such plan exists, to the extent the executive is unable to perform his duties for a period of 6 consecutive months, Ben Franklin Bank of Illinois shall continue to pay his salary for one year following termination of employment due to disability and, thereafter, 66 ²/3% of his base salary for all subsequent years until the earliest of: (i) his recovery from the disability; (ii) death; (iii) attainment of age 65; or (iv) 36 months following the date of termination following disability. In the event of executive’s death, his estate or beneficiaries will be paid executive’s base salary for one year from executive’s death. Upon retirement at age 65 or such later date determined by the Board, executive will receive only those benefits to which he is entitled under any retirement plan of Ben Franklin Bank of Illinois to which he is a party.

Upon termination of the executive’s employment other than in connection with a change in control, disability, or as result of the expiration of the agreement’s term following a notice of non-renewal, the executive agrees not to compete with Ben Franklin Bank of Illinois for a period of one year following termination of employment in any town, city, or county in which there is currently a branch of Ben Franklin Bank of Illinois or any subsidiary of Ben Franklin Financial, Inc., or in which Ben Franklin Bank of Illinois, or a subsidiary has filed an application for regulatory approval to establish an office.

Ben Franklin Bank of Illinois also anticipates entering into generally similar agreements with terms of one year with each of Mr. Jenkins and Ms. Plesiotis.

SIMPLE IRA Savings Plan. Ben Franklin Bank of Illinois maintains a SIMPLE IRA Savings Plan. The SIMPLE IRA Savings Plan is a retirement plan in which the employer establishes a SIMPLE IRA (an individual retirement account or annuity) for each eligible

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employee. Employees that are at least 21 years of age and have earned at least $5,000 in each of the two prior years are eligible to participate in the SIMPLE IRA Savings Plan and to have a SIMPLE IRA established for them. Under the SIMPLE IRA Savings Plan, participants are permitted to make salary reduction contributions up to $10,000 per year (this limit increases by $2,500 for participants aged 50 or older). The employer has the option of making (i) matching contributions on each participant’s salary reduction contributions equal to 3% (this amount can be less than 3% but greater than 1% under limited circumstances) of each participant’s compensation or (ii) non-elective contributions of 2% of compensation for each eligible employee. All contributions under the SIMPLE IRA Savings Plan are 100% vested at all times. Withdrawals of contributions are generally permitted at any time, but are subject to a 10% excise tax if withdrawn prior to attainment of age 59 ¹/2. If such withdrawal is made within 2 years of beginning participation in the SIMPLE IRA, this excise tax increases to 25%. As part of the reorganization and offering, participants in the SIMPLE IRA Savings Plan will be permitted to use their SIMPLE IRA account balances to purchase shares of stock of Ben Franklin Financial, Inc. stock for their accounts. However, because the SIMPLE IRA Savings Plan is not a tax-qualified employer retirement plan under the Internal Revenue Code, participants will not receive certain special tax treatment on the stock they purchase in the offering.

Future Stock Benefit Plans

Employee Stock Ownership Plan and Trust. We intend to implement an employee stock ownership plan in connection with the reorganization and offering. The board of directors of Ben Franklin Bank of Illinois adopted the employee stock ownership plan on             , 2006, and the board of directors of Ben Franklin Financial, Inc. will, at the completion of the reorganization and offering, ratify the action to make the employee stock ownership loan. Employees who are at least 21 years old with at least one year of service during which the employee has completed at least 1,000 hours of service with Ben Franklin Bank of Illinois will be eligible to participate. As part of the reorganization and offering, the employee stock ownership plan trust intends to borrow funds from Ben Franklin Financial, Inc. and use those funds to purchase a number of shares equal to 3.92% of the common stock issued in the reorganization (including shares issued to Ben Franklin Financial, MHC). Collateral for the loan will be the common stock purchased by the employee stock ownership plan. The loan will be repaid principally from Ben Franklin Bank of Illinois discretionary contributions to the employee stock ownership plan over a period of 15 years. The loan documents will provide that the loan may be repaid over a shorter period, without penalty for prepayments. It is anticipated that the interest rate for the loan will be a floating rate equal to the prime rate. Shares purchased by the employee stock ownership plan will be held in a suspense account for allocation among participants as the loan is repaid.

Contributions to the employee stock ownership plan and shares released from the suspense account in an amount proportional to the repayment of the employee stock ownership plan loan will be allocated among employee stock ownership plan participants on the basis of compensation in the year of allocation. Benefits under the plan will vest at the rate of 20% per year so that a participant who has five years of credited service after adoption of the plan will be fully vested in his or her account balance under the plan, with credit given to participants for years of credited service with Ben Franklin Bank of Illinois’s mutual predecessor prior to the adoption of the plan. A participant’s interest in his account under the plan will also fully vest in

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the event of termination of service due to a participant’s early or normal retirement, death, disability, or upon a change in control (as defined in the plan). Vested benefits will be payable in the form of common stock and/or cash. Ben Franklin Bank of Illinois’s contributions to the employee stock ownership plan are discretionary, subject to the loan terms and tax law limits. Therefore, benefits payable under the employee stock ownership plan cannot be estimated. Pursuant to SOP 93-6, we will be required to record compensation expense each year in an amount equal to the fair market value of the shares released from the suspense account. In the event of a change in control, the employee stock ownership plan will terminate and participants will become fully vested in their account balances.

Stock-Based Incentive Plan. Following the offering, we intend to adopt a stock-based incentive plan that will provide for grants of stock options and restricted common stock awards for up to 4.90% and 1.96%, respectively, of our outstanding shares (including shares issued to Ben Franklin Financial, MHC) provided that if Ben Franklin Bank of Illinois’ tangible capital at the time of adoption of the stock-based incentive plan is less than 10% of its assets then the amount of options and restricted shares may not exceed 1.47% of our outstanding shares. Without prior Office of Thrift Supervision approval, the number of options granted and shares awarded under the plan, when aggregated with any subsequently adopted stock-based incentive plans (exclusive of any shares held by any employee stock ownership plan), may not exceed 25% of the number of shares of common stock held by persons other than Ben Franklin Financial, MHC.

The stock-based incentive plan will not be established sooner than six months after the stock offering and would require the approval of a majority of the outstanding shares of Ben Franklin Financial, Inc. eligible to be cast, as well as by a majority of the votes eligible to be cast by stockholders other than Ben Franklin Financial, MHC if the stock-based incentive plan is implemented within one year after the stock offering. Under applicable regulations, the following additional restrictions would apply to our stock-based incentive plan if it were implemented within one year after the stock offering:

• non-employee directors in the aggregate may not receive more than 30% of the options and restricted awards authorized under the plan;

• no non-employee director may receive more than 5% of the options and restricted awards authorized under the plan;

• no officer or employee may receive more than 25% of the options and restricted awards authorized under the plan;

• options and restricted awards may not vest more rapidly than 20% per year, beginning on the first anniversary of stockholder approval of the plan; and

• accelerated vesting is not permitted except for death, disability or upon a change in control of Ben Franklin Bank of Illinois or Ben Franklin Financial, Inc.

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Under current Office of Thrift Supervision policy, the foregoing restrictions would also apply to stock-based incentive plans implemented more than one year after the stock offering unless a waiver of the restriction is obtained from the Office of Thrift Supervision. Ben Franklin Bank of Illinois may request a waiver of any one or more of the foregoing restrictions, including restrictions on the total amount and types of awards, if it adopts a stock-based incentive plan more than one year after the offering.

Ben Franklin Financial, Inc. may obtain the shares needed for this plan by issuing additional authorized shares of common stock or from treasury shares obtained through stock repurchases. We will have to recognize compensation expense for accounting purposes ratably over the vesting period, equal to the fair value of options and shares of common stock on the original grant date. Restricted stock awards under this plan may contain restrictions that require continued employment for a period of time for the award to be vested. Awards would not be vested unless the specified employment requirements are satisfied. However, pending vesting, the award recipient may have voting and dividend rights with respect to restricted stock awards. When an award becomes vested, the recipient generally must include the current fair market value of the vested shares in his or her income for federal income tax purposes. We will be allowed a federal income tax deduction in the same amount.

Transactions with Certain Related Persons

In the ordinary course of business, Ben Franklin Bank of Illinois makes loans available to its directors, officers and employees. These loans are made in the ordinary course of business on substantially the same terms (other than interest rate), including collateral, as comparable loans to other borrowers. Management believes that these loans neither involve more than the normal risk of collectibility nor present other unfavorable features. Federal regulations permit executive officers and directors to participate in loan programs that are available to other employees, as long as the director or executive officer is not given preferential treatment compared to other participating employees. Loans made to directors or executive officers, including any modification of such loans, must be approved by a majority of disinterested members of the board of directors. The interest rate on loans to directors and officers is the same as that offered to other employees. At March 31, 2006, we had no loans outstanding to directors or executive officers.

Participation By Management in the Offering

The following table sets forth information regarding intended common stock purchases by each of the directors and executive officers of Ben Franklin Bank of Illinois and their associates, and by all directors and executive officers as a group. In the event the individual maximum purchase limitation is increased, persons subscribing for the maximum amount may increase their purchase order. Directors and executive officers will purchase shares of common stock at the same $10.00 purchase price per share and on the same terms as other purchasers in the offering. This table excludes shares of common stock to be purchased by the employee stock ownership plan, as well as any restricted stock awards or stock option grants which, in any case, may be made no earlier than six months after the completion of the reorganization and offering. The directors and officers have indicated their intention to purchase in the offering an aggregate of $860,000 of common stock, equal to 15.0%, 12.7%, 11.1% and 9.6% of the number of shares of common stock to be sold in the offering, at the minimum, midpoint, maximum and adjusted maximum of the estimated valuation range, respectively.

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Name	Aggregate Purchase Price(1)		Number of Shares(1)	Percent at Midpoint
C. Steven Sjogren	$	200,000	20,000	3.0	%
Robert E. DeCelles		100,000	10,000	1.5
Bernadine V. Dziedzic		100,000	10,000	1.5
John R. Perkins		100,000	10,000	1.5
Nicholas J. Raino		100,000	10,000	1.5
James M. Reninger		100,000	10,000	1.5
All directors and executive officers as a group	$	860,000	86,000	12.7	%

(1) Includes purchases by the individual’s spouse and other relatives of the named individual living in the same household. The above named individuals are not aware of any other purchases by a person who or entity which would be considered an associate of the named individuals under the Plan of Reorganization.

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THE REORGANIZATION AND THE STOCK OFFERING

The board of directors of Ben Franklin Bank of Illinois and the Office of Thrift Supervision have approved the plan subject to the plan’s approval by members at a Special Meeting of Members, and subject to the satisfaction of certain other conditions imposed by the Office of Thrift Supervision in its approval. Office of Thrift Supervision approval does not constitute a recommendation or endorsement of the plan by the Office of Thrift Supervision.

General

On June 28, 2006, the board of directors unanimously adopted the plan pursuant to which we will reorganize from a federally chartered mutual savings bank into a two-tier federal mutual holding company structure. The plan has been approved by the Office of Thrift Supervision subject to, among other things, approval of the plan by our members as of the voting record date. A special meeting of members has been called for this purpose, to be held on             , 2006. The reorganization will be completed as follows, or in any manner approved by the Office of Thrift Supervision that is consistent with the purposes of the plan and applicable laws and regulations:

(i) Ben Franklin Bank of Illinois will organize an interim stock bank as a wholly-owned subsidiary (“Interim One”);

(ii) Interim One will organize an interim stock bank as a wholly-owned subsidiary (“Interim Two”);

(iii) Interim One will organize Ben Franklin Financial, Inc. as a wholly-owned subsidiary;

(iv) Ben Franklin Bank of Illinois will amend its charter to be in the form of a federal stock savings bank charter, at which time it will become a stock savings bank (the “Stock Bank”), and Interim One will exchange its charter for a federal mutual holding company charter to become Ben Franklin Financial, MHC;

(v) simultaneously with step (iv), Interim Two will merge with and into the Stock Bank, and the Stock Bank will be the surviving institution;

(vi) all of the stock constructively issued by the Stock Bank will be transferred to Ben Franklin Financial, MHC in exchange for membership interests in Ben Franklin Financial, MHC; and

(vii) Ben Franklin Financial, MHC will contribute the Stock Bank’s stock to Ben Franklin Financial, Inc., and the Stock Bank will become a wholly owned subsidiary of Ben Franklin Financial, Inc.

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Concurrently with the reorganization, Ben Franklin Financial, Inc. will offer for sale up to 45% of its common stock representing up to 45% of the pro forma market value of Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois.

We have mailed to each person eligible to vote at the special meeting a proxy statement containing information concerning the business purposes of the reorganization and the effects of the reorganization on voting rights, liquidation rights, existing savings accounts, deposit insurance, loans and Ben Franklin Bank of Illinois’s business. The proxy statement also describes the manner in which the plan may be amended or terminated. Included with the proxy statement is a proxy card that can be used to vote on the plan.

The following is a summary of the material aspects of the plan, the subscription offering, and the community offering. The plan should be consulted for a more detailed description of its terms.

Reasons for the Reorganization

The primary purpose of the reorganization is to establish a holding company and to convert Ben Franklin Bank of Illinois to the stock form of ownership in order to compete and expand more effectively in the financial services marketplace. The stock form of ownership is the corporate form used by commercial banks, most major businesses and a large number of savings institutions. The reorganization also will enable customers, employees, management and directors to have an equity ownership interest in our company. Management believes that this will enhance the long-term growth and performance of Ben Franklin Bank of Illinois and Ben Franklin Financial, Inc. by enabling us to attract and retain qualified employees who have a direct interest in our financial success. The reorganization will permit us to issue and sell capital stock, which is a source of capital not available to mutual savings banks. Since we will not be offering all of our common stock for sale in the offering, the reorganization will result in less capital raised in comparison to a standard mutual-to-stock conversion. We are not undertaking a standard mutual-to-stock conversion at this time since we do not believe we could effectively deploy that amount of additional capital on a short-term or near-term basis. The reorganization, however, also will allow us to raise additional capital in the future because a majority of our common stock will be available for sale in the event of a conversion of Ben Franklin Financial, MHC to stock form. The reorganization also will give us greater flexibility to structure and finance the expansion of our operations, including the potential acquisition of other financial institutions, and to diversify into other financial services, to the extent permissible by applicable law and regulation. Although there are no current arrangements, understandings or agreements regarding any such opportunities, we will be in a position after the reorganization, subject to regulatory limitations and our financial condition, to take advantage of any such opportunities that may arise. Lastly, the reorganization will enable us to better manage our capital by providing broader investment opportunities through the holding company structure and by enabling us to repurchase our common stock as market conditions permit. Although the reorganization and offering will create a stock savings bank and stock holding company, only a minority of the common stock will be offered for sale in the offering. As a result, our mutual form of ownership and its ability to provide community-oriented financial services will be preserved through the mutual holding company structure.

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The board of directors believes that these advantages outweigh the potential disadvantages of the mutual holding company structure to minority stockholders, including the inability of stockholders other than Ben Franklin Financial, MHC to own a majority of the common stock of Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois. A majority of our voting stock will be owned by Ben Franklin Financial, MHC, which will be controlled by its board of directors. While this structure will permit management to focus on our long-term business strategy for growth and capital redeployment without undue pressure from stockholders, it will also serve to perpetuate our existing management and directors. Ben Franklin Financial, MHC will be able to elect all the members of Ben Franklin Financial, Inc.’s board of directors, and will be able to control the outcome of all matters presented to our stockholders for resolution by vote. No assurance can be given that Ben Franklin Financial, MHC will not take action adverse to the interests of stockholders, other than the mutual holding company. For example, Ben Franklin Financial, MHC could prevent the sale of control of Ben Franklin Financial, Inc., or defeat a candidate for the board of directors of Ben Franklin Financial, Inc. or other proposals put forth by stockholders.

The reorganization does not preclude the conversion of Ben Franklin Financial, MHC from the mutual to stock form of organization in the future. No assurance can be given when, if ever, Ben Franklin Financial, MHC will convert to stock form or what conditions the Office of Thrift Supervision or other regulatory agencies may impose on such a transaction. See “Risk Factors” and “Summary—Possible Conversion of Ben Franklin Financial, MHC to Stock Form.”

Effects of the Reorganization and Offering on Depositors and Borrowers of Ben Franklin Bank of Illinois

Continuity. While the reorganization is being accomplished, and after its completion, our routine business of accepting deposits and making loans will continue without interruption. We will continue to be subject to regulation by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. After the reorganization, we will continue to provide services for depositors and borrowers under current policies by our management and staff.

Liquidation Rights. Following the completion of the reorganization, all depositors who had liquidation rights with respect to Ben Franklin Bank of Illinois as of the effective date of the reorganization will continue to have such rights solely with respect to Ben Franklin Financial, MHC so long as they continue to hold deposit accounts with Ben Franklin Bank of Illinois. In addition, all persons who become depositors of Ben Franklin Bank of Illinois subsequent to the reorganization will have such liquidation rights with respect to Ben Franklin Financial, MHC.

Deposit Accounts and Loans. Under the plan, each depositor of Ben Franklin Bank of Illinois at the time of the reorganization will automatically continue as a depositor after the reorganization, and each such deposit account will remain the same with respect to deposit balance, interest rate and other terms, except to the extent such deposit is reduced by withdrawals to purchase common stock in the offering. All insured deposit accounts of Ben Franklin Bank of Illinois will continue to be federally insured by the Federal Deposit Insurance Corporation up to the legal maximum limit in the same manner as deposit accounts existing in Ben Franklin Bank of Illinois immediately prior to the reorganization. Furthermore, no loan outstanding will be affected by the reorganization, and the amounts, interest rates, maturity and security for each loan will remain the same as they were prior to the reorganization.

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Voting Rights. Following the completion of the reorganization and offering, deposit account holders of Ben Franklin Bank of Illinois will no longer have voting rights in Ben Franklin Bank of Illinois, but will have voting rights in Ben Franklin Financial, MHC. Following the completion of the reorganization and offering, voting rights in Ben Franklin Financial, Inc. will be held exclusively by its stockholders. Each share of outstanding common stock held by a stockholder will entitle the stockholder to one vote on matters considered by Ben Franklin Financial, Inc. stockholders. Although Ben Franklin Financial, Inc. will have the power to issue shares of capital stock to persons other than Ben Franklin Financial, MHC, as long as Ben Franklin Financial, MHC is in existence, Ben Franklin Financial, MHC will be required to own a majority of the voting stock of Ben Franklin Financial, Inc., and consequently will be able to control the outcome of matters put to a vote of stockholders. Ben Franklin Financial, Inc. may issue any amount of non-voting stock to persons other than Ben Franklin Financial, MHC, and Ben Franklin Financial, Inc. must own 100% of the voting stock of Ben Franklin Bank of Illinois.

Tax Effects of the Reorganization

We intend to proceed with the reorganization on the basis of an opinion from our special counsel, Luse Gorman Pomerenk & Schick, P.C., Washington, D.C., as to tax matters that are material to the reorganization. The opinion is based, among other things, on factual representations made by us, including the representation that the exercise price of the subscription rights to purchase the common stock will be approximately equal to the fair market value of the stock at the time of the completion of the reorganization. Luse Gorman Pomerenk & Schick, P.C.’s opinion provides as follows:

1. The conversion of Ben Franklin Bank of Illinois’s charter from a mutual savings bank charter to a stock bank charter will qualify as a tax-free reorganization under Section 368(a)(1)(F) of the Internal Revenue Code of 1986 (the “Code”), and no gain or loss will be recognized by Ben Franklin Bank of Illinois in either its mutual form (the “Mutual Bank”) or stock form (the “Stock Bank”) as a result.

2. Stock Bank’s holding period in the assets received from the Mutual Bank will include the period during which such assets were held by the Mutual Bank.

3. The Stock Bank’s basis in the assets of Ben Franklin Bank of Illinois will be the same as the basis of such assets in the hands of the Mutual Bank immediately prior to the reorganization.

4. Mutual Bank members will recognize no gain or loss upon the constructive receipt of solely Stock Bank common stock in exchange for their membership interests in Mutual Bank.

5. The Stock Bank will succeed to and take into account the Mutual Bank’s earnings and profits or deficit in earnings and profits, as of the date of the reorganization.

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6. For purposes of Section 381, Stock Bank will be treated the same as Mutual Bank, and therefore, Mutual Bank’s tax year will not end merely as a result of the conversion of the Mutual Bank to stock form and Stock Bank will not be required to obtain a new employer identification number.

7. No gain or loss will be recognized by eligible account holders, supplemental eligible account holders or other members of Mutual Bank on the issuance to them of withdrawable deposit accounts in Stock Bank plus liquidation rights with respect to Ben Franklin Financial, MHC, in exchange for their deposit accounts in Mutual Bank or to the other depositors on the issuance to them of withdrawable deposit accounts.

8. It is more likely than not that the fair market value of the subscription rights to purchase common stock is zero. Accordingly, no gain or loss will be recognized by eligible account holders, supplemental eligible account holders or other members of the Mutual Bank upon the distribution to them of the nontransferable subscription rights to purchase shares of stock in Ben Franklin Financial, Inc. Gain realized, if any, by the eligible account holders, supplemental eligible account holders and other members of the Mutual Bank on the distribution to them of the nontransferable subscription rights to purchase shares of common stock will be recognized but only in an amount not in excess of the fair market value of such subscription rights. Eligible account holders and supplemental eligible account holders will not realize any taxable income as a result of the exercise by them of the nontransferable subscription rights.

9. The basis of the deposit accounts in Stock Bank to be received by the eligible account holders, supplemental eligible account holders and other members of Mutual Bank will be the same as the basis of their deposit accounts in Mutual Bank surrendered in exchange therefor. The basis of the interests in the liquidation rights in the Ben Franklin Financial, MHC to be received by the eligible account holders and supplemental eligible account holders and other members of Mutual Bank will be zero.

10. The exchange of Stock Bank common stock constructively received by eligible account holders, supplemental eligible account holders and other members in exchange for membership interests in Ben Franklin Financial, MHC will constitute a tax-free exchange of property solely for “stock” pursuant to Section 351 of the Code.

11. Eligible account holders, supplemental eligible account holders and other members will recognize no gain or loss upon the transfer of Stock Bank common stock (which they constructively received in the conversion of the Mutual Bank to stock form) to Ben Franklin Financial, MHC solely in exchange for membership interests in Ben Franklin Financial, MHC.

12. Eligible account holders, supplemental eligible account holders and other members’ basis in the Ben Franklin Financial, MHC membership interests received in the transaction (which basis is -0-) will be the same as the basis of the property transferred in exchange for such interests.

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13. Ben Franklin Financial, MHC will recognize no gain or loss upon receipt of property from eligible account holders, supplemental eligible account holders and other members in exchange for membership interests in Ben Franklin Financial, MHC.

14. Ben Franklin Financial, MHC’s basis in the property received from eligible account holders, supplemental eligible account holders and other members (which basis is -0-) will be the same as the basis of such property in the hands of eligible account holders, supplemental eligible account holders and other members immediately prior to the transaction.

15. Ben Franklin Financial, MHC’s holding period for the property received from eligible account holders, supplemental account holders and other members will include the period during which such property was held by such persons.

16. Ben Franklin Financial, MHC and the persons who purchased common stock of Ben Franklin Financial, Inc. in the subscription and community offering (“minority stockholders”) will recognize no gain or loss upon the transfer of Stock Bank stock and cash, respectively, to Ben Franklin Financial, Inc. in exchange for stock in Ben Franklin Financial, Inc.

17. Ben Franklin Financial, Inc. will recognize no gain or loss on its receipt of Stock Bank stock and cash in exchange for Ben Franklin Financial, Inc. common stock.

18. Ben Franklin Financial, MHC’s basis in the Ben Franklin Financial, Inc. common stock received in the Secondary 351 Transaction will be the same as its basis in the Stock Bank stock exchanged for such stock.

19. Ben Franklin Financial, MHC’s holding period in the Ben Franklin Financial, Inc. common stock received will include the period during which it held the Stock Bank common stock, provided that such property was a capital asset on the date of the exchange.

20. Ben Franklin Financial, Inc.’s basis in the Stock Bank stock received from Ben Franklin Financial, MHC will be the same as the basis of such property in the hands of Ben Franklin Financial, MHC.

21. Ben Franklin Financial, Inc.’s holding period for the Stock Bank stock received from Ben Franklin Financial, MHC will include the period during which such property was held by Ben Franklin Financial, MHC.

22. It is more likely than not that the basis of the Ben Franklin Financial, Inc. common stock to its stockholders will be the purchase price thereof. The holding period of the common stock purchased pursuant to the exercise of subscription rights shall commence on the date on which the right to acquire such stock was exercised.

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The opinion addresses all material Federal income tax consequences of the reorganization. The tax opinion as to items 8 and 22 above is based on the position that subscription rights to be received by eligible account holders and supplemental eligible account holders do not have any economic value at the time of distribution or the time the subscription rights are exercised. In this regard, Luse Gorman Pomerenk & Schick, P.C. noted that the subscription rights will be granted at no cost to the recipients, are legally non-transferable and of short duration, and will provide the recipient with the right only to purchase shares of common stock at the same price to be paid by members of the general public in any community offering. The firm also noted that the Internal Revenue Service has not in the past concluded that subscription rights have value. Based on the foregoing, Luse Gorman Pomerenk & Schick, P.C. believes that it is more likely than not that the nontransferable subscription rights to purchase shares of common stock have no value. However, the issue of whether or not the nontransferable subscription rights have value is based on all the facts and circumstances. If the nontransferable subscription rights granted to eligible subscribers are subsequently found to have an ascertainable value greater than zero, income may be recognized by various recipients of the nontransferable subscription rights (in certain cases, whether or not the rights are exercised) and we could recognize gain on the distribution of the nontransferable subscription rights. The Federal and state tax opinions, respectively, referred to in this prospectus are filed as exhibits to the registration statement. See “Where You Can Find More Information.”

The opinions of Luse Gorman Pomerenk & Schick, P.C., unlike a letter ruling issued by the Internal Revenue Service, are not binding on the Internal Revenue Service and the conclusions expressed therein may be challenged at a future date. The Internal Revenue Service has issued favorable rulings for transactions substantially similar to the proposed reorganization, but any such ruling may not be cited as precedent by any taxpayer other than the taxpayer to whom the ruling is addressed. We do not plan to apply for a letter ruling concerning the transactions described in this prospectus.

We also have received an opinion from Crowe Chizek and Company LLC that the Illinois State income tax consequences of the proposed transaction are consistent with the Federal income tax consequences.

Offering of Common Stock

Under the plan of reorganization, up to 892,688 shares of Ben Franklin Financial, Inc. common stock will be offered for sale, subject to certain restrictions described below, through a subscription and community offering.

Subscription Offering. The subscription offering will expire at 12:00 noon, Illinois time, on [EXPIRATION DATE], unless otherwise extended by Ben Franklin Bank of Illinois and Ben Franklin Financial, Inc. Regulations of the Office of Thrift Supervision require that all shares to be offered in the offering be sold within a period ending not more than 90 days after Office of Thrift Supervision approval of the use of the prospectus or a longer period as may be approved by the Office of Thrift Supervision or, despite approval of the plan of reorganization by

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our members, the reorganization and offering will not be effected. This period expires on [EXTENSION DATE #1], unless extended with the approval of the Office of Thrift Supervision. If the offering is not completed by [EXTENSION DATE #1], all subscribers will have the right to modify or rescind their subscriptions and to have their subscription funds returned promptly with interest. In the event of an extension of this type, all subscribers will be notified in writing of the time period within which subscribers must notify Ben Franklin Bank of Illinois of their intention to maintain, modify or rescind their subscriptions. If the subscriber rescinds or does not respond in any manner to Ben Franklin Bank of Illinois’s notice, the funds submitted will be refunded to the subscriber with interest at Ben Franklin Bank of Illinois’s current passbook savings rate, and/or the subscriber’s withdrawal authorizations will be terminated. In the event that the offering is not consummated, all funds submitted and not previously refunded pursuant to the subscription and community offering will be promptly refunded to subscribers with interest at Ben Franklin Bank of Illinois’s current passbook savings rate, and all withdrawal authorizations will be terminated.

Subscription Rights. Under the plan of reorganization, nontransferable subscription rights to purchase the shares of common stock have been issued to persons and entities entitled to purchase the shares of common stock in the subscription offering. The amount of shares of common stock that these parties may purchase will depend on the availability of the common stock for purchase under the categories described in the plan of reorganization. Subscription priorities have been established for the allocation of common stock to the extent that the common stock is available. These priorities are as follows:

Category 1: Eligible Account Holders. Subject to the maximum purchase limitations, each depositor with $50.00 or more on deposit at Ben Franklin Bank of Illinois, as of the close of business on March 31, 2005 will receive nontransferable subscription rights to subscribe for up to the greater of the following:

(i) $100,000 of common stock;

(ii) one-tenth of one percent of the total offering of common stock; or

(iii) 15 times the product, rounded down to the nearest whole number, obtained by multiplying the total number of shares of common stock to be sold by a fraction, the numerator of which is the amount of the qualifying deposit of the eligible account holder and the denominator is the total amount of qualifying deposits of all eligible account holders. The balance of qualifying deposits of all eligible account holders was $97.4 million.

If the exercise of subscription rights in this category results in an oversubscription, shares of common stock will be allocated among subscribing eligible account holders so as to permit each one, to the extent possible, to purchase a number of shares sufficient to make the person’s total allocation equal 100 shares or the number of shares for which the person has actually subscribed, whichever is less. Thereafter, unallocated shares will be allocated among the remaining subscribing eligible account holders whose subscriptions remain unfilled in the proportion that the amounts of their respective qualifying deposits bear to the total amount of qualifying deposits of all remaining eligible account holders whose subscriptions remain

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unfilled; however, no fractional shares shall be issued. If the amount so allocated exceeds the amount subscribed for by any one or more eligible account holders, the excess shall be reallocated, one or more times as necessary, among those eligible account holders whose subscriptions are still not fully satisfied on the same principle until all available shares have been allocated or all subscriptions satisfied. Subscription rights received by officers and directors in this category based on their increased deposits in Ben Franklin Bank of Illinois in the one-year period preceding March 31, 2005 are subordinated to the subscription rights of other eligible account holders.

Category 2: Tax-Qualified Employee Plans. The plan of reorganization provides that tax-qualified employee plans of Ben Franklin Bank of Illinois, such as the employee stock ownership plan, will receive nontransferable subscription rights to purchase up to 10% of the shares of common stock issued in the offering. The employee stock ownership plan intends to purchase 3.92% of the shares of common stock issued in the reorganization (including shares issued to Ben Franklin Financial, MHC). In the event the number of shares offered in the offering is increased above the maximum of the valuation range, tax-qualified employee plans will have a priority right to purchase any shares exceeding that amount up to 10% of the common stock issued in the offering. If the employee stock ownership plan’s subscription is not filled in its entirety, the employee stock ownership plan may purchase shares of common stock in the open market or may purchase shares of common stock directly from Ben Franklin Financial, Inc.

Category 3: Supplemental Eligible Account Holders. To the extent that there are sufficient shares of common stock remaining after satisfaction of subscriptions by eligible account holders and the tax-qualified employee plans, and subject to the maximum purchase limitations, each depositor with $50.00 or more on deposit, as of the close of business on June 30, 2006, will receive nontransferable subscription rights to subscribe for up to the greater of:

(i) $100,000 of common stock;

(ii) one-tenth of one percent of the total offering of common stock; or

(iii) 15 times the product, rounded down to the nearest whole number, obtained by multiplying the total number of shares of common stock to be issued by a fraction, the numerator of which is the amount of qualifying deposits of the supplemental eligible account holder and the denominator is the total amount of qualifying deposits of all supplemental eligible account holders. The balance of qualifying deposits of all supplemental eligible account holders was $             million.

If the exercise of subscription rights in this category results in an oversubscription, shares of common stock will be allocated among subscribing supplemental eligible account holders so as to permit each supplemental eligible account holder, to the extent possible, to purchase a number of shares sufficient to make his or her total allocation equal 100 shares or the number of shares for which the person has actually subscribed, whichever is less. Thereafter, unallocated shares will be allocated among subscribing supplemental eligible account holders whose subscriptions remain unfilled in the proportion that the amounts of their respective qualifying deposits bear to total qualifying deposits of all subscribing supplemental eligible account holders.

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Category 4: Other Members. To the extent that there are sufficient shares of common stock remaining after satisfaction of subscriptions by eligible account holders, the tax-qualified employee plans and supplemental eligible account holders, and subject to the maximum purchase limitations, each member of Ben Franklin Bank of Illinois who is not an eligible account holder, supplemental eligible account holder or tax-qualified employee plan, as of the close of business on [VOTING RECORD DATE], will receive nontransferable subscription rights to purchase $100,000 of common stock.

If there is an oversubscription in this category, the available shares of common stock will be allocated proportionately based on the size of such other member’s orders.

Ben Franklin Bank of Illinois and Ben Franklin Financial, Inc. will make reasonable efforts to comply with the securities laws of all states in the United States in which persons entitled to subscribe for shares of common stock pursuant to the plan of reorganization reside. However, no shares of common stock will be offered or sold under the plan of reorganization to any person who resides in a foreign country or resides in a state of the United States in which a small number of persons otherwise eligible to subscribe for shares under the plan of reorganization reside or as to which Ben Franklin Bank of Illinois and Ben Franklin Financial, Inc. determine that compliance with the securities laws of the state would be impracticable for reasons of cost or otherwise, including, but not limited to, a requirement that Ben Franklin Bank of Illinois or Ben Franklin Financial, Inc. or any of their officers, directors or employees register, under the securities laws of the state, as a broker, dealer, salesman or agent. No payments will be made in lieu of the granting of subscription rights to any person.

Community Offering. Any shares of common stock which have not been purchased in the subscription offering may be offered by Ben Franklin Financial, Inc. in a community offering to members of the general public to whom Ben Franklin Financial, Inc. delivers a copy of this prospectus and a stock order form, with preference given to natural persons residing in Cook County, Illinois. Subject to the maximum purchase limitations, these persons may purchase up to $100,000 of common stock. The community offering, if any, may be undertaken concurrently with, during, or promptly after the subscription offering, and may terminate at any time without notice, but may not terminate later than [EXTENSION DATE #1], unless extended by Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois. Subject to any required regulatory approvals, Ben Franklin Financial, Inc. will determine in its sole discretion the advisability of a community offering, the commencement and termination dates of any community offering, and the methods of finding potential purchasers in such offering. The opportunity to subscribe for shares of common stock in the community offering category is subject to the right of Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois, in their sole discretion, to accept or reject these orders in whole or in part either at the time of receipt of an order or as soon as practicable thereafter.

If there are not sufficient shares of common stock available to fill orders in the community offering, the shares of common stock will be allocated first to each natural person

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residing in Cook County, Illinois whose order is accepted by Ben Franklin Bank of Illinois and, thereafter, to the extent any shares remain available, to cover orders of other members of the general public. In the event orders for common stock in each of these categories exceed the number of shares available for sale within such category, orders shall first be filled so that each person may receive 1,000 shares, and thereafter remaining shares will be allocated on an equal number of shares basis per order.

Syndicated Community Offering. The plan of reorganization provides that, if necessary, all shares of common stock not purchased in the subscription offering and community offering may be offered for sale to the general public in a syndicated community offering to be managed by Keefe, Bruyette & Woods, Inc., acting as our agent. In such capacity, Keefe, Bruyette & Woods, Inc. may form a syndicate of other brokers-dealers who are NASD member firms. Alternatively, we may sell any remaining shares in an underwritten public offering. Neither Keefe, Bruyette & Woods, Inc. nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in the syndicated community offering; however, Keefe, Bruyette & Woods, Inc. has agreed to use its best efforts in the sale of shares in any syndicated community offering. We have not selected any particular broker-dealers to participate in a syndicated community offering and will not do so until prior to the commencement of the syndicated community offering. The syndicated community offering would terminate no later than 45 days after the expiration of the subscription offering, unless extended by us, with approval of the Office of Thrift Supervision. See “—Community Offering” above for a discussion of rights of subscribers in the event an extension is granted.

The opportunity to subscribe for shares of common stock in the syndicated community offering is subject to our right to reject orders, in whole or part, either at the time of receipt of an order or as soon as practicable following the expiration date of the offering. If your order is rejected in part, you will not have the right to cancel the remainder of your order.

The price at which shares of common stock are sold in the syndicated community offering will be the same price as in the subscription and community offerings. Subject to the overall purchase limitations, no person by himself or herself may subscribe for or purchase more than $100,000 or 10,000 shares of common stock.

Limitations on Purchase of Shares. The plan provides for certain limitations on the purchase of shares of common stock in the offering. These limitations are as follows:

A. The aggregate amount of outstanding common stock of Ben Franklin Financial, Inc. owned or controlled by persons other than Ben Franklin Financial, MHC at the close of the reorganization and offering shall be less than 50% of Ben Franklin Financial, Inc.’s total outstanding common stock.

B. The maximum purchase of common stock in the subscription offering by a person or group of persons through a single deposit account is $100,000. No person by himself, or with an associate or group of persons acting in concert, may purchase more than $300,000 of the common stock offered in the offering, except that: (i) Ben Franklin Financial, Inc. may, in its sole discretion and without further

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notice to or solicitation of subscribers or other prospective purchasers, increase such maximum purchase limitation to 5% of the number of shares offered in the offering; (ii) the tax-qualified employee plans may purchase up to 10% of the shares offered in the offering; and (iii) for purposes of this paragraph B shares to be held by any tax-qualified employee plan and attributable to a person shall not be aggregated with other shares purchased directly by or otherwise attributable to such person.

C. The aggregate amount of common stock acquired in the offering, plus all prior stock offerings by Ben Franklin Financial, Inc., by any non-tax-qualified employee plan or any management person (as defined in the plan) and his or her associates, exclusive of any shares of common stock acquired by such plan or management person and his or her associates in the secondary market, shall not exceed 4.9% of the outstanding shares of common stock of Ben Franklin Financial, Inc., at the conclusion of the offering. In calculating the number of shares held by any management person and his or her associates under this paragraph, shares held by any tax-qualified employee plan or non-tax-qualified employee plan of Ben Franklin Financial, Inc., or Ben Franklin Bank of Illinois that are attributable to such person shall not be counted.

D. The aggregate amount of common stock acquired in the offering, plus all prior stock offerings by Ben Franklin Financial, Inc., by any non-tax-qualified employee plan or any management person and his or her associates, exclusive of any common stock acquired by such plan or management person and his or her associates in the secondary market, shall not exceed 4.9% of the stockholders’ equity of Ben Franklin Financial, Inc., at the conclusion of the offering. In calculating the number of shares held by any management person and his or her associates under this paragraph, shares held by any tax-qualified employee plan or non-tax-qualified employee plan of Ben Franklin Financial, Inc., or Ben Franklin Bank of Illinois that are attributable to such person shall not be counted.

E. The aggregate amount of common stock acquired in the offering, plus all prior stock offerings by Ben Franklin Financial, Inc., by any one or more tax-qualified employee plans, exclusive of any shares of common stock acquired by such plans in the secondary market, shall not exceed 4.9% of the outstanding shares of common stock of Ben Franklin Financial, Inc., at the conclusion of the offering.

F. The aggregate amount of common stock acquired in the offering, plus all prior stock offerings by Ben Franklin Financial, Inc., by any one or more tax-qualified employee plans, exclusive of any shares of common stock acquired by such plans in the secondary market, shall not exceed 4.9% of the stockholders’ equity of Ben Franklin Financial, Inc., at the conclusion of the offering

G. The aggregate amount of common stock acquired in the offering, plus all prior stock offerings by Ben Franklin Financial, Inc., by all stock benefit plans of Ben Franklin Financial, Inc., or Ben Franklin Bank of Illinois, other than employee

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stock ownership plans, shall not exceed 25% of the outstanding common stock of Ben Franklin Financial, Inc., held by persons other than the Ben Franklin Financial, MHC.

H. The aggregate amount of common stock acquired in the offering, plus all prior stock offerings by Ben Franklin Financial, Inc., by all non-tax-qualified employee plans or management persons and their associates, exclusive of any common stock acquired by such plans or management persons and their associates in the secondary market, shall not exceed 33% of the outstanding shares of common stock held by persons other than the Ben Franklin Financial, MHC at the conclusion of the offering. In calculating the number of shares held by management persons and their associates under this paragraph or paragraph I. below, shares held by any tax-qualified employee plan or non-tax-qualified employee plan that are attributable to such persons shall not be counted.

I. The aggregate amount of common stock acquired in the offering, plus all prior stock offerings by Ben Franklin Financial, Inc., by all non-tax-qualified employee plans or management persons and their associates, exclusive of any common stock acquired by such plans or management persons and their associates in the secondary market, shall not exceed 33% of the stockholders’ equity of Ben Franklin Financial, Inc., held by persons other than the Ben Franklin Financial, MHC at the conclusion of the offering.

J. Notwithstanding any other provision of the plan of reorganization, no person shall be entitled to purchase any common stock to the extent such purchase would be illegal under any Federal law or state law or regulation or would violate regulations or policies of the National Association of Securities Dealers, Inc. (“NASD”). Ben Franklin Financial, Inc., and/or its agents may ask for an acceptable legal opinion from any purchaser as to the legality of such purchase and may refuse to honor any purchase order if such opinion is not timely furnished.

K. The board of directors of Ben Franklin Financial, Inc., has the right in its sole discretion to reject any order submitted by a person whose representations the board of directors believes to be false or who it otherwise believes, either alone or acting in concert with others, is violating, circumventing, or intends to violate, evade or circumvent the terms and conditions of this Plan.

L. A minimum of 25 shares of common stock must be purchased by each person purchasing shares in the offering to the extent those shares are available; provided, however, that in the event the minimum number of shares of common stock purchased times the price per share exceeds $500, then such minimum purchase requirement shall be reduced to such number of shares which when multiplied by the price per share shall not exceed $500, as determined by the Board.

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For purposes of the plan of reorganization, the members of the board of directors are not deemed to be acting in concert solely by reason of their board membership. The term “associate” is used above to indicate any of the following relationships with a person:

• any corporation or organization, other than Ben Franklin Financial, MHC, Ben Franklin Financial, Inc. or Ben Franklin Bank of Illinois or a majority-owned subsidiary of Ben Franklin Financial, Inc. or Ben Franklin Bank of Illinois, of which a person is a senior officer or partner, or beneficially owns, directly or indirectly, 10% or more of any class of equity securities of the corporation or organization;

• any trust or other estate if the person has a substantial beneficial interest in the trust or estate or is a trustee or fiduciary of the estate. For purposes of Office of Thrift Supervision Regulations Sections 563b.370, 563b.380, 563b.385, 563b.390 and 563b.505 a person who has a substantial beneficial interest in a tax-qualified or non-tax-qualified employee plan, or who is a trustee or fiduciary of the plan is not an associate of the plan. For purposes of Section 563b.370 of the Office of Thrift Supervision Regulations, a tax-qualified employee plan is not an associate of a person;

• any person who is related by blood or marriage to such person and (i) who lives in the same house as the person; or (ii) who is a director or senior officer of Ben Franklin Financial, MHC, Ben Franklin Financial, Inc. or Ben Franklin Bank of Illinois or a subsidiary thereof; and

• any person acting in concert with the persons or entities specified above.

As used above, the term “acting in concert” means:

• knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement;

• a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise; or

• a person or company which acts in concert with another person or company (“other party”) shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated.

Persons or companies who file jointly a Schedule 13-D or Schedule 13-G with any regulatory agency will be deemed to be acting in concert.

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The boards of directors of Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois may, in their sole discretion, and without notice or solicitation of other prospective purchasers, increase the maximum purchase limitation up to 5.0% of the shares being offered in the offering or decrease it to 0.10% of the shares offered in the offering. Requests to purchase shares of Ben Franklin Financial, Inc. common stock under this provision will be allocated by the boards of directors in accordance with the priority rights and allocation procedures set forth above. Depending upon market and financial conditions, and subject to certain regulatory limitations, the boards of directors of Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois, with the approval of the Office of Thrift Supervision and without further approval of the members, may increase or decrease any of the above purchase limitations at any time. To the extent that shares are available, each subscriber must subscribe for a minimum of 25 shares. In computing the number of shares of common stock to be allocated, all numbers will be rounded down to the next whole number.

Shares of common stock purchased in the offering will be freely transferable except for shares of common stock purchased by executive officers and directors of Ben Franklin Bank of Illinois or Ben Franklin Financial, Inc. and except as described below. In addition, under NASD guidelines, members of the NASD and their associates are subject to certain reporting requirements upon purchase of these securities.

Restrictions on Transferability of Subscription Rights

Subscription rights are nontransferable. Ben Franklin Bank of Illinois may reasonably investigate to determine compliance with this restriction. Persons selling or otherwise transferring their rights to subscribe for shares of common stock in the subscription offering or subscribing for shares of common stock on behalf of another person may forfeit those rights and may face possible further sanctions and penalties imposed by the Office of Thrift Supervision or another agency of the United States Government. Ben Franklin Bank of Illinois and Ben Franklin Financial, Inc. will pursue any and all legal and equitable remedies in the event they become aware of the transfer of subscription rights and will not honor orders known by them to involve the transfer of these rights. Each person exercising subscription rights will be required to certify that he or she is purchasing shares solely for his or her own account and that he or she has no agreement or understanding with any other person for the sale or transfer of the shares of common stock. In addition, joint stock registration will be allowed only if the qualifying account is so registered. Once tendered, subscription orders cannot be revoked without the consent of Ben Franklin Bank of Illinois and Ben Franklin Financial, Inc.

Prospectus Delivery and Procedure for Purchasing Common Stock

To ensure that each purchaser receives a prospectus at least 48 hours prior to the end of the offering, in accordance with Rule 15c2-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) no prospectus will be mailed later than five days or hand delivered any later than two days prior to the end of the offering. Execution of the order form will confirm receipt or delivery of a prospectus in accordance with Rule 15c2-8. Order forms will be distributed only with a prospectus. Neither we nor Keefe, Bruyette & Woods, Inc. is obligated to deliver a prospectus and an order form by any means other than the United States Postal Service.

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To ensure that eligible account holders, supplemental eligible account holders, and other members are properly identified as to their stock purchase priorities, such parties must list all deposit accounts, or in the case of other members who are borrowers only, loans held at Ben Franklin Bank of Illinois, on the order form giving all names on each deposit account and/or loan and the account and/or loan numbers at the applicable eligibility date.

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Full payment by check, money order, bank draft or withdrawal authorization (payment by wire transfer will not be accepted) must accompany an original order form. We are not obligated to accept an order submitted on photocopied or telecopied order forms. Orders cannot and will not be accepted without the execution of the certification appearing on the order form.

If the employee stock ownership plan purchases shares of common stock, it will not be required to pay for such shares until consummation of the offering, provided that there is a loan commitment to lend to the employee stock ownership plan the amount of funds necessary to purchase the number of shares ordered.

Plan of Distribution and Marketing Arrangements

Offering materials for the offering initially have been distributed to certain persons by mail, with additional copies made available through our Stock Information Center and Keefe, Bruyette & Woods, Inc. All prospective purchasers must send payment directly to Ben Franklin Bank of Illinois, where such funds will be held in a segregated savings account at Ben Franklin Bank of Illinois or, at our discretion, another federally insured depository institution, and not released until the offering is completed or terminated.

To assist in the marketing of the common stock, we have retained Keefe, Bruyette & Woods, Inc., which is a broker-dealer registered with the NASD. Keefe, Bruyette & Woods, Inc. will assist us in the offering as follows: (i) in training and educating our employees regarding the mechanics of the offering; (ii) in conducting informational meetings for employees, customers and the general public; (iii) in coordinating the selling efforts in our local communities; and (iv) in soliciting orders for shares of common stock in the subscription and community offering. For these services, Keefe, Bruyette & Woods, Inc. will receive a management fee of $25,000 and a success fee equal to 1.25% of the dollar amount of the shares of common stock sold in the subscription and community offerings with a minimum of $100,000. The success fee will be reduced by the management fee. No fee will be payable to Keefe, Bruyette & Woods, Inc. with respect to shares purchased by officers, directors and employees or their immediate families or shares purchased by our tax-qualified employee benefit plans currently estimated to total 49,980 shares, 67,620 shares, and 77,763 shares at the minimum, maximum and adjusted maximum of the offering range, respectively. If there is a syndicated offering, Keefe, Bruyette & Woods, Inc. will receive a fee in an amount competitive with gross underwriting discounts charged at such time for underwritings of comparable amounts of common stock sold at a comparable price per share in a similar market environment. However, the total fees payable to Keefe, Bruyette & Woods, Inc. and other NASD member firms in the syndicated offering shall not exceed 5.5% of the aggregate dollar amount of the common stock sold in the syndicated community offering.

We also will reimburse Keefe, Bruyette & Woods, Inc. for its reasonable expenses associated with its marketing effort (including legal fees), up to a maximum of $65,000. We will indemnify Keefe, Bruyette & Woods, Inc. against liabilities and expenses (including legal fees) incurred in connection with certain claims or litigation arising out of or based upon untrue statements or omissions contained in the offering material for the common stock, including liabilities under the Securities Act of 1933.

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Keefe, Bruyette & Woods, Inc. has not prepared any report or opinion constituting a recommendation or advice to us or to persons who subscribe for stock, nor has it prepared an opinion as to the fairness to us of the purchase price or the terms of the stock to be sold. Keefe, Bruyette & Woods, Inc. expresses no opinion as to the prices at which common stock to be issued may trade.

Our directors and executive officers may participate in the solicitation of offers to purchase shares of common stock. Other trained employees may participate in the offering in ministerial capacities, providing clerical work in effecting a sales transaction or answering questions of a ministerial nature. Other questions of prospective purchasers will be directed to executive officers or registered representatives. We will rely on Rule 3a4-1 of the Exchange Act, so as to permit officers, directors, and employees to participate in the sale of shares of common stock. No officer, director or employee will be compensated for his participation by the payment of commissions or other remuneration based either directly or indirectly on the transactions in the common stock. Keefe, Bruyette & Woods, Inc. will solicit orders and conduct sales of the common stock of Ben Franklin Financial, Inc. in states in which our directors and executive officers are not permitted to offer and sell our common stock.

How We Determined Stock Pricing and the Number of Shares to be Issued

The plan of reorganization and Federal regulations require that the aggregate purchase price of the common stock sold in the offering be based on the appraised pro forma market value of the common stock, as determined on the basis of an independent valuation. We retained RP Financial, LC. to make the independent valuation. RP Financial, LC. will receive a fee of $32,500. We have agreed to indemnify RP Financial, LC. and its employees and affiliates against certain losses (including any losses in connection with claims under the Federal securities laws) arising out of its services as appraiser, except where RP Financial, LC.’s liability results from its negligence or bad faith.

The independent valuation was prepared by RP Financial, LC. in reliance upon the information contained in the prospectus, including the financial statements. RP Financial, LC. also considered the following factors, among others:

• the present and projected operating results and financial condition of Ben Franklin Bank of Illinois and the economic and demographic conditions in our existing market area;

• historical, financial and other information relating to Ben Franklin Bank of Illinois;

• a comparative evaluation of the operating and financial statistics of Ben Franklin Bank of Illinois with those of other publicly traded subsidiaries of holding companies;

• the aggregate size of the offering;

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• the impact of the reorganization and offering on our stockholders’ equity and earnings potential;

• the proposed dividend policy of Ben Franklin Financial, Inc.; and

• the trading market for securities of comparable institutions and general conditions in the market for such securities.

On the basis of the foregoing, RP Financial, LC. advised us that as of June 16, 2006, the estimated pro forma market value of the common stock on a fully converted basis ranged from a minimum of $12.8 million to a maximum of $17.3 million, with a midpoint of $15.0 million (the estimated valuation range). The board determined to offer the shares of common stock in the offering at the purchase price of $10.00 per share and that 45% of the shares issued should be held by purchasers in the offering and 55% should be held by Ben Franklin Financial, MHC. Based on the estimated valuation range and the purchase price of $10.00 per share, the number of shares of common stock that Ben Franklin Financial, Inc. will issue will range from 1,275,000 shares to 1,725,000 shares, with a midpoint of 1,500,000 shares, and the number of shares sold in the offering will range from 573,750 shares to 776,250 shares, with a midpoint of 675,000 shares.

The board reviewed the independent valuation and, in particular, considered (i) our financial condition and results of operations for the three months ended March 31, 2006 and the year ended December 31, 2005, (ii) financial comparisons to other financial institutions, and (iii) stock market conditions generally and, in particular, for financial institutions, all of which are set forth in the independent valuation. The board also reviewed the methodology and the assumptions used by RP Financial, LC. in preparing the independent valuation. The estimated valuation range may be amended with the approval of the Office of Thrift Supervision, if necessitated by subsequent developments in our financial condition or market conditions generally.

Following commencement of the subscription offering, the maximum of the estimated valuation range may be increased by up to 15%, to up to $19.8 million and the maximum number of shares that will be outstanding immediately following the offering may be increased up to 15% to 1,983,750 shares. Under such circumstances the number of shares sold in the offering will be increased to 892,688 shares and the number of shares held by Ben Franklin Financial, MHC will be increased to 1,091,062 shares. The increase in the valuation range may occur to reflect changes in market and financial conditions, demand for the shares, or regulatory considerations, without the resolicitation of subscribers. The minimum of the estimated valuation range and the minimum of the offering range may not be decreased without a resolicitation of subscribers. The purchase price of $10.00 per share will remain fixed. See “Offering of Common Stock-Limitations On Purchase of Shares” as to the method of distribution and allocation of additional shares of common stock that may be issued in the event of an increase in the offering range to fill unfilled orders in the subscription and community offerings.

The independent valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock. RP Financial, LC. did not independently verify the financial statements and other information

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provided by Ben Franklin Bank of Illinois, nor did RP Financial, LC. value independently the assets or liabilities of Ben Franklin Bank of Illinois. The independent valuation considers Ben Franklin Bank of Illinois as a going concern and should not be considered as an indication of its liquidation value. Moreover, because the valuation is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons purchasing shares in the offering will thereafter be able to sell such shares at prices at or above the purchase price.

The independent valuation will be updated at the time of the completion of the offering. If the update to the independent valuation at the conclusion of the offering results in an increase in the pro forma market value of the common stock to more than $19.8 million or a decrease in the pro forma market value to less than $12.8 million, then Ben Franklin Financial, Inc., after consulting with the Office of Thrift Supervision, may terminate the plan of reorganization and return all funds promptly, with interest on payments made by check, certified or teller’s check, bank draft or money order; extend or hold a new subscription offering, community offering, or both; establish a new offering range and commence a resolicitation of subscribers; or take such other actions as may be permitted by the Office of Thrift Supervision in order to complete the reorganization and offering. In the event that a resolicitation is commenced, unless an affirmative response is received within a reasonable period of time, all funds will be promptly returned to investors as described above. A resolicitation, if any, following the conclusion of the subscription and community offerings would not exceed 45 days unless further extended by the Office of Thrift Supervision for periods of up to 90 days not to extend beyond 24 months following the special meeting of members, or [EXTENSION DATE #2].

An increase in the independent valuation and the number of shares to be issued in the offering would decrease both a subscriber’s ownership interest and Ben Franklin Financial, Inc.’s pro forma earnings and stockholders’ equity on a per share basis while increasing pro forma earnings and stockholders’ equity on an aggregate basis. A decrease in the independent valuation and the number of shares of common stock to be issued in the offering would increase both a subscriber’s ownership interest and Ben Franklin Financial, Inc.’s pro forma earnings and stockholders’ equity on a per share basis while decreasing pro forma net income and stockholders’ equity on an aggregate basis. For a presentation of the effects of such changes, see “Pro Forma Data.”

Copies of the appraisal report of RP Financial, LC. and the detailed memorandum of the appraiser setting forth the method and assumptions for such appraisal are available for inspection at the main office of Ben Franklin Bank of Illinois and the other locations specified under “Where You Can Find More Information.”

No sale of shares of common stock may occur unless, prior to such sale, RP Financial, LC. confirms to Ben Franklin Bank of Illinois and the Office of Thrift Supervision that, to the best of its knowledge, nothing of a material nature has occurred that, taking into account all relevant factors, would cause RP Financial, LC. to conclude that the independent valuation is incompatible with its estimate of the pro forma market value of the common stock of Ben Franklin Financial, Inc. at the conclusion of the offering. Any change that would result in an aggregate purchase price that is below the minimum or above the maximum of the estimated valuation range would be subject to Office of Thrift Supervision’s approval. If such

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confirmation is not received, we may extend the offering; reopen the offering or commence a new offering; establish a new estimated valuation range and commence a resolicitation of all purchasers with the approval of the Office of Thrift Supervision; or take such other actions as permitted by the Office of Thrift Supervision in order to complete the offering.

Procedure for Purchasing Shares

Prospectus Delivery. To ensure that each purchaser receives a prospectus at least 48 hours before the expiration date, prospectuses may not be mailed any later than five days prior to such date or be hand delivered any later than two days prior to such date. Order forms may only be distributed with a prospectus.

Expiration Date. The offering will terminate at 12:00 noon, Illinois time on [EXPIRATION DATE] unless extended by us for up to 45 days following the expiration of the stock offering, which is [EXTENSION DATE #1], or, if approved by the Office of Thrift Supervision, for an additional period after [EXTENSION DATE #1] (as so extended, the “expiration date”). We are not required to give purchasers notice of any extension unless the expiration date is later than [EXTENSION DATE #1], in which event purchasers will be given the right to increase, decrease, confirm, or rescind their orders.

Use of Order Forms. In order to purchase shares of common stock, each purchaser must complete an order form except for certain persons purchasing in the syndicated community offering as more fully described below. Any person receiving an order form who desires to purchase shares of common stock may do so by delivering to a full service office of Ben Franklin Bank of Illinois, a properly executed and completed order form, together with full payment for the shares of common stock purchased. The order form must be received by Ben Franklin Bank of Illinois prior to 12:00 noon, Illinois time on [EXPIRATION DATE]. Each person ordering shares of common stock is required to represent that they are purchasing such shares for his or her own account. Our interpretation of the terms and conditions of the plan of reorganization and stock issuance plan and of the acceptability of the order forms will be final. We are not required to accept copies of order forms.

Payment for Shares. Payment for all shares will be required to accompany a completed order form for the purchase to be valid. Payment for shares may be made by (i) check or money order or (ii) authorization of withdrawal from a deposit account maintained with Ben Franklin Bank of Illinois. Third party checks will not be accepted as payment for a subscriber’s order. Appropriate means by which such withdrawals may be authorized are provided in the order forms.

Once such a withdrawal amount has been authorized, a hold will be placed on such funds, making them unavailable to the depositor until the offering has been completed or terminated. In the case of payments authorized to be made through withdrawal from deposit accounts, all funds authorized for withdrawal will continue to earn interest at the contract rate until the offering is completed or terminated.

Interest penalties for early withdrawal applicable to certificate of deposit accounts at Ben Franklin Bank of Illinois will not apply to withdrawals authorized for the purchase of shares of

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common stock. However, if a withdrawal results in a certificate of deposit account with a balance less than the applicable minimum balance requirement, the certificate of deposit shall be canceled at the time of withdrawal without penalty, and the remaining balance will earn interest at our passbook rate subsequent to the withdrawal.

Payments received by Ben Franklin Bank of Illinois will be placed in a segregated savings account or at another federally insured depository institution. Funds held at Ben Franklin Bank of Illinois will be paid interest at our passbook rate from the date payment is received until the offering is completed or terminated. Such interest will be paid by check, on all funds held, including funds accepted as payment for shares of common stock, promptly following completion or termination of the offering.

The employee stock ownership plan will not be required to pay for the shares of common stock it intends to purchase until consummation of the offering.

We may, in our sole discretion, permit institutional investors to submit irrevocable orders together with the legally binding commitment for payment and to thereafter pay for such shares of common stock for which they subscribe in the community offering at any time prior to the 48 hours before completion of the offering. This payment may be made by wire transfer.

Owners of self-directed IRAs may use the assets of such IRAs to purchase shares of common stock in the offering, provided that the IRA accounts are not maintained at Ben Franklin Bank of Illinois. Persons with IRAs maintained with us must have their accounts transferred to a self-directed IRA account with an unaffiliated trustee in order to purchase shares of common stock in the offering. In addition, the provisions of ERISA and IRS regulations require that executive officers, trustees, and 10% stockholders who use self-directed IRA funds and/or Keogh plan accounts to purchase shares of common stock in the offering, make such purchase for the exclusive benefit of the IRA and/or Keogh plan participant. Assistance on how to transfer IRAs maintained at Ben Franklin Bank of Illinois can be obtained from the Stock Information Center. Depositors interested in using funds in an IRA maintained at Ben Franklin Bank of Illinois should contact the Stock Information Center as soon as possible.

Once submitted, an order cannot be modified or revoked unless the offering is terminated or extended beyond [EXTENSION DATE #1].

Delivery of Stock Certificates. Certificates representing shares of common stock issued in the offering will be mailed to the persons entitled thereto at the registration address noted on the order form, as soon as practicable following consummation of the offering. Any certificates returned as undeliverable will be held by us until claimed by persons legally entitled thereto or otherwise disposed of in accordance with applicable law. Until certificates for the shares of common stock are available and delivered to purchasers, purchasers may not be able to sell the shares of common stock that they ordered.

Restrictions on Purchase or Transfer of Stock by Directors and Officers

All shares of the common stock purchased by our directors and officers in the offering will be subject to the restriction that such shares may not be sold or otherwise disposed of for value for a period of one year following the date of purchase, except for any disposition of such

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shares (i) following the death of the original purchaser or (ii) by reason of an exchange of securities in connection with a merger or acquisition approved by the applicable regulatory authorities. Sales of shares of the common stock by Ben Franklin Financial, Inc.’s directors and officers will also be subject to certain insider trading and other transfer restrictions under the Federal securities laws. See “Supervision and Regulation—Federal Securities Laws.”

Purchases of outstanding shares of common stock of Ben Franklin Financial, Inc. by directors, executive officers, or any person who was an executive officer or director of Ben Franklin Bank of Illinois after adoption of the plan of reorganization, and their associates during the three-year period following the reorganization and offering may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the prior written approval of the Office of Thrift Supervision. This restriction does not apply, however, to negotiated transactions involving more than 1% of Ben Franklin Financial, Inc.’s outstanding common stock or to the purchase of shares of common stock under the stock option plan.

Ben Franklin Financial, Inc. has filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933, as amended, for the registration of the shares of common stock to be issued in the offering. The registration under the Securities Act of shares of the common stock to be issued in the offering does not cover the resale of the shares of common stock. Shares of common stock purchased by persons who are not affiliates of Ben Franklin Financial, Inc. may be resold without registration. Shares purchased by an affiliate of Ben Franklin Financial, Inc. will have resale restrictions under Rule 144 of the Securities Act of 1933. If Ben Franklin Financial, Inc. meets the current public information requirements of Rule 144 under the Securities Act of 1933, each affiliate of Ben Franklin Financial, Inc. who complies with the other conditions of Rule 144, including those that require the affiliate’s sale to be aggregated with those of certain other persons, would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month period, the greater of 1% of the outstanding shares of Ben Franklin Financial, Inc. common stock or the average weekly volume of trading in the shares of common stock during the preceding four calendar weeks. Provision may be made in the future by Ben Franklin Financial, Inc. to permit affiliates to have their shares of common stock registered for sale under the Securities Act of 1933 under certain circumstances.

Under guidelines of the NASD, members of the NASD and their associates face certain reporting requirements upon purchase of the securities.

Interpretation, Amendment and Termination

All interpretations of the plan of reorganization by the board of directors will be final, subject to the authority of the Office of Thrift Supervision. The plan of reorganization provides that, if deemed necessary or desirable by the board of directors of Ben Franklin Bank of Illinois, the plan of reorganization may be substantially amended by a majority vote of the board of directors as a result of comments from regulatory authorities or otherwise, at any time prior to submission of proxy materials to Ben Franklin Bank of Illinois’s members. Amendment of the plan of reorganization thereafter requires a majority vote of the board of directors, with the concurrence of the Office of Thrift Supervision. The plan of reorganization may be terminated by a majority vote of the board of directors of Ben Franklin Bank of Illinois at any time prior to

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the earlier of approval of the plan by the Office of Thrift Supervision and the date of the special meeting of members, and may be terminated at any time thereafter with the concurrence of the Office of Thrift Supervision. Completion of the reorganization requires the approval of the plan of reorganization by the affirmative vote of not less than a majority of the total number of votes of members eligible to be cast at the Special Meeting of Members. The plan of reorganization shall be terminated if the reorganization and offering are not completed within 24 months from the date on which the members of Ben Franklin Bank of Illinois approve the plan of reorganization and may not be extended by Ben Franklin Bank of Illinois or the Office of Thrift Supervision.

Stock Information Center

If you have any questions regarding the offering or the reorganization, please call the Stock Information Center at (847)                      from 10:00 a.m. to 4:00 p.m., Illinois time, Monday through Friday.

RESTRICTIONS ON THE ACQUISITION OF BEN FRANKLIN FINANCIAL, INC.

AND BEN FRANKLIN BANK OF ILLINOIS

The principal Federal regulatory restrictions which affect the ability of any person, firm or entity to acquire Ben Franklin Financial, Inc., Ben Franklin Bank of Illinois or their respective capital stock are described below. Also discussed are certain provisions in Ben Franklin Financial, Inc.’s charter and bylaws that may be deemed to affect the ability of a person, firm or entity to acquire Ben Franklin Financial, Inc.

Federal Law

The Change in Bank Control Act provides that no person, acting directly or indirectly or through or in concert with one or more other persons, may acquire control of a savings institution unless the Office of Thrift Supervision has been given 60 days prior written notice. The Home Owners’ Loan Act provides that no company may acquire “control” of a savings institution without the prior approval of the Office of Thrift Supervision. Any company that acquires such control becomes a savings and loan holding company subject to registration, examination and regulation by the Office of Thrift Supervision. Pursuant to Federal regulations, a person is deemed conclusively to have acquired control of a savings institution by, among other things, acquiring more than 25% of any class of voting stock of the institution or controlling the election of a majority of the directors of an institution. Moreover, a person is presumed to have acquired control, subject to rebuttal, by acquiring more than 10% of any class of voting stock, or of more than 25% of any class of stock of a savings institution, where certain enumerated “control factors” are also present in the acquisition.

The Office of Thrift Supervision may prohibit an acquisition of control if:

• it would result in a monopoly or substantially lessen competition;

• the financial condition of the acquiring person might jeopardize the financial stability of the institution; or

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• the competence, experience or integrity of the acquiring person indicates that it would not be in the interest of the depositors or of the public to permit the acquisition of control by such person.

These restrictions do not apply to the acquisition of a savings institution’s capital stock by one or more tax-qualified employee stock benefit plans, provided that the plans do not have beneficial ownership of more than 25% of any class of equity security of the savings institution.

For a period of three years following completion of the offering, Office of Thrift Supervision regulations generally prohibit any person from acquiring or making an offer to acquire beneficial ownership of more than 10% of the stock of Ben Franklin Financial, Inc. or Ben Franklin Bank of Illinois without Office of Thrift Supervision’s prior approval.

Charter and Bylaws of Ben Franklin Financial, Inc.

The following discussion is a summary of provisions of the charter and bylaws of Ben Franklin Financial, Inc. that relate to corporate governance. The description is necessarily general and qualified by reference to the charter and bylaws.

Classified Board of Directors. The board of directors of Ben Franklin Financial, Inc. is required by the charter and bylaws to be divided into three staggered classes that are as equal in size as is possible. Each year one class will be elected by stockholders of Ben Franklin Financial, Inc. for a three year term. A classified board promotes continuity and stability of management of Ben Franklin Financial, Inc., but makes it more difficult for stockholders to change a majority of the directors because it generally takes at least two annual elections of directors for this to occur.

Authorized but Unissued Shares of Capital Stock. Following the stock offering, Ben Franklin Financial, Inc. will have authorized but unissued shares of preferred stock and common stock. See “Description of Capital Stock of Ben Franklin Financial, Inc.” Although these shares could be used by the board of directors of Ben Franklin Financial, Inc. to make it more difficult or to discourage an attempt to obtain control of Ben Franklin Financial, Inc. through a merger, tender offer, proxy contest or otherwise, it is unlikely that we would use or need to use shares for these purposes since Ben Franklin Financial, MHC will own a majority of the common stock for so long as we remain in the mutual holding company structure.

How Shares are Voted. Ben Franklin Financial, Inc.’s charter provides that there will not be cumulative voting by stockholders for the election of Ben Franklin Financial, Inc.’s directors. No cumulative voting rights means that Ben Franklin Financial, MHC, as the holder of a majority of the shares eligible to be voted at a meeting of stockholders, may elect all directors of Ben Franklin Financial, Inc. to be elected at that meeting. This could prevent minority stockholder representation on Ben Franklin Financial, Inc.’s board of directors.

Restrictions on Acquisitions of Shares. Ben Franklin Bank of Illinois’s charter provides that for a period of five years from the closing of the stock issuance no person, other than Ben Franklin Financial, Inc. and Ben Franklin Financial, MHC, may offer directly or indirectly to acquire or acquire the beneficial ownership of more than 10% of any class of equity security of

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Ben Franklin Bank of Illinois. This provision does not apply to any tax-qualified employee benefit plan of Ben Franklin Bank of Illinois or Ben Franklin Financial, Inc. or to an underwriter or member of an underwriting or selling group involving the public sale or resale of securities of Ben Franklin Financial, Inc. In addition, during this five-year period, all shares owned over the 10% limit may not be voted in any matter submitted to stockholders for a vote. The inclusion of this provision in Ben Franklin Bank of Illinois’s charter is deemed to restrict the acquisition and voting of shares of Ben Franklin Financial, Inc.

Procedures for Stockholder Nominations. Ben Franklin Financial, Inc.’s bylaws provide that any stockholder wanting to make a nomination for the election of directors or a proposal for new business at a meeting of stockholders must send written notice to the Secretary of Ben Franklin Financial, Inc. at least five days before the date of the annual meeting. The bylaws further provide that if a stockholder wanting to make a nomination or a proposal for new business does not follow the prescribed procedures, the proposal will not be considered until an adjourned, special, or annual meeting of the shareholders taking place 30 days or more thereafter. Management believes that it is in the best interests of Ben Franklin Financial, Inc. and its stockholders to provide enough time for management to disclose to stockholders information about a dissident slate of nominations for directors. This advance notice requirement may also give management time to solicit its own proxies in an attempt to defeat any dissident slate of nominations if management thinks it is in the best interest of stockholders generally. Similarly, adequate advance notice of stockholder proposals will give management time to study such proposals and to determine whether to recommend to the stockholders that such proposals be adopted.

Benefit Plans

In addition to the provisions of Ben Franklin Financial, Inc.’s charter and bylaws described above, benefit plans of Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois that may authorize the issuance of equity to its board of directors, officers and employees adopted in connection with the stock offering contain provisions which also may discourage hostile takeover attempts which the board of directors of Ben Franklin Bank of Illinois might conclude are not in the best interests of Ben Franklin Financial, Inc. and Ben Franklin Bank of Illinois or Ben Franklin Financial, Inc.’s stockholders.

DESCRIPTION OF CAPITAL STOCK OF BEN FRANKLIN FINANCIAL, INC.

General

Ben Franklin Financial, Inc. is authorized to issue 20,000,000 shares of common stock having a par value of $0.01 per share and 1,000,000 shares of serial preferred stock. Each share of Ben Franklin Financial, Inc.’s common stock will have the same relative rights as, and will be identical in all respects with, each other share of common stock. Upon payment of the purchase price for the common stock in accordance with the stock issuance plan, all of the stock will be duly authorized, fully paid and nonassessable. Presented below is a description of Ben Franklin Financial, Inc.’s capital stock that are deemed material to an investment decision with respect to the offering. The common stock of Ben Franklin Financial, Inc. will represent nonwithdrawable capital, will not be an account of an insurable type, and will not be insured by the Federal Deposit Insurance Corporation.

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Ben Franklin Financial, Inc. currently expects that it will have a maximum of up to 1,983,750 shares of common stock outstanding after the stock offering, of which up to 892,688 shares will be held by persons other than Ben Franklin Financial, MHC. The board of directors can, without stockholder approval, issue additional shares of common stock, although Ben Franklin Financial, MHC, so long as it is in existence, must own a majority of Ben Franklin Financial, Inc.’s outstanding shares of common stock. Ben Franklin Financial, Inc.’s issuance of additional shares of common stock could dilute the voting strength of the holders of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control. Ben Franklin Financial, Inc. has no present plans to issue additional shares of common stock other than pursuant to the stock benefit plans previously discussed.

Common Stock

Distributions. Ben Franklin Financial, Inc. can pay dividends if, as and when declared by its board of directors, subject to compliance with limitations which are imposed by law. The holders of common stock of Ben Franklin Financial, Inc. will be entitled to receive and share equally in such dividends as may be declared by the board of directors of Ben Franklin Financial, Inc. out of funds legally available therefor. Dividends from Ben Franklin Financial, Inc. will depend, in large part, upon receipt of dividends from Ben Franklin Bank of Illinois, because Ben Franklin Financial, Inc. initially will have no source of income other than dividends from Ben Franklin Bank of Illinois, earnings from the investment of proceeds from the sale of shares of common stock, and interest payments with respect to Ben Franklin Financial, Inc.’s loan to the employee stock ownership plan. A regulation of the Office of Thrift Supervision imposes limitations on “capital distributions” by savings institutions. See “Supervision and Regulation—Capital Distributions.” Pursuant to our charter, Ben Franklin Financial, Inc. is authorized to issue preferred stock. If Ben Franklin Financial, Inc. issues preferred stock, the holders thereof may have a priority over the holders of the common stock with respect to dividends.

Voting Rights. Upon the effective date of the stock offering, the holders of common stock of Ben Franklin Financial, Inc. will possess exclusive voting rights in Ben Franklin Financial, Inc. Each holder of common stock will be entitled to one vote per share and will not have any right to cumulate votes in the election of directors. If Ben Franklin Financial, Inc. issues preferred stock, holders of the preferred stock may also possess voting rights.

Liquidation. In the event of any liquidation, dissolution or winding up of Ben Franklin Bank of Illinois, Ben Franklin Financial, Inc., as holder of Ben Franklin Bank of Illinois’s capital stock, would be entitled to receive, after payment or provision for payment of all debts and liabilities of Ben Franklin Bank of Illinois, including all deposit accounts and accrued interest thereon, all assets of Ben Franklin Bank of Illinois available for distribution. In the event of liquidation, dissolution or winding up of Ben Franklin Financial, Inc., the holders of its common stock would be entitled to receive, after payment or provision for payment of all its debts and liabilities, all of the assets of Ben Franklin Financial, Inc. available for distribution. If preferred stock is issued, the holders thereof may have a priority over the holders of the common stock in the event of liquidation or dissolution.

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Rights to Buy Additional Shares. Holders of the common stock of Ben Franklin Financial, Inc. will not be entitled to preemptive rights with respect to any shares which may be issued. Preemptive rights are the priority right to buy additional shares if Ben Franklin Financial, Inc. issues more shares in the future. The common stock is not subject to redemption.

Preferred Stock

None of the shares of Ben Franklin Financial, Inc.’s authorized preferred stock will be issued in the stock offering. Such stock may be issued with such preferences and designations as the board of directors may from time to time determine. The board of directors can, without stockholder approval, issue preferred stock with voting, dividend, liquidation and conversion rights which could dilute the voting strength of the holders of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control. Ben Franklin Financial, Inc. has no present plans to issue preferred stock.

TRANSFER AGENT AND REGISTRAR

                                              will act as the transfer agent and registrar for the common stock.

LEGAL AND TAX MATTERS

The legality of the common stock and the Federal income tax consequences of the reorganization and offering have been passed upon for Ben Franklin Bank of Illinois and Ben Franklin Financial, Inc. by the firm of Luse Gorman Pomerenk & Schick, P.C., Washington, D.C. The Illinois state income tax consequences of the reorganization and offering have been passed upon for Ben Franklin Bank of Illinois and Ben Franklin Financial, Inc. by Crowe Chizek and Company LLC, Oak Brook, Illinois. Luse Gorman Pomerenk & Schick, A Professional Corporation and Crowe Chizek and Company LLC have consented to the references in this prospectus to their opinions. Certain legal matters regarding the reorganization and offering will be passed upon for Keefe, Bruyette & Woods, Inc. by Malizia Spidi & Fisch, P.C.

EXPERTS

The consolidated financial statements of Ben Franklin Bank of Illinois and subsidiaries as of and for the years ended December 31, 2005 and 2004, have been included herein and in the registration statement in reliance upon the report of Crowe Chizek and Company LLC, an independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

RP Financial, LC. has consented to the publication in this prospectus of the summary of its report to Ben Franklin Bank of Illinois and Ben Franklin Financial, Inc. setting forth its opinion as to the estimated pro forma market value of the common stock upon the completion of the reorganization and offering and its valuation with respect to subscription rights.

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WHERE YOU CAN FIND MORE INFORMATION

Ben Franklin Financial, Inc. has filed a registration statement with the Securities and Exchange Commission under the Securities Act of 1933, with respect to the common stock offered hereby. As permitted by the rules and regulations of the Securities and Exchange Commission, this prospectus does not contain all the information set forth in the registration statement. This information can be examined without charge at the public reference facilities of the Securities and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of the material can be obtained from the Securities and Exchange Commission at prescribed rates. The registration statement also is available through the Securities and Exchange Commission’s world wide web site on the internet at http://www.sec.gov. The statements contained in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement are, of necessity, brief descriptions thereof and are not necessarily complete but do contain all material information regarding the documents; each statement is qualified by reference to the contract or document.

Ben Franklin Bank of Illinois has filed a Combined Application MHC-1/MHC-2 with the Office of Thrift Supervision with respect to the reorganization and offering. Pursuant to the rules and regulations of the Office of Thrift Supervision, this prospectus omits certain information contained in that Application. The Application may be examined at the principal offices of the Office of Thrift Supervision, 1700 G Street, N.W., Washington, D.C. 20552 and at the Southeast Regional Office of the Office of Thrift Supervision located at 1475 Peachtree Street, N.E., Atlanta, Georgia 30309.

A copy of the charter and bylaws of Ben Franklin Financial, Inc. is available without charge from Ben Franklin Bank of Illinois.

REGISTRATION REQUIREMENTS

In connection with the offering, Ben Franklin Financial, Inc. will register the common stock with the Securities and Exchange Commission under Section 12(g) of the Securities Exchange Act of 1934. Upon this registration, Ben Franklin Financial, Inc. and the holders of its shares of common stock will become subject to the proxy solicitation rules, reporting requirements and restrictions on stock purchases and sales by directors, officers and greater than 10% stockholders, the annual and periodic reporting and certain other requirements of the Securities Exchange Act of 1934. Under the plan of reorganization, Ben Franklin Financial, Inc. has undertaken that it will not terminate this registration for a period of at least three years following the reorganization.

142

BEN FRANKLIN BANK OF ILLINOIS

Arlington Heights, Illinois

FINANCIAL STATEMENTS

December 31, 2005 and 2004

CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2
FINANCIAL STATEMENTS
STATEMENTS OF FINANCIAL CONDITION	F-3
STATEMENTS OF INCOME	F-4
STATEMENTS OF EQUITY	F-5
STATEMENTS OF CASH FLOWS	F-6
NOTES TO FINANCIAL STATEMENTS	F-7

F-1

[Letterhead of Crowe Chizek and Company LLC]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Ben Franklin Bank of Illinois

Arlington Heights, Illinois

We have audited the accompanying statements of financial condition of Ben Franklin Bank of Illinois as of December 31, 2005 and 2004, and the related statements of income, equity, and cash flows for the years then ended. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ben Franklin Bank of Illinois as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Crowe Chizek and Company LLC

Crowe Chizek and Company LLC

Oak Brook, Illinois

March 25, 2006

F-2

BEN FRANKLIN BANK OF ILLINOIS

STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands)

	(Unaudited)
	March 31,			December 31
	2006			2005			2004
ASSETS
Cash and due from banks	$	1,186		$	1,718		$	2,595
Interest-bearing deposit accounts		2,564			1,121			1,071
Federal funds sold		5,130			4,200			2,275
Cash and cash equivalents		8,880			7,039			5,941
Securities available-for-sale		6,663			7,163			9,869
Loans receivable, net of allowance for loan losses of $510 at March 31, 2006 (unaudited); $509 at December 31, 2005; $492 at December 31, 2004		91,100			89,982			90,255
Federal Home Loan Bank stock		2,077			2,077			6,515
Premises and equipment, net		636			658			790
Accrued interest receivable		513			489			436
Other assets		378			361			422
Total assets	$	110,247		$	107,769		$	114,228
LIABILITIES AND EQUITY
Liabilities
Non interest-bearing deposits	$	2,107		$	1,084		$	876
Interest-bearing, deposits		97,133			95,076			97,395
Total deposits		99,240			96,160			98,271
Advances from Federal Home Loan Bank		2,000			2,000			7,000
Advances from borrowers for taxes and insurance		375			616			532
Other liabilities		276			659			414
Total liabilities		101,891			99,435			106,217
Commitments and contingent liabilities		—			—			—
Equity
Retained earnings, substantially restricted		8,458			8,410			8,022
Accumulated other comprehensive loss		(102	)		(76	)		(11	)
Total equity		8,356			8,334			8,011
Total liabilities and equity	$	110,247		$	107,769		$	114,228

See accompanying notes to financial statements.

F-3

BEN FRANKLIN BANK OF ILLINOIS

STATEMENTS OF INCOME

(Dollars in thousands)

	(Unaudited)
	Three Months Ended				Years Ended
	March 31				December 31
	2006		2005		2005		2004
Interest and dividend income
Loans	$	1,338	$	1,169	$	5,014	$	4,164
Securities		84		241		581		1,197
Federal funds sold		53		24		140		32
Interest-bearing deposit accounts and other		14		8		29		11
		1,489		1,442		5,764		5,404
Interest expense
Deposits		689		483		2,204		1,928
Federal Home Loan Bank advances		23		75		145		440
		712		558		2,349		2,368
Net interest income		777		884		3,415		3,036
Provision for loan losses		1		6		17		19
Net interest income after provision for loan losses		776		878		3,398		3,017
Noninterest income
Service fee income		37		32		130		175
Gain on sale of loans		—		1		34		11
Loss on sale of securities		—		—		—		(1	)
Other		6		8		32		57
		43		41		196		242
Noninterest expenses
Compensation and employee benefits		438		426		1,697		1,653
Occupancy expenses		134		140		563		554
Data processing services		61		61		248		243
Professional fees		28		27		115		110
Regulatory fees		24		25		99		104
Other		61		65		284		276
		746		744		3,006		2,940
Income before income taxes		73		175		588		319
Provision for income taxes		25		59		200		108
Net income	$	48	$	116	$	388	$	211

See accompanying notes to financial statements.

F-4

BEN FRANKLIN BANK OF ILLINOIS

STATEMENTS OF EQUITY

(Dollars in thousands)

	Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total			Comprehensive Income (Loss)
Balance at January 1, 2004	$	7,811	$	(49	)	$	7,762
Comprehensive income:
Net income		211		—			211		$	211
Change in unrealized loss on securities available-for-sale, net of taxes		—		38			38			38
Total comprehensive income									$	249
Balance at December 31, 2004		8,022		(11	)		8,011
Comprehensive income:
Net income		388		—			388		$	388
Change in unrealized loss on securities available-for-sale, net of taxes		—		(65	)		(65	)		(65	)
Total comprehensive income									$	323
Balance at December 31, 2005		8,410		(76	)		8,334
Comprehensive income
Net income		48		—			48		$	48
Change in unrealized loss on securities available-for-sale, net of taxes		—		(26	)		(26	)		(26	)
Total comprehensive income									$	22
Balance at March 31, 2006 (unaudited)	$	8,458	$	(102	)	$	8,356

See accompanying notes to financial statements.

F-5

BEN FRANKLIN BANK OF ILLINOIS

STATEMENTS OF CASH FLOWS

(Dollars in thousands)

	(Unaudited) Three Months Ended March 31						Years Ended December 31
	2006			2005			2005			2004
Cash flows from operating activities
Net income	$	48		$	116		$	388		$	211
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization		38			40			171			173
Amortization of premiums and discounts		13			30			50			256
Provision for loan losses		1			6			17			19
Loss on sale of securities		—			—			—			1
Gain on sale of loans		—			(1	)		(34	)		(11	)
FHLB stock dividends		—			(152	)		(262	)		(792	)
Changes in:
Deferred loan costs		25			33			105			77
Accrued interest receivable		(24	)		(15	)		(53	)		(21	)
Deferred income taxes		(8	)		(307	)		(268	)		12
Other assets		3			237			285			288
Other liabilities		(383	)		314			324			(780	)
Net cash from operating activities		(287	)		301			723			(567	)
Cash flows from investing activities
Proceeds from sales of securities available-for-sale		—			—			—			2,374
Proceeds from calls and maturities of securities available-for-sale		—			—			—			2,200
Purchase of securities available-for-sale		—			—			—			(2,682	)
Principal repayments on mortgage-backed securities		447			646			2,546			3,306
Net (increase) decrease in loans		(2,370	)		(2,466	)		(1,764	)		5,414
Proceeds from the sale of loans		1,228			2,516			5,778			2,344
Purchase of loans		—			—			(3,819	)		(17,993	)
Redemption of Federal Home Loan Bank stock		—			4,700			4,700			7,000
Capital expenditures		(16	)		(20	)		(39	)		(12	)
Net cash from investing activities		(711	)		5,376			7,402			1,951
Cash flows from financing activities
Net increase (decrease) in deposits		3,080			(759	)		(2,111	)		(1,746	)
Net change in advances from FHLB		—			(5,000	)		(5,000	)		—
Net change in advances from borrowers for taxes and insurance		(241	)		(190	)		84			90
Net cash from financing activities		2,839			(5,949	)		(7,027	)		(1,656	)
Net change in cash and cash equivalents		1,841			(272	)		1,098			(272	)
Cash and cash equivalents at beginning of year		7,039			5,941			5,941			6,213
Cash and cash equivalents at end of year	$	8,880		$	5,669		$	7,039		$	5,941
Supplemental disclosures of cash flow information
Interest paid	$	746		$	556		$	2,299		$	2,344
Income taxes paid		368			59			159			37

See accompanying notes to financial statements.

F-6

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Ben Franklin Bank of Illinois (the Bank) is a federally chartered mutual savings bank and a member of the Federal Home Loan Bank (FHLB) system. The Bank maintains insurance on savings accounts with the Savings Association Insurance Fund (SAIF) of the Federal Deposit Insurance Corporation.

Nature of Business: The Bank provides a full line of financial services to customers in the Cook County, Illinois area. Ben Franklin Bank of Illinois grants residential and consumer loans, substantially all of which are secured by specific items of collateral, including residences and consumer assets.

Basis of Presentation for Interim Financial Statements: The financial statements of the Bank at March 31, 2006 and for the three months ended March 31, 2006 and 2005 have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) for interim financial information and predominant practices followed by the financial services industry, and are unaudited. In the opinion of the Bank’s management, all adjustments consisting of normal recurring accruals necessary for a fair presentation of the financial condition and results of operations for the interim periods included herein have been made.

Use of Estimates in the Preparation of Financial Statements: The preparation of financial statements in conformity with (GAAP) and with general practices within the thrift industry requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period.

Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an allowance for loan losses. Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term. Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest receivable on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

(Continued)

F-7

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Securities: Securities are classified as held-to-maturity when the Bank has the positive intent and ability to hold those securities to maturity. Accordingly, they are stated at cost, adjusted for amortization of premiums and accretion of discounts. Securities are classified as available-for-sale when the Bank may decide to sell those securities for changes in market interest rates, liquidity needs, changes in yields on alternative investments, and for other reasons. They are carried at fair value. Unrealized gains and losses on securities available-for-sale are charged or credited to a valuation allowance, which is included as a separate component of equity.

Realized gains and losses on disposition are based on the net proceeds and the adjusted carrying amount of the securities sold, using the specific identification method.

Recognition of Interest Income on Loans: Interest income on mortgage and installment loans is recognized over the term of the loans based on the principal balance outstanding. Unearned interest on home improvement loans is amortized into income by the interest method.

Loan Origination Fees and Related Costs: Loan origination fees, net of certain direct loan origination costs, are deferred. The net deferred fee or cost is recognized as an adjustment to interest income using the interest method over the contractual life of the loans.

Premises and Equipment: Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from 3 to 30 years. The cost and accumulated depreciation of assets retired or sold are eliminated from the financial statements, and the gain or loss on disposition is credited or charged to operations when incurred.

Servicing Rights: Servicing rights represent the allocated value of servicing rights retained on loans sold. Servicing assets are expensed in proportion to and over the period of, estimated net servicing revenues. Impairment is evaluated based on the fair value of the assets, using groupings of the underlying loans as to interest rates and then, secondarily, as to loan type and investor. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Any impairment of a grouping is reported as a valuation allowance, to the extent that fair value is less than the capitalized amount for a grouping.

Servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal; or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income.

Other Real Estate Owned: Real estate acquired through foreclosure and similar proceedings is carried at fair value less estimated costs to sell. Losses on disposition, including expenses incurred in connection with the disposition, are charged to operations.

(Continued)

F-8

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes: The provision for income taxes is based on an asset and liability approach, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.

Allowance for Loans Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses and decreased by charge-offs less recoveries. Loan losses are charged against the allowance when management believes that the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience; the nature and volume of the portfolio; information about specific borrower situations; and estimated collateral values, economic conditions, and other factors.

Allocation of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

A loan is impaired when full payment under the terms is not expected. Commercial and commercial real estate loans are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or the fair value of collateral if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures.

Cash Flow: Cash and cash equivalents include cash, deposits with other financial institutions under 90 days, and federal funds sold. Net cash flows are reported for loan and deposit transactions.

Loan Commitments and Related Financial Instruments: Financial instruments include off-balance-sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available-for-sale, net of tax, which are also recognized as separate components of equity.

(Continued)

F-9

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

New Accounting Standards: In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement 123R, Share-Based Payment. As a result of the conversion discussed in Note 14, this statement would be effective for all employee awards granted, modified or settled after June 30, 2006. As of the effective date, compensation expense related to the nonvested portion of awards outstanding as of that date would be based on the grant-date fair value as calculated under the original provisions of Statement 123. Adoption of this standard could impact the amount of salary expense incurred for future financial statements reporting if the Bank had a stock award program in place after the proposed statement becomes effective.

In May 2005, FAS No. 154, Accounting Changes and Error Corrections a replacement of APB Opinion No. 20 and FASB Statement No. 3, was issued. FAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. This Statement also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. This statement is effective for fiscal years that begin after December 15, 2005. Management does not believe the adoption of SFAS No. 154 will have a material impact on the results of operations or financial condition of Ben Franklin Financial, Inc.

In February 2006, SFAS No. 155, Accounting for Certain Hybrid Financial Instruments an amendment of FASB Statements No. 133 and 140, was issued. FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, establishes, among other things, the accounting for certain derivatives embedded in other financial instruments. The primary objective of this Statement with respect to Statement 133 are to: a. Simplify accounting for certain hybrid financial instruments by permitting fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation and eliminate the interim guidance in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interest in Securitized Financial Assets,” which provides that beneficial interests in securitized financial assets are not subject to the provisions of Statement No. 133. The primary objective of this Statement with respect to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets Extinguishments of Liabilities, is to eliminate a restriction on the passive derivative instruments that a qualifying special-purpose entity (SPE) may hold. This statement is effective for fiscal years that begin after September 15, 2006. Management does not believe the adoption of SFAS No. 155 will have material impact on the results of operations or financial condition of Ben Franklin Financial, Inc.

(Continued)

F-10

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In March 2006, FASB issued Statement 156, Accounting for Servicing of Financial Assets an amendment of FASB Statement 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. FASB Statement 140 establishes, among other things, the accounting for all separately recognized servicing assets and servicing liabilities. This Statement amends Statement 140 to require that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. This Statement permits, but does not require, the subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value. This statement is effective for fiscal years that begin after September 15, 2006. Management does not believe the adoption of SFAS 156 will have a material impact on the results of operations or financial condition of Ben Franklin Financial, Inc.

NOTE 2 — SECURITIES

	Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
March 31, 2006 (Unaudited)
FNMA	$	3,999	$	1	$	(113	)
FHLMC		1,082		—		(41	)
GNMA		1,582		1		(9	)
Total	$	6,663	$	2	$	(163	)
December 31, 2005
FNMA	$	4,253	$	—	$	(85	)
FHLMC		1,103		—		(29	)
GNMA		1,807		2		(10	)
Total	$	7,163	$	2	$	(124	)
December 31, 2004
FNMA	$	5,699	$	7	$	(37	)
FHLMC		1,162		—		(7	)
GNMA		3,008		9		(5	)
Total	$	9,869	$	16	$	(49	)

Proceeds from securities available-for-sale sold during the periods ended March 31, 2006 (unaudited) and December 31, 2005 and 2004 amounted to $0, $0, and $2,374,000, respectively, with a gross loss of $3,000 and a gross gain of $2,000 realized in 2004.

(Continued)

F-11

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 2 — SECURITIES (Continued)

Securities with unrealized losses as of March 31, 2006 (unaudited) not recognized in income are as follows:

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
FNMA	$	1,006	$	(19	)	$	2,904	$	(94	)	$	3,910	$	(113	)
FHLMC		—		—			1,082		(41	)		1,082		(41	)
GNMA		656		(3	)		633		(6	)		1,289		(9	)
Total temporarily impaired	$	1,662	$	(22	)	$	4,619	$	(141	)	$	6,281	$	(163	)

Securities with unrealized losses as of December 31, 2005 not recognized in income are as follows:

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
FNMA	$	1,067	$	(15	)	$	3,092	$	(70	)	$	4,159	$	(85	)
FHLMC		—		—			1,103		(29	)		1,103		(29	)
GNMA		642		(6	)		445		(4	)		1,087		(10	)
Total temporarily impaired	$	1,709	$	(21	)	$	4,640	$	(103	)	$	6,349	$	(124	)

Securities with unrealized losses as of December 31, 2004 not recognized in income are as follows:

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
FNMA	$	—	$	—		$	4,354	$	(37	)	$	4,354	$	(37	)
FHLMC		1,162		(7	)		—		—			1,162		(7	)
GNMA		—		—			766		(5	)		766		(5	)
Total temporarily impaired	$	1,162	$	(7	)	$	5,120	$	(42	)	$	6,282	$	(49	)

The unrealized losses have not been recognized into income because the issuers’ securities are of high credit quality (rated AA or higher), management has the intent and ability to hold for the foreseeable future, and the decline in fair value is largely due to changes in market interest rates. The fair value is expected to recover as the securities approach their maturity dates and/or market rates decline.

(Continued)

F-12

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 3 — LOANS RECEIVABLE

Loans receivable at March 31, 2006 (unaudited) and December 31 are summarized as follows:

	(Unaudited) March 31 2006			December 31
				2005			2004
First mortgage loans
Secured by one-to-four-family residences	$	47,790		$	48,820		$	53,441
Secured by multi-family residences		15,511			15,219			12,865
Secured by commercial real estate		12,718			12,504			8,521
Secured by land		1,087			691			163
Construction loans		6,349			5,259			6,744
Total first mortgage loans		83,455			82,493			81,734
Consumer and other loans
Home equity line of credit		8,061			8,263			9,393
Commercial loans		2,458			1,748			1,823
Other consumer loans		60			104			56
Total consumer and other loans		10,579			10,115			11,272
Premiums and net deferred loan origination costs		46			70			128
Loans in process		(2,470	)		(2,187	)		(2,387	)
Allowance for loan losses		(510	)		(509	)		(492	)
	$	91,100		$	89,982		$	90,255

Loans serviced for others total approximately $4,900,000, $3,700,000, and $1,100,000 at March 31, 2006 (unaudited) and December 31, 2005 and 2004, respectively.

Loans to principal officers, directors and other affiliates in 2005 and through March 31, 2006 (unaudited) were as follows:

Balance at January 1, 2005	$	531
New loans		3
Repayments		(211	)
Balance at December 31, 2005		323
Repayments		(3	)
Balance at March 31, 2006 (unaudited)	$	320

(Continued)

F-13

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 3 — LOANS RECEIVABLE (Continued)

Activity in the allowance for loan losses is as follows:

	(Unaudited) Three Months Ended March 31				Years Ended December 31
	2006		2005		2005		2004
Balance at beginning of year	$	509	$	492	$	492	$	473
Provision for loan losses		1		6		17		19
Loans charged off		—		—		—		—
Recoveries of loans previously charged off		—		—		—		—
	$	510	$	498	$	509	$	492

There were no impaired loans outstanding as of March 31, 2006 (unaudited) and December 31, 2005 or 2004.

Nonperforming loans were as follows:

	(Unaudited) March 31 2006		December 31
			2005		2004
Loans past due over 90 days still on accrual	$	421	$	—	$	—
Nonaccrual loans		—		—		—

Nonperforming loans includes both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

NOTE 4 — ACCRUED INTEREST RECEIVABLE

Accrued interest consists of the following:

	(Unaudited) March 31 2006		December 31
			2005		2004
Loans	$	484	$	457	$	398
Securities		29		32		38
	$	513	$	489	$	436

(Continued)

F-14

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 5 — PREMISES AND EQUIPMENT

Premises and equipment consist of the following:

	(Unaudited) March 31			December 31
	2006			2005			2004
Land	$	225		$	225		$	225
Building		318			318			318
Furniture and fixtures		875			859			820
		1,418			1,402			1,363
Accumulated depreciation		(782	)		(744	)		(573	)
	$	636		$	658		$	790

NOTE 6 — DEPOSITS

Deposit accounts with balances of $100,000 or more totaled approximately $14,615,000, $13,497,000, and $13,840,000 at March 31, 2006 (unaudited) and December 31, 2005 and 2004. Deposits greater than $100,000 are not insured.

The scheduled maturities of certificates of deposit are as follows:

	(Unaudited) March 31, 2006		December 31, 2005
2006	$	34,378	$	39,196
2007		26,105		17,207
2008		1,288		1,563
2009		1,999		1,986
2010		98		261
	$	63,868	$	60,213

(Continued)

F-15

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 6 — DEPOSITS (Continued)

Interest expense on deposits is summarized as follows:

	(Unaudited) Three Months Ended March 31				Years Ended December 31
	2006		2005		2005		2004
NOW	$	15	$	17	$	72	$	70
Money market		68		63		250		268
Savings		23		25		103		103
Certificates of deposit		583		378		1,779		1,487
	$	689	$	483	$	2,204	$	1,928

Deposits from principal officers, directors and other affiliates total approximately $322,000, $343,000 and $373,000 at March 31, 2006 (unaudited) and December 31, 2005 and 2004, respectively.

NOTE 7 — ADVANCES FROM FHLB

Secured advances from the FHLB of Chicago are summarized as follows:

				(Unaudited) March 31 2006		December 31
Maturity Date	Type	Call Date	Interest Rate			2005		2004
February 28, 2005	Fixed Rate	Quarterly	6.18%	$	—	$	—	$	7,000
March 22, 2010	Fixed Rate	N/A	4.58%	$	2,000	$	2,000	$	—

The Bank has adopted a collateral pledge agreement whereby the Bank has agreed to keep on hand, free of all other pledges, liens, and encumbrances, first mortgages with unpaid principal balances aggregating no less than 142% of the outstanding secured advances from the FHLB. All FHLB stock is also pledged to secure these advances.

(Continued)

F-16

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 8 — REGULATORY MATTERS

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 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 I capital as defined in the regulations to risk-weighted assets as defined and of Tier I capital to adjusted assets as defined. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios. The Bank was categorized as well capitalized at March 31, 2006 (unaudited) and December 31, 2005 and 2004. There are no conditions or events since that notification that management believes have changed the institution’s category.

The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If undercapitalized, asset growth and expansion are limited and plans for capital restoration are required.

The following is a reconciliation of the Bank’s capital under accounting principles generally accepted in the United States of America (GAAP) to regulatory capital:

	(Unaudited) March 31 2006			December 31
				2005			2004
GAAP capital	$	8,356		$	8,334		$	8,011
Deferred tax asset limitation		(125	)		(126	)		—
Unrealized loss on securities available-for-sale		102			76			11
Tier I capital		8,333			8,284			8,022
Allowance for loan losses		510			509			492
Total capital	$	8,843		$	8,793		$	8,514

(Continued)

F-17

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 8 — REGULATORY MATTERS (Continued)

At year end, actual capital levels and minimum required levels were:

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to Be Well Capitalized Under Prompt Corrective Action Regulations
	Amount		Ratio		Amount		Ratio		Amount		Ratio
March 31, 2006 (Unaudited)
Total capital (to risk-weighted assets)	$	8,843	11.5	%	$	6,155	8.0	%	$	7,694	10.0	%
Tier 1 (core) capital (to risk-weighted assets)		8,333	10.8			3,077	4.0			4,616	6.0
Tier 1 (core) capital (to adjusted total assets)		8,333	7.6			4,411	4.0			5,514	5.0
December 31, 2005
Total capital (to risk-weighted assets)	$	8,793	11.7	%	$	6,038	8.0	%	$	7,548	10.0	%
Tier 1 (core) capital (to risk-weighted assets)		8,284	11.0			3,019	4.0			4,529	6.0
Tier 1 (core) capital (to adjusted total assets)		8,284	7.7			4,310	4.0			5,388	5.0
December 31, 2004
Total capital (to risk-weighted assets)	$	8,514	11.3	%	$	6,020	8.0	%	$	7,524	10.0	%
Tier 1 (core) capital (to risk-weighted assets)		8,022	10.7			3,010	4.0			4,515	6.0
Tier 1 (core) capital (to adjusted total assets)		8,022	7.0			4,570	4.0			5,712	5.0

NOTE 9 — EMPLOYEE BENEFITS

The Bank maintains a Savings Incentive Matching Plan for Employees (SIMPLE) covering substantially all employees. Participants may elect to make tax-deferred contributions to the plan up to $10,000 per calendar year. Annually, the Bank makes dollar-for-dollar matching contributions based on amounts contributed by participants up to a maximum of 3% of compensation per participant. The Bank made contributions totaling $23,000 and $25,000 during 2005 and 2004, respectively. No contribution has been made in the period ended March 31, 2006 (unaudited).

(Continued)

F-18

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 10 — INCOME TAXES

The provision for income taxes consists of the following:

	(Unaudited) Three Months Ended March 31						Years Ended December 31
	2006			2005			2005			2004
Current	$	33		$	366		$	468		$	96
Deferred		(8	)		(307	)		(268	)		12
	$	25		$	59		$	200		$	108

The income tax provision differs from the amounts determined by applying the statutory U.S. federal income tax rate as a result of the following items:

	(Unaudited) Three Months Ended March 31								Years Ended December 31
	2006				2005				2005				2004
	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
Income tax provision computed at the statutory rate	$	25	34.0	%	$	59	34.0	%	$	200	34.0	%	$	108	34.0	%
State tax and other		—	.2			—	—			—	—			—	(.1	)
	$	25	34.2	%	$	59	34.0	%	$	200	34.0	%	$	108	33.9	%

The net deferred tax liability consists of the following:

	(Unaudited) March 31			December 31
	2006			2005			2004
Deferred tax assets
Accumulated depreciation	$	198		$	86		$	68
Bad debts		93			197			191
Deferred loan fees		24			20			15
Net operating loss carryforwards		76			79			126
Unrealized loss on securities available-for-sale		53			39			6
Deferred tax liabilities
FHLB stock dividends and other		(200	)		(199	)		(485	)
Net asset (liability)	$	244		$	222		$	(79	)

State net operating losses of approximately $1,600,000 are being carried forward and will be available to reduce future taxable income. These carryforwards expire through 2021.

(Continued)

F-19

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 11 — COMMITMENTS AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

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 consist of commitments to make loans and fund unused lines of credit and loans in process. The Bank’s exposure to credit loss in the event of nonperformance by the other party to these financial instruments is represented by the contractual amount of these instruments. The Bank follows the same credit policy to make such commitments as is followed for those loans recorded on the statement of financial condition. These financial instruments are summarized as follows:

	Contractual Amount
	(Unaudited) March 31		December 31
	2006		2005		2004
Financial instruments whose contract amounts represent credit risk
Unused lines of credit	$	12,166	$	13,937	$	15,812
Commitments to make loans		1,000		3,145		2,694

The contractual amount of fixed rate commitments to make loans at March 31, 2006 (unaudited) and December 31, 2005 and 2004 were $0, $1,422,000, and $1,034,000. Commitments to make loans are generally made for 60 days or less. The fixed rate loan commitments at March 31, 2006 have rates ranging from 6.40% to 6.75%. Financial instruments that potentially subject the Bank to concentrations of credit risk include deposit accounts in other financial institutions. At March 31, 2006 (unaudited), the Bank had interest-bearing deposits amounting to $2,239,000 with the Federal Home Loan Bank of Chicago and non-interest-bearing deposits of $865,000 with JP Morgan Chase. The Bank also had federal funds sold to JP Morgan Chase of $5,130,000. At December 31, 2005, the Bank had interest-bearing deposits amounting to $799,000 with the Federal Home Loan Bank of Chicago and non-interest-bearing deposits of $1,378,000 with JP Morgan Chase. The Bank also had federal funds sold to JP Morgan Chase of $4,200,000.

The Bank currently leases its main bank facility under a noncancelable one-year operating lease. The Bank currently leases its branch facility under a noncancelable five-year operating lease that matures on November 30, 2009. Minimum rental commitments under the leases are as follows as of March 31, 2006 (unaudited):

2006	$	77
2007		76
2008		77
2009		71
	$	301

(Continued)

F-20

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 11 — COMMITMENTS AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (Continued)

Rent expense for the three months ended March 31, 2006 and 2005 (unaudited) was approximately $39,000 and $38,000, respectively, and for the years ended December 31, 2005 and 2004 was approximately $157,000 and $155,000, respectively.

NOTE 12 — FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of the Bank’s financial instruments are as follows:

	(Unaudited) March 31, 2006						December 31, 2005						December 31, 2004
	Approximate Carrying Value			Estimated Fair Value			Approximate Carrying Value			Estimated Fair Value			Approximate Carrying Value			Estimated Fair Value
Financial assets
Cash and cash equivalents	$	8,880		$	8,880		$	7,039		$	7,039		$	5,941		$	5,941
Securities available-for-sale		6,663			6,663			7,163			7,163			9,869			9,869
Loans receivable, net		91,100			90,286			89,982			89,211			90,255			90,596
FHLB stock		2,077			2,077			2,077			2,077			6,515			6,515
Accrued interest receivable		513			513			489			489			436			436
Financial liabilities
NOW, money market, and savings	$	(35,372	)	$	(35,372	)	$	(35,947	)	$	(35,947	)	$	(42,759	)	$	(42,759	)
Certificates of deposits		(63,868	)		(63,156	)		(60,213	)		(59,644	)		(55,512	)		(55,453	)
FHLB advances		(2,000	)		(1,953	)		(2,000	)		(1,976	)		(7,000	)		(7,050	)
Accrued interest payable		(85	)		(85	)		(119	)		(119	)		(69	)		(69	)

The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The methods and assumptions used to determine fair values for each class of financial instrument are presented below.

The estimated fair value for cash and cash equivalents; FHLB stock; accrued interest receivable; NOW, money market, and savings deposits; and accrued interest payable are considered to approximate their carrying values. The estimated fair values for securities available-for-sale are based on quoted market values for the individual securities or for equivalent securities. The estimated fair value for loans is based on estimates of the rates the Bank would charge for similar loans at March 31, 2006 (unaudited) and December 31, 2005 and 2004, applied for the time period until estimated payment. The estimated fair value of certificates of deposit is based on estimates of the rate the Bank would pay on such deposits at March 31, 2006 (unaudited) and December 31, 2005 and 2004, applied for the time period until maturity. The fair value of FHLB advances is based on current rates for similar financing. Loan commitments are not included in the table above as their estimated fair value is immaterial.

(Continued)

F-21

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 12 — FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

While the above estimates are based on management’s judgment of the most appropriate factors, there is no assurance that were the Bank to have disposed of these items on March 31, 2006 (unaudited) and December 31, 2005, the fair values would have been achieved, because the market value may differ depending on the circumstances. The estimated fair values at March 31, 2006 (unaudited) and December 31, 2005 and 2004 should not necessarily be considered to apply at subsequent dates.

NOTE 13 — COMPREHENSIVE INCOME

Other comprehensive income components and related taxes were as follows:

	(Unaudited) Three Months Ended March 31						Years Ended December 31
	2006			2005			2005			2004
Unrealized holding gains and losses on securities available-for-sale	$	(40	)	$	(89	)	$	(98	)	$	59
Less reclassification adjustments for gains and losses recognized in income		—			—			—			1
		(40	)		(89	)		(98	)		58
Tax effect		14			31			33			(20	)
Other comprehensive income (loss)	$	(26	)	$	(58	)	$	(65	)	$	38

NOTE 14 — ADOPTION OF PLAN OF CONVERSION AND REORGANIZATION (UNAUDITED)

The Board of Directors of the Bank has adopted a Plan of Reorganization and Stock Issuance (the “Plan”) to (i) reorganize the Bank into a mutual holding company, Ben Franklin Financial, MHC, (the “MHC”) and (ii) form a new subsidiary holding company, Ben Franklin Financial, Inc., a federal corporation (the “Holding Company”), as a direct subsidiary to hold 100% of the stock of the Bank. Concurrently with the reorganization, the Holding Company will offer and sell shares of its common stock in a public offering representing up to 45% of its shares that will be outstanding after the offering. The common stock will be offered on a priority basis to eligible deposits with the remaining shares offered to the public in a community offering or a syndicated community offering, or a combination thereof. Upon completion of the stock offering, the MHC will continue to own at least a majority of the common stock.

(Continued)

F-22

BEN FRANKLIN BANK OF ILLINOIS

NOTES TO FINANCIAL STATEMENTS

(Table amounts in thousands)

NOTE 14 — ADOPTION OF PLAN OF CONVERSION AND REORGANIZATION

(UNAUDITED) (Continued)

The plan must be approved by the Office of Thrift Supervision.

The Holding Company plans to offer to the public shares of common stock representing a minority ownership of the estimated pro forma market value of the Bank as determined by an independent appraisal. The Bank may not pay dividends to the Stock Holding Company if the dividends would cause the Bank to fall below the “well capitalized” capital threshold.

Offering costs have been deferred and will be deducted from the proceeds of the shares sold in the offering. If the offering is not completed, all costs will be charged to expense. At March 31, 2006 (unaudited), $5,300 of offering costs had been incurred and deferred. No offering costs had been incurred as of December 31, 2005.

F-23

You should rely only on the information contained in this document or that to which we have referred you. We have not authorized anyone to provide you with information that is different. This document does not constitute an offer to sell, or the solicitation of an offer to buy, any of the securities offered hereby to any person in any jurisdiction in which such offer or solicitation would be unlawful. The affairs of Ben Franklin Bank of Illinois or Ben Franklin Financial, Inc. may change after the date of this prospectus. Delivery of this document and the sales of shares made hereunder does not mean otherwise.

Ben Franklin Financial, Inc.

Proposed Holding Company for Ben Franklin Bank of Illinois

776,250 Shares of Common Stock

(Subject to Increase to up to 892,688 Shares)

PROSPECTUS

Keefe, Bruyette & Woods

August     , 2006

Until the later of                     , 2006 or 90 days after the commencement of the offering, all dealers effecting transactions in the registered securities, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers

Provisions in the Registrant’s bylaws provide for indemnification of the Registrant’s directors and officers up to the fullest extent authorized by applicable law and regulations of the Office of Thrift Supervision (OTS). Section 545.121 of the OTS regulations are described below.

Generally, federal regulations define areas for indemnity coverage for federal savings associations as follows:

(a) Any person against whom any action is brought or threatened because that person is or was a director or officer of the savings association shall be indemnified by the savings association for:

(i) Any amount for which that person becomes liable under a judgment in such action; and

(ii) Reasonable costs and expenses, including reasonable attorneys’ fees, actually paid or incurred by that person in defending or settling such action, or in enforcing his or her rights under this section if he or she attains a favorable judgment in such enforcement action.

(b) Indemnification shall be made to such person under paragraph (b) of this Section only if:

(i) Final judgment on the merits is in his or her favor; or

(ii) In case of:

a. Settlement,

b. Final judgment against him or her, or

c. Final judgment in his or her favor, other than on the merits, if a majority of the disinterested directors of the savings association determine that he or she was acting in good faith within the scope of his or her employment or authority as he or she could reasonably have perceived it under the circumstances and for a purpose he or she could reasonably have believed under the circumstances was in the best interest of the savings association or its members. However, no indemnification shall be made unless the association gives the Office at least 60 days notice of its intention to make such indemnification. Such notice shall state the facts on which the action arose, the terms of any settlement, and any disposition of the action by a court. Such notice, a copy thereof, and a certified copy of the resolution containing the required determination by the board of directors shall be sent to the Regional Director, who shall promptly acknowledge receipt thereof. The notice period shall run from the date of such receipt. No such indemnification shall be made if the OTS advises the association in writing, within such notice period, of its objection thereto.

(c) As used in this paragraph:

(i) “Action” means any judicial or administrative proceeding, or threatened proceeding, whether civil, criminal, or otherwise, including any appeal or other proceeding for review;

(ii) “Court” includes, without limitation, any court to which or in which any appeal or any proceeding for review is brought;

(iii) “Final Judgment” means a judgment, decree, or order which is not appealable or as to which the period for appeal has expired with no appeal taken;

(iv) “Settlement” includes the entry of a judgment by consent or confession or a plea of guilty or of nolo contendere.

II-1

Item 25. Other Expenses of Issuance and Distribution

		Amount
*	Legal Fees	$	200,000
*	Accounting Fees and Expenses		155,000
*	Conversion Agent and Data Processing Fees		13,500
*	Marketing Agent Fees and Expenses (1)		165,000
*	Appraisal Fees and Expenses		32,500
*	Business Plan Consultant Fees and Expenses		25,000
*	Printing, Postage, Mailing and EDGAR		51,000
*	Filing Fees (OTS, NASD and SEC)		16,749
*	State “Blue Sky” Filing Fees		24,000
*	Other Expenses		12,251
*	Total	$	695,000

* Estimated

(1) Ben Franklin Financial, Inc. has retained Keefe, Bruyette & Woods, Inc. to assist in the sale of common stock on a best efforts basis in the offering.

Item 26. Recent Sales of Unregistered Securities

Not Applicable.

Item 27. Exhibits and Financial Statement Schedules:

The exhibits filed as part of this registration statement are as follows:

(a) List of Exhibits

1.1	Engagement Letter between Ben Franklin Bank of Illinois and Keefe, Bruyette & Woods, Inc.
1.2	Form of Agency Agreement between Ben Franklin Financial, Inc., Ben Franklin Financial, MHC, Ben Franklin Bank of Illinois and Keefe, Bruyette & Woods, Inc. *
2	Plan of Reorganization from a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan
3.1	Charter of Ben Franklin Financial, Inc.
3.2	Bylaws of Ben Franklin Financial, Inc.
4	Form of Common Stock Certificate of Ben Franklin Financial, Inc.
5	Opinion of Luse Gorman Pomerenk & Schick regarding legality of securities being registered
8.1	Federal Tax Opinion of Luse Gorman Pomerenk & Schick
8.2	State Tax Opinion of Crowe Chizek & Co., LLC
10.1	Simple IRA Savings Plan
10.2	Employee Stock Ownership Plan*
10.3	Form of Employment Agreement with C. Steven Sjogren
10.4	Form of Employment Agreement with Glen A. Miller
10.5	Form of Employment Agreement with Robin L. Jenkins
10.6	Form of Employment Agreement with Angie Plesiotis
21	Subsidiaries of Registrant
23.1	Consent of Luse Gorman Pomerenk & Schick (contained in Opinions included as Exhibits 5 and 8)
23.2	Consent of Crowe Chizek & Co., LLC
23.3	Consent of RP Financial, LC.
24	Power of Attorney (set forth on signature page)
99.1	Appraisal Agreement between Ben Franklin Bank of Illinois and RP Financial, LC.

II-2

99.2	Business Plan Agreement between Ben Franklin Bank of Illinois and Keller & Company, Inc.
99.3	Appraisal Report of RP Financial, LC. *,**
99.4	Letter of RP Financial, LC. with respect to Subscription Rights
99.5	Marketing Materials*
99.6	Order and Acknowledgment Form*

* To be filed supplementally or by amendment.

** Supporting financial schedules filed pursuant to Rule 202 of Regulation S-T.

Item 28. Undertakings

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) Include any additional or changed material information on the plan of distribution.

(2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

(3) To file a post-effective amendment to remove from registration any of the securities being registered that remain unsold at the termination of the offering.

(4) For determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned small business issuer undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and

(iv) Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser.

II-3

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-4

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the City of Arlington Heights, State of Illinois on June 29, 2006.

BEN FRANKLIN FINANCIAL, INC.
By:	/s/ C. Steven Sjogren
	C. Steven Sjogren
	Chairman of the Board, President and Chief Executive Officer
	(Duly Authorized Representative)

POWER OF ATTORNEY

We, the undersigned directors and officers of Ben Franklin Financial, Inc. (the “Company”) hereby severally constitute and appoint C. Steven Sjogren as our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said C. Steven Sjogren may deem necessary or advisable to enable the Company to comply with the Securities Act of 1933, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with the registration statement on Form SB-2 relating to the offering of the Company’s common stock, including specifically, but not limited to, power and authority to sign for us in our names in the capacities indicated below the registration statement and any and all amendments (including post-effective amendments) thereto; and we hereby approve, ratify and confirm all that said C. Steven Sjogren shall do or cause to be done by virtue thereof.

In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates indicated.

Signatures	Title	Date
/s/ C. Steven Sjogren C. Steven Sjogren	Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)	June 29, 2006
/s/ Glen A. Miller Glen A. Miller	Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)	June 29, 2006
/s/ Robert E. DeCelles Robert E. DeCelles	Director	June 29, 2006
/s/ Bernadine V. Dziedzic Bernadine V. Dziedzic	Director	June 29, 2006

II-5

/s/ John R. Perkins John R. Perkins	Director	June 29, 2006
/s/ Nicholas J. Raino Nicholas J. Raino	Director	June 29, 2006
/s/ James M. Reninger James M. Reninger	Director	June 29, 2006

II-6

As filed with the Securities and Exchange Commission on June 30, 2006

Registration No. 333-            

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

EXHIBITS

TO

REGISTRATION STATEMENT

ON

FORM SB-2

Ben Franklin Financial, Inc.

Arlington Heights, Illinois

EXHIBIT INDEX

1.1	Engagement Letter between Ben Franklin Bank of Illinois and Keefe, Bruyette & Woods, Inc.
1.2	Form of Agency Agreement between Ben Franklin Financial, Inc., Ben Franklin Financial, MHC, Ben Franklin Bank of Illinois and Keefe, Bruyette & Woods, Inc. *
2	Plan of Reorganization from a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan
3.1	Charter of Ben Franklin Financial, Inc.
3.2	Bylaws of Ben Franklin Financial, Inc.
4	Form of Common Stock Certificate of Ben Franklin Financial, Inc.
5	Opinion of Luse Gorman Pomerenk & Schick regarding legality of securities being registered
8.1	Federal Tax Opinion of Luse Gorman Pomerenk & Schick
8.2	State Tax Opinion of Crowe Chizek & Co., LLC
10.1	Simple IRA Savings Plan
10.2	Employee Stock Ownership Plan*
10.3	Form of Employment Agreement with C. Steven Sjogren
10.4	Form of Employment Agreement with Glen A. Miller
10.5	Form of Employment Agreement with Robin L. Jenkins
10.6	Form of Employment Agreement with Angie Plesiotis
21	Subsidiaries of Registrant
23.1	Consent of Luse Gorman Pomerenk & Schick (contained in Opinions included as Exhibits 5 and 8.1)
23.2	Consent of Crowe Chizek & Co., LLC
23.3	Consent of RP Financial, LC.
24	Power of Attorney (set forth on signature page)
99.1	Appraisal Agreement between Ben Franklin Bank of Illinois and RP Financial, LC.
99.2	Business Plan Agreement between Ben Franklin Bank of Illinois and Keller & Company, Inc.
99.3	Appraisal Report of RP Financial, LC. *,**
99.4	Letter of RP Financial, LC. with respect to Subscription Rights
99.5	Marketing Materials*
99.6	Order and Acknowledgment Form*

* To be filed supplementally or by amendment.

** Supporting financial schedules filed pursuant to Rule 202 of Regulation S-T.

EX-1.1

Exhibit 1.1

June 12, 2006

Mr. C. Steven Sjogren

Chairman, President & CEO

Ben Franklin Bank of Illinois

14 N. Dryden Place

Arlington Heights, IL 60004-6399

Dear Mr. Sjogren:

This proposal is being made in connection with the proposed minority stock offering (the “Offering”) by the to be formed mid-tier holding company (the “Company”) for Ben Franklin Bank of Illinois (the “Bank”).

Keefe, Bruyette and Woods, Inc. (“KBW”) will act as the Company’s and the Bank’s exclusive financial advisor and marketing agent in connection with the Offering. This letter sets forth selected terms and conditions of our engagement.

1. Advisory/Offering Services. As the Bank’s and Company’s financial advisor and marketing agent, KBW will provide the Bank and the Company with a comprehensive program of services designed to promote an orderly, efficient, cost-effective and long-term stock distribution. KBW will provide financial and logistical advice to the Bank and the Company concerning the Offering and related issues. KBW will assist in providing Offering enhancement services intended to maximize stock sales in the Subscription Offering and to residents of the Bank’s market area, if necessary, in the Community Offering.

KBW shall provide financial advisory services to the Bank which are typical in connection with an equity offering and include, but are not limited to, overall financial analysis of the Company and the Bank with a focus on identifying factors which impact the valuation of the common stock and providing the appropriate recommendations for the equity valuation.

Additionally, post-Offering financial advisory services will include advice on shareholder relations, after-market trading, dividend policy (for both regular and special dividends), stock repurchase strategy, communication with market makers and financial modeling (see Section 8 for details). Prior to the closing of the Offering, KBW shall furnish to the Company a Post-Offering reference manual, which will include specifics relative to these items. (The nature of the services to be provided by KBW as the Bank’s and the Company’s financial advisor and marketing agent is further described in Exhibit A attached hereto.)

Keefe, Bruyette & Woods * 211 Bradenton Ave. * Dublin, OH 43017

614.766.8400 * Fax 614.766.8406

Mr. C. Steven Sjogren

June 12, 2006

Page 2 of 5

2. Preparation of Offering Documents. The Bank, the Company and their counsel will draft the Registration Statement, Form MHC-2, Prospectus and other documents to be used in connection with the Offering and minority stock issuance. KBW will attend meetings to review these documents and advise you on their form and content. KBW and its counsel will draft appropriate agency agreement and related documents as well as marketing materials other than the Prospectus.

3. Due Diligence Review. Prior to filing the Registration Statement, Application for Offering or any offering or other documents naming KBW as the Bank’s and the Company’s financial advisor and marketing agent, KBW and their representatives will undertake substantial investigations to learn about the Bank’s business and operations (“due diligence review”) in order to confirm information provided to us and to evaluate information to be contained in the Bank’s and/or the Company’s offering documents. The Bank agrees that it will make available to KBW all relevant information, whether or not publicly available, which KBW reasonably requests, and will permit KBW to discuss with management the operations and prospects of the Bank. KBW will treat all material non-public information as confidential. The Bank acknowledges that KBW will rely upon the accuracy and completeness of all information received from the Bank, its officers, directors, employees, agents and representatives, accountants and counsel including this letter to serve as the Bank’s and the Company’s financial advisor and marketing agent.

4. Regulatory Filings. The Bank and/or the Company will cause appropriate Offering documents to be filed with all appropriate regulatory agencies including, the Securities and Exchange Commission (“SEC”), the National Association of Securities Dealers (“NASD”), the Office of Thrift Supervision (“OTS”), and such state securities commissioners as may be determined by the Bank.

5. Agency Agreement. The specific terms of KBW’s services, including stock offering enhancement and syndicated offering services contemplated in this letter shall be set forth in a mutually agreed upon Agency Agreement between KBW and the Bank and the Company to be executed prior to commencement of the Offering, and dated the date that the Company’s Prospectus is declared effective and/or authorized to be disseminated by the appropriate regulatory agencies, the SEC, the NASD, the OTS and such state securities commissioners and other regulatory agencies as required by applicable law.

6. Representations, Warranties and Covenants. The Agency Agreement will provide for to be agreed upon representations, warranties and covenants by the Bank and KBW, and for the Company to indemnify KBW and their controlling persons (and, if applicable, the members of the selling group and their controlling persons), and for KBW to indemnify the Bank and the Company against certain liabilities, including, without limitation, liabilities under the Securities Act of 1933, to the extent applicable.

Mr. C. Steven Sjogren

June 12, 2006

Page 3 of 5

7. Fees. For the services hereunder, the Bank and/or Company shall pay the following fees to KBW at closing unless stated otherwise:

(a) Management Fee. A Management Fee of $25,000 payable in four consecutive monthly installments of $6,250 commencing with the adoption of the Plan of Stock Issuance. Such fees shall be deemed to have been earned when due. Should the Offering be terminated for any reason not attributable to the action or inaction of KBW, KBW shall have earned and be entitled to be paid fees accruing through the stage at which point the termination occurred.

(b) Success Fee: A Success Fee equal to the greater of 1.25% or $100,000 shall be paid to KBW upon consummation of the transaction. The Success Fee of 1.25% shall be charged based on the aggregate Purchase Price of Common Stock sold in the Subscription Offering and Community Offering excluding shares purchased by the Bank’s officers, directors, or employees (or members of their immediate family) or their IRAs and any ESOP, tax-qualified or stock based compensation plans or similar plan created by the Bank for some or all of its directors or employees. The Management Fee described in 7(a) will be applied against the Success Fee.

(c) Broker-Dealer Pass-Through. If any shares of the Company’s stock remain available after the subscription offering, at the request of the Bank, KBW will seek to form a syndicate of registered broker-dealers to assist in the sale of such common stock on a best efforts basis, subject to the terms and conditions set forth in the selected dealers agreement. KBW will endeavor to distribute the common stock among dealers in a fashion which best meets the distribution objectives of the Bank and the Plan of Offering. KBW will be paid a fee not to exceed 5.5% of the aggregate Purchase Price of the shares of common stock sold by them. From this fee, KBW will pass onto selected broker-dealers, who assist in the syndicated community offering, an amount competitive with gross underwriting discounts charged at such time for comparable amounts of stock sold at a comparable price per share in a similar market environment. Fees with respect to purchases affected with the assistance of a broker/dealer other than KBW shall be transmitted by KBW to such broker/dealer. The decision to utilize selected broker-dealers will be made by the Bank upon consultation with KBW. In the event, with respect to any stock purchases, fees are paid pursuant to this subparagraph 7(c), such fees shall be in lieu of, and not in addition to, payment pursuant to subparagraph 7(b).

Mr. C. Steven Sjogren

June 12, 2006

Page 4 of 5

8. Additional Services. KBW further agrees to provide general financial advisory assistance to the Company and the Bank for a period of five years following completion of the Offering, including assistance with financial modeling, formation of a dividend policy and share repurchase program, assistance with shareholder reporting and shareholder relations matters, general advice on mergers and acquisitions and other related financial matters, without the payment by the Company and the Bank of any fees in addition to those set forth in Section 7 hereof. If, however, a specific buy side assignment were to develop, KBW would look to develop a separate and specific engagement letter tailored to the such a transaction, while simultaneously maintaining the elements of this agreement in good standing.

9. Expenses. The Bank will bear those expenses of the proposed offering customarily borne by issuers, including, without limitation, regulatory filing fees, SEC, DTC, “Blue Sky,” and NASD filing and registration fees; the fees of the Bank’s accountants, attorneys, appraiser, transfer agent and registrar, printing, mailing and marketing and syndicate expenses associated with the Offering; the fees set forth in Section 7; and fees for “Blue Sky” legal work. If KBW incurs expenses on behalf of Client, Client will reimburse KBW for such expenses.

KBW shall be reimbursed for reasonable out-of-pocket expenses, including costs of travel, meals and lodging, photocopying, telephone, facsimile and couriers not to exceed $20,000. The selection of KBW’s counsel will be done by KBW, with the approval of the Bank. The Bank will reimburse KBW for the fees, not to exceed $40,000, and expenses, not to exceed $5,000, of its counsel.

10. Conditions. KBW’s willingness and obligation to proceed hereunder shall be subject to, among other things, satisfaction of the following conditions in KBW’s opinion, which opinion shall have been formed in good faith by KBW after reasonable determination and consideration of all relevant factors: (a) full and satisfactory disclosure of all relevant material, financial and other information in the disclosure documents and a determination by KBW, in its sole discretion, that the sale of stock on the terms proposed is reasonable given such disclosures; (b) no material adverse change in the condition or operations of the Bank subsequent to the execution of the agreement; and (c) no adverse market conditions at the time of offering which in KBW’s opinion make the sale of the shares by the Company inadvisable.

11. Benefit. This Agreement shall inure to the benefit of the parties hereto and their respective successors and to the parties indemnified pursuant to the terms and conditions of the Agency Agreement and their successors, and the obligations and liabilities assumed hereunder by the parties hereto shall be binding upon their respective successors provided, however, that this Agreement shall not be assignable by KBW.

Mr. C. Steven Sjogren

June 12, 2006

Page 5 of 5

12. Definitive Agreement. This letter reflects KBW’s present intention of proceeding to work with the Bank on its proposed Offering. It does not create a binding obligation on the part of the Bank, the Company or KBW except as to the agreement to maintain the confidentiality of non-public information set forth in Section 3, the payment of certain fees as set forth in Section 7(a) and 7(b) and the assumption of expenses as set forth in Section 9, all of which shall constitute the binding obligations of the parties hereto and which shall survive the termination of this Agreement or the completion of the services furnished hereunder and shall remain operative and in full force and effect. You further acknowledge that any report or analysis rendered by KBW pursuant to this engagement is rendered for use solely by the management of the Bank and its agents in connection with the Offering. Accordingly, you agree that you will not provide any such information to any other person without our prior written consent.

KBW acknowledges that in offering the Company’s stock no person will be authorized to give any information or to make any representation not contained in the offering prospectus and related offering materials filed as part of a registration statement to be declared effective in connection with the offering. Accordingly, KBW agrees that in connection with the offering it will not give any unauthorized information or make any unauthorized representation. We will be pleased to elaborate on any of the matters discussed in this letter at your convenience.

If the foregoing correctly sets forth our mutual understanding, please so indicate by signing and returning the original copy of this letter to the undersigned.

Very truly yours,

KEEFE, BRUYETTE & WOODS, INC.
By:
	Charles E. Sloane
	Managing Director
BEN FRANKLIN BANK OF ILLINOIS
By:	/s/ C. Steven Sjogren	Date: 6-22-06
	C. Steven Sjogren
	Chairman, President & CEO

EXHIBIT A

OFFERING SERVICES PROPOSAL

TO BEN FRANKLIN BANK OF ILLINOIS

KBW provides thrift institutions converting from the mutual to stock form of ownership with a comprehensive program of stock issuance services designed to promote an orderly, efficient, cost-effective and long-term stock distribution. The following list is representative of the stock issuance services, if appropriate, we propose to perform on behalf of the Bank and the Company.

General Services

Assist management and legal counsel with the design of the transaction structure.

Analyze and make recommendations on bids from printing, transfer agent, and appraisal firms.

Assist officers and directors in obtaining bank loans to purchase stock, if requested.

Assist in drafting and distribution of press releases as required or appropriate.

Stock Offering Enhancement Services

Establish and manage Stock Information Center at the Bank. Stock Information Center personnel will track prospective investors; record stock orders; mail order confirmations; provide the Bank’s senior management with daily reports; answer customer inquiries; and handle special situations as they arise.

Assign KBW’s personnel to be at the Bank through completion of the Subscription and Community Offerings to manage the Stock Information Center, meet with prospective shareholders at individual and community information meetings (if applicable), solicit local investor interest through a tele-marketing campaign, answer inquiries, and otherwise assist in the sale of stock in the Subscription and Community Offerings. This effort will be lead by a Principal of KBW.

Create target investor list based upon review of the Bank’s depositor base.

Provide intensive financial and marketing input for drafting of the prospectus.

Stock Offering Enhancement Services- Continued

Prepare other marketing materials, including prospecting letters and brochures, and media advertisements.

Arrange logistics of community information meeting(s) as required.

Prepare audio-visual presentation by senior management for community information meeting(s).

Prepare management for question-and-answer period at community information meeting(s).

Attend and address community information meeting(s) and be available to answer questions.

Broker-Assisted Sales Services.

Arrange for broker information meeting(s) as required.

Prepare audio-visual presentation for broker information meeting(s).

Prepare script for presentation by senior management at broker information meeting(s).

Prepare management for question-and-answer period at broker information meeting(s).

Attend and address broker information meeting(s) and be available to answer questions.

Produce confidential broker memorandum to assist participating brokers in selling the Bank’s common stock.

After-market Support Services.

KBW will use their best efforts to secure trading and on-going research commitment from at least two NASD firms, one of which will be Keefe, Bruyette & Woods, Inc.

EX-2

Exhibit 2

BEN FRANKLIN BANK OF ILLINOIS

PLAN OF REORGANIZATION

FROM A MUTUAL SAVINGS BANK

TO A MUTUAL HOLDING COMPANY

AND STOCK ISSUANCE PLAN

TABLE OF CONTENTS

		Page
1.	Introduction	1
2.	Definitions	2
3.	The Reorganization	7
4.	Conditions to Implementation of the Reorganization	10
5.	Special Meeting of Members	10
6.	Rights of Members of the MHC	11
7.	Conversion of MHC to Stock Form	11
8.	Timing of the Reorganization and Sale of Capital Stock	12
9.	Number of Shares to be Offered	12
10.	Independent Valuation and Purchase Price of Shares	12
11.	Method of Offering Shares and Rights to Purchase Stock	13
12.	Additional Limitations on Purchases of Common Stock	17
13.	Payment for Stock	19
14.	Manner of Exercising Subscription Rights Through Order Forms	20
15.	Undelivered, Defective or Late Order Form; Insufficient Payment	21
16.	Completion of the Stock Offering	21
17.	Market for Common Stock	21
18.	Stock Purchases by Management Persons After the Stock Offering	22
19.	Resales of Stock by Directors and Officers	22
20.	Stock Certificates	22
21.	Restriction on Financing Stock Purchases	22
22.	Stock Benefit Plans	22
23.	Post-Reorganization Filing and Market Making	23
24.	Payment of Dividends and Repurchase of Stock	23
25.	Reorganization and Stock Offering Expenses	23
26.	Employment and Other Severance Agreements	23
27.	Residents of Foreign Countries and Certain States	24
28.	Interpretation	24
29.	Amendment or Termination of the Plan	24

Exhibits
Exhibit A	Charter and Bylaws of the Bank
Exhibit B	Charter and Bylaws of the Holding Company
Exhibit C	Charter and Bylaws of the MHC

1. Introduction

This Plan of Reorganization from a Mutual Savings Association to a Mutual Holding Company and Stock Issuance Plan (the “Plan”) provides for the reorganization of Ben Franklin Bank of Illinois (the “Bank”) from a federally-chartered mutual savings bank into the mutual holding company structure (the “Reorganization”) under the laws of the United States of America and the regulations of the Office of Thrift Supervision (“OTS”). The mutual holding company (the “MHC”) will be a mutually-owned federal corporation, and all of the current ownership and voting rights of the Members of the Bank will be transferred to the MHC. As part of the Reorganization and the Plan, the Bank will convert to a federal stock savings bank (the “Stock Bank”), and a stock holding company (the “Holding Company”) will be established as a federal corporation and a majority-owned subsidiary of the MHC at all times so long as the MHC remains in existence. Concurrently with the Reorganization, the Holding Company intends to offer for sale up to 49.9% of its Common Stock in the Stock Offering. The Common Stock will be offered on a priority basis to depositors and the Tax-Qualified Employee Plans of the Bank, with any remaining shares offered to the public in a Community Offering or a Syndicated Community Offering, or a combination thereof. The Reorganization, Stock Offering and Issuance of Common Stock shall be conducted in accordance with 12 C.F.R. Parts 563g and 575, to the extent applicable, Form OC of the Regulations. By this Plan, any prior plan of conversion or reorganization, to the extent not already terminated or abandoned, is hereby terminated and all rights thereunder extinguished.

The primary purpose of the Reorganization is to establish a holding company and to convert the Bank to the stock form of ownership, which will enable the Bank to compete and expand more effectively in the financial services marketplace. The Reorganization will permit the Holding Company to issue Capital Stock, which is a source of capital not available to mutual savings associations. Since the Holding Company will not be offering all of its Common Stock for sale to depositors and the public in the Stock Offering, the Reorganization will result in less capital raised in comparison to a standard mutual-to-stock conversion. The Reorganization, however, will also permit the Bank to raise additional capital since a majority of the Holding Company’s common stock will be available for sale in the future. It will also provide the Bank with greater flexibility to structure and finance the expansion of its operations, including the potential acquisition of other financial institutions. Lastly, the Reorganization will enable the Bank to better manage its capital by (i) providing broader acquisition and investment opportunities through the holding company structure, (ii) enabling the Bank to distribute capital to stockholders of the Holding Company in the form of dividends, and (iii) enabling the Holding Company to repurchase its common stock as market conditions warrant. Although the Reorganization and Stock Offering will create a stock savings bank and stock holding company, only a minority of the Common Stock will be offered for sale in the Stock Offering. As a result, the Bank’s mutual form of ownership and its ability to remain an independent community savings bank will be preserved through the mutual holding company structure. The Reorganization is subject to the approval of the OTS, and must be approved by the affirmative vote of a majority of the total votes eligible to be cast by Members.

In the event the Board of Directors of the Bank determines not to establish the Holding Company as part of the Reorganization, then all references in this Plan to the issuance of Common Stock by the Holding Company, including all references to Employee Plans of the

Holding Company, shall mean the issuance of common stock by the Bank and Employee Plans of the Bank. If no Holding Company is established as part of the Reorganization, the Board of Directors may elect to establish the Holding Company subsequent to the completion of the Reorganization and Stock Offering.

2. Definitions

As used in this Plan, the terms set forth below have the following meanings:

Acting in Concert: The term Acting in Concert means (i) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; or (ii) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. A Person or company which acts in concert with another Person or company (“other party”) shall also be deemed to be acting in concert with any Person or company who is also acting in concert with that other party, except that any Tax-Qualified Employee Plan will not be deemed to be acting in concert with its trustee or a Person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated.

Actual Purchase Price: The price per share, determined as provided in this Plan, at which the Common Stock will be sold in the Stock Offering.

Affiliate: Any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another Person.

Associate: The term “Associate,” when used to indicate a relationship with any Person, means: (i) any corporation or organization (other than the Bank, the Holding Company, the MHC or a majority-owned subsidiary of any thereof) of which such Person is a senior officer or partner, or beneficially owns, directly or indirectly, 10% or more of any class of equity securities of the corporation or organization; (ii) any trust or other estate, if the Person has a substantial beneficial interest in the trust or estate or is a trustee or fiduciary of the trust or estate. For purposes of §§563b.370, 563b.380, 563b.385, 563b.390, 563b.395 and 563b.505 of the Regulations, a Person who has a substantial beneficial interest in a Tax-Qualified or Non-Tax Qualified Employee Plan, or who is a trustee or a fiduciary of the plan, is not an Associate of the plan. For purposes of §563b.370 of the Regulations, a Tax-Qualified Employee Plan is not an Associate of a Person; (iii) any Person who is related by blood or marriage to such Person and (a) who lives in the same house as the Person; or (b) who is a director or senior officer of the Bank, the Holding Company, the MHC or a subsidiary thereof.

Bank: Ben Franklin Bank of Illinois in its pre-Reorganization mutual form or post-Reorganization stock form, as indicated by the context.

Capital Stock: Any and all authorized stock of the Bank or the Holding Company.

Common Stock: Common stock issuable by the Holding Company in connection with the Reorganization, including securities convertible into Common Stock, pursuant to its stock charter.

2

Community: Cook County, Illinois.

Community Offering: The offering to certain members of the general public of any unsubscribed shares in the Subscription Offering. The Community Offering may include a Syndicated Community Offering or public offering.

Control: (including the terms “controlling,” “controlled by” and “under common control with”) means the direct or indirect power to direct or exercise a controlling influence over the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise as described in Part 574 of the Regulations.

Deposit Account(s): Any withdrawable account as defined in Section 561.42 of the Regulations, and shall include all demand deposit accounts as defined in Section 561.16 of the Regulations and certificates of deposit.

Effective Date: The date upon which all necessary approvals have been obtained to complete the Reorganization, and the Reorganization and Stock Offering have been completed.

Eligible Account Holder: Any person holding a Qualifying Deposit on the Eligibility Record Date for purposes of determining subscription rights.

Eligibility Record Date: March 31, 2005, the date for determining who qualifies as an Eligible Account Holder of the Bank.

Employee Plans: The Tax-Qualified and Non-Tax Qualified Employee Plans of the Bank and/or the Company.

ESOP: The Bank’s employee stock ownership plan.

Estimated Valuation Range: The range of the estimated pro forma market value of the total number of shares of Common Stock to be issued by the Holding Company to the MHC and to Minority Stockholders, as determined by the Independent Appraiser prior to the Subscription Offering and as it may be amended from time to time thereafter.

Exchange Act: The Securities Exchange Act of 1934, as amended.

FDIC: The Federal Deposit Insurance Corporation.

HOLA: The Home Owners’ Loan Act, as amended.

Holding Company: Ben Franklin Financial, Inc., the federal corporation which will be majority-owned by the MHC and which will own 100% of the common stock of the Bank, and any successor to such corporation that may be established in connection with a Conversion Transaction.

Holding Company Application: The Holding Company Application on Form H(e)-1 or H(e)-1-s to be submitted by the Bank to the OTS to have the Holding Company acquire the common stock of the Bank.

3

Independent Appraiser: The appraiser retained by the Bank to prepare an appraisal of the pro forma market value of the Bank and the Holding Company.

Management Person: Any Officer or director of the Bank or any Affiliate of the Bank, and any person acting in concert with any such Officer or director.

Market Maker: A dealer (i.e., any person who engages directly or indirectly as agent, broker, or principal in the business of offering, buying, selling or otherwise dealing or trading in securities issued by another person) who, with respect to a particular security, (1) regularly publishes bona fide competitive bid and offer quotations on request, and (2) is ready, willing and able to effect transactions in reasonable quantities at the dealer’s quoted prices with other brokers or dealers.

Member: Any person or entity who qualifies as a member of the Bank pursuant to its charter and bylaws.

MHC: Ben Franklin Financial, MHC, the mutual holding company resulting from the Reorganization.

Minority Ownership Interest: The shares of the Holding Company’s Common Stock owned by persons other than the MHC, expressed as a percentage of the total shares of Holding Company Common Stock outstanding.

Minority Stock Offering: One or more offerings of less than 50% in the aggregate of the outstanding Common Stock of the Holding Company to persons other than the MHC.

Minority Stockholder: Any owner of the Holding Company’s Common Stock, other than the MHC.

Non-Voting Stock: Any Capital Stock other than Voting Stock.

Notice: The Notice of Mutual Holding Company Reorganization to be submitted by the Bank to the OTS to notify the OTS of the Reorganization and the Stock Offering.

Offering Range: The aggregate purchase price of the Common Stock to be sold in the Stock Offering based on the Independent Valuation expressed as a range, which may vary within 15% above or 15% below the midpoint of such range, with a possible adjustment by up to 15% above the maximum of such range. The Offering Range will be based on the Estimated Valuation Range, but will represent a Minority Ownership Interest equal to up to 49.9% of the Common Stock.

Officer: An executive officer of the Holding Company or the Bank, including the Chief Executive Officer, President, Senior Vice Presidents in charge of principal business functions, Secretary, Treasurer and any other person performing similar functions.

Order Form: Any form (together with any attached cover letter and/or certifications or acknowledgements), sent by the Bank to any Person containing among other things a description of the alternatives available to such Person under the Plan and by which any such Person may make elections regarding purchases of Common Stock in the Subscription and Community Offerings.

4

Other Member: Any person who is a Member of the Bank at the close of business on the Voting Record Date who is not an Eligible Account Holder or Supplemental Eligible Account Holder, or Tax-Qualified Employee Plan.

OTS: The Office of Thrift Supervision, and any successor thereto.

Person: An individual, corporation, partnership, association, joint-stock company, limited liability company, trust, unincorporated organization, or a government or political subdivision of a government.

Plan: This Plan of Reorganization from a Mutual Savings Association to a Mutual Holding Company and Stock Issuance Plan.

Qualifying Deposit: The aggregate balance of each Deposit Account of an Eligible Account Holder as of the close of business on the Eligibility Record Date or of a Supplemental Eligible Account Holder as of the close of business on the Supplemental Eligibility Record Date, as the case may be, provided such aggregate balance is not less than $50.

Regulations: The rules and regulations of the OTS, including the OTS rules and regulations regarding mutual holding companies.

Reorganization: The reorganization of the Bank into the mutual holding company structure including the organization of the MHC, the Holding Company and the Bank in stock form pursuant to this Plan.

Resident: The terms “resident,” “residence,” “reside,” “resided” or “residing” as used herein with respect to any person shall mean any person who occupied a dwelling within the Bank’s Community, has an intent to remain with the Community for a period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence within the Community together with an indication that such presence within the Community is something other than merely transitory in nature. To the extent the Person is a corporation or other business entity, the principal place of business or headquarters shall be in the Community. To the extent a person is a personal benefit plan, the circumstances of the beneficiary shall apply with respect to this definition. In the case of all other benefit plans, the circumstances of the trustee shall be examined for purposes of this definition. The Bank may utilize deposit or loan records or such other evidence provided to it to make a determination as to whether a person is a resident. In all cases, however, such a determination shall be in the sole discretion of the Bank.

SEC: The Securities and Exchange Commission.

Special Meeting: The Special Meeting of Members called for the purpose of voting on the Plan.

Stock Bank: The federally chartered stock savings bank resulting from the conversion of the Bank to stock form pursuant to this Plan.

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Stock Offering: The offering of Common Stock of the Holding Company to persons other than the MHC, in a Subscription Offering and, to the extent shares remain available, in a Community Offering.

Subscription Offering: The offering of Common Stock of the Holding Company for subscription and purchase pursuant to Section 11 of this Plan.

Subsidiary: A company that is controlled by another company, either directly or indirectly through one or more subsidiaries.

Supplemental Eligible Account Holder: Any Person holding a Qualifying Deposit on the Supplemental Eligibility Record Date, who is not an Eligible Account Holder, a Tax-Qualified Employee Plan or an Officer or director of the Bank.

Supplemental Eligibility Record Date: The last day of the calendar quarter preceding approval of the Plan by the OTS.

Syndicated Community Offering: The offering of Common Stock following or contemporaneously with the Community Offering through a syndicate of broker-dealers.

Tax-Qualified Employee Plan: Any defined benefit plan or defined contribution plan (including any employee stock ownership plan, stock bonus plan, profit-sharing plan, or other plan) of the Bank, the Holding Company, the MHC or any of their affiliates, which, with its related trusts, meets the requirements to be qualified under Section 401 of the Internal Revenue Code. The term “Non-Tax-Qualified Employee Plan” means any stock benefit plan which is not so qualified under Section 401 of the Internal Revenue Code.

Voting Member: Any Person who at the close of business on the Voting Record Date is entitled to vote as a Member of the Bank pursuant to its charter and bylaws.

Voting Record Date: The date established by the Bank for determining which Members are entitled to vote on the Plan.

Voting Stock:

(1) Voting Stock means common stock or preferred stock, or similar interests if the shares by statute, charter or in any manner, entitle the holder:

(i) To vote for or to select directors of the Bank or the Holding Company; and

(ii) To vote on or to direct the conduct of the operations or other significant policies of the Bank or the Holding Company.

(2) Notwithstanding anything in paragraph (1) above, preferred stock is not “Voting Stock” if:

(i) Voting rights associated with the preferred stock are limited solely to the type customarily provided by statute with regard to matters that would

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significantly and adversely affect the rights or preferences of the preferred stock, such as the issuance of additional amounts or classes of senior securities, the modification of the terms of the preferred stock, the dissolution of the Bank, or the payment of dividends by the Bank when preferred dividends are in arrears;

(ii) The preferred stock represents an essentially passive investment or financing device and does not otherwise provide the holder with control over the issuer; and

(iii) The preferred stock does not at the time entitle the holder, by statute, charter, or otherwise, to select or to vote for the selection of directors of the Bank or the Holding Company.

(3) Notwithstanding anything in paragraphs (1) and (2) above, “Voting Stock” shall be deemed to include preferred stock and other securities that, upon transfer or otherwise, are convertible into Voting Stock or exercisable to acquire Voting Stock where the holder of the stock, convertible security or right to acquire Voting Stock has the preponderant economic risk in the underlying Voting Stock. Securities immediately convertible into Voting Stock at the option of the holder without payment of additional consideration shall be deemed to constitute the Voting Stock into which they are convertible; other convertible securities and rights to acquire Voting Stock shall not be deemed to vest the holder with the preponderant economic risk in the underlying Voting Stock if the holder has paid less than 50% of the consideration required to directly acquire the Voting Stock and has no other economic interest in the underlying Voting Stock.

3. The Reorganization

A. Organization of the Holding Companies and the Bank

As part of the Reorganization, the Bank will convert to a federal stock charter and become the Stock Bank, and the Holding Company and the MHC will be established as federal corporations. The Reorganization will be effected as follows, or in any manner approved by the OTS that is consistent with the purposes of this Plan and applicable laws and regulations: (i) the Bank will organize an interim stock savings bank as a wholly-owned subsidiary (“Interim One”); (ii) Interim One will also organize an interim stock savings bank as a wholly-owned subsidiary (“Interim Two”); (iii) Interim One will organize the Holding Company as a wholly-owned subsidiary; (iv) the Bank will exchange its charter for a federal stock savings bank charter to become the Stock Bank and Interim One will exchange its charter for a federal mutual holding company charter to become the MHC; (v) simultaneously with step (iv), Interim Two will merge with and into the Stock Bank with the Stock Bank as the resulting institution; (vi) all of the initially issued stock of the Stock Bank will be transferred to the MHC in exchange for membership interests in the MHC; and (vii) the MHC will contribute the capital stock of the Stock Bank to the Holding Company, and the Stock Bank will become a wholly-owned subsidiary of the Holding Company.

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Contemporaneously with the Reorganization, the Holding Company will offer for sale in the Stock Offering shares of Common Stock representing the pro forma market value of the Holding Company and the Bank. Upon consummation of the Reorganization, the legal existence of the Bank will not terminate, but the Stock Bank will be a continuation of the Bank, and all property of the Bank, including its right, title, and interest in and to all of its property and assets of every conceivable value or benefit then existing or pertaining to the Bank, or which would inure to the Bank will by operation of law and without the necessity of any conveyance or transfer and without any further act or deed, vest in the Stock Bank. The Stock Bank will have, hold, and enjoy the same in its right and fully and to the same extent as the same was possessed, held, and enjoyed by the Bank. The Stock Bank will continue to have, succeed to, and be responsible for all the assets, rights, liabilities and obligations of the Bank and will maintain its headquarters and operations at the Bank’s present locations.

Upon consummation of the Reorganization, substantially all of the assets and liabilities (including the savings accounts, demand accounts, tax and loan accounts, United States Treasury General Accounts, or United States Treasury Time Deposit Open Accounts, as defined in the Regulations) of the Bank shall become the assets and liabilities of the Stock Bank, which will thereupon become an operating savings bank subsidiary of the Holding Company and of the MHC. The Bank will apply to the OTS to have the Holding Company receive or retain (as the case may be) up to 50% of the net proceeds of the Stock Offering, or such other amount as may be determined by the Board of Directors. The Stock Bank may distribute additional capital to the Holding Company following the Reorganization, subject to the OTS regulations governing capital distributions.

B. Effect on Deposit Accounts and Borrowings

Each deposit account in the Bank on the Effective Date will remain a deposit account in the Stock Bank in the same amount and upon the same terms and conditions, and will continue to be federally insured up to the legal maximum by the FDIC in the same manner as the deposit account existed in the Bank immediately prior to the Reorganization. Upon consummation of the Reorganization, all loans and other borrowings from the Bank shall retain the same status with the Stock Bank after the Reorganization as they had with the Bank immediately prior to the Reorganization.

C. The Bank

Upon completion of the Reorganization the Stock Bank will be authorized to exercise any and all powers, rights and privileges of, and will be subject to all limitations applicable to, capital stock savings banks under federal law. A copy of the proposed charter and bylaws of the Stock Bank is attached hereto as Exhibit A and made a part of this Plan. The Reorganization will not result in any reduction of the amount of retained earnings (other than the assets of the Bank retained by or distributed to the Holding Company or the MHC), undivided profits, and general loss reserves that the Bank had prior to the Reorganization. Such retained earnings and general loss reserves will be accounted for by the MHC, the Holding Company and the Stock Bank on a consolidated basis in accordance with generally accepted accounting principles.

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The initial members of the Board of Directors of the Stock Bank will be the members of the existing Board of Directors of the Bank. The Stock Bank will be wholly-owned by the Holding Company. The Holding Company will be wholly-owned by its stockholders who will consist of the MHC and the persons who purchase Common Stock in the Stock Offering and any subsequent Minority Stock Offering. Upon the Effective Date of the Reorganization, the voting and membership rights of Members will be transferred to the MHC, subject to the conditions specified below.

D. The Holding Company

The Holding Company will be authorized to exercise any and all powers, rights and privileges, and will be subject to all limitations applicable to savings and loan holding companies and mutual holding companies under federal law and regulations. The initial members of the Board of Directors of the Holding Company will be the existing Board of Directors of the Bank. Thereafter, the voting stockholders of the Holding Company will elect approximately one-third of the Holding Company’s directors annually. A copy of the proposed charter and bylaws of the Holding Company is attached as Exhibit B and made part of this Plan.

The Holding Company will have the power to issue shares of Capital Stock to persons other than the MHC. However, so long as the MHC is in existence, the MHC will be required to own at least a majority of the Voting Stock of the Holding Company. The Holding Company may issue any amount of Non-Voting Stock to persons other than the MHC. The Holding Company will be authorized to undertake one or more Minority Stock Offerings of less than 50% in the aggregate of the total outstanding Common Stock of the Holding Company, and the Holding Company intends to offer for sale up to 49.9% of its Common Stock in the Stock Offering.

E. The Mutual Holding Company

As a mutual corporation, the MHC will have no stockholders. The members of the MHC will have exclusive voting authority as to all matters requiring a vote of members under the charter of the MHC. Persons who have membership rights with respect to the Bank under its existing charter immediately prior to the Reorganization shall continue to have such rights solely with respect to the MHC after the Reorganization so long as such persons remain depositors of the Bank after the Reorganization. In addition, all persons who become depositors of the Stock Bank following the Reorganization will have membership rights with respect to the MHC. The rights and powers of the MHC will be defined by the MHC’s charter and bylaws (a copy of which is attached to this Plan as Exhibit C and made a part hereof) and by the statutory and regulatory provisions applicable to savings and loan holding companies and mutual holding companies. In particular, the MHC will be subject to the limitations and restrictions imposed on savings and loan holding companies by Section 10(o)(5) of the HOLA.

The initial members of the Board of Directors of the MHC will be the existing Board of Directors of the Bank. Thereafter, approximately one-third of the directors of the MHC will be elected annually by the members of the MHC who will consist of the former Members of the Bank and all persons who become depositors of the Bank after the Reorganization.

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4. Conditions to Implementation of the Reorganization

Consummation of the Reorganization is expressly conditioned upon the following:

A. Approval of the Plan by a majority of the Board of Directors of the Bank.

B. The filing of a Reorganization Notice, including the Plan, with the OTS and either:

(i) The OTS has given written notice of its intent not to disapprove the Reorganization; or

(ii) Sixty days have passed since the OTS received the Reorganization Notice and deemed it complete under § 516.210 or § 516.220 of the OTS regulations, and the OTS has not given written notice that the Reorganization is disapproved or extended for an additional 30 days the period during which disapproval may be issued.

C. The filing of a holding company application with and approval by the OTS pursuant to the HOLA for the Holding Company and MHC to become mutual savings and loan holding companies by owning or acquiring up to 100% of the common stock of the Stock Bank and the Holding Company, respectively, to be issued in connection with the Reorganization.

D. Submission of the Plan to the Members for approval pursuant to a Proxy Statement and form of proxy cleared in advance by the OTS, and such Plan is approved by a majority of the total votes of the Voting Members eligible to be cast at a meeting held at the call of the directors in accordance with the procedures prescribed by the Bank’s charter and bylaws.

E. All necessary approvals have been obtained from the OTS in connection with the adoption of the charter and bylaws of the MHC, the Holding Company and the Stock Bank, the conversion of the Bank to a stock charter, and any transfer of assets and liabilities of the Bank to the Stock Bank pursuant to the Plan; and all conditions specified or otherwise imposed by the OTS in connection with the issuance of a notice of intent not to disapprove the Notice have been satisfied.

5. Special Meeting of Members

Subsequent to the approval of the Plan by the OTS, the Special Meeting shall be scheduled in accordance with the Bank’s Bylaws. Promptly after receipt of approval and at least 20 days but not more than 45 days prior to the Special Meeting, the Bank shall distribute proxy solicitation materials to all Voting Members. The proxy solicitation materials shall include a proxy statement and other documents authorized for use by the regulatory authorities. A copy of the Plan will be made available to Voting Members upon request. Pursuant to the Regulations, an affirmative vote of not less than a majority of the total outstanding votes of the Voting Members is required for approval of the Plan. Voting may be in person or by proxy. The OTS shall be notified promptly of the actions of the Voting Members.

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6. Rights of Members of the MHC

Following the Reorganization, all persons who had membership rights with respect to the Bank as of the date of the Reorganization will continue to have such rights solely with respect to the MHC as long as they remain depositors with the Bank. All existing proxies granted by members of the Bank to the Board of Directors of the Bank shall automatically become proxies granted to the Board of Directors of the MHC. In addition, all persons who become depositors of the Stock Bank subsequent to the Reorganization also will have membership rights with respect to the MHC. In each case, no person who ceases to be the holder of a deposit account with the Stock Bank after the Reorganization shall have any membership or other rights with respect to the MHC. Borrowers of the Stock Bank who were borrower members of the Bank at the time of Reorganization will have the same membership rights in the MHC as they had in the Bank immediately prior to the Reorganization for so long their pre-Reorganization borrowings remain outstanding. Borrowers will not receive membership rights in connection with any new borrowings made after the Reorganization.

7. Conversion of MHC to Stock Form

Following the completion of the Reorganization, the MHC may elect to convert to stock form in accordance with applicable law (a “Conversion Transaction”). There can be no assurance when, if ever, a Conversion Transaction will occur.

In a Conversion Transaction, the MHC would merge with and into the Stock Bank or the Holding Company, with the Stock Bank or the Holding Company as the resulting entity, and the depositors of the Stock Bank would receive the right to subscribe for shares of common stock of the Holding Company or its successor, which shares would represent the ownership interest of the MHC in the Holding Company and the Stock Bank. The additional shares of Common stock of the Holding Company issued in the Conversion Transaction would be sold at their aggregate pro forma market value as determined by an Independent Appraisal.

Any Conversion Transaction shall be fair and equitable to Minority Stockholders. In any Conversion Transaction, Minority Stockholders, if any, will be entitled without additional consideration to maintain the same percentage ownership interest in the Holding Company after the Conversion Transaction as their percentage ownership interest in the Holding Company immediately prior to the Conversion Transaction (i.e., the “Minority Ownership Interest”). The Minority Ownership Interest of Minority Stockholders shall not be reduced in a Conversion Transaction as a result of any waiver of dividends by the MHC.

At the sole discretion of the Board of Directors of the MHC and the Holding Company, a Conversion Transaction may be effected in any other manner necessary to qualify the Conversion Transaction as a tax-free reorganization under applicable federal and state tax laws, provided such Conversion Transaction does not diminish the rights and ownership interest of Minority Stockholders. If a Conversion Transaction does not occur, the MHC will always own a majority of the Voting Stock of the Holding Company. Management of the Bank has no current intention to conduct a Conversion Transaction.

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A Conversion Transaction would require the approval of the OTS and would be presented to a vote of the members of the MHC. Federal regulatory policy requires that in any Conversion Transaction the members of the MHC will be accorded the same stock purchase priorities as if the MHC were a mutual savings bank converting to stock form.

8. Timing of the Reorganization and Sale of Capital Stock

The Bank intends to consummate the Reorganization as soon as feasible following the receipt of all approvals referred to in Section 4 of the Plan. Subject to the approval of the OTS, the Holding Company intends to commence the Stock Offering concurrently with the proxy solicitation of Members. The Holding Company may close the Stock Offering before the Special Meeting, provided that the offer and sale of the Common Stock shall be conditioned upon approval of the Plan by the Members at the Special Meeting. Subject to OTS approval, the Bank’s proxy solicitation materials may permit certain Members to return to the Bank by a reasonable date certain a postage paid card or other written communication requesting receipt of the prospectus if the prospectus is not mailed concurrently with the proxy solicitation materials. The Stock Offering shall be conducted in compliance with 12 C.F.R. part 563g, the securities offering regulations of the SEC and to the extent applicable Form OC promulgated under the Regulations.

9. Number of Shares to be Offered

The total number of shares (or range thereof) of Common Stock to be issued and offered for sale pursuant to the Plan shall be determined initially by the Board of Directors of the Bank and the Holding Company in conjunction with the determination of the Independent Appraiser. The number of shares to be offered may be adjusted prior to completion of the Stock Offering. The total number of shares of Common Stock that may be issued to persons other than the MHC at the close of the Stock Offering must be less than 50% of the issued and outstanding shares of Common Stock of the Holding Company.

10. Independent Valuation and Purchase Price of Shares

All shares of Common Stock sold in the Stock Offering shall be sold at a uniform price per share. The purchase price and number of shares to be outstanding shall be determined by the Board of Directors of the Holding Company on the basis of the estimated pro forma market value of the Holding Company and the Bank. The aggregate purchase price for the Common Stock will not be inconsistent with such market value of the Holding Company and the Bank. The pro forma market value of the Holding Company and the Bank will be determined for such purposes by the Independent Appraiser.

Prior to the commencement of the Stock Offering, an Estimated Valuation Range will be established, which range may vary within 15% above to 15% below the midpoint of such range, and up to 15% greater than the maximum of such range, as determined by the Board of Directors at the time of the Stock Offering and consistent with OTS regulations. The Holding Company intends to issue up to 49.9% of its Common Stock in the Stock Offering. The number of shares of Common Stock to be issued and the ownership interest of the MHC may be increased or decreased by the Holding Company, taking into consideration any change in the independent valuation and other factors, at the discretion of the Board of Directors of the Bank and the Holding Company.

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Based upon the independent valuation as updated prior to the commencement of the Stock Offering, the Board of Directors may establish the minimum and maximum percentage of shares of Common Stock that will be offered for sale in the Stock Offering, or it may fix the percentage of shares that will be offered for sale in the Stock Offering. In the event the percentage of the shares offered for sale in the Minority Stock Offering is not fixed in the Stock Offering, the Minority Ownership Interest resulting from the Stock Offering will be determined as follows: (a) the product of (x) the total number of shares of Common Stock sold by the Holding Company and (y) the purchase price per share, divided by (b) the aggregate pro forma market value of the Bank and the Holding Company upon the closing of the Stock Offering and sale of all the Common Stock.

Notwithstanding the foregoing, no sale of Common Stock may be consummated unless, prior to such consummation, the Independent Appraiser confirms to the Holding Company, the Bank and to the OTS that, to the best knowledge of the Independent Appraiser, nothing of a material nature has occurred which, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the aggregate value of the Common Stock sold in the Stock Offering at the Actual Purchase Price is incompatible with its estimate of the aggregate consolidated pro forma market value of the Holding Company and the Bank. If such confirmation is not received, the Holding Company may cancel the Stock Offering, extend the Stock Offering and establish a new price range and/or estimated price range, extend, reopen or hold a new Stock Offering or take such other action as the OTS may permit.

The estimated market value of the Holding Company and the Bank shall be determined for such purpose by an Independent Appraiser on the basis of such appropriate factors as are not inconsistent with OTS regulations. The Common Stock to be issued in the Stock Offering shall be fully paid and nonassessable.

If there is a Community Offering or Syndicated Community Offering of shares of Common Stock not subscribed for in the Subscription Offering, the price per share at which the Common Stock is sold in such Community Offering or Syndicated Community Offering shall be the Actual Purchase Price which will be equal to the purchase price per share at which the Common Stock is sold to persons in the Subscription Offering. Shares sold in the Community Offering or Syndicated Community Offering will be subject to the same limitations as shares sold in the Subscription Offering.

11. Method of Offering Shares and Rights to Purchase Stock

In descending order of priority, the opportunity to purchase Common Stock shall be given in the Subscription Offering to: (1) Eligible Account Holders; (2) Tax-Qualified Employee Plans; (3) Supplemental Eligible Account Holders; and (4) Other Members, pursuant to priorities established by the Board of Directors. Any shares of Common Stock that are not subscribed for in the Subscription Offering may at the discretion of the Bank and the Holding Company be offered for sale in a Community Offering or a Syndicated Community Offering. The minimum purchase by any Person shall be 25 shares. The Holding Company shall

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determine in its sole discretion whether each prospective purchaser is a “resident,” “associate,” or “acting in concert” as defined in the Plan, and shall interpret all other provisions of the Plan in its sole discretion. All such determinations are in the sole discretion of the Holding Company, and may be based on whatever evidence the Holding Company chooses to use in making any such determination.

In addition to the priorities set forth below, the Board of Directors may establish other priorities for the purchase of Common Stock, subject to the approval of the OTS. The priorities for the purchase of shares in the Stock Offering are as follows:

A. Subscription Offering

Priority 1: Eligible Account Holders. Each Eligible Account Holder shall receive non-transferable subscription rights to subscribe for shares of Common Stock offered in the Stock Offering in an amount equal to the greater of $100,000, one-tenth of one percent (0.1%) of the total shares offered in the Stock Offering, or 15 times the product (rounded down to the nearest whole number) obtained by multiplying the total number of shares of Common Stock to be issued in the Stock Offering by a fraction, of which the numerator is the Qualifying Deposit of the Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders, in each case on the Eligibility Record Date and subject to the provisions of Section 12; provided that the Holding Company may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, increase such maximum purchase limitation to 5% of the maximum number of shares offered in the Stock Offering or decrease such maximum purchase limitation to 0.1% of the maximum number of shares offered in the Stock Offering, subject to the overall purchase limitations set forth in Section 12. If there are insufficient shares available to satisfy all subscriptions of Eligible Account Holders, shares will be allocated to Eligible Account Holders so as to permit each such subscribing Eligible Account Holder to purchase a number of shares sufficient to make his total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares will be allocated pro rata to remaining subscribing Eligible Account Holders whose subscriptions remain unfilled in the same proportion that each such subscriber’s Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. To ensure proper allocation of stock, each Eligible Account Holder must list on his subscription order form all accounts in which he had an ownership interest as of the Eligibility Record Date. Officers, directors, and their Associates may be Eligible Account Holders. However, if an officer, director, or his or her Associate receives subscription rights based on increased deposits in the year before the Eligibility Record Date, subscription rights based upon these deposits are subordinate to the subscription rights of other Eligible Account Holders.

Priority 2: Tax-Qualified Employee Plans. The Tax-Qualified Employee Plans shall be given the opportunity to purchase in the aggregate up to 10% of the shares offered in the Stock Offering. In the event of an oversubscription in the Stock Offering, subscriptions for shares by the Tax-Qualified Employee Plans may be satisfied, in whole or in part, out of authorized but unissued shares of the Holding Company subject to the maximum purchase limitations applicable to such plans as set forth in Section 12, or may be satisfied, in whole or in part, through open market purchases by the Tax-Qualified Employee Plans subsequent to the

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closing of the Stock Offering. If the final valuation exceeds the maximum of the Offering Range, up to 10% of the Common Stock issued in the Stock Offering may be sold to the Tax-Qualified Employee Plans notwithstanding any oversubscription by Eligible Account Holders.

Priority 3: Supplemental Eligible Account Holders. To the extent there are sufficient shares remaining after satisfaction of subscriptions by Eligible Account Holders, and the Tax-Qualified Employee Plans, each Supplemental Eligible Account Holder shall receive non-transferable subscription rights to subscribe for shares of Common Stock offered in the Stock Offering in an amount equal to the greater of $100,000, one-tenth of one percent (0.1%) of the total shares offered in the Stock Offering, or 15 times the product (rounded down to the nearest whole number) obtained by multiplying the total number of shares of Common Stock to be issued in the Stock Offering by a fraction, of which the numerator is the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders, in each case on the Supplemental Eligibility Record Date and subject to the provisions of Section 12; provided that the Bank may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, increase such maximum purchase limitation to 5% of the maximum number of shares offered in the Stock Offering or decrease such maximum purchase limitation to 0.1% of the maximum number of shares offered in the Stock Offering, subject to the overall purchase limitations set forth in Section 12. In the event Supplemental Eligible Account Holders subscribe for a number of shares which, when added to the shares subscribed for by Eligible Account Holders and the Tax-Qualified Employee Plans, is in excess of the total shares offered in the Stock Offering, the subscriptions of Supplemental Eligible Account Holders will be allocated among subscribing Supplemental Eligible Account Holders so as to permit each subscribing Supplemental Eligible Account Holder to purchase a number of shares sufficient to make his total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares will be allocated to each subscribing Supplemental Eligible Account Holder whose subscription remains unfilled in the same proportion that such subscriber’s Qualifying Deposits on the Supplemental Eligibility Record Date bear to the total amount of Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions remain unfilled.

Priority 4: Other Members. To the extent that there are sufficient shares remaining after satisfaction of subscriptions by Eligible Account Holders, the Tax-Qualified Employee Plans and Supplemental Eligible Account Holders, each Other Member shall have the opportunity to purchase up to $100,000 of Common Stock offered in the Stock Offering, provided that the Bank may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, increase such maximum purchase limitation to 5% of the maximum number of shares offered in the Stock Offering, or decrease such maximum purchase limitation to 0.1% of the maximum number of shares offered in the Stock Offering, subject to the overall purchase limitations set forth in Section 12. In the event Other Members subscribe for a number of shares which, when added to the shares subscribed for by the Eligible Account Holders, Tax-Qualified Employee Plans and Supplemental Eligible Account Holders, is in excess of the total number of shares offered in the Stock Offering, the subscriptions of such Other Members will be allocated among subscribing Other Members on a pro rata basis based on the size of such Other Members’ orders.

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B. Community Offering

Any shares of Common Stock not subscribed for in the Subscription Offering may be offered for sale in a Community Offering. This will involve an offering of all unsubscribed shares directly to the general public with a preference to those natural persons residing in the Community. The Community Offering, if any, shall be for a period of not more than 45 days unless extended by the Holding Company and the Bank, and shall commence concurrently with, during or promptly after the Subscription Offering. The Holding Company and the Bank may use one or more investment banking firms on a best efforts basis to sell the unsubscribed shares in the Subscription and Community Offering. The Holding Company and the Bank may pay a commission or other fee to such investment banking firm(s) as to the shares sold by such firm(s) in the Subscription and Community Offering and may also reimburse such firm(s) for expenses incurred in connection with the sale. No Person may purchase more than $100,000 of Common Stock in the Community Offering, subject to the overall purchase limitations set forth in Section 12. In the event orders for Common Stock in the Community Offering exceed the number of shares available for sale, shares will be allocated (to the extent shares remain available) first to cover orders of natural persons residing in the Community, and, thereafter, to the extent any shares remain available, to cover orders of other members of the general public on a basis that will promote a widespread distribution of stock. In the event orders for Common Stock in each of these categories exceed the number of shares available for sale within such category, orders shall first be filled so that each Person may receive 1,000 shares, and thereafter remaining shares will be allocated on an equal number of shares basis per order.

The Bank and the Holding Company, in their sole discretion, may reject subscriptions, in whole or in part, received from any Person under this Section 11.B.

C. Syndicated Community Offering

Any shares of Common Stock not sold in the Subscription Offering or in the Community Offering, if any, may be offered for sale to the general public by a selling group of broker-dealers in a Syndicated Community Offering, subject to terms, conditions and procedures, including the timing of the offering, as may be determined by the Bank and the Holding Company subject to the rights of the Holding Company to accept or reject in whole or in part all orders in the Syndicated Community Offering. It is expected that the Syndicated Community Offering would commence as soon as practicable after termination of the Subscription Offering and the Community Offering, if any. The Syndicated Community Offering shall be completed within 45 days after the termination of the Subscription Offering, unless such period is extended as provided herein. No Person, Associate of such Person, or group of Persons acting in concert, may purchase more than $100,000 of Common Stock in the Syndicated Community Offering, subject to the overall purchase limitations set forth in Section 12.

If for any reason a Syndicated Community Offering of unsubscribed shares of Common Stock cannot be effected and any shares remain unsold after the Subscription Offering and the Community Offering, if any, the Boards of Directors of the Holding Company and the Bank will seek to make other arrangements (including an underwritten public offering) for the sale of the remaining shares. Such other arrangements will be subject to the approval of the OTS and to compliance with applicable securities laws.

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12. Additional Limitations on Purchases of Common Stock

Purchases of Common Stock in the Stock Offering will be subject to the following purchase limitations:

A. The aggregate amount of outstanding Common Stock of the Holding Company owned or controlled by persons other than MHC at the close of the Stock Offering shall be less than 50% of the Holding Company’s total outstanding Common Stock.

B. The maximum purchase of Common Stock in the Subscription Offering by a Person or group of Persons through a single Deposit Account is $100,000. No Person by himself, or with an Associate or group of Persons acting in concert, may purchase more than $300,000 of the Common Stock offered in the Stock Offering, except that: (i) the Holding Company may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, increase such maximum purchase limitation to 5% of the number of shares offered in the Stock Offering; (ii) the Tax-Qualified Employee Plans may purchase up to 10% of the shares offered in the Stock Offering; and (iii) for purposes of this subsection 12.B shares to be held by any Tax-Qualified Employee Plan and attributable to a person shall not be aggregated with other shares purchased directly by or otherwise attributable to such person.

C. The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by the Holding Company, by any Non-Tax-Qualified Employee Plan or any Management Person and his or her Associates, exclusive of any shares of Common Stock acquired by such plan or Management Person and his or her Associates in the secondary market, shall not exceed 4.9% of the outstanding shares of Common Stock of the Holding Company at the conclusion of the Stock Offering. In calculating the number of shares held by any Management Person and his or her Associates under this paragraph, shares held by any Tax-Qualified Employee Plan or Non-Tax-Qualified Employee Plan of the Holding Company or the Bank that are attributable to such Person shall not be counted.

D. The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by the Holding Company, by any Non-Tax-Qualified Employee Plan or any Management Person and his or her Associates, exclusive of any Common Stock acquired by such plan or Management Person and his or her Associates in the secondary market, shall not exceed 4.9% of the stockholders’ equity of the Holding Company at the conclusion of the Stock Offering. In calculating the number of shares held by any Management Person and his or her Associates under this paragraph, shares held by any Tax-Qualified Employee Plan or Non-Tax-Qualified Employee Plan of the Holding Company or the Bank that are attributable to such Person shall not be counted.

E. The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by the Holding Company, by any one or more Tax-Qualified

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Employee Plans, exclusive of any shares of Common Stock acquired by such plans in the secondary market, shall not exceed 4.9% of the outstanding shares of Common Stock of the Holding Company at the conclusion of the Stock Offering.

F. The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by the Holding Company, by any one or more Tax-Qualified Employee Plans, exclusive of any shares of Common Stock acquired by such plans in the secondary market, shall not exceed 4.9% of the stockholders’ equity of the Holding Company at the conclusion of the Stock Offering

G. The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by the Holding Company, by all stock benefit plans of the Holding Company or the Bank, other than employee stock ownership plans, shall not exceed 25% of the outstanding common stock of the Holding Company held by persons other than the MHC.

H. The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by the Holding Company, by all Non-Tax-Qualified Employee Plans or Management Persons and their Associates, exclusive of any Common Stock acquired by such plans or Management Persons and their Associates in the secondary market, shall not exceed 33% of the outstanding shares of Common Stock held by persons other than the MHC at the conclusion of the Stock Offering. In calculating the number of shares held by Management Persons and their Associates under this paragraph or paragraph I. below, shares held by any Tax-Qualified Employee Plan or Non-Tax-Qualified Employee Plan that are attributable to such persons shall not be counted.

I. The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by the Holding Company, by all Non-Tax-Qualified Employee Plans or Management Persons and their Associates, exclusive of any Common Stock acquired by such plans or Management Persons and their Associates in the secondary market, shall not exceed 33% of the stockholders’ equity of the Holding Company held by persons other than the MHC at the conclusion of the Stock Offering.

J. Notwithstanding any other provision of this Plan, no person shall be entitled to purchase any Common Stock to the extent such purchase would be illegal under any federal law or state law or regulation or would violate regulations or policies of the National Association of Securities Dealers, Inc., particularly those regarding free riding and withholding. The Holding Company and/or its agents may ask for an acceptable legal opinion from any purchaser as to the legality of such purchase and may refuse to honor any purchase order if such opinion is not timely furnished.

K. The Board of Directors of the Holding Company has the right in its sole discretion to reject any order submitted by a person whose representations the Board of Directors believes to be false or who it otherwise believes, either alone or acting in concert with others, is violating, circumventing, or intends to violate, evade or circumvent the terms and conditions of this Plan.

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L. A minimum of 25 shares of Common Stock must be purchased by each Person purchasing shares in the Stock Offering to the extent those shares are available; provided, however, that in the event the minimum number of shares of Common Stock purchased times the price per share exceeds $500, then such minimum purchase requirement shall be reduced to such number of shares which when multiplied by the price per share shall not exceed $500, as determined by the Board.

Subscription rights afforded under this Plan and by OTS regulations are non-transferable. No person may transfer, offer to transfer, or enter into any agreement or understanding to transfer, the legal or beneficial ownership of any subscription rights under this Plan. No person may transfer, offer to transfer or enter into an agreement or understanding to transfer legal or beneficial ownership of any shares of Common Stock except pursuant to this Plan.

EACH PERSON PURCHASING COMMON STOCK IN THE STOCK OFFERING WILL BE DEEMED TO CONFIRM THAT SUCH PURCHASE DOES NOT CONFLICT WITH THE PURCHASE LIMITATIONS IN THIS PLAN. ALL QUESTIONS CONCERNING WHETHER ANY PERSONS ARE ASSOCIATES OR A GROUP ACTING IN CONCERT OR WHETHER ANY PURCHASE CONFLICTS WITH THE PURCHASE LIMITATIONS IN THIS PLAN OR OTHERWISE VIOLATES ANY PROVISION OF THIS PLAN SHALL BE DETERMINED BY THE BANK IN ITS SOLE DISCRETION. SUCH DETERMINATION SHALL BE CONCLUSIVE, FINAL AND BINDING ON ALL PERSONS, AND THE BANK MAY TAKE ANY REMEDIAL ACTION INCLUDING, WITHOUT LIMITATION, REJECTING THE PURCHASE OR REFERRING THE MATTER TO THE OTS FOR ACTION, AS THE BANK MAY IN ITS SOLE DISCRETION DEEM APPROPRIATE.

13. Payment for Stock

All payments for Common Stock subscribed for or ordered in the Stock Offering must be delivered in full to the Bank, together with a properly completed and executed order form, or purchase order in the case of the Syndicated Community Offering, on or prior to the expiration date specified on the order form or purchase order, as the case may be, unless such date is extended by the Bank; provided, that if the Employee Plans subscribe for shares of Common Stock during the Subscription Offering, such plans may pay for such shares at the Actual Purchase Price upon consummation of the Stock Offering. The Holding Company or the Bank may make scheduled discretionary contributions to the ESOP provided such contributions from the Bank, if any, do not cause the Bank to fail to meet its regulatory capital requirement.

Payment for Common Stock shall be made either by check or money order, or if a purchaser has a Deposit Account in the Bank, such purchaser may pay for the shares subscribed for by authorizing the Bank to make a withdrawal from the purchaser’s Deposit Account at the Bank in an amount equal to the purchase price of such shares. Such authorized withdrawal, whether from a savings passbook or certificate account, shall be without penalty as to premature withdrawal. If the authorized withdrawal is from a certificate account, and the remaining

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balance does not meet the applicable minimum balance requirements, the certificate shall be canceled at the time of withdrawal, without penalty, and the remaining balance will earn interest at the Bank’s passbook rate. Funds for which a withdrawal is authorized will remain in the purchaser’s Deposit Account but may not be used by the purchaser until the Common Stock has been sold or the 45-day period (or such longer period as may be approved by the OTS) following the Stock Offering has expired, whichever occurs first. Thereafter, the withdrawal will be given effect only to the extent necessary to satisfy the subscription (to the extent it can be filled) at the Actual Purchase Price per share. Interest will continue to be earned on any amounts authorized for withdrawal until such withdrawal is given effect. Payment for Common Stock made by check or money order will be paid by the Bank at a rate no less than the Bank’s passbook rate. Such interest will be paid from the date payment is received by the Bank until consummation or termination of the Stock Offering. If for any reason the Stock Offering is not consummated, all payments made by subscribers in the Stock Offering will be refunded to them with interest. In case of amounts authorized for withdrawal from Deposit Accounts, refunds will be made by canceling the authorization for withdrawal.

14. Manner of Exercising Subscription Rights Through Order Forms

As soon as practicable after the prospectus prepared by the Holding Company and the Bank has been declared effective by the OTS and the SEC, copies of the prospectus and order forms will be distributed to all Eligible Account Holders, Supplemental Eligible Account Holders and the Tax-Qualified Employee Plans at their last known addresses appearing on the records of the Bank for the purpose of subscribing for shares of Common Stock in the Subscription Offering and will be made available to those persons that purchase Common Stock in the Community Offering.

Each order form will be preceded or accompanied by the prospectus describing the Holding Company, the Bank, the Common Stock and the Subscription and Community Offerings. Each order form will contain, among other things, the following:

A. A specified date by which all order forms must be received by the Bank, which date shall be not less than 20, nor more than 45 days, following the date on which the order forms are mailed by the Bank, and which date will constitute the termination of the Subscription Offering;

B. The purchase price per share for shares of Common Stock to be sold in the Subscription and Community Offerings;

C. A description of the minimum and maximum number of shares of Common Stock that may be subscribed for pursuant to the exercise of Subscription Rights or otherwise purchased in the Community Offering;

D. Instructions as to how the recipient of the order form must indicate thereon the number of shares of Common Stock for which such Person elects to subscribe and the available alternative methods of payment therefor;

E. An acknowledgment that the recipient of the order form has received a final copy of the prospectus prior to execution of the order form;

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F. A statement indicating the consequences of failing to properly complete and return the order form, including a statement to the effect that all subscription rights are nontransferable, will be void at the end of the Subscription Offering, and can only be exercised by delivering to the Bank within the subscription period such properly completed and executed order form, together with a check or money order in the full amount of the purchase price as specified in the order form for the shares of Common Stock for which the recipient elects to subscribe in the Subscription Offering (or by authorizing on the order form that the Bank withdraw said amount from the subscriber’s Deposit Account at the Bank); and

G. A statement to the effect that the executed order form, once received by the Bank, may not be modified or amended by the subscriber without the consent of the Bank.

Notwithstanding the above, the Bank and the Holding Company reserve the right in their sole discretion to accept or reject orders received on photocopied or facsimilied order forms.

15. Undelivered, Defective or Late Order Form; Insufficient Payment

In the event order forms (a) are not delivered and are returned to the Bank by the United States Postal Service or the Bank is unable to locate the addressee, (b) are not received back by the Bank or are received by the Bank after the expiration date specified thereon, (c) are defectively filled out or executed, (d) are not accompanied by the full required payment for the shares of Common Stock subscribed for (including cases in which Deposit Accounts from which withdrawals are authorized are insufficient to cover the amount of the required payment), or (e) are not mailed pursuant to a “no mail” order placed in effect by the account holder, the subscription rights of the Person to whom such rights have been granted will lapse as though such Person failed to return the completed order form within the time period specified thereon; provided, that the Bank may, but will not be required to, waive any immaterial irregularity on any order form or require the submission of corrected order forms or the remittance of full payment for subscribed shares by such date as the Bank may specify. The interpretation by the Bank of terms and conditions of this Plan and of the order forms will be final, subject to the authority of the OTS.

16. Completion of the Stock Offering

The Stock Offering will be terminated if not completed within 90 days from the date on which the prospectus is declared effective by the OTS unless an extension is approved by the OTS.

17. Market for Common Stock

If at the close of the Stock Offering the Holding Company has more than 100 shareholders of any class of stock, the Holding Company shall use its best efforts to:

(i) encourage and assist a market maker to establish and maintain a market for that class of stock; and

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(ii) list that class of stock on a national or regional securities exchange, or on the Nasdaq quotation system.

18. Stock Purchases by Management Persons After the Stock Offering

For a period of three years after the Stock Offering, no Management Person or his or her Associates may purchase, without the prior written approval of the OTS, any Common Stock of the Holding Company, except from a broker-dealer registered with the SEC, except that the foregoing shall not apply to:

A. Negotiated transactions involving more than 1% of the outstanding stock in the class of stock; or

B. Purchases of stock made by and held by any Tax-Qualified or Non-Tax Qualified Employee Plan even if such stock is attributable to Management Persons or their Associates.

19. Resales of Stock by Directors and Officers

Common Stock purchased by Management Persons and their Associates in the Stock Offering may not be resold for a period of at least one year following the date of purchase, except in the case of death of a Management Person or an Associate.

20. Stock Certificates

Each stock certificate shall bear a legend giving appropriate notice of the restrictions set forth in Section 19 above. Appropriate instructions shall be issued to the Holding Company’s transfer agent with respect to applicable restrictions on transfers of such stock. Any shares of stock issued as a stock dividend, stock split or otherwise with respect to such restricted stock, shall be subject to the same restrictions as apply to the restricted stock.

21. Restriction on Financing Stock Purchases

The Holding Company and the Bank will not loan funds to any Person to purchase Common Stock in the Stock Offering, and will not knowingly offer or sell any of the Common Stock to any Person whose purchase would be financed by funds loaned to the Person by the Holding Company, the Bank or any Affiliate.

22. Stock Benefit Plans

The Board of Directors of the Bank and/or the Holding Company intend to adopt one or more stock benefit plans for employees, officers and directors, including an ESOP, stock award plans and stock option plans, which will be authorized to purchase Common Stock and grant options for Common Stock. However, only the Tax-Qualified Employee Plans will be permitted to purchase Common Stock in the Stock Offering, subject to the purchase priorities set forth in this Plan. The Board of Directors of the Bank intends to establish the ESOP and authorize the ESOP and any other Tax-Qualified Employee Plans to purchase in the aggregate up to 10% of the shares issued in the Stock Offering. The Bank or the Holding Company may make scheduled

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discretionary contributions to one or more Tax-Qualified Employee Plans to purchase Common Stock issued in the Stock Offering, or to purchase issued and outstanding shares of Common Stock in the open market or from authorized but unissued shares of Common Stock or treasury shares from the Holding Company subsequent to the completion of the Stock Offering; provided such contributions do not cause the Bank to fail to meet any of its regulatory capital requirements. In addition to shares purchased by one or more Tax-Qualified Employee Plans in this Stock Offering, any subsequent stock offering, and/or from authorized but unissued shares or treasury shares of the Holding Company, this Plan specifically authorizes the Holding Company to grant awards under one or more stock benefit plans, including stock recognition and award plans and stock option plans, in an amount up to 25% of the number of shares of Common Stock held by persons other than the MHC.

23. Post-Reorganization Filing and Market Making

It is likely that there will be a limited market for the Common Stock sold in the Stock Offering, and purchasers must be prepared to hold the Common Stock for an indefinite period of time. If the Holding Company has more than 35 stockholders of any class of stock, the Holding Company shall register its Common Stock with the SEC pursuant to the Exchange Act, and shall undertake not to deregister such Common Stock for a period of three years thereafter.

24. Payment of Dividends and Repurchase of Stock

The Holding Company may not declare or pay a cash dividend on its Common Stock if the effect thereof would cause the regulatory capital of the Bank to be reduced below the amount required under § 567.2 of the Regulations. Otherwise, the Holding Company may declare dividends or make other capital distributions in accordance with §563b.520 of the Regulations. Following completion of the Stock Offering, the Holding Company may repurchase its Common Stock consistent with § 563b.510 and § 563b.515 of the Regulations relating to stock repurchases, as long as such repurchases do not cause the regulatory capital of the Bank to be reduced below the amount required under § 563b.550. of the Regulations. The MHC may from time to time purchase Common Stock of the Holding Company. Subject to any notice or approval requirements of the OTS under the Regulations, the MHC may waive its right to receive dividends declared by the Holding Company.

25. Reorganization and Stock Offering Expenses

The Regulations require that the expenses of any Stock Offering must be reasonable. The Bank will use its best efforts to assure that the expenses incurred by the Bank and the Holding Company in effecting the Reorganization and the Stock Offering will be reasonable.

26. Employment and Other Severance Agreements

Following or contemporaneously with the Reorganization, the Bank and/or the Holding Company may enter into employment and/or severance arrangements with one or more executive officers of the Bank and/or the Holding Company. It is anticipated that any employment contracts entered into by the Bank and/or the Holding Company will be for terms not exceeding three years and that such contracts will provide for annual renewals of the term of the contracts, subject to approval by the Board of Directors. The Bank and/or the Holding Company also may

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enter into severance arrangements with one or more executive officers which provide for the payment of severance compensation in the event of a change in control of the Bank and/or the Holding Company. The terms of such employment and severance arrangements have not been determined as of this time, but will be described in any prospectus circulated in connection with the Stock Offering and will be subject to and comply with all regulations of the OTS.

27. Residents of Foreign Countries and Certain States

The Holding Company will make reasonable efforts to comply with the securities laws of all States in the United States in which Persons entitled to subscribe for shares of Common Stock pursuant to this Plan reside. However, no such Person will be issued subscription rights or be permitted to purchase shares of Common Stock in the Subscription Offering if such Person resides in a foreign country or resides in a state of the United States with respect to which any of the following apply: (A) a small number of Persons otherwise eligible to subscribe for shares under this Plan reside in such state; (B) the issuance of subscription rights or the offer or sale of shares of Common Stock to such Persons would require the Holding Company, under the securities laws of such state, to register as a broker, dealer, salesman or agent or to register or otherwise qualify its securities for sale in such state; or (C) such registration or qualification would be impracticable for reasons of cost or otherwise.

28. Interpretation

All interpretations of this Plan and application of its provisions to particular circumstances by a majority of the Board of Directors of the Bank shall be final, subject to the authority of the OTS.

29. Amendment or Termination of the Plan

If necessary or desirable, the terms of the Plan may be substantially amended by a majority vote of the Bank’s Board of Directors, as a result of comments from regulatory authorities or otherwise, at any time prior to the solicitation of proxies and submission of the Plan and proxy materials to a vote of the Members. At any time after the solicitation of proxies and submission of the Plan and proxy materials to a vote of the Members, the terms of the Plan that relate to the Reorganization may be amended by a majority vote of the Board of Directors only with the concurrence of the OTS. Terms of the Plan relating to the Stock Offering including, without limitation, Sections 8 through 20, may be amended by a majority vote of the Bank’s Board of Directors as a result of comments from regulatory authorities or otherwise at any time prior to the approval of the Plan by the OTS and at any time thereafter with the concurrence of the OTS. The Plan may be terminated by a majority vote of the Board of Directors at any time prior to the earlier of approval of the Plan by the OTS and the date of the Special Meeting, and may be terminated by a majority vote of the Board of Directors at any time thereafter with the concurrence of the OTS. In its discretion, the Board of Directors may modify or terminate the Plan upon the order of the regulatory authorities without a resolicitation of proxies or another meeting of the Members; however, any material amendment of the terms of the Plan that relate to the Reorganization which occur after the Special Meeting shall require a resolicitation of Members. Failure of the Members to approve the Plan will result in the termination of the Plan.

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The Plan shall be terminated if the Reorganization is not completed within 24 months from the date upon which the Members of the Bank approve the Plan, and may not be extended by the Bank or the OTS.

Dated: June 28, 2006.

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EX-3.1

Exhibit 3.1

BEN FRANKLIN FINANCIAL, INC.

STOCK HOLDING COMPANY CHARTER

Section 1. Corporate Title. The full corporate title of the Mutual Holding Company subsidiary holding company is Ben Franklin Financial, Inc. (the “Company”).

Section 2. Domicile. The domicile of the Company shall be located in the City of Arlington Heights in the State of Illinois.

Section 3. Duration. The duration of the Company is perpetual.

Section 4. Purpose and Powers. The purpose of the Company is to pursue any or all of the lawful objectives of a federal mutual holding company chartered under Section 10(o) of the Home Owners’ Loan Act, 12 U.S.C. 1467a(o), and to exercise all of the express, implied, and incidental powers conferred thereby and by all acts amendatory thereof and supplemental thereto, subject to the Constitution and laws of the United States as they are now in effect, or as they may hereafter be amended, and subject to all lawful and applicable rules, regulations, and orders of the Office of Thrift Supervision (the “Office”).

Section 5. Capital Stock. The total number of shares of all classes of the capital stock that the Company has authority to issue is 21,000,000 of which 20,000,000 shares shall be common stock, par value $0.01 per share, and of which 1,000,000 shares shall be serial preferred stock. The shares may be issued from time to time as authorized by the board of directors without the approval of its shareholders, except as otherwise provided in this Section 5 or to the extent that such approval is required by governing law, rule, or regulation. The consideration for the issuance of the shares shall be paid in full before their issuance and shall not be less than the par or stated value. Neither promissory notes nor future services shall constitute payment or part payment for the issuance of shares of the Company. The consideration for the shares shall be cash, tangible or intangible property (to the extent direct investment in such property would be permitted to the Company), labor, or services actually performed for the Company, or any combination of the foregoing. In the absence of actual fraud in the transaction, the value of such property, labor, or services, as determined by the board of directors of the Company, shall be conclusive. Upon payment of such consideration, such shares shall be deemed to be fully paid and nonassessable. In the case of a stock dividend, that part of the retained earnings of the Company that is transferred to common stock or paid in capital accounts upon the issuance of shares as a stock dividend shall be deemed to be the consideration for their issuance.

Except for shares issued in the initial organization of the Company, no shares of capital stock (including shares issuable upon conversion, exchange, or exercise of other securities) shall be issued, directly or indirectly, to officers, directors, or controlling persons (except for shares issued to the parent mutual holding company) of the Company other than as part of a general public offering or as qualifying shares to a director, unless their issuance or the plan under which they would be issued has been approved by a majority of the total votes eligible to be cast at a legal meeting.

Nothing contained in this Section 5 (or in any supplementary sections hereto) shall entitle the holders of any class or series of capital stock to vote as a separate class or series or to more than one vote per share, and there shall be no cumulation of votes for the election of directors. Provided, that this restriction on voting separately by class or series shall not apply:

(i) To any provision which would authorize the holders of preferred stock, voting as a class or series, to elect some members of the board of directors, less than a majority thereof, in the event of default in the payment of dividends on any class or series of preferred stock;

(ii) To any provision which would require the holders of preferred stock, voting as a class or series, to approve the merger or consolidation of the Company with another corporation or the sale, lease, or conveyance (other than by mortgage or pledge) of properties or business in exchange for securities of a corporation other than the Company if the preferred stock is exchanged for securities of such other corporation: Provided, that no provision may require such approval for transactions undertaken with the assistance or pursuant to the direction of the Office or the Federal Deposit Insurance Corporation;

(iii) To any amendment which would adversely change the specific terms of any class or series of capital stock as set forth in this Section 5 (or in any supplementary sections hereto), including any amendment which would create or enlarge any class or series ranking prior thereto in rights and preferences. An amendment which increases the number of authorized shares of any class or series of capital stock, or substitutes the surviving Company in a merger or consolidation for the Company, shall not be considered to be such an adverse change.

A description of the different classes and series of the Company’s capital stock and a statement of the designations, and the relative rights, preferences and limitations of the shares of each class of and series of capital stock are as follows:

A. Common Stock. Except as provided in this Section 5 (or in any supplementary sections thereto) the holders of common stock shall exclusively possess all voting power. Each holder of shares of common stock shall be entitled to one vote for each share held by such holder.

Whenever there shall have been paid, or declared and set aside for payment, to the holders of the outstanding shares of any class of stock having preference over the common stock as to payment of dividends, the full amount of dividends and of sinking fund, retirement fund or other retirement payments, if any, to which such holders are respectively entitled in preference to the common stock, then dividends may be paid on the common stock and on any class or series of stock entitled to participate therewith as to dividends out of any assets legally available for the payment of dividends.

In the event of any liquidation, dissolution, or winding up of the Company, the holders of the common stock (and the holders of any class or series of stock entitled to participate with the common stock in the distribution of assets) shall be entitled to receive, in cash or in kind, the assets of the Company available for distribution remaining after: (i) payment or provision for payment of the Company’s debts and liabilities; (ii) distributions or provision for distributions in settlement of its liquidation account; and (iii) distributions or provisions for distributions to holders of any class or series of stock having preference over the common stock in the liquidation, dissolution, or winding up of the Company. Each share of common stock shall have the same relative rights as and be identical in all respects with all the other shares of common stock.

B. Preferred Stock. The Company may provide in supplementary sections to its charter for one or more classes of preferred stock, which shall be separately identified. The shares of any class may be divided into and issued in series, with each series separately designated so as to distinguish the shares thereof from the shares of all other series and classes. The terms of each series shall be set forth in a supplementary section to the charter. All shares of the same class shall be identical, except as to the following relative rights and preferences, as to which there may be variations between different series:

(a) The distinctive serial designation and the number of shares constituting such series;

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(b) The dividend rate or the amount of dividends to be paid on the shares of such series, whether dividends shall be cumulative and, if so, from which date(s), the payment date(s) for dividends, and the participating or other special rights, if any, with respect to dividends;

(c) The voting powers, full or limited, if any, of shares of such series;

(d) Whether the shares of such series shall be redeemable and, if so, the price(s) at which, and the terms and conditions on which, such shares may be redeemed;

(e) The amount(s) payable upon the shares of such series in the event of voluntary or involuntary liquidation, dissolution, or winding up of the Company;

(f) Whether the shares of such series shall be entitled to the benefit of a sinking or retirement fund to be applied to the purchase or redemption of such shares, and if so entitled, the amount of such fund and the manner of its application, including the price(s) at which such shares may be redeemed or purchased through the application of such fund;

(g) Whether the shares of such series shall be convertible into, or exchangeable for, shares of any other class or classes of stock of the Company and, if so, the conversion price(s) or the rate(s) of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;

(h) The price or other consideration for which the shares of such series shall be issued; and

(i) Whether the shares of such series which are redeemed or converted shall have the status of authorized but unissued shares of serial preferred stock and whether such shares may be reissued as shares of the same or any other series of serial preferred stock.

Each share of each series of serial preferred stock shall have the same relative rights as and be identical in all respects with all the other shares of the same series.

The board of directors shall have authority to divide, by the adoption of supplementary charter sections, any authorized class of preferred stock into series and, within the limitations set forth in this section and the remainder of this charter, fix and determine the relative rights and preferences of the shares of any series so established.

Prior to the issuance of any preferred shares of a series established by a supplementary charter section adopted by the board of directors, the Company shall file with the Secretary to the Office a dated copy of that supplementary section of this charter establishing and designating the series and fixing and determining the relative rights and preferences thereof.

Section 6. Preemptive Rights. Holders of the capital stock of the Company shall not be entitled to preemptive rights with respect to any shares of the Company which may be issued.

Section 7. Directors. The Company shall be under the direction of a board of directors. The authorized number of directors, as stated in the Company’s bylaws, shall not be fewer than five nor more than fifteen except when a greater or lesser number is approved by the Director of the Office, or his or her delegate.

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Section 8. Amendment of Charter. Except as provided in Section 5, no amendment, addition, alteration, change or repeal of this charter shall be made, unless such is proposed by the board of directors of the Company, approved by the shareholders by a majority of the votes eligible to be cast at a legal meeting, unless a higher vote is otherwise required, and approved or preapproved by the Office.

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BEN FRANKLIN FINANCIAL, INC.
ATTEST:
	Bernadine V. Dziedzic
	Corporate Secretary
BY:
	C. Steven Sjogren
	Chairman of the Board, President and Chief Executive Officer
OFFICE OF THRIFT SUPERVISION
ATTEST:
	Secretary of Office of Thrift Supervision
BY:
	Director of Office of Thrift Supervision
Effective Date:

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EX-3.2

Exhibit 3.2

BEN FRANKLIN FINANCIAL, INC.

BYLAWS

ARTICLE I – Home Office

The home office of Ben Franklin Financial, Inc. (the “Company”) shall be at 14 N. Dryden Place, in the City of Arlington Heights, in the County of Cook, in the State of Illinois.

ARTICLE II – Shareholders

Section 1. Place of Meetings. All annual and special meetings of shareholders shall be held at the home office of the Company or at such other convenient place as the board of directors may determine.

Section 2. Annual Meeting. A meeting of the shareholders of the Company for the election of directors and for the transaction of any other business of the Company shall be held annually within 150 days after the end of the Company’s fiscal year, on the [                  day of May] of each calendar year, if not a legal holiday, and if a legal holiday, then on the next day following which is not a legal holiday, at 10:00 a.m., or at such other date and time within such 150-day period as the board of directors may determine.

Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by the regulations of the Office of Thrift Supervision (the “Office”), may be called at any time by the chairman of the board, the president, or a majority of the board of directors, and shall be called by the chairman of the board, the president, or the secretary upon the written request of the holders of not less than one-tenth of all of the outstanding capital stock of the Company entitled to vote at the meeting. Such written request shall state the purpose or purposes of the meeting and shall be delivered to the home office of the Company addressed to the chairman of the board, the president, or the secretary.

Section 4. Conduct of Meetings. Annual and special meetings shall be conducted in accordance with rules established by the Board of Directors and made available for inspection by shareholders at the annual or special meeting. The board of directors shall designate, when present, either the chairman of the board or president to preside at such meetings.

Section 5. Notice of Meetings. Written notice stating the place, day, and hour of the meeting and the purpose(s) for which the meeting is called shall be delivered not fewer than 20 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the chairman of the board, the president, or the secretary, or the directors calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the mail, addressed to the shareholder at the address as it appears on the stock transfer books or records of the Company as of the record date prescribed in Section 6 of this Article II with postage prepaid. When any shareholders’ meeting, either annual or special, is adjourned for 30 days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. It shall not be necessary to give any notice of the time and place of any meeting adjourned for less than 30 days or of the business to be transacted at the meeting, other than an announcement at the meeting at which such adjournment is taken.

Section 6. Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper

purpose, the board of directors shall fix in advance a date as the record date for any such determination of shareholders. Such date in any case shall be not more than 60 days and, in case of a meeting of shareholders, not fewer than 10 days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment.

Section 7. Voting Lists. At least 20 days before each meeting of the shareholders, the officer or agent having charge of the stock transfer books for shares of the Company shall make a complete list of the shareholders of record entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address and the number of shares held by each. This list of shareholders shall be kept on file at the home office of the Company and shall be subject to inspection by any shareholder of record or the shareholder’s agent at any time during usual business hours for a period of 20 days prior to such meeting. Such list also shall be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder of record or the shareholder’s agent during the entire time of the meeting. The original stock transfer book shall constitute prima facie evidence of the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders.

In lieu of making the shareholder list available for inspection by shareholders as provided in the preceding paragraph, the board of directors may elect to follow the procedures prescribed in § 552.6(d) of the Office’s regulations as now or hereafter in effect.

Section 8. Quorum. A majority of the outstanding shares of the Company entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares is represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If a quorum is present at a meeting of shareholders and the withdrawal of shareholders results in the presence of less than a quorum, the shareholders present may continue to transact business until adjournment. If a quorum is present the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater number of shareholders voting together or voting by classes is required by law or the charter. Directors, however, are elected by a plurality of the votes cast at an election of directors.

Section 9. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his or her duly authorized attorney in fact. Proxies may be given telephonically or electronically as long as the holder uses a procedure for verifying the identity of the shareholder. Proxies solicited on behalf of the management shall be voted as directed by the shareholder or, in the absence of such direction, as determined by a majority of the board of directors. No proxy shall be valid more than eleven months from the date of its execution except for a proxy coupled with an interest.

Section 10. Voting of Shares in the Name of Two or More Persons. When ownership stands in the name of two or more persons, in the absence of written directions to the Company to the contrary, at any meeting of the shareholders of the Company any one or more of such shareholders may cast, in person or by proxy, all votes to which such ownership is entitled. In the event an attempt is made to cast conflicting votes, in person or by proxy, by the several persons in whose names shares of stock stand, the vote or votes to which those persons are entitled shall be cast as directed by a majority of those holding such stock and present in person or by proxy at such meeting, but no votes shall be cast for such stock if a majority cannot agree.

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Section 11. Voting of Shares of Certain Holders. Shares standing in the name of another corporation may be voted by any officer, agent, or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine. Shares held by an administrator, executor, guardian, or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name. Shares standing in the name of a trustee may be voted by him or her, either in person or by proxy, but no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name. Shares held in trust in an IRA or Keogh Account, however, may be voted by the Company if no other instructions are received. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer into his or her name if authority to do so is contained in an appropriate order of the court or other public authority by which such receiver was appointed.

A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

Neither treasury shares of its own stock held by the Company nor shares held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Company, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting.

Section 12. Cumulative Voting. Stockholders may not cumulate their votes for election of directors.

Section 13. Inspectors of Election. In advance of any meeting of shareholders, the board of directors may appoint any persons other than nominees for office as inspectors of election to act at such meeting or any adjournment. The number of inspectors shall be either one or three. Any such appointment shall not be altered at the meeting. If inspectors of election are not so appointed, the chairman of the board or the president may, or on the request of not fewer than 10 percent of the votes represented at the meeting shall, make such appointment at the meeting. If appointed at the meeting, the majority of the votes present shall determine whether one or three inspectors are to be appointed. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the board of directors in advance of the meeting or at the meeting by the chairman of the board or the president.

Unless otherwise prescribed by regulations of the Office, the duties of such inspectors shall include: determining the number of shares and the voting power of each share, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; receiving votes, ballots, or consents; hearing and determining all challenges and questions in any way arising in connection with the rights to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all shareholders.

Section 14. Nominating Committee. The board of directors shall act as a nominating committee for selecting the nominees for election as directors. Except in the case of a nominee substituted as a result of the death or other incapacity of a management nominee, the nominating committee shall deliver written nominations to the secretary at least 20 days prior to the date of the annual meeting. Upon delivery, such nominations shall be posted in a conspicuous place in each office of the Company. No nominations for directors except those made by the nominating committee shall be voted upon at the annual meeting unless other nominations by shareholders are made in writing and delivered to the secretary of the Company at least five days prior to the date of the annual meeting. Upon delivery,

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such nominations shall be posted in a conspicuous place in each office of the Company. Ballots bearing the names of all persons nominated by the nominating committee and by shareholders shall be provided for use at the annual meeting. However, if the nominating committee shall fail or refuse to act at least 20 days prior to the annual meeting, nominations for directors may be made at the annual meeting by any shareholder entitled to vote and shall be voted upon.

Section 15. New Business. Any new business to be taken up at the annual meeting shall be stated in writing and filed with the secretary of the Company at least five days prior to the date of the annual meeting, and all business so stated, proposed, and filed shall be considered at the annual meeting; but no other proposal shall be acted upon at the annual meeting. Any shareholder may make any other proposal at the annual meeting and the same may be discussed and considered, but unless stated in writing and filed with the secretary at least five days before the meeting, such proposal shall be laid over for action at an adjourned, special or annual meeting of the shareholders taking place 30 days or more thereafter. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors, and committees; but in connection with such reports, no new business shall be acted upon at such annual meeting unless stated and filed as herein provided.

Section 16. Informal Action by Shareholders. Any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of shareholders, may be taken without a meeting if consent in writing, setting forth the action so taken, shall be given by all of the shareholders entitled to vote with respect to the subject matter.

ARTICLE III – Board of Directors

Section 1. General Powers. The business and affairs of the Company shall be under the direction of its board of directors. The board of directors shall annually elect a chairman of the board and a president from among its members and shall designate, when present, either the chairman of the board or the president to preside at its meetings.

Section 2. Number and Term. The board of directors shall consist of six (6) members and shall be divided into three classes as nearly equal in number as possible. The members of each class shall be elected for a term of three years and until their successors are elected and qualified. One class shall be elected by ballot annually.

Section 3. Regular Meetings. A regular meeting of the board of directors shall be held without notice other than this bylaw following the annual meeting of shareholders. The board of directors may provide, by resolution, the time and place for the holding of additional regular meetings without other notice than such resolution. Directors may participate in a meeting by means of a conference telephone or similar communications device through which all persons participating can hear each other at the same time. Participation by such means shall constitute presence in person for all purposes.

Section 4. Qualification. Each director shall at all times be the beneficial owner of not less than 100 shares of capital stock of the Company unless the company is a wholly-owned subsidiary of a holding company.

Section 5. Special Meetings. Special meetings of the board of directors may be called by or at the request of the chairman of the board, the president, or one-third of the directors. The persons authorized to call special meetings of the board of directors may fix any place, within the Company’s normal lending territory, as the place for holding any special meeting of the board of directors called by such persons.

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Members of the board of directors may participate in special meetings by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other. Such participation shall constitute presence in person for all purposes.

Section 6. Notice. Written notice of any special meeting shall be given to each director at least 24 hours prior thereto when delivered personally or by telegram or at least five days prior thereto when delivered by mail at the address at which the director is most likely to be reached. Such notice shall be deemed to be delivered when deposited in the mail so addressed, with postage prepaid if sent by mail, when delivered to the telegraph company if sent by telegram or when the Company receives notice of delivery if electronically transmitted. Any director may waive notice of any meeting by a writing filed with the secretary. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the board of directors need be specified in the notice or waiver of notice of such meeting.

Section 7. Quorum. A majority of the number of directors fixed by Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the board of directors; but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time. Notice of any adjourned meeting shall be given in the same manner as prescribed by Section 6 of this Article III.

Section 8. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless a greater number is prescribed by regulation of the Office or by these bylaws.

Section 9. Action Without a Meeting. Any action required or permitted to be taken by the board of directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors.

Section 10. Resignation. Any director may resign at any time by sending a written notice of such resignation to the home office of the Company addressed to the chairman of the board or the president. Unless otherwise specified, such resignation shall take effect upon receipt by the chairman of the board or the president. More than three consecutive absences from regular meetings of the board of directors, unless excused by resolution of the board of directors, shall automatically constitute a resignation, effective when such resignation is accepted by the board of directors.

Section 11. Vacancies. Any vacancy occurring on the board of directors may be filled by the affirmative vote of a majority of the remaining directors although less than a quorum of the board of directors. A director elected to fill a vacancy shall be elected to serve until the next election of directors by the shareholders. Any directorship to be filled by reason of an increase in the number of directors may be filled by election by the board of directors for a term of office continuing only until the next election of directors by the shareholders.

Section 12. Compensation. Directors, as such, may receive a stated salary for their services. By resolution of the board of directors, a reasonable fixed sum, and reasonable expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the board of directors. Members of either standing or special committees may be allowed such compensation for attendance at committee meetings as the board of directors may determine.

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Section 13. Presumption of Assent. A director of the Company who is present at a meeting of the board of directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless his or her dissent or abstention shall be entered in the minutes of the meeting or unless he or she shall file a written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Company within five days after the date a copy of the minutes of the meeting is received. Such right to dissent shall not apply to a director who voted in favor of such action.

Section 14. Removal of Directors. At a meeting of shareholders called expressly for that purpose, any director may be removed only for cause by a vote of the holders of a majority of the shares then entitled to vote at an election of directors. Whenever the holders of the shares of any class are entitled to elect one or more directors by the provisions of the charter or supplemental sections thereto, the provisions of this section shall apply, in respect to the removal of a director or directors so elected, to the vote of the holders of the outstanding shares of that class and not to the vote of the outstanding shares as a whole.

Section 15. Advisory Directors. Advisory directors may be appointed and their compensation for services (in an amount not to exceed those fees paid to voting directors) determined by resolution of the board of directors of the Company. Only former directors of the Company or Brooklyn Federal Savings Bank (including former directors of other savings banks which have been merged with, or otherwise acquired by the Company) shall be eligible to serve as advisory directors. Advisory directors shall be available for consultation with and advice to the management of the Company. Advisory directors may attend meetings of the board of directors, but shall have no vote on any matter acted upon by such board.

ARTICLE IV – Executive And Other Committees

Section 1. Appointment. The board of directors, by resolution adopted by a majority of the full board, may designate the chief executive officer and two or more of the other directors to constitute an executive committee. The designation of any committee pursuant to this Article IV and the delegation of authority shall not operate to relieve the board of directors, or any director, of any responsibility imposed by law or regulation.

Section 2. Authority. The executive committee, when the board of directors is not in session, shall have and may exercise all of the authority of the board of directors except to the extent, if any, that such authority shall be limited by the resolution appointing the executive committee; and except also that the executive committee shall not have the authority of the board of directors with reference to: the declaration of dividends; the amendment of the charter or bylaws of the Company or recommending to the shareholders a plan of merger, consolidation, or conversion; the sale, lease, or other disposition of all or substantially all of the property and assets of the Company otherwise than in the usual and regular course of its business; a voluntary dissolution of the Company; a revocation of any of the foregoing; or the approval of a transaction in which any member of the executive committee, directly or indirectly, has any material beneficial interest.

Section 3. Tenure. Subject to the provisions of Section 8 of this Article IV, each member of the executive committee shall hold office until the next regular annual meeting of the board of directors following his or her designation and until a successor is designated as a member of the executive committee.

Section 4. Meetings. Regular meetings of the executive committee may be held without notice at such times and places as the executive committee may fix from time to time by resolution. Special

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meetings of the executive committee may be called by any member thereof upon not less than one day’s notice stating the place, date, and hour of the meeting, which notice may be written or oral. Any member of the executive committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the executive committee need not state the business proposed to be transacted at the meeting.

Section 5. Quorum. A majority of the members of the executive committee shall constitute a quorum for the transaction of business at any meeting thereof, and action of the executive committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present.

Section 6. Action Without a Meeting. Any action required or permitted to be taken by the executive committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the members of the executive committee.

Section 7. Vacancies. Any vacancy in the executive committee may be filled by a resolution adopted by a majority of the full board of directors.

Section 8. Resignations and Removal. Any member of the executive committee may be removed at any time with or without cause by resolution adopted by a majority of the full board of directors. Any member of the executive committee may resign from the executive committee at any time by giving written notice to the president or secretary of the Company. Unless otherwise specified, such resignation shall take effect upon its receipt; the acceptance of such resignation shall not be necessary to make it effective.

Section 9. Procedure. The executive committee shall elect a presiding officer from its members and may fix its own rules of procedure which shall not be inconsistent with these bylaws. It shall keep regular minutes of its proceedings and report the same to the board of directors for its information at the meeting held next after the proceedings shall have occurred.

Section 10. Other Committees. The board of directors may by resolution establish an audit, loan, or other committee composed of directors as it may determine to be necessary or appropriate for the conduct of the business of the Company and may prescribe the duties, constitution, and procedures thereof.

ARTICLE V – Officers

Section 1. Positions. The officers of the Company shall be a president, one or more vice presidents, a secretary, and a treasurer or comptroller, each of whom shall be elected by the board of directors. The board of directors also may designate the chairman of the board as an officer. The offices of the secretary and treasurer or comptroller may be held by the same person and a vice president also may be either the secretary or the treasurer or comptroller. The board of directors may designate one or more vice presidents as executive vice president or senior vice president. The board of directors also may elect or authorize the appointment of such other officers as the business of the Company may require. The officers shall have such authority and perform such duties as the board of directors may from time to time authorize or determine. In the absence of action by the board of directors, the officers shall have such powers and duties as generally pertain to their respective offices.

Section 2. Election and Term of Office. The officers of the Company shall be elected annually at the first meeting of the board of directors held after each annual meeting of the shareholders. If the election of officers is not held at such meeting, such election shall be held as soon thereafter as possible.

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Each officer shall hold office until a successor has been duly elected and qualified or until the officer’s death, resignation, or removal in the manner hereinafter provided. Election or appointment of an officer, employee, or agent shall not of itself create contractual rights. The board of directors may authorize the Company to enter into an employment contract with any officer in accordance with regulations of the Office; but no such contract shall impair the right of the board of directors to remove any officer at any time in accordance with Section 3 of this Article V.

Section 3. Removal. Any officer may be removed by the board of directors whenever in its judgment the best interests of the Company will be served thereby, but such removal, other than for cause, shall be without prejudice to the contractual rights, if any, of the person so removed.

Section 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification, or otherwise may be filled by the board of directors for the unexpired portion of the term.

Section 5. Remuneration. The remuneration of the officers shall be fixed from time to time by the board of directors.

ARTICLE VI – Contracts, Loans, Checks, and Deposits

Section 1. Contracts. To the extent permitted by regulations of the Office, and except as otherwise prescribed by these bylaws with respect to certificates for shares, the board of directors may authorize any officer, employee or agent of the Company to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Company. Such authority may be general or confined to specific instances.

Section 2. Loans. No loans shall be contracted on behalf of the Company and no evidence of indebtedness shall be issued in its name unless authorized by the board of directors. Such authority may be general or confined to specific instances.

Section 3. Checks, Drafts, etc. All checks, drafts, or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the Company shall be signed by one or more officers, employees, or agents of the Company in such manner as shall from time to time be determined by the board of directors.

Section 4. Deposits. All funds of the Company not otherwise employed shall be deposited from time to time to the credit of the Company in any duly authorized depositories as the board of directors may select.

ARTICLE VII – Certificates for Shares and Their Transfer

Section 1. Certificates for Shares. Certificates representing shares of capital stock of the Company shall be in such form as shall be determined by the board of directors and approved by the Office. Such certificates shall be signed by the chief executive officer or by any other officer of the Company authorized by the board of directors, attested by the secretary or an assistant secretary, and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar other than the Company itself or one of its employees. Each certificate for shares of capital stock shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Company. All certificates surrendered to the Company for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares has been surrendered and cancelled, except that in the case of a lost or destroyed certificate, a new certificate may be issued upon such terms and indemnity to the Company as the board of directors may prescribe.

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Section 2. Transfer of Shares. Transfer of shares of capital stock of the Company shall be made only on its stock transfer books. Authority for such transfer shall be given only by the holder of record or by his or her legal representative, who shall furnish proper evidence of such authority, or by his or her attorney authorized by a duly executed power of attorney and filed with the Company. Such transfer shall be made only on surrender for cancellation of the certificate for such shares. The person in whose name shares of capital stock stand on the books of the Company shall be deemed by the Company to be the owner for all purposes.

ARTICLE VIII – Fiscal Year

The fiscal year of the Company shall end on the last day of December of each year. The appointment of accountants shall be subject to annual ratification by the shareholders.

ARTICLE IX – Dividends

Subject only to the terms of the Company’s charter and the regulations and orders of the Office, the board of directors may, from time to time, declare, and the Company may pay, dividends on its outstanding shares of capital stock.

ARTICLE X – Corporate Seal

The board of directors shall provide a Company seal which shall be two concentric circles between which shall be the name of the Company. The year of incorporation or an emblem may appear in the center.

ARTICLE XI – Amendments

These bylaws may be amended in a manner consistent with regulations of the Office and shall be effective after: (i) approval of the amendment by a majority vote of the authorized board of directors, or by a majority vote of the votes cast by the shareholders of the Company at any legal meeting; and (ii) receipt of any applicable regulatory approval. When the Company fails to meet its quorum requirements, solely due to vacancies on the board, then the affirmative vote of a majority of the sitting board will be required to amend the bylaws.

ARTICLE XII – Indemnification

The Company shall indemnify its personnel, including directors, officers and employees, to the fullest extent authorized by applicable law and OTS regulations, as the same exists or may hereafter be amended.

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EX-4

Exhibit 4

CHARTERED UNDER THE LAWS OF THE UNITED STATES OF AMERICA

            No. BEN FRANKLIN FINANCIAL, INC. Shares            

Arlington Heights, Illinois

CUSIP:                     

FULLY PAID AND NON-ASSESSABLE

PAR VALUE $0.01 PER SHARE

THE SHARES REPRESENTED BY THIS

CERTIFICATE ARE SUBJECT TO

RESTRICTIONS, SEE REVERSE SIDE

THIS CERTIFIES that is the owner of

SHARES OF COMMON STOCK OF

BEN FRANKLIN FINANCIAL, INC.

a federally chartered subsidiary holding company

The shares evidenced by this certificate are transferable only on the books of Ben Franklin Financial, Inc. by the holder hereof, in person or by attorney, upon surrender of this certificate properly endorsed.

The interest in Ben Franklin Financial, Inc. evidenced by this certificate may not be retired or withdrawn except as provided in the Rules and Regulations promulgated by the Office of Thrift Supervision and the charter and bylaws of Ben Franklin Financial, Inc. The common stock evidenced hereby is not an account of an insurable type and is not insured by the Federal Deposit Insurance Corporation or any other Federal or state governmental agency.

This certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.

IN WITNESS WHEREOF, Ben Franklin Financial, Inc. has caused this certificate to be executed by the facsimile signatures of its duly authorized officers and has caused its seal to be hereunto affixed.

By		[SEAL]	By
	BERNADINE V. DZIEDZIC			C. STEVEN SJOGREN
	CORPORATE SECRETARY			CHAIRMAN OF THE BOARD, PRESIDENT AND
				CHIEF EXECUTIVE OFFICER

The Board of Directors of Ben Franklin Financial, Inc. (the “Company”) is authorized by resolution or resolutions, from time to time adopted, to provide for the issuance of more than one class of stock, including preferred stock in series, and to fix and state the voting powers, designations, preferences, limitations and restrictions thereof. The Company will furnish to any stockholder upon request and without charge a full description of each class of stock and any series thereof.

The shares represented by this Certificate may not be cumulatively voted on any matter.

The following abbreviations when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations.

TEN COM	-	as tenants in common	UNIF GIFT MIN ACT		Custodian
				(Cust)		(Minor)
TEN ENT	-	as tenants by the entireties
				Under Uniform Gifts to Minors Act
JT TEN	-	as joint tenants with right of survivorship and not as tenants in common
				(State)

Additional abbreviations may also be used though not in the above list

For value received,                                          hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER

(please print or typewrite name and address including postal zip code of assignee)

Shares of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint                                                                                   Attorney to transfer the said shares on the books of the within named corporation with full power of substitution in the premises.

Dated

In the presence of Signature:

NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME OF THE STOCKHOLDER(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER.

EX-5

Exhibit 5

LUSE GORMAN POMERENK & SCHICK

A Professional Corporation

Attorneys at Law

5335 WISCONSIN AVENUE, N.W., SUITE 400

Washington, D.C. 20015

TELEPHONE (202) 274-2000

Facsimile (202) 362-2902

www.luselaw.com

writer’s direct dial number writer’s e-mail

(202) 274-2000

June 29, 2006

The Board of Directors

Ben Franklin Financial, Inc.

14 N. Dryden Place

Arlington Heights, Illinois 60004

Re:	Ben Franklin Financial, Inc.
	Common Stock Par Value $0.01 Per Share

Ladies and Gentlemen:

You have requested the opinion of this firm as to certain matters in connection with the offer and sale (the “Offering”) of Ben Franklin Financial, Inc. (the “Company”) Common Stock, par value $0.01 per share (“Common Stock”). We have reviewed the Company’s Charter, Registration Statement on Form SB-2 (the “Form SB-2”), as well as applicable statutes and regulations governing the Company and the offer and sale of the Common Stock.

We are of the opinion that upon the declaration of effectiveness of the Form SB-2, the Common Stock, when sold pursuant to the Company’s prospectus and the Ben Franklin Bank of Illinois Plan of Reorganization from a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan, will be legally issued, fully paid and non-assessable.

This Opinion has been prepared in connection with the Form SB-2. We hereby consent to our firm being referenced under the caption “Legal and Tax Matters,” and for inclusion as an exhibit to the Registration Statement on Form SB-2.

Very truly yours,

/s/ Luse Gorman Pomerenk & Schick

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

EX-8.1

Exhibit 8.1

LUSE GORMAN POMERENK & SCHICK

A Professional Corporation

Attorneys at Law

5335 WISCONSIN AVENUE, N.W., SUITE 400

Washington, D.C. 20015

TELEPHONE (202) 274-2000

Facsimile (202) 362-2902

www.luselaw.com

(202) 274-2000

June 29, 2006

Board of Directors

Ben Franklin Bank of Illinois

14 North Dryden Place

Arlington Heights, IL 60004

Re: Mutual Holding Company Formation and Stock Issuance

Ladies and Gentlemen:

We have been requested as special counsel to Ben Franklin Bank of Illinois to express our opinion concerning the Federal income tax consequences relating to the proposed conversion of Ben Franklin Bank of Illinois from a federally chartered mutual savings bank (sometimes referred to herein as “Mutual Bank”) to a federally chartered stock savings bank (sometimes referred to herein as “Stock Bank”) and the formation of Ben Franklin Financial, MHC, a federal mutual holding company, and Ben Franklin Financial, Inc., a mid-tier federal holding company and the subsidiary of Ben Franklin Financial, MHC. Ben Franklin Financial, MHC will acquire the outstanding stock of Stock Bank and subsequently contribute Stock Bank’s stock to Ben Franklin Financial, Inc. Concurrently with the Reorganization, Ben Franklin Financial, Inc. will offer for sale up to 49.9% of its Common Stock on a priority basis to depositors and Tax-Qualified Employee Plans of Ben Franklin Bank of Illinois, with any remaining shares offered to the public in a Community Offering or a Syndicated Community Offering, or a combination thereof.

In connection therewith, we have examined the Ben Franklin Bank of Illinois Plan of Reorganization From A Mutual Savings Bank To A Mutual Holding Company And Stock Issuance Plan, dated June 28, 2006 (“Plan of Reorganization”) and certain other documents of or relating to the reorganization of the bank into the mutual holding company structure (the “Reorganization”), some of which are described or referred to in the Plan of Reorganization and which we deemed necessary to examine in order to issue the opinions set forth below. Unless otherwise defined, all terms used herein have the meanings given to such terms in the Plan of Reorganization.

In our examination, we have assumed the authenticity of original documents, the accuracy of copies and the genuineness of signatures. We have further assumed the absence of adverse facts not apparent from the face of the instruments and documents we examined.

In issuing our opinions, we have assumed that the Plan of Reorganization has been duly and validly authorized and has been approved and adopted by the board of directors of Ben Franklin Bank of Illinois at a meeting duly called and held; that Ben Franklin Bank of Illinois will comply

Board of Directors

Ben Franklin Bank of Illinois

June 29, 2006

Page 2

with the terms and conditions of the Plan of Reorganization, and that the various factual representations and warranties which are provided to us are accurate, complete, true and correct. Accordingly, we express no opinion concerning the effect, if any, of variations from the foregoing. We specifically express no opinion concerning tax matters relating to the Plan of Reorganization under state and local tax laws, except on the basis of the documents and assumptions described above.

For purposes of this opinion, we are relying on the factual representations provided to us by Ben Franklin Bank of Illinois, which are incorporated herein by reference.

In issuing the opinions set forth below, we have referred solely to existing provisions of the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury Regulations thereunder, current Internal Revenue Service (“IRS”) administrative rulings, notices and procedures and court decisions. Such laws, regulations, administrative rulings, notices and procedures, and court decisions are subject to change at any time. Any such change could affect the continuing validity of the opinions set forth below. This opinion is as of the date hereof, and we disclaim any obligation to advise you of any change in any matter considered herein after the date hereof.

We emphasize that the outcome of litigation cannot be predicted with certainty and, although we have attempted in good faith to opine as to the probable outcome of the merits of each tax issue with respect to which an opinion was requested, there can be no assurance that our conclusions are correct or that they would be adopted by the IRS or a court.

SUMMARY OF OPINIONS

Based on the facts, representations and assumptions set forth herein, we are of the opinion that:

With Respect to the Exchange of Ben Franklin Bank of Illinois’ Charter for a Stock Charter (the “Bank Conversion”):

1. The conversion of Ben Franklin Bank of Illinois’ charter from a mutual savings bank charter to a stock bank charter will qualify as a reorganization within the meaning of Section 368(a)(1)(F) of the Code. (Rev. Rul. 2003-48, 2003-19 I.R.B. 863).

2. No gain or loss will be recognized by Ben Franklin Bank of Illinois upon the transfer of its assets to Stock Bank solely in exchange for shares of Stock Bank stock and the assumption by Stock Bank of the liabilities of Mutual Bank. (Code Sections 361(a) and 357(a)).

Board of Directors

Ben Franklin Bank of Illinois

June 29, 2006

Page 3

3. No gain or loss will be recognized by Stock Bank upon the receipt of the assets of the Mutual Bank in exchange for shares of Stock Bank common stock. (Code Section 1032(a)).

4. Stock Bank’s holding period in the assets received from Mutual Bank will include the period during which such assets were held by Mutual Bank. (Code Section 1223(2)).

5. Stock Bank’s basis in the assets of Ben Franklin Bank of Illinois will be the same as the basis of such assets in the hands of Mutual Bank immediately prior to the reorganization. (Code Section 362(b)).

6. Mutual Bank members will recognize no gain or loss upon the constructive receipt of solely Stock Bank common stock in exchange for their membership interests in Mutual Bank. (Code Section 354(a)(1)).

7. Stock Bank will succeed to and take into account Mutual Bank’s earnings and profits or deficit in earnings and profits, as of the date of the reorganization. (Code Section 381).

8. For purposes of Section 381, Stock Bank will be treated the same as Mutual Bank, and therefore, Mutual Bank’s tax year will not end merely as a result of the conversion of Mutual Bank to stock form and Stock Bank will not be required to obtain a new employee identification number. (Treas. Reg. Section 1.381(b)-2 and Rev. Rul. 73-526, 1973-2 CB. 404).

9. No gain or loss shall be recognized by Eligible Account Holders, Supplemental Eligible Account Holders or Other Members of Mutual Bank on the issuance to them of withdrawable deposit accounts in Stock Bank plus liquidation rights with respect to Ben Franklin Financial, MHC, in exchange for their deposit accounts in the Mutual Bank or to the other depositors on the issuance to them of withdrawable deposit accounts. (Code Section 354(a)).

10. It is more likely than not that the fair market value of the subscription rights to purchase Common Stock is zero. Accordingly, no gain or loss will be recognized by Eligible Account Holders, Supplemental Eligible Account Holders or Other Members upon the distribution to them of the nontransferable subscription rights to purchase shares of stock of Ben Franklin Financial, Inc. Gain realized, if any, by the Eligible Account Holders, Supplemental Eligible Account Holders and Other Members on the distribution to them of nontransferable subscription rights to purchase shares of Common Stock will be recognized but only in an amount not in excess of the fair market value of such subscription rights. (Code Section 356(a)). Eligible Account Holders and Supplemental Eligible Account Holders will not realize any taxable income as a result of the exercise by them of the nontransferable subscription rights (Rev. Rul. 56-572, 1956-2 C.B. 182).

Board of Directors

Ben Franklin Bank of Illinois

June 29, 2006

Page 4

11. The basis of the deposit accounts in the Stock Bank to be received by the Eligible Account Holders, Supplemental Eligible Account Holders and Other Members of the Mutual Bank will be the same as the basis of their deposit accounts in Mutual Bank surrendered in exchange therefor. (Code Section 358(a)(1)). The basis of the interests in the liquidation rights in Ben Franklin Financial, MHC to be received by the Eligible Account Holders, Supplemental Eligible Account Holders, and Other Members of Mutual Bank shall be zero. (Rev. Rul. 71-233, 1971-1 C.B. 113).

With Respect to the Transfer of Stock Bank Stock to Ben Franklin Financial, MHC, for Membership Interests (the “351 Transaction”):

12. The exchange of Stock Bank common stock constructively received by Eligible Account Holders, Supplemental Eligible Account Holders and Other Members in exchange for membership interests in Ben Franklin Financial, MHC will constitute a tax-free exchange of property solely for “stock” pursuant to Section 351 of the Code. (Rev. Rul. 2003-48, 2003-19 I.R.B. 863).

13. Eligible Account Holders, Supplemental Eligible Account Holders and Other Members will recognize no gain or loss upon the transfer of Stock Bank common stock they constructively received in the Bank Conversion to Ben Franklin Financial, MHC solely in exchange for membership interests in Ben Franklin Financial, MHC. (Code Section 351).

14. Eligible Account Holders, Supplemental Eligible Account Holders and Other Members basis in the Ben Franklin Financial, MHC membership interests received in the transaction (which basis is -0-) will be the same as the basis of the property transferred in exchange therefor. (Code Section 358(a)(1)).

15. Ben Franklin Financial, MHC will recognize no gain or loss upon the receipt of property from Eligible Account Holders, Supplemental Eligible Account Holders and Other Members in exchange for membership interests in Ben Franklin Financial, MHC. (Code Section 1032(a)).

16. Ben Franklin Financial, MHC’s basis in the property received from Eligible Account Holders, Supplemental Eligible Account Holders and Other Members (which basis is -0-) will be the same as the basis of such property in the hands of Eligible Account Holders, Supplemental Eligible Account Holders and Other Members immediately prior to the transaction. (Code Section 362(a)).

17. Ben Franklin Financial, MHC’s holding period for the property received from Eligible Account Holders, Supplemental Eligible Account Holders and Other Members will include the period during which such property was held by such persons. (Code Section 1223(2)).

Board of Directors

Ben Franklin Bank of Illinois

June 29, 2006

Page 5

With Respect to the Transfers to Ben Franklin Financial, Inc. in Exchange for Common Stock in Ben Franklin Financial, Inc. (the “Secondary 351 Transaction”):

18. Ben Franklin Financial, MHC and the persons who purchased Common Stock of Ben Franklin Financial, Inc. in the Subscription and Community Offering (“Minority Stockholders”) will recognize no gain or loss upon the transfer of Stock Bank stock and cash, respectively, to Ben Franklin Financial, Inc. in exchange for stock in Ben Franklin Financial, Inc. (Code Section 351(a)).

19. Ben Franklin Financial, Inc. will recognize no gain or loss on its receipt of Stock Bank stock and cash in exchange for Ben Franklin Financial, Inc. Common Stock. (Code Section 1032(a)).

20. Ben Franklin Financial, MHC’s basis in the Ben Franklin Financial, Inc. Common Stock received in the Secondary 351 Transaction will be the same as its basis in the Stock Bank stock transferred. (Code Section 358(a)(1)).

21. Ben Franklin Financial, MHC’s holding period in the Ben Franklin Financial, Inc. Common Stock received will include the period during which it held the Stock Bank common stock, provided that such property was a capital asset on the date of the exchange. (Code Section 1223(1)).

22. Ben Franklin Financial, Inc.’s basis in the Stock Bank stock received from Ben Franklin Financial, MHC will be the same as the basis of such property in the hands of Ben Franklin Financial, MHC. (Code Section 362(a)).

23. Ben Franklin Financial, Inc.’s holding period for the Stock Bank stock received from Ben Franklin Financial, MHC will include the period during which such property was held by Ben Franklin Financial, MHC. (Code Section 1223(2)).

24. It is more likely than not that the basis of the Ben Franklin Financial, Inc. Common Stock to its stockholders will be the purchase price thereof. (Code Section 1012). The holding period of the Common Stock purchased pursuant to the exercise of subscription rights shall commence on the date on which the right to acquire such stock was exercised. (Code Section 1223(6)).

PROPOSED TRANSACTION

On June 28, 2006, the board of directors of Ben Franklin Bank of Illinois adopted the Plan of Reorganization. For what are represented to be valid business purposes, Ben Franklin Bank of Illinois’ board of directors has decided to convert to a mutual holding company structure pursuant to statutes. The following steps are proposed:

(i) Ben Franklin Bank of Illinois will organize an interim stock savings bank (Interim One) as its wholly owned subsidiary;

Board of Directors

Ben Franklin Bank of Illinois

June 29, 2006

Page 6

(ii) Interim One will organize an interim stock savings bank as its wholly owned subsidiary (Interim Two); and

(iii) Interim One will also organize a federal mid-tier holding company as its wholly owned subsidiary (Ben Franklin Financial, Inc.).

The following transactions will occur simultaneously:

(iv) Ben Franklin Bank of Illinois will exchange its charter for a federal stock savings bank charter (Stock Bank) and will constructively issue its common stock to members of Ben Franklin Bank of Illinois;

(v) Interim One will cancel its outstanding stock and exchange its charter for a federal mutual Ben Franklin Financial, Inc. charter and thereby become Ben Franklin Financial, MHC;

(vi) Interim Two will merge with and into Stock Bank, with Stock Bank as the surviving entity, and the former members of Mutual Bank who constructively hold common stock in Stock Bank will exchange their common stock in Stock Bank for membership interests in Ben Franklin Financial, Inc.; and

(vii) Ben Franklin Financial, MHC will contribute Stock Bank’s common stock to Ben Franklin Financial, Inc., a wholly owned subsidiary of Ben Franklin Financial, MHC, for additional shares of Ben Franklin Financial, Inc. stock.

(viii) Contemporaneously, with the contribution set forth in “(vii)”, Ben Franklin Financial, Inc. will offer to sell up to 49.9% of its Common Stock in the Subscription Offering and, if applicable, the Community Offering.

These transactions are referred to herein collectively as the “Reorganization.”

Those persons who, as of the date of the Bank Conversion (the “Effective Date”), hold depository rights with respect to Mutual Bank will thereafter have such rights solely with respect to Stock Bank. Each deposit account with Mutual Bank at the time of the exchange will become a deposit account in Stock Bank in the same amount and upon the same terms and conditions. Following the completion of the Reorganization, all depositors and borrowers who had membership rights with respect to Mutual Bank immediately prior to the Reorganization will continue to have such rights solely with respect to Ben Franklin Financial, MHC so long as they continue to hold

Board of Directors

Ben Franklin Bank of Illinois

June 29, 2006

Page 7

deposit accounts or borrowings with Stock Bank. All new depositors of Stock Bank after the completion of the Reorganization will have ownership rights solely with respect to Ben Franklin Financial, MHC so long as they continue to hold deposit accounts with Stock Bank.

The shares of Interim Two common stock owned by Ben Franklin Financial, MHC prior to the Reorganization shall be converted into and become shares of common stock of Stock Bank on the Effective Date. The shares of Stock Bank common stock constructively received by Stock Bank stockholders (formerly the members holding liquidation rights of Mutual Bank) will be transferred to Ben Franklin Financial, MHC by such persons in exchange for membership interests in Ben Franklin Financial, MHC.

Ben Franklin Financial, Inc. will have the power to issue shares of capital stock (including common and preferred stock) to persons other than Ben Franklin Financial, MHC. So long as Ben Franklin Financial, MHC is in existence, however, it must own a majority of the voting stock of Ben Franklin Financial, Inc. Ben Franklin Financial, Inc. may issue any amount of non-voting stock to persons other than Ben Franklin Financial, MHC. No such non-voting stock will be issued as of the date of the Reorganization.

The opinions set forth above represent our conclusions as to the application of existing Federal income tax law to the facts of the instant transaction, and we can give no assurance that changes in such law, or in the interpretation thereof, will not affect the opinions expressed by us. Moreover, there can be no assurance that contrary positions may not be taken by the IRS, or that a court considering the issues would not hold contrary to such opinions.

Our opinion under paragraph 10 above is predicated on the representation that no person shall receive any payment, whether in money or property, in lieu of the issuance of subscription rights. Our opinion under paragraphs 10 and 24 is based on the position that the subscription rights to purchase shares of Common Stock received by Eligible Account Holders, Supplemental Eligible Account Holders and Other Members have a fair market value of zero. We note that the subscription rights will be granted at no cost to the recipients, will be legally non-transferable and of short duration, and will provide the recipient with the right only to purchase shares of Common Stock at the same price to be paid by members of the general public in any Community Offering. Based on the foregoing, we believe it is more likely than not that the nontransferable subscription rights to purchase Common Stock have no value.

If the subscription rights are subsequently found to have a fair market value, income may be recognized by various recipients of the subscription rights (in certain cases, whether or not the rights are exercised) and the Ben Franklin Financial, Inc. and/or the Stock Bank may be taxable on the distribution of the subscription rights.

Board of Directors

Ben Franklin Bank of Illinois

June 29, 2006

Page 8

All of the opinions set forth above are qualified to the extent that the validity of any provision of any agreement may be subject to or affected by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally. We do not express any opinion as to the availability of any equitable or specific remedy upon any breach of any of the covenants, warranties or other provisions contained in any agreement. We have not examined, and we express no opinion with respect to the applicability of, or liability under, any Federal, state or local law, ordinance, or regulation governing or pertaining to environmental matters, hazardous wastes, toxic substances, asbestos, or the like.

It is expressly understood that the opinions set forth above represent our conclusions based upon the documents reviewed by us and the facts presented to us. Any material amendments to such documents or changes in any significant fact would affect the opinions expressed herein.

We have not been asked to, and we do not, render any opinion with respect to any matters other than those expressly set forth above.

We hereby consent to the filing of the opinion as an exhibit to Ben Franklin Bank of Illinois’ combined Form MHC-1/MHC-2 Notice of MHC Reorganization and Application for Approval of a Minority Stock Issuance by a Subsidiary of MHC, and as an exhibit to the Holding Company’s Application on Form H(e)1-S, as filed with the OTS and Ben Franklin Financial, Inc.’s Registration Statement on Form SB-2 as filed with the SEC. We also consent to the references to our firm in the Prospectus contained in the Forms MHC-1/MHC-2, H(e)1-S, and SB-2 under the captions “The Reorganization and the Stock Offering - Tax Effects of the Reorganization” and “Legal and Tax Matters,” and to the summarization of our opinion in such Prospectus.

Very truly yours,

/s/ LUSE GORMAN POMERENK & SCHICK

LUSE GORMAN POMERENK & SCHICK

A Professional Corporation

EX-8.2

EXHIBIT 8.2

[Letter of Crowe Chizek and Company LLC]

June 29, 2006

Board of Directors

Ben Franklin Bank of Illinois

14 North Dryden Place

Arlington Heights, IL 60004

Re: Illinois Income Tax Consequences of the Conversion of Ben Franklin Bank of Illinois from a Federally Chartered Mutual Savings Bank to a Federally Chartered Stock Savings Bank and the Formation of Ben Franklin Financial, MHC, a Federal Mutual Holding Company, and Ben Franklin Financial, Inc., a Mid-Tier Federal Holding Company

To the Members of the Board of Directors:

In accordance with your request, we render our opinion relating to the Illinois income tax consequences of the Reorganization of Ben Franklin Bank of Illinois.

Statement of Facts

The facts and circumstances surrounding the transaction are quite detailed and are described at length in the Ben Franklin Bank of Illinois Plan of Reorganization from a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan (the “Plan of Reorganization”), dated June 28, 2006. However, a brief summary of the Plan of Reorganization is as follows:

Ben Franklin Bank of Illinois will convert from a federally chartered mutual savings bank (“Mutual Bank”) to a federally chartered stock savings bank (“Stock Bank”). In addition, Ben Franklin Financial, MHC, a federal mutual holding company, and Ben Franklin Financial, Inc., a mid-tier federal holding company and the subsidiary of Ben Franklin Financial, MHC will be formed. Ben Franklin Financial, MHC will acquire the outstanding stock of Stock Bank and subsequently contribute Stock Bank’s stock to Ben Franklin Financial, Inc. Concurrently with the Reorganization, Ben Franklin Financial, Inc. intends to offer for sale up to 49.9% of its Common Stock on a priority basis to depositors and Tax-Qualified Employee Plans of Ben Franklin Bank of Illinois, with any remaining shares offered to the public in a Community Offering or a Syndicated Community Offering, or a combination thereof.

Board of Directors

Ben Franklin Bank of Illinois

June 29, 2006

Page 2

Opinion

You have provided us with a copy of the federal income tax opinion of the Reorganization prepared by Luse Gorman Pomerenk & Schick, dated June 29, 2006 (the “Federal Tax Opinion”) in which they have opined, inter alia, that the Bank Conversion will be a transaction described in Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the “Code”) and the other transactions in the Reorganization will be transactions described in Section 351(a) of the Code.

Our opinion regarding the Illinois income tax consequences adopts and relies upon the facts, representations, assumptions, and conclusions as set forth in the Federal Tax Opinion and incorporates the capitalized terms contained in the Federal Tax Opinion. Our opinion on the Illinois income tax consequences assumes that the final federal income tax consequences of the Reorganization will be those outlined in the Federal Tax Opinion. Based upon that information, we render the following opinion with respect to the Illinois income tax consequences of the Reorganization.

1. No gain or loss will be recognized by Mutual Bank as a result of the Bank Conversion. ITA Sec. 403(a) (35 ILCS 5/403(a))

2. No gain or loss will be recognized by Stock Bank as a result of the Bank Conversion. ITA Sec. 403(a) (35 ILCS 5/403(a))

3. Stock Bank’s holding period of the assets of Mutual Bank will include the period during which such assets were held by Mutual Bank. ITA Sec. 403(a) (35 ILCS 5/403(a))

4. The basis of Mutual Bank’s assets in the hands of Stock Bank will be the same as the basis of those assets in the hands of Mutual Bank immediately prior to the Bank Conversion. ITA Sec. 403(a) (35 ILCS 5/403(a))

5. No gain or loss will be recognized by Mutual Bank members on the transfer of their membership interest in Mutual Bank solely for a constructive stock interest in Stock Bank. ITA Sec. 203(a)(1) (35 ILCS 5/203(a)(1))

6. Mutual Bank’s tax year will not end merely as a result of the conversion of Mutual Bank to stock form and Stock Bank will not be required to obtain a new employer identification number. ITA Sec. 401(a) (35 ILCS 5/401(a)) and ITA Sec. 403(a) (35 ILCS 5/403(a))

7. No gain or loss will be recognized by the Eligible Account Holders, Supplemental Eligible Account Holders or Other Members of Mutual Bank on the issuance to them of withdrawable deposit accounts in Stock Bank plus liquidation rights with respect to Ben Franklin Financial, MHC, in exchange for their deposit accounts in the Mutual Bank or to the other depositors on the issuance to them of withdrawable deposit accounts. ITA Sec. 203(a)(1) (35 ILCS 5/203(a)(1))

Board of Directors

Ben Franklin Bank of Illinois

June 29, 2006

Page 3

8. It is more likely than not that the fair market value of the subscription rights to purchase Common Stock is zero. Accordingly, no gain or loss will be recognized by Eligible Account Holders, Supplemental Eligible Account Holders or Other Members upon the distribution to them of the nontransferable subscription rights to purchase share of stock of Ben Franklin Financial, Inc. Gain realized, if any, by the Eligible Account Holders, Supplemental Eligible Account Holders and Other Members on the distribution to them of nontransferable subscription rights to purchase shares of Common Stock will be recognized but only in an amount not in excess of the fair market value of such subscription rights. Eligible Account Holders and Supplemental Eligible Account Holders will not realize any taxable income as a result of the exercise by them of the nontransferable subscription rights. ITA Sec. 203(a)(1) (35 ILCS 5/203(a)(1))

9. The basis of the deposit accounts in the Stock Bank to be received by the Eligible Account Holders, Supplemental Eligible Account Holders and Other Members of the Mutual Bank will be the same as the basis of their deposit accounts in Mutual Bank surrendered in exchange therefor. The basis of the interests in the liquidation rights in Ben Franklin Financial, MHC to be received by the Eligible Account Holders, Supplemental Eligible Account Holders, and Other Members of Mutual Bank will be zero. ITA Sec. 203(a)(1) (35 ILCS 5/203(a)(1))

10. Eligible Account Holders, Supplemental Eligible Account Holders and Other Members will recognize no gain or loss upon the transfer of Stock Bank common stock they constructively received in the Bank Conversion to Ben Franklin Financial, MHC solely in exchange for membership interests in Ben Franklin Financial, MHC. ITA Sec. 203(a)(1) (35 ILCS 5/203(a)(1))

11. Eligible Account Holders’, Supplemental Eligible Account Holders’ and Other Members’ basis in the Ben Franklin Financial, MHC membership interests received in the transaction (which basis is -0-) will be the same as the basis of the property transferred in exchange therefor. ITA Sec. 203(a)(1) (35 ILCS 5/203(a)(1))

12. Ben Franklin Financial, MHC will recognize no gain or loss upon the receipt of property from Eligible Account Holders, Supplemental Eligible Account Holders and Other Members in exchange for membership interests in Ben Franklin Financial, MHC. ITA Sec. 403(a) (35 ILCS 5/403(a))

13. Ben Franklin Financial, MHC’s basis in the property received from Eligible Account Holders, Supplemental Eligible Account Holders and Other Members (which basis is -0-) will be the same as the basis of such property in the hands of Eligible Account Holders, Supplemental Eligible Account Holders and Other Members immediately prior to the transaction. ITA Sec. 403(a) (35 ILCS 5/403(a))

14. Ben Franklin Financial, MHC’s holding period for the property received from Eligible Account Holders, Supplemental Eligible Account Holders and Other Members will include the period during which such property was held by such persons. ITA Sec. 403(a) (35 ILCS 5/403(a))

Board of Directors

Ben Franklin Bank of Illinois

June 29, 2006

Page 4

15. Ben Franklin Financial, MHC and the persons who purchased Common Stock of Ben Franklin Financial, Inc. in the Subscription and Community Offering (“Minority Stockholders”) will recognize no gain or loss upon the transfer of Stock Bank stock and cash, respectively, to Ben Franklin Financial, Inc. in exchange for stock in Ben Franklin Financial, Inc. ITA Sec. 403(a) (35 ILCS 5/403(a)) and ITA Sec. 203(a)(1) (35 ILCS 5/203(a)(1))

16. Ben Franklin Financial, Inc. will recognize no gain or loss on its receipt of Stock Bank stock and cash in exchange for Ben Franklin Financial, Inc. Common Stock. ITA Sec. 403(a) (35 ILCS 5/403(a))

17. Ben Franklin Financial, MHC’s basis in the Ben Franklin Financial, Inc. Common Stock received in the Secondary 351 Transaction will be the same as its basis in the Stock Bank stock transferred. ITA Sec. 403(a) (35 ILCS 5/403(a))

18. Ben Franklin Financial, MHC’s holding period in the Ben Franklin Financial, Inc. Common Stock received will include the period during which it held the Stock Bank common stock, provided that such property was a capital asset on the date of the exchange. ITA Sec. 403(a) (35 ILCS 5/403(a))

19. Ben Franklin Financial, Inc.’s basis in the Stock Bank stock received from Ben Franklin Financial, MHC will be the same as the basis of such property in the hands of Ben Franklin Financial, MHC. ITA Sec. 403(a) (35 ILCS 5/403(a))

20. Ben Franklin Financial, Inc.’s holding period for the Stock Bank stock received from Ben Franklin Financial, MHC will include the period during which such property was held by Ben Franklin Financial, MHC. ITA Sec. 403(a) (35 ILCS 5/403(a))

21. It is more likely than not that the basis of the Ben Franklin Financial, Inc. Common Stock to its stockholders will be the purchase price thereof. The holding period of the Common Stock purchased pursuant to the exercise of subscription rights will commence on the date on which the right to acquire such stock was exercised. ITA Sec. 203(a)(1) (35 ILCS 5/203(a)(1))

Limitations on Opinion

The above opinions are effective to the extent that the Bank is solvent. No opinion is expressed about the tax treatment of the transaction if the Bank is insolvent. Whether or not the Bank is solvent will be determined at the end of the taxable year in which the Reorganization is consummated.

Our opinion under paragraphs 8 and 21 assume that the subscription rights have a fair market value of zero. If the subscription rights are subsequently found to have a fair market value, income may be recognized by various recipients of the subscription rights (in certain cases, whether or not the rights are exercised) and Ben Franklin Financial, Inc. and/or the Stock Bank may be taxable on the distribution of the subscription rights.

Board of Directors

Ben Franklin Bank of Illinois

June 29, 2006

Page 5

Our opinion is based upon legal authorities currently in effect, which authorities are subject to modification or challenge at any time and perhaps with retroactive effect. Further, no opinion is expressed under the provisions of any of the other sections of the Illinois Code and Income Tax Regulations which may also be applicable thereto, or to the tax treatment of any conditions existing at the time of, or effects resulting from, the Reorganization which are not specifically covered by the opinions set forth above.

Should it finally be determined that the facts and the federal income tax consequences are not as outlined in the Federal Tax Opinion, the Illinois income tax consequences and our Illinois tax opinion will differ from what is contained herein. If any fact contained in this opinion letter or the Federal Tax Opinion changes to alter the federal tax treatment, it is imperative that we be notified in order to determine the effect on the Illinois income tax consequences, if any. Our opinion is based on the current Illinois tax law, which is subject to change.

We consent to the filing of this opinion letter as an exhibit to Ben Franklin Bank of Illinois’ combined Form MHC-1/MHC-2 Notice of MHC Reorganization and Application for Approval of a Minority Stock Issuance by a Subsidiary of MHC, and as a exhibit to the Holding Company’s Application on Form H(e)1-S, as filed with the OTS and Ben Franklin Financial, Inc.’s Registration Statement on Form SB-2 as filed with the SEC. We also consent to the references to our firm in the Prospectus contained in the Forms MHC-1/MHC-2, H(e)1-S, and SB-2 under the captions “The Reorganization and the Stock Offering – Tax Effects of the Reorganization” and “Legal and Tax Matters,” and to the summarization of our opinion in such Prospectus.

Very truly yours,

/s/ Crowe Chizek and Company LLC

Crowe Chizek and Company LLC

EX-10.1

EXHIBIT 10.1

Simple Ira Plan

314 Simple IRA Savings Plan

The Bank has established a Simple IRA Savings Plan to provide employees the potential for future financial security for retirement. The Bank reserves the right to amend the plan at any time or to substitute the current plan with another form of savings plan.

To be eligible to join the Simple IRA Savings Plan you must be 21 years of age and have earned at least $5,000 in each of two prior calendar years of employment with The Bank. You may apply to come into the plan effective on the commencement date of any calendar quarter (Jan. 1, April 1, July 1, October 1) following your date of employment.

Because each contribution to a Simple IRA Savings Plan is automatically deducted from your pay before federal and state tax withholdings are calculated, you save tax dollars now by having your current taxable amount reduced. While the amounts deducted generally will be taxed when they are finally distributed, favorable tax rules typically apply to Simple IRA distributions.

The Simple IRA Savings Plan allows you to elect how much salary you want to contribute per year and direct the investment of your plan account, so you can tailor your own retirement package to meet your individual needs. The maximum amount that may be contributed to a Simple IRA is $7,000, effective just through the 2002 calendar year. The Bank makes a contribution to your Simple IRA at the end of each calendar year. The value of that contribution can change from year to year. Complete details of the Simple IRA Savings Plan are described in the Summary Plan Description provided to eligible employees and include those rules regulating the employer’s contributions. Contact your Manager for more information about the Simple IRA Savings Plan.

315 Payroll Deduction Authorization

In cooperation with Dean Witter, The Bank will withhold an amount of your choosing from the payroll credit on the 15^th and the 30^th of the month. There will be no income tax withheld on the amount you contribute to your plan. These funds will be sent to Dean Witter and added to your Simple IRA Plan. Contributions other than through payroll deductions are not allowed.

Please understand that Dean Witter can only execute a purchase for an individual in increments of $100 or more. If you send in an amount less than $100, the funds will be deposited into a money market account temporarily, until the account reaches $100. You may change the amount withheld at any time.

PART V — Employer Matching Contributions

The Employer must either match an Eligible Employee’s elective deferrals for a year on a dollar-for-dollar basis up to the “Applicable Percentage” of the employee’s Compensation, as described in A below or, in the alternative, make nonelective contributions on behalf of all Eligible Employees, as described in B below.

A. Matching Contributions. For any year, the Employer must make a matching contribution to an Eligible Employee’s SIMPLE IRA account equal to the lesser of the employee’s elective deferrals for such year or the Applicable Percentage of the employee’s Compensation for such year. The “Applicable Percentage” of an Eligible Employee’s Compensation is 3 percent. However, the Employer may elect to use a lesser percentage of Compensation as the Applicable Percentage for a year provided that all of the following requirements are met:

1. the percentage elected is at least 1 percent;

2. the election of a lower percentage for the year would not result in the Applicable Percentage limit being lower than 3 percent in more than two of the five years (ending with such year). For purposes of this requirement, the Employer will be treated as having used an Applicable Percentage limit of 3 percent for years prior to the first year that the SIMPLE Plan was in effect with respect to the Employer and any predecessor, and

3. the Employer must notify all Eligible Employees of its election to use an Applicable Percentage limit of less than 3 percent for a year within a reasonable period before the start of the 60-day election period for such year by including the Applicable Percentage in the Notice to Employees set forth at Appendix A.

B. Alternative Nonelective Contributions. For any year, the Employer may elect, in lieu of matching contributions, to make a nonelective contribution to the SIMPLE IRA account of each Eligible Employee who actually receives $                                                                                                                                                                                                       (No greater than $5,000)

Compensation from the Employer for such year. Such nonelective contribution shall be an amount equal to 2 percent of the Compensation of each such Eligible Employee, regardless of whether the Eligible Employee has elective deferrals for such year. For purposes of calculating nonelective contributions, an Eligible Employee’s Compensation taken into account shall not exceed $160,000, or such higher limit (in increments of $10,000) as may be prescribed by the U.S. Treasury Department pursuant to Code section 401(a) (17). An Employer must make this election in advance of such year and notify all Eligible Employees by including the election in the Notice to Employees set forth at Appendix A.

C. Timing of Matching or Nonelective Contributions. The Employer must make matching or nonelective contributions for a year to an Eligible Employee^’s SIMPLE IRA account not later than the due date, including extensions, for the Employer^’s Federal income tax return for its taxable year with or within which the year for which the contribution is made, ends.

EX-10.3

EXHIBIT 10.3

EMPLOYMENT AGREEMENT

This Agreement (“Agreement”) is made by and between Ben Franklin Bank of Illinois, a federal savings bank (the “Bank”), with its principal office in Arlington Heights, Illinois, and C. Steven Sjogren (“Executive”) and shall be effective as of [                    ], provided, however, that under no circumstances shall this Agreement be effective prior to the completion of its mutual holding company reorganization.

WHEREAS, in order to induce Executive to remain in the employ of the Bank and to provide further incentive to achieve the financial and performance objectives of the Bank, the parties desire to enter into this Agreement upon the terms and conditions hereof; and

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1. POSITION AND RESPONSIBILITIES.

The Executive agrees to serve as the President and Chief Executive Officer of the Bank and as such, the Executive shall be responsible for the overall management of the Bank, including responsibility for establishing the business objectives, policies and strategic plan of the Bank in conjunction with the Board. Executive shall also be responsible for providing leadership and direction to all departments or divisions of the Bank, and shall be the primary contact between the Board and the staff of the Bank. Executive also agrees to serve, if elected, as an officer and director of the Bank or any affiliate of the Bank. Failure to reappoint Executive as President and Chief Executive Officer of the Bank or, if Executive is also a director of the Bank, failure to re-nominate the Executive as a director of the Bank without the consent of Executive during the term of this Agreement (except for any termination for Just Cause or Retirement, as defined herein) shall constitute a breach of this Agreement.

2. TERM AND DUTIES.

(a) The term of this Agreement and the period of Executive’s employment hereunder will begin as of the Effective Date and will continue for a period of thirty-six (36) full calendar months thereafter. On each anniversary date of the Effective Date (the “Anniversary Date”), this Agreement shall renew for an additional year such that the remaining term shall be thirty-six (36) full calendar months provided, however, that the Board shall at least sixty (60) days before such Anniversary Date conduct a comprehensive performance evaluation and review of Executive for purposes of determining whether to extend this Agreement. The Board shall give Executive notice of its decision whether or not to renew this Agreement at least thirty (30) days and not more than sixty (60) days prior to the Anniversary Date, and if written notice of non-renewal is provided to Executive within said time frame, the term of this Agreement shall not be extended and the remaining term shall be twenty-four (24) months from such Anniversary Date.

(b) During the period of his employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence approved by the Board, Executive shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties hereunder including activities and services

related to the organization, operation and management of the Bank; provided, however, that with the approval of the Board, Executive may serve, or continue to serve, on the boards of directors of, and hold any other offices or positions in, business, social, religious, charitable or similar organizations which will not present any conflict of interest with the Bank or materially affect the performance of Executive’s duties pursuant to this Agreement.

3. COMPENSATION, BENEFITS AND REIMBURSEMENT.

(a) The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2. The Bank shall pay Executive as compensation a salary of not less than [$                    ] per year (“Base Salary”). Such Base Salary shall be payable biweekly, or with such other frequency as officers and employees are generally paid. During the period of this Agreement, Executive’s Base Salary shall be reviewed at least annually. Such review shall be conducted by a committee designated by the Board, and the Bank may increase, but not decrease (except a decrease that is generally applicable to all employees) Executive’s Base Salary (with any increase in Base Salary to become “Base Salary” for purposes of this Agreement). Base Salary shall not include any director’s fees that the Executive is entitled to receive as a director of the Bank or any affiliate of the Bank. Such director’s fees shall be separately paid to the Executive.

(b) Executive will be entitled to participate in and receive benefits under any employee benefit plans including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident insurance plans, medical coverage or any other employee benefit plan or arrangement made available by the Bank currently or in the future to its senior executives and key management employees. Executive will be entitled to participate in any incentive compensation and bonus plans offered by the Bank in which Executive is eligible to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement.

(c) In addition to the Base Salary provided for by paragraph (a) of this Section 3, the Bank shall pay or reimburse Executive for all reasonable travel and other reasonable expenses incurred by Executive performing his obligations under this Agreement and may provide such additional compensation in such form and such amounts as the Board may from time to time determine. The Bank shall reimburse Executive for his ordinary and necessary business expenses including, without limitation, fees for memberships in such clubs and organizations as Executive and the Board shall mutually agree are necessary and appropriate for business purposes, and travel and entertainment expenses, incurred in connection with the performance of his duties under this Agreement.

4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

(a) Upon the occurrence of an Event of Termination (as herein defined) during Executive’s term of employment under this Agreement, the provisions of this Section 4 shall apply. As used in this Agreement, an “Event of Termination” shall mean and include any of the following:

(i) the termination by the Bank of Executive’s full-time employment hereunder for any reason other than termination governed by Section 5 (Termination for Cause) or termination governed by Section 6 (Termination for Disability or death) or termination governed by Section 7 (Termination Upon Retirement); or

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(ii) Executive’s resignation from the Bank’s employ for any of the following reasons:

(A) the failure to appoint or reappoint Executive to the position set forth under Section 1 or, if Executive is also a director of the Bank or its holding company (the “Holding Company”) as of the date hereof, failure to re-nominate Executive as a director of the Bank or the Holding Company as applicable;

(B) a material change in Executive’s functions, duties, or responsibilities with the Bank, which change would cause Executive’s position to become one of lesser responsibility, importance, or scope from the position and attributes thereof described in Section 1, above;

(C) a relocation of Executive’s principal place of employment by more than forty-five (45) miles from its location at the Effective Date of this Agreement;

(D) a material reduction in the benefits and perquisites to Executive from those being provided as of the later of the Effective Date or any subsequent Anniversary Date of this Agreement, other than an employee-wide reduction in pay or benefits;

(E) a liquidation or dissolution of the Bank; or

(F) a material breach of this Agreement by the Bank or the Holding Company.

Upon the occurrence of any event described in clauses (A), (B), (C), (D), (E) or (F), above, Executive shall have the right to elect to terminate his employment under this Agreement by resignation upon not less than thirty (30) days prior written Notice of Termination, as defined in Section 9(a), given within ninety (90) days after the event giving rise to said right to elect. Notwithstanding the preceding sentence, in the event of a continuing breach of this Agreement by the Bank, Executive, after giving due notice within the prescribed time frame of an initial event specified above, shall not waive any of his rights under this Agreement and this Section solely by virtue of the fact that Executive has submitted his resignation, provided Executive has remained in the employment of the Bank and is engaged in good faith discussions to resolve any occurrence of an event described in clauses (A), (B), (C), (D) or (F) above.

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(iii) (A) Executive’s involuntary termination by the Bank (or any successor thereto) on the effective date of, or at any time following, a Change in Control, or (B) Executive’s resignation from the employment with the Bank (or any successor thereto) following a Change in Control as a result of any event described in Section 4(a)(ii)(A), (B), (C), (D), or (F) above. For these purposes, a “Change in Control” shall mean a change in control of the Bank or the Holding Company of a nature that: (i) would be required to be reported in response to Item 5.01 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) without limitation such a Change in Control shall be deemed to have occurred at such time as (a) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Holding Company or Bank representing 25% or more of the combined voting power of the Holding Company’s or Bank’s outstanding securities except for any securities purchased by the Bank’s employee stock ownership plan or trust; or (b) individuals who constitute the Board of Directors of the Bank or the Holding Company on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least a majority of the directors of the Board, shall be, for purposes of this clause (b), considered as though he were a member of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Bank or the Holding Company or similar transaction in which the Bank or Holding Company is not the surviving institution occurs; provided, however, that, to the extent necessary to comply with Code Section 409A, “Change in Control” shall instead have the meaning set forth in Code Section 409A and the regulations and other guidance published thereunder; and provided further that a Change in Control shall not be deemed to have occurred solely as a result of the conversion of the Holding Company’s mutual holding company parent to stock form or a reorganization used to effect such a conversion.

(b) Upon the occurrence of an Event of Termination under Sections 4(a) (i) or (ii), on the Date of Termination, as defined in Section 9(b), the Bank shall be obligated to pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) his earned but unpaid salary as of the date of his termination of employment with the Bank; (ii) the benefits, if any, to which he is entitled as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the Bank’s officers and employees; (iii) the remaining payments that Executive would have earned, in accordance with Sections 3(a) and 3(b), if he had continued his employment with the Bank for the remainder of the term of this Agreement (but in any event, such term shall not exceed thirty-six (36) months), and had earned the maximum bonus or incentive award in each

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calendar year that ends during such term; and (iv) the annual contributions or payments that would have been made on Executive’s behalf to any employee benefit plans of the Bank as if Executive had continued his employment with the Bank for the remainder of the term of this Agreement (but in any event, such term shall not exceed thirty-six (36) months), based on contributions or payments made (on an annualized basis) at the Date of Termination. Any payments hereunder shall be made in a lump sum within thirty (30) days after the Date of Termination, or in the event that Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) applies, no later than the first day of the seventh month following the Date of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment.

(c) Upon the occurrence of an Event of Termination under Section 4(a)(iii), on the Date of Termination, as defined in Section 9(b), the Bank shall be obligated to pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) his earned but unpaid salary as of the date of his termination of employment with the Bank; (ii) the benefits, if any, to which he is entitled as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the Bank or Holding Company’s officers and employees; (iii) the remaining payments that Executive would have earned, in accordance with Sections 3 (a) and (b), if he had continued his employment with the Bank for a thirty-six (36) month period following his termination of employment, and had earned the maximum bonus or incentive award in each calendar year that ends during such term; and (iv) the annual contributions or payments that would have been made on Executive’s behalf to any employee benefit plans of the Bank or the Company as if Executive had continued his employment with the Bank for a thirty-six (36) month period following his termination of employment, based on contributions or payments made (on an annualized basis) at the Date of Termination. Any payments hereunder shall be made in a lump sum within thirty (30) days after the Date of Termination, or in the event that Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) applies, no later than the first day of the seventh month following the Date of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment.

(d) Upon the occurrence of an Event of Termination under Section 4(a)(i), (ii) or (iii), the Bank will cause to be continued, at the Bank’s expense, medical coverage substantially identical to the coverage maintained by the Bank for Executive and his family prior to Executive’s termination. Such coverage shall continue at the Bank’s expense for the remainder of the term of this Agreement following the Date of Termination.

(e) Notwithstanding anything in this Agreement to the contrary, in no event shall the aggregate payments or benefits to be made or afforded to Executive under this Section constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended, (“Code”) or any successor thereto, and in order to avoid such a result, Executive’s benefits hereunder shall be reduced, if necessary, to an amount, the value of which is one dollar ($1.00) less than an amount equal to three (3) times Executive’s “base amount,” as determined in accordance with Section 280G. The allocation of the reduction required hereby shall be determined by Executive.

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(f) In the event the Executive resigns for any reason other than an Event of Termination (as described in Section 4), Termination for Just Cause (as described in Section 5), Termination for Disability or Death (as described in Section 6) or Termination Upon Retirement (as described in Section 7), all obligations of the Bank hereunder shall immediately cease upon the date of such resignation.

(g) Notwithstanding the foregoing, to the extent required by regulations or interpretations of the Office of Thrift Supervision, all severance payments under the Agreement shall not exceed three (3) times the Executive’s average annual compensation (as defined in such regulations or interpretations) over the most recent five (5) taxable years.

5. TERMINATION FOR JUST CAUSE.

(a) The term “Termination for Just Cause” shall mean termination because of the Executive’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement.

(b) Notwithstanding Section 5(a), the Bank may not terminate Executive for Just Cause unless and until there shall have been delivered to him a Notice of Termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for that purpose, finding that in the good faith opinion of the Board, Executive was guilty of conduct justifying Termination for Just Cause and specifying the particulars thereof in detail. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Just Cause. During the period beginning on the date of the Notice of Termination for Just Cause pursuant to Section 5 hereof through the Date of Termination, any unvested stock options and related rights granted to Executive under any stock option plan of the Bank or the Holding Company (or any affiliate) shall not be exercisable nor shall any unvested awards granted to Executive under any stock benefit plan of the Bank or Holding Company (or affiliate thereof) vest. At the Date of Termination, any such unvested stock options and related rights and any such unvested awards shall become null and void and shall not be exercisable by or delivered to Executive at any time subsequent to such Termination for Just Cause. In the Event of Executive’s Termination for Just Cause, Executive shall resign immediately as a director of the Bank and as a director and/or officer of any affiliate of the Bank.

6. TERMINATION FOR DISABILITY OR DEATH.

(a) The Bank or Executive may terminate Executive’s employment after having established Executive’s Disability. For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform his duties under this Agreement and that results in Executive’s becoming eligible for long-term disability benefits under a long-term disability plan of the Bank (or, if the Bank has no such plan in effect, that impairs Executive’s ability to substantially perform his duties under this Agreement for a period of one hundred eighty (180) consecutive days). The Board shall determine in good faith, based upon competent medical advice and other factors that they reasonably believe to be

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relevant, whether or not Executive is and continues to be disabled for purposes of this Agreement. As a condition to any benefits, the Board may require Executive to submit to such physical or mental evaluations and tests as it deems reasonably appropriate, at the Bank’s expense.

(b) In the event of such Disability, Executive’s obligation to perform services under this Agreement will terminate. In the event of such termination, Executive shall receive benefits under any disability program sponsored by the Bank, provided such benefit is not less than the benefits provided in the following sentence of this Section 6(b). In the event the Bank does not sponsor any disability programs, the Executive shall continue to receive (x) his Base Salary, as defined in Section 3(a), at the rate in effect on the Date of Termination for period of one (1) year following the Date of Termination by reason of Disability, and (y) sixty-six and two-thirds percent (66 ²/3%) of Executive’s Base Salary each successive year after the first year following termination through the earliest to occur of (i) the date of Executive’s death; (ii) the date the Executive recovers from such Disability; (iii) the date Executive attains age 65; or (iv) the expiration of thirty six (36) months following the Date of Termination.

(c) In the event of Executive’s death during the term of this Agreement, his estate, legal representatives or named beneficiary or beneficiaries (as directed by Executive in writing) shall be paid Executive’s Base Salary, as defined in Section 3, at the rate in effect at the time of Executive’s death for a period of one (1) year from the date of Executive’s death.

7. TERMINATION UPON RETIREMENT

Termination of Executive’s employment based on “Retirement” shall mean termination of Executive’s employment at age 65, unless extended by the Board. Upon termination of Executive’s employment based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party.

8. RESIGNATION FROM BOARDS OF DIRECTORS

In the event of Executive’s termination of employment for any reason other than upon a Change in Control, Executive shall resign as a director of the Bank, and as a director and/or officer of any affiliate of the Bank.

9. NOTICE

(a) Any notice required hereunder shall be in writing and hand-delivered to the other party. Hand delivery to the Bank shall be made to the Chairman or the Secretary of the Board of Directors. Any termination by the Bank or by Executive shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

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(b) “Date of Termination” shall mean (A) if Executive’s employment is terminated for Disability, thirty (30) days after a Notice of Termination is given (provided that he shall not have returned to the performance of his duties on a full-time basis during such thirty (30) day period), and (B) if his employment is terminated for any other reason, the date specified in the Notice of Termination.

(c) If the party receiving a Notice of Termination desires to dispute or contest the basis or reasons for termination, the party receiving the Notice of Termination must notify the other party within thirty (30) days after receiving the Notice of Termination that such a dispute exists, and shall pursue the resolution of such dispute in good faith and with reasonable diligence pursuant to Section 19 of this Agreement. During the pendency of any such dispute, the Bank shall not be obligated to pay Executive compensation or other payments beyond the Date of Termination.

10. SOURCE OF PAYMENTS.

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank.

11. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of the Bank and Executive. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement.

12. NO ATTACHMENT; BINDING ON SUCCESSORS.

(a) Except as required by law or as otherwise provided in this Agreement, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and of no effect.

(b) This Agreement shall be binding upon, and inure to the benefit of, Executive and the Bank and their respective successors and assigns.

13. MODIFICATION AND WAIVER.

(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived.

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14. REQUIRED PROVISIONS.

(a) The Bank may terminate Executive’s employment at any time, but any termination by the Board other than Termination for Just Cause as defined in Section 5 hereof shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause.

(b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) [12 USC §1818(e)(3)] or 8(g)(1) [12 USC §1818(g)(1)] of the Federal Deposit Insurance Act (the “FDI Act”), the Bank’s obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

(c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) [12 USC §1818(e)(4)] or 8(g)(1) [12 USC §1818(g)(1)] of the FDI Act, all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

(d) If the Bank is in default as defined in Section 3(x)(1) [12 USC §1813(x)(1)] of the FDI Act, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

(e) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary for the continued operation of the Bank, (i) by the Director of the OTS or his or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) [12 USC §1823(c)] of the FDI Act; or (ii) by the Director or his or her designee at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.

(f) Notwithstanding anything herein contained to the contrary, any payments to Executive by the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the FDI Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

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15. NON-COMPETITION AND POST-TERMINATION OBLIGATIONS.

(a) All payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with paragraph (b), (c) and (d) of this Section 15.

(b) Executive shall, upon reasonable notice, furnish such information and assistance to the Bank as may reasonably be required by the Bank in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between the Executive and the Bank or any of its subsidiaries or affiliates.

(c) Executive recognizes and acknowledges that the knowledge of the business activities and plans for business activities of the Bank and affiliates thereof, as it may exist from time to time, is a valuable, special and unique asset of the business of the Bank and affiliates thereof. Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities of the Bank or affiliates thereof to any person, firm, corporation, or other entity for any reason or purpose whatsoever (except for such disclosure as may be required to be provided to the Office of Thrift Supervision (“OTS”), the Federal Deposit Insurance Corporation (“FDIC”), or other regulatory agency with jurisdiction over the Bank or Executive). Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank, and Executive may disclose any information regarding the Bank which is otherwise publicly available or which Executive is otherwise legally required to disclose. In the event of a breach or threatened breach by Executive of the provisions of this Section 15, the Bank will be entitled to an injunction restraining Executive from disclosing, in whole or in part, his knowledge of the past, present, planned or considered business activities of the Bank or any of its affiliates, or from rendering any services to any person, firm, corporation or other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

(d) Upon any termination of Executive’s employment hereunder for any reason other than (i) pursuant to Section 4(a)(iii); (ii) pursuant to Section 6; or (iii) any termination of Executive’s employment hereunder as a result of the expiration of Executive’s employment term following a notice of non-renewal pursuant to Section 2, Executive agrees not to compete in the banking and lending business with the Bank and any of its affiliates for a period of one (1) year following such termination in any city or town in which the Bank has an office or has filed an application for regulatory approval to establish an office, determined as of the effective date of such termination, except as agreed to pursuant to a resolution duly adopted by the Board. Executive agrees that during such period and within said cities and towns, Executive shall not work for or advise, consult or otherwise serve with, directly or indirectly, any entity whose business materially competes with the depository, lending or other business activities of the Bank. The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive’s breach of this Section 15(d) agree that in the event of any such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive, Executive’s partners, agents, servants, employers, employees and all persons acting for or with Executive. Executive represents and admits that Executive’s experience and capabilities are such that

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Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

(e) Upon any termination of Executive’s employment hereunder for any reason other than (i) pursuant to Section 4(a)(iii); (ii) pursuant to Section 6; or (iii) any termination of Executive’s employment hereunder as a result of the expiration of Executive’s employment term following a notice of non-renewal pursuant to Section 2, Executive agrees that Executive will not, in any manner whatsoever, for a period of one (1) year following the termination of Executive’s employment with the Bank either as an individual or as a partner, stockholder, director, officer, principal, employee, agent, consultant, or in any other relationship or capacity, with any person, firm, corporation or other business entity, either directory or indirectly, solicit or induce or aid in the solicitation or inducement of any employees of the Bank to leave their employment with the Bank. Executive further agrees that the Executive will not, in any manner whatsoever, for a period of one (1) year following the termination of Executive’s employment with the Bank, either as an individual or as a partner, stockholder, director, officer, principal, employee, agent, consultant or in any other relationship or capacity with any person, firm, corporation or other business entity, either directly or indirectly, solicit the business of any customers or clients of the Bank at the time of termination of Executive’s employment with the Bank.

16. SEVERABILITY.

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

17. HEADINGS FOR REFERENCE ONLY.

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

18. GOVERNING LAW.

This Agreement shall be governed by the laws of the State of Illinois but only to the extent not superseded by federal law.

19. ARBITRATION.

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, conducted before a single arbitrator selected by the Bank and Executive sitting in a location selected by the Bank and Executive within twenty-five (25) miles of Arlington Heights, Illinois in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

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20. PAYMENT OF LEGAL FEES.

All reasonable legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, provided that the dispute or interpretation has been settled by Executive and the Bank or resolved in Executive’s favor.

21. INDEMNIFICATION.

(a) The Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense, and shall indemnify Executive (and his heirs, executors and administrators) for the term of this Agreement and for a period of six years thereafter to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his performance of services as a director or officer of the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements (such settlements must be approved by the Board); provided, however, the Bank shall not be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive. Any such indemnification shall be made consistent with OTS Regulations and Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359.

(b) Notwithstanding the foregoing, no indemnification shall be made unless the Bank gives the OTS at least 60 days’ notice of its intention to make such indemnification. Such notice shall state the facts on which the action arose, the terms of any settlement, and any disposition of the action by a court. Such notice, a copy thereof, and a certified copy of the resolution containing the required determination by the Board shall be sent to the Regional Director of the OTS, who shall promptly acknowledge receipt thereof. The notice period shall run from the date of such receipt. No such indemnification shall be made if the OTS advises the Bank in writing within such notice period, of its objection thereto.

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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its duly authorized representative, and Executive has signed this Agreement, effective as of the day and date first above written.

ATTEST:	BEN FRANKLIN BANK OF ILLINOIS
	By:
Corporate Secretary		Chairman of the Board
WITNESS:	EXECUTIVE:
	C. Steven Sjogren

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EX-10.4

EXHIBIT 10.4

EMPLOYMENT AGREEMENT

This Agreement (“Agreement”) is made by and between Ben Franklin Bank of Illinois, a federal savings bank (the “Bank”), with its principal office in Arlington Heights, Illinois, and Glen Miller (“Executive”) and shall be effective as of [                ], provided, however, that under no circumstances shall this Agreement be effective prior to the completion of its mutual holding company reorganization.

WHEREAS, in order to induce Executive to remain in the employ of the Bank and to provide further incentive to achieve the financial and performance objectives of the Bank, the parties desire to enter into this Agreement upon the terms and conditions hereof; and

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1. POSITION AND RESPONSIBILITIES.

The Executive agrees to serve as the Vice President and Chief Financial Officer of the Bank and as such, the Executive shall be responsible for overseeing the accounting, financial and regulatory reporting functions of the Bank, in each case under the direction of the Chief Executive Officer. Failure to reappoint Executive as Vice President and Chief Financial Officer of the Bank without the consent of Executive during the term of this Agreement (except for any termination for Just Cause or Retirement, as defined herein) shall constitute a breach of this Agreement.

2. TERM AND DUTIES.

(a) The term of this Agreement and the period of Executive’s employment hereunder will begin as of the Effective Date and will continue for a period of thirty-six (36) full calendar months thereafter. On each anniversary date of the Effective Date (the “Anniversary Date”), this Agreement shall renew for an additional year such that the remaining term shall be thirty-six (36) full calendar months provided, however, that the Board shall at least sixty (60) days before such Anniversary Date conduct a comprehensive performance evaluation and review of Executive for purposes of determining whether to extend this Agreement. The Board shall give Executive notice of its decision whether or not to renew this Agreement at least thirty (30) days and not more than sixty (60) days prior to the Anniversary Date, and if written notice of non-renewal is provided to Executive within said time frame, the term of this Agreement shall not be extended and the remaining term shall be twenty-four (24) months from such Anniversary Date.

(b) During the period of his employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence approved by the Board, Executive shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties hereunder including activities and services related to the organization, operation and management of the Bank; provided, however, that with the approval of the Board, Executive may serve, or continue to serve, on the boards of directors of, and hold any other offices or positions in, business, social, religious, charitable or similar organizations which will not present any conflict of interest with the Bank or materially affect the performance of Executive’s duties pursuant to this Agreement.

3. COMPENSATION, BENEFITS AND REIMBURSEMENT.

(a) The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2. The Bank shall pay Executive as compensation a salary of not less than [$            ] per year (“Base Salary”). Such Base Salary shall be payable biweekly, or with such other frequency as officers and employees are generally paid. During the period of this Agreement, Executive’s Base Salary shall be reviewed at least annually. Such review shall be conducted by a committee designated by the Board, and the Bank may increase, but not decrease (except a decrease that is generally applicable to all employees) Executive’s Base Salary (with any increase in Base Salary to become “Base Salary” for purposes of this Agreement). Base Salary shall not include any director’s fees that the Executive is entitled to receive as a director of the Bank or any affiliate of the Bank. Such director’s fees shall be separately paid to the Executive.

(b) Executive will be entitled to participate in and receive benefits under any employee benefit plans including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident insurance plans, medical coverage or any other employee benefit plan or arrangement made available by the Bank currently or in the future to its senior executives and key management employees. Executive will be entitled to participate in any incentive compensation and bonus plans offered by the Bank in which Executive is eligible to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement.

(c) In addition to the Base Salary provided for by paragraph (a) of this Section 3, the Bank shall pay or reimburse Executive for all reasonable travel and other reasonable expenses incurred by Executive performing his obligations under this Agreement and may provide such additional compensation in such form and such amounts as the Board may from time to time determine. The Bank shall reimburse Executive for his ordinary and necessary business expenses including, without limitation, fees for memberships in such clubs and organizations as Executive and the Board shall mutually agree are necessary and appropriate for business purposes, and travel and entertainment expenses, incurred in connection with the performance of his duties under this Agreement.

4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

(a) Upon the occurrence of an Event of Termination (as herein defined) during Executive’s term of employment under this Agreement, the provisions of this Section 4 shall apply. As used in this Agreement, an “Event of Termination” shall mean and include any of the following:

(i) the termination by the Bank of Executive’s full-time employment hereunder for any reason other than termination governed by Section 5 (Termination for Cause) or termination governed by Section 6 (Termination for Disability or death) or termination governed by Section 7 (Termination Upon Retirement); or

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(ii) Executive’s resignation from the Bank’s employ for any of the following reasons:

(A) the failure to appoint or reappoint Executive to the position set forth under Section 1;

(B) a material change in Executive’s functions, duties, or responsibilities with the Bank, which change would cause Executive’s position to become one of lesser responsibility, importance, or scope from the position and attributes thereof described in Section 1, above;

(C) a relocation of Executive’s principal place of employment by more than forty-five (45) miles from its location at the Effective Date of this Agreement;

(D) a material reduction in the benefits and perquisites to Executive from those being provided as of the later of the Effective Date or any subsequent Anniversary Date of this Agreement, other than an employee-wide reduction in pay or benefits;

(E) a liquidation or dissolution of the Bank; or

(F) a material breach of this Agreement by the Bank or the Holding Company.

Upon the occurrence of any event described in clauses (A), (B), (C), (D), (E) or (F), above, Executive shall have the right to elect to terminate his employment under this Agreement by resignation upon not less than thirty (30) days prior written Notice of Termination, as defined in Section 9(a), given within ninety (90) days after the event giving rise to said right to elect. Notwithstanding the preceding sentence, in the event of a continuing breach of this Agreement by the Bank, Executive, after giving due notice within the prescribed time frame of an initial event specified above, shall not waive any of his rights under this Agreement and this Section solely by virtue of the fact that Executive has submitted his resignation, provided Executive has remained in the employment of the Bank and is engaged in good faith discussions to resolve any occurrence of an event described in clauses (A), (B), (C), (D) or (F) above.

(iii) (A) Executive’s involuntary termination by the Bank (or any successor thereto) on the effective date of, or at any time following, a Change in Control, or (B) Executive’s resignation from the employment with the Bank (or any successor thereto) following a Change in Control as a result of any event described in Section 4(a)(ii)(A), (B), (C), (D), or (F) above.

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For these purposes, a “Change in Control” shall mean a change in control of the Bank or, its holding company as of the date hereof (the “Holding Company”) of a nature that: (i) would be required to be reported in response to Item 5.01 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) without limitation such a Change in Control shall be deemed to have occurred at such time as (a) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Holding Company or Bank representing 25% or more of the combined voting power of the Holding Company’s or Bank’s outstanding securities except for any securities purchased by the Bank’s employee stock ownership plan or trust; or (b) individuals who constitute the Board of Directors of the Bank or the Holding Company on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least a majority of the directors of the Board, shall be, for purposes of this clause (b), considered as though he were a member of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Bank or the Holding Company or similar transaction in which the Bank or Holding Company is not the surviving institution occurs; provided, however, that, to the extent necessary to comply with Code Section 409A, “Change in Control” shall instead have the meaning set forth in Code Section 409A and the regulations and other guidance published thereunder; and provided further that a Change in Control shall not be deemed to have occurred solely as a result of the conversion of the Holding Company’s mutual holding company parent to stock form or a reorganization used to effect such a conversion.

(b) Upon the occurrence of an Event of Termination under Sections 4(a) (i) or (ii), on the Date of Termination, as defined in Section 9(b), the Bank shall be obligated to pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) his earned but unpaid salary as of the date of his termination of employment with the Bank; (ii) the benefits, if any, to which he is entitled as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the Bank’s officers and employees; (iii) the remaining payments that Executive would have earned, in accordance with Sections 3(a) and 3(b), if he had continued his employment with the Bank for the remainder of the term of this Agreement (but in any event, such term shall not exceed thirty-six (36) months), and had earned the maximum bonus or incentive award in each calendar year that ends during such term; and (iv) the annual contributions or payments that would have been made on Executive’s behalf to any employee benefit plans of the Bank as if Executive had continued his employment with the Bank for the remainder of the term of this Agreement (but in any event, such term shall not exceed thirty-six (36) months), based on contributions or payments made (on an annualized basis) at the Date of Termination. Any

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payments hereunder shall be made in a lump sum within thirty (30) days after the Date of Termination, or in the event that Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) applies, no later than the first day of the seventh month following the Date of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment.

(c) Upon the occurrence of an Event of Termination under Section 4(a)(iii), on the Date of Termination, as defined in Section 9(b), the Bank shall be obligated to pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) his earned but unpaid salary as of the date of his termination of employment with the Bank; (ii) the benefits, if any, to which he is entitled as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the Bank or Holding Company’s officers and employees; (iii) the remaining payments that Executive would have earned, in accordance with Sections 3 (a) and (b), if he had continued his employment with the Bank for a thirty-six (36) month period following his termination of employment, and had earned the maximum bonus or incentive award in each calendar year that ends during such term; and (iv) the annual contributions or payments that would have been made on Executive’s behalf to any employee benefit plans of the Bank or the Company as if Executive had continued his employment with the Bank for a thirty-six (36) month period following his termination of employment, based on contributions or payments made (on an annualized basis) at the Date of Termination. Any payments hereunder shall be made in a lump sum within thirty (30) days after the Date of Termination, or in the event that Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) applies, no later than the first day of the seventh month following the Date of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment.

(d) Upon the occurrence of an Event of Termination under Section 4(a)(i), (ii) or (iii), the Bank will cause to be continued, at the Bank’s expense, medical coverage substantially identical to the coverage maintained by the Bank for Executive and his family prior to Executive’s termination. Such coverage shall continue at the Bank’s expense for the remainder of the term of this Agreement following the Date of Termination.

(e) Notwithstanding anything in this Agreement to the contrary, in no event shall the aggregate payments or benefits to be made or afforded to Executive under this Section constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended, (“Code”) or any successor thereto, and in order to avoid such a result, Executive’s benefits hereunder shall be reduced, if necessary, to an amount, the value of which is one dollar ($1.00) less than an amount equal to three (3) times Executive’s “base amount,” as determined in accordance with Section 280G. The allocation of the reduction required hereby shall be determined by Executive.

(f) In the event the Executive resigns for any reason other than an Event of Termination (as described in Section 4), Termination for Just Cause (as described in Section 5), Termination for Disability or Death (as described in Section 6) or Termination Upon Retirement (as described in Section 7), all obligations of the Bank hereunder shall immediately cease upon the date of such resignation.

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(g) Notwithstanding the foregoing, to the extent required by regulations or interpretations of the Office of Thrift Supervision, all severance payments under the Agreement shall not exceed three (3) times the Executive’s average annual compensation (as defined in such regulations or interpretations) over the most recent five (5) taxable years.

5. TERMINATION FOR JUST CAUSE.

(a) The term “Termination for Just Cause” shall mean termination because of the Executive’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement.

(b) Notwithstanding Section 5(a), the Bank may not terminate Executive for Just Cause unless and until there shall have been delivered to him a Notice of Termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for that purpose, finding that in the good faith opinion of the Board, Executive was guilty of conduct justifying Termination for Just Cause and specifying the particulars thereof in detail. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Just Cause. During the period beginning on the date of the Notice of Termination for Just Cause pursuant to Section 5 hereof through the Date of Termination, any unvested stock options and related rights granted to Executive under any stock option plan of the Bank or the Holding Company (or any affiliate) shall not be exercisable nor shall any unvested awards granted to Executive under any stock benefit plan of the Bank or Holding Company (or affiliate thereof) vest. At the Date of Termination, any such unvested stock options and related rights and any such unvested awards shall become null and void and shall not be exercisable by or delivered to Executive at any time subsequent to such Termination for Just Cause. In the Event of Executive’s Termination for Just Cause, Executive shall resign immediately as a director of the Bank and as a director and/or officer of any affiliate of the Bank.

6. TERMINATION FOR DISABILITY OR DEATH.

(a) The Bank or Executive may terminate Executive’s employment after having established Executive’s Disability. For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform his duties under this Agreement and that results in Executive’s becoming eligible for long-term disability benefits under a long-term disability plan of the Bank (or, if the Bank has no such plan in effect, that impairs Executive’s ability to substantially perform his duties under this Agreement for a period of one hundred eighty (180) consecutive days). The Board shall determine in good faith, based upon competent medical advice and other factors that they reasonably believe to be relevant, whether or not Executive is and continues to be disabled for purposes of this Agreement. As a condition to any benefits, the Board may require Executive to submit to such physical or mental evaluations and tests as it deems reasonably appropriate, at the Bank’s expense.

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(b) In the event of such Disability, Executive’s obligation to perform services under this Agreement will terminate. In the event of such termination, Executive shall receive benefits under any disability program sponsored by the Bank, provided such benefit is not less than the benefits provided in the following sentence of this Section 6(b). In the event the Bank does not sponsor any disability programs, the Executive shall continue to receive (x) his Base Salary, as defined in Section 3(a), at the rate in effect on the Date of Termination for period of one (1) year following the Date of Termination by reason of Disability, and (y) sixty-six and two-thirds percent (66 ²/3%) of Executive’s Base Salary each successive year after the first year following termination through the earliest to occur of (i) the date of Executive’s death; (ii) the date the Executive recovers from such Disability; (iii) the date Executive attains age 65; or (iv) the expiration of thirty six (36) months following the Date of Termination.

(c) In the event of Executive’s death during the term of this Agreement, his estate, legal representatives or named beneficiary or beneficiaries (as directed by Executive in writing) shall be paid Executive’s Base Salary, as defined in Section 3, at the rate in effect at the time of Executive’s death for a period of one (1) year from the date of Executive’s death.

7. TERMINATION UPON RETIREMENT

Termination of Executive’s employment based on “Retirement” shall mean termination of Executive’s employment at age 65, unless extended by the Board. Upon termination of Executive’s employment based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party.

8. RESIGNATION FROM BOARDS OF DIRECTORS

In the event of Executive’s termination of employment for any reason other than upon a Change in Control, Executive shall, if applicable, resign as a director of the Bank, and as a director and/or officer of any affiliate of the Bank including the Holding Company.

9. NOTICE

(a) Any notice required hereunder shall be in writing and hand-delivered to the other party. Hand delivery to the Bank shall be made to the Chairman or the Secretary of the Board of Directors. Any termination by the Bank or by Executive shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

(b) “Date of Termination” shall mean (A) if Executive’s employment is terminated for Disability, thirty (30) days after a Notice of Termination is given (provided that he shall not have returned to the performance of his duties on a full-time basis during such thirty (30) day period), and (B) if his employment is terminated for any other reason, the date specified in the Notice of Termination.

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(c) If the party receiving a Notice of Termination desires to dispute or contest the basis or reasons for termination, the party receiving the Notice of Termination must notify the other party within thirty (30) days after receiving the Notice of Termination that such a dispute exists, and shall pursue the resolution of such dispute in good faith and with reasonable diligence pursuant to Section 19 of this Agreement. During the pendency of any such dispute, the Bank shall not be obligated to pay Executive compensation or other payments beyond the Date of Termination.

10. SOURCE OF PAYMENTS.

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank.

11. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of the Bank and Executive. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement.

12. NO ATTACHMENT; BINDING ON SUCCESSORS.

(a) Except as required by law or as otherwise provided in this Agreement, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and of no effect.

(b) This Agreement shall be binding upon, and inure to the benefit of, Executive and the Bank and their respective successors and assigns.

13. MODIFICATION AND WAIVER.

(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived.

14. REQUIRED PROVISIONS.

(a) The Bank may terminate Executive’s employment at any time, but any termination by the Board other than Termination for Just Cause as defined in Section 5 hereof

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shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause.

(b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) [12 USC §1818(e)(3)] or 8(g)(1) [12 USC §1818(g)(1)] of the Federal Deposit Insurance Act (the “FDI Act”), the Bank’s obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

(c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) [12 USC §1818(e)(4)] or 8(g)(1) [12 USC §1818(g)(1)] of the FDI Act, all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

(d) If the Bank is in default as defined in Section 3(x)(1) [12 USC §1813(x)(1)] of the FDI Act, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

(e) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary for the continued operation of the Bank, (i) by the Director of the OTS or his or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) [12 USC §1823(c)] of the FDI Act; or (ii) by the Director or his or her designee at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.

(f) Notwithstanding anything herein contained to the contrary, any payments to Executive by the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the FDI Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

15. NON-COMPETITION AND POST-TERMINATION OBLIGATIONS.

(a) All payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with paragraph (b), (c) and (d) of this Section 15.

(b) Executive shall, upon reasonable notice, furnish such information and assistance to the Bank as may reasonably be required by the Bank in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between the Executive and the Bank or any of its subsidiaries or affiliates.

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(c) Executive recognizes and acknowledges that the knowledge of the business activities and plans for business activities of the Bank and affiliates thereof, as it may exist from time to time, is a valuable, special and unique asset of the business of the Bank and affiliates thereof. Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities of the Bank or affiliates thereof to any person, firm, corporation, or other entity for any reason or purpose whatsoever (except for such disclosure as may be required to be provided to the Office of Thrift Supervision (“OTS”), the Federal Deposit Insurance Corporation (“FDIC”), or other regulatory agency with jurisdiction over the Bank or Executive). Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank, and Executive may disclose any information regarding the Bank which is otherwise publicly available or which Executive is otherwise legally required to disclose. In the event of a breach or threatened breach by Executive of the provisions of this Section 15, the Bank will be entitled to an injunction restraining Executive from disclosing, in whole or in part, his knowledge of the past, present, planned or considered business activities of the Bank or any of its affiliates, or from rendering any services to any person, firm, corporation or other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

(d) Upon any termination of Executive’s employment hereunder for any reason other than (i) pursuant to Section 4(a)(iii); (ii) pursuant to Section 6; or (iii) any termination of Executive’s employment hereunder as a result of the expiration of Executive’s employment term following a notice of non-renewal pursuant to Section 2, Executive agrees not to compete in the banking and lending business with the Bank and any of its affiliates for a period of one (1) year following such termination in any city or town in which the Bank has an office or has filed an application for regulatory approval to establish an office, determined as of the effective date of such termination, except as agreed to pursuant to a resolution duly adopted by the Board. Executive agrees that during such period and within said cities and towns, Executive shall not work for or advise, consult or otherwise serve with, directly or indirectly, any entity whose business materially competes with the depository, lending or other business activities of the Bank. The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive’s breach of this Section 15(d) agree that in the event of any such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive, Executive’s partners, agents, servants, employers, employees and all persons acting for or with Executive. Executive represents and admits that Executive’s experience and capabilities are such that Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

(e) Upon any termination of Executive’s employment hereunder for any reason other than (i) pursuant to Section 4(a)(iii); (ii) pursuant to Section 6; or (iii) any termination of Executive’s employment hereunder as a result of the expiration of Executive’s employment term

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following a notice of non-renewal pursuant to Section 2, Executive agrees that Executive will not, in any manner whatsoever, for a period of one (1) year following the termination of Executive’s employment with the Bank either as an individual or as a partner, stockholder, director, officer, principal, employee, agent, consultant, or in any other relationship or capacity, with any person, firm, corporation or other business entity, either directory or indirectly, solicit or induce or aid in the solicitation or inducement of any employees of the Bank to leave their employment with the Bank. Executive further agrees that the Executive will not, in any manner whatsoever, for a period of one (1) year following the termination of Executive’s employment with the Bank, either as an individual or as a partner, stockholder, director, officer, principal, employee, agent, consultant or in any other relationship or capacity with any person, firm, corporation or other business entity, either directly or indirectly, solicit the business of any customers or clients of the Bank at the time of termination of Executive’s employment with the Bank.

16. SEVERABILITY.

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

17. HEADINGS FOR REFERENCE ONLY.

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

18. GOVERNING LAW.

This Agreement shall be governed by the laws of the State of Illinois but only to the extent not superseded by federal law.

19. ARBITRATION.

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, conducted before a single arbitrator selected by the Bank and Executive sitting in a location selected by the Bank and Executive within twenty-five (25) miles of Arlington Heights, Illinois in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

20. PAYMENT OF LEGAL FEES.

All reasonable legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, provided that the dispute or interpretation has been settled by Executive and the Bank or resolved in Executive’s favor.

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21. INDEMNIFICATION.

(a) The Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense, and shall indemnify Executive (and his heirs, executors and administrators) for the term of this Agreement and for a period of six years thereafter to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his performance of services as a director or officer of the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements (such settlements must be approved by the Board); provided, however, the Bank shall not be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive. Any such indemnification shall be made consistent with OTS Regulations and Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359.

(b) Notwithstanding the foregoing, no indemnification shall be made unless the Bank gives the OTS at least 60 days’ notice of its intention to make such indemnification. Such notice shall state the facts on which the action arose, the terms of any settlement, and any disposition of the action by a court. Such notice, a copy thereof, and a certified copy of the resolution containing the required determination by the Board shall be sent to the Regional Director of the OTS, who shall promptly acknowledge receipt thereof. The notice period shall run from the date of such receipt. No such indemnification shall be made if the OTS advises the Bank in writing within such notice period, of its objection thereto.

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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its duly authorized representative, and Executive has signed this Agreement, effective as of the day and date first above written.

ATTEST:	BEN FRANKLIN BANK OF ILLINOIS
	By:
Corporate Secretary		Chairman of the Board
WITNESS:	EXECUTIVE:
	Glen Miller

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EX-10.5

EXHIBIT 10.5

EMPLOYMENT AGREEMENT

This Agreement (“Agreement”) is made by and between Ben Franklin Bank of Illinois, a federal savings bank (the “Bank”), with its principal office in Arlington Heights, Illinois, and Robin L. Jenkins (“Executive”) and shall be effective as of [                ], provided, however, that under no circumstances shall this Agreement be effective prior to the completion of its mutual holding company reorganization.

WHEREAS, in order to induce Executive to remain in the employ of the Bank and to provide further incentive to achieve the financial and performance objectives of the Bank, the parties desire to enter into this Agreement upon the terms and conditions hereof; and

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1. POSITION AND RESPONSIBILITIES.

The Executive agrees to serve as the Senior Vice President and Chief Lending Officer of the Bank and as such, the Executive shall be responsible for the lending function of the Bank under the direction of the Chief Executive Officer. Failure to reappoint Executive as Senior Vice President and Chief Lending Officer of the Bank without the consent of Executive during the term of this Agreement (except for any termination for Just Cause or Retirement, as defined herein) shall constitute a breach of this Agreement.

2. TERM AND DUTIES.

(a) The term of this Agreement and the period of Executive’s employment hereunder will begin as of the Effective Date and will continue for a period of twelve (12) full calendar months thereafter. On each anniversary date of the Effective Date (the “Anniversary Date”), this Agreement shall renew for an additional year such that the remaining term shall be twelve (12) full calendar months provided, however, that the Board shall at least sixty (60) days before such Anniversary Date conduct a comprehensive performance evaluation and review of Executive for purposes of determining whether to extend this Agreement. The Board shall give Executive notice of its decision whether or not to renew this Agreement at least thirty (30) days and not more than sixty (60) days prior to the Anniversary Date.

(b) During the period of his employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence approved by the Board, Executive shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties hereunder including activities and services related to the organization, operation and management of the Bank; provided, however, that with the approval of the Board, Executive may serve, or continue to serve, on the boards of directors of, and hold any other offices or positions in, business, social, religious, charitable or similar organizations which will not present any conflict of interest with the Bank or materially affect the performance of Executive’s duties pursuant to this Agreement.

3. COMPENSATION, BENEFITS AND REIMBURSEMENT.

(a) The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2. The Bank shall pay Executive as compensation a salary of not less than [$                ] per year (“Base Salary”). Such Base Salary shall be payable biweekly, or with such other frequency as officers and employees are generally paid. During the period of this Agreement, Executive’s Base Salary shall be reviewed at least annually. Such review shall be conducted by a committee designated by the Board, and the Bank may increase, but not decrease (except a decrease that is generally applicable to all employees) Executive’s Base Salary (with any increase in Base Salary to become “Base Salary” for purposes of this Agreement). Base Salary shall not include any director’s fees that the Executive is entitled to receive as a director of the Bank or any affiliate of the Bank. Such director’s fees shall be separately paid to the Executive.

(b) Executive will be entitled to participate in and receive benefits under any employee benefit plans including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident insurance plans, medical coverage or any other employee benefit plan or arrangement made available by the Bank currently or in the future to its senior executives and key management employees. Executive will be entitled to participate in any incentive compensation and bonus plans offered by the Bank in which Executive is eligible to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement.

(c) In addition to the Base Salary provided for by paragraph (a) of this Section 3, the Bank shall pay or reimburse Executive for all reasonable travel and other reasonable expenses incurred by Executive performing his obligations under this Agreement and may provide such additional compensation in such form and such amounts as the Board may from time to time determine. The Bank shall reimburse Executive for his ordinary and necessary business expenses including, without limitation, fees for memberships in such clubs and organizations as Executive and the Board shall mutually agree are necessary and appropriate for business purposes, and travel and entertainment expenses, incurred in connection with the performance of his duties under this Agreement.

4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

(a) Upon the occurrence of an Event of Termination (as herein defined) during Executive’s term of employment under this Agreement, the provisions of this Section 4 shall apply. As used in this Agreement, an “Event of Termination” shall mean and include any of the following:

(i) the termination by the Bank of Executive’s full-time employment hereunder for any reason other than termination governed by Section 5 (Termination for Cause) or termination governed by Section 6 (Termination for Disability or death) or termination governed by Section 7 (Termination Upon Retirement); or

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(ii) Executive’s resignation from the Bank’s employ for any of the following reasons:

(A) the failure to appoint or reappoint Executive to the position set forth under Section 1;

(B) a material change in Executive’s functions, duties, or responsibilities with the Bank, which change would cause Executive’s position to become one of lesser responsibility, importance, or scope from the position and attributes thereof described in Section 1, above;

(C) a relocation of Executive’s principal place of employment by more than forty-five (45) miles from its location at the Effective Date of this Agreement;

(D) a material reduction in the benefits and perquisites to Executive from those being provided as of the later of the Effective Date or any subsequent Anniversary Date of this Agreement, other than an employee-wide reduction in pay or benefits;

(E) a liquidation or dissolution of the Bank; or

(F) a material breach of this Agreement by the Bank or the Holding Company.

Upon the occurrence of any event described in clauses (A), (B), (C), (D), (E) or (F), above, Executive shall have the right to elect to terminate his employment under this Agreement by resignation upon not less than thirty (30) days prior written Notice of Termination, as defined in Section 9(a), given within ninety (90) days after the event giving rise to said right to elect. Notwithstanding the preceding sentence, in the event of a continuing breach of this Agreement by the Bank, Executive, after giving due notice within the prescribed time frame of an initial event specified above, shall not waive any of his rights under this Agreement and this Section solely by virtue of the fact that Executive has submitted his resignation, provided Executive has remained in the employment of the Bank and is engaged in good faith discussions to resolve any occurrence of an event described in clauses (A), (B), (C), (D) or (F) above.

(iii) (A) Executive’s involuntary termination by the Bank (or any successor thereto) on the effective date of, or at any time following, a Change in Control, or (B) Executive’s resignation from the employment with the Bank (or any successor thereto) following a Change in Control as a result of any event described in Section 4(a)(ii)(A), (B), (C), (D), or (F) above. For these purposes, a “Change in Control” shall mean a change in control of the Bank or, its holding company as of the date hereof (the “Holding Company”) of a nature that: (i) would be required to be reported in

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response to Item 5.01 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) without limitation such a Change in Control shall be deemed to have occurred at such time as (a) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Holding Company or Bank representing 25% or more of the combined voting power of the Holding Company’s or Bank’s outstanding securities except for any securities purchased by the Bank’s employee stock ownership plan or trust; or (b) individuals who constitute the Board of Directors of the Bank or the Holding Company on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least a majority of the directors of the Board, shall be, for purposes of this clause (b), considered as though he were a member of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Bank or the Holding Company or similar transaction in which the Bank or Holding Company is not the surviving institution occurs; provided, however, that, to the extent necessary to comply with Code Section 409A, “Change in Control” shall instead have the meaning set forth in Code Section 409A and the regulations and other guidance published thereunder; and provided further that a Change in Control shall not be deemed to have occurred solely as a result of the conversion of the Holding Company’s mutual holding company parent to stock form or a reorganization used to effect such a conversion.

(b) Upon the occurrence of an Event of Termination under Sections 4(a) (i) or (ii), on the Date of Termination, as defined in Section 9(b), the Bank shall be obligated to pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) his earned but unpaid salary as of the date of his termination of employment with the Bank; (ii) the benefits, if any, to which he is entitled as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the Bank’s officers and employees; (iii) the remaining payments that Executive would have earned, in accordance with Sections 3(a) and 3(b), if he had continued his employment with the Bank for the remainder of the term of this Agreement (but in any event, such term shall not exceed twelve (12) months), and had earned the maximum bonus or incentive award in the calendar year that ends during such term; and (iv) the annual contributions or payments that would have been made on Executive’s behalf to any employee benefit plans of the Bank as if Executive had continued his employment with the Bank for the remainder of the term of this Agreement (but in any event, such term shall not exceed twelve (12) months), based on contributions or payments made (on an annualized basis) at the Date of Termination. Any payments hereunder shall be made in a lump sum within thirty (30) days after the Date of Termination, or in the event that Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) applies, no later than the first day of the seventh month following the Date of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment.

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(c) Upon the occurrence of an Event of Termination under Section 4(a)(iii), on the Date of Termination, as defined in Section 9(b), the Bank shall be obligated to pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) his earned but unpaid salary as of the date of his termination of employment with the Bank; (ii) the benefits, if any, to which he is entitled as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the Bank or Holding Company’s officers and employees; (iii) the remaining payments that Executive would have earned, in accordance with Sections 3 (a) and (b), if he had continued his employment with the Bank for a twelve (12) month period following his termination of employment, and had earned the maximum bonus or incentive award in each calendar year that ends during such term; and (iv) the annual contributions or payments that would have been made on Executive’s behalf to any employee benefit plans of the Bank or the Company as if Executive had continued his employment with the Bank for a twelve (12) month period following his termination of employment, based on contributions or payments made (on an annualized basis) at the Date of Termination. Any payments hereunder shall be made in a lump sum within thirty (30) days after the Date of Termination, or in the event that Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) applies, no later than the first day of the seventh month following the Date of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment.

(d) Upon the occurrence of an Event of Termination under Section 4(a)(i), (ii) or (iii), the Bank will cause to be continued, at the Bank’s expense, medical coverage substantially identical to the coverage maintained by the Bank for Executive and his family prior to Executive’s termination. Such coverage shall continue at the Bank’s expense for the remainder of the term of this Agreement following the Date of Termination.

(e) Notwithstanding anything in this Agreement to the contrary, in no event shall the aggregate payments or benefits to be made or afforded to Executive under this Section constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended, (“Code”) or any successor thereto, and in order to avoid such a result, Executive’s benefits hereunder shall be reduced, if necessary, to an amount, the value of which is one dollar ($1.00) less than an amount equal to three (3) times Executive’s “base amount,” as determined in accordance with Section 280G. The allocation of the reduction required hereby shall be determined by Executive.

(f) In the event the Executive resigns for any reason other than an Event of Termination (as described in Section 4), Termination for Just Cause (as described in Section 5), Termination for Disability or Death (as described in Section 6) or Termination Upon Retirement (as described in Section 7), all obligations of the Bank hereunder shall immediately cease upon the date of such resignation.

(g) Notwithstanding the foregoing, to the extent required by regulations or interpretations of the Office of Thrift Supervision, all severance payments under the Agreement shall not exceed three (3) times the Executive’s average annual compensation (as defined in such regulations or interpretations) over the most recent five (5) taxable years.

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5. TERMINATION FOR JUST CAUSE.

(a) The term “Termination for Just Cause” shall mean termination because of the Executive’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement.

(b) Notwithstanding Section 5(a), the Bank may not terminate Executive for Just Cause unless and until there shall have been delivered to him a Notice of Termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for that purpose, finding that in the good faith opinion of the Board, Executive was guilty of conduct justifying Termination for Just Cause and specifying the particulars thereof in detail. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Just Cause. During the period beginning on the date of the Notice of Termination for Just Cause pursuant to Section 5 hereof through the Date of Termination, any unvested stock options and related rights granted to Executive under any stock option plan of the Bank or the Holding Company (or any affiliate) shall not be exercisable nor shall any unvested awards granted to Executive under any stock benefit plan of the Bank or Holding Company (or affiliate thereof) vest. At the Date of Termination, any such unvested stock options and related rights and any such unvested awards shall become null and void and shall not be exercisable by or delivered to Executive at any time subsequent to such Termination for Just Cause. In the Event of Executive’s Termination for Just Cause, Executive shall resign immediately as a director of the Bank and as a director and/or officer of any affiliate of the Bank.

6. TERMINATION FOR DISABILITY OR DEATH.

(a) The Bank or Executive may terminate Executive’s employment after having established Executive’s Disability. For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform his duties under this Agreement and that results in Executive’s becoming eligible for long-term disability benefits under a long-term disability plan of the Bank (or, if the Bank has no such plan in effect, that impairs Executive’s ability to substantially perform his duties under this Agreement for a period of one hundred eighty (180) consecutive days). The Board shall determine in good faith, based upon competent medical advice and other factors that they reasonably believe to be relevant, whether or not Executive is and continues to be disabled for purposes of this Agreement. As a condition to any benefits, the Board may require Executive to submit to such physical or mental evaluations and tests as it deems reasonably appropriate, at the Bank’s expense.

(b) In the event of such Disability, Executive’s obligation to perform services under this Agreement will terminate. In the event of such termination, Executive shall receive benefits under any disability program sponsored by the Bank, provided such benefit is not less than the

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benefits provided in the following sentence of this Section 6(b). In the event the Bank does not sponsor any disability programs, the Executive shall continue to receive his Base Salary, as defined in Section 3(a), at the rate in effect on the Date of Termination through the earliest to occur of (i) the date of Executive’s death; (ii) the date the Executive recovers from such Disability; (iii) the date Executive attains age 65; or (iv) the expiration of twelve (12) months following the Date of Termination.

(c) In the event of Executive’s death during the term of this Agreement, his estate, legal representatives or named beneficiary or beneficiaries (as directed by Executive in writing) shall be paid Executive’s Base Salary, as defined in Section 3, at the rate in effect at the time of Executive’s death for a period of one (1) year from the date of Executive’s death.

7. TERMINATION UPON RETIREMENT

Termination of Executive’s employment based on “Retirement” shall mean termination of Executive’s employment at age 65, unless extended by the Board. Upon termination of Executive’s employment based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party.

8. RESIGNATION FROM BOARDS OF DIRECTORS

In the event of Executive’s termination of employment for any reason other than upon a Change in Control, Executive shall, if applicable, resign as a director of the Bank, and as a director and/or officer of any affiliate of the Bank including the Holding Company.

9. NOTICE

(a) Any notice required hereunder shall be in writing and hand-delivered to the other party. Hand delivery to the Bank shall be made to the Chairman or the Secretary of the Board of Directors. Any termination by the Bank or by Executive shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

(b) “Date of Termination” shall mean (A) if Executive’s employment is terminated for Disability, thirty (30) days after a Notice of Termination is given (provided that he shall not have returned to the performance of his duties on a full-time basis during such thirty (30) day period), and (B) if his employment is terminated for any other reason, the date specified in the Notice of Termination.

(c) If the party receiving a Notice of Termination desires to dispute or contest the basis or reasons for termination, the party receiving the Notice of Termination must notify the other party within thirty (30) days after receiving the Notice of Termination that such a dispute exists, and shall pursue the resolution of such dispute in good faith and with reasonable diligence

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pursuant to Section 19 of this Agreement. During the pendency of any such dispute, the Bank shall not be obligated to pay Executive compensation or other payments beyond the Date of Termination.

10. SOURCE OF PAYMENTS.

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank.

11. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of the Bank and Executive. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement.

12. NO ATTACHMENT; BINDING ON SUCCESSORS.

(a) Except as required by law or as otherwise provided in this Agreement, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and of no effect.

(b) This Agreement shall be binding upon, and inure to the benefit of, Executive and the Bank and their respective successors and assigns.

13. MODIFICATION AND WAIVER.

(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived.

14. REQUIRED PROVISIONS.

(a) The Bank may terminate Executive’s employment at any time, but any termination by the Board other than Termination for Just Cause as defined in Section 5 hereof shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause.

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(b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) [12 USC §1818(e)(3)] or 8(g)(1) [12 USC §1818(g)(1)] of the Federal Deposit Insurance Act (the “FDI Act”), the Bank’s obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

(c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) [12 USC §1818(e)(4)] or 8(g)(1) [12 USC §1818(g)(1)] of the FDI Act, all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

(d) If the Bank is in default as defined in Section 3(x)(1) [12 USC §1813(x)(1)] of the FDI Act, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

(e) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary for the continued operation of the Bank, (i) by the Director of the OTS or his or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) [12 USC §1823(c)] of the FDI Act; or (ii) by the Director or his or her designee at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.

(f) Notwithstanding anything herein contained to the contrary, any payments to Executive by the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the FDI Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

15. NON-COMPETITION AND POST-TERMINATION OBLIGATIONS.

(a) All payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with paragraph (b), (c) and (d) of this Section 15.

(b) Executive shall, upon reasonable notice, furnish such information and assistance to the Bank as may reasonably be required by the Bank in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between the Executive and the Bank or any of its subsidiaries or affiliates.

(c) Executive recognizes and acknowledges that the knowledge of the business activities and plans for business activities of the Bank and affiliates thereof, as it may exist from time to time, is a valuable, special and unique asset of the business of the Bank and affiliates

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thereof. Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities of the Bank or affiliates thereof to any person, firm, corporation, or other entity for any reason or purpose whatsoever (except for such disclosure as may be required to be provided to the Office of Thrift Supervision (“OTS”), the Federal Deposit Insurance Corporation (“FDIC”), or other regulatory agency with jurisdiction over the Bank or Executive). Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank, and Executive may disclose any information regarding the Bank which is otherwise publicly available or which Executive is otherwise legally required to disclose. In the event of a breach or threatened breach by Executive of the provisions of this Section 15, the Bank will be entitled to an injunction restraining Executive from disclosing, in whole or in part, his knowledge of the past, present, planned or considered business activities of the Bank or any of its affiliates, or from rendering any services to any person, firm, corporation or other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

(d) Upon any termination of Executive’s employment hereunder for any reason other than (i) pursuant to Section 4(a)(iii); (ii) pursuant to Section 6; or (iii) any termination of Executive’s employment hereunder as a result of the expiration of Executive’s employment term following a notice of non-renewal pursuant to Section 2, Executive agrees not to compete in the banking and lending business with the Bank and any of its affiliates for a period of one (1) year following such termination in any city or town in which the Bank has an office or has filed an application for regulatory approval to establish an office, determined as of the effective date of such termination, except as agreed to pursuant to a resolution duly adopted by the Board. Executive agrees that during such period and within said cities and towns, Executive shall not work for or advise, consult or otherwise serve with, directly or indirectly, any entity whose business materially competes with the depository, lending or other business activities of the Bank. The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive’s breach of this Section 15(d) agree that in the event of any such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive, Executive’s partners, agents, servants, employers, employees and all persons acting for or with Executive. Executive represents and admits that Executive’s experience and capabilities are such that Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

(e) Upon any termination of Executive’s employment hereunder for any reason other than (i) pursuant to Section 4(a)(iii); (ii) pursuant to Section 6; or (iii) any termination of Executive’s employment hereunder as a result of the expiration of Executive’s employment term following a notice of non-renewal pursuant to Section 2, Executive agrees that Executive will not, in any manner whatsoever, for a period of one (1) year following the termination of Executive’s employment with the Bank either as an individual or as a partner, stockholder,

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director, officer, principal, employee, agent, consultant, or in any other relationship or capacity, with any person, firm, corporation or other business entity, either directory or indirectly, solicit or induce or aid in the solicitation or inducement of any employees of the Bank to leave their employment with the Bank. Executive further agrees that the Executive will not, in any manner whatsoever, for a period of one (1) year following the termination of Executive’s employment with the Bank, either as an individual or as a partner, stockholder, director, officer, principal, employee, agent, consultant or in any other relationship or capacity with any person, firm, corporation or other business entity, either directly or indirectly, solicit the business of any customers or clients of the Bank at the time of termination of Executive’s employment with the Bank.

16. SEVERABILITY.

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

17. HEADINGS FOR REFERENCE ONLY.

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

18. GOVERNING LAW.

This Agreement shall be governed by the laws of the State of Illinois but only to the extent not superseded by federal law.

19. ARBITRATION.

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, conducted before a single arbitrator selected by the Bank and Executive sitting in a location selected by the Bank and Executive within twenty-five (25) miles of Arlington Heights, Illinois in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

20. PAYMENT OF LEGAL FEES.

All reasonable legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, provided that the dispute or interpretation has been settled by Executive and the Bank or resolved in Executive’s favor.

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21. INDEMNIFICATION.

(a) The Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense, and shall indemnify Executive (and his heirs, executors and administrators) for the term of this Agreement and for a period of six years thereafter to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his performance of services as a director or officer of the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements (such settlements must be approved by the Board); provided, however, the Bank shall not be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive. Any such indemnification shall be made consistent with OTS Regulations and Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359.

(b) Notwithstanding the foregoing, no indemnification shall be made unless the Bank gives the OTS at least 60 days’ notice of its intention to make such indemnification. Such notice shall state the facts on which the action arose, the terms of any settlement, and any disposition of the action by a court. Such notice, a copy thereof, and a certified copy of the resolution containing the required determination by the Board shall be sent to the Regional Director of the OTS, who shall promptly acknowledge receipt thereof. The notice period shall run from the date of such receipt. No such indemnification shall be made if the OTS advises the Bank in writing within such notice period, of its objection thereto.

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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its duly authorized representative, and Executive has signed this Agreement, effective as of the day and date first above written.

ATTEST:	BEN FRANKLIN BANK OF ILLINOIS
	By:
Corporate Secretary		Chairman of the Board
WITNESS:	EXECUTIVE:
	Robin L. Jenkins

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EX-10.6

EXHIBIT 10.6

EMPLOYMENT AGREEMENT

This Agreement (“Agreement”) is made by and between Ben Franklin Bank of Illinois, a federal savings bank (the “Bank”), with its principal office in Arlington Heights, Illinois, and Angie Plesiotis (“Executive”) and shall be effective as of [                ], provided, however, that under no circumstances shall this Agreement be effective prior to the completion of its mutual holding company reorganization.

WHEREAS, in order to induce Executive to remain in the employ of the Bank and to provide further incentive to achieve the financial and performance objectives of the Bank, the parties desire to enter into this Agreement upon the terms and conditions hereof; and

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1. POSITION AND RESPONSIBILITIES.

The Executive agrees to serve as the Vice President and Chief Operations Officer of the Bank and as such, the Executive shall be responsible for overseeing the teller, branches and retail deposit operations of the Bank and report to such persons as the Chief Executive Officer shall designate. Failure to reappoint Executive as Vice President and Chief Operations Officer of the Bank without the consent of Executive during the term of this Agreement (except for any termination for Just Cause or Retirement, as defined herein) shall constitute a breach of this Agreement.

2. TERM AND DUTIES.

(a) The term of this Agreement and the period of Executive’s employment hereunder will begin as of the Effective Date and will continue for a period of twelve (12) full calendar months thereafter. On each anniversary date of the Effective Date (the “Anniversary Date”), this Agreement shall renew for an additional year such that the remaining term shall be twelve (12) full calendar months provided, however, that the Board shall at least sixty (60) days before such Anniversary Date conduct a comprehensive performance evaluation and review of Executive for purposes of determining whether to extend this Agreement. The Board shall give Executive notice of its decision whether or not to renew this Agreement at least thirty (30) days and not more than sixty (60) days prior to the Anniversary Date.

(b) During the period of her employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence approved by the Board, Executive shall devote substantially all her business time, attention, skill, and efforts to the faithful performance of her duties hereunder including activities and services related to the organization, operation and management of the Bank; provided, however, that with the approval of the Board, Executive may serve, or continue to serve, on the boards of directors of, and hold any other offices or positions in, business, social, religious, charitable or similar organizations which will not present any conflict of interest with the Bank or materially affect the performance of Executive’s duties pursuant to this Agreement.

3. COMPENSATION, BENEFITS AND REIMBURSEMENT.

(a) The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2. The Bank shall pay Executive as compensation a salary of not less than [$                ] per year (“Base Salary”). Such Base Salary shall be payable biweekly, or with such other frequency as officers and employees are generally paid. During the period of this Agreement, Executive’s Base Salary shall be reviewed at least annually. Such review shall be conducted by a committee designated by the Board, and the Bank may increase, but not decrease (except a decrease that is generally applicable to all employees) Executive’s Base Salary (with any increase in Base Salary to become “Base Salary” for purposes of this Agreement). Base Salary shall not include any director’s fees that the Executive is entitled to receive as a director of the Bank or any affiliate of the Bank. Such director’s fees shall be separately paid to the Executive.

(b) Executive will be entitled to participate in and receive benefits under any employee benefit plans including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident insurance plans, medical coverage or any other employee benefit plan or arrangement made available by the Bank currently or in the future to its senior executives and key management employees. Executive will be entitled to participate in any incentive compensation and bonus plans offered by the Bank in which Executive is eligible to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement.

(c) In addition to the Base Salary provided for by paragraph (a) of this Section 3, the Bank shall pay or reimburse Executive for all reasonable travel and other reasonable expenses incurred by Executive performing her obligations under this Agreement and may provide such additional compensation in such form and such amounts as the Board may from time to time determine. The Bank shall reimburse Executive for her ordinary and necessary business expenses including, without limitation, fees for memberships in such clubs and organizations as Executive and the Board shall mutually agree are necessary and appropriate for business purposes, and travel and entertainment expenses, incurred in connection with the performance of her duties under this Agreement.

4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

(a) Upon the occurrence of an Event of Termination (as herein defined) during Executive’s term of employment under this Agreement, the provisions of this Section 4 shall apply. As used in this Agreement, an “Event of Termination” shall mean and include any of the following:

(i) the termination by the Bank of Executive’s full-time employment hereunder for any reason other than termination governed by Section 5 (Termination for Cause) or termination governed by Section 6 (Termination for Disability or death) or termination governed by Section 7 (Termination Upon Retirement); or

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(ii) Executive’s resignation from the Bank’s employ for any of the following reasons:

(A) the failure to appoint or reappoint Executive to the position set forth under Section 1;

(B) a material change in Executive’s functions, duties, or responsibilities with the Bank, which change would cause Executive’s position to become one of lesser responsibility, importance, or scope from the position and attributes thereof described in Section 1, above;

(C) a relocation of Executive’s principal place of employment by more than forty-five (45) miles from its location at the Effective Date of this Agreement;

(D) a material reduction in the benefits and perquisites to Executive from those being provided as of the later of the Effective Date or any subsequent Anniversary Date of this Agreement, other than an employee-wide reduction in pay or benefits;

(E) a liquidation or dissolution of the Bank; or

(F) a material breach of this Agreement by the Bank or the Holding Company.

Upon the occurrence of any event described in clauses (A), (B), (C), (D), (E) or (F), above, Executive shall have the right to elect to terminate her employment under this Agreement by resignation upon not less than thirty (30) days prior written Notice of Termination, as defined in Section 9(a), given within ninety (90) days after the event giving rise to said right to elect. Notwithstanding the preceding sentence, in the event of a continuing breach of this Agreement by the Bank, Executive, after giving due notice within the prescribed time frame of an initial event specified above, shall not waive any of her rights under this Agreement and this Section solely by virtue of the fact that Executive has submitted her resignation, provided Executive has remained in the employment of the Bank and is engaged in good faith discussions to resolve any occurrence of an event described in clauses (A), (B), (C), (D) or (F) above.

(iii) (A) Executive’s involuntary termination by the Bank (or any successor thereto) on the effective date of, or at any time following, a Change in Control, or (B) Executive’s resignation from the employment with the Bank (or any successor thereto) following a Change in Control as a result of any event described in Section 4(a)(ii)(A), (B), (C), (D), or (F) above. For these purposes, a “Change in Control” shall mean a change in control of the Bank or, its holding company as of the date hereof (the “Holding Company”) of a nature that: (i) would be required to be reported in

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response to Item 5.01 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) without limitation such a Change in Control shall be deemed to have occurred at such time as (a) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Holding Company or Bank representing 25% or more of the combined voting power of the Holding Company’s or Bank’s outstanding securities except for any securities purchased by the Bank’s employee stock ownership plan or trust; or (b) individuals who constitute the Board of Directors of the Bank or the Holding Company on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least a majority of the directors of the Board, shall be, for purposes of this clause (b), considered as though she were a member of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Bank or the Holding Company or similar transaction in which the Bank or Holding Company is not the surviving institution occurs; provided, however, that, to the extent necessary to comply with Code Section 409A, “Change in Control” shall instead have the meaning set forth in Code Section 409A and the regulations and other guidance published thereunder; and provided further that a Change in Control shall not be deemed to have occurred solely as a result of the conversion of the Holding Company’s mutual holding company parent to stock form or a reorganization used to effect such a conversion.

(b) Upon the occurrence of an Event of Termination under Sections 4(a) (i) or (ii), on the Date of Termination, as defined in Section 9(b), the Bank shall be obligated to pay Executive, or, in the event of her subsequent death, her beneficiary or beneficiaries, or her estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) her earned but unpaid salary as of the date of her termination of employment with the Bank; (ii) the benefits, if any, to which she is entitled as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the Bank’s officers and employees; (iii) the remaining payments that Executive would have earned, in accordance with Sections 3(a) and 3(b), if she had continued her employment with the Bank for the remainder of the term of this Agreement (but in any event, such term shall not exceed twelve (12) months), and had earned the maximum bonus or incentive award in the calendar year that ends during such term; and (iv) the annual contributions or payments that would have been made on Executive’s behalf to any employee benefit plans of the Bank as if Executive had continued her employment with the Bank for the remainder of the term of this Agreement (but in any event, such term shall not exceed twelve (12) months), based on contributions or payments made (on an annualized basis) at the Date of Termination. Any payments hereunder shall be made in a lump sum within thirty (30) days after the Date of Termination, or in the event that Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) applies, no later than the first day of the seventh month following the Date of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment.

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(c) Upon the occurrence of an Event of Termination under Section 4(a)(iii), on the Date of Termination, as defined in Section 9(b), the Bank shall be obligated to pay Executive, or, in the event of her subsequent death, her beneficiary or beneficiaries, or her estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) her earned but unpaid salary as of the date of her termination of employment with the Bank; (ii) the benefits, if any, to which she is entitled as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the Bank or Holding Company’s officers and employees; (iii) the remaining payments that Executive would have earned, in accordance with Sections 3 (a) and (b), if she had continued her employment with the Bank for a twelve (12) month period following her termination of employment, and had earned the maximum bonus or incentive award in each calendar year that ends during such term; and (iv) the annual contributions or payments that would have been made on Executive’s behalf to any employee benefit plans of the Bank or the Company as if Executive had continued her employment with the Bank for a twelve (12) month period following her termination of employment, based on contributions or payments made (on an annualized basis) at the Date of Termination. Any payments hereunder shall be made in a lump sum within thirty (30) days after the Date of Termination, or in the event that Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) applies, no later than the first day of the seventh month following the Date of Termination. Such payments shall not be reduced in the event Executive obtains other employment following termination of employment.

(d) Upon the occurrence of an Event of Termination under Section 4(a)(i), (ii) or (iii), the Bank will cause to be continued, at the Bank’s expense, medical coverage substantially identical to the coverage maintained by the Bank for Executive and her family prior to Executive’s termination. Such coverage shall continue at the Bank’s expense for the remainder of the term of this Agreement following the Date of Termination.

(e) Notwithstanding anything in this Agreement to the contrary, in no event shall the aggregate payments or benefits to be made or afforded to Executive under this Section constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended, (“Code”) or any successor thereto, and in order to avoid such a result, Executive’s benefits hereunder shall be reduced, if necessary, to an amount, the value of which is one dollar ($1.00) less than an amount equal to three (3) times Executive’s “base amount,” as determined in accordance with Section 280G. The allocation of the reduction required hereby shall be determined by Executive.

(f) In the event the Executive resigns for any reason other than an Event of Termination (as described in Section 4), Termination for Just Cause (as described in Section 5), Termination for Disability or Death (as described in Section 6) or Termination Upon Retirement (as described in Section 7), all obligations of the Bank hereunder shall immediately cease upon the date of such resignation.

(g) Notwithstanding the foregoing, to the extent required by regulations or interpretations of the Office of Thrift Supervision, all severance payments under the Agreement shall not exceed three (3) times the Executive’s average annual compensation (as defined in such regulations or interpretations) over the most recent five (5) taxable years.

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5. TERMINATION FOR JUST CAUSE.

(a) The term “Termination for Just Cause” shall mean termination because of the Executive’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement.

(b) Notwithstanding Section 5(a), the Bank may not terminate Executive for Just Cause unless and until there shall have been delivered to her a Notice of Termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for that purpose, finding that in the good faith opinion of the Board, Executive was guilty of conduct justifying Termination for Just Cause and specifying the particulars thereof in detail. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Just Cause. During the period beginning on the date of the Notice of Termination for Just Cause pursuant to Section 5 hereof through the Date of Termination, any unvested stock options and related rights granted to Executive under any stock option plan of the Bank or the Holding Company (or any affiliate) shall not be exercisable nor shall any unvested awards granted to Executive under any stock benefit plan of the Bank or Holding Company (or affiliate thereof) vest. At the Date of Termination, any such unvested stock options and related rights and any such unvested awards shall become null and void and shall not be exercisable by or delivered to Executive at any time subsequent to such Termination for Just Cause. In the Event of Executive’s Termination for Just Cause, Executive shall resign immediately as a director of the Bank and as a director and/or officer of any affiliate of the Bank.

6. TERMINATION FOR DISABILITY OR DEATH.

(a) The Bank or Executive may terminate Executive’s employment after having established Executive’s Disability. For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform her duties under this Agreement and that results in Executive’s becoming eligible for long-term disability benefits under a long-term disability plan of the Bank (or, if the Bank has no such plan in effect, that impairs Executive’s ability to substantially perform her duties under this Agreement for a period of one hundred eighty (180) consecutive days). The Board shall determine in good faith, based upon competent medical advice and other factors that they reasonably believe to be relevant, whether or not Executive is and continues to be disabled for purposes of this Agreement. As a condition to any benefits, the Board may require Executive to submit to such physical or mental evaluations and tests as it deems reasonably appropriate, at the Bank’s expense.

(b) In the event of such Disability, Executive’s obligation to perform services under this Agreement will terminate. In the event of such termination, Executive shall receive benefits under any disability program sponsored by the Bank, provided such benefit is not less than the

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benefits provided in the following sentence of this Section 6(b). In the event the Bank does not sponsor any disability programs, the Executive shall continue to receive her Base Salary, as defined in Section 3(a), at the rate in effect on the Date of Termination through the earliest to occur of (i) the date of Executive’s death; (ii) the date the Executive recovers from such Disability; (iii) the date Executive attains age 65; or (iv) the expiration of twelve (12) months following the Date of Termination.

(c) In the event of Executive’s death during the term of this Agreement, her estate, legal representatives or named beneficiary or beneficiaries (as directed by Executive in writing) shall be paid Executive’s Base Salary, as defined in Section 3, at the rate in effect at the time of Executive’s death for a period of one (1) year from the date of Executive’s death.

7. TERMINATION UPON RETIREMENT

Termination of Executive’s employment based on “Retirement” shall mean termination of Executive’s employment at age 65, unless extended by the Board. Upon termination of Executive’s employment based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party.

8. RESIGNATION FROM BOARDS OF DIRECTORS

In the event of Executive’s termination of employment for any reason other than upon a Change in Control, Executive shall, if applicable, resign as a director of the Bank, and as a director and/or officer of any affiliate of the Bank including the Holding Company.

9. NOTICE

(a) Any notice required hereunder shall be in writing and hand-delivered to the other party. Hand delivery to the Bank shall be made to the Chairman or the Secretary of the Board of Directors. Any termination by the Bank or by Executive shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

(b) “Date of Termination” shall mean (A) if Executive’s employment is terminated for Disability, thirty (30) days after a Notice of Termination is given (provided that she shall not have returned to the performance of her duties on a full-time basis during such thirty (30) day period), and (B) if her employment is terminated for any other reason, the date specified in the Notice of Termination.

(c) If the party receiving a Notice of Termination desires to dispute or contest the basis or reasons for termination, the party receiving the Notice of Termination must notify the other party within thirty (30) days after receiving the Notice of Termination that such a dispute exists, and shall pursue the resolution of such dispute in good faith and with reasonable diligence

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pursuant to Section 19 of this Agreement. During the pendency of any such dispute, the Bank shall not be obligated to pay Executive compensation or other payments beyond the Date of Termination.

10. SOURCE OF PAYMENTS.

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank.

11. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of the Bank and Executive. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to her without reference to this Agreement.

12. NO ATTACHMENT; BINDING ON SUCCESSORS.

(a) Except as required by law or as otherwise provided in this Agreement, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and of no effect.

(b) This Agreement shall be binding upon, and inure to the benefit of, Executive and the Bank and their respective successors and assigns.

13. MODIFICATION AND WAIVER.

(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived.

14. REQUIRED PROVISIONS.

(a) The Bank may terminate Executive’s employment at any time, but any termination by the Board other than Termination for Just Cause as defined in Section 5 hereof shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause.

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(b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) [12 USC §1818(e)(3)] or 8(g)(1) [12 USC §1818(g)(1)] of the Federal Deposit Insurance Act (the “FDI Act”), the Bank’s obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

(c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) [12 USC §1818(e)(4)] or 8(g)(1) [12 USC §1818(g)(1)] of the FDI Act, all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

(d) If the Bank is in default as defined in Section 3(x)(1) [12 USC §1813(x)(1)] of the FDI Act, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

(e) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary for the continued operation of the Bank, (i) by the Director of the OTS or her or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) [12 USC §1823(c)] of the FDI Act; or (ii) by the Director or her or her designee at the time the Director or her or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.

(f) Notwithstanding anything herein contained to the contrary, any payments to Executive by the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the FDI Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

15. NON-COMPETITION AND POST-TERMINATION OBLIGATIONS.

(a) All payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with paragraph (b), (c) and (d) of this Section 15.

(b) Executive shall, upon reasonable notice, furnish such information and assistance to the Bank as may reasonably be required by the Bank in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between the Executive and the Bank or any of its subsidiaries or affiliates.

(c) Executive recognizes and acknowledges that the knowledge of the business activities and plans for business activities of the Bank and affiliates thereof, as it may exist from time to time, is a valuable, special and unique asset of the business of the Bank and affiliates

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thereof. Executive will not, during or after the term of her employment, disclose any knowledge of the past, present, planned or considered business activities of the Bank or affiliates thereof to any person, firm, corporation, or other entity for any reason or purpose whatsoever (except for such disclosure as may be required to be provided to the Office of Thrift Supervision (“OTS”), the Federal Deposit Insurance Corporation (“FDIC”), or other regulatory agency with jurisdiction over the Bank or Executive). Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank, and Executive may disclose any information regarding the Bank which is otherwise publicly available or which Executive is otherwise legally required to disclose. In the event of a breach or threatened breach by Executive of the provisions of this Section 15, the Bank will be entitled to an injunction restraining Executive from disclosing, in whole or in part, her knowledge of the past, present, planned or considered business activities of the Bank or any of its affiliates, or from rendering any services to any person, firm, corporation or other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

(d) Upon any termination of Executive’s employment hereunder for any reason other than (i) pursuant to Section 4(a)(iii); (ii) pursuant to Section 6; or (iii) any termination of Executive’s employment hereunder as a result of the expiration of Executive’s employment term following a notice of non-renewal pursuant to Section 2, Executive agrees not to compete in the banking and lending business with the Bank and any of its affiliates for a period of one (1) year following such termination in any city or town in which the Bank has an office or has filed an application for regulatory approval to establish an office, determined as of the effective date of such termination, except as agreed to pursuant to a resolution duly adopted by the Board. Executive agrees that during such period and within said cities and towns, Executive shall not work for or advise, consult or otherwise serve with, directly or indirectly, any entity whose business materially competes with the depository, lending or other business activities of the Bank. The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive’s breach of this Section 15(d) agree that in the event of any such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive, Executive’s partners, agents, servants, employers, employees and all persons acting for or with Executive. Executive represents and admits that Executive’s experience and capabilities are such that Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

(e) Upon any termination of Executive’s employment hereunder for any reason other than (i) pursuant to Section 4(a)(iii); (ii) pursuant to Section 6; or (iii) any termination of Executive’s employment hereunder as a result of the expiration of Executive’s employment term following a notice of non-renewal pursuant to Section 2, Executive agrees that Executive will not, in any manner whatsoever, for a period of one (1) year following the termination of Executive’s employment with the Bank either as an individual or as a partner, stockholder,

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director, officer, principal, employee, agent, consultant, or in any other relationship or capacity, with any person, firm, corporation or other business entity, either directory or indirectly, solicit or induce or aid in the solicitation or inducement of any employees of the Bank to leave their employment with the Bank. Executive further agrees that the Executive will not, in any manner whatsoever, for a period of one (1) year following the termination of Executive’s employment with the Bank, either as an individual or as a partner, stockholder, director, officer, principal, employee, agent, consultant or in any other relationship or capacity with any person, firm, corporation or other business entity, either directly or indirectly, solicit the business of any customers or clients of the Bank at the time of termination of Executive’s employment with the Bank.

16. SEVERABILITY.

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

17. HEADINGS FOR REFERENCE ONLY.

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

18. GOVERNING LAW.

This Agreement shall be governed by the laws of the State of Illinois but only to the extent not superseded by federal law.

19. ARBITRATION.

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, conducted before a single arbitrator selected by the Bank and Executive sitting in a location selected by the Bank and Executive within twenty-five (25) miles of Arlington Heights, Illinois in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

20. PAYMENT OF LEGAL FEES.

All reasonable legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, provided that the dispute or interpretation has been settled by Executive and the Bank or resolved in Executive’s favor.

11

21. INDEMNIFICATION.

(a) The Bank shall provide Executive (including her heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense, and shall indemnify Executive (and her heirs, executors and administrators) for the term of this Agreement and for a period of six years thereafter to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by her in connection with or arising out of any action, suit or proceeding in which she may be involved by reason of her performance of services as a director or officer of the Bank (whether or not she continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements (such settlements must be approved by the Board); provided, however, the Bank shall not be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive. Any such indemnification shall be made consistent with OTS Regulations and Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359.

(b) Notwithstanding the foregoing, no indemnification shall be made unless the Bank gives the OTS at least 60 days’ notice of its intention to make such indemnification. Such notice shall state the facts on which the action arose, the terms of any settlement, and any disposition of the action by a court. Such notice, a copy thereof, and a certified copy of the resolution containing the required determination by the Board shall be sent to the Regional Director of the OTS, who shall promptly acknowledge receipt thereof. The notice period shall run from the date of such receipt. No such indemnification shall be made if the OTS advises the Bank in writing within such notice period, of its objection thereto.

12

IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its duly authorized representative, and Executive has signed this Agreement, effective as of the day and date first above written.

ATTEST:	BEN FRANKLIN BANK OF ILLINOIS
	By:
Corporate Secretary		Chairman of the Board
WITNESS:	EXECUTIVE:
	Angie Plesiotis

13

EX-21

Exhibit 21

Subsidiaries Of The Registrant

The following is a list of the subsidiaries of Ben Franklin Financial, Inc., Inc. following the reorganization:

Name	State of Incorporation
Ben Franklin Bank of Illinois	Federal

EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement on Form SB-2 filed with the Securities and Exchange Commission and the Notice of Mutual Holding Company Reorganization on Form MHC-1 (“Form MHC-1”), Application for Approval of Minority Stock Issuance on Form MHC-2 (“Form MHC-2”) and Holding Company Application on Form H-(e)1-S (“Form H-(e)1-S”) filed with the Office of Thrift Supervision of our report dated March 25, 2006 on the financial statements of Ben Franklin Bank of Illinois. We also consent to the references to us under the headings “Tax Effects of the Reorganization”, “Legal and Tax Matters” and “Experts” in this Registration Statement on Form SB-2 and Forms MHC-1, MHC-2 and H-(e)1-S.

/s/ Crowe Chizek and Company LLC

Crowe Chizek and Company LLC

Oak Brook, Illinois

June 27, 2006

EX-23.3

Exhibit 23.3

RP^® FINANCIAL, LC.

Financial Services Industry Consultants

June 28, 2006

Board of Directors

Ben Franklin Bank of Illinois

14 North Dryden Place

Arlington Heights, Illinois 60004

Members of the Board of Directors:

We hereby consent to the use of our firm’s name in the Form MHC-1 and the Form MHC-2, and any amendments thereto, for Ben Franklin Bank of Illinois. We also hereby consent to the inclusion of, summary of and references to our Appraisal Report in such filings, and the Registration Statement on Form SB-2, and any amendments thereto, including the prospectus of Ben Franklin Financial, Inc.

Sincerely,

RP^® FINANCIAL, LC.

EX-99.1

Exhibit 99.1

RP^® FINANCIAL, LC.

Financial Services Industry Consultants

May 26, 2006

Mr. C. Steven Sjogren

Chairman, President and Chief Executive Officer

Ben Franklin Bank of Illinois

14 N. Dryden Place

Arlington Heights, Illinois 60004-6399

Dear Mr. Sjogren:

This letter sets forth the agreement between Ben Franklin Bank of Illinois, Arlington Heights, Illinois (the “Bank”), and RP^® Financial, LC. (“RP Financial”) for the independent appraisal services in connection with the “Minority Stock Issuance” by a newly formed mid-tier stock holding company that will be a subsidiary of a newly formed mutual holding company (the “MHC”). The specific appraisal services to be rendered by RP Financial are described below.

Description of Conversion Appraisal Services

Prior to preparing the valuation report, RP Financial will conduct a financial due diligence, including on-site interviews of senior management and reviews of financial and other documents and records, to gain insight into the Bank’s operations, financial condition, profitability, market area, risks and various internal and external factors which impact the pro forma value of the Bank. RP Financial will prepare a written detailed valuation report of the Bank that will be fully consistent with applicable regulatory guidelines and standard pro forma valuation practices. In this regard, the applicable regulatory guidelines are those set forth in the Office of Thrift Supervision’s (“OTS”) October 21, 1994 “Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization,” which have been endorsed by the Federal Deposit Insurance Corporation (“FDIC”) and various state banking agencies.

The appraisal report will include an in-depth analysis of the Bank’s financial condition and operating results, as well as an assessment of the Bank’s interest rate risk, credit risk and liquidity risk. The appraisal report will describe the Bank’s business strategies, market area, prospects for the future and the intended use of proceeds both in the short term and over the longer term. A peer group analysis relative to publicly-traded savings institutions will be conducted for the purpose of determining appropriate valuation adjustments relative to the group.

Washington Headquarters
Rosslyn Center	Telephone: (703) 528-1700
1700 North Moore Street, Suite 2210	Fax No.: (703) 528-1788
Arlington, VA 22209	Toll-Free No.: (866) 723-0594
www.rpfinancial.com	E-Mail: wpommerening@rpfinancial.com

Mr. C. Steven Sjogren

May 26, 2006

Page 2

We will review pertinent sections of the applications and offering documents to obtain necessary data and information for the appraisal, including the impact of key deal elements on the appraised value, such as dividend policy, use of proceeds and reinvestment rate, tax rate, conversion expenses, and characteristics of stock plans. The appraisal report will conclude with a midpoint pro forma market value that will establish the range of value, and reflect the Minority Stock Issuance size and offering price per share determined by the Bank’s Board of Directors. The appraisal report may be periodically updated prior to the commencement of the Minority Stock Issuance and the appraisal is required to be updated just prior to the closing of the Minority Stock Issuance.

RP Financial agrees to deliver the valuation appraisal and subsequent updates, in writing, to the Bank at the above address in conjunction with the filing of the regulatory application. Subsequent updates will be filed promptly as certain events occur which would warrant the preparation and filing of such valuation updates. Further, RP Financial agrees to perform such other services as are necessary or required in connection with the regulatory review of the appraisal and respond to the regulatory comments, if any, regarding the valuation appraisal and subsequent updates.

Fee Structure and Payment Schedule

The Bank agrees to pay RP Financial a fixed fee of $27,500 for preparation and delivery of the original appraisal report and $5,000 on delivery of each update to the valuation, plus reimbursable expenses. Payment of these fees shall be made according to the following schedule:

$5,000 upon execution of the letter of agreement engaging RP Financial’s appraisal services;

$22,500 upon delivery of the completed original appraisal report; and

$5,000 upon delivery of each completed updated appraisal report.

The Bank will reimburse RP Financial for out-of-pocket expenses incurred in preparation of the valuation. Such out-of-pocket expenses will likely include travel, printing, telephone, facsimile, shipping, computer and data services. RP Financial will agree to limit reimbursable expenses to $5,000 in connection with this appraisal engagement, subject to written authorization from the Bank to exceed such level.

In the event the Bank shall, for any reason, discontinue the proposed Minority Stock Issuance prior to delivery of the completed documents set forth above and payment of the respective progress payment fees, the Bank agrees to compensate RP Financial according to RP Financial’s standard billing rates for consulting services based on accumulated and verifiable time expenses, not to exceed the respective fee caps noted above, after giving full credit to the initial retainer fee. RP Financial’s standard billing rates range from $75 per hour for research associates to $300 per hour for managing directors.

Mr. C. Steven Sjogren

May 26, 2006

Page 3

If during the course of the proposed transaction, unforeseen events occur so as to materially change the nature or the work content of the services described in this contract, the terms of said contract shall be subject to renegotiation by the Bank and RP Financial. Such unforeseen events shall include, but not be limited to, major changes in the conversion regulations, appraisal guidelines or processing procedures as they relate to appraisals, major changes in management or procedures, operating policies or philosophies, and excessive delays or suspension of processing of conversion applications by the regulators such that completion of the transaction requires the preparation by RP Financial of a new appraisal or financial projections.

Representations and Warranties

The Bank and RP Financial agree to the following:

1. The Bank agrees to make available or to supply to RP Financial such information with respect to its business and financial condition as RP Financial may reasonably request in order to provide the aforesaid valuation. Such information heretofore or hereafter supplied or made available to RP Financial shall include: annual financial statements, periodic regulatory filings and material agreements, debt instruments, off balance sheet assets or liabilities, commitments and contingencies, unrealized gains or losses and corporate books and records. All information provided by the Bank to RP Financial shall remain strictly confidential (unless such information is otherwise made available to the public), and if the Reorganization and Minority Stock Issuance are not consummated or the services of RP Financial are terminated hereunder, RP Financial shall upon request promptly return to the Bank the original and any copies of such information.

2. The Bank hereby represents and warrants to RP Financial that any information provided to RP Financial does not and will not, to the best of the Bank’s knowledge, at the times it is provided to RP Financial, contain any untrue statement of a material fact or fail to state a material fact necessary to make the statements therein not false or misleading in light of the circumstances under which they were made.

3. (a) The Bank agrees that it will indemnify and hold harmless RP Financial, any affiliates of RP Financial, the respective directors, officers, agents and employees of RP Financial or their successors and assigns who act for or on behalf of RP Financial in connection with the services called for under this agreement (hereinafter referred to as “RP Financial”), from and against any and all losses, claims, damages and liabilities (including, but not limited to, all losses and expenses in connection with claims under the federal securities laws) attributable to (i) any untrue statement or alleged untrue statement of a material fact contained in the financial statements or other information furnished or otherwise provided by the Bank to RP Financial, either orally or in writing; (ii) the omission or alleged omission of a material fact from the financial statements or other information furnished or otherwise made available by the Bank to RP Financial; or (iii) any action or omission to act by the Bank, or the Bank’s respective officers, Directors, employees or agents which action or omission is willful or negligent. The Bank will be under no obligation to indemnify RP Financial hereunder if a court determines that RP Financial

Mr. C. Steven Sjogren

May 26, 2006

Page 4

was negligent or acted in bad faith with respect to any actions or omissions of RP Financial related to a matter for which indemnification is sought hereunder. Any time devoted by employees of RP Financial to situations for which indemnification is provided hereunder, shall be an indemnifiable cost payable by the Bank at the normal hourly professional rate chargeable by such employee.

(b) RP Financial shall give written notice to the Bank of such claim or facts within thirty days of the assertion of any claim or discovery of material facts upon which RP Financial intends to base a claim for indemnification hereunder. In the event the Bank elects, within ten business days of the receipt of the original notice thereof, to contest such claim by written notice to RP Financial, RP Financial will be entitled to be paid any amounts payable by the Bank hereunder within five days after the final determination of such contest either by written acknowledgement of the Bank or a final judgment (including all appeals therefrom) of a court of competent jurisdiction. If the Bank does not so elect, RP Financial shall be paid promptly and in any event within thirty days after receipt by the Bank of the notice of the claim.

(c) The Bank shall pay for or reimburse the reasonable expenses, including attorneys’ fees, incurred by RP Financial in advance of the final disposition of any proceeding within thirty days of the receipt of such request if RP Financial furnishes the Bank: (1) a written statement of RP Financial’s good faith belief that it is entitled to indemnification hereunder; and (2) a written undertaking to repay the advance if it ultimately is determined in a final adjudication of such proceeding that it or he is not entitled to such indemnification. The Bank may assume the defense of any claim (as to which notice is given in accordance with 3(b)) with counsel reasonably satisfactory to RP Financial, and after notice from the Bank to RP Financial of its election to assume the defense thereof, the Bank will not be liable to RP Financial for any legal or other expenses subsequently incurred by RP Financial (other than reasonable costs of investigation and assistance in discovery and document production matters). Notwithstanding the foregoing, RP Financial shall have the right to employ their own counsel in any action or proceeding if RP Financial shall have concluded that a conflict of interest exists between the Bank and RP Financial which would materially impact the effective representation of RP Financial. In the event that RP Financial concludes that a conflict of interest exists, RP Financial shall have the right to select counsel reasonably satisfactory to the Bank which will represent RP Financial in any such action or proceeding and the Bank shall reimburse RP Financial for the reasonable legal fees and expenses of such counsel and other expenses reasonably incurred by RP Financial. In no event shall the Bank be liable for the fees and expenses of more than one counsel, separate from its own counsel, for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same allegations or circumstances. The Bank will not be liable under the foregoing indemnification provision in respect of any compromise or settlement of any action or proceeding made without its consent, which consent shall not be unreasonably withheld.

(d) In the event the Bank does not pay any indemnified loss or make advance reimbursements of expenses in accordance with the terms of this agreement, RP Financial shall have all remedies available at law or in equity to enforce such obligation.

It is understood that, in connection with RP Financial’s above-mentioned engagement, RP Financial may also be engaged to act for the Bank in one or more additional capacities, and that

Mr. C. Steven Sjogren

May 26, 2006

Page 5

the terms of the original engagement may be incorporated by reference in one or more separate agreements. The provisions of Paragraph 3 herein shall apply to the original engagement, any such additional engagement, any modification of the original engagement or such additional engagement and shall remain in full force and effect following the completion or termination of RP Financial’s engagement(s). This agreement constitutes the entire understanding of the Bank and RP Financial concerning the subject matter addressed herein, and such contract shall be governed and construed in accordance with the laws of the Commonwealth of Virginia. This agreement may not be modified, supplemented or amended except by written agreement executed by both parties.

The Bank and RP Financial are not affiliated, and neither the Bank nor RP Financial has an economic interest in, or is held in common with, the other and has not derived a significant portion of its gross revenues, receipts or net income for any period from transactions with the other.

* * * * * * * * * * *

Please acknowledge your agreement to the foregoing by signing as indicated below and returning to RP Financial a signed copy of this letter, together with the initial retainer fee of $5,000.

Sincerely,

William E. Pommerening

Chief Executive Officer and

Managing Director

	/s/ C. Steven Sjogren
Agreed To and Accepted By:	C. Steven Sjogren
	Chairman, President and Chief Executive Officer

Upon Authorization by the Board of Directors For:	Ben Franklin Bank of Illinois
	Arlington Heights, Illinois

Date Executed: 5/31/06

EX-99.2

Exhibit 99.2

KELLER & COMPANY, INC.

FINANCIAL INSTITUTION CONSULTANTS

555 METRO PLACE NORTH

SUITE 524

DUBLIN, OHIO 43017

(614) 766-1426

(614) 766-1459 FAX

May 4, 2006

Mr. C. Steven Sjogren

Chief Executive Officer

Ben Franklin Bank of Illinois

14 North Dryden Place

Arlington Heights, Illinois 60004

Re: Business Plan Proposal

Dear Mr. Sjogren:

This letter represents our proposal to prepare a complete three-year Business Plan (“Plan”) for Ben Franklin Bank of Illinois (“Ben Franklin Bank” or the “Bank”) to fulfill all regulatory requirements relating to the Bank’s mutual to stock conversion and minority stock offering. The Plan will focus on Ben Franklin Bank’s new three-year pro formas, the minority stock offering impact on Ben Franklin Bank and the planned use of proceeds.

Keller & Company (“Keller”) is experienced in preparing business plans for filing with and approval by all regulatory agencies. Keller prepared thirty-two in 2003, thirty-three in 2004 and thirty-five in 2005, and all were approved. Ben Franklin Bank’ s Plan will be based on the format provided in the attached Exhibit A. Keller will prepare the three-year pro formas and each discussion section in accordance with regulatory requirements and based on the Bank’s input. Keller’s objective is to ensure that the Bank’s Plan is in compliance with all applicable requirements, and that management and directorate are knowledgeable of and comfortable with the assumptions, commitments and projections contained in the Plan, making the Plan useful for the future. Keller has filed numerous Plans with the OTS and the FDIC and is familiar with the pre-filing requirements of the OTS for business plans.

Exhibit B provides a sample set of pro formas. Ben Franklin Bank’s pro formas will incorporate the most current interest rate projections available. Keller’s procedure in preparing the Plan and three-year projections is to request key financial information, including the most recent TFR and CMR Reports as of March 31, 2006, investment portfolio mix, recent lending activity, interest rate risk

Mr. C. Steven Sjogren

May 4, 2006

Page 2

report, savings activity, costs and yields and other data from Ben Franklin Bank. Based on a review of this information, I will then schedule a time to meet with management to discuss the Bank’s plans and expectations for the remainder of 2006, 2007, 2008 and 2009, focusing on such items as use of proceeds, deposit growth expectations, loan origination projections, new products and services, increases in general valuation allowance, capital expenditures, increases in fixed assets, investment strategy, expansion plans, overhead expenses, board fees, fee income, total compensation, etc. We will then prepare financial projections tying the beginning figures to Ben Franklin Bank’s March 31, 2006 TFR Report balances. Assets and liabilities will be repriced based on their maturity period, with such items tied to rate indices and their yields and costs adjusting based on interest rate trends. The projections will be based somewhat on Ben Franklin Bank’s actual performance in 2005 in conjunction with the input from discussions with management. We can introduce numerous scenarios for internal use as part of the preparation of the Plan to show the impact of alternative strategies and the impact of proceeds at any other levels rather than the midpoint as required by the regulator.

With each set of pro formas, we will send Ben Franklin Bank a discussion summary of the assumptions for easy review and comments (Exhibit C). After your review of the pro formas, we will make any adjustments that are required. When the pro formas are complete, we will provide the final pro forma financial statements, as well as pro formas for the mutual holding company (Exhibit D).

With regard to the text of the Plan, we will complete each section in draft form for your review, and revise each section based on management’s comments and requests. We will also send a copy to the conversion counsel for their input and comments. The Plan will be in full compliance with all regulatory requirements. We will also prepare a quarterly comparison chart each quarter after the conversion for presentation to the board, showing the quarterly variance in actual performance relative to projections and provide comments on the variance, at no charge.

Mr. C. Steven Sjogren

May 4, 2006

Page 3

Our fee for the preparation of the Business Plan text and pro formas is a fee of $24,000, plus out-of-pocket expenses not to exceed $1,500. The fee includes a retainer fee of $3,000 to be paid at the time of signing this agreement and deducted from the total fee at the time of completion of the Business Plan.

I look forward to possibly working with the Bank and its management and would be pleased to discuss our proposal or answer any questions.

Sincerely,

KELLER and COMPANY, INC.

/s/ Michael R. Keller

Michael R. Keller

President

MRK:jmm

enclosure

Accepted this 9^th day of May, 2006.

/s/ C. Steven Sjogren

C. Steven Sjogren

Chief Executive Officer

cc: Kip Weissman, Esq.

EX-99.3

Exhibit 99.3

PRO FORMA VALUATION REPORT

MUTUAL HOLDING COMPANY

STOCK OFFERING

BEN FRANKLIN BANK OF ILLINOIS

Arlington Heights, Illinois

Dated As Of:

June 16, 2006

Prepared By:

RP^® Financial, LC.

1700 North Moore Street

Suite 2210

Arlington, Virginia 22209

RP^® FINANCIAL, LC.

Financial Services Industry Consultants

June 16, 2006

Board of Directors

Ben Franklin Bank of Illinois

14 North Dryden Place

Arlington Heights, Illinois 60004

Members of the Board of Directors:

At your request, we have completed and hereby provide an independent appraisal (“Appraisal”) of the estimated pro forma market value of the common stock which is to be offered in connection with the mutual-to-stock conversion transaction described below.

This Appraisal is furnished pursuant to the conversion regulations promulgated by the Office of Thrift Supervision (“OTS”). Specifically, this Appraisal has been prepared in accordance with the “Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization” as set forth by the OTS, and applicable regulatory interpretations thereof.

Description of Plan of Reorganization and Stock Offering

The Board of Directors of Ben Franklin Bank of Illinois (“Ben Franklin Bank” or the “Bank”) has adopted a plan of reorganization, pursuant to which Ben Franklin Bank will reorganize into a mutual holding company structure. As part of the plan of reorganization, Ben Franklin Bank will convert from a federally-chartered mutual savings bank to a federally-chartered stock savings bank and will become a wholly-owned subsidiary of Ben Franklin Financial, Inc. (“Ben Franklin Financial” or the “Company”), a federally-chartered mid-tier holding corporation, and Ben Franklin Financial will issue a majority of its common stock to Ben Franklin Financial, MHC (the “MHC”), a federally-chartered mutual holding company, and sell a minority of its common stock to the public. It is anticipated that the public shares will be offered in a subscription offering to the Bank’s Eligible Account Holders, Tax-Qualified Employee Stock Benefit Plans including the employee stock ownership plan (the “ESOP”), Supplemental Eligible Account Holders and Other Members, as such terms are defined for purposes of applicable federal regulatory requirements governing mutual-to-stock conversions. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be offered for sale in a community offering.

Washington Headquarters
Rosslyn Center	Telephone: (703) 528-1700
1700 North Moore Street, Suite 2210	Fax No.: (703) 528-1788
Arlington, VA 22209	Toll-Free No.: (866) 723-0594
www.rpfinancial.com	E-Mail: mail@rpfinancial.com

Board of Directors

June 16, 2006

Page 2

The aggregate amount of stock sold by the Company cannot exceed the appraised value of the Bank. Immediately following the offering, the primary assets of the Company will be the capital stock of the Bank and the net offering proceeds remaining after contributing proceeds to the Bank in exchange for 100% of the capital stock of the Bank. The Company will contribute at least 50% of the net offering proceeds in exchange for the Bank’s capital stock. The remaining net offering proceeds, retained at the Company, will be used to fund a loan to the ESOP and as general working capital.

RP^® Financial, LC.

RP^® Financial, LC. (“RP Financial”) is a financial consulting firm serving the financial services industry nationwide that, among other things, specializes in financial valuations and analyses of business enterprises and securities, including the pro forma valuation for savings institutions converting from mutual-to-stock form. The background and experience of RP Financial is detailed in Exhibit V-1. We believe that, except for the fee we will receive for our appraisal, we are independent of the Bank and the other parties engaged by Ben Franklin Bank to assist in the corporate reorganization and minority stock issuance process.

Valuation Methodology

In preparing our appraisal, we have reviewed the Bank’s, the Company’s and MHC’s regulatory applications, including the prospectus as filed with the OTS and the Securities and Exchange Commission (“SEC”). We have conducted a financial analysis of the Bank that has included due diligence related discussions with Ben Franklin Bank’s management; Crowe Chizek and Company LLC, the Bank’s independent auditor; Luse Gorman Pomerenk & Schick, P.C., Ben Franklin Bank’s conversion counsel; and Keefe Bruyette & Wood, Inc., which has been retained as the financial and marketing advisor in connection with the Bank’s stock offering. All conclusions set forth in the Appraisal were reached independently from such discussions. In addition, where appropriate, we have considered information based on other available published sources that we believe are reliable. While we believe the information and data gathered from all these sources are reliable, we cannot guarantee the accuracy and completeness of such information.

We have investigated the competitive environment within which Ben Franklin Bank operates and have assessed the Bank’s relative strengths and weaknesses. We have monitored all material regulatory and legislative actions affecting financial institutions generally and analyzed the potential impact of such developments on Ben Franklin Bank and the industry as a whole to the extent we were aware of such matters. We have analyzed the potential effects of the stock conversion on the Bank’s operating characteristics and financial performance as they relate to the pro forma market value of Ben Franklin Financial. We have reviewed the economy and demographic characteristics of the primary market area in which the Bank currently operates. We have compared Ben Franklin Bank’s financial performance and condition with publicly-traded thrift institutions evaluated and selected in accordance with the Valuation Guidelines, as

Board of Directors

June 16, 2006

Page 3

well as all publicly-traded thrifts and thrift holding companies. We have reviewed conditions in the securities markets in general and the markets for thrifts, thrift holding companies and mutual holding companies including mutual holding company offerings.

The Appraisal is based on Ben Franklin Bank’s representation that the information contained in the regulatory applications and additional information furnished to us by the Bank and its independent auditors, legal counsel, investment bankers and other authorized agents are truthful, accurate and complete. We did not independently verify the financial statements and other information provided by the Bank, or its independent auditors, legal counsel, investment bankers and other authorized agents nor did we independently value the assets or liabilities of the Bank. The valuation considers Ben Franklin Bank only as a going concern and should not be considered as an indication of the Bank’s liquidation value.

Our appraised value is predicated on a continuation of the current operating environment for the Bank, the MHC and the Company and for all thrifts and their holding companies. Changes in the local and national economy, the federal and state legislative and regulatory environments for financial institutions and mutual holding companies, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability, and may materially impact the value of thrift stocks as a whole or the Bank’s value alone. It is our understanding that there are no current plans for pursuing a second-step conversion or for selling control of the Company or the Bank following the offering. To the extent that such factors can be foreseen, they have been factored into our analysis.

The estimated pro forma market value is defined as the price at which the Company’s stock, immediately upon completion of the offering, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Valuation Conclusion

It is our opinion that, as of June 16, 2006, the estimated aggregate pro forma market value of the shares to be issued immediately following the offering, both shares issued publicly as well as to the MHC, was $15,000,000 at the midpoint, equal to 1,500,000 shares issued at a per share value of $10.00. Pursuant to conversion guidelines, the 15% valuation range indicates a minimum value of $12,750,000 and a maximum value of $17,250,000. Based on the $10.00 per share offering price determined by the Board, this valuation range equates to total shares outstanding of 1,275,000 shares at the minimum of the valuation range and 1,725,000 total shares outstanding at the maximum of the valuation range. In the event that the appraised value is subject to an increase, the aggregate pro forma market value may be increased up to a super maximum value of $19,837,500 without a resolicitation. Based on the $10.00 per share offering price, the super maximum value would result in total shares outstanding of 1,983,750. The Board of Directors has established a public offering range such that the public ownership of the Company will constitute a 45.0% ownership interest of the Company. Accordingly, the offering range to the public of the minority stock will be $5,737,500 at the minimum, $6,750,000 at the midpoint, $7,762,500 at the maximum and $8,926,880 at the super maximum.

Board of Directors

June 16, 2006

Page 4

Limiting Factors and Considerations

The valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of the common stock. Moreover, because such valuation is determined in accordance with applicable OTS regulatory guidelines and is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of common stock in the conversion will thereafter be able to buy or sell such shares at prices related to the foregoing valuation of the estimated pro forma market value thereof. The appraisal reflects only a valuation range as of this date for the pro forma market value of Ben Franklin Financial immediately upon issuance of the stock and does not take into account any trading activity with respect to the purchase and sale of common stock in the secondary market on the date of issuance of such securities or at anytime thereafter following the completion of the public stock offering.

The valuation prepared by RP Financial in accordance with applicable OTS regulatory guidelines was based on the financial condition and operations of Ben Franklin Financial as of March 31, 2006, the date of the financial data included in the prospectus.

RP Financial is not a seller of securities within the meaning of any federal and state securities laws and any report prepared by RP Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities. RP Financial maintains a policy which prohibits RP Financial, its principals or employees from purchasing stock of its financial institution clients.

The valuation will be updated as provided for in the OTS conversion regulations and guidelines. These updates will consider, among other things, any developments or changes in the financial performance and condition of Ben Franklin Financial, management policies, and current conditions in the equity markets for thrift stocks, both existing issues and new issues. These updates may also consider changes in other external factors which impact value including, but not limited to: various changes in the federal and state legislative and regulatory environments for financial institutions, the stock market and the market for thrift stocks, and interest rates. Should any such new developments or changes be material, in our opinion, to the valuation of the shares, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained in the update at the date of the release of the update.

Board of Directors

June 16, 2006

Page 5

Respectfully submitted,

RP^® FINANCIAL, LC.

/s/ William E. Pommerening

William E. Pommerening

Chief Executive Officer and

Managing Director

/s/ Gregory E. Dunn

Gregory E. Dunn

Senior Vice President

RP^® Financial, LC.

TABLE OF CONTENTS

BEN FRANKLIN BANK OF ILLINOIS

Arlington Heights, Illinois

DESCRIPTION	PAGE NUMBER
CHAPTER ONE OVERVIEW AND FINANCIAL ANALYSIS
Introduction	1.1
Plan of Reorganization and Stock Offering	1.1
Strategic Overview	1.2
Balance Sheet Trends	1.4
Income and Expense Trends	1.7
Interest Rate Risk Management	1.10
Lending Activities and Strategy	1.11
Asset Quality	1.14
Funding Composition and Strategy	1.15
Legal Proceedings	1.16
CHAPTER TWO MARKET AREA
Introduction	2.1
Market Area Demographics	2.2
National Economic Factors	2.2
Regional Economy	2.7
Market Area Deposit Characteristics and Trends	2.9
Competition	2.9
CHAPTER THREE PEER GROUP ANALYSIS
Peer Group Selection	3.1
Basis of Comparison	3.2
Ben Franklin Bank’s Peer Group	3.3
Financial Condition	3.5
Income and Expense Components	3.7
Loan Composition	3.10
Interest Rate Risk	3.10
Credit Risk	3.11
Summary	3.12

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TABLE OF CONTENTS

BEN FRANKLIN BANK OF ILLINOIS

Arlington Heights, Illinois

(continued)

DESCRIPTION	PAGE NUMBER
CHAPTER FOUR VALUATION ANALYSIS
Introduction	4.1
Appraisal Guidelines	4.1
RP Financial Approach to the Valuation	4.2
Valuation Analysis	4.3
1.      Financial Condition	4.3
2.      Profitability, Growth and Viability of Earnings	4.5
3.      Asset Growth	4.7
4.      Primary Market Area	4.7
5.      Dividends	4.8
6.      Liquidity of the Shares	4.9
7.      Marketing of the Issue	4.10
A.     The Public Market	4.10
B.     The New Issue Market	4.16
C.     The Acquisition Market	4.17
8.      Management	4.17
9.      Effect of Government Regulation and Regulatory Reform	4.18
Summary of Adjustments	4.18
Basis of Valuation – Fully-Converted Pricing Ratios	4.18
Valuation Approaches: Fully-Converted Basis	4.20
1.      Price-to-Earnings (“P/E”)	4.21
2.      Price-to-Book (“P/B”)	4.22
3.      Price-to-Assets (“P/A”)	4.23
Comparison to Recent Offerings	4.23
Valuation Conclusion	4.24

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LIST OF TABLES

BEN FRANKLIN BANK OF ILLINOIS

Arlington Heights, Illinois

TABLE NUMBER	DESCRIPTION	PAGE
1.1	Historical Balance Sheets	1.5
1.2	Historical Income Statements	1.9
2.1	Summary Demographic Data	2.3
2.2	Cook County Employment Sectors	2.9
2.3	Unemployment Trends	2.9
2.4	Deposit Summary	2.11
2.5	Market Area Deposit Competitors	2.12
3.1	Peer Group of Publicly-Traded Thrifts	3.5
3.2	Balance Sheet Composition and Growth Rates	3.7
3.3	Income as a Percent of Average Assets and Yields, Costs, Spreads	3.9
3.4	Loan Portfolio Composition and Related Information	3.14
3.5	Interest Rate Risk Measures and Net Interest Income Volatility	3.15
3.6	Credit Risk Measures and Related Information	3.17
4.1	Market Area Unemployment Rates	4.8
4.2	Recent Conversion Pricing Characteristics	4.17
4.3	Calculation of Implied Per Share Data	4.22
4.4	MHC Institutions – Implied Pricing Ratios, Full Conversion Basis	4.25
4.5	Pricing Table: MHC Public Market Pricing	4.26

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I. OVERVIEW AND FINANCIAL ANALYSIS

Introduction

Ben Franklin Bank of Illinois (“Ben Franklin Bank” or the “Bank”), chartered in 1893, is a federally-chartered savings bank headquartered in Arlington Heights, Illinois. Arlington Heights is a northwest suburb of Chicago. The Bank conducts operations through the main office and one other branch in Arlington Heights and one branch in Rolling Meadows. All of the Bank’s offices are located in Cook County, Illinois. A map of the Bank’s office locations is included as Exhibit I-1. The Bank is a member of the Federal Home Loan Bank (“FHLB”) system and its deposits are insured up to the maximum allowable amount by the Federal Deposit Insurance Corporation (“FDIC”). At March 31, 2006, Ben Franklin Bank had $110.2 million in assets, $99.2 million in deposits and total equity of $8.4 million equal to 7.6% of total assets. Ben Franklin Bank’s audited financial statements are included by reference as Exhibit I-2.

Plan of Reorganization and Stock Offering

The Board of Directors of Ben Franklin Bank has adopted a plan to reorganize from the mutual form of organization to the mutual holding company form of organization. As part of the reorganization, Ben Franklin Bank will convert from a federally-chartered mutual savings bank to a federal stock savings bank. Pursuant to the reorganization, Ben Franklin Bank will become a wholly-owned subsidiary of Ben Franklin Financial, Inc. (“Ben Franklin Financial” or the “Company”), a federally-chartered mid-tier holding corporation, and Ben Franklin Financial will issue a majority of its common stock to Ben Franklin Financial, MHC (the “MHC”), a federally-chartered mutual holding company, and sell a minority of its common stock to the public. Concurrent with the reorganization, the Company will retain up to 50% of the net stock proceeds. Immediately after consummation of the reorganization, it is not anticipated that the MHC or the Company will engage in any business activity other than ownership of their respective subsidiaries and investment of stock proceeds that are retained by the Company.

The MHC will own a controlling interest in the Company of at least 51%, and the Company will be the sole subsidiary of the MHC. The Company will own 100% of the Bank’s

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outstanding stock. The Company’s initial activities will be ownership of its subsidiary, Ben Franklin Bank, investment of the net cash proceeds retained at the holding company level (initially in short-term investment securities) and extending a loan to the Bank’s newly-formed employee stock ownership plan (“ESOP”). Subsequent activities of the Company, pursuant to regulatory guidelines and limitations, may include payment of regular or special dividends, acquisitions of other financial institutions, acquisitions of other financial service providers and/or stock repurchases.

Strategic Overview

Historically, Ben Franklin Bank’s operating strategy has been fairly reflective of a traditional thrift operating strategy in which 1-4 family residential mortgage loans and retail deposits have constituted the principal components of the Bank’s assets and liabilities, respectively. Beyond 1-4 family loans, lending diversification by the Bank includes commercial real estate, multi-family, construction, land, consumer and commercial business loans. Pursuant to the Bank’s business plan, Ben Franklin Bank will continue to emphasize 1-4 family lending, but will also pursue greater diversification into other types of lending. Lending diversification by the Bank is expected to continue to emphasize commercial real estate loans, which include multi-family loans, and home equity loans, as a means to enhance the yield and reduce the interest rate risk of its loan portfolio.

Investments serve as a supplement to the Bank’s lending activities. The intent of the Bank’s investment strategy is to provide and maintain liquidity and to generate a favorable return within the context of supporting interest rate and credit risk objectives. Investments currently held by the Bank consist of mortgage-backed securities and FHLB stock. Historically, the Bank has also maintained investments in U.S. Treasury and agency securities. To manage the interest rate risk associated with the investment portfolio, the Bank’s investment in mortgage-backed securities includes adjustable securities. When the Bank invests in U.S. Treasury and agency securities, the maturities are laddered. The current portfolio of mortgage-backed securities is maintained as available for sale.

Retail deposits have consistently served as the primary interest-bearing funding source for the Bank. Pursuant to the Bank’s business plan, growth of transaction and saving deposits is

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being emphasized for purposes of managing interest rate risk and reducing funding cost. Time deposits constitute the largest portion of the Bank’s deposit base, in which the Bank has been seeking to extend CD maturities for purposes of managing interest rate risk. Borrowings serve as an alternative funding source for the Bank to support management of funding costs and interest rate risk. The Bank’s use of borrowings has typically been limited to FHLB advances with fixed rate terms.

Ben Franklin Bank’s core earnings base is largely dependent upon net interest income and operating expense levels. Overall, the Bank’s operating strategy has served to strengthen the net interest margin, which has been supported by increasing the concentration of interest-earning assets maintained in loans and increasing the concentration of loans maintained in higher yielding non-residential mortgage loans. The Bank’s operating expense ratio as a percent of average assets is also viewed as being relatively high, which can in part be attributed to the de-leveraging of operating expenses that has resulted from asset shrinkage as well as maintaining a three branch network with only $99 million of deposits. In this regard, the Bank is consolidating its Arlington Heights branch office into a newly built main office facility that will be a leased facility. The new main office will be at the same site as the current main office, but will have a more attractive corner location and drive through facilities. The current main office is a storefront location within a strip mall. The branch that is being consolidated is approximately two blocks from the main office. February 2007 is the target date to relocate to the new facility.

In recent years, the Bank’s plan has been to shrink assets to build the equity-to-assets ratio, while improving earnings through shifting the composition of interest-earning assets towards a higher concentration of loans and, in particular, higher yielding non-residential mortgage loans. The post-offering business plan is to resume balance sheet growth, through emphasizing loan growth. Loan growth will emphasize pursuing further diversification into non-residential mortgage loans and home equity loans. Additionally, the Bank plans to evaluate growth opportunities through expansion and diversification of other products and services.

Accordingly, a key component of the Bank’s business plan is to raise capital through a public stock offering. The capital realized from the minority stock offering will increase the operating flexibility and overall financial strength of Ben Franklin Bank. The additional capital realized from stock proceeds will increase liquidity and leverage capacity to support funding of

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planned loan growth. Ben Franklin Bank’s higher capital position resulting from the infusion of stock proceeds will also serve to reduce interest rate risk, through enhancing the Bank’s interest-earning-assets-to-interest-bearing-liabilities (“IEA/IBL”) ratio. The additional funds realized from the stock offering will provide an alternative funding source to deposits and borrowings in meeting the Bank’s future funding needs, which may facilitate a reduction in Ben Franklin Bank’s funding costs. Additionally, Ben Franklin Bank’s higher equity-to-assets ratio will also better position the Bank to take advantage of expansion opportunities as they arise. Such expansion would most likely occur through the establishment or acquisition of additional banking offices or customer facilities that would provide for further penetration in the markets currently served by the Bank or nearby surrounding markets. The Bank will also be positioned better to pursue growth through acquisition of other financial service providers following the stock offering, given its strengthened capital position. At this time, the Bank has no specific plans for expansion. The projected use of proceeds is highlighted below.

• MHC. The Bank intends to capitalize the MHC with $100,000 of cash. The primary activity of the MHC will be ownership of the majority interest in Ben Franklin Financial. Such cash is anticipated to be invested into low risk liquid instruments.

• The Company. The Company is expected to retain up to 50% of the net conversion proceeds. At present, funds at the holding company level are expected to be initially invested primarily into short-term investment grade securities. Over time, the funds may be utilized for various corporate purposes, which may include acquisitions, infusing additional equity into the Bank, repurchases of common stock, and the payment of regular and/or special cash dividends.

• The Bank. Approximately 50% of the net conversion proceeds will be infused into the Bank. Cash proceeds (i.e., net proceeds less deposits withdrawn to fund stock purchases) infused into the Bank will initially become part of general funds, pending deployment into loans and investment securities.

Balance Sheet Trends

Table 1.1 shows the Bank’s historical balance sheet data for the years ended December 31, 2001 through December 31, 2005 and at March 31, 2006. From year end 2001 through

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March 31, 2006, Ben Franklin Bank’s assets declined at an annual rate of 5.9%. Notably, after 2002, most of the asset shrinkage consisted of cash and investments. Investment proceeds and liquidity were redeployed into loans, as well funded deposit run-off and the pay down of borrowings. A summary of Ben Franklin Bank’s key operating ratios for the past three and one-quarter years are presented in Exhibit I-3.

Ben Franklin Bank’s loans receivable portfolio decreased at a 1.8% annual rate from year end 2001 through March 31, 2006. Loan shrinkage largely occurred during 2002, as the loans receivable balance declined from $98.5 million at year end 2001 to $80.3 million at year end 2002. Loan growth during the period occurred mostly in 2004, as loans receivable increased from $80.3 million at year end 2003 to $90.3 million at year end 2004. Overall, the less significant decline in loans compared to assets served to increase the loans-to-assets ratio from 69.1% at year end 2001 to 82.6% at March 31, 2006. Ben Franklin Bank’s historical emphasis on 1-4 family lending is reflected in its loan portfolio composition, as 50.8% of total loans receivable consisted of 1-4 family permanent mortgage loans at March 31, 2006. Trends in the Bank’s loan portfolio composition reflect the current lending emphasis on commercial real and multi-family lending, while 1-4 family permanent mortgage loans have become a less significant component of the Bank’s loan portfolio composition. The concentration of 1-4 family permanent mortgage loans comprising total loans decreased from 57.5% at year end 2004 to 50.8% at March 31, 2006. While the Bank has remained an active originator of 1-4 family loans, the 1-4 family loan balance has declined since 2004 in light of the Bank’s general philosophy of selling longer term fixed rate originations to the secondary market.

Commercial real estate and multi-family loans constitute the most significant area of loan portfolio diversification for the Bank, with the level of commercial real estate and multi-family loans comprising total loans increasing from 23.0% at year end 2004 to 30.0% at March 31, 2006. Consumer loans represent the second largest area of lending diversification for the Bank, with home equity loans accounting for the major portion of the consumer loan balance. Consumer loans equaled 8.6% of total loans at March 31, 2006, versus 10.2% of total loans at year end 2004. The balance of the loan portfolio at March 31, 2006 consisted of construction loans (6.8% of total loans), commercial business loans (2.6% of total loans) and land loans (1.2% of total loans). Land and commercial business loan concentrations were higher at March 31, 2006 compared to year end 2004, while the level of construction loans comprising total loans reflected a slight decline from year end 2004 to March 31, 2006.

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The intent of the Bank’s investment policy is to provide adequate liquidity and to generate a favorable return within the context of supporting Ben Franklin Bank’s overall credit and interest rate risk objectives. It is anticipated that proceeds retained at the holding company level will primarily be invested into investments with short-terms. Over the past five and one-quarter fiscal years, the Bank’s level of cash and investment securities (inclusive of FHLB stock) has ranged from a high of 38.0% of assets at year end 2002 to a low of 15.1% of assets at year end 2005. At March 31, 2006 the Bank maintained total cash and investments of $17.6 million, equal to 16.0% of assets. At March 31, 2006, the Bank’s investment portfolio consisted of mortgage-backed securities ($6.7 million) and FHLB stock ($2.1 million). To facilitate management of interest rate risk, the Bank’s philosophy is to invest funds in assets with varying maturities or repricing terms and to maintain the portfolio of investment securities as available for sale. As of March 31, 2006, the Bank maintained a net unrealized loss of $161,000 on the mortgage-backed securities portfolio. The Bank also maintained cash and cash equivalents of $8.9 million as of March 31, 2006, which equaled 8.1% of assets. Exhibit I-4 provides historical detail of the Bank’s investment portfolio.

Over the past five and one-quarter fiscal years, Ben Franklin Bank’s funding needs have been substantially met through retail deposits, internal cash flows and borrowings. From year end 2001 through March 31, 2006, the Bank’s deposits decreased at an annual rate of 5.2%. Most of the deposit run-off occurred during 2002 and 2003, although the Bank did not record deposit growth until the first quarter of 2006. The decline in deposits was at a slightly slower pace compared to asset shrinkage recorded during the period, as total deposits increased from 87.3% of assets at year end 2001 to 90.0% of assets at March 31, 2006. Since 2004, the Bank has experienced an increase in time deposits which has been largely offset by a comparable reduction in transaction and savings and accounts. At March 31, 2006 transaction and savings accounts equaled 35.6% of total deposits and time deposits equaled 64.6% of total deposits.

Borrowings serve as an alternative funding source for the Bank to address funding needs for growth and to support management of deposit costs and interest rate risk. As part of the Bank’s strategy to shrink the balance sheet, borrowings have been paid down with liquidity and

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proceeds realized from maturing or the sale of investments. Overall, borrowings decreased from $9.0 million or 6.3% of assets at year end 2001 to $2.0 million or 1.8% of assets at March 31, 2006. The Bank’s use of borrowings has been limited to FHLB advances during the past five and one-quarter years.

The Bank’s capital increased at a 2.1% annual rate from year end 2001 through March 31, 2006, reflecting the retention of earnings during that period. Equity growth combined with asset shrinkage provided for an increase in the Bank’s equity-top-assets ratio from 5.4% at year end 2001 to 7.6% at March 31, 2006. All of the Bank’s capital is tangible capital and the Bank maintained capital surpluses relative to all of its regulatory capital requirements at March 31, 2006. The addition of stock proceeds will serve to strengthen the Bank’s capital position.

Income and Expense Trends

Table 1.2 shows the Bank’s historical income statements for the years ended 2001 through 2005 and for the twelve months ended March 31, 2006. Over the past five and one-quarter years, the Bank’s earnings ranged from a low of 0.05% of average assets in 2001 to a high of 0.35% of average assets in 2005. For the twelve months ended March 31, 2006, the Bank reported earnings of $320,000 or 0.29% of average assets. Net interest income and operating expenses represent the primary components of the Bank’s earnings. Non-interest operating income derived largely from retail banking activities has been a limited contributor to the Bank’s earnings Loan loss provisions and gains on the sale of loans and investments have had a varied impact on the Bank’s earnings over the past five and one-quarter fiscal years.

Ben Franklin Bank’s net interest margin showed steady improvement during the past five years, with the net interest income to average assets ratio increasing from 1.91% in 2001 to 3.08% in 2005. The Bank’s net interest income to average assets ratio declined slightly to 3.03% for the twelve months ended March 31, 2006. A number of factors have contributed to the improvement in the Bank’s net interest income ratio, including a shift in interest-earning composition towards a higher concentration of loans and increased diversification into higher yielding types of loans. Other factors that have contributed to the improvement in the Bank’s net interest income ratio include the pay down of higher costing borrowings, the more immediate

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impact that declining interest rates during 2001 through the first half of 2004 had on the Bank’s interest-bearing liabilities as compared to its less rate sensitive interest-earning assets and the increase in the Bank’s equity-to-assets ratio has lessened the proportion of interest-bearing liabilities funding assets. The Bank’s net interest rate spread increased from 2.56% in 2004 to 3.02% in 2005, but then declined to 2.71% during the first quarter of 2006. The recent narrowing of the net interest rate spread reflects the adverse impact of the flatter yield curve, as short-term rates have increased more than long term rates which, in turn, has resulted in a more significant increase in the Bank’s funding costs relative to the yield earned on interest-earning assets. The Bank’s historical net interest rate spreads and yields and costs are set forth in Exhibits I-3 and I-5.

Non-interest operating income has been a limited contributor to the Bank’s earnings over the past five and one-quarter years, reflecting the Bank’s adherence to a traditional thrift operating philosophy and resultant limited diversification into products and services that generate non-interest operating income. Fees and service charges earned on deposit accounts constitute the largest source of non-interest operating income for the Bank. Throughout the period shown in Table 1.2, sources of non-interest operating income have ranged from a low of 0.10% of average assets during 2002 to a high of 0.20% of average assets during 2004. For the twelve months ended March 31, 2006, non-interest operating income equaled 0.15% of average assets. Overall, beyond Ben Franklin Bank’s relatively undiversified operating strategy, the Bank’s current philosophy of selling loans on a servicing released basis has also limited non-interest operating income. Notwithstanding, the potential increase in non-interest operating income that may be realized through growth of transaction deposits or the possible introduction of other fee-oriented services, Ben Franklin Bank’s earnings can be expected to remain highly dependent upon the net interest margin.

Operating expenses represent the other major component of the Bank’s earnings, ranging from a low of 2.34% of average assets during 2003 to a high of 2.75% of average assets during the twelve months ended March 31, 2006. While total operating expenses have declined from 2001 and 2002 levels and have remained fairly stable during the past three and one-quarter years, asset shrinkage has placed upward pressured on the Bank’s operating expense ratio in recent years. Upward pressure will be placed on the Bank’s operating expense ratio following the stock

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offering, due to expenses associated with operating as a publicly-traded company, including expenses related to the stock benefit plans. At the same, the increase in capital realized from the stock offering will increase the Bank’s capacity to leverage operating expenses through pursuing a more aggressive growth strategy.

Overall, the general trends in the Bank’s net interest margin and operating expense ratio since fiscal 2001 have translated into an improved expense coverage ratio (net interest income divided by operating expenses). The Bank’s expense coverage ratio equaled 0.78 times during 2001, versus a comparable ratio of 1.10 times during the twelve months ended March 31, 2006. The improvement in the Bank’s expense coverage ratio was realized through a more significant increase in the net interest income ratio compared to the operating expense ratio. Similarly, as the result of more significant increase in the Bank’s net interest income ratio compared to the operating expense ratio, Ben Franklin Bank’s efficiency ratio (defined as operating expenses, net of amortization of goodwill and intangibles, as a percent of the sum of net interest income and non-interest operating income) of 86.5% for the twelve months ended March 31, 2006 was more favorable than the 118.4% efficiency ratio maintained during 2001.

Loan loss provisions have generally had a limited impact on the Bank’s earnings over the past five and one-quarter years, with the amount of loan loss provision established based on such factors as loan growth, loan portfolio composition, seasoning of the loan portfolio, trends in non-performing loans, loan charge-offs, past loss experience and economic trends in the Bank’s lending area. Over the past five and one-quarter years, the highest loan loss provisions established by the Bank equaled 0.05% of average assets. Comparatively, in 2001 and 2002, the Bank had recoveries to loan provisions equaling 0.20% and 0.08% of average assets, respectively. For the twelve months ended March 31, 2006, loan loss provisions established by Ben Franklin Bank equaled 0.01% of average assets. As of March 31, 2006, the Bank maintained allowance for loan losses of $510,000, equal to 121.1% of non-performing loans and accruing loans more than 90 days past due and 0.56% of net loans receivable. Exhibit I-6 sets forth the Bank’s allowance for loan loss activity during the past two and one-quarter years.

The Bank records gains from the sale of fixed rate loan originations to the secondary market. Gains realized from the sale of loans were a larger source of earnings during 2002 and 2003, as historically low mortgage rates supported an increase in the Bank’s lending volume for

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longer term 1-4 family fixed rate loans. Gains on the sale of loans equaled 0.09% and 0.16% of average assets during 2002 and 2003, respectively, versus 0.03% of average assets during the twelve months ended March 31, 2006. With the exception of 2001, gains from the sale of investment securities or other assets were not a significant factor in the Bank’s earnings. In 2001, gains realized from the sale of investments equaled $772,000 or 0.51% of average assets. The gains realized from the sale of investment securities are viewed as non-recurring income items, while gains generated from the sale of fixed rate loan originations have been an ongoing activity for the Bank. However, gains realized through secondary market activities are subject to a certain degree of volatility as well, given the dependence of such gains on the interest rate environment and resulting demand for longer term fixed rate loans.

For the twelve months ended March 31, 2006, the Bank’s effective tax rate equaled 34.16%, which approximated the Bank’s effective tax rate for 2005. As set forth in the prospectus, the Bank’s marginal effective tax rate equals 34.0%.

Interest Rate Risk Management

The Bank implements a number of strategies to manage interest rates risk, pursuant to which the Bank seeks to maintain an acceptable balance between maximizing yield potential and limiting exposure to changing interest rates. Management of the Bank’s interest rate risk is conducted on an ongoing basis and is reviewed formally by the Asset/Liability Committee (“ALCO”) on a monthly basis. The Bank utilizes a gap analysis prepared internally and net portfolio value (“NPV”) reports prepared by the OTS to monitor and analyze the effects that interest rate movements will have on the balance sheet and net interest income. The OTS analysis, as of March 31, 2006, indicated a 200 basis point instantaneous and sustained rise in interest rates would result in a 17% decline in the NPV (see Exhibit I-7).

The Bank manages interest rate risk from the asset size of the balance sheet through maintaining investments as available for sale, lending diversification into loans that are primarily floating rate loans tied to the prime rate, purchasing 1-4 family loans with adjustable rate terms and underwriting 1-4 family fixed rate loans to allow for their sale into the secondary market. As of December 31, 2005, of the total loans due after December 31, 2006, adjustable rate loans comprised 55.1% of the Bank’s loan portfolio (see Exhibit I-8). On the liability side of the

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balance sheet, management of interest rate risk has been pursued through emphasizing growth of lower costing and less interest rate sensitive transaction and savings accounts, offering attractive rates on certain longer term CDs and utilization of longer term fixed rate FHLB advances. The infusion of stock proceeds will serve to further limit the Bank’s interest rate risk exposure, as most of the net proceeds will be redeployed into interest-earning assets and the increase to capital will lessen the proportion of interest rate sensitive liabilities funding assets, thereby, strengthening the Bank’s IEA/IBL ratio.

Lending Activities and Strategy

The Bank’s lending activities have traditionally emphasized 1-4 family loans and 1-4 family loans continue to comprise the largest portion of the loan portfolio. Beyond 1-4 family loans, lending diversification by the Bank includes commercial real estate, multi-family, commercial business, construction, land and consumer loans. Going forward, the Bank’s lending strategy is to pursue further diversification of the loan portfolio, whereby growth of commercial real estate, multi-family and commercial business loans will be emphasized. However, the origination of 1-4 family loans is expected to remain as a significant component of the Bank’s lending activities. Growth of the 1- 4 family portfolio is expected to continued to be slowed somewhat by the sale of longer term fixed rate loans into the secondary market. Lending diversification by the Bank is expected to continue to emphasize commercial real estate/multi-family loans and home equity loans. Exhibit I-9 provides historical detail of Ben Franklin Bank’s loan portfolio composition over the past two and one-quarter years and Exhibit I-10 provides the contractual maturity of the Bank’s loan portfolio by loan type as of March 31, 2006.

Ben Franklin Bank offers fixed rate and adjustable rate 1-4 family permanent mortgage loans. Loans are underwritten to secondary market standards and the Bank’s current philosophy is to sell longer terms fixed rate loans to the secondary market on a servicing released basis. In the current interest rate environment, fixed rate loans have constituted the majority of the Bank’s 1-4 family loan volume. The Bank offers ARM and balloon loans with varied repricing terms, with current offerings emphasizing 3- and 5-year balloon loans. ARM and balloon loans are offered for terms of up to 30 years. In light of the limited demand for ARM loans, the Bank has supplemented originations with purchases of ARM loans from local institutions. Loans

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purchased by the Bank are subject to the same underwriting criteria as originated loans and are secured by residences in the Bank’s regional lending area. As of March 31, 2006, the Bank’s 1-4 family loan portfolio totaled $47.8 million or 50.8% of total loans outstanding.

Construction loans originated by the Bank consist mostly of loans to finance the construction of 1-4 family residences and, to a lesser extent, consist of loans to finance the rehabilitation of multi-family properties. The Bank’s 1-4 family construction lending activities consist of construction financing for the end buyer of the house, in which the permanent loan is originated as a separate loan. The underwriting of 1-4 family construction loans is consistent with the underwriting criteria applied for permanent loans. Construction loans on 1-4 family properties are generally tied to the prime rate as published in The Wall Street Journal and require payment of interest only during the construction period. Multi-family construction loans are subject to the same underwriting criteria as required for permanent mortgage loans, as well as submission of completed plans, specifications and cost estimates related to the proposed construction. Multi-family construction loans are extended up to a LTV ratio of 80.0% based on the lesser of the appraised value of the property or cost of construction. Land loans consist substantially of properties that will be used for development of residential lots and constitute a minor area of lending diversification for the Bank. As of March 31, 2006, Ben Franklin Bank’s outstanding balance of construction and land loans totaled $7.4 million or 7.9% of total loans outstanding.

The balance of the mortgage loan portfolio consists of commercial real estate and multi-family loans, which are collateralized by properties in the Bank’s normal lending territory. Commercial real estate and multi-family loans are typically extended up to a LTV ratio of 80.0% and require a minimum debt-coverage ratio of 1.2 times. Commercial real estate and multi-family loans are offered for up to 20 year terms and typically have a shorter term balloon provision such as five years. Loan rates for commercial real estate and multi-family loan are generally tied to the prime rate as published in The Wall Street Journal. The commercial real estate and multi-family loan portfolio includes loan participations that have been purchased by the Bank, which are secured by properties in the Bank’s regional lending area and are subject to the same underwriting criteria as applied to loans originated by the Bank. With the Bank’s lending volume of originated commercial real estate and multi-family loans picking up,

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purchases of commercial real estate and multi-family loans have become a less significant component of the Bank’s commercial real estate and multi-family lending activities. Properties securing the commercial real and multi-family loan portfolio consist mostly of apartments and mixed-use properties. Growth of the commercial real estate and multi-family loan portfolio is a targeted area of lending growth in the Bank’s business plan, in which the Bank will continue to emphasize originations of multi-family loans secured by local properties. Growth will also be supported by the increase in capital provided by the infusion of stock proceeds, as the Bank’s higher capital position will increase its loans-to-one borrower limit and, thereby, provide for increased flexibility with respect to originating larger loans and retaining credits that are currently near the regulatory limit for loans-to-one borrower. As of March 31, 2006, the commercial real estate and multi-family loan portfolio totaled $28.2 million or 30.0% of total loans outstanding.

Diversification into non-mortgage lending consists primarily of consumer loans, with home equity loans constituting the major portion of the consumer loan portfolio. Home equity loans are offered as floating rate lines of credit (“HELOCs”) as well as fixed rate loans with terms up to 10 ten years and a five year balloon provision. HELOCs are indexed to the prime rate as published in The Wall Street Journal and require payment of interest only for up to seven years. The Bank will lend up to a maximum LTV ratio of 80.0% of the combined balance of the home equity loan or line of credit and the first lien. Beyond home equity loans, the Bank’s consumer lending activities have been minimal with the balance of the portfolio consisting largely of loans secured by deposits. As of March 31, 2006, the Bank’s consumer loan portfolio totaled $8.1 million or 8.6% of total loans outstanding. With the exception of $60,000 of other consumer loans, home equity loans accounted for the entire balance of the Bank’s consumer loan portfolio at March 31, 2006.

The Bank offers commercial business term loans and lines of credit to small and medium sized companies in its market area. Commercial business loans offered by the Bank consist primarily of floating rate loans indexed to the prime rate as reported in The Wall Street Journal. Leases receivable account for the largest portion of the commercial business loan portfolio followed by secured loans, while the portfolio also includes a minor amount of unsecured loans. As of March 31, 2006, Ben Franklin Bank’s outstanding balance of commercial business loans equaled $2.5 million or 2.6% of total loans outstanding.

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Exhibit I-11 provides a summary of the Bank’s lending activities over the past two and one-quarter years. Total loans originated increased from $18.3 million in 2004 to $25.7 million in 2005, but the $5.1 million of loans originated in the first quarter of 2006 were less than $8.4 million of loans originated in the first quarter of 2005. While the Bank’s loan volume was up in 2005, loans purchased decreased from $18.0 million in 2004 to $3.8 million in 2005. No loans were purchased in the first quarter of 2006. Originations of commercial real estate and multi-family loans accounted for the most active lending area for the Bank during the past two and one-quarter years, with such originations totaling $26.0 million or 53.0% of total loans originated. The Bank recorded $10.0 million of net loan growth in 2004, which was supported by the large amount of loans purchased during that year. Comparatively, during 2005 and the first quarter of 2006, there was little change in the loans receivable balance as loan originations and purchases were substantially offset by loan repayments and sales.

Asset Quality

The Bank’s historical 1-4 family lending emphasis, favorable real estate market conditions and credit risk management strategies have generally supported favorable credit quality measures. As shown in Exhibit I-12, the Bank did non maintain any non-performing assets at year ends 2004 and 2005 and at March 31, 2006, the only non-performing assets held by the Bank consisted of $421,000 of accruing loans more than 90 days past due. The non-performing loan balance at March 31, 2006 consisted of a loan secured by a multi-family property, which was repaid in full subsequent to March 31, 2006.

To track the Bank’s asset quality and the adequacy of valuation allowances, Ben Franklin Bank has established detailed asset classification policies and procedures which are consistent with regulatory guidelines. Detailed asset classifications are reviewed quarterly by senior management and the Board. Pursuant to these procedures, when needed, the Bank establishes additional valuation allowances to cover anticipated losses in classified or non-classified assets. As of March 31, 2006, the Bank maintained valuation allowances of $510,000, equal to 0.56% of net loans receivable.

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Funding Composition and Strategy

Deposits have consistently served as the Bank’s primary source of funds and at March 31, 2006 deposits accounted for 98.0% of Ben Franklin Bank’s interest-bearing funding composition. Exhibit I-13 sets forth the Bank’s deposit composition for the past two and one-quarter years and Exhibit I-14 provides the interest rate and maturity composition of the CD portfolio at March 31, 2006. The Bank’s deposit composition is concentrated in CDs, with the current CD composition reflecting a higher concentration of short-term CDs (maturities of one year or less). As of March 31, 2006, the CD portfolio totaled $63.9 million or 64.4% of total deposits and 53.8% of the CDs were scheduled to mature in one year or less. As of March 31, 2006, jumbo CDs (CD accounts with balances of $100,000 or more) amounted to $10.9 million or 17.0% of total CDs. The Bank does not hold any brokered CDs.

Lower cost savings and transaction accounts comprise the balance of the Bank’s deposit composition, with such deposits amounting to $35.4 million or 35.6% of total deposits at March 31, 2006. Comparatively, the concentration of core deposits comprising total deposits equaled $42.8 million or 43.5% of total deposits at year end 2004. The reduction in core deposits since year end 2004 has consisted mostly of money market account deposits. Increasing the concentration of core deposits in the deposit base is a strategic initiative that has been targeted in the Bank’s business plan, in which checking accounts will be pursued as the primary source of core deposit growth. The Bank’s core deposits consist mostly of money market deposits, which totaled $15.1 million or 42.7% of core deposits at March 31, 2006.

Borrowings serve as an alternative funding source for the Bank to support management of funding costs and interest rate risk. The Bank’s utilization of borrowings has typically been limited to FHLB advances. Ben Franklin Bank maintained a $2.0 million FHLB advance at March 31, 2006, which had a fixed rate maturity date of March 22, 2010. Exhibit I-15 provides further detail of Ben Franklin Bank’s borrowing activities during the past two and one-quarter years. To the extent additional borrowings are required to fund growth, FHLB advances would likely continue to be the primary source of borrowings utilized by the Bank.

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Legal Proceedings

The Bank is periodically involved in routine legal proceedings occurring in the ordinary course of business which, in the aggregate, involve amounts which are believed by management to be immaterial to the Bank’s financial condition and results of operations.

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II. MARKET AREA

Introduction

Ben Franklin Bank serves the Chicago metropolitan area through the main office in Arlington Heights and two branch offices located in Arlington Heights and Rolling Meadows. Arlington Heights and Rolling Meadows are northwest of downtown Chicago and are part of Cook County. The major portion of the Bank’s lending activities is conducted in the Chicago metropolitan area, while the retail deposit base consists substantially of customers who reside in the northwest suburbs of Chicago. Exhibit II-1 provides information on the Bank’s office facilities.

With operations in a major metropolitan area, the Bank’s competitive environment includes a significant number of thrifts, commercial banks and other financial services companies, some of which have a regional or national presence and most of which are larger than the Bank in terms of deposits, loans, scope of operations, and number of branches. These institutions also have greater resources at their disposal than the Bank. The Chicago MSA has a highly diversified economy, which has participated in the recovery that has been experienced in the national economy during recent years. A strengthening economy combined with low interest rates has provided for a favorable lending environment throughout the Chicago MSA, in which lenders have realized the benefit of strong loan demand and appreciation in real estate values.

Future business and growth opportunities will be partially influenced by economic and demographic characteristics of the markets served by the Bank, particularly the future growth and stability of the regional economy, demographic growth trends, and the nature and intensity of the competitive environment for financial institutions. These factors have been examined to help determine the growth potential that exists for the Bank and the relative economic health of the Bank’s market area.

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Market Area Demographics

Key demographic and economic indicators in the Bank’s market area include population, number of households and household/per capita income levels. Demographic data for Cook County, as well as comparative data for Illinois and the U.S. is provided in Table 2.1. Typical of large urban markets in general, Cook County’s demographic growth trends compare less favorably to the faster growing outlying suburban markets. From 2000 through 2005, Cook County’s population increased at a 0.2% annual rate, which lagged the comparable Illinois and U.S. growth rates of 0.7% and 1.2% respectively. Growth in the number of households paralleled the population growth rates, with the U.S. and Illinois household growth rates exceeding Cook County’s growth rate. Projected growth rates for population and households are consistent with recent historical trends, with Cook County’s growth rates continuing to fall below the comparable growth rates projected for Illinois and the U.S.

Median household and per capita income levels in Cook County were similar to the Illinois measures, which exceeded the comparable measures for the U.S. Cook County is home to a broad socioeconomic spectrum of citizens with a wide range of income levels. While a significant portion of Cook County residents maintain employment in lower wage unskilled jobs, there are also several areas within the metropolitan area with high concentrations of relatively affluent white collar professionals. Chicago also has areas of poverty and is home to a significant immigrant population, many of whom are at the lower end of the income scale. From 2000 to 2005, household income and per capita income growth in Cook County approximated the comparable growth rates for Illinois, but fell below the comparable U.S. growth rates. Over the next five years, household and per capita income growth rates for Cook County are projected to increase and, therefore, more closely match the projected comparable growth rates for the U.S. Household income distribution measures for Cook County were fairly comparable to the Illinois and U.S. measures, although Cook County maintained a slightly higher concentration of households in the upper income brackets in comparison to both Illinois and the U.S.

National Economic Factors

The future success of the Bank’s operations is partially dependent upon various national

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and local economic trends. In assessing national economic trends over the past year, economic data at the end of the second quarter of 2005 showed signs that the expansion was on firm footing. In particular, manufacturing activity picked up in June, consumer confidence hit a three year high in June and first quarter GDP growth was revised upward to a 3.8% annual rate compared to the original estimate of 3.5%. June employment data showed modest job growth, but the national unemployment rate dropped to 5.0%. Consumer spending rose sharply in June, which fueled a surge in retail sales and increased sales of durable goods orders.

Employment data for July 2005 indicated that the U.S. economy was continuing to strengthen, as the July unemployment rate held steady at 5.0% and 207,000 jobs were added in July. Other economic data generally reflected an upbeat picture of economic growth during July and August, although durable goods orders unexpectedly dropped sharply in July. Sales of new homes remained strong in July and a mid-August reading of the index of leading indicators implied a continuation of moderate growth in the months ahead. Retail sales fell sharply in August due to a decline in demand for cars, while August industrial output was up nominally. The unemployment rate for August dropped to a four year low of 4.9%, as 169,000 jobs were added during the month. August data reflected a decline in new home construction as well as new home sales, although existing home sales increased during August.

The outlook for future economic growth became considerably less favorable following the devastation caused by Hurricane Katrina, with employment and output expected to take a sizable hit from the loss of economic activity in the Gulf region. As expected, initial jobless claims rose sharply in the aftermath of Katrina, while consumer confidence slid to a two year low in September 2005 as energy prices soared and the September unemployment rate increased to 5.1%. However, despite Katrina and higher energy prices, manufacturing activity picked up in September. Comparatively, business activity in the service sector dropped sharply in September. Housing starts unexpectedly surged in September, while the index of leading indicators fell in September which was largely attributed to the hurricanes in the Gulf region. Overall, the economy expanded at a 4.1% annual rate in the third quarter, the fastest pace since early-2004 with brisk spending by consumers, businesses and the government helping to sustain the stronger growth.

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The economy generally showed positive growth trends at the beginning of the fourth quarter of 2005, although the housing market showed signs of cooling off as mortgage rates moved higher. Retail sales, excluding autos and orders for durable goods, posted strong gains in October. Other measures showing that the economy was on solid footing included a decline in the October unemployment rate to 5.0% and a 0.9% rise in the October index of leading indicators. Falling gas prices helped to lift consumer confidence in October and November. Comparatively, higher mortgage rates served to slow home construction and existing home sales in October, but new home sales unexpectedly surged in October. November unemployment data showed job growth in line with expectations and no change in the national unemployment rate of 5.0%. Other economic data for November was also generally positive, as November retail sales were up solidly from a year ago, consumer spending picked up modestly in November, new home construction rose more than expected in November and factory orders posted the biggest gain in three months in November supported by a surge in demand for commercial aircraft.

Year end economic data generally showed a slower pace of economic growth, with the U.S. economy increasing at just a 1.1% annual rate in the fourth quarter of 2005. The fourth quarter growth rate was the slowest pace in three years, as higher energy costs and rising borrowings costs hurt consumer spending. While sales of new homes climbed to an all time high in 2005, rising mortgage rates and higher home prices translated into a sharp decline in housing construction during December. Other data showed the economy on solid footing at year end, as industrial production rose for a third straight month and consumer spending was up in December but the personal-savings rate plunged to negative levels. Job growth slowed in December, following a big increase in jobs added in November, although the December unemployment rate dipped to 4.9%.

Economic data at the beginning of 2006 generally reflected a healthy economy, with retail sales surging in January and the U.S. unemployment rate dropping to 4.7%, the lowest rate in more than four years. The service sector also continued to expand in January, although at a slower pace compared to December. While rising home inventories in a number of large cities signaled a cooling market for housing, housing starts surged 14.5% in January with the help of unusually mild weather. Notwithstanding the increase in housing starts, both new and existing homes declined in January and unsold homes reached a ten year high. Other data reflected a

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more positive picture of the economy, which included an upward revision in fourth quarter GDP to 1.7% and healthy growth in the manufacturing and service sectors during February. The February employment report showed strong job growth, but the national unemployment rate for February edged up from 4.7% to 4.8% as more people entered the labor market. Mild weather supported a surge in existing home sales during February, but, at the same time, the inventory of houses for sale also increased. Economic data for March generally reflected a strong economy, based on robust numbers for retail sales, new home sales and durable-goods orders. The national unemployment rate for March declined to 4.7%, with over 200,000 jobs added during the month. First quarter GDP growth was revised upward to an annual rate of 5.3% compared to an original estimate of 4.7%.

The economic data at the start of the second quarter 2006 was somewhat mixed. April data for retail sales, manufacturing activity and new home sales all showed positive trends, while, comparatively, durable goods orders were down sharply in April, existing home sales were low in April and the pace of job growth slowed in April. The national unemployment rate for April held steady at 4.7%. Followings a strong rise in manufacturing activity during April, the index for manufacturing activity fell in May. The pace of job slowed further in May, although the May national unemployment rate dipped to 4.6% which was the lowest rate since the summer of 2001. In a sign that higher gasoline prices and weaker home sales may be slowing the economy, retail sales rose only 0.1% in May from April. Weaker consumer demand also translated into a decline in factory output for May.

In terms of interest rate trends over the past year, economic data showing that the economy was gaining momentum pushed Treasury yields higher at the start of the third quarter of 2005. The decline in Treasury prices became more pronounced in late-July on news that China revalued its currency. Treasury yields continued to climb in early-August, following a strong employment report for July that suggested the economy was continuing to strengthen. As expected, the Federal Reserve concluded its August meeting by increasing its target rate by another quarter-point to 3.5% and indicated plans to continue to raise rates at a measured pace. The yield curve became flatter during the second half of August and early-September, as long-term Treasury yields eased lower on expectations that rising oil prices would slow consumer spending. An upbeat assessment of the economy by the Federal Reserve and growing

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expectations that the Federal Reserve would continue to raise rates at its mid-September meeting reversed the downward trend in long-term Treasury yields in mid-September. The Federal Reserve concluded the September meeting by raising its target interest rate another quarter point to 3.75%, concluding that Katrina’s impact on inflation was more worrisome than its effect on growth. The rate increase by the Federal Reserve combined with signs of inflation becoming more prominent pushed Treasury yields higher at the end of the third quarter.

Treasury yields generally trended higher at the beginning of the fourth quarter of 2005, as inflation worries become more prominent. The yield on the 10-year Treasury note moved above 4.5% in late-October, reflecting expectations of a continuation of rate increases by the Federal Reserve amid signs inflation could rise. Inflation fears, better than expected economic data and another rate hike by the Federal Reserve at the beginning of November pushed Treasury yields higher in early-November, as the yield on the 10-year Treasury note hit a 16-month high. At the November meeting, the Federal Reserve indicated that it would continue to raise rates until the economy showed signs of slowing down. The yield on the 10-year Treasury note ebbed below 4.5% in mid- and late-November, as inflation concerns eased following reports that showed core producer prices fell in October and October core consumer prices rose only slightly. Renewed inflation fears prompted by an upward revision in the third quarter growth rate for the U.S. economy pushed Treasury yields higher at the end of November and into early-December. Interest rates stabilized heading into mid-December, as a healthy increase in third quarter productivity helped to soothe inflation fears. Long-term Treasury yields declined slightly in mid-December following the Federal Reserve’s quarter point rate hike to a four and one-half year high of 4.25%, as the Federal Reserve signaled that the current cycle of rate increases may be nearing an end. The yield on the 10-year Treasury eased lower in late-December, which combined with higher short-term rates, provided for a slightly inverted yield curve at year end.

Treasury yields stabilized through most of January 2006, as the Federal Reserve indicated that it was becoming less worried about inflation and may be nearing an end to their campaign to raise rates. Uncertainty over future Federal Reserve policy with the incoming of a new Federal Reserve Chairman pushed long-term Treasury yields higher in late-January. The Federal Reserve concluded its end of January meeting by raising the target interest rate another quarter point to 4.5%, which was the 14^th consecutive rate hike implemented by the Federal Reserve

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over the past 19 months. An expanding economy with inflation under control provided for a relatively stable interest rate environment through most of February. Consumer prices jumped 0.7% in January due to higher energy costs, but core prices rose only 0.2% which served to soothe inflation fears. Interest rates edged higher in early-March, reflecting growing expectations that foreign central banks would keep raising interest rates based on forecasts of an improving global economy. A positive report for consumer-price inflation during February helped to pull Treasury yields lower in mid-March, while, comparatively, an upward revision to consumer-price inflation for the fourth quarter of 2005 and a quarter point rate hike by the Federal Reserve with hints of more rate increases to come translated into Treasury yields spiking higher at the close of the first quarter.

The upward trend in interest rates continued into the second quarter of 2006, with the yield on the 10-year Treasury note moving above 5.0% in mid-April for the first time since mid-2002. Economic data showing a strengthening economy and higher consumer prices pushed bond yields higher into early-May, reflecting growing expectations that more rate increases were in store from the Federal Reserve to contain inflation. As expected, the Federal Reserve concluded its May meeting by increasing the federal funds rate another quarter point to 5.0% and kept its options open for future rate increase. Interest rates stabilized during the second half of May and then edged lower in early-June on news that job growth was weaker than expected during May. A 2.4% in core consumer prices for May pushed interest rates higher in mid-June, as expectations increased that the Federal Reserve would raise interest rates again despite signs of a cooling economy. As of June 16, 2006, the constant maturity yields for U.S. government bonds with terms of one and ten years equaled 5.18% and 5.13%, respectively, versus comparable year ago yields of 3.38% and 4.09%. Exhibit II-2 provides historical interest rate trends from 1995 through June 16, 2006.

Regional Economy

Consistent with major metropolitan areas in general, service jobs constitute the largest source of employment in Cook County. As shown in Table 2.2, wholesale/retail, government and finance, insurance and real estate were the next the largest employment sectors in Cook

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County. Manufacturing employment, which tends to be higher paying jobs, was the fifth largest employment sector in Cook County. Total employment in Cook County declined from 2001 through 2003, with the most significant job losses occurring in the manufacturing sector. Most other sectors of the Cook County economy also experienced job erosion from 2001 through 2003, although there was some modest growth in the financial services and government sectors.

Table 2.2

Cook County Employment Sectors(1)

Employment Sectors	% of Labor Force
Services	44.2	%
Wholesale/Retail Trade	13.0
Government	11.2
Finance, insurance and real estate	11.1
Manufacturing	8.6
Transportation and warehousing	4.8
Construction	4.5
Information	2.3
Other	0.3
	100.0	%

(1) As of 2003.

Source: Regional Economic Information System Bureau of Economic Analysis.

Comparative unemployment rates for Cook County, as well as for the U.S. and Illinois, are shown in Table 2.3. Cook County’s April 2006 unemployment rate of 5.2% was higher than the comparable Illinois unemployment rate of 5.0% and the U.S. unemployment rate of 4.5%. Consistent with the U.S. and Illinois unemployment trends, Cook County’s April 2006 unemployment rate was lower compared to the year ago rate of 6.8%.

Table 2.3

Unemployment Trends(1)

Region	April 2005 Unemployment		April 2006 Unemployment
United States	4.9	%	4.5	%
Illinois	5.8		5.0
Cook County	6.8		5.2

(1) Unemployment rates have not been seasonally adjusted.

Source: U.S. Bureau of Labor Statistics.

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Market Area Deposit Characteristics and Trends

The Bank’s retail deposit base is closely tied to the economic fortunes of the Chicago metropolitan area and, in particular, the markets that are nearby to one of Ben Franklin Bank’s three locations. Table 2.4 displays deposit market trends from June 30, 2002 through June 30, 2005 for the branches that were maintained by the Bank during that period. Additional data is also presented for the state of Illinois. The data reflects that Cook County maintains a significant concentration of the state’s total deposits, as total bank and thrift deposits in Cook County accounted for over half of the total bank and thrift deposits maintained in the state at June 30, 2005. Cook County’s market share of total state deposits decreased slightly from 2002 through 2005, as bank and thrift deposits in Cook County increased at a 4.3% annual rate during the three year period versus a 4.5% annual growth rate for the state of Illinois. Commercial banks maintained a dominant market share of deposits both in Illinois and Cook County. For the three year period covered in Table 2.4, savings institutions experienced a decrease in deposit market share in Illinois and Cook County.

Ben Franklin Bank’s $99.3 million of deposits represented a 0.1% market share of total bank and thrift deposits maintained in Cook County at June 30, 2005. The Bank’s nominal market share of deposits is reflective of the highly competitive banking environment in the Chicago metropolitan area, where the Bank competes against significantly larger competitors as well as a number of locally-based institutions that operate primarily in the Chicago MSA. Ben Franklin Bank’s deposits declined at a 5.5% annual rate from June 30, 2002 through June 30, 2005, reflecting the Ban’s strategy to shrink the balance sheet as a means to increase the equity-to-assets ratio.

Competition

As implied by the Bank’s very low market share of deposits, competition among financial institutions in the Bank’s market area is significant. Among the Bank’s competitors are much larger and more diversified institutions, which have greater resources than maintained by Ben Franklin Bank. Financial institution competitors in the Bank’s primary market area include other locally-based thrifts and banks, as well as regional, super regional and money center banks.

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From a competitive standpoint, Ben Franklin Bank has sought to emphasize its community orientation in the markets served by its branches. Table 2.5 lists the Bank’s largest competitors in Cook County, based on deposit market share as noted parenthetically. The Bank’s market share and market rank are also provided in Table 2.5.

Table 2.5

Ben Franklin Bank of Illinois

Market Area Deposit Competitors

Location	Name
Cook County	JP Morgan Chase Bank NA (18.4%)
	LaSalle Bank NA (17.6%)
	Harris NA. (9.2%)
	Ben Franklin (0.1%) - Rank of 127

Source: FDIC.

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III. PEER GROUP ANALYSIS

This chapter presents an analysis of Ben Franklin Bank’s operations versus a group of comparable companies (the “Peer Group”) selected from the universe of all publicly-traded savings institutions. The primary basis of the pro forma market valuation of Ben Franklin Bank is provided by these public companies. Factors affecting the Bank’s pro forma market value such as financial condition, credit risk, interest rate risk, and recent operating results can be readily assessed in relation to the Peer Group. Current market pricing of the Peer Group, subject to appropriate adjustments to account for differences between Ben Franklin Bank and the Peer Group, will then be used as a basis for the valuation of Ben Franklin Bank’s to-be-issued common stock.

Peer Group Selection

The mutual holding company form of ownership has been in existence in its present form since 1991. As of the date of this appraisal, there were approximately 36 publicly-traded institutions operating as subsidiaries of MHCs. We believe there are a number of characteristics of MHC shares that make them different from the shares of fully-converted companies. These factors include: (1) lower aftermarket liquidity in the MHC shares since less than 50% of the shares are available for trading; (2) guaranteed minority ownership interest, with no opportunity of exercising voting control of the institution in the MHC form of organization; (3) the potential impact of “second-step” conversions on the pricing of public MHC institutions; (4) the regulatory policies regarding the dividend waiver by MHC institutions; and (5) most MHCs have formed mid-tier holding companies, facilitating the ability for stock repurchases, thus improving the liquidity of the stock on an interim basis. We believe that each of these factors has an impact on the pricing of the shares of MHC institutions, and that such factors are not reflected in the pricing of fully-converted public companies.

Given the unique characteristics of the MHC form of ownership, RP Financial concluded that the appropriate Peer Group for Ben Franklin Bank’s valuation should be comprised of subsidiary institutions of mutual holding companies. The selection of publicly-traded mutual holding companies for the Bank’s Peer Group is consistent with the regulatory guidelines and

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other recently completed MHC transactions. Further, the Peer Group should be comprised of only those MHC institutions whose common stock is either listed on a national exchange or is NASDAQ listed, since the market for companies trading in this fashion is regular and reported. We believe non-listed MHC institutions are inappropriate for the Peer Group, since the trading activity for thinly-traded stocks is typically highly irregular in terms of frequency and price and may not be a reliable indicator of market value. We have excluded from the Peer Group those public MHC institutions that are currently pursuing a “second-step” conversion and/or companies whose market prices appear to be distorted by speculative factors or unusual operating conditions. MHCs which have recently completed a minority stock offering have been excluded as well, due to the lack of a seasoned trading history and insufficient quarterly financial data that includes the impact of the offering proceeds. The universe of all publicly-traded institutions is included as Exhibit III-1.

Basis of Comparison

This appraisal includes two sets of financial data and ratios for the Peer Group institutions. The first set of financial data reflects the actual book value, earnings, assets and operating results reported by the Peer Group institutions in its public filings inclusive of the minority ownership interest outstanding to the public. The second set of financial data, discussed at length in the following chapter, places the Peer Group institutions on equal footing by restating their financial data and pricing ratios on a “fully-converted” basis through assuming the sale of the majority shares held by the MHCs in public offerings based on their current trading prices and standard assumptions for a thrift conversion offering. Throughout the appraisal, the adjusted figures will be specifically identified as being on a “fully-converted” basis. Unless so noted, the figures referred to in the appraisal will be actual financial data reported by the Peer Group institutions.

Both sets of financial data have their specific use and applicability to the appraisal. The actual financial data, as reported by the Peer Group companies and reflective of the minority interest outstanding, will be used in Chapter III to make financial comparisons between the Peer Group and the Bank. The differences between the Peer Group’s reported financial data and the financial data of Ben Franklin Bank are not significant enough to distort the conclusions of the

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comparison (in fact, such differences are greater in a standard conversion appraisal). The adjusted financial data (fully-converted basis) will be more fully described and quantified in the pricing analysis discussed in Chapter IV. The fully-converted pricing ratios are considered critical to the valuation analysis in Chapter IV, because they place each Peer Group institution on a fully-converted basis (making their pricing ratios comparable to the pro forma valuation conclusion reached herein), eliminate distortion in pricing ratios between Peer Group institutions that have sold different percentage ownership interests to the public, and reflect the implied pricing ratios being placed on the Peer Group institutions in the market today to reflect the unique trading characteristics of publicly-traded MHC institutions.

Ben Franklin Bank’s Peer Group

Under ideal circumstances, the Peer Group would be comprised of ten publicly-traded Illinois-based MHC institutions with capital, earnings, credit quality and interest rate risk comparable to Ben Franklin Bank. However, given the limited number of publicly-traded institutions in the MHC form of ownership, the selection criteria was necessarily broad-based and not confined to a particular geographic market area. In light of the relatively small asset size of the Bank, the selection criteria used for the Peer Group was the ten smallest publicly-traded MHCs in terms of asset size with seasoned trading histories. Two companies which met the criteria for asset size and seasoned trading histories were excluded due to (1) announcement of a second-step conversion (First Federal Financial Services of Illinois) and (2) negative earnings for the twelve month period ended March 31, 2006 (FedFirst Financial of Pennsylvania). The asset sizes of the Peer Group companies ranged from $126 million to $366 million. The universe of all publicly-traded MHC institutions, exclusive of institutions that have announced second-step conversions, is included as Exhibit III-2 and Exhibit III-3 provides summary demographic and deposit market share data for the primary market areas served by each of the Peer Group companies.

Unlike the universe of fully-converted publicly-traded thrifts, which includes approximately 134 companies, the universe of public MHC institutions is small, thereby reducing the prospects of a highly comparable Peer Group. Nonetheless, because the trading characteristics of public MHC institution shares are significantly different from those of fully-converted

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companies, public MHC institutions were the most appropriate group to consider as Peer Group candidates for this valuation. Relying solely on full stock public companies for the Peer Group would not capture the difference in current market pricing for public MHC institutions and thus could lead to distorted valuation conclusions. The federal regulatory agencies have previously concurred with this selection procedure of the Peer Group for MHC valuations. To account for differences between Ben Franklin Bank and the MHC Peer Group in reaching a valuation conclusion, it will be necessary to make certain valuation adjustments. The following discussion addresses financial similarities and differences between Ben Franklin Bank and the Peer Group.

Table 3.1 on the following page lists key general characteristics of the Peer Group companies. Although there are differences among several of the Peer Group members, by and large they are well-capitalized and profitable institutions and their decision to reorganize in MHC form suggests a commonality of operating philosophy. Importantly, the trading prices of the Peer Group companies reflect the unique operating and other characteristics of public MHC institutions. While the Peer Group is not exactly comparable to Ben Franklin Bank, we believe such companies form a good basis for the valuation of Ben Franklin Bank, subject to certain valuation adjustments.

In aggregate, the Peer Group companies maintain a higher level of capitalization relative to the universe of all public thrifts (15.60% of assets versus 11.10% for the all public average), generate comparable earnings on a return on average assets basis (0.69% ROAA versus 0.70% for the all public average), and generate a lower return on equity (4.66% ROE versus 7.33% for the all public average). The summary table below underscores the key differences, particularly in the average pricing ratios between full stock and MHC institutions (both as reported and on a fully-converted basis).

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	All Publicly-Traded		Peer Group Reported Basis		Fully Converted Basis (Pro Forma)
Financial Characteristics (Averages)
Assets ($Mil)	2,868		297		340
Equity/Assets (%)	11.10	%	15.60	%	25.25
Return on Assets (%)	0.70		0.69		0.83
Return on Equity (%)	7.33		4.66		3.38
Pricing Ratios (Averages)(1)
Price/Earnings (x)	19.79	x	29.57	x	28.43	x
Price/Book (%)	153.98	%	166.79	%	89.54	%
Price/Assets (%)	17.00		26.66		22.85

(1) Based on market prices as of June 16, 2006.

The following sections present a comparison of Ben Franklin Bank’s financial condition, income and expense trends, loan composition, interest rate risk and credit risk versus the figures reported by the Peer Group. The conclusions drawn from the comparative analysis are then factored into the valuation analysis discussed in the final chapter.

Financial Condition

Table 3.2 shows comparative balance sheet measures for Ben Franklin Bank and the Peer Group. Ben Franklin Bank’s and the Peer Group’s ratios reflect balances as of March 31, 2006, unless otherwise indicated for the Peer Group companies. Ben Franklin Bank’s net worth base of 7.6% was below the Peer Group’s average net worth ratio of 15.6%. However, the Bank’s pro forma capital position will increase with the addition of stock proceeds and will be more comparable to the Peer Group’s ratio following the stock offering. Tangible equity-to-assets ratios for the Bank’s and the Peer Group equaled 7.6% and 14.8%, respectively, as goodwill and intangibles maintained by the Peer Group equaled 0.8% of assets. The increase in Ben Franklin Bank’s pro forma capital position will be favorable from a risk perspective and in terms of future earnings potential that could be realized through leverage and lower funding costs. At the same time, the Bank’s higher pro forma capitalization will also result in a relatively low return on equity initially following the stock offering. Both Ben Franklin Bank’s and the Peer Group’s

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capital ratios reflected capital surpluses with respect to the regulatory capital requirements, with the Peer Group’s ratios currently exceeding the Bank’s ratios. On a pro forma basis, the Bank’s regulatory surpluses will likely be more comparable to the Peer Group’s ratios.

The interest-earning asset compositions for the Bank and the Peer Group were somewhat similar, with loans constituting the bulk of interest-earning assets for both Ben Franklin Bank and the Peer Group. The Bank’s loans-to-assets ratio of 82.6% exceeded the comparable Peer Group ratio of 64.8%. Comparatively, the Peer Group’s cash and investments-to-assets ratio of 29.6% was above the comparable ratio for the Bank of 16.0%. Overall, Ben Franklin Bank’s interest-earning assets amounted to 98.6% of assets, which exceeded the comparable Peer Group ratio of 94.4%.

Ben Franklin Bank’s funding liabilities reflected a funding strategy that was somewhat similar to that of the Peer Group’s funding composition. The Bank’s deposits equaled 90.0% of assets, which was above the comparable Peer Group ratio of 72.1%. Comparatively, borrowings accounted for a higher portion of the Peer Group’s interest-bearing funding composition, as indicated by borrowings-to-assets ratios of 11.4% and 1.8% for the Peer Group and Ben Franklin Bank, respectively. Total interest-bearing liabilities maintained by the Bank and the Peer Group, as a percent of assets, equaled 91.8% and 83.5%, respectively. Following the increase in capital provided by the net proceeds of the stock offering, the Bank’s ratio of interest-bearing liabilities as a percent of assets will be more comparable to the Peer Group’s ratio.

A key measure of balance sheet strength for a thrift institution is its IEA/IBL ratio. Presently, the Peer Group’s IEA/IBL ratio is stronger than the Bank’s ratio, based on IEA/IBL ratios of 113.1% and 107.4%, respectively. The additional capital realized from stock proceeds should serve to provide Ben Franklin Bank with an IEA/IBL ratio that that is fairly comparable to the Peer Group’s ratio, as the increase in capital provided by the infusion of stock proceeds will serve to lower the level of interest-bearing liabilities funding assets and will be primarily deployed into interest-earning assets.

The growth rate section of Table 3.2 shows annual growth rates for key balance sheet items. Ben Franklin Bank’s growth rates are based on annualized growth for the 15-month period ended March 31, 2006, while the Peer Group’s growth rates are based on annual growth

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for the twelve months ended March 31, 2006 or the most recent period available. Ben Franklin’s assets decreased at a 2.8% annualized rate, while the Peer Group posted an asset growth rate of 5.9%. The Bank’s asset shrinkage consisted of investments, in which cash flow realized from maturing investments and investments sold funded modest loan growth and the pay down of borrowings. Asset growth for the Peer Group was realized through loan growth, which was partially funded with cash and investments.

The Bank recorded modest deposit growth of 0.8% for the period, which along with cash flow generated from the investment proceeds funded a 63.3% reduction in borrowings. Comparatively, the Peer Group had a higher deposit growth rate of 3.7%, which along with a 12.6% increase in borrowings funded the Peer Group’s asset growth. Capital growth rates posted by the Bank and the Peer Group equaled 3.4% and 1.0%. Factors contributing to the Bank’s higher capital growth rate included its lower level of capital, as well as retention of all of its earnings. Comparatively, while recording a higher return on assets than the Bank, the Peer Group’s capital growth rate was slowed by dividend payments as well as stock repurchases. The increase in capital realized from stock proceeds will likely depress the Bank’s capital growth rate initially following the stock offering. Dividend payments and stock repurchases, pursuant to regulatory limitations and guidelines, could also potentially slow the Bank’s capital growth rate in the longer term following the stock offering.

Income and Expense Components

Table 3.3 displays comparable statements of operations for the Bank and the Peer Group, based on earnings for the twelve months ended March 31, 2006, unless otherwise indicated for the Peer Group companies. Ben Franklin Bank and the Peer Group reported net income to average assets ratios of 0.29% and 0.69%, respectively. The Peer Group maintained comparative earnings advantages with respect to net interest income and non-interest operating income, while slightly lower operating expenses and loan loss provisions and slightly higher net gains represented comparative earnings advantages for the Bank.

The Peer Group’s stronger net interest margin was realized through maintenance of a lower interest expense ratio, which was partially offset by the Bank’s higher interest income

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ratio. The Bank’s higher interest income ratio was realized through earning a comparable yield on assets (5.49% versus 5.48% for the Peer Group) on a higher concentration of assets maintained as interest-earning assets(98.6% versus 94.4% for the Peer Group). The Peer Group’s lower interest expense ratio was supported by maintenance of a lower cost of funds (2.35% versus 2.57% for the Bank) and maintenance of a lower level of interest-bearing liabilities funding assets (83.5% versus 91.8% for the Bank). Overall, Ben Franklin Bank and the Peer Group reported net interest income to average assets ratios of 3.03% and 3.23%, respectively.

In another key area of core earnings strength, the Bank maintained a slightly lower level of operating expenses than the Peer Group. For the period covered in Table 3.3, the Bank and the Peer Group reported operating expense to average assets ratios of 2.75% and 2.81%, respectively. The fairly comparable operating expense ratios maintained the Bank and the Peer Group were consistent with the similarity of the number of employees maintained relative to their respective assets sizes. Assets per full time equivalent employee equaled $3.9 million for the Bank, versus $4.1 million for the Peer Group. On a post-offering basis, the Bank’s operating expenses can be expected to increase with the addition of stock benefit plans and certain expenses that result from being a publicly traded company, with such expenses already impacting the Peer Group’s operating expenses. At the same time, Ben Franklin Bank’s capacity to leverage operating expenses will be more comparable to the Peer Group’s leverage capacity following the increase in capital realized from the infusion of net stock proceeds.

When viewed together, net interest income and operating expenses provide considerable insight into a thrift’s earnings strength, since those sources of income and expenses are typically the most prominent components of earnings and are generally more predictable than losses and gains realized from the sale of assets or other non-recurring activities. In this regard, as measured by their expense coverage ratios (net interest income divided by operating expenses), the Peer Group’s earnings were slightly stronger than the Bank’s. Expense coverage ratios posted by Ben Franklin Bank and the Peer Group equaled 1.10x and 1.15x, respectively. An expense coverage ratio of greater than 1.0x indicates that an institution is able to sustain pre-tax profitability without having to rely on non-interest sources of income.

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As noted above, sources of non-interest operating income provided a larger contribution to the Peer Group’s earnings. Non-interest operating income equaled 0.63% and 0.15% of the Peer Group’s and Ben Franklin Bank’s average assets, respectively. Taking non-interest operating income into account in comparing the Bank’s and the Peer Group’s earnings, Ben Franklin Bank’s efficiency ratio (operating expenses, net of amortization of intangibles, as a percent of the sum of non-interest operating income and net interest income) of 86.5% was less favorable than the Peer Group’s efficiency ratio of 72.3%.

Loan loss provisions had a slightly larger impact on the Peer Group’s earnings, with loan loss provisions established by the Bank and the Peer Group equaling 0.01% and 0.08% of average assets, respectively. The relatively minor impact of loan loss provisions on the Bank’s and the Peer Group’s earnings were indicative of their generally favorable credit quality measures and low risk lending strategies.

Net gains realized from the sale of assets were a slightly larger contributor to the Bank’s earnings, as the Bank reported net gains equal to 0.03% of average assets versus a net loss equal to 0.01% of average assets reported by the Peer Group. Typically, gains and losses generated from the sale of assets are viewed as earnings with a relatively high degree of volatility, particularly to the extent that such gains and losses result from the sale of investments or other assets that are not considered to be part of an institution’s core operations. Comparatively, to the extent that gains have been derived through selling fixed rate loans into the secondary market, which accounted for all of the Bank’s gains, such gains may be considered to be an ongoing activity for an institution particularly during periods of low interest rates and, therefore, warrant some consideration as a core earnings factor for an institution. However, loan sale gains are still viewed as a more volatile source of income than income generated through the net interest margin and non-interest operating income. Extraordinary items were not a factor in either the Bank’s or the Peer Group’s earnings.

Taxes had a more significant impact on the Bank’s earnings, as Ben Franklin Bank and the Peer Group posted effective tax rates of 34.16% and 29.20%, respectively. As indicated in the prospectus, the Bank’s effective marginal tax rate is equal to 34.0%.

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Loan Composition

Table 3.4 presents data related to the Bank’s and the Peer Group’s loan portfolio compositions and investment in mortgage-backed securities. The Bank’s composition of assets reflected a similar concentration of 1-4 family permanent mortgage loans and mortgage-backed securities as maintained by the Peer Group (49.4% of assets versus 48.7% for the Peer Group). The comparability of the Bank’s and the Peer Group’s ratios resulted from the Bank maintaining a higher concentration of 1-4 family loans, which was substantially negated by the higher concentration of mortgage-backed securities maintained by the Peer Group. Loans serviced for others equaled 4.4% and 9.7% of the Bank’s and the Peer Group’s assets, respectively, thereby indicating a slightly greater influence of mortgage banking activities on the Peer Group’s operations. Servicing intangibles were not significant for either the Bank or the Peer Group.

Diversification into higher risk types of lending was greater for the Bank. Commercial real estate/multi-family loans represented the most significant area of lending diversification for the Bank (25.6% of assets), followed by consumer loans (7.4% of assets) and construction and land loans (6.7% of assets). The Peer Group’s lending diversification consisted primarily of commercial real estate/multi-family loans (11.4% of assets), while other areas of lending diversification for the Peer Group were fairly evenly distributed between the other loan types shown in Table 3.4. Lending diversification was more significant for the Bank in all lending areas except for commercial business loans. Overall, the Bank’s higher ratio of loans-to-assets and higher degree of lending diversification into higher risk types of lending translated into a higher risk weighted assets-to-assets ratio of 69.8%, versus a comparable Peer Group ratio of 58.3%.

Interest Rate Risk

Table 3.5 reflects various key ratios highlighting the relative interest rate risk exposure of the Bank versus the Peer Group companies. In terms of balance sheet composition, Ben Franklin Bank’s interest rate risk characteristics were considered to be less favorable than the Peer Group’s. Most notably, Ben Franklin Bank’s lower tangible capital position and lower IEA/IBL ratio indicate a greater dependence on the yield-cost spread to sustain the net interest margin.

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However, a lower level of non-interest earning assets represented an advantage for the Bank with respect to capacity to generate net interest income and, in turn, limit the interest rate risk associated with the balance sheet. On a pro forma basis, the infusion of stock proceeds should provide the Bank with more comparable balance sheet interest rate risk characteristics as maintained by the Peer Group, particularly with respect to the increases that will be realized in the Bank’s equity-to-assets and IEA/IBL ratios.

To analyze interest rate risk associated with the net interest margin, we reviewed quarterly changes in net interest income as a percent of average assets for Ben Franklin Bank and the Peer Group. In general, the more significant fluctuations in the Bank’s ratios implied that the interest rate risk associated with the Bank’s net interest income was greater compared to the Peer Group’s, based on the interest rate environment that prevailed during the period covered in Table 3.5. The stability of the Bank’s net interest margin should be enhanced by the infusion of stock proceeds, as interest rate sensitive liabilities will be funding a lower portion of Ben Franklin Bank’s assets and the proceeds will be substantially deployed into interest-earning assets.

Credit Risk

Overall, the credit risk factors associated with Ben Franklin Bank’s and the Peer Group’s balance sheets were considered to be indicative of limited credit risk exposure. As shown in Table 3.6, the Bank’s ratio of non-performing assets and accruing loans that are more than 90 days past due equaled 0.38% of assets, which was just slightly above the comparable Peer Group ratio of 0.33%. The Bank maintained a zero balance of non-performing loans, as the result of classifying all loans that are 90 days past due as accruing loans and such loans are not included in the calculation of the non-performing loan balance. Comparatively, the Peer Group’s non-performing loans/loans ratio equaled 0.42%. The Bank maintained lower levels of loss reserves as a percent of non-performing assets and accruing loans that are more than 90 days past due (121.1% versus 273.3% for the Peer Group) and as a percent of loans (0.56% versus 0.81% for the Peer Group). Net loan charge-offs reported by the Peer Group were nominal, while the Bank did not record any net loan charge-offs.

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Summary

Based on the above analysis, RP Financial concluded that the Peer Group forms a reasonable basis for determining the pro forma market value of Ben Franklin Bank. Such general characteristics as asset size, capital position, interest-earning asset composition, funding composition, core earnings measures, loan composition, credit quality and exposure to interest rate risk all tend to support the reasonability of the Peer Group from a financial standpoint. Those areas where differences exist will be addressed in the form of valuation adjustments to the extent necessary.

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IV. VALUATION ANALYSIS

Introduction

This chapter presents the valuation analysis and methodology used to determine Ben Franklin Bank’s estimated pro forma market value for purposes of pricing the minority stock. The valuation incorporates the appraisal methodology promulgated by the OTS and adopted in practice by the FDIC for standard conversions and mutual holding company offerings, particularly regarding selection of the Peer Group, fundamental analysis on both the Bank and the Peer Group, and determination of the Bank’s pro forma market value utilizing the market value approach.

Appraisal Guidelines

The OTS written appraisal guidelines specify the market value methodology for estimating the pro forma market value of an institution. The FDIC, state banking agencies and other Federal agencies have endorsed the OTS appraisal guidelines as the appropriate guidelines involving mutual-to-stock conversions. As previously noted, the appraisal guidelines for MHC offerings are somewhat different, particularly in the Peer Group selection process. Specifically, the regulatory agencies have indicated that the Peer Group should be based on the pro forma fully-converted pricing characteristics of publicly-traded MHCs, rather than on already fully-converted publicly-traded stock thrifts, given the unique differences in stock pricing of MHCs and fully-converted stock thrifts. Pursuant to this methodology: (1) a peer group of comparable publicly-traded MHC institutions is selected; (2) a financial and operational comparison of the subject company to the peer group is conducted to discern key differences; and (3) the pro forma market value of the subject company is determined based on the market pricing of the peer group, subject to certain valuation adjustments based on key differences. In addition, the pricing characteristics of recent conversions and MHC offerings must be considered.

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RP Financial Approach to the Valuation

The valuation analysis herein complies with such regulatory approval guidelines. Accordingly, the valuation incorporates a detailed analysis based on the Peer Group, discussed in Chapter III, which constitutes “fundamental analysis” techniques. Additionally, the valuation incorporates a “technical analysis” of recently completed conversions and stock offerings of comparable MHCs, including closing pricing and aftermarket trading of such offerings. It should be noted that these valuation analyses, based on either the Peer Group or the recent conversions and MHC transactions, cannot possibly fully account for all the market forces which impact trading activity and pricing characteristics of a stock on a given day.

The pro forma market value determined herein is a preliminary value for the Bank’s to-be-issued stock. Throughout the MHC process, RP Financial will: (1) review changes in the Bank’s operations and financial condition; (2) monitor the Bank’s operations and financial condition relative to the Peer Group to identify any fundamental changes; (3) monitor the external factors affecting value including, but not limited to, local and national economic conditions, interest rates, and the stock market environment, including the market for thrift stocks; and (4) monitor pending MHC offerings, and to a lesser extent, standard conversion offerings, both regionally and nationally. If material changes should occur prior to the close of the offering, RP Financial will evaluate if updated valuation reports should be prepared reflecting such changes and their related impact on value, if any. RP Financial will also prepare a final valuation update at the closing of the offering to determine if the prepared valuation analysis and resulting range of value continues to be appropriate.

The appraised value determined herein is based on the current market and operating environment for the Bank and for all thrifts. Subsequent changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or major world events), which may occur from time to time (often with great unpredictability) may materially impact the market value of all thrift stocks, including Ben Franklin Bank’s value, the market value of the stocks of public MHC institutions, or Ben Franklin Bank’s value alone. To the extent a change in factors impacting the Bank’s value can be reasonably anticipated and/or quantified, RP Financial has incorporated the estimated impact into its analysis.

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Valuation Analysis

A fundamental analysis discussing similarities and differences relative to the Peer Group was presented in Chapter III. The following sections summarize the key differences between the Bank and the Peer Group and how those differences affect the pro forma valuation. Emphasis is placed on the specific strengths and weaknesses of the Bank relative to the Peer Group in such key areas as financial condition, profitability, growth and viability of earnings, asset growth, primary market area, dividends, liquidity of the shares, marketing of the issue, management, and the effect of government regulations and/or regulatory reform. We have also considered the market for thrift stocks, in particular new issues, to assess the impact on value of Ben Franklin Bank coming to market at this time.

1. Financial Condition

The financial condition of an institution is an important determinant in pro forma market value because investors typically look to such factors as liquidity, capital, asset composition and quality, and funding sources in assessing investment attractiveness. The similarities and differences in the Bank’s and the Peer Group’s financial strengths are noted as follows:

• Overall A/L Composition. Loans funded by retail deposits were the primary components of both Ben Franklin Bank’s and the Peer Group’s balance sheets. The Bank’s interest-earning asset composition exhibited a higher concentration of loans and a greater degree of diversification into higher risk and higher yielding types of loans. Overall, the Bank’s asset composition provided for a comparable yield earned on interest-earning assets and a higher risk weighted assets-to-assets ratio in comparison to the Peer Group. Ben Franklin Bank’s funding composition reflected a higher level of deposits and a lower level of borrowings in comparison to the Peer Group’s ratios, although the Peer Group maintained a lower cost of funds than the Bank. Overall, as a percent of assets, the Bank maintained higher levels of interest-earning assets and interest-bearing liabilities, which translated into a lower IEA/IBL ratio for the Bank. After factoring in the impact of the net stock proceeds, the Bank’s IEA/IBL ratio will be more comparable to the Peer Group’s ratio. On balance, RP Financial concluded that asset/liability composition was a neutral factor in our adjustment for financial condition.

• Credit Quality. The Bank and the Peer Group maintained comparable non-performing assets ratios. Loss reserves as a percent loans and non-performing assets were higher for the Peer Group, while net loan charge-offs were nominally higher for the Peer Group. As noted above, the Bank’s risk weighted assets-to-assets ratio was higher than the Bank’s ratio. Overall, RP Financial concluded that this was a neutral factor in our adjustment for financial condition.

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• Balance Sheet Liquidity. The Peer Group operated with a higher level of cash and investment securities relative to the Bank (29.6% of assets versus 16.0% for the Bank). Following the infusion of stock proceeds, the Bank’s cash and investments ratio is expected to increase as the proceeds retained at the holding company level will be initially deployed into investments. The Bank’s future borrowing capacity was considered to be slightly greater than the Peer Group’s, given that the Bank borrowings-to-assets ratio was less than the comparable Peer Group ratio. Overall, RP Financial concluded that no adjustment was warranted for the Bank’s liquidity.

• Funding Liabilities. The Bank’s interest-bearing funding composition reflected a higher concentration of deposits and a lower concentration of borrowings relative to the comparable Peer Group ratios. Notwithstanding, the Peer Group’s greater utilization of borrowings, Ben Franklin Bank’s overall cost of funds was slightly higher than the Peer Group’s. The Bank’s higher cost of funds could in part be attributed to a deposit composition that is concentrated in relatively higher costing CDs. Total interest-bearing liabilities as a percent of assets were higher for the Bank compared to the Peer Group ratio, which was attributable to Ben Franklin Bank’s lower capital position. Following the stock offering, the increase in the Bank’s capital position should provide Ben Franklin with a more comparable level of interest-bearing liabilities as maintained by the Peer Group. Overall, RP Financial concluded that no adjustment was warranted for Ben Franklin Bank’s funding composition.

• Capital. The Peer Group operates with a higher equity-to-assets ratio than the Bank. However, following the stock offering, Ben Franklin Bank’s pro forma capital position will be more comparable to the Peer Group’s equity-to-assets ratio. The increase in the Bank’s pro forma capital position will result in greater leverage potential and reduce the level of interest-bearing liabilities utilized to fund assets. At the same time, the Bank’s more significant capital surplus will likely result in a lower ROE. On balance, RP Financial concluded that capital strength was a neutral factor in our adjustment for financial condition.

On balance, Ben Franklin Bank’s balance sheet strength was considered to be comparable to the Peer Group’s. Accordingly, no adjustment was applied for the Bank’s financial condition.

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2. Profitability, Growth and Viability of Earnings

Earnings are a key factor in determining pro forma market value, as the level and risk characteristics of an institution’s earnings stream and the prospects and ability to generate future earnings heavily influence the multiple that the investment community will pay for earnings. The major factors considered in the valuation are described below.

• Reported Earnings. The Bank’s reported earnings were lower than the Peer Group’s on a ROAA basis (0.29% of average assets versus 0.69% for the Peer Group). The Peer Group maintained a higher net interest margin, higher level of non-interest operating income and lower effective tax rate, which was partially offset by the Bank’s slightly lower levels of operating expenses and loan loss provisions. Reinvestment of stock proceeds into interest-earning assets will serve to increase the Bank’s earnings, with the benefit of reinvesting proceeds expected to be somewhat offset by higher operating expenses associated with operating as a publicly-traded company and the implementation of stock benefit plans. Overall, the Bank’s reported earnings were considered to be less favorable than the Peer Group’s and, thus, the Bank’s reported earnings were considered as a slightly negative factor in our adjustment for the Bank’s profitability growth and viability of earnings.

• Core Earnings. Both the Bank’s and the Peer Group’s earnings were derived largely from recurring sources, including net interest income, operating expenses, and non-interest operating income. In these measures, the Bank operated with a lower net interest margin, a lower operating expense ratio and a lower level of non-interest operating income. The Bank’s lower ratios for net interest income and operating expenses translated into a slightly lower expense coverage ratio compared to the Peer Group’s ratio (1.10x versus 1.15x for the Peer Group). Similarly, the Bank’s efficiency ratio of 86.5% was less favorable than the Peer Group’s efficiency ratio of 72.3%, as the Bank’s lower operating expense ratio was more than offset by the Peer Group’s more favorable ratios for net interest income and non-interest operating income. Loss provisions had a slightly larger impact on the Peer Group’s earnings, while the Bank had a higher effective tax rate than indicated for the Peer Group. Overall, these measures, as well as the expected earnings benefit the Bank should realize from the redeployment of stock proceeds into interest-earning assets net of the additional expenses associated with the stock benefit plans, indicate that the Bank’s core earnings were less favorable than the Peer Group’s. Accordingly, the Bank’s core earnings were considered a slightly negative factor in our adjustment for the Bank’s profitability growth and viability of earnings.

• Interest Rate Risk. Quarterly changes in the Bank’s and the Peer Group’s net interest income to average assets ratios indicated that a higher degree of volatility was associated with the Bank’s net interest margin. Other measures of interest rate risk, such as capital, IEA/IBL and non-interest-earning assets ratios, were more favorable for the Peer Group with the exception of the Bank’s lower ratio

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for non-interest-earning assets, thereby indicating a lower dependence on the yield-cost spread to sustain net interest income. On a pro forma basis, the infusion of stock proceeds can be expected to provide the Bank with equity-to-assets and IEA/ILB ratios that are comparable to the Peer Group ratios, as well as enhance the stability of the Bank’s net interest margin. Accordingly, on balance, this was a neutral factor in our adjustment for profitability, growth and viability of earnings.

• Credit Risk. Loan loss provisions were a slightly larger factor in the Peer Group’s earnings. In terms of future exposure to credit quality related losses, lending diversification into higher risk types of loans was greater for the Bank and the Bank maintained a higher concentration of assets in loans. The Bank’s and the Peer Group’s credit quality measures indicated that the Bank and the Peer Group maintained comparable levels of non-performing assets, while the Peer Group maintained higher levels of reserves as a percent of loans and non-performing assets. Overall, RP Financial concluded that earnings credit risk was a neutral factor in our adjustment for profitability, growth and viability of earnings.

• Earnings Growth Potential. Several factors were considered in assessing earnings growth potential. First, the Bank’s historical growth reflected a decline in assets, while the Peer Group’s stronger loan growth supported asset growth for the period. Second, the infusion of stock proceeds will increase the Bank’s earnings growth potential with respect to leverage capacity. Third, opportunities to increase earnings through loan and deposit growth are considered to be comparable for the Bank and the Peer Group, as the more densely populated market area served by the Bank is viewed as being somewhat negated by the higher degree of competition that the Bank faces as the result of operating in a large metropolitan market area. Lastly, the Peer Group’s higher level of non-interest operating income implies greater earnings growth potential and sustainability of earnings during periods when net interest margins come under pressure as the result of adverse changes in interest rates. Overall, this was a neutral factor in our adjustment for profitability, growth and viability of earnings.

• Return on Equity. The Bank’s current return on equity is lower than the Peer Group’s return on equity ratio. Accordingly, as the result of the significant increase in capital that will be realized from the infusion of net stock proceeds into the Bank’s equity, combined with the Bank’s lower return on assets, the Bank’s pro forma return on equity on a core earnings basis will be well below the Peer Group’s return on equity ratio. Accordingly, this was a negative factor in the adjustment for profitability, growth and viability of earnings.

Overall, based on the downward adjustments applied for the Bank’s reported earnings, core earnings and return on equity we concluded that a slight downward adjustment was warranted for this factor.

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3. Asset Growth

The Peer Group recorded stronger asset growth than the Bank, as the Bank experienced a decline in assets that resulted from a decline in cash and investments that was only partially negated by modest loan growth for the period. Comparatively, the Peer Group recorded a 5.9% increase in assets, which was largely achieved through loan growth. Loan growth was notably stronger for the Peer Group (13.8% versus 0.8% loan growth for the Bank). On a pro forma basis, the Bank’s tangible equity-to-assets ratio will be comparable to the Peer Group’s tangible equity-to-assets ratio, indicating comparable leverage capacity for the Bank and, therefore, provide the Bank with the flexibility to resume a growth strategy. Accordingly, on balance, we believe no valuation adjustment was warranted for this factor.

4. Primary Market Area

The general condition of an institution’s market area has an impact on value, as future success is in part dependent upon opportunities for profitable activities in the local market served. Overall, the Chicago metropolitan area is considered to account for the major portion of the Bank’s deposit and lending activities. Operating in a densely populated market area provides the Bank with growth opportunities, but such growth must be achieved in a highly competitive market environment. The Bank competes against significantly larger institutions that provide a larger array of services and have significantly larger branch networks than maintained by Ben Franklin Bank. The competitiveness of the Chicago market area is highlighted by the Bank’s nominal deposit market share.

The Peer Group companies generally operate in less densely populated markets with lower per capita income than Cook County, but the Peer Group companies also generally operate in markets with a lower cost of living than Cook County. Cook County’s projected population growth rate was slightly above and below the comparable Peer Group average and median growth rates. The average and median deposit market shares maintained by the Peer Group companies were significantly above the Bank’s market share of deposits in Cook County. Overall, the degree of competition faced by the Peer Group companies was viewed as significantly less than faced by the Bank in Cook County, while the growth potential in the markets served by the Peer Group companies was for the most part viewed to be similar to the

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Bank’s primary market area. Summary demographic and deposit market share data for the Bank and the Peer Group companies is provided in Exhibit III-3. As shown in Table 4.1, April 2006 unemployment rates for the majority of the markets served by the Peer Group companies were generally comparable or slightly above the unemployment rate reflected for Cook County. On balance, we concluded that no adjustment was appropriate for the Bank’s market area.

Table 4.1

Market Area Unemployment Rates

Ben Franklin Bank and the Peer Group Companies(1)

	County	April 2006 Unemployment
Ben Franklin Bank - IL	Cook	5.2	%
The Peer Group
Brooklyn Federal MHC – NY	Kings	5.5	%
Cheviot Financial Corp. MHC – OH	Hamilton	5.2
Colonial Bankshares MHC - NJ	Cumberland	7.0
Gouverneur Bancorp MHC – NY	St. Lawrence	6.3
Greene County Bancorp MHC – NY	Greene	4.9
Heritage Financial MHC - GA	Dougherty	6.0
Jacksonville Bancorp MHC - IL	Morgan	5.4
Kentucky First Federal Banc. MHC – KY	Perry	7.4
Naugatuck Valley Fin.. MHC – CT	New Haven	4.2
Pathfinder Bancorp MHC – NY	Oswego	6.0

(1) Unemployment rates are not seasonally adjusted.

Source: U.S. Bureau of Labor Statistics.

5. Dividends

At this time the Bank has not established a dividend policy. Future declarations of dividends by the Board of Directors will depend upon a number of factors, including investment opportunities, growth objectives, financial condition, profitability, tax considerations, minimum capital requirements, regulatory limitations, stock market characteristics and general economic conditions.

Eight out of the ten Peer Group companies pay regular cash dividends, with implied dividend yields ranging from 1.50% to 3.70%. The average dividend yield on the stocks of the Peer Group institutions equaled 2.03% as of June 16, 2006. As of June 16, 2006, approximately

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87% of all publicly-traded thrifts had adopted cash dividend policies (see Exhibit IV-1), exhibiting an average yield of 2.20%. The dividend paying thrifts generally maintain higher than average profitability ratios, facilitating their ability to pay cash dividends.

Our valuation adjustment for dividends for Ben Franklin Bank also considered the regulatory policy with regard to waiver of dividends by the MHC. Under current policy, any waiver of dividends by an FDIC regulated MHC requires that the minority stockholders’ ownership interest be reduced in a second-step conversion to reflect the cumulative waived dividend account. Comparatively, no adjustment for waived dividends is required for OTS regulated companies in a second-step conversion. As an MHC operating under OTS regulation, the Bank will be subject to the same regulatory dividend policy as all of the Peer Group companies, as all of the Peer Group companies also operate under OTS regulation pursuant to the dividend waiver policy. Accordingly, we believe that to the extent Ben Franklin Bank’s pro forma market value would be influenced by the OTS’ dividend policy regarding MHC institutions, it has been sufficiently captured in the pricing of the Peer Group companies.

While the Bank has not established a definitive dividend policy prior to converting, the Bank will have the capacity to pay a dividend comparable to the Peer Group’s average dividend yield based on pro forma earnings and capitalization. On balance, we concluded that no adjustment was warranted for purposes of the Bank’s dividend policy.

6. Liquidity of the Shares

The Peer Group is by definition composed of companies that are traded in the public markets. Nine of the Peer Group members trade on the NASDAQ system and one Peer Group member trades on the AMEX. Typically, the number of shares outstanding and market capitalization provides an indication of how much liquidity there will be in a particular stock. The market capitalization of the Peer Group companies, based on the shares issued and outstanding to public shareholders (i.e., excluding the majority ownership interest owned by the respective MHCs) ranged from $10.4 million to $53.6 million as of June 16, 2006, with average and median market values of $31.9 million and $32.7 million, respectively. The shares issued and outstanding to the public shareholders of the Peer Group members ranged from 880,000 to 4.5 million, with average and median shares outstanding of 2.6 million and 2.7 million,

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respectively. The Bank’s minority stock offering is expected to have a pro forma market value that is at the lower end of the range of market values indicated for the Peer Group companies, while the number of public shares outstanding for the Bank is expected to be below the average and median number of shares outstanding indicated for the Peer Group. It is anticipated that the Bank’s stock will be listed for trading on the OTC Bulletin Board following the stock offering, which generally suggests lower liquidity compared to a stock listed on NASDAQ or an exchange. Overall, we anticipate that the Bank’s public stock will have a less liquid trading market as the Peer Group companies on average and, therefore, concluded a slight downward adjustment was necessary for this factor.

7. Marketing of the Issue

Three separate markets exist for thrift stocks: (1) the after-market for public companies, both fully-converted stock companies and MHCs, in which trading activity is regular and investment decisions are made based upon financial condition, earnings, capital, ROE, dividends and future prospects; (2) the new issue market in which converting thrifts are evaluated on the basis of the same factors but on a pro forma basis without the benefit of prior operations as a publicly-held company and stock trading history; and (3) the thrift acquisition market. All three of these markets were considered in the valuation of the Bank’s to-be-issued stock.

A. The Public Market

The value of publicly-traded thrift stocks is easily measurable, and is tracked by most investment houses and related organizations. Exhibit IV-1 provides pricing and financial data on all publicly-traded thrifts. In general, thrift stock values react to market stimuli such as interest rates, inflation, perceived industry health, projected rates of economic growth, regulatory issues and stock market conditions in general. Exhibit IV-2 displays historical stock market trends for various indices and includes historical stock price index values for thrifts and commercial banks. Exhibit IV-3 displays historical stock price indices for thrifts only.

In terms of assessing general stock market conditions, the performance of the overall stock market has been mixed over the past year. The broader stock market staged a rally at the start of the third quarter of 2005, as investors reacted favorably to falling oil prices and job

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growth reflected in the June employment data. Favorable inflation data for June and some positive third quarter earnings reports sustained the rally into the latter part of July. Stocks posted further gains in early-August on optimism about the economy, corporate profits and interest rates. Concerns that rising oil prices would reduce consumer spending and hurt corporate earnings produced a downward trend in the stock market during the second half of August, with the Dow Jones Industrial Average (“DJIA”) posting a 1.5% loss for the month of August. The stock market showed resiliency in the aftermath of Hurricane Katrina, as oil prices fell following the Energy Department’s decision to release some of the Strategic Petroleum Reserve. Lower oil prices and an upbeat report from the Federal Reserve that showed the economy kept growing in July and August helped to extend the rebound in the stock market heading into mid-September. The rebound in the broader stock market paused in mid-September, as Hurricane Rita, higher oil prices and a quarter point rate increase by the Federal Reserve contributed to the DJIA posting its worst weekly loss in three months for the trading week ending September 23^rd. Stocks rebounded mildly at the close of the third quarter, which helped the DJIA to a 2.9% gain for the third quarter.

Inflation fears pushed stocks lower at the start of the fourth quarter of 2005, as comments from the Federal Reserve suggested that the central bank was worried about inflation and was likely to keep raising rates. The DJIA dropped to a five-month low in mid-October, reflecting concerns that high oil prices would depress consumer spending. Mixed results for third quarter earnings and inflation worries translated into an uneven trading market through the end of October. Optimism that a strong economy would produce a year-end rally provided a lift to the broader stock market in early-November. Lower bond yields and oil prices helped to extend the rally through mid-November. The DJIA approached a four and one-half year high in late-November, as the Federal Reserve hinted that the cycle of rate increases could be approaching an end. Stocks fluctuated in first half of December, as strong economic news and higher oil prices renewed concerns about inflation and rising interest rates. Acquisitions in the technology and pharmaceutical industries, along with some positive economic news showing a dip in unemployment claims and strong third quarter GDP growth, provided a boost to the broader stock market heading into late-December. However, the gains were not sustained through the end of the year, as higher oil prices, inflation concerns and the inversion of the yield curve pulled stocks lower in late-December.

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The broader stock market rallied higher at the start of 2006 on indications that the Federal Reserve was nearing an end to the current cycle of rate increases. In the second week of January, the DJIA closed above 11000 for the first time since before September 11, 2001. Higher oil prices, some disappointing fourth quarter earnings and worries about Iran pushed stocks lower in mid-January, which was followed by a rebound in the broader stock market in late-January. The late-January gains were supported by some favorable fourth quarter earnings and economic news showing strong December orders for durable goods and lower than expected unemployment. Mixed reaction to some fourth quarter earnings reports and concerns about the housing market cooling off provided for a choppy market during the first half of February. Some favorable economic data, which included a surge in January retail sales and only a slight rise in core consumer prices for January, supported gains in the broader stock market heading into late-February. Major indexes approached multi-year highs in late-February, before faltering at the end of February on economic data showing a decline in consumer confidence and the housing market slowing down. However, in early-March 2006, stocks trended lower on concerns that rising global interest rates would hurt corporate profits. Stocks rebounded in mid-March, as economic data showing steady economic growth and little consumer inflation helped to lift the DJIA to a four and one-half year high. Consumer prices rose just 0.1% in February, while job growth and housing construction were both stronger than expected in February. Stocks trended lower at the close of the first quarter on interest rate worries, as the Federal Reserve lifted rates another quarter point and hinted at more increases to come.

The broader stock market traded up at the start of the second quarter of 2006, reflecting optimism about first quarter earnings and that tame inflation would bring an end to rate increases by the Federal Reserve. Higher oil prices curbed the positive trend in stocks during mid-April, which was followed by the biggest gain of the year for the DJIA. The release of the minutes from the Federal Reserve’s March meeting, which signaled that the Federal Reserve was about to stop raising rates served as the catalyst to the rally. Stocks generally edged higher through the end of April, as investors focused on strong first quarter earnings reports by a number of blue chip stocks. However, the positive trend was somewhat subdued by new inflation fears resulting from strong economic reports for March. Lower oil prices and a strong retail sales report for April helped to lift the DJIA to a six year high in early-May. Stocks traded flat on news of another rate increase by the Federal Reserve, which was followed by a sharp sell-off

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in mid-May as a larger than expected rise in April consumer prices sparked inflation fears. An upward revision to first quarter GDP growth provided a boost to stocks heading into late-May, but the rally was cut short as a drop in consumer-confidence numbers for May and concerns of slower economic growth hurting corporate profits spurred another sell-off in late-May. Despite closing up on the last day of May, the month of May was the worst monthly performance for the DJIA in eleven months.

The down turn in the broader stock market continued during the first part of June 2006, as stocks tumbled after an inflation warning by the Federal Reserve Chairman stoked fears of future rate increases. Comparatively, stocks surged in mid-June following reassuring inflation comments by the Federal Reserve Chairman. As an indication of the general trends in the nation’s stock markets over the past year, as of June 16, 2006, the DJIA closed at 11014.55 an increase of 3.7% from one year ago and an increase of 2.8% year-to-date, and the NASDAQ closed at 2129.95 an increase of 1.9% from one year ago and a decrease of 3.4% year-to-date. The Standard & Poors 500 Index closed at 1251.54 on June 16, 2006, an increase of 2.8% from one year ago and an increase of 0.3% year-to-date.

The market for thrift stocks has been mixed during the past twelve months, but, in general, thrift stocks have outperformed the broader market during the past year. Strength in the broader stock market and some positive second quarter earnings reports in the thrift sector supported a positive trend in thrift stocks at the beginning of the third quarter of 2005. Thrift stocks settled into a narrow trading range in late-July and early-August, as higher short-term interest rates provided for further flattening of the Treasury yield curve. Weakness in the broader market combined with a flatter yield curved pressured thrift stocks lower in mid- and late-August. Similar to the broader market, the market for thrift issues showed mixed results in early-September amid ongoing concerns about the long-term economic impact of Hurricane Katrina. Strength in the broader market and speculation of the Federal Reserve taking a pause in increasing rates supported a mild rally in thrift stocks going into mid-September. Likewise, thrift issues sold off in conjunction with the broader stock market going into late-September, as investors reacted negatively to the Federal Reserve hiking interest rates by another quarter point and the threat of Hurricane Rita hurting energy production. In contrast to the rebound in the broader stock market, thrift issues continued their slide at the end of the third quarter as a sharp decline in September consumer confidence weighed heavily on the thrift sector.

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Thrift stocks retreated further at the beginning of the fourth quarter of 2005 on concerns about higher interest rates and inflation. Mixed earnings reports and shareholder activism at Sovereign Bancorp produced a choppy trading market for the thrift sector heading into late-October. Some positive macroeconomic news, which included a rise in consumer spending, helped to initiate a rally in thrift stocks at the end of October. Strength in the broader stock market and merger speculation helped to fuel gains for thrift stocks through much of November. Overall, the SNL Index for all publicly-traded thrifts registered a 3.6% increase during November. Thrift issues generally eased lower during early-December, reflecting concerns about higher interest rates and the strength of the housing market. Signals from the Federal Reserve that it could stop raising rates sometime in 2006 and easing inflation fears on lower than expected revised third quarter GDP growth lifted thrift stocks going into late-December. However, weakness in the broader market and an inverted yield curve pressured thrift stocks lower at year end.

Thrift stocks participated in the broader stock market rally at the beginning of the New Year, as interest rate sensitive issues benefited from news that rate increases by the Federal Reserve may be nearing an end. Thrift stocks continued to parallel the broader market in mid-January, as the sector traded down following some disappointing fourth quarter earnings caused by net interest margin pressure. Short covering and a slight improvement in the yield curve provided for a brief rebound in thrift stocks in late-January 2006, followed by a downward move in the sector at the end of January as investors anticipated another rate hike by the Federal Reserve. The downward trend in thrift stocks continued through mid-February, reflecting concerns that valuations were too high in light of a number of thrift issues experiencing a weaker earnings outlook due to spread compression resulting from the inverted yield curve. Thrift stocks strengthened along with the broader market heading into late-February, as mortgage lenders benefited from inflation data that showed only a small rise in core consumer prices for January and news that housing starts surged in January. Comparatively, reports of declining home sales, lower consumer confidence and higher oil prices depressed thrift stocks at the end of February and the first week of March. Thrifts stocks rebounded in conjunction with the broader

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market in mid-March 2006, as interest rate sensitive issues benefited from tame inflation data reflected in the February consumer price index. The proposed acquisition of North Fork Bancorp by Capital One helped to further the advance in thrift and bank stocks, particularly in the Northeast. Higher interest rates pushed thrift stocks lower in late-March, particularly after the Federal Reserve increased rates another quarter point and indicated that more rate increases were likely.

Thrift issues traded in a narrow range during the first half of April 2006, in which mixed earnings reports and concerns about interest rates and inflation provided for an uneven trading market. Thrift stocks spiked higher in conjunction with the broader market heading in to the second half of April, as investors reacted favorably to news that the Federal Reserve was contemplating an end to rate increases during its March meeting. The rally in thrift stocks was short-lived, with renewed concerns about interest rates and inflation providing for a modest pull back in thrift stocks during late-April. However, thrift stocks rebounded at the end of April, as comments from the Federal Reserve Chairman fueled speculation that the current cycle of Federal Reserve rate hikes may be nearing an end.

Strength in the broader market and Wachovia Corp.’s announced deal to acquire Golden West Financial Corp. sustained a rally in thrift stocks during early-May. Higher interest rates, weakness in the broader market and a drop in consumer confidence pushed thrift stocks lower in mid-May. Inflation fears continued the slide in thrift stocks into late-May. Thrift stocks closed out May advancing in conjunction with the broader market. Inflation fears, sparked by comments from the Federal Reserve Chairman, pulled thrift stocks lower along with the broader market in early-June. Acquisition speculation helped thrift stocks to stabilize ahead of the broader market heading into mid-June. Interest rate concerns weighed on thrift stocks in mid-June, although thrift stocks moved higher following comments from the Federal Reserve Chairman that eased inflationary concerns. On June 16, 2006, the SNL Index for all publicly-traded thrifts closed at 1,691.8, an increase of 7.6% from one year ago and an increase of 4.7% year-to-date. The SNL MHC Index closed at 3,208.3 on June 16, 2006, an increase of 15.5% from one year ago and an increase of 10.2% year-to-date.

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B. The New Issue Market

In addition to thrift stock market conditions in general, the new issue market for converting thrifts is also an important consideration in determining the Bank’s pro forma market value. The new issue market is separate and distinct from the market for seasoned thrift stocks in that the pricing ratios for converting issues are computed on a pro forma basis, specifically: (1) the numerator and denominator are both impacted by the conversion offering amount, unlike existing stock issues in which price change affects only the numerator; and (2) the pro forma pricing ratio incorporates assumptions regarding source and use of proceeds, effective tax rates, stock plan purchases, etc. which impact pro forma financials, whereas pricing for existing issues are based on reported financials. The distinction between pricing of converting and existing issues is perhaps no clearer than in the case of the price/book (“P/B”) ratio in that the P/B ratio of a converting thrift will typically result in a discount to book value whereas in the current market for existing thrifts the P/B ratio often reflects a premium to book value. Therefore, it is appropriate to also consider the market for new issues, both at the time of the conversion and in the aftermarket.

The market for converting thrift issues has been relatively stable over the past several quarters, with most converting issues having successful offerings and reflecting modest price appreciation in initial trading activity. In general, investor interest in smaller offerings with resulting less liquid trading markets has been for the most not as strong compared to larger offerings with more liquid trading markets. As shown in Table 4.2, there were no standard or second-step conversions competed during the past three months. Three mutual holding company offerings were completed during the past three months, which are considered to be more relevant for purposes of our analysis. All three of the MHC offerings were closed at the top of the super range. On a fully-converted basis, the average closing pro forma price/tangible book ratio of the recent MHC offerings equaled 78.6%. On average, the prices of the recent MHC offerings reflected price appreciation of 7.3% and 7.0% after the first week and first month of trading, respectively. As of June 16, 2006, the three recent MHC offerings reflected average price appreciation of 4.7%

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C. The Acquisition Market

Also considered in the valuation was the potential impact on Ben Franklin Bank’s stock price of recently completed and pending acquisitions of other savings institutions operating in Illinois. As shown in Exhibit IV-4, there were twelve Illinois thrift acquisitions completed from the beginning of 2003 through year-to-date 2006, and there are currently no acquisitions pending for Illinois savings institutions. To the extent that speculation of a re-mutualization may impact the Bank’s valuation, we have largely taken this into account in selecting companies which operate in the MHC form of ownership. Accordingly, the Peer Group companies are considered to be subject to the same type of acquisition speculation that may influence Ben Franklin Bank’s trading price.

* * * * * * * * * * *

In determining our valuation adjustment for marketing of the issue, we considered trends in both the overall thrift market, the new issue market including the new issue market for MHC shares and the local acquisition market for thrift stocks. Taking these factors and trends into account, RP Financial concluded that no adjustment was appropriate in the valuation analysis for purposes of marketing of the issue.

8. Management

Ben Franklin Bank’s management team appears to have experience and expertise in all of the key areas of the Bank’s operations. Exhibit IV-5 provides summary resumes of Ben Franklin Bank’s Board of Directors and senior management. The financial characteristics of the Bank suggest that the Board and senior management have been effective in implementing an operating strategy that can be well managed by the Bank’s present organizational structure. The Bank currently does not have any senior management positions that are vacant.

Similarly, the returns, capital positions and other operating measures of the Peer Group companies are indicative of well-managed financial institutions, which have Boards and

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management teams that have been effective in implementing competitive operating strategies. Therefore, on balance, we concluded no valuation adjustment relative to the Peer Group was appropriate for this factor.

9. Effect of Government Regulation and Regulatory Reform

In summary, as a federally-insured savings institution operating in the MHC form of ownership, Ben Franklin Bank will operate in substantially the same regulatory environment as the Peer Group members — all of whom are adequately capitalized institutions and are operating with no apparent restrictions. Exhibit IV-6 reflects the Bank’s pro forma regulatory capital ratios. Accordingly, no adjustment has been applied for the effect of government regulation and regulatory reform.

Summary of Adjustments

Overall, based on the factors discussed above, we concluded that the Bank’s pro forma market value should reflect the following valuation adjustments relative to the Peer Group:

Key Valuation Parameters:	Valuation Adjustment
Financial Condition	No Adjustment
Profitability, Growth and Viability of Earnings	Slight Downward
Asset Growth	No Adjustment
Primary Market Area	No Adjustment
Dividends	No Adjustment
Liquidity of the Shares	Slight Downward
Marketing of the Issue	No Adjustment
Management	No Adjustment
Effect of Government Regulations and Regulatory Reform	No Adjustment

Basis of Valuation - Fully-Converted Pricing Ratios

As indicated in Chapter III, the valuation analysis included in this section places the Peer Group institutions on equal footing by restating their financial data and pricing ratios on a “fully-converted” basis. We believe there are a number of characteristics of MHC shares that make them different from the shares of fully-converted companies. These factors include: (1) lower aftermarket liquidity in the MHC shares since less than 50% of the shares are available for

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trading; (2) no opportunity for public shareholders to exercise voting control; (3) the potential pro forma impact of second-step conversions on the pricing of MHC institutions; (4) the regulatory policies regarding the dividend waiver policy by MHC institutions; and (5) the middle-tier structure maintained by most MHCs facilitates the ability for stock repurchases. The above characteristics of MHC shares have provided MHC shares with different trading characteristics versus fully-converted companies. To account for the unique trading characteristics of MHC shares, RP Financial has placed the financial data and pricing ratios of the Peer Group on a fully-converted basis to make them comparable for valuation purposes. Using the per share and pricing information of the Peer Group on a fully-converted basis accomplishes a number of objectives. First, such figures eliminate distortions that result when trying to compare institutions that have different public ownership interests outstanding. Secondly, such an analysis provides ratios that are comparable to the pricing information of fully-converted public companies, and more importantly, are directly applicable to determining the pro forma market value range of the 100% ownership interest in Ben Franklin Bank as an MHC. Lastly, such an analysis allows for consideration of the potential dilutive impact of dividend waiver policies adopted by the Federal agencies. This technique is validated by the investment community’s evaluation of MHC pricing, which also incorporates the pro forma impact of a second-step conversion based on the current market price.

To calculate the fully-converted pricing information for MHCs, the reported financial information for the public MHCs must incorporate the following assumptions, based on completed second-step conversions to date: (1) all shares owned by the MHC are assumed to be sold at the current trading price in a second step-conversion; (2) the gross proceeds from such a sale are adjusted to reflect reasonable offering expenses and standard stock based benefit plan parameters that would be factored into a second-step conversion of MHC institutions; (3) net proceeds are assumed to be reinvested at market rates on a tax effected basis; and (4) the public ownership interest is adjusted to reflect the pro forma impact of the waived dividends pursuant to applicable regulatory policy. Book value per share and earnings per share figures for the public MHCs were adjusted by the impact of the assumed second step-conversion, resulting in an estimation of book value per share and earnings per share figures on a fully-converted basis. Table 4.3 on the following page shows the calculation of per share financial data (fully-converted basis) for each of the ten public MHC institutions that form the Peer Group.

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Valuation Approaches: Fully-Converted Basis

In applying the accepted valuation methodology promulgated by the OTS and adopted by the FDIC, i.e., the pro forma market value approach, including the fully-converted analysis described above, we considered the three key pricing ratios in valuing Ben Franklin Bank’s to-be-issued stock — price/earnings (“P/E”), price/book (“P/B”), and price/assets (“P/A”) approaches — all performed on a pro forma basis including the effects of the stock proceeds. In computing the pro forma impact of the conversion and the related pricing ratios, we have incorporated the valuation parameters disclosed in Ben Franklin Bank’s prospectus for reinvestment rate, effective tax rate and stock benefit plan assumptions (summarized in Exhibits IV-7 and IV-8). Pursuant to the minority stock offering, we have also incorporated the valuation parameters disclosed in Ben Franklin Bank’s prospectus for offering expenses. The assumptions utilized in the pro forma analysis in calculating the Bank’s full conversion value were consistent with the assumptions utilized for the minority stock offering, except expenses were assumed to equal 5.0% of gross proceeds, the ESOP was assumed to equal 8.0% of the offering, the MRP was assumed to equal 4.0% of the offering and the stock option plan was assumed to equal 10.0% of the offering.

In our estimate of value, we assessed the relationship of the pro forma pricing ratios relative to the Peer Group, recent conversions and MHC offerings.

RP Financial’s valuation placed an emphasis on the following:

• P/E Approach. The P/E approach is generally the best indicator of long-term value for a stock. Given the similarities between the Bank’s and the Peer Group’s earnings composition and overall financial condition, the P/E approach was carefully considered in this valuation. At the same time, recognizing that (1) the earnings multiples will be evaluated on a pro forma fully-converted basis for the Bank as well as for the Peer Group; and (2) the Peer Group on average has had the opportunity to realize the benefit of reinvesting the minority offering proceeds, we also gave weight to the other valuation approaches.

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• P/B Approach. P/B ratios have generally served as a useful benchmark in the valuation of thrift stocks, particularly in the context of an initial public offering, as the earnings approach involves assumptions regarding the use of proceeds. RP Financial considered the P/B approach to be a valuable indicator of pro forma value taking into account the pricing ratios under the P/E and P/A approaches. We have also modified the P/B approach to exclude the impact of intangible assets (i.e., price/tangible book value or “P/TB”), in that the investment community frequently makes this adjustment in its evaluation of this pricing approach.

• P/A Approach. P/A ratios are generally a less reliable indicator of market value, as investors typically assign less weight to assets and attribute greater weight to book value and earnings. Furthermore, this approach as set forth in the regulatory valuation guidelines does not take into account the amount of stock purchases funded by deposit withdrawals, thus understating the pro forma P/A ratio. At the same time, the P/A ratio is an indicator of franchise value, and, in the case of highly capitalized institutions, high P/A ratios may limit the investment community’s willingness to pay market multiples for earnings or book value when ROE is expected to be low.

The Bank will adopt Statement of Position (“SOP”) 93-6, which will cause earnings per share computations to be based on shares issued and outstanding excluding unreleased ESOP shares. For purposes of preparing the pro forma pricing analyses, we have reflected all shares issued in the offering, including all ESOP shares, to capture the full dilutive impact, particularly since the ESOP shares are economically dilutive, receive dividends and can be voted. However, we did consider the impact of the adoption of SOP 93-6 in the valuation.

Based on the application of the three valuation approaches, taking into consideration the valuation adjustments discussed above, RP Financial concluded that as of June 16, 2006, the pro forma market value of Ben Franklin Bank’s full conversion offering equaled $15,000,000 at the midpoint, equal to 1,500,000 shares at $10.00 per share.

1. Price-to-Earnings (“P/E”). The application of the P/E valuation method requires calculating the Bank’s pro forma market value by applying a valuation P/E multiple (fully-converted basis) to the pro forma earnings base. In applying this technique, we considered both reported earnings and a recurring earnings base, that is, earnings adjusted to exclude any one-time non-operating items, plus the estimated after-tax earnings benefit of the reinvestment of the net proceeds. The Bank’s reported earnings equaled $320,000 for the twelve months ended

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March 31, 2006. In deriving Ben Franklin Bank’s core earnings, the only adjustment made to reported earnings was to eliminate gains on the sale of loans, which equaled $33,000 for the twelve months ended March 31, 2006. As shown below, on a tax effected basis, assuming an effective marginal tax rate of 34.0% for the loan sale gains, the Bank’s core earnings were determined to equal $298,000 for the twelve months ended March 31, 2006. (Note: see Exhibit IV-9 for the adjustments applied to the Peer Group’s earnings in the calculation of core earnings).

	Amount
	($000)
Net income	$	320
Less: Gain on sale of loans(1)		(22	)
Core earnings estimate	$	298

(1) Tax effected at 34.0%.

Based on Ben Franklin Bank’s reported and estimated core earnings and incorporating the impact of the pro forma assumptions discussed previously, the Bank’s pro forma reported and core P/E multiples (fully-converted basis) at the $15.0 million midpoint value equaled 31.48 times and 33.01 times, respectively, which provided for premiums of 10.7% and 18.5% relative to the Peer Group’s average reported and core P/E multiples (fully-converted basis) of 28.43 times and 27.86 times, respectively (see Table 4.4). At the top of the super range, the Bank’s reported and core P/E multiples equaled 37.65 times and 39.29 times, respectively. In comparison to the Peer Group’s average reported and core P/E multiples, the Bank’s P/E multiples at the top of the super range reflected premiums of 32.4% and 41.0%, respectively.

On an MHC reported basis, the Bank’s reported and core P/E multiples at the midpoint value of $15.0 million equaled 41.19 times and 43.84 times, respectively. The Bank’s reported and core P/E multiples provided for premiums of 39.3% and 38.6% relative to the Peer Group’s average reported and core P/E multiples of 29.57 times and 31.62 times, respectively. The Bank’s implied MHC pricing ratios relative to the MHC pricing ratios for the Peer Group are shown in Table 4.5, and the pro forma calculations are detailed in Exhibits IV-10 and Exhibit IV-11.

2. Price-to-Book (“P/B”). The application of the P/B valuation method requires calculating the Bank’s pro forma market value by applying a valuation P/B ratio, as derived from

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the Peer Group’s P/B ratio (fully-converted basis), to Ben Franklin Bank’s pro forma book value (fully-converted basis). Based on the $15.0 million midpoint valuation, Ben Franklin Bank’s pro forma P/B and P/TB ratios both equaled 72.09%. In comparison to the average P/B and P/TB ratios for the Peer Group of 89.54% and 92.78%, the Bank’s ratios reflected a discount of 19.5% on a P/B basis and a discount of 22.3% on a P/TB basis. At the top of the super range, the Bank’s P/B and P/TB ratios on a fully-converted basis both equaled 79.92%. In comparison to the Peer Group’s average P/B and P/TB ratios, the Bank’s P/B and P/TB ratios at the top of the super range reflected discounts of 10.7% and 13.9%, respectively. RP Financial considered the discounts under the P/B approach to be reasonable in light of the Bank’s resulting P/E multiples.

On an MHC reported basis, the Bank’s P/B and P/TB ratios at the $15.0 million midpoint value both equaled 111.73%. In comparison to the average P/B and P/TB ratios indicated for the Peer Group of 166.79% and 176.99%, respectively, Ben Franklin Bank’s ratios were discounted by 33.0% on a P/B basis and 36.8% on a P/TB basis.

3. Price-to-Assets (“P/A”). The P/A valuation methodology determines market value by applying a valuation P/A ratio (fully-converted basis) to the Bank’s pro forma asset base, conservatively assuming no deposit withdrawals are made to fund stock purchases. In all likelihood there will be deposit withdrawals, which results in understating the pro forma P/A ratio which is computed herein. At the midpoint of the valuation range, Ben Franklin Bank’s full conversion value equaled 12.23% of pro forma assets. Comparatively, the Peer Group companies exhibited an average P/A ratio (fully-converted basis) of 22.83%, which implies a discount of 46.5% has been applied to the Bank’s pro forma P/A ratio (fully-converted basis).

On an MHC reported basis, Ben Franklin Bank’s pro forma P/A ratio at the $15.0 million midpoint value equaled 13.01%. In comparison to the Peer Group’s average P/A ratio of 26.66%, Ben Franklin Bank’s P/A ratio indicated a discount of 51.2%.

Comparison to Recent Offerings

As indicated at the beginning of this chapter, RP Financial’s analysis of recent conversion and MHC offering pricing characteristics at closing and in the aftermarket has been limited to a “technical” analysis and, thus, the pricing characteristics of recent conversion offerings can not

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be a primary determinate of value. Particular focus was placed on the P/TB approach in this analysis, since the P/E multiples do not reflect the actual impact of reinvestment and the source of the stock proceeds (i.e., external funds vs. deposit withdrawals). The three recently completed MHC offerings closed at an average price/tangible book ratio of 78.6% (fully-converted basis) and, on average, appreciated 7.3% after one week of trading and 4.7% through June 16, 2006. In comparison, the Bank’s P/TB ratio of 72.1% at the midpoint value reflected an implied discount of 8.3% relative to the average closing P/TB ratio of the recent MHC offerings. At the top of the super range, the Bank’s P/TB ratio of 79.9% reflected an implied premium of 1.7% relative to the average closing P/TB ratio of the recent MHC offerings. The current fully-converted average P/TB ratio of Lake Shore Bancorp and United Community Bancorp, which are the two recent MHC offering that are traded on NASDAQ, equaled 82.1% based on closing market prices as of June 16, 2006. In comparison to the average current P/TB ratio of Lake Shore Bancorp and United Community Bancorp, the Bank’s P/TB ratio at the midpoint value reflects an implied discount of 12.2% and at the top of the super range reflects an implied discount of 2.7%.

Valuation Conclusion

Based on the foregoing, it is our opinion that, as of June 16, 2006, the estimated aggregate pro forma market value of the shares to be issued immediately following the conversion, both shares issued publicly as well as to the MHC, equaled $15,000,000 at the midpoint, equal to 1,500,000 shares offered at a per share value of $10.00. Pursuant to conversion guidelines, the 15% offering range indicates a minimum value of $12,750,000 and a maximum value of $17,250,000. Based on the $10.00 per share offering price determined by the Board, this valuation range equates to total shares outstanding of 1,275,000 at the minimum and 1,725,000 at the maximum. In the event the appraised value is subject to an increase, the aggregate pro forma market value may be increased up to a supermaximum value of $19,837,500 without a resolicitation. Based on the $10.00 per share offering price, the supermaximum value would result in total shares outstanding of 1,983,750. The Board of Directors has established a public offering range such that the public ownership of the Bank will constitute a 45.0% ownership interest. Accordingly, the offering to the public of the minority stock will equal $5,737,500 at the minimum, $6,750,000 at the midpoint, $7,762,500 at the maximum and

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$8,926,880 at the supermaximum of the valuation range. The pro forma valuation calculations relative to the Peer Group (fully-converted basis) are shown in Table 4.4 and are detailed in Exhibit IV-7 and Exhibit IV-8; the pro forma valuation calculations relative to the Peer Group based on reported financials are shown in Table 4.5 and are detailed in Exhibits IV-10 and IV-11.

EX-99.4

Exhibit 99.4

RP^® FINANCIAL, LC.

Financial Services Industry Consultants

June 28, 2006

Board of Directors

Ben Franklin Bank of Illinois

14 North Dryden Place

Arlington Heights, Illinois 60004

Re: Plan of Reorganization Subscription Rights

Ben Franklin Bank of Illinois

Gentlemen:

All capitalized terms not otherwise defined in this letter have the meanings given such terms in the Pan of Reorganization adopted by the Board of Directors of Ben Franklin Bank of Illinois (“Ben Franklin Bank” or the “Bank”). Pursuant to the Plan of Reorganization, Ben Franklin Bank will become a wholly-owned subsidiary of Ben Franklin Financial, Inc. (the “Company”), a federal corporation, and the Company will issue a majority of its common stock to Ben Franklin Financial, MHC, a federal mutual holding company, and sell a minority of its common stock to the public.

We understand that in accordance with the Plan of Reorganization, subscription rights to purchase shares of common stock in the Company are to be issued to: (1) Eligible Account Holders; (2) Tax-Qualified Employee Plans; (3) Supplemental Eligible Account Holders; and (4) Other Members. Based solely upon our observation that the subscription rights will be available to such parties without cost, will be legally non-transferable and of short duration, and will afford such parties the right only to purchase shares of common stock at the same price as will be paid by members of the general public in the community offering, but without undertaking any independent investigation of state or federal law or the position of the Internal Revenue Service with respect to this issue, we are of the belief that, as a factual matter:

(1) the subscription rights will have no ascertainable market value; and

(2) the price at which the subscription rights are exercisable will not be more or less than the pro forma market value of the shares upon issuance.

Changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability and may materially impact the value of thrift stocks as a whole or the Company’s value alone. Accordingly, no assurance can be given that persons who subscribe to shares of common stock in the subscription offering will thereafter be able to buy or sell such shares at the same price paid in the subscription offering.

Sincerely,

RP^® FINANCIAL, LC.

CORRESP

[Letterhead of Luse Gorman Pomerenk & Schick, P.C.]

(202) 274-2029 kweissman@luselaw.com

June 30, 2006

VIA EDGAR

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re:	Ben Franklin Financial, Inc.
	Registration Statement on Form SB-2

Ladies and Gentlemen:

Pursuant to Rule 101 of Regulation S-T and on behalf of Ben Franklin Financial, Inc. (the “Registrant”), we are transmitting by EDGAR under the Securities Act of 1933 (the “Securities Act”) the Registrant’s Registration Statement on Form SB-2, including exhibits (the “Registration Statement”). The registration fee of $956 has been calculated in accordance with Section 6(b) of the Securities Act and Rule 457 promulgated thereunder, and was transmitted to the Securities and Exchange Commission by wire transfer in accordance with Rule 13 of Regulation S-T.

The Registration Statement relates to the issuance by the Registrant of its shares of common stock, par value $0.01 per share, in connection with its reorganization and minority stock issuance. Upon the completion of the offering, Ben Franklin Financial, MHC will be the majority owner of the Registrant.

If you have any questions or comments, please contact the undersigned at (202) 274-2029 or Benjamin Azoff at (202) 274-2010.

Very truly yours,

/s/ Kip A. Weissman

Kip A. Weissman

Enclosures
cc:	C. Steven Sjogren, President and
	Chief Executive Officer
	Benjamin Azoff, Esq.