##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K





|  |  |                                                                                             
|- |  | --------------------------------------------------------------------------------------------
|þ |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
| 
|  |  | For the Fiscal Year Ended December 31, 2005.                                                
| 
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
| 
|  |  | For the transition period
    from           to           .                                 

Commission File Number 000-51194


Benjamin Franklin
Bancorp, Inc.


(Exact name of Registrant as specified in its Charter)


|                         |  |                                     
|------------------------ |  | ------------------------------------
|Massachusetts            |  | 04-3336598                          
|(State of incorporation) |  | (I.R.S. Employer Identification No.)

P.O. Box 309


58 Main Street


Franklin, Massachusetts 02038-0309


(508) 528-7000


(Address and telephone number of principal executive
offices)


SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
ACT:


None


SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
ACT:


Common Stock, no par value





o þ


o þ


þ o


S-K 10-K 10-K. o


12b-2


o o þ


12b-2 o þ






DOCUMENTS INCORPORATED BY REFERENCE


10-K.










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##### 










TABLE OF CONTENTS


|                                                                           |  |                                                                                                                      |    |      |    | 
|-------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                                                           |  |                                                                                                                      |    | Page |   
|                                                                           |  |                                                                                                                      |    |      |   
|PART I                                                                     |  |                                                                                                                      | 2  |     
|Item 1.                                                                    |  | Business                                                                                                             |    |      | 2  | 
|                                                                           |  | General                                                                                                              |    |      | 2  | 
|                                                                           |  | Stock Conversion and Merger                                                                                          |    |      | 2  | 
|                                                                           |  | Market Area and Competition                                                                                          |    |      | 3  | 
|                                                                           |  | Lending Activities                                                                                                   |    |      | 4  | 
|                                                                           |  | Asset Quality                                                                                                        |    |      | 12 | 
|                                                                           |  | Investment Activities                                                                                                |    |      | 19 | 
|                                                                           |  | Sources of Funds                                                                                                     |    |      | 21 | 
|                                                                           |  | Employees                                                                                                            |    |      | 24 | 
|                                                                           |  | Subsidiary Activities                                                                                                |    |      | 24 | 
|                                                                           |  | Regulation and Supervision                                                                                           |    |      | 25 | 
|                                                                           |  | Forward-Looking Statements                                                                                           |    |      | 33 | 
|Item 1A.                                                                   |  | Risk Factors That May Affect Future
    Results                                                                      |    |      | 34 | 
|Item 1B.                                                                   |  | Unresolved Staff Comments                                                                                            |    |      | 38 | 
|Item 2.                                                                    |  | Properties                                                                                                           |    |      | 38 | 
|Item 3.                                                                    |  | Legal Proceedings                                                                                                    |    |      | 38 | 
|Item 4.                                                                    |  | Submission of Matters to a Vote of
    Security Holders                                                              |    |      | 39 | 
|PART II                                                                    |  |                                                                                                                      | 39 |     
|Item 5.                                                                    |  | Market for Registrants Common
    Equity, Related Stockholder Matters and Issuer Purchases of
    Equity Securities |    |      | 39 | 
|Item 6.                                                                    |  | Selected Financial Data                                                                                              |    |      | 40 | 
|Item 7.                                                                    |  | Managements Discussion and
    Analysis of Financial Condition and Results of Operations                            |    |      | 42 | 
|Item 7A.                                                                   |  | Quantitative and Qualitative Disclosures
    about Market Risk                                                       |    |      | 53 | 
|Item 8.                                                                    |  | Financial Statements and Supplementary
    Data                                                                      |    |      | 59 | 
|Item 9.                                                                    |  | Changes in and Disagreements With
    Accountants on Accounting and Financial Disclosure                             |    |      | 59 | 
|Item 9A.                                                                   |  | Controls and Procedures                                                                                              |    |      | 59 | 
|Item 9B.                                                                   |  | Other Information                                                                                                    |    |      | 60 | 
|PART III                                                                   |  |                                                                                                                      | 60 |     
|Item 10.                                                                   |  | Directors and Executive Officers of the
    Registrant                                                               |    |      | 60 | 
|Item 11.                                                                   |  | Executive Compensation                                                                                               |    |      | 60 | 
|Item 12.                                                                   |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |    |      | 60 | 
|Item 13.                                                                   |  | Certain Relationships and Related
    Transactions                                                                   |    |      | 60 | 
|Item 14.                                                                   |  | Principal Accountant Fees and
    Services                                                                           |    |      | 60 | 
|PART IV                                                                    |  |                                                                                                                      | 60 |     
|Item 15.                                                                   |  | Exhibits and Financial Statement
    Schedules                                                                       |    |      | 60 | 
|EX-10.4.1 Amended and Restated Supplemental Executive Retirement Agreement
|EX-10.4.2 Amended and Restated Supplemental Executive Retirement Agreement
|EX-21 Subsidiaries of Registrant                                          
|EX-23.1 Consent of Independent Registered Public Accounting Firm          
|EX-31.1 Certification of CEO                                              
|EX-31.2 Certification of CFO                                              
|EX-32.1 Certification of CEO                                              
|EX-32.2 Certification of CFO                                              



1



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PART I







|        |         
|------- | --------
|Item 1. | Business




General


mutual-to






www.benfranklinbank.com www.benfranklinbank.com 10-K www.sec.gov 1-800-SEC-0330.





Stock Conversion and Merger


mutual-to




2



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Market Area and Competition






|                 |  |           |        |  |                  |   |        |              |  |  |     |  
|---------------- |  | --------- | ------ |  | ---------------- | - | ------ | ------------ |  |  | --- | -
|                 |  | Per       |        |  |                  |   |       
|                 |  | Capita    |        |  | Median Household |   |        | Unemployment | 
|                 |  | Income(1) |        |  | Income(2)        |   |        | Rate(3)      | 
|                 |  |           |        |  |                  |   |        |              | 
|Norfolk County   |  | $         | 48,238 |  |                  | $ | 82,600 |              |  |  | 3.8 | %
|Middlesex County |  |           | 47,451 |  |                  |   | 80,400 |              |  |  | 3.7 | %
|Worcester County |  |           | 33,479 |  |                  |   | 58,400 |              |  |  | 4.6 | %
|Massachusetts    |  |           | 39,504 |  |                  |   | 74,400 |              |  |  | 4.4 | %
|United States    |  |           | 31,472 |  |                  |   | 58,000 |              |  |  | 4.7 | %






|    |                                                 
|--- | ------------------------------------------------
|(1) | Bureau of Economic Analysis, as of June 2005.   
|(2) | Housing and Urban Development, as of March 2005.
|(3) | FDIC website, as of December 2005.              

.7 -













3



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Lending Activities


General. one-to lines-of




4



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|                                |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         |  |        |        |         |  |         |         |         |  |        |        |         | 
|------------------------------- | ------------ | ---------------------- | ------- | ------- | ------- |  | ------ | ------ | ------- |  | ------- | ------- | ------- | ------ | ------ | ------ | ------- |  | ------- | ------- | ------- |  | ------- | ------ | ------- | ------ | ------- | ------- | ------- |  | ------ | ------ | ------- |  | ------- | ------- | ------- |  | ------ | ------ | ------- | 
|                                |              | At December 31,        |        
|                                |              |                        |        
|                                |              | 2005                   |         |         | 2004    |  |        | 2003   |         |  | 2002    |         |         | 2001   |       
|                                |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |       
|                                |              | Amount                 |         |         | Percent |  |        | Amount |         |  | Percent |         |         | Amount |        |        | Percent |  |         | Amount  |         |  | Percent |        |         | Amount |         |         | Percent | 
|                                |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         | 
|                                |              | (Dollars in thousands) |        
|Mortgage loans on real estate:  |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         |  |        |        |         |  |         |         |         |  |        |       
|                                | Residential  |                        | $       | 286,204 |         |  |        | 46.95% |         |  | $       | 241,090 |         |        |        | 62.56% |         |  | $       | 172,123 |         |  |         | 59.22% |         |        | $       | 165,007 |         |  |        | 62.58% |         |  | $       | 172,959 |         |  |        | 66.99% |        
|                                | Commercial   |                        |         | 209,009 |         |  |        | 34.29% |         |  |         | 85,911  |         |        |        | 22.29% |         |  |         | 68,652  |         |  |         | 23.62% |         |        |         | 51,357  |         |  |        | 19.48% |         |  |         | 45,532  |         |  |        | 17.64% |        
|                                | Construction |                        |         | 60,399  |         |  |        | 9.91%  |         |  |         | 28,651  |         |        |        | 7.43%  |         |  |         | 23,936  |         |  |         | 8.23%  |         |        |         | 21,082  |         |  |        | 8.00%  |         |  |         | 19,106  |         |  |        | 7.40%  |        
|                                | Home equity  |                        |         | 32,419  |         |  |        | 5.32%  |         |  |         | 23,199  |         |        |        | 6.02%  |         |  |         | 18,171  |         |  |         | 6.25%  |         |        |         | 16,507  |         |  |        | 6.26%  |         |  |         | 11,161  |         |  |        | 4.32%  |        
|                                |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         | 
|                                |              |                        | 588,031 |         |         |  | 96.46% |        |         |  | 378,851 |         |         |        | 98.30% |        |         |  | 282,882 |         |         |  | 97.32%  |        |         |        | 253,953 |         |         |  | 96.32% |        |         |  | 248,758 |         |         |  | 96.35% |       
|                                |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         | 
|Other loans:                    |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         |  |        |        |         |  |         |         |         |  |        |       
|                                | Commercial   |                        |         | 19,162  |         |  |        | 3.14%  |         |  |         | 4,375   |         |        |        | 1.14%  |         |  |         | 5,559   |         |  |         | 1.92%  |         |        |         | 6,552   |         |  |        | 2.48%  |         |  |         | 5,512   |         |  |        | 2.14%  |        
|                                | Consumer     |                        |         | 2,395   |         |  |        | 0.39%  |         |  |         | 2,170   |         |        |        | 0.56%  |         |  |         | 2,219   |         |  |         | 0.76%  |         |        |         | 3,157   |         |  |        | 1.20%  |         |  |         | 3,899   |         |  |        | 1.51%  |        
|                                |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         | 
|                                |              |                        | 21,557  |         |         |  | 3.54%  |        |         |  | 6,545   |         |         |        | 1.70%  |        |         |  | 7,778   |         |         |  | 2.68%   |        |         |        | 9,709   |         |         |  | 3.68%  |        |         |  | 9,411   |         |         |  | 3.65%  |       
|                                |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         | 
|                                |              | Total loans            |         |         | 609,588 |  |        |        | 100.00% |  |         |         | 385,396 |        |        |        | 100.00% |  |         |         | 290,660 |  |         |        | 100.00% |        |         |         | 263,662 |  |        |        | 100.00% |  |         |         | 258,169 |  |        |        | 100.00% | 
|                                |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         | 
|Other items:                    |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         |  |        |        |         |  |         |         |         |  |        |       
|Deferred loan origination costs |              |                        | 1,214   |         |         |  |        |        |         |  | 1,149   |         |         |        |        |        |         |  | 725     |         |         |  |         |        |         |        | 583     |         |         |  |        |        |         |  | 574     |         |         |  |        |       
|Allowance for loan losses       |              |                        | (5,670  | )       |         |  |        |        |         |  | (3,172  | )       |         |        |        |        |         |  | (2,523  | )       |         |  |         |        |         |        | (2,312  | )       |         |  |        |        |         |  | (1,177  | )       |         |  |        |       
|                                |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         | 
|                                |              | Total loans, net       |         | $       | 605,132 |  |        |        |         |  |         | $       | 383,373 |        |        |        |         |  |         | $       | 288,862 |  |         |        |         |        |         | $       | 261,933 |  |        |        |         |  |         | $       | 257,566 |  |        |        |         | 
|                                |              |                        |         |         |         |  |        |        |         |  |         |         |         |        |        |        |         |  |         |         |         |  |         |        |         |        |         |         |         | 

5



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Residential Real Estate Loans.








loan-to loan-to




Commercial Real Estate Loans.


6



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Construction Loans.


loan-to




7



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one-to loan-to loan-to




Home Equity
Lines-of-Credit and
Loans. lines-of lines-of lines-of


lines-of one-to lines-of lines-of


Commercial Business Loans.






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Consumer and Other Loans.


Loan Origination and Underwriting.


lines-of




9



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|                                                 |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |         |        |         |         |         |        |        |         | 
|------------------------------------------------ | ------------------------------ | -------------------------------- | ---------------------- | ------ | ------ | ------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | ------ | ------- | 
|                                                 |                                | For the Years Ended December 31, |                       
|                                                 |                                |                                  |                       
|                                                 |                                | 2005                             |                        |        | 2004   |         |         | 2003   |         |         | 2002    |        |         | 2001    |        
|                                                 |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |        
|                                                 |                                | (Dollars in thousands)           |                       
|Loans at beginning of year                       |                                | $                                | 385,396                |        |        | $       | 290,660 |        |         | $       | 263,662 |        |         | $       | 258,169 |        |         | $       | 284,637 |       
|                                                 |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |        
|Originations:                                    |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |         |        |         |         |         |       
|                                                 | Mortgage loans on real estate: |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |         |        |         |         |         |        |       
|                                                 |                                | Residential                      |                        |        | 61,132 |         |         |        | 116,866 |         |         |        | 183,263 |         |         |        | 151,241 |         |         |        | 94,461 |        
|                                                 |                                | Commercial                       |                        |        | 81,759 |         |         |        | 26,167  |         |         |        | 27,105  |         |         |        | 23,383  |         |         |        | 9,371  |        
|                                                 |                                | Construction                     |                        |        | 49,376 |         |         |        | 43,661  |         |         |        | 16,176  |         |         |        | 22,524  |         |         |        | 32,301 |        
|                                                 |                                | Home equity                      |                        |        | 17,990 |         |         |        | 15,947  |         |         |        | 17,115  |         |         |        | 14,509  |         |         |        | 9,104  |        
|                                                 |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |        
|                                                 |                                |                                  | 210,257                |        |        |         | 202,642 |        |         |         | 243,659 |        |         |         | 211,657 |        |         |         | 145,237 |       
|                                                 | Other loans:                   |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |         |        |         |         |         |        |       
|                                                 |                                | Commercial                       |                        |        | 11,682 |         |         |        | 3,338   |         |         |        | 1,584   |         |         |        | 1,310   |         |         |        | 1,933  |        
|                                                 |                                | Consumer                         |                        |        | 1,993  |         |         |        | 1,659   |         |         |        | 1,625   |         |         |        | 1,953   |         |         |        | 3,502  |        
|                                                 |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |        
|                                                 |                                |                                  | 13,675                 |        |        |         | 4,996   |        |         |         | 3,209   |        |         |         | 3,263   |        |         |         | 5,435   |       
|                                                 |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |        
|                                                 |                                |                                  | Total loans originated |        |        | 223,932 |         |        |         | 207,638 |         |        |         | 246,869 |         |        |         | 214,920 |         |        |        | 150,672 | 
|Loans acquired through acquisition of Chart Bank |                                |                                  | 185,847                |        |        |         |        |        |         |         |        |        |         |         |        |        |         |         |        |       
|Purchases of mortgage loans                      |                                |                                  |                       |        |        |         | 34,207  |        |         |         | 26,546  |        |         |         | 1,298   |        |         |         | 853     |       
|                                                 |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |        
|Deduct:                                          |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |         |        |         |         |         |       
|Principal loan repayments and prepayments        |                                |                                  | 162,348                |        |        |         | 115,907 |        |         |         | 149,623 |        |         |         | 140,554 |        |         |         | 114,717 |       
|                                                 | Loan sales                     |                                  |                        | 23,160 |        |         |         | 31,185 |         |         |         | 96,256 |         |         |         | 69,752 |         |         |         | 63,244 |       
|                                                 | Charge-offs                    |                                  |                        | 79     |        |         |         | 17     |         |         |         | 537    |         |         |         | 419    |         |         |         | 32     |       
|                                                 |                                |                                  | Total deductions       |        |        | 185,587 |         |        |         | 147,109 |         |        |         | 246,416 |         |        |         | 210,725 |         |        |        | 177,993 | 
|                                                 |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |        
|Net increase (decrease) in loans                 |                                |                                  | 224,192                |        |        |         | 94,736  |        |         |         | 26,998  |        |         |         | 5,493   |        |         |         | (26,468 | )     
|                                                 |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |        
|Loans at end of year                             |                                | $                                | 609,588                |        |        | $       | 385,396 |        |         | $       | 290,660 |        |         | $       | 263,662 |        |         | $       | 258,169 |       
|                                                 |                                |                                  |                        |        |        |         |         |        |         |         |         |        |         |         |        





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Loan Maturity.


|                                 |       |                      |         |          |                     |                        |      |              |          |   |         |         |  |          |      |      |      |   |        |        |  |  |      |      |  
|-------------------------------- | ----- | -------------------- | ------- | -------- | ------------------- | ---------------------- | ---- | ------------ | -------- | - | ------- | ------- |  | -------- | ---- | ---- | ---- | - | ------ | ------ |  |  | ---- | ---- | -
|                                 |       | Residential Mortgage |         |          | Commercial Mortgage |                        |      | Construction |         
|                                 |       |                      |         |          |                     |                        |      |              |         
|                                 |       |                      |         | Weighted |                     |                        |      |              | Weighted |   |         |         |  | Weighted |     
|                                 |       |                      |         | Average  |                     |                        |      |              | Average  |   |         |         |  | Average  |     
|                                 |       | Amount               |         |          | Rate                |                        |      | Amount       |          |   | Rate    |         |  | Amount   |      |      | Rate |  
|                                 |       |                      |         |          |                     |                        |      |              |          |   |         |         |  |          |      |      |      |  
|                                 |       |                      |         |          |                     | (Dollars in thousands) |      |              |          |   |        
|Due less than one year           |       | $                    | 10,882  |          |                     |                        | 5.25 | %            |          | $ | 17,519  |         |  |          | 7.02 | %    |      | $ | 46,613 |        |  |  | 7.43 | %   
|Due after one year to five years |       |                      | 49,108  |          |                     |                        | 4.95 | %            |          |   | 55,636  |         |  |          | 6.55 | %    |      |   | 9,996  |        |  |  | 7.88 | %   
|Due after five years             |       |                      | 226,214 |          |                     |                        | 4.72 | %            |          |   | 135,854 |         |  |          | 6.23 | %    |      |   | 3,790  |        |  |  | 6.88 | %   
|                                 |       |                      |         |          |                     |                        |      |              |          |   |         |         |  |          |      |      |      |  
|                                 | Total |                      | $       | 286,204  |                     |                        |      | 4.78         | %        |   | $       | 209,009 |  |          |      | 6.38 | %    |   | $      | 60,399 |  |  |      | 7.47 | %
|                                 |       |                      |         |          |                     |                        |      |              |          |   |         |         |  |          |      |      |      |  

|                                 |       |            |        |          |          |                        |      |        |          |   |        |        |  |          |      |      |      |   |         |         |  |  |      |      |  
|-------------------------------- | ----- | ---------- | ------ | -------- | -------- | ---------------------- | ---- | ------ | -------- | - | ------ | ------ |  | -------- | ---- | ---- | ---- | - | ------- | ------- |  |  | ---- | ---- | -
|                                 |       | Commercial |        |          | Consumer |                        |      | Total  |         
|                                 |       |            |        |          |          |                        |      |        |         
|                                 |       |            |        | Weighted |          |                        |      |        | Weighted |   |        |        |  | Weighted |     
|                                 |       |            |        | Average  |          |                        |      |        | Average  |   |        |        |  | Average  |     
|                                 |       | Amount     |        |          | Rate     |                        |      | Amount |          |   | Rate   |        |  | Amount   |      |      | Rate |  
|                                 |       |            |        |          |          |                        |      |        |          |   |        |        |  |          |      |      |      |  
|                                 |       |            |        |          |          | (Dollars in thousands) |      |        |          |   |       
|Due less than one year           |       | $          | 12,600 |          |          |                        | 8.08 | %      |          | $ | 10,245 |        |  |          | 7.27 | %    |      | $ | 97,859  |         |  |  | 7.18 | %   
|Due after one year to five years |       |            | 4,568  |          |          |                        | 7.25 | %      |          |   | 2,420  |        |  |          | 6.42 | %    |      |   | 121,728 |         |  |  | 6.04 | %   
|Due after five years             |       |            | 1,994  |          |          |                        | 7.82 | %      |          |   | 22,149 |        |  |          | 6.80 | %    |      |   | 390,001 |         |  |  | 5.40 | %   
|                                 |       |            |        |          |          |                        |      |        |          |   |        |        |  |          |      |      |      |  
|                                 | Total |            | $      | 19,162   |          |                        |      | 7.86   | %        |   | $      | 34,814 |  |          |      | 6.91 | %    |   | $       | 609,588 |  |  |      | 5.81 | %
|                                 |       |            |        |          |          |                        |      |        |          |   |        |        |  |          |      |      |      |  

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|                                |             |                        |        |         |            |   |         |         |  |   |         |         | 
|------------------------------- | ----------- | ---------------------- | ------ | ------- | ---------- | - | ------- | ------- |  | - | ------- | ------- | 
|                                |             | Fixed                  |        |         | Adjustable |   |         | Total   | 
|                                |             |                        |        |         |            |   |         |         | 
|                                |             | (Dollars in thousands) |       
|Residential mortgage            |             | $                      | 88,164 |         |            | $ | 187,158 |         |  | $ | 275,322 |        
|Commercial mortgage             |             |                        | 22,894 |         |            |   | 168,597 |         |  |   | 191,491 |        
|Construction                    |             |                        | 965    |         |            |   | 12,821  |         |  |   | 13,786  |        
|Commercial                      |             |                        | 3,217  |         |            |   | 3,344   |         |  |   | 6,561   |        
|Home equity, consumer and other |             |                        | 5,171  |         |            |   | 19,398  |         |  |   | 24,569  |        
|                                |             |                        |        |         |            |   |         |         | 
|                                | Total Loans |                        | $      | 120,412 |            |   | $       | 391,318 |  |   | $       | 511,729 | 
|                                |             |                        |        |         |            |   |         |         | 




Asset Quality


General.


Delinquent Loans. one-to


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|                     |                      |                        |  |    |                  |  |   |        |     |  |        |   |   |        |   |    |        |  |  |    |    |  |   |     |     | 
|-------------------- | -------------------- | ---------------------- |  | -- | ---------------- |  | - | ------ | --- |  | ------ | - | - | ------ | - | -- | ------ |  |  | -- | -- |  | - | --- | --- | 
|                     |                      | Loans Delinquent for   |  |    |                  |  |  
|                     |                      |                        |  |    |                  |  |  
|                     |                      | 60-89 Days             |  |    | 90 Days and Over |  |   | Total  |    
|                     |                      |                        |  |    |                  |  |   |        |    
|                     |                      | Number                 |  |    | Amount           |  |   | Number |     |  | Amount |   |   | Number |   |    | Amount | 
|                     |                      |                        |  |    |                  |  |   |        |     |  |        |   |   |        |   |    |        | 
|                     |                      | (Dollars in thousands) | 
|At December 31, 2005 |                      |                        |  |    |                  |  |   |        |     |  |        |   |   |        |   |    |        |  |  |    |    |  |   |    
|                     | Residential mortgage |                        |  | 2  |                  |  | $ | 157    |     |  |        |  |   |        | $ |   |        |  |  | 2  |    |  | $ | 157 |    
|                     | Commercial mortgage  |                        |  |   |                  |  |   |       |     |  |        |  |   |        |   |   |        |  |  |   |    |  |   |    |    
|                     | Construction         |                        |  |   |                  |  |   |       |     |  |        |  |   |        |   |   |        |  |  |   |    |  |   |    |    
|                     | Commercial           |                        |  | 1  |                  |  |   | 11     |     |  |        | 1 |   |        |   | 40 |        |  |  | 2  |    |  |   | 51  |    
|                     | Consumer             |                        |  | 10 |                  |  |   | 169    |     |  |        | 4 |   |        |   | 27 |        |  |  | 14 |    |  |   | 196 |    
|                     |                      |                        |  |    |                  |  |   |        |     |  |        |   |   |        |   |    |        | 
|                     |                      | Total                  |  |    | 13               |  |   | $      | 337 |  |        |   | 5 |        |   | $  | 67     |  |  |    | 18 |  |   | $   | 404 | 
|                     |                      |                        |  |    |                  |  |   |        |     |  |        |   |   |        |   |    |        | 
|At December 31, 2004 |                      |                        |  |    |                  |  |   |        |     |  |        |   |   |        |   |    |        |  |  |    |    |  |   |    
|                     | Residential mortgage |                        |  | 2  |                  |  | $ | 163    |     |  |        |  |   |        | $ |   |        |  |  | 2  |    |  | $ | 163 |    
|                     | Commercial mortgage  |                        |  |   |                  |  |   |       |     |  |        |  |   |        |   |   |        |  |  |   |    |  |   |    |    
|                     | Construction         |                        |  |   |                  |  |   |       |     |  |        |  |   |        |   |   |        |  |  |   |    |  |   |    |    
|                     | Commercial           |                        |  | 1  |                  |  |   | 32     |     |  |        |  |   |        |   |   |        |  |  | 1  |    |  |   | 32  |    
|                     | Consumer             |                        |  | 2  |                  |  |   | 1      |     |  |        | 4 |   |        |   | 3  |        |  |  | 6  |    |  |   | 4   |    
|                     |                      |                        |  |    |                  |  |   |        |     |  |        |   |   |        |   |    |        | 
|                     |                      | Total                  |  |    | 5                |  |   | $      | 196 |  |        |   | 4 |        |   | $  | 3      |  |  |    | 9  |  |   | $   | 199 | 
|                     |                      |                        |  |    |                  |  |   |        |     |  |        |   |   |        |   |    |        | 
|At December 31, 2003 |                      |                        |  |    |                  |  |   |        |     |  |        |   |   |        |   |    |        |  |  |    |    |  |   |    
|                     | Residential mortgage |                        |  | 5  |                  |  | $ | 538    |     |  |        |  |   |        | $ |   |        |  |  | 5  |    |  | $ | 538 |    
|                     | Commercial mortgage  |                        |  |   |                  |  |   |       |     |  |        |  |   |        |   |   |        |  |  |   |    |  |   |    |    
|                     | Construction         |                        |  |   |                  |  |   |       |     |  |        |  |   |        |   |   |        |  |  |   |    |  |   |    |    
|                     | Commercial           |                        |  | 1  |                  |  |   | 160    |     |  |        |  |   |        |   |   |        |  |  | 1  |    |  |   | 160 |    
|                     | Consumer             |                        |  | 12 |                  |  |   | 12     |     |  |        | 8 |   |        |   | 5  |        |  |  | 20 |    |  |   | 17  |    
|                     |                      |                        |  |    |                  |  |   |        |     |  |        |   |   |        |   |    |        | 
|                     |                      | Total                  |  |    | 18               |  |   | $      | 710 |  |        |   | 8 |        |   | $  | 5      |  |  |    | 26 |  |   | $   | 715 | 
|                     |                      |                        |  |    |                  |  |   |        |     |  |        |   |   |        |   |    |        | 

Other Real Estate Owned.


Classification of Assets and Loan Review.




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Non-Performing Assets.


|                                                              |                                       |                                        |     |      |      |   |     |      |     |   |      |      |     |      |   |      |   |   |     |      |     | 
|------------------------------------------------------------- | ------------------------------------- | -------------------------------------- | --- | ---- | ---- | - | --- | ---- | --- | - | ---- | ---- | --- | ---- | - | ---- | - | - | --- | ---- | --- | 
|                                                              |                                       | At December 31,                        |    
|                                                              |                                       |                                        |    
|                                                              |                                       | 2005                                   |     |      | 2004 |   |     | 2003 |     |   | 2002 |      |     | 2001 |  
|                                                              |                                       |                                        |     |      |      |   |     |      |     |   |      |      |     |      |  
|                                                              |                                       | (Dollars in thousands)                 |    
|Non-accrual loans:                                            |                                       |                                        |     |      |      |   |     |      |     |   |      |      |     |      |   |      |   |   |     |     
|                                                              | Residential mortgage                  |                                        | $   | 184  |      |   | $   |     |     |   | $    |     |     |      | $ |     |   |   | $   |     |    
|                                                              | Commercial mortgage                   |                                        |     |     |      |   |     |     |     |   |      |     |     |      |   |     |   |   |     |     |    
|                                                              | Construction                          |                                        |     |     |      |   |     |     |     |   |      |     |     |      |   |     |   |   |     |     |    
|                                                              | Commercial                            |                                        |     | 256  |      |   |     | 334  |     |   |      | 458  |     |      |   |     |   |   |     | 157  |    
|                                                              | Consumer and other                    |                                        |     | 25   |      |   |     |     |     |   |      |     |     |      |   |     |   |   |     |     |    
|                                                              |                                       |                                        |     |      |      |   |     |      |     |   |      |      |     |      |  
|                                                              |                                       | Total non-performing loans             |     | $    | 465  |   |     | $    | 334 |   |      | $    | 458 |      |   | $    |  |   |     | $    | 157 | 
|                                                              |                                       |                                        |     |      |      |   |     |      |     |   |      |      |     |      |  
|Loans greater than 90 days delinquent and still
    accruing: |                                       |                                        |     |      |      |   |     |      |     |   |      |      |     |      |   |      |   |   |     |     
|                                                              | Residential mortgage                  |                                        | $   |     |      |   | $   |     |     |   | $    |     |     |      | $ |     |   |   | $   |     |    
|                                                              | Commercial mortgage                   |                                        |     |     |      |   |     |     |     |   |      |     |     |      |   |     |   |   |     |     |    
|                                                              | Construction                          |                                        |     |     |      |   |     |     |     |   |      |     |     |      |   |     |   |   |     |     |    
|                                                              | Commercial                            |                                        |     |     |      |   |     |     |     |   |      |     |     |      |   |     |   |   |     |     |    
|                                                              | Consumer and other                    |                                        |     | 2    |      |   |     | 3    |     |   |      | 5    |     |      |   | 2    |   |   |     |     |    
|                                                              |                                       |                                        |     |      |      |   |     |      |     |   |      |      |     |      |  
|                                                              |                                       | Total loans 90 days and still accruing |     | $    | 2    |   |     | $    | 3   |   |      | $    | 5   |      |   | $    | 2 |   |     | $    |    | 
|                                                              |                                       |                                        |     |      |      |   |     |      |     |   |      |      |     |      |  
|Total non-performing assets                                   |                                       | $                                      | 467 |      |      | $ | 337 |      |     | $ | 463  |      |     | $    | 2 |      |   | $ | 157 |     
|                                                              |                                       |                                        |     |      |      |   |     |      |     |   |      |      |     |      |  
|Ratios:                                                       |                                       |                                        |     |      |      |   |     |      |     |   |      |      |     |      |   |      |   |   |     |     
|                                                              | Non-performing loans to total loans   |                                        |     | 0.08 | %    |   |     | 0.09 | %   |   |      | 0.16 | %   |      |   | 0.00 | % |   |     | 0.06 | %  
|                                                              | Non-performing assets to total assets |                                        |     | 0.05 | %    |   |     | 0.07 | %   |   |      | 0.10 | %   |      |   | 0.00 | % |   |     | 0.04 | %  



Allowance for Loan Losses.




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|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |           |      |      |   |        |     |     |  
|----------------------------------------------------------------- | ----------------- | -------------------------------------- | ------- | --- | ---- | - | ------ | ---- | --- | - | ------ | ---- | ---- | ---- | --------- | ---- | ---- | - | ------ | --- | --- | -
|                                                                  |                   | At or For the Years Ended December 31, |        
|                                                                  |                   |                                        |        
|                                                                  |                   | 2005                                   |         |     | 2004 |   |        | 2003 |     |   | 2002   |      |      | 2001 |          
|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |          
|                                                                  |                   | (Dollars in thousands)                 |        
|Balance at beginning of year                                      |                   | $                                      | 3,172   |     |      | $ | 2,523  |      |     | $ | 2,312  |      |      | $    | 1,177     |      |      | $ | 1,068  |    
|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |          
|Allowance added from acquisition of Chart Bank                    |                   |                                        | 1,812   |     |      |   |       |      |     |   |       |      |      |      |          |      |      |   |       |    
|Charge-offs:                                                      |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |           |      |      |   |        |    
|Mortgage loans on real estate                                     |                   |                                        |        |     |      |   |       |      |     |   |       |      |      |      |          |      |      |   |       |    
|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |          
|                                                                  |                   |                                        |        |     |      |   |       |      |     |   |       |      |      |      |          |      |      |   |       |    
|Other loans:                                                      |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |           |      |      |   |        |    
|                                                                  | Commercial        |                                        |         | (68 | )    |   |        |     |     |   |        | (43  | )    |      |           | (389 | )    |   |        | (10 | )  
|                                                                  | Consumer          |                                        |         | (11 | )    |   |        | (17  | )   |   |        | (494 | )    |      |           | (30  | )    |   |        | (22 | )  
|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |          
|                                                                  |                   | Total other loans                      |         |     | (79  | ) |        |      | (17 | ) |        |      | (537 | )    |           |      | (419 | ) |        |     | (32 | )
|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |          
|                                                                  | Total charge-offs |                                        |         | (79 | )    |   |        | (17  | )   |   |        | (537 | )    |      |           | (419 | )    |   |        | (32 | )  
|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |          
|Recoveries:                                                       |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |           |      |      |   |        |    
|Mortgage loans on real estate                                     |                   |                                        |        |     |      |   |       |      |     |   |       |      |      |      |          |      |      |   | 20     |    
|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |          
|                                                                  |                   |                                        |        |     |      |   |       |      |     |   |       |      |      |      |          |      |      |   | 20     |    
|Other loans:                                                      |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |           |      |      |   |        |    
|                                                                  | Commercial        |                                        |         | 71  |      |   |        | 35   |     |   |        | 100  |      |      |           | 132  |      |   |        | 55  |    
|                                                                  | Consumer          |                                        |         | 8   |      |   |        | 11   |     |   |        | 23   |      |      |           | 10   |      |   |        | 15  |    
|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |          
|                                                                  |                   | Total other loans                      |         |     | 79   |   |        |      | 46  |   |        |      | 123  |      |           |      | 142  |   |        |     | 70  |  
|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |          
|                                                                  | Total recoveries  |                                        |         | 79  |      |   |        | 46   |     |   |        | 123  |      |      |           | 142  |      |   |        | 90  |    
|Net (charge-offs)/ recoveries                                     |                   |                                        |        |     |      |   | 29     |      |     |   | (414   | )    |      |      | (277      | )    |      |   | 58     |    
|Provision for loan losses                                         |                   |                                        | 686     |     |      |   | 620    |      |     |   | 625    |      |      |      | 1,412     |      |      |   | 51     |    
|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |          
|Balance at end of year                                            |                   | $                                      | 5,670   |     |      | $ | 3,172  |      |     | $ | 2,523  |      |      | $    | 2,312     |      |      | $ | 1,177  |    
|                                                                  |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |          
|Ratios:                                                           |                   |                                        |         |     |      |   |        |      |     |   |        |      |      |      |           |      |      |   |        |    
|Net (charge-offs)/recoveries to average loans outstanding         |                   |                                        | 0.00    | %   |      |   | 0.01   | %    |     |   | (0.15  | )%   |      |      | (0.11     | )%   |      |   | 0.02   | %  
|Allowance for loan losses to non- performing loans at end of year |                   |                                        | 1214.13 | %   |      |   | 940.56 | %    |     |   | 544.82 | %    |      |      | 115600.00 | %    |      |   | 749.45 | %  
|Allowance for loan losses to total loans at end of year(1)        |                   |                                        | 0.93    | %   |      |   | 0.82   | %    |     |   | 0.87   | %    |      |      | 0.88      | %    |      |   | 0.46   | %  






|    |                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The increase in the allowance for loan losses as a percentage of
    the loan portfolio as of December 31, 2005 compared to
    December 31, 2004 was primarily due to an increase in the
    proportion of commercial loans in the portfolio.

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|                               |                |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |       |          |  |         |           |         |  |          |        |         |          |       |       |       |  |         |         |         |  |        |        |         | 
|------------------------------ | -------------- | ---------------------- | ----- | -------- | -------- |  | ------- | -------- | -------- |  | --------- | ------ | ------- | -------- | ------- | ----- | -------- |  | ------- | --------- | ------- |  | -------- | ------ | ------- | -------- | ----- | ----- | ----- |  | ------- | ------- | ------- |  | ------ | ------ | ------- | 
|                               |                | At December 31,        |      
|                               |                |                        |      
|                               |                | 2005                   |       |          | 2004     |  |         | 2003     |         
|                               |                |                        |       |          |          |  |         |          |         
|                               |                |                        |       | Percent  |          |  |         |          | Percent  |  |           |        |         | Percent  |        
|                               |                |                        |       | of Loans |          |  |         |          | of Loans |  |           |        |         | of Loans |        
|                               |                |                        |       | Loan     |          |  | in Each |          |          |  |           | Loan   |         |          | in Each |       |          |  |         | Loan      |         |  | in Each  |       
|                               |                | Allowance              |       |          | Balances |  |         | Category |          |  | Allowance |        |         | Balances |         |       | Category |  |         | Allowance |         |  | Balances |        |         | Category |      
|                               |                | for Loan               |       |          | by       |  |         | to Total |          |  | for Loan  |        |         | by       |         |       | to Total |  |         | for Loan  |         |  | by       |        |         | to Total |      
|                               |                | Losses                 |       |          | Category |  |         | Loans    |          |  | Losses    |        |         | Category |         |       | Loans    |  |         | Losses    |         |  | Category |        |         | Loans    |      
|                               |                |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |       |          |  |         |           |         |  |          |        |         |          |      
|                               |                | (Dollars in thousands) |      
|Mortgage loans on real estate: |                |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |       |          |  |         |           |         |  |          |        |         |          |       |       |       |  |         |         |         |  |        |       
|                               | Residential    |                        | $     | 727      |          |  | $       | 286,204  |          |  |           | 46.95% |         |          | $       | 612   |          |  | $       | 241,090   |         |  |          | 62.56% |         |          | $     | 485   |       |  | $       | 172,123 |         |  |        | 59.22% |        
|                               | Commercial     |                        |       | 2,652    |          |  |         | 209,009  |          |  |           | 34.29% |         |          |         | 1,295 |          |  |         | 85,911    |         |  |          | 22.29% |         |          |       | 1,136 |       |  |         | 68,652  |         |  |        | 23.62% |        
|                               | Construction   |                        |       | 947      |          |  |         | 60,399   |          |  |           | 9.91%  |         |          |         | 505   |          |  |         | 28,651    |         |  |          | 7.43%  |         |          |       | 338   |       |  |         | 23,936  |         |  |        | 8.24%  |        
|                               | Home equity    |                        |       | 270      |          |  |         | 32,419   |          |  |           | 5.32%  |         |          |         | 193   |          |  |         | 23,199    |         |  |          | 6.02%  |         |          |       | 108   |       |  |         | 18,171  |         |  |        | 6.25%  |        
|                               |                |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |       |          |  |         |           |         |  |          |        |         |          |      
|                               |                |                        | 4,596 |          |          |  | 588,031 |          |          |  | 96.46%    |        |         |          | 2,605   |       |          |  | 378,851 |           |         |  | 98.30%   |        |         |          | 2,067 |       |       |  | 282,882 |         |         |  | 97.32% |       
|                               |                |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |       |          |  |         |           |         |  |          |        |         |          |      
|Other loans:                   |                |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |       |          |  |         |           |         |  |          |        |         |          |       |       |       |  |         |         |         |  |        |       
|                               | Commercial     |                        |       | 714      |          |  |         | 19,162   |          |  |           | 3.14%  |         |          |         | 325   |          |  |         | 4,375     |         |  |          | 1.14%  |         |          |       | 421   |       |  |         | 5,559   |         |  |        | 1.91%  |        
|                               | Consumer       |                        |       | 50       |          |  |         | 2,395    |          |  |           | 0.39%  |         |          |         | 27    |          |  |         | 2,170     |         |  |          | 0.56%  |         |          |       | 27    |       |  |         | 2,219   |         |  |        | 0.76%  |        
|                               | Unallocated(1) |                        |       | 310      |          |  |         | 0        |          |  |           | 0.00%  |         |          |         | 215   |          |  |         | 0         |         |  |          | 0.00%  |         |          |       | 8     |       |  |         | 0       |         |  |        | 0.00%  |        
|                               |                |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |       |          |  |         |           |         |  |          |        |         |          |      
|                               |                |                        | 1,074 |          |          |  | 21,557  |          |          |  | 3.54%     |        |         |          | 567     |       |          |  | 6,545   |           |         |  | 1.70%    |        |         |          | 456   |       |       |  | 7,778   |         |         |  | 2.68%  |       
|                               |                |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |       |          |  |         |           |         |  |          |        |         |          |      
|                               |                | Total                  |       | $        | 5,670    |  |         | $        | 609,588  |  |           |        | 100.00% |          |         | $     | 3,172    |  |         | $         | 385,396 |  |          |        | 100.00% |          |       | $     | 2,523 |  |         | $       | 290,660 |  |        |        | 100.00% | 
|                               |                |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |       |          |  |         |           |         |  |          |        |         |          |      

|                               |              |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |     |          |  |         |         |         |  |        |        |         | 
|------------------------------ | ------------ | ---------------------- | ----- | -------- | -------- |  | ------- | -------- | -------- |  | --------- | ------ | ------- | -------- | ------- | --- | -------- |  | ------- | ------- | ------- |  | ------ | ------ | ------- | 
|                               |              | At December 31,        |      
|                               |              |                        |      
|                               |              | 2002                   |       |          | 2001     | 
|                               |              |                        |       |          |          | 
|                               |              |                        |       | Percent  |          |  |         |          | Percent  | 
|                               |              |                        |       | of Loans |          |  |         |          | of Loans | 
|                               |              |                        |       | Loan     |          |  | in Each |          |          |  |           | Loan   |         |          | in Each |    
|                               |              | Allowance              |       |          | Balances |  |         | Category |          |  | Allowance |        |         | Balances |         |     | Category | 
|                               |              | for Loan               |       |          | by       |  |         | to Total |          |  | for Loan  |        |         | by       |         |     | to Total | 
|                               |              | Losses                 |       |          | Category |  |         | Loans    |          |  | Losses    |        |         | Category |         |     | Loans    | 
|                               |              |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |     |          | 
|                               |              | (Dollars in thousands) |      
|Mortgage loans on real estate: |              |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |     |          |  |         |         |         |  |        |       
|                               | Residential  |                        | $     | 552      |          |  | $       | 165,007  |          |  |           | 62.58% |         |          | $       | 433 |          |  | $       | 172,959 |         |  |        | 66.99% |        
|                               | Commercial   |                        |       | 549      |          |  |         | 51,357   |          |  |           | 19.48% |         |          |         | 236 |          |  |         | 45,532  |         |  |        | 17.64% |        
|                               | Construction |                        |       | 422      |          |  |         | 21,082   |          |  |           | 8.00%  |         |          |         | 143 |          |  |         | 19,106  |         |  |        | 7.40%  |        
|                               | Home equity  |                        |       | 82       |          |  |         | 16,507   |          |  |           | 6.50%  |         |          |         | 28  |          |  |         | 11,161  |         |  |        | 4.32%  |        
|                               |              |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |     |          | 
|                               |              |                        | 1,605 |          |          |  | 253,953 |          |          |  | 96.32%    |        |         |          | 840     |     |          |  | 248,758 |         |         |  | 96.35% |       
|                               |              |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |     |          | 
|Other loans:                   |              |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |     |          |  |         |         |         |  |        |       
|                               | Commercial   |                        |       | 181      |          |  |         | 6,552    |          |  |           | 2.48%  |         |          |         | 90  |          |  |         | 5,512   |         |  |        | 2.14%  |        
|                               | Consumer     |                        |       | 276      |          |  |         | 3,157    |          |  |           | 1.20%  |         |          |         | 30  |          |  |         | 3,899   |         |  |        | 1.51%  |        
|                               | Unallocated  |                        |       | 250      |          |  |         | 0        |          |  |           | 0.00%  |         |          |         | 217 |          |  |         | 0       |         |  |        | 0.00%  |        
|                               |              |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |     |          | 
|                               |              |                        | 707   |          |          |  | 9,709   |          |          |  | 3.68%     |        |         |          | 337     |     |          |  | 9,411   |         |         |  | 3.65%  |       
|                               |              |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |     |          | 
|                               |              | Total                  |       | $        | 2,312    |  |         | $        | 263,662  |  |           |        | 100.00% |          |         | $   | 1,177    |  |         | $       | 258,169 |  |        |        | 100.00% | 
|                               |              |                        |       |          |          |  |         |          |          |  |           |        |         |          |         |     |          | 

18



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The unallocated portion of the allowance for loan losses is
    intended to capture the exposure, if any, that may exist as a
    result of a number qualitative factors that are difficult to
    quantify with precision. The Company increased the unallocated
    portion of the allowance in 2004 and 2005, compared to 2003,
    based on managements analysis of general business and
    economic conditions, the seasoning of the loan portfolio, the
    level of real estate values in Massachusetts, changes in the
    composition of the loan officer and support staff, and the
    allowance as a percentage of total loans.




Investment Activities


General.




Government-sponsored Enterprise Obligations.


Corporate and Municipal Obligations.


Mortgage-Backed Securities.


Restricted Equity Securities.


19



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|                               |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            |  |        |        |         |  |        |        |         | 
|------------------------------ | --------------------------------------------------- | ----------------------------------- | ------ | ------ | ---------- |  | ------ | -------------- | ------- |  | ---------- | ------ | ------ | -------------- | ------ | ------ | ---------- |  | ------ | ------ | ------- |  | ------ | ------ | ------- | 
|                               |                                                     | At December 31,                     |       
|                               |                                                     |                                     |       
|                               |                                                     | 2005                                |        |        | 2004       |  |        | 2003           |        
|                               |                                                     |                                     |        |        |            |  |        |                |        
|                               |                                                     | Amortized Cost                      |        |        | Fair Value |  |        | Amortized Cost |         |  | Fair Value |        |        | Amortized Cost |        |        | Fair Value | 
|                               |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            | 
|                               |                                                     | (Dollars in thousands)              |       
|Securities available for sale: |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            |  |        |        |         |  |        |       
|                               | Government-sponsored enterprise obligations         |                                     | $      | 86,141 |            |  | $      | 85,494         |         |  | $          | 33,607 |        |                | $      | 33,306 |            |  | $      | 30,272 |         |  | $      | 30,347 |        
|                               | State agency and municipal obligations              |                                     |        | 2,211  |            |  |        | 2,191          |         |  |            |       |        |                |        |       |            |  |        |       |         |  |        |       |        
|                               |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            | 
|                               |                                                     |                                     | 88,352 |        |            |  | 87,685 |                |         |  | 33,607     |        |        |                | 33,306 |        |            |  | 30,272 |        |         |  | 30,347 |       
|                               | Corporate bonds and other obligations               |                                     |        | 2,508  |            |  |        | 2,500          |         |  |            | 5,056  |        |                |        | 5,014  |            |  |        |       |         |  |        |       |        
|                               |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            | 
|                               |                                                     |                                     | 90,860 |        |            |  | 90,185 |                |         |  | 38,663     |        |        |                | 38,320 |        |            |  | 30,272 |        |         |  | 30,347 |       
|                               | Mortgage-backed securities                          |                                     |        | 34,107 |            |  |        | 32,194         |         |  |            | 49,246 |        |                |        | 47,750 |            |  |        | 74,502 |         |  |        | 72,299 |        
|                               |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            | 
|                               |                                                     | Total debt securities               |        |        | 124,967    |  |        |                | 122,379 |  |            |        | 87,909 |                |        |        | 86,070     |  |        |        | 104,774 |  |        |        | 102,646 | 
|                               |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            | 
|                               |                                                     | Total available for sale securities |        | $      | 124,967    |  |        | $              | 122,379 |  |            | $      | 87,909 |                |        | $      | 86,070     |  |        | $      | 104,774 |  |        | $      | 102,646 | 
|                               |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            | 
|Securities held to maturity:   |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            |  |        |        |         |  |        |       
|                               | Mortgage-backed securities                          |                                     | $      | 109    |            |  | $      | 109            |         |  | $          | 217    |        |                | $      | 221    |            |  | $      | 386    |         |  | $      | 398    |        
|                               |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            | 
|Restricted equity securities:  |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            |  |        |        |         |  |        |       
|                               | Federal Home Loan Bank of Boston stock              |                                     | $      | 7,496  |            |  | $      | 7,496          |         |  | $          | 4,459  |        |                | $      | 4,459  |            |  | $      | 3,707  |         |  | $      | 3,707  |        
|                               | Access Capital Strategies Community Investment Fund |                                     |        | 2,000  |            |  |        | 2,000          |         |  |            | 2,000  |        |                |        | 2,000  |            |  |        | 3,000  |         |  |        | 3,000  |        
|                               | SBLI & DIF stock                                    |                                     |        | 516    |            |  |        | 516            |         |  |            | 516    |        |                |        | 516    |            |  |        | 515    |         |  |        | 515    |        
|                               |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            | 
|                               |                                                     | Total restricted equity securities  |        | $      | 10,012     |  |        | $              | 10,012  |  |            | $      | 6,975  |                |        | $      | 6,975      |  |        | $      | 7,222   |  |        | $      | 7,222   | 
|                               |                                                     |                                     |        |        |            |  |        |                |         |  |            |        |        |                |        |        |            | 

20



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|                               |                                             |                        |   |                    |                    |  |                      |                   |          |   |         |        |        |           |  |      |         |   |   |       |       |  |  |      |      |  
|------------------------------ | ------------------------------------------- | ---------------------- | - | ------------------ | ------------------ |  | -------------------- | ----------------- | -------- | - | ------- | ------ | ------ | --------- |  | ---- | ------- | - | - | ----- | ----- |  |  | ---- | ---- | -
|                               |                                             |                        |   | More than One Year |                    |  | More than Five Years |                  
|                               |                                             | One Year or Less       |   |                    | through Five Years |  |                      | through Ten Years |         
|                               |                                             |                        |   |                    |                    |  |                      |                   |         
|                               |                                             |                        |   | Weighted           |                    |  |                      |                   | Weighted |   |         |        |        | Weighted  | 
|                               |                                             | Amortized              |   |                    | Average            |  |                      | Amortized         |          |   | Average |        |        | Amortized |  |      | Average |  
|                               |                                             | Cost                   |   |                    | Yield              |  |                      | Cost              |          |   | Yield   |        |        | Cost      |  |      | Yield   |  
|                               |                                             |                        |   |                    |                    |  |                      |                   |          |   |         |        |        |           |  |      |         |  
|                               |                                             | (Dollars in thousands) |  
|Securities available for sale: |                                             |                        |   |                    |                    |  |                      |                   |          |   |         |        |        |           |  |      |         |   |   |       |       |  |  |     
|                               | Government-sponsored enterprise obligations |                        | $ | 37,392             |                    |  |                      | 3.29              | %        |   | $       | 48,749 |        |           |  | 4.16 | %       |   | $ |      |       |  |  | 0.00 | %   
|                               | State agency and municipal obligations      |                        |   | 503                |                    |  |                      | 2.64              | %        |   |         | 1,708  |        |           |  | 2.86 | %       |   |   |      |       |  |  | 0.00 | %   
|                               | Corporate bonds and other obligations       |                        |   | 2,508              |                    |  |                      | 2.43              | %        |   |         |       |        |           |  | 0.00 | %       |   |   |      |       |  |  | 0.00 | %   
|                               | Mortgage-backed securities                  |                        |   |                   |                    |  |                      | 0.00              | %        |   |         |       |        |           |  | 0.00 | %       |   |   | 3,507 |       |  |  | 3.75 | %   
|                               |                                             |                        |   |                    |                    |  |                      |                   |          |   |         |        |        |           |  |      |         |  
|                               |                                             | Total debt securities  |   |                    | 40,403             |  |                      |                   | 3.23     | % |         |        | 50,457 |           |  |      | 4.11    | % |   |       | 3,507 |  |  |      | 3.75 | %
|                               |                                             |                        |   |                    |                    |  |                      |                   |          |   |         |        |        |           |  |      |         |  
|Securities held to maturity:   |                                             |                        |   |                    |                    |  |                      |                   |          |   |         |        |        |           |  |      |         |   |   |       |       |  |  |     
|                               | Mortgage-backed securities                  |                        |   | 37                 |                    |  |                      | 6.50              | %        |   |         | 35     |        |           |  | 5.50 | %       |   |   |      |       |  |  |      |     
|                               |                                             |                        |   |                    |                    |  |                      |                   |          |   |         |        |        |           |  |      |         |  
|                               |                                             | Total securities       |   | $                  | 40,440             |  |                      |                   | 3.23     | % |         | $      | 50,492 |           |  |      | 4.11    | % |   | $     | 3,507 |  |  |      | 3.75 | %
|                               |                                             |                        |   |                    |                    |  |                      |                   |          |   |         |        |        |           |  |      |         |  

|                               |                                        |                        |   |          |                  |  |  |           |          |   |       |        |         |         |   |        |         |  |  |      |      |  
|------------------------------ | -------------------------------------- | ---------------------- | - | -------- | ---------------- |  |  | --------- | -------- | - | ----- | ------ | ------- | ------- | - | ------ | ------- |  |  | ---- | ---- | -
|                               |                                        | More than Ten Years    |   |          | Total Securities | 
|                               |                                        |                        |   |          |                  | 
|                               |                                        |                        |   | Weighted |                  |  |  |           | Weighted |  
|                               |                                        | Amortized              |   |          | Average          |  |  | Amortized |          |   | Fair  |        |         | Average |  
|                               |                                        | Cost                   |   |          | Yield            |  |  | Cost      |          |   | Value |        |         | Yield   |  
|                               |                                        |                        |   |          |                  |  |  |           |          |   |       |        |         |         |  
|                               |                                        | (Dollars in thousands) |  
|Securities available for sale: |                                        |                        |   |          |                  |  |  |           |          |   |       |        |         |         |   |        |         |  |  |     
|                               | U.S. Government and agency securities  |                        | $ |         |                  |  |  | 0.00      | %        |   | $     | 86,141 |         |         | $ | 85,494 |         |  |  | 3.78 | %   
|                               | State agency and municipal obligations |                        |   |         |                  |  |  | 0.00      | %        |   |       | 2,211  |         |         |   | 2,191  |         |  |  | 2.81 | %   
|                               | Corporate bonds and other obligations  |                        |   |         |                  |  |  | 0.00      | %        |   |       | 2,508  |         |         |   | 2,500  |         |  |  | 2.43 | %   
|                               | Mortgage-backed securities             |                        |   | 30,601   |                  |  |  | 4.10      | %        |   |       | 34,107 |         |         |   | 32,194 |         |  |  | 4.06 | %   
|                               |                                        |                        |   |          |                  |  |  |           |          |   |       |        |         |         |  
|                               |                                        | Total debt securities  |   |          | 30,601           |  |  |           | 4.10     | % |       |        | 124,967 |         |   |        | 122,379 |  |  |      | 3.81 | %
|                               |                                        |                        |   |          |                  |  |  |           |          |   |       |        |         |         |  
|Securities held to maturity:   |                                        |                        |   |          |                  |  |  |           |          |   |       |        |         |         |   |        |         |  |  |     
|                               | Mortgage-backed securities             |                        |   | 37       |                  |  |  | 6.00      | %        |   |       | 109    |         |         |   | 109    |         |  |  | 6.02 | %   
|                               |                                        |                        |   |          |                  |  |  |           |          |   |       |        |         |         |  
|                               |                                        | Total securities       |   | $        | 30,638           |  |  |           | 4.10     | % |       | $      | 125,076 |         |   | $      | 122,488 |  |  |      | 3.81 | %
|                               |                                        |                        |   |          |                  |  |  |           |          |   |       |        |         |         |  




Sources of Funds


General.


Deposits.


21



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|                      |                                        |                          |         |          |         |  |         |         |          |         |         |       |  |         |         |         |      |  |        |         |  |  |       |       | 
|--------------------- | -------------------------------------- | ------------------------ | ------- | -------- | ------- |  | ------- | ------- | -------- | ------- | ------- | ----- |  | ------- | ------- | ------- | ---- |  | ------ | ------- |  |  | ----- | ----- | 
|                      |                                        | Years Ended December 31, |        
|                      |                                        |                          |        
|                      |                                        | 2005                     |         |          | 2004    | 
|                      |                                        |                          |         |          |         | 
|                      |                                        |                          |         | Weighted |         |  |         |         | Weighted |        
|                      |                                        | Average                  |         |          |         |  | Average |         |          | Average |         |       |  |         | Average |        
|                      |                                        | Balance                  |         |          | Percent |  |         | Rate    |          |         | Balance |       |  | Percent |         |         | Rate | 
|                      |                                        |                          |         |          |         |  |         |         |          |         |         |       |  |         |         |         |      | 
|                      |                                        | (Dollars in thousands)   |        
|Deposit type:         |                                        |                          |         |          |         |  |         |         |          |         |         |       |  |         |         |         |      |  |        |         |  |  |       |      
|Demand deposits       |                                        | $                        | 114,483 |          |         |  | 20.19%  |         |          |         | 0.00%   |       |  | $       | 87,969  |         |      |  | 22.12% |         |  |  | 0.00% |      
|NOW deposits          |                                        |                          | 31,742  |          |         |  | 5.60%   |         |          |         | 0.20%   |       |  |         | 23,657  |         |      |  | 5.95%  |         |  |  | 0.15% |      
|Money market deposits |                                        |                          | 95,638  |          |         |  | 16.86%  |         |          |         | 1.62%   |       |  |         | 53,246  |         |      |  | 13.39% |         |  |  | 1.00% |      
|Regular savings       |                                        |                          | 102,781 |          |         |  | 18.12%  |         |          |         | 0.50%   |       |  |         | 98,753  |         |      |  | 24.83% |         |  |  | 0.50% |      
|                      |                                        |                          |         |          |         |  |         |         |          |         |         |       |  |         |         |         |      | 
|                      | Total transaction and savings accounts |                          |         | 344,644  |         |  |         | 60.77%  |          |         |         | 0.62% |  |         |         | 263,625 |      |  |        | 66.29%  |  |  |       | 0.40% | 
|                      | Certificates of deposit                |                          |         | 222,500  |         |  |         | 39.23%  |          |         |         | 2.86% |  |         |         | 134,034 |      |  |        | 33.71%  |  |  |       | 2.47% | 
|                      |                                        |                          |         |          |         |  |         |         |          |         |         |       |  |         |         |         |      | 
|                      | Total deposits                         |                          | $       | 567,144  |         |  |         | 100.00% |          |         |         | 1.50% |  |         | $       | 397,659 |      |  |        | 100.00% |  |  |       | 1.10% | 
|                      |                                        |                          |         |          |         |  |         |         |          |         |         |       |  |         |         |         |      | 

|                      |                                        |                              |        |          |         |  |         |         |  |  |      |      |  
|--------------------- | -------------------------------------- | ---------------------------- | ------ | -------- | ------- |  | ------- | ------- |  |  | ---- | ---- | -
|                      |                                        | Year Ended December 31, 2003 |       
|                      |                                        |                              |       
|                      |                                        |                              |        | Weighted |        
|                      |                                        | Average                      |        |          |         |  | Average |        
|                      |                                        | Balance                      |        |          | Percent |  |         | Rate    | 
|                      |                                        |                              |        |          |         |  |         |         | 
|                      |                                        | (Dollars in thousands)       |       
|Deposit type:         |                                        |                              |        |          |         |  |         |         |  |  |      |     
|Demand deposits       |                                        | $                            | 57,253 |          |         |  | 14.81%  |         |  |  | 0.00 | %   
|NOW deposits          |                                        |                              | 60,751 |          |         |  | 15.71%  |         |  |  | 0.15 | %   
|Money market deposits |                                        |                              | 48,256 |          |         |  | 12.48%  |         |  |  | 0.81 | %   
|Regular savings       |                                        |                              | 93,501 |          |         |  | 24.18%  |         |  |  | 0.50 | %   
|                      |                                        |                              |        |          |         |  |         |         | 
|                      | Total transaction and savings accounts |                              |        | 259,761  |         |  |         | 67.19%  |  |  |      | 0.37 | %
|                      | Certificates of deposit                |                              |        | 126,856  |         |  |         | 32.81%  |  |  |      | 2.79 | %
|                      |                                        |                              |        |          |         |  |         |         | 
|                      | Total deposits                         |                              | $      | 386,617  |         |  |         | 100.00% |  |  |      | 1.16 | %
|                      |                                        |                              |        |          |         |  |         |         | 

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|              |              |                        |   |         |      |  |   |         |  |  |   |         | 
|------------- | ------------ | ---------------------- | - | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|              |              | At December 31,        |  
|              |              |                        |  
|              |              | 2005                   |   |         | 2004 |  |   | 2003    | 
|              |              |                        |   |         |      |  |   |         | 
|              |              | (Dollars in thousands) |  
|Interest Rate |              |                        |   |         |      |  |   |         |  |  |   |        
|              | Less than 2% |                        | $ | 267     |      |  | $ | 36,982  |  |  | $ | 55,034  | 
|              | 2.00%-2.99%  |                        |   | 49,698  |      |  |   | 75,524  |  |  |   | 37,753  | 
|              | 3.00%-3.99%  |                        |   | 150,838 |      |  |   | 12,241  |  |  |   | 7,776   | 
|              | 4.00%-4.99%  |                        |   | 62,001  |      |  |   | 10,332  |  |  |   | 13,960  | 
|              | 5.00%-5.99%  |                        |   | 19      |      |  |   | 1,406   |  |  |   | 4,034   | 
|              | 6.00%-6.99%  |                        |   | 0       |      |  |   | 736     |  |  |   | 5,226   | 
|              |              |                        |   |         |      |  |   |         | 
|              | Total        |                        | $ | 262,823 |      |  | $ | 137,221 |  |  | $ | 123,783 | 
|              |              |                        |   |         |      |  |   |         | 



|              |              |                          |   |         |                    |  |   |        |  |  |      |       |  |      |   |       |       |  |   |       |  |  |   |         | 
|------------- | ------------ | ------------------------ | - | ------- | ------------------ |  | - | ------ |  |  | ---- | ----- |  | ---- | - | ----- | ----- |  | - | ----- |  |  | - | ------- | 
|              |              | Year Ending December 31, |   |         | After December 31, | 
|              |              |                          |   |         |                    | 
|              |              | 2006                     |   |         | 2007               |  |   | 2008   |  |  | 2009 |       |  | 2009 |   |       | Total | 
|              |              |                          |   |         |                    |  |   |        |  |  |      |       |  |      |   |       |       | 
|              |              | (Dollars in thousands)   |  
|Interest Rate |              |                          |   |         |                    |  |   |        |  |  |      |       |  |      |   |       |       |  |   |       |  |  |   |        
|              | Less than 2% |                          | $ | 267     |                    |  | $ |       |  |  | $    |      |  |      | $ |      |       |  | $ |      |  |  | $ | 267     | 
|              | 2.00%-2.99%  |                          |   | 44,105  |                    |  |   | 5,416  |  |  |      | 177   |  |      |   |      |       |  |   |      |  |  |   | 49,698  | 
|              | 3.00%-3.99%  |                          |   | 113,193 |                    |  |   | 27,990 |  |  |      | 6,670 |  |      |   | 2,535 |       |  |   | 450   |  |  |   | 150,838 | 
|              | 4.00%-4.99%  |                          |   | 46,875  |                    |  |   | 9,727  |  |  |      | 1,086 |  |      |   | 2,824 |       |  |   | 1,489 |  |  |   | 62,001  | 
|              | 5.00%-5.99%  |                          |   | 19      |                    |  |   |       |  |  |      |      |  |      |   |      |       |  |   |      |  |  |   | 19      | 
|              |              |                          |   |         |                    |  |   |        |  |  |      |       |  |      |   |       |       | 
|              | Total        |                          | $ | 204,459 |                    |  | $ | 43,133 |  |  | $    | 7,933 |  |      | $ | 5,359 |       |  | $ | 1,939 |  |  | $ | 262,823 | 
|              |              |                          |   |         |                    |  |   |        |  |  |      |       |  |      |   |       |       | 



|                     |                                      |                        |         |        | 
|-------------------- | ------------------------------------ | ---------------------- | ------- | ------ | 
|                     |                                      | At December 31, 2005   |        
|                     |                                      |                        |        
|                     |                                      | (Dollars in thousands) |        
|Three months or less |                                      | $                      | 24,273  |       
|                     | Over three months through six months |                        |         | 27,300 | 
|                     | Over six months through one year     |                        |         | 31,917 | 
|                     | Over one year to three years         |                        |         | 18,580 | 
|                     | Over three years                     |                        |         | 2,820  | 
|                     |                                      |                        |        
|                     |                                      | $                      | 104,890 |       
|                     |                                      |                        |        

Borrowings.


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|                                              |  |                           |         |   |      |   |        |      |  |   |        |  
|--------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                              |  | At or For the Years Ended |        
|                                              |  | December 31,              |        
|                                              |  |                           |        
|                                              |  | 2005                      |         |   | 2004 |   |        | 2003 | 
|                                              |  |                           |         |   |      |   |        |      | 
|                                              |  | (Dollars in thousands)    |        
|Balance at end of year                        |  | $                         | 128,936 |   |      | $ | 76,250 |      |  | $ | 36,000 |  
|Average balance during year                   |  |                           | 101,181 |   |      |   | 51,497 |      |  |   | 36,000 |  
|Maximum outstanding at any month end          |  |                           | 128,936 |   |      |   | 76,250 |      |  |   | 36,000 |  
|Weighted average interest rate at end of year |  |                           | 4.00    | % |      |   | 3.87   | %    |  |   | 4.47   | %
|Weighted average interest rate during year    |  |                           | 3.94    | % |      |   | 3.95   | %    |  |   | 4.47   | %

3-month 3-month







Employees







Subsidiary Activities




Benjamin Franklin Bank Capital Trust I,


Benjamin Franklin Securities Corp


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Creative Strategic Solutions, Inc. (CSSI)





Regulation and Supervision




| |         
| | --------
| | General.







| |                               
| | ------------------------------
| | Massachusetts Bank Regulation.

General.




Investment Activities.


Lending Activities.


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Dividends.


Regulatory Enforcement Authority.


Insurance Sales.


DIF.




| |                     
| | --------------------
| | Federal Regulations.

Capital Requirements.




26



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Standards for Safety and Soundness.


Investment Activities.


27



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Interstate Banking and Branching.


Prompt Corrective Regulatory Action.






Transactions with Affiliates.


28



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Enforcement.


Insurance of Deposit Accounts.


29



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| |                        
| | -----------------------
| | Federal Reserve System.





| |                               
| | ------------------------------
| | Federal Home Loan Bank System.





30



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| |                            
| | ---------------------------
| | Holding Company Regulation.

General.








Dividends.




31



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Financial Modernization.




| |                          
| | -------------------------
| | Miscellaneous Regulation.

Community Reinvestment Act.




Consumer Protection And Fair Lending Regulations.


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Sarbanes-Oxley Act of 2002.







Forward-Looking Statements






| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | 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.                                         





| |   |                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to enter new markets successfully and take advantage
    of growth opportunities;                                                                                                           
|
| |  | significantly increased competition among depository and other
    financial institutions;                                                                                                              
|
| |  | inflation, changes in the interest rate environment (including
    changes in the shape of the yield curve) that reduce our margins
    or reduce the fair value of financial instruments;              
|
| |  | general economic conditions, either nationally or in our market
    areas, that are worse than expected;                                                                                                
|
| |  | adverse changes in the securities markets;                                                                                                                                                              
|
| |  | legislative or regulatory changes that adversely affect our
    business;                                                                                                                               
|
| |  | changes in consumer spending, borrowing and savings habits;                                                                                                                                             
|
| |  | changes in accounting policies and practices, as may be adopted
    by the bank regulatory agencies, the Financial Accounting
    Standards Board and the Public Company Accounting Oversight
    Board;
|
| |  | changes in our organization, compensation and benefit
    plans; and                                                                                                                                    
|
| |  | the risk factors described above.                                                                                                                                                                       



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|          |                                            
|--------- | -------------------------------------------
|Item 1.A. | Risk Factors That May Affect Future Results





| |                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our Commercial Real Estate, Construction And Commercial
    Business Loans May Expose Us To Increased Credit Risks, And This
    Risk Will Increase If We Succeed In Increasing These Types Of
    Loans.









| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | Our Continuing Concentration Of Loans In Our Primary
    Market Area May Increase Our Risk.



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| |                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our Return On Equity May Initially Be Low Compared To
    Other Financial Institutions. A Low Return Could Lower The
    Trading Price Of Our Common Stock.





| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | We May Have Difficulty Meeting Our Branch Expansion Goals,
    And Our Branch Expansion Strategy May Not Be Accretive To
    Earnings.





| |                                                                                      
| | -------------------------------------------------------------------------------------
| | Strong Competition Within Our Market Area May Limit Our
    Growth And Profitability.





| |                                                                       
| | ----------------------------------------------------------------------
| | Our Ability to Grow May Be Limited if We Cannot Make
    Acquisitions.



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| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | We Operate In A Highly Regulated Environment And May Be
    Adversely Affected By Changes In Law And Regulations.





Truth-in




| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Changes in Market Interest Rates Could Adversely Affect
    Our Financial Condition and Results of Operations.





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





| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | Our Stock Value May Suffer From Anti-Takeover Provisions
    That May Impede Potential Takeovers.





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|          |                          
|--------- | -------------------------
|Item 1.B. | Unresolved Staff Comments








|        |           
|------- | ----------
|Item 2. | Properties



|                     |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|-------------------- |  | ------------ | ---- |  | --------------- |  | ------------- | ----- |  | ------- | ---------- |  |  | -------------------------- | - | 
|                     |  | Year Opened/ |      |  |                 |  | Expiration of |       |  | Renewal |           
|                     |  | Acquired     |      |  | Owned or Leased |  |               | Lease |  |         | Options    | 
|                     |  |              |      |  |                 |  |               |       |  |         |            | 
|Main Office:         |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|58 Main Street       |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|Franklin, MA 02038   |  |              | 1935 |  |                 |  | Owned         |       |  |         |           |  |  |                            |  | 
|Branch Offices:      |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|231 East Central St. |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|Franklin, MA 02038   |  |              | 1998 |  |                 |  | Owned         |       |  |         |           |  |  |                            |  | 
|4 North Main St.     |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|Bellingham, MA 02019 |  |              | 1982 |  |                 |  | Owned         |       |  |         |           |  |  |                            |  | 
|1 Mechanic St.       |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|Foxborough, MA 02035 |  |              | 1998 |  |                 |  | Owned         |       |  |         |           |  |  |                            |  | 
|76 North Street      |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|Medfield, MA 02052   |  |              | 1998 |  |                 |  | Owned         |       |  |         |           |  |  |                            |  | 
|221 Main Street      |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|Milford, MA 01757    |  |              | 1992 |  |                 |  | Owned         |       |  |         |           |  |  |                            |  | 
|40 Austin Street     |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|Newton, MA 02460     |  |              | 2005 |  |                 |  | Owned         |       |  |         |           |  |  |                            |  | 
|1290 Main Street,    |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|Waltham, MA 02451    |  |              | 2005 |  |                 |  | Owned         |       |  |         |           |  |  |                            |  | 
|75 Moody Street      |  |              |      |  |                 |  |               |       |  |         |            |  |  |                            |   | 
|Waltham MA 02453     |  |              | 2005 |  |                 |  | Leased        |       |  |         | March 2008 |  |  | Four 10-year renewal terms






|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings



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






PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Market Information.




|               |  |      |       |  |     |                    |       |           |  |   |      | 
|-------------- |  | ---- | ----- |  | --- | ------------------ | ----- | --------- |  | - | ---- | 
|               |  |      |       |  |     | Dividends Declared |      
|2005           |  | High |       |  | Low |                    |       | per Share | 
|               |  |      |       |  |     |                    |       |           | 
|First Quarter  |  | $    |      |  |     | $                  |      |           |  | $ |     | 
|Second Quarter |  |      | 11.59 |  |     |                    | 9.91  |           |  |   |     | 
|Third Quarter  |  |      | 14.40 |  |     |                    | 11.11 |           |  |   | 0.03 | 
|Fourth Quarter |  |      | 14.80 |  |     |                    | 13.20 |           |  |   | 0.03 | 

Holders.




Dividends.








39



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##### Table of Contents



Securities Authorized for Issuance under Equity
Compensation Plans.










|              |  |           |        |  |                |                     |                  |                     |                        |                              |                              |  |  |  |   | 
|------------- |  | --------- | ------ |  | -------------- | ------------------- | ---------------- | ------------------- | ---------------------- | ---------------------------- | ---------------------------- |  |  |  | - | 
|              |  |           |        |  |                | (c) Total Number of |                  |                     | (d) Maximum Number (or |                             
|              |  | (a) Total |        |  |                |                     | Shares Purchased |                     |                        | Approximate Dollar Value) of |                             
|              |  | Number of |        |  | (b) Average    |                     |                  | as Part of Publicly |                        |                              | Shares That May yet be       | 
|              |  | Shares    |        |  | Price Paid per |                     |                  | Announced Plans or  |                        |                              | Purchased Under the Plans or | 
|Period        |  | Purchased |        |  | Share          |                     |                  | Programs(1)         |                        |                              | Programs(1)                  | 
|              |  |           |        |  |                |                     |                  |                     |                        |                              |                              | 
|October 1-31  |  |           | 45,494 |  |                | $                   | 13.77            |                     |                        |                              | 45,494                       |  |  |  | 0 | 
|November 1-30 |  |           | 0      |  |                |                     |                  |                     |                        |                              | 0                            |  |  |  | 0 | 
|December 1-31 |  |           | 0      |  |                |                     |                  |                     |                        |                              | 0                            |  |  |  | 0 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In a press release issued on March 31, 2005 and in a
    Current Report on
    Form 8-K filed on
    April 1, 2005, the Company announced that its employee
    stock ownership plan (the ESOP) intended to purchase
    in the public offering after market up to 478,194 shares of
    the Companys common stock, or 8% of the shares sold in the
    offering and issued to the Benjamin Franklin Bank Charitable
    Foundation. In the second and third quarters of 2005, the ESOP
    purchased 432,700 shares, resulting in a total of
    478,194 shares purchased through December 31, 2005,
    the maximum provided for in the ESOP.






|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                   |  |                        |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|---------------------------------- |  | ---------------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  |  | - | ------- | 
|                                   |  | At December 31,        |        
|                                   |  |                        |        
|                                   |  | 2005                   |         |  | 2004 |   |         | 2003 |  |   | 2002    |  |  | 2001 |        
|                                   |  |                        |         |  |      |   |         |      |  |   |         |  |  |      |        
|                                   |  | (Dollars in thousands) |        
|Selected Financial Condition Data: |  |                        |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|Total assets                       |  | $                      | 867,057 |  |      | $ | 517,393 |      |  | $ | 458,844 |  |  | $    | 452,230 |  |  | $ | 430,084 | 
|Loans, net                         |  |                        | 605,132 |  |      |   | 383,373 |      |  |   | 288,862 |  |  |      | 261,933 |  |  |   | 257,566 | 
|Securities(2)                      |  |                        | 132,500 |  |      |   | 93,262  |      |  |   | 110,254 |  |  |      | 114,728 |  |  |   | 86,136  | 
|Deposits                           |  |                        | 611,673 |  |      |   | 396,499 |      |  |   | 380,257 |  |  |      | 373,300 |  |  |   | 360,979 | 
|Short-term borrowings              |  |                        |        |  |      |   | 4,250   |      |  |   |        |  |  |      |        |  |  |   |        | 
|Long-term debt(1)                  |  |                        | 140,339 |  |      |   | 81,000  |      |  |   | 45,000  |  |  |      | 45,000  |  |  |   | 36,000  | 
|Stockholders equity               |  |                        | 108,112 |  |      |   | 31,328  |      |  |   | 29,301  |  |  |      | 29,814  |  |  |   | 26,937  | 






|    |                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Long-term debt includes advances from the Federal Home Loan Bank
    of Boston, secured borrowings and subordinated debt. See
    Business of Benjamin Franklin Bancorp  Sources
    of Funds  Borrowings.
|   
|(2) | Includes restricted equity securities.                                                                                                                                                                        

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|                                                    |  |                                  |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        |  
|--------------------------------------------------- |  | -------------------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  |  | - | ------ | -
|                                                    |  | For the Years Ended December 31, |       
|                                                    |  |                                  |       
|                                                    |  | 2005(1)                          |        |  | 2004 |   |        | 2003 |  |   | 2002   |  |  | 2001 |       
|                                                    |  |                                  |        |  |      |   |        |      |  |   |        |  |  |      |       
|                                                    |  | (Dollars in thousands)           |       
|Selected Operating Data:                            |  |                                  |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        |  
|Interest and dividend income                        |  | $                                | 35,135 |  |      | $ | 20,795 |      |  | $ | 19,532 |  |  | $    | 21,406 |  |  | $ | 26,441 |  
|Interest expense                                    |  |                                  | 13,117 |  |      |   | 7,032  |      |  |   | 6,752  |  |  |      | 7,594  |  |  |   | 12,397 |  
|                                                    |  |                                  |        |  |      |   |        |      |  |   |        |  |  |      |       
|Net interest income                                 |  |                                  | 22,018 |  |      |   | 13,763 |      |  |   | 12,780 |  |  |      | 13,812 |  |  |   | 14,044 |  
|Provision for loan losses                           |  |                                  | 686    |  |      |   | 620    |      |  |   | 625    |  |  |      | 1,412  |  |  |   | 51     |  
|                                                    |  |                                  |        |  |      |   |        |      |  |   |        |  |  |      |       
|Net interest income after provision for loan losses |  |                                  | 21,332 |  |      |   | 13,143 |      |  |   | 12,155 |  |  |      | 12,400 |  |  |   | 13,993 |  
|Non-interest income                                 |  |                                  | 3,487  |  |      |   | 2,148  |      |  |   | 2,990  |  |  |      | 1,285  |  |  |   | 1,752  |  
|Gain (loss) on sales of securities, net             |  |                                  |       |  |      |   | (24    | )    |  |   | 86     |  |  |      | 1,569  |  |  |   | (2,529 | )
|Non-interest expense                                |  |                                  | 23,276 |  |      |   | 12,686 |      |  |   | 12,724 |  |  |      | 12,115 |  |  |   | 11,565 |  
|                                                    |  |                                  |        |  |      |   |        |      |  |   |        |  |  |      |       
|Income before income tax expense                    |  |                                  | 1,543  |  |      |   | 2,581  |      |  |   | 2,507  |  |  |      | 3,139  |  |  |   | 1,651  |  
|Income tax expense                                  |  |                                  | 1,112  |  |      |   | 892    |      |  |   | 819    |  |  |      | 443    |  |  |   | 1,610  |  
|                                                    |  |                                  |        |  |      |   |        |      |  |   |        |  |  |      |       
|Net income                                          |  | $                                | 431    |  |      | $ | 1,689  |      |  | $ | 1,688  |  |  | $    | 2,696  |  |  | $ | 41     |  
|                                                    |  |                                  |        |  |      |   |        |      |  |   |        |  |  |      |       
|Dividends paid per common share:(2)                 |  | $                                | 0.06   |  |      |   | n/a    |      |  |   | n/a    |  |  |      | n/a    |  |  |   | n/a    |  
|Earnings per share (basic and diluted):(2)          |  |                                  | n/a    |  |      |   | n/a    |      |  |   | n/a    |  |  |      | n/a    |  |  |   | n/a    |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Operating results for 2005 reflect the acquisition of Chart
    Bank, the conversion from mutual to stock form, and the
    $4.0 million pre-tax contribution to the Benjamin Franklin
    Bank Charitable Foundation, all occurring on April 4, 2005.
    For further information refer to Item 7. Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.                                                              
|   
|(2) | The Companys
    mutual-to-stock
    conversion was completed on April 4, 2005. Because shares
    were not issued and outstanding for the entire period, earnings
    per share have not been reported for the year ended
    December 31, 2005. Earnings per share (both basic and
    diluted) were $.16 in each of the third and fourth quarters of
    2005. Cash dividends paid per share were $.03 in each of the
    third and fourth quarters of 2005.

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|                                                                            |  |                                        |        |   |      |  |        |      |  |  |        |   |  |      |        |   |  |  |        |  
|--------------------------------------------------------------------------- |  | -------------------------------------- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | - |  | ---- | ------ | - |  |  | ------ | -
|                                                                            |  | At or For the Years Ended December 31, |       
|                                                                            |  |                                        |       
|                                                                            |  | 2005                                   |        |   | 2004 |  |        | 2003 |  |  | 2002   |   |  | 2001 |       
|                                                                            |  |                                        |        |   |      |  |        |      |  |  |        |   |  |      |       
|Selected Financial Ratios and Other Data:                                   |  |                                        |        |   |      |  |        |      |  |  |        |   |  |      |        |   |  |  |        |  
|Performance Ratios:                                                         |  |                                        |        |   |      |  |        |      |  |  |        |   |  |      |        |   |  |  |        |  
|Return on average assets (ratio of net income to average total
    assets)  |  |                                        | 0.06   | % |      |  | 0.34   | %    |  |  | 0.36   | % |  |      | 0.61   | % |  |  | 0.01   | %
|Return on average equity (ratio of net income to average equity)            |  |                                        | 0.49   | % |      |  | 5.59   | %    |  |  | 5.65   | % |  |      | 9.45   | % |  |  | 0.16   | %
|Net interest rate spread(1)                                                 |  |                                        | 2.79   | % |      |  | 2.63   | %    |  |  | 2.76   | % |  |      | 3.32   | % |  |  | 3.30   | %
|Net interest margin(2)                                                      |  |                                        | 3.21   | % |      |  | 3.00   | %    |  |  | 2.98   | % |  |      | 3.47   | % |  |  | 3.51   | %
|Efficiency ratio(3)                                                         |  |                                        | 67.79  | % |      |  | 79.09  | %    |  |  | 84.78  | % |  |      | 75.69  | % |  |  | 72.84  | %
|Non-interest expense to average total assets                                |  |                                        | 2.99   | % |      |  | 2.58   | %    |  |  | 2.73   | % |  |      | 2.76   | % |  |  | 2.64   | %
|Average interest-earning assets to average interest bearing
    liabilities |  |                                        | 121.90 | % |      |  | 123.91 | %    |  |  | 114.38 | % |  |      | 108.04 | % |  |  | 106.92 | %
|Asset Quality Ratios:                                                       |  |                                        |        |   |      |  |        |      |  |  |        |   |  |      |        |   |  |  |        |  
|Non-performing assets to total assets                                       |  |                                        | 0.05   | % |      |  | 0.07   | %    |  |  | 0.10   | % |  |      | 0.00   | % |  |  | 0.04   | %
|Non-performing loans to total loans                                         |  |                                        | 0.08   | % |      |  | 0.09   | %    |  |  | 0.16   | % |  |      | 0.00   | % |  |  | 0.06   | %
|Allowance for loan losses to total loans                                    |  |                                        | 0.93   | % |      |  | 0.82   | %    |  |  | 0.87   | % |  |      | 0.88   | % |  |  | 0.46   | %
|Capital Ratios:                                                             |  |                                        |        |   |      |  |        |      |  |  |        |   |  |      |        |   |  |  |        |  
|Equity to total assets at end of year                                       |  |                                        | 12.47  | % |      |  | 6.05   | %    |  |  | 6.39   | % |  |      | 6.59   | % |  |  | 6.26   | %
|Average equity to average assets                                            |  |                                        | 11.36  | % |      |  | 6.13   | %    |  |  | 6.42   | % |  |      | 6.49   | % |  |  | 5.82   | %
|Risk-based capital ratio at end of year                                     |  |                                        | 14.89  | % |      |  | 12.48  | %    |  |  | 13.94  | % |  |      | 13.54  | % |  |  | 9.65   | %
|Other Data:                                                                 |  |                                        |        |   |      |  |        |      |  |  |        |   |  |      |        |   |  |  |        |  
|Number of full service offices                                              |  |                                        | 9      |   |      |  | 6      |      |  |  | 6      |   |  |      | 6      |   |  |  | 6      |  






|    |                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The net interest rate spread represents the difference between
    the weighted-average yield on interest-earning assets and the
    weighted-average cost of interest-bearing liabilities for the
    period.                                                                                                                                                    
|   
|(2) | The net interest margin represents net interest income as a
    percent of average interest-earning assets for the period.                                                                                                                                                                                                                                        
|   
|(3) | The efficiency ratio represents operating expense minus expenses
    related to the amortization of intangible assets and the
    contribution to the Benjamin Franklin Bank Charitable Foundation
    divided by the sum of net interest income (before the loan loss
    provision) plus other income (excluding net gains (losses) on
    sale of bank assets).






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company is committed to opening new branches, most likely in
    the markets contiguous to its existing branch communities. One
    such location has already been identified in Wellesley Hills,
    Massachusetts, where the Company expects to open a branch in
    mid-2006. Management estimates the annual direct costs of
    operating this branch at $610,000. This branch opening, and any
    others that occur, are likely reduce the Companys earnings
    until such time as they attain profitability.                                                                                                                                                                                                                                                                                                                                
|
| |  | The Company experienced net interest margin (NIM)
    compression in the fourth quarter of 2005, due to the effect of
    increased price competition for certificate accounts and the
    continued flattening of the Treasury yield curve, which had the
    effect of reducing the spread between the Companys earning
    assets and its core deposit accounts. Management expects that
    the Companys NIM will contract further in 2006 as a result
    of the relatively flat yield curve and continued competitive
    pressure on both certificate and money market account interest
    rates. Interest rates on money market accounts in particular
    have tended to lag the rise in market interest rates over the
    past year, and management considers it likely that those rates
    will rise significantly in the coming months.
|
| |  | The Board of Directors has adopted the Benjamin Franklin
    Bancorp, Inc. Stock Incentive Plan (the Plan),
    subject to approval by the stockholders. The Company anticipates
    that compensation expense will increase as a result of this
    Plan, as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the stock-based incentive plan would award 239,096 shares
    of restricted stock to eligible participants, which would be
    expensed as the awards vest. Assuming that all shares of
    restricted stock under the stock-based incentive plan are
    awarded at a price of $14.07 per share (the Companys
    market price per share at of the close of business on
    December 31, 2005), and that the awards vest over a five
    year period, the corresponding annual expense (pre-tax)
    associated with shares awarded under the stock-based incentive
    plan would be approximately $673,000. The actual expense of the
    restricted stock awards granted under the stock-based incentive
    plan will be determined by the fair market value of the stock on
    the grant date, which might be different than $14.07 per
    share;                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | the stock-based incentive plan would grant options to acquire
    common stock equal to 597,741 shares to eligible
    participants, which would be expensed as the awards vest. Using
    the Black-Scholes option pricing model, assuming that all option
    grants are made at a grant-date share price and option exercise
    price of $14.07 and that options vest over a 5 year period,
    the options would be valued at $2,365,000 and the corresponding
    annual expense (pre-tax) associated with options granted under
    the stock-based incentive plan would be approximately $473,000.
    The actual expense of the options granted will be determined by
    the results of the Black-Scholes option pricing model at the
    date of grant for the actual period under measurement. The
    assumptions and factors considered in this pricing model will
    include the grant-date share price and option exercise price,
    the dividend yield, if any, the expected option life, the option
    vesting period, the risk-free interest rate, and the volatility
    rate for the stock, all of which may differ from the information
    used herein to estimate the effect of stock option grants on
    future earnings.

Overview


Income.


43



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Expenses.




Critical Accounting Policies




Allowance for Loan Losses.


Income Taxes.


Intangible Assets.




44



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Analysis of Net Interest Income






|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |         |         |  |   |        |        |  |  |         |       | 
|---------------------------------------------------------------------- | ---------------------------------- | ------------------------ | ------- | ------- | -------- | - | ------- | ------ |  | ----------- | ------- | ------- |  | -------- | ------- | ------- | ---- | ----------- | ------ | ------- |  |  | -------- | ----- |  | ---- | ------- | ------- |  | - | ------ | ------ |  |  | ------- | ----- | 
|                                                                       |                                    | Years Ended December 31, |        
|                                                                       |                                    |                          |        
|                                                                       |                                    | 2005                     |         |         | 2004     |   |         | 2003   | 
|                                                                       |                                    |                          |         |         |          |   |         |        | 
|                                                                       |                                    | Average                  |         |         |          |   | Average |        |  |             |         | Average |  |          |        
|                                                                       |                                    | Outstanding              |         |         |          |   | Yield/  |        |  | Outstanding |         |         |  |          | Yield/  |         |      | Outstanding |        |         |  |  | Yield/   |      
|                                                                       |                                    | Balance                  |         |         | Interest |   |         | Rate   |  |             | Balance |         |  | Interest |         |         | Rate |             |        | Balance |  |  | Interest |       |  | Rate |        
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|                                                                       |                                    | (Dollars in thousands)   |        
|Interest-earning assets:                                               |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |         |         |  |   |        |        |  |  |         |      
|Loans                                                                  |                                    | $                        | 547,542 |         |          | $ | 30,409  |        |  |             | 5.56%   |         |  | $        | 338,198 |         |      | $           | 17,320 |         |  |  | 5.12%    |       |  | $    | 270,343 |         |  | $ | 15,530 |        |  |  | 5.74%   |      
|Securities                                                             |                                    |                          | 120,007 |         |          |   | 4,211   |        |  |             | 3.51%   |         |  |          | 107,122 |         |      |             | 3,336  |         |  |  | 3.11%    |       |  |      | 122,570 |         |  |   | 3,450  |        |  |  | 2.81%   |      
|Short-term Investments                                                 |                                    |                          | 18,701  |         |          |   | 515     |        |  |             | 2.75%   |         |  |          | 13,367  |         |      |             | 139    |         |  |  | 1.04%    |       |  |      | 35,293  |         |  |   | 552    |        |  |  | 1.56%   |      
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|                                                                       | Total interest-earning assets      |                          |         | 686,250 |          |   |         | 35,135 |  |             |         | 5.13%   |  |          |         | 458,687 |      |             |        | 20,795  |  |  |          | 4.53% |  |      |         | 428,205 |  |   |        | 19,532 |  |  |         | 4.56% | 
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|Non-interest-earning assets                                            |                                    |                          | 91,508  |         |          |   |         |        |  |             |         |         |  |          | 33,838  |         |      |             |        |         |  |  |          |       |  |      | 37,495  |         |  |   |        |        |  |  |         |      
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|                                                                       | Total assets                       |                          | $       | 777,758 |          |   |         |        |  |             |         |         |  |          | $       | 492,525 |      |             |        |         |  |  |          |       |  |      | $       | 465,700 |  |   |        |        |  |  |         |       | 
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|Interest-bearing liabilities:                                          |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |         |         |  |   |        |        |  |  |         |      
|Savings deposits                                                       |                                    | $                        | 102,781 |         |          |   | 518     |        |  |             | 0.50%   |         |  | $        | 98,753  |         |      |             | 490    |         |  |  | 0.50%    |       |  | $    | 93,501  |         |  |   | 465    |        |  |  | 0.50%   |      
|Money market                                                           |                                    |                          | 95,638  |         |          |   | 1,553   |        |  |             | 1.62%   |         |  |          | 53,246  |         |      |             | 535    |         |  |  | 1.00%    |       |  |      | 48,256  |         |  |   | 392    |        |  |  | 0.81%   |      
|NOW accounts                                                           |                                    |                          | 31,742  |         |          |   | 63      |        |  |             | 0.20%   |         |  |          | 23,657  |         |      |             | 36     |         |  |  | 0.15%    |       |  |      | 60,751  |         |  |   | 92     |        |  |  | 0.15%   |      
|Certificates of deposits                                               |                                    |                          | 222,500 |         |          |   | 6,366   |        |  |             | 2.86%   |         |  |          | 134,034 |         |      |             | 3,305  |         |  |  | 2.47%    |       |  |      | 126,856 |         |  |   | 3,538  |        |  |  | 2.79%   |      
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|                                                                       | Total deposits                     |                          |         | 452,661 |          |   |         | 8,500  |  |             |         | 1.88%   |  |          |         | 309,690 |      |             |        | 4,366   |  |  |          | 1.41% |  |      |         | 329,364 |  |   |        | 4,487  |  |  |         | 1.36% | 
|Borrowings                                                             |                                    |                          | 110,281 |         |          |   | 4,617   |        |  |             | 4.19%   |         |  |          | 60,497  |         |      |             | 2,666  |         |  |  | 4.41%    |       |  |      | 45,001  |         |  |   | 2,265  |        |  |  | 5.03%   |      
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|                                                                       | Total interest-bearing liabilities |                          |         | 562,942 |          |   |         | 13,117 |  |             |         | 2.34%   |  |          |         | 370,187 |      |             |        | 7,032   |  |  |          | 1.90% |  |      |         | 374,365 |  |   |        | 6,752  |  |  |         | 1.80% | 
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|Non-interest bearing liabilities                                       |                                    |                          | 126,455 |         |          |   |         |        |  |             |         |         |  |          | 92,124  |         |      |             |        |         |  |  |          |       |  |      | 61,454  |         |  |   |        |        |  |  |         |      
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|                                                                       | Total liabilities                  |                          |         | 689,397 |          |   |         |        |  |             |         |         |  |          |         | 462,311 |      |             |        |         |  |  |          |       |  |      |         | 435,819 |  |   |        |        |  |  |         |       | 
|Equity                                                                 |                                    |                          | 88,361  |         |          |   |         |        |  |             |         |         |  |          | 30,214  |         |      |             |        |         |  |  |          |       |  |      | 29,881  |         |  |   |        |        |  |  |         |      
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|                                                                       | Total liabilities and equity       |                          | $       | 777,758 |          |   |         |        |  |             |         |         |  |          | $       | 492,525 |      |             |        |         |  |  |          |       |  |      | $       | 465,700 |  |   |        |        |  |  |         |       | 
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|Net interest income                                                    |                                    |                          |         |         |          | $ | 22,018  |        |  |             |         |         |  |          |         |         |      | $           | 13,763 |         |  |  |          |       |  |      |         |         |  | $ | 12,780 |        |  |  |         |      
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|Net interest rate spread(1)                                            |                                    |                          |         |         |          |   |         |        |  |             | 2.79%   |         |  |          |         |         |      |             |        |         |  |  | 2.63%    |       |  |      |         |         |  |   |        |        |  |  | 2.76%   |      
|Net interest-earning assets(2)                                         |                                    | $                        | 123,308 |         |          |   |         |        |  |             |         |         |  | $        | 88,500  |         |      |             |        |         |  |  |          |       |  | $    | 53,840  |         |  |   |        |        |  |  |         |      
|                                                                       |                                    |                          |         |         |          |   |         |        |  |             |         |         |  |          |         |         |      |             |        |         |  |  |          |       |  |      |        
|Net interest margin(3)                                                 |                                    |                          |         |         |          |   |         |        |  |             | 3.21%   |         |  |          |         |         |      |             |        |         |  |  | 3.00%    |       |  |      |         |         |  |   |        |        |  |  | 2.98%   |      
|Average of interest-earning assets to interest-bearing
    liabilities |                                    |                          |         |         |          |   |         |        |  |             | 121.90% |         |  |          |         |         |      |             |        |         |  |  | 123.91%  |       |  |      |         |         |  |   |        |        |  |  | 114.38% |      

45



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|    |                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Net interest rate spread represents the difference between the
    weighted-average yield on interest-earning assets and the
    weighted-average cost of interest-bearing liabilities.
|   
|(2) | Net interest-earning assets represents total interest-earning
    assets less total interest-bearing liabilities.                                                                      
|   
|(3) | Net interest margin represents net interest income divided by
    average total interest-earning assets.                                                                               



|                                         |                         |                          |        |        |                          |   |                     |            |  |   |          |        |  |      |       |       |            |   |        |        |   |   |       |       |  
|---------------------------------------- | ----------------------- | ------------------------ | ------ | ------ | ------------------------ | - | ------------------- | ---------- |  | - | -------- | ------ |  | ---- | ----- | ----- | ---------- | - | ------ | ------ | - | - | ----- | ----- | -
|                                         |                         | Years Ended December 31, |        |        | Years Ended December 31, |  
|                                         |                         | 2005 vs. 2004            |        |        | 2004 vs. 2003            |  
|                                         |                         |                          |        |        |                          |  
|                                         |                         | Increase (Decrease)      |        |        |                          |   | Increase (Decrease) |            |  |  
|                                         |                         | Due to                   |        |        | Total                    |   |                     | Due to     |  |   | Total    |       
|                                         |                         |                          |        |        | Increase                 |   |                     |            |  |   | Increase |       
|                                         |                         | Volume                   |        |        | Rate                     |   |                     | (Decrease) |  |   | Volume   |        |  | Rate |       |       | (Decrease) |  
|                                         |                         |                          |        |        |                          |   |                     |            |  |   |          |        |  |      |       |       |            |  
|                                         |                         | (Dollars in thousands)   |       
|Interest-earning assets:                 |                         |                          |        |        |                          |   |                     |            |  |   |          |        |  |      |       |       |            |   |        |        |   |   |       |      
|                                         | Loans                   |                          | $      | 11,518 |                          |   | $                   | 1,571      |  |   | $        | 13,089 |  |      | $     | 3,898 |            |   | $      | (2,108 | ) |   | $     | 1,790 |  
|                                         | Securities              |                          |        | 426    |                          |   |                     | 449        |  |   |          | 875    |  |      |       | (435  | )          |   |        | 321    |   |   |       | (114  | )
|                                         | Short-term investments  |                          |        | 74     |                          |   |                     | 302        |  |   |          | 376    |  |      |       | (343  | )          |   |        | (70    | ) |   |       | (413  | )
|                                         |                         |                          |        |        |                          |   |                     |            |  |   |          |        |  |      |       |       |            |  
|Total interest-earning assets            |                         |                          | 12,018 |        |                          |   | 2,322               |            |  |   | 14,340   |        |  |      | 3,120 |       |            |   | (1,857 | )      |   |   | 1,263 |      
|                                         |                         |                          |        |        |                          |   |                     |            |  |   |          |        |  |      |       |       |            |  
|Interest-bearing liabilities:            |                         |                          |        |        |                          |   |                     |            |  |   |          |        |  |      |       |       |            |   |        |        |   |   |       |      
|                                         | Savings deposits        |                          |        | 20     |                          |   |                     | 8          |  |   |          | 28     |  |      |       | 25    |            |   |        |       |   |   |       | 25    |  
|                                         | Money market accounts   |                          |        | 574    |                          |   |                     | 444        |  |   |          | 1,018  |  |      |       | 40    |            |   |        | 103    |   |   |       | 143   |  
|                                         | NOW accounts            |                          |        | 14     |                          |   |                     | 13         |  |   |          | 27     |  |      |       | (56   | )          |   |        |       |   |   |       | (56   | )
|                                         | Certificates of deposit |                          |        | 2,463  |                          |   |                     | 598        |  |   |          | 3,061  |  |      |       | 200   |            |   |        | (433   | ) |   |       | (233  | )
|                                         |                         |                          |        |        |                          |   |                     |            |  |   |          |        |  |      |       |       |            |  
|Total deposits                           |                         |                          | 3,071  |        |                          |   | 1,063               |            |  |   | 4,134    |        |  |      | 209   |       |            |   | (330   | )      |   |   | (121  | )    
|Short-term borrowings and long-term debt |                         |                          | 2,091  |        |                          |   | (140                | )          |  |   | 1,951    |        |  |      | 514   |       |            |   | (113   | )      |   |   | 401   |      
|                                         |                         |                          |        |        |                          |   |                     |            |  |   |          |        |  |      |       |       |            |  
|Total interest-bearing liabilities       |                         |                          | 5,162  |        |                          |   | 923                 |            |  |   | 6,085    |        |  |      | 723   |       |            |   | (443   | )      |   |   | 280   |      
|                                         |                         |                          |        |        |                          |   |                     |            |  |   |          |        |  |      |       |       |            |  
|Change in net interest income            |                         | $                        | 6,856  |        |                          | $ | 1,399               |            |  | $ | 8,255    |        |  | $    | 2,397 |       |            | $ | (1,414 | )      |   | $ | 983   |      
|                                         |                         |                          |        |        |                          |   |                     |            |  |   |          |        |  |      |       |       |            |  

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


Total Assets.




Cash and Short-term Investments.


46



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Securities.


Net Loans.


Deposits.




Borrowed Funds.


Stockholders Equity. mutual-to


47



---



##### Table of Contents





Comparison of Operating Results For The Year Ended
December 31, 2005 and December 31, 2004


Net Income.


Net Interest Income.






Interest Income.


48



---



##### Table of Contents





Interest Expense.






Provision for Loan Losses.


Non-interest Income.




49



---



##### Table of Contents







Non-interest Expense.




Income Taxes.


50



---



##### Table of Contents



Comparison of Financial Condition At December 31, 2004
and December 31, 2003


Total Assets.


Cash and Short-term Investments.


Securities.


Net Loans. 15-year


Deposits.


Borrowed Funds.


Retained Earnings.


Comparison of Operating Results For The Year Ended
December 31, 2004 and December 31, 2003


Net Income.


Net Interest Income.


51



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Interest Income.


Interest Expense.


Provision for Loan Losses.


Non-interest Income.


Non-interest Expense.




52



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Income Taxes.


Off-Balance-Sheet Arrangements




Impact of Inflation and Changing Prices




Impact of Recent Accounting Standards




mutual-to


Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of
Liabilities


53



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|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risk





Management of Credit Risk.


Management of Market Risk.










| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Emphasizing the origination and retention of adjustable-rate
    mortgage loans, variable rate commercial loans and variable rate
    home equity
    lines-of-credit;
|
| |  | Investing in securities with relatively short maturities and/or
    expected average lives;                                                                           

54



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| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | Classifying nearly all of the investment portfolio as
    available for sale in order to provide for
    flexibility in liquidity management.







|                                  |  |                                |       |   
|--------------------------------- |  | ------------------------------ | ----- | --
|                                  |  | Percentage Change in Estimated |      
|                                  |  | Net Interest Income            |      
|                                  |  | Over 12 Months                 |      
|                                  |  |                                |      
|300 basis point increase in rates |  |                                | (5.24 | )%
|200 basis point increase in rates |  |                                | (2.32 | )%
|100 basis point increase in rates |  |                                | (.98  | )%
|Flat interest rates               |  |                                |      |   
|100 basis point decrease in rates |  |                                | .25   | % 

12-month 12-month




55



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Repricing Gap as of December 31, 2005


|                                                          |                                    |                        |          |           |             |   |           |                |  |           |               |         |           |               |        |        |            |   |        |        |  |   |         |        |  |   |         |         | 
|--------------------------------------------------------- | ---------------------------------- | ---------------------- | -------- | --------- | ----------- | - | --------- | -------------- |  | --------- | ------------- | ------- | --------- | ------------- | ------ | ------ | ---------- | - | ------ | ------ |  | - | ------- | ------ |  | - | ------- | ------- | 
|                                                          |                                    |                        |          | More than |             |   | More than |                |  | More than |               |         | More than |               |        |        |            |  
|                                                          |                                    | Up to                  |          |           | One Year to |   |           | Two Years      |  |           | Three Years   |         |           | Four Years    |        |        | More than  |   |        |       
|                                                          |                                    | One Year               |          |           | Two Years   |   |           | to Three Years |  |           | to Four Years |         |           | to Five Years |        |        | Five Years |   |        | Total  | 
|                                                          |                                    |                        |          |           |             |   |           |                |  |           |               |         |           |               |        |        |            |   |        |        | 
|                                                          |                                    | (Dollars in thousands) |         
|Interest-earning assets:                                  |                                    |                        |          |           |             |   |           |                |  |           |               |         |           |               |        |        |            |   |        |        |  |   |         |        |  |   |         |        
|Loans(1)                                                  |                                    | $                      | 225,487  |           |             | $ | 113,025   |                |  | $         | 99,322        |         |           | $             | 84,158 |        |            | $ | 37,132 |        |  | $ | 49,999  |        |  | $ | 609,123 |        
|Investment securities(2)                                  |                                    |                        | 48,707   |           |             |   | 41,768    |                |  |           | 7,800         |         |           |               | 5,330  |        |            |   | 3,756  |        |  |   | 27,728  |        |  |   | 135,089 |        
|Short-term investments                                    |                                    |                        | 12,051   |           |             |   |           |                |  |           |               |         |           |               |        |        |            |   |        |        |  |   |         |        |  |   | 12,051  |        
|                                                          |                                    |                        |          |           |             |   |           |                |  |           |               |         |           |               |        |        |            |   |        |        | 
|                                                          | Total interest-earning assets      |                        |          | 286,245   |             |   |           | 154,793        |  |           |               | 107,122 |           |               |        | 89,488 |            |   |        | 40,888 |  |   |         | 77,727 |  |   |         | 756,263 | 
|                                                          |                                    |                        |          |           |             |   |           |                |  |           |               |         |           |               |        |        |            |   |        |        | 
|Interest-bearing liabilities:                             |                                    |                        |          |           |             |   |           |                |  |           |               |         |           |               |        |        |            |   |        |        |  |   |         |        |  |   |         |        
|Savings deposits                                          |                                    |                        | 37,519   |           |             |   | 23,149    |                |  |           | 14,283        |         |           |               | 8,813  |        |            |   | 5,437  |        |  |   | 8,759   |        |  |   | 97,960  |        
|Money market                                              |                                    |                        | 56,137   |           |             |   | 22,735    |                |  |           | 9,208         |         |           |               | 3,729  |        |            |   | 1,510  |        |  |   | 1,028   |        |  |   | 94,347  |        
|NOW accounts                                              |                                    |                        | 2,959    |           |             |   | 2,685     |                |  |           | 2,438         |         |           |               | 2,214  |        |            |   | 2,010  |        |  |   | 19,841  |        |  |   | 32,147  |        
|Certificates of deposits                                  |                                    |                        | 204,404  |           |             |   | 43,132    |                |  |           | 7,933         |         |           |               | 5,359  |        |            |   | 1,939  |        |  |   | 56      |        |  |   | 262,823 |        
|Long-term debt                                            |                                    |                        | 47,403   |           |             |   | 23,000    |                |  |           | 27,000        |         |           |               |       |        |            |   | 33,936 |        |  |   | 9,000   |        |  |   | 140,339 |        
|                                                          |                                    |                        |          |           |             |   |           |                |  |           |               |         |           |               |        |        |            |   |        |        | 
|                                                          | Total interest-bearing liabilities |                        |          | 348,422   |             |   |           | 114,702        |  |           |               | 60,862  |           |               |        | 20,115 |            |   |        | 44,833 |  |   |         | 38,685 |  |   |         | 627,617 | 
|                                                          |                                    |                        |          |           |             |   |           |                |  |           |               |         |           |               |        |        |            |   |        |        | 
|Interest rate sensitivity gap                             |                                    | $                      | (62,177) |           |             | $ | 40,091    |                |  | $         | 46,260        |         |           | $             | 69,373 |        |            | $ | (3,945 | )      |  | $ | 39,042  |        |  | $ | 128,645 |        
|                                                          |                                    |                        |          |           |             |   |           |                |  |           |               |         |           |               |        |        |            |   |        |        | 
|Interest rate sensitivity gap as a % of total assets      |                                    |                        | (7.17)   | %         |             |   | 4.62      | %              |  |           | 5.34          | %       |           |               | 8.00   | %      |            |   | (0.45  | )%     |  |   | 4.50    | %      |  |   |         |        
|Cum. interest rate sensitivity gap                        |                                    | $                      | (62,177) |           |             | $ | (22,085   | )              |  | $         | 24,175        |         |           | $             | 93,548 |        |            | $ | 89,603 |        |  | $ | 128,645 |        |  |   |         |        
|                                                          |                                    |                        |          |           |             |   |           |                |  |           |               |         |           |               |        |        |            |   |        |        | 
|Cum. interest rate sensitivity gap as a % of total assets |                                    |                        | (7.17)   | %         |             |   | (2.55     | )%             |  |           | 2.79          | %       |           |               | 10.79  | %      |            |   | 10.33  | %      |  |   | 14.84   | %      |  |   |         |        

56



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|    |                                                                                               
|--- | ----------------------------------------------------------------------------------------------
|(1) | Excludes the allowance for loan losses, deferred fees and costs,
    and non-performing loans.
|   
|(2) | Securities are shown at amortized cost.                                                       



Liquidity Risk Management.








57



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| |                         
| | ------------------------
| | Contractual Obligations:

|                                   |  |                        |         |          |         |           |         |             |       |         |            |  |           |       |        |  |  |   |        | 
|---------------------------------- |  | ---------------------- | ------- | -------- | ------- | --------- | ------- | ----------- | ----- | ------- | ---------- |  | --------- | ----- | ------ |  |  | - | ------ | 
|                                   |  |                        |         |          |         |           |         | More than   |       |         |           
|                                   |  |                        |         |          |         | More than |         |             | Three |         |            | 
|                                   |  |                        |         |          |         | One Year  |         |             | Years |         |            | 
|                                   |  |                        |         | One Year |         |           | through |             |       | through |            |  | Over Five |      
|                                   |  | Total                  |         |          | or Less |           |         | Three Years |       |         | Five Years |  |           | Years |       
|                                   |  |                        |         |          |         |           |         |             |       |         |            |  |           |       |       
|                                   |  | (Dollars in thousands) |        
|Federal Home Loan Bank advances(1) |  | $                      | 128,936 |          |         | $         | 8,936   |             |       | $       | 50,000     |  |           | $     | 40,000 |  |  | $ | 30,000 | 
|Subordinated debt                  |  |                        | 9,000   |          |         |           |        |             |       |         |           |  |           |       |       |  |  |   | 9,000  | 
|Other borrowed funds               |  |                        | 2,403   |          |         |           | 2,403   |             |       |         |           |  |           |       |       |  |  |   |       | 
|Operating leases(2)                |  |                        | 799     |          |         |           | 236     |             |       |         | 367        |  |           |       | 196    |  |  |   |       | 
|Other contractual obligations(3)   |  |                        | 5,758   |          |         |           | 1,842   |             |       |         | 3,647      |  |           |       | 269    |  |  |   |       | 
|                                   |  |                        |         |          |         |           |         |             |       |         |            |  |           |       |       
|Total contractual obligations      |  | $                      | 146,896 |          |         | $         | 13,417  |             |       | $       | 54,014     |  |           | $     | 40,465 |  |  | $ | 39,000 | 
|                                   |  |                        |         |          |         |           |         |             |       |         |            |  |           |       |       






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Secured under a blanket security agreement on qualifying assets,
    principally 1-4 Family Residential mortgage loans. Advances
    totalling $36 million shown with maturities of greater than
    three years may be called by the FHLB during the period
    remaining to maturity. These advances bear rates ranging from
    3.99% to 4.91%, with a weighted average rate of 4.47%. Based on
    the current and predicted level of market interest rates,
    management considers it likely that these advances will be
    called by the FHLBB in the next 12 months. One advance in
    the amount of $10 million maturing in June, 2010 will
    become immediately payable if
    3-month LIBOR rises
    above 6.0% (measured on a quarterly basis, beginning in June
    2006).
|   
|(2) | Represents non-cancelable operating leases for branch offices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(3) | Represents contracts for technology services and employment
    agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



| |                  
| | -----------------
| | Loan Commitments:

|                                                  |                        |                        |        |           |         |   |             |             |  |         |            |           |       |   |   |   |  |   |        |        | 
|------------------------------------------------- | ---------------------- | ---------------------- | ------ | --------- | ------- | - | ----------- | ----------- |  | ------- | ---------- | --------- | ----- | - | - | - |  | - | ------ | ------ | 
|                                                  |                        | December 31, 2005      |       
|                                                  |                        |                        |       
|                                                  |                        |                        |        | More than |         |   | More than   |             | 
|                                                  |                        |                        |        | One Year  |         |   | Three Years |             | 
|                                                  |                        |                        |        | One Year  |         |   | through     |             |  | through |            | Over Five |      
|                                                  |                        | Total                  |        |           | or Less |   |             | Three Years |  |         | Five Years |           | Years |  
|                                                  |                        |                        |        |           |         |   |             |             |  |         |            |           |       |  
|                                                  |                        | (Dollars in thousands) |       
|Commitments to grant loans(1)                     |                        | $                      | 30,420 |           |         | $ | 30,420      |             |  | $       |           |           |       | $ |  |   |  | $ |       |       
|Unused portion of commercial loan lines of credit |                        |                        | 19,547 |           |         |   | 19,547      |             |  |         |           |           |       |   |  |   |  |   |       |       
|Unused portion of home equity lines of credit(3)  |                        |                        | 39,896 |           |         |   |            |             |  |         |           |           |       |   |  |   |  |   | 39,896 |       
|Unused portion of construction loans(4)           |                        |                        | 24,420 |           |         |   | 4,939       |             |  |         | 18,888     |           |       |   |  |   |  |   | 593    |       
|Unused portion of personal lines of credit(2)     |                        |                        | 2,457  |           |         |   |            |             |  |         |           |           |       |   |  |   |  |   | 2,457  |       
|Commercial letter of credit                       |                        |                        | 1,412  |           |         |   | 1,412       |             |  |         |            |           |       |   |   |   |  |   |        |       
|                                                  |                        |                        |        |           |         |   |             |             |  |         |            |           |       |   |  
|                                                  | Total loan commitments |                        | $      | 118,152   |         |   | $           | 56,318      |  |         | $          | 18,888    |       |   | $ |  |  |   | $      | 42,946 | 
|                                                  |                        |                        |        |           |         |   |             |             |  |         |            |           |       |   |  




General:


58



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|    |                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Commitments for loans are extended to customers for up to
    180 days after which they expire.                                                                   
|   
|(2) | Unused portion of checking overdraft lines of credit are
    available to customers in good standing indefinitely.                                              
|   
|(3) | Unused portions of home equity lines of credit are available to
    the borrower for up to 10 years.                                                              
|   
|(4) | Unused portions of construction loans are available to the
    borrower for up to 2 years for development loans and up to
    1 year for other construction loans.

Management of Other Risks.









|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and
Procedures. 13a-15(e) 15d-15(e)).




Changes in Internal Controls Over Financial
Reporting.


59



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##### Table of Contents








|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services






PART IV







|         |                                            
|-------- | -------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules.

(a) Exhibits


|            |    |      |             |                                                                                                                                                                                 |           |  
|----------- | -- | ---- | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | -
|Exhibit No. |    |      | Description |                                                                                                                                                                                 | Footnotes
|            |    |      |             |                                                                                                                                                                                 |          
|            | 2  | .1   |             | Plan of Conversion of Benjamin Franklin Bancorp.                                                                                                                                |           | 3
|            | 2  | .2   |             | Agreement and Plan of Merger among Benjamin Franklin Bancorp,
    M.H.C., Benjamin Franklin Savings Bank and Chart Bank, a
    Cooperative Bank, dated as of September 1, 2004. |           | 2
|            | 3  | .1   |             | Articles of Organization of Benjamin Franklin Bancorp, Inc.                                                                                                                     |           | 2
|            | 3  | .2   |             | Bylaws of Benjamin Franklin Bancorp, Inc.                                                                                                                                       |           | 7
|            | 4  | .1   |             | Form of Common Stock Certificate of Benjamin Franklin Bancorp,
    Inc.                                                                                                         |           | 5
|            | 10 | .1.1 |             | Form of Employment Agreement with Thomas R. Venables.*                                                                                                                          |           | 6
|            | 10 | .1.2 |             | Form of Employment Agreement with Claire S. Bean.*                                                                                                                              |           | 6

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|            |    |      |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |           |  
|----------- | -- | ---- | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | -
|Exhibit No. |    |      | Description |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Footnotes
|            |    |      |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          
|            | 10 | .2   |             | Form of Change in Control Agreement with five other Executive
    Officers, providing one years severance to Brian E.
    Ledwith, Michael J. Piemonte and Kathleen P. Sawyer, and two
    years severance to Mariane E. Broadhurst and Rose M.
    Buckley. This form contains all material information concerning
    the agreement and the only differences are the name and contact
    information of the executive officer who is party to the
    agreement and the number of years of severance provided.* |           | 2
|            | 10 | .3   |             | Form of Benjamin Franklin Bank Benefit Restoration Plan.*                                                                                                                                                                                                                                                                                                                                                                                                                                                            |           | 2
|            | 10 | .4.1 |             | Amended and Restated Supplemental Executive Retirement Agreement
    between Benjamin Franklin Bank and Thomas R. Venables dated as
    of March 22, 2006.*                                                                                                                                                                                                                                                                                                                                                          |           | 1
|            | 10 | .4.2 |             | Amended and Restated Supplemental Executive Retirement Agreement
    between Benjamin Franklin Bank and Claire S. Bean dated as of
    March 22, 2006.*                                                                                                                                                                                                                                                                                                                                                              |           | 1
|            | 10 | .5   |             | Benjamin Franklin Bancorp Director Fee Continuation Plan.*                                                                                                                                                                                                                                                                                                                                                                                                                                                           |           | 4
|            | 10 | .6   |             | Benjamin Franklin Bancorp Employee Salary Continuation Plan.*                                                                                                                                                                                                                                                                                                                                                                                                                                                        |           | 2
|            | 10 | .7.1 |             | Payments and Waiver Agreement among Richard E. Bolton, Jr.,
    Benjamin Franklin Bancorp, M.H.C., Benjamin Franklin Savings
    Bank and Chart Bank, a Cooperative Bank, dated as of
    September 1, 2004.*                                                                                                                                                                                                                                                                                                        |           | 2
|            | 10 | .7.2 |             | Consulting and Noncompetition Agreement between Richard E.
    Bolton, Jr. and Benjamin Franklin Bancorp, M.H.C., dated as
    of September 1, 2004.*                                                                                                                                                                                                                                                                                                                                                                |           | 2
|            | 11 |      |             | See Note 3 to the Financial Statements for a discussion of
    earnings per share.                                                                                                                                                                                                                                                                                                                                                                                                                                   |           | 
|            | 21 |      |             | Subsidiaries of Registrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |           | 1
|            | 23 | .1   |             | Consent of Wolf & Company, P.C. , independent
    registered public accounting firm.                                                                                                                                                                                                                                                                                                                                                                                                                                 |           | 1
|            | 31 | .1   |             | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                              |           | 1
|            | 31 | .2   |             | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                              |           | 1
|            | 32 | .1   |             | Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                           |           | 1
|            | 32 | .2   |             | Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                           |           | 1






| |   |                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | Relates to compensation.                                                                                                                                        
|
| | 1 | Filed herewith.                                                                                                                                                 
|
| | 2 | Incorporated by reference to the Registrants Registration
    Statement on
    Form S-1, File
    No. 333-121154,
    filed on December 10, 2004.              
|
| | 3 | Incorporated by reference to Amendment No. 1 to the
    Registrants Registration Statement on
    Form S-1, File No.
    333-121154, filed on January 24, 2005.
|
| | 4 | Incorporated by reference to the Registrants Registration
    Statement on
    Form S-4, File
    No. 333-121608,
    filed on December 23, 2004.              
|
| | 5 | Incorporated by reference to the Registrants Registration
    Statement on
    Form 8-A, File
    No. 000-51194,
    filed on March 9, 2005.                   
|
| | 6 | Incorporated by reference to the Registrants Annual Report
    on Form 10-K,
    filed on March 29, 2005.                                                      
|
| | 7 | Incorporated by reference to the Registrants Current
    Report on
    Form 8-K, filed on
    March 3, 2006.                                                   

(b) Financial Statement Schedules




61



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##### Table of Contents



SIGNATURES






| |                                
| | -------------------------------
| | Benjamin Franklin Bancorp, Inc.



| |     |                       
| | --- | ----------------------
| | By: | /s/ Thomas R. Venables

| |                                      
| | -------------------------------------
| |                                      
| | Thomas R. Venables                   
| | President and Chief Executive Officer





|                                                 |  |                                                                                   |  | 
|------------------------------------------------ |  | --------------------------------------------------------------------------------- |  | 
|Signature                                        |  | Title                                                                            
|                                                 |  |                                                                                  
|                                                
|/s/ Thomas R. VenablesThomas R. Venables         |  | President and Chief Executive Officer, Director(Principal Executive Officer)     
|                                                
|/s/ Claire S. BeanClaire S. Bean                 |  | Treasurer and Chief Financial Officer(Principal Financial and Accounting Officer)
|                                                
|/s/ Mary AmblerMary Ambler                       |  | Director                                                                         
|                                                
|/s/ William P. BissonnetteWilliam P. Bissonnette |  | Director                                                                         
|                                                
|/s/ Richard E. Bolton, Jr.Richard E. Bolton, Jr. |  | Director                                                                         
|                                                
|/s/ William F. Brady, Jr.William F. Brady, Jr.   |  | Director                                                                         
|                                                
|/s/ Paul E. CapassoPaul E. Capasso               |  | Director                                                                         
|                                                
|/s/ John C. FullerJohn C. Fuller                 |  | Director                                                                         
|                                                
|/s/ Jonathan A. HaynesJonathan A. Haynes         |  | Director                                                                         
|                                                
|/s/ Anne M. KingAnne M. King                     |  | Director                                                                         

62



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|                                       |  |          |  | 
|-------------------------------------- |  | -------- |  | 
|Signature                              |  | Title   
|                                       |  |         
|                                      
|/s/ Richard D. MannRichard D. Mann     |  | Director
|                                      
|/s/ Daniel F. OBrienDaniel F. OBrien |  | Director
|                                      
|/s/ Charles F. OteriCharles F. Oteri   |  | Director
|                                      
|/s/ Donald P. QuinnDonald P. Quinn     |  | Director
|                                      
|/s/ Neil E. TodreasNeil E. Todreas     |  | Director
|                                      
|/s/ Alfred H. WahlersAlfred H. Wahlers |  | Director
|                                      
|/s/ Charles YergatianCharles Yergatian |  | Director

63



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Benjamin Franklin Bancorp, Inc.


Annual Report on
Form 10-K for the
Year Ended December 31, 2005


Exhibits Filed Herewith


|        |    |             |  |                                                                                                                                                             
|------- | -- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 10 | .4.1        |  | Amended and Restated Supplemental Executive Retirement Agreement
    between Benjamin Franklin Bank and Thomas R. Venables dated as
    of December 5, 2005.
|        | 10 | .4.2        |  | Amended and Restated Supplemental Executive Retirement Agreement
    between Benjamin Franklin Bank and Claire S. Bean dated as of
    December 5, 2005.    
|        | 21 |             |  | Subsidiaries of Registrant.                                                                                                                                 
|        | 23 | .1          |  | Consent of Wolf & Company, P.C., Independent
    Registered Public Accounting firm.                                                                         
|        | 31 | .1          |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley act of 2002.                                                     
|        | 31 | .2          |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley act of 2002.                                                     
|        | 32 | .1          |  | Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.  
|        | 32 | .2          |  | Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.  

64



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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                               |  |         
|-------------------------------------------------------------- |  | --------
|                                                               |  | Page    
|                                                               |  |         
|Report of Independent Registered Public
    Accounting Firm    |  | F-2     
|Consolidated Balance Sheets                                    |  | F-3     
|Consolidated Statements of Income                              |  | F-4     
|Consolidated Statements of Changes in
    Stockholders Equity |  | F-5     
|Consolidated Statements of Cash Flows                          |  | F-6     
|Notes to Consolidated Financial
    Statements                 |  | F-7-F-33

F-1



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##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














| |                         
| | ------------------------
| | /s/ Wolf & Company, P.C.





F-2



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY





CONSOLIDATED BALANCE SHEETS


|                                                                                 |                                                                                                               |                                 |                            |        |        |         |         |        |        |         | 
|-------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ------------------------------- | -------------------------- | ------ | ------ | ------- | ------- | ------ | ------ | ------- | 
|                                                                                 |                                                                                                               | December 31,                    |                           
|                                                                                 |                                                                                                               |                                 |                           
|                                                                                 |                                                                                                               | 2005                            |                            |        | 2004   |        
|                                                                                 |                                                                                                               |                                 |                            |        |        |        
|                                                                                 |                                                                                                               | (Dollars in thousands)          |                           
|ASSETS                                                                          
|Cash and due from banks                                                          |                                                                                                               | $                               | 16,499                     |        |        | $       | 8,691   |       
|Cash supplied by CSSI to ATM customers                                           |                                                                                                               |                                 | 37,200                     |        |        |         |        |       
|Short-term investments                                                           |                                                                                                               |                                 | 12,051                     |        |        |         | 5,513   |       
|                                                                                 |                                                                                                               |                                 |                            |        |        |        
|                                                                                 |                                                                                                               | Total cash and cash equivalents |                            |        | 65,750 |         |         |        | 14,204 |        
|Securities available for sale, at fair value                                     |                                                                                                               |                                 | 122,379                    |        |        |         | 86,070  |       
|Securities held to maturity, at amortized cost                                   |                                                                                                               |                                 | 109                        |        |        |         | 217     |       
|Restricted equity securities, at cost                                            |                                                                                                               |                                 | 10,012                     |        |        |         | 6,975   |       
|Loans, net of allowance for loan losses of $5,670 in 2005 and
    $3,172 in 2004 |                                                                                                               |                                 | 605,132                    |        |        |         | 383,373 |       
|Premises and equipment, net                                                      |                                                                                                               |                                 | 11,167                     |        |        |         | 11,147  |       
|Accrued interest receivable                                                      |                                                                                                               |                                 | 3,045                      |        |        |         | 1,490   |       
|Bank-owned life insurance                                                        |                                                                                                               |                                 | 7,451                      |        |        |         | 7,182   |       
|Goodwill                                                                         |                                                                                                               |                                 | 33,763                     |        |        |         | 4,248   |       
|Identifiable intangible asset                                                    |                                                                                                               |                                 | 4,133                      |        |        |         | 45      |       
|Other assets                                                                     |                                                                                                               |                                 | 4,116                      |        |        |         | 2,442   |       
|                                                                                 |                                                                                                               |                                 |                            |        |        |        
|                                                                                 |                                                                                                               | $                               | 867,057                    |        |        | $       | 517,393 |       
|                                                                                 |                                                                                                               |                                 |                            |        |        |        
|                                                                                
|LIABILITIES AND STOCKHOLDERS EQUITY                                            
|Deposits                                                                         |                                                                                                               | $                               | 611,673                    |        |        | $       | 396,499 |       
|Short-term borrowings                                                            |                                                                                                               |                                 |                           |        |        |         | 4,250   |       
|Long-term debt                                                                   |                                                                                                               |                                 | 140,339                    |        |        |         | 81,000  |       
|Other liabilities                                                                |                                                                                                               |                                 | 6,933                      |        |        |         | 4,316   |       
|                                                                                 |                                                                                                               |                                 |                            |        |        |        
|                                                                                 |                                                                                                               |                                 | Total liabilities          |        |        | 758,945 |         |        |        | 486,065 | 
|                                                                                 |                                                                                                               |                                 |                            |        |        |        
|Commitments and contingencies (Notes 8 and 14)                                   |                                                                                                               |                                 |                            |        |        |         |         |       
|Stockholders equity:                                                            |                                                                                                               |                                 |                            |        |        |         |         |       
|                                                                                 | Common stock, no par value, 75,000,000 shares authorized;
    8,488,898 shares issued and outstanding in 2005 |                                 |                            |       |        |         |         |       |       
|                                                                                 | Additional paid-in capital                                                                                    |                                 |                            | 82,849 |        |         |         |       |       
|                                                                                 | Retained earnings                                                                                             |                                 |                            | 32,942 |        |         |         | 32,997 |       
|                                                                                 | Unearned compensation                                                                                         |                                 |                            | (5,353 | )      |         |         |       |       
|                                                                                 | Accumulated other comprehensive loss                                                                          |                                 |                            | (2,326 | )      |         |         | (1,669 | )     
|                                                                                 |                                                                                                               |                                 |                            |        |        |        
|                                                                                 |                                                                                                               |                                 | Total stockholders equity |        |        | 108,112 |         |        |        | 31,328  | 
|                                                                                 |                                                                                                               |                                 |                            |        |        |        
|                                                                                 |                                                                                                               | $                               | 867,057                    |        |        | $       | 517,393 |       
|                                                                                 |                                                                                                               |                                 |                            |        |        |        



F-3



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##### Table of Contents






BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


CONSOLIDATED STATEMENTS OF INCOME


|                                                     |                                                              |                                    |        |        |        |  |        |        |        |  |        |        |        | 
|---------------------------------------------------- | ------------------------------------------------------------ | ---------------------------------- | ------ | ------ | ------ |  | ------ | ------ | ------ |  | ------ | ------ | ------ | 
|                                                     |                                                              | Years Ended December 31,           |       
|                                                     |                                                              |                                    |       
|                                                     |                                                              | 2005                               |        |        | 2004   |  |        | 2003   |       
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|                                                     |                                                              | (Dollars in thousands)             |       
|Interest and dividend income:                        |                                                              |                                    |        |        |        |  |        |        |        |  |        |       
|                                                     | Loans, including fees                                        |                                    | $      | 30,409 |        |  | $      | 17,320 |        |  | $      | 15,530 |       
|                                                     | Debt securities                                              |                                    |        | 3,811  |        |  |        | 3,092  |        |  |        | 3,200  |       
|                                                     | Dividends                                                    |                                    |        | 400    |        |  |        | 244    |        |  |        | 250    |       
|                                                     | Short-term investments                                       |                                    |        | 515    |        |  |        | 139    |        |  |        | 552    |       
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|                                                     |                                                              | Total interest and dividend income |        |        | 35,135 |  |        |        | 20,795 |  |        |        | 19,532 | 
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|Interest expense:                                    |                                                              |                                    |        |        |        |  |        |        |        |  |        |       
|                                                     | Interest on deposits                                         |                                    |        | 8,500  |        |  |        | 4,366  |        |  |        | 4,487  |       
|                                                     | Interest on borrowings                                       |                                    |        | 4,617  |        |  |        | 2,666  |        |  |        | 2,265  |       
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|                                                     |                                                              | Total interest expense             |        |        | 13,117 |  |        |        | 7,032  |  |        |        | 6,752  | 
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|Net interest income                                  |                                                              |                                    | 22,018 |        |        |  | 13,763 |        |        |  | 12,780 |       
|Provision for loan losses                            |                                                              |                                    | 686    |        |        |  | 620    |        |        |  | 625    |       
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|Net interest income, after provision for loan losses |                                                              |                                    | 21,332 |        |        |  | 13,143 |        |        |  | 12,155 |       
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|Other income (charges):                              |                                                              |                                    |        |        |        |  |        |        |        |  |        |       
|                                                     | ATM servicing fees                                           |                                    |        | 1,639  |        |  |        |       |        |  |        |       |       
|                                                     | Deposit service fees                                         |                                    |        | 1,233  |        |  |        | 882    |        |  |        | 928    |       
|                                                     | Loan servicing fees                                          |                                    |        | 442    |        |  |        | 254    |        |  |        | 336    |       
|                                                     | Gain on sale of loans, net                                   |                                    |        | 116    |        |  |        | 123    |        |  |        | 975    |       
|                                                     | Gain (loss) on sales of securities, net                      |                                    |        |       |        |  |        | (24    | )      |  |        | 86     |       
|                                                     | Loss on sale/write-down of bank owned land, net              |                                    |        | (1,020 | )      |  |        |       |        |  |        |       |       
|                                                     | Income from bank-owned life insurance                        |                                    |        | 269    |        |  |        | 198    |        |  |        | 181    |       
|                                                     | Miscellaneous                                                |                                    |        | 808    |        |  |        | 691    |        |  |        | 570    |       
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|                                                     |                                                              | Total other income                 |        |        | 3,487  |  |        |        | 2,124  |  |        |        | 3,076  | 
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|Operating expenses:                                  |                                                              |                                    |        |        |        |  |        |        |        |  |        |       
|                                                     | Salaries and employee benefits                               |                                    |        | 9,882  |        |  |        | 7,487  |        |  |        | 6,668  |       
|                                                     | Occupancy and equipment                                      |                                    |        | 2,374  |        |  |        | 1,410  |        |  |        | 1,788  |       
|                                                     | Data processing                                              |                                    |        | 1,734  |        |  |        | 1,353  |        |  |        | 1,446  |       
|                                                     | Professional fees                                            |                                    |        | 1,021  |        |  |        | 373    |        |  |        | 985    |       
|                                                     | Contribution to Benjamin Franklin Bank Charitable Foundation |                                    |        | 4,000  |        |  |        |       |        |  |        |       |       
|                                                     | Other general and administrative                             |                                    |        | 4,265  |        |  |        | 2,063  |        |  |        | 1,837  |       
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|                                                     |                                                              | Total operating expenses           |        |        | 23,276 |  |        |        | 12,686 |  |        |        | 12,724 | 
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|Income before income taxes                           |                                                              |                                    | 1,543  |        |        |  | 2,581  |        |        |  | 2,507  |       
|Provision for income taxes                           |                                                              |                                    | 1,112  |        |        |  | 892    |        |        |  | 819    |       
|                                                     |                                                              |                                    |        |        |        |  |        |        |       
|                                                     |                                                              | Net income                         |        | $      | 431    |  |        | $      | 1,689  |  |        | $      | 1,688  | 
|                                                     |                                                              |                                    |        |        |        |  |        |        |       



F-4



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY





CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
EQUITY


Years Ended December 31, 2005, 2004 and 2003


|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   |  |   |        |        |   |   |         |        |       |  
|----------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | -------------------------- | --------- | ---------- | ------ | - | -------- | - |  | ----------- | ------ | - | ------------- | ----- | ------ | ------------- |  | - | ------ | - |  | - | ------ | ------ | - | - | ------- | ------ | ----- | -
|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  | Accumulated |        |   |              
|                                                                                    |                                                                                                              | Common Stock               |           | Additional |        |   |          |   |  |             | Other  |   |               | Total |       
|                                                                                    |                                                                                                              |                            |           | Paid-In    |        |   | Retained |   |  | Unearned    |        |   | Comprehensive |       |        | Stockholders | 
|                                                                                    |                                                                                                              | Shares                     |           |            | Amount |   | Capital  |   |  | Earnings    |        |   | Compensation  |       |        | Income (Loss) |  |   | Equity |  
|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |  
|                                                                                    |                                                                                                              | (Dollars in thousands)     |          
|Balance at December 31, 2002                                                        |                                                                                                              |                            |          |            |        | $ |         |   |  | $           |       |   |               | $     | 29,620 |               |  | $ |       |   |  | $ | 194    |        |   | $ | 29,814  |       
|Comprehensive loss:                                                                 |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   |  |   |        |        |   |   |         |       
|                                                                                    | Net income                                                                                                   |                            |           |           |        |   |          |  |  |             |        |  |               |       |        | 1,688         |  |   |        |  |  |   |        |        |   |   |         | 1,688  |      
|                                                                                    | Net unrealized loss on securities available for sale, net of
    reclassification adjustment and tax effects |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   |  |   |        | (2,201 | ) |   |         | (2,201 | )    
|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   | 
|                                                                                    |                                                                                                              | Total comprehensive loss   |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   |  |   |        |        |   |   |         |        | (513  | )
|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   | 
|Balance at December 31, 2003                                                        |                                                                                                              |                            |          |            |        |   |         |   |  |             |       |   |               |       | 31,308 |               |  |   |       |   |  |   | (2,007 | )      |   |   | 29,301  |       
|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   | 
|Comprehensive income:                                                               |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   |  |   |        |        |   |   |         |       
|                                                                                    | Net income                                                                                                   |                            |           |           |        |   |          |  |  |             |        |  |               |       |        | 1,689         |  |   |        |  |  |   |        |       |   |   |         | 1,689  |      
|                                                                                    | Net unrealized gain on securities available for sale, net of
    reclassification adjustment and tax effects |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |              |  |   |        |   |  |   |        | 338    |   |   |         | 338    |      
|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   | 
|                                                                                    |                                                                                                              | Total comprehensive income |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   |  |   |        |        |   |   |         |        | 2,027 |  
|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   | 
|Balance at December 31, 2004                                                        |                                                                                                              |                            |          |            |        |   |         |   |  |             |       |   |               |       | 32,997 |               |  |   |       |   |  |   | (1,669 | )      |   |   | 31,328  |       
|Comprehensive loss:                                                                 |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   |  |   |        |        |   |   |         |       
|                                                                                    | Net income                                                                                                   |                            |           |           |        |   |          |  |  |             |        |  |               |       |        | 431           |  |   |        |  |  |   |        |       |   |   |         | 431    |      
|                                                                                    | Net unrealized loss on securities available for sale, net of tax
    effects                                 |                            |           |           |        |   |          |  |  |             |        |  |               |       |        |              |  |   |        |  |  |   |        | (657   | ) |   |         | (657   | )    
|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   | 
|                                                                                    |                                                                                                              | Total comprehensive loss   |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   |  |   |        |        |   |   |         |        | (226  | )
|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   | 
|Issuance of common stock for initial public offering, net of
    expenses of $2,053 |                                                                                                              |                            | 5,577,419 |            |        |   |         |   |  |             | 53,721 |   |               |       |       |               |  |   |       |   |  |   |       |        |   |   | 53,721  |       
|Issuance of common stock to Benjamin Franklin Bank Charitable
    Foundation        |                                                                                                              |                            | 400,000   |            |        |   |         |   |  |             | 4,000  |   |               |       |       |               |  |   |       |   |  |   |       |        |   |   | 4,000   |       
|Issuance of common stock for acquisition of Chart Bank                              |                                                                                                              |                            | 2,511,479 |            |        |   |         |   |  |             | 25,115 |   |               |       |       |               |  |   |       |   |  |   |       |        |   |   | 25,115  |       
|Stock purchased for ESOP                                                            |                                                                                                              |                            |          |            |        |   |         |   |  |             |        |   |               |       |        |               |  |   | (5,537 | ) |  |   |        |        |   |   | (5,537  | )     
|Release of ESOP stock                                                               |                                                                                                              |                            |          |            |        |   |         |   |  |             | 13     |   |               |       |       |               |  |   | 184    |   |  |   |       |        |   |   | 197     |       
|Dividends declared ($.06 per share)                                                 |                                                                                                              |                            |          |            |        |   |         |   |  |             |       |   |               |       | (486   | )             |  |   |       |   |  |   |       |        |   |   | (486    | )     
|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   | 
|Balance at December 31, 2005                                                        |                                                                                                              |                            | 8,488,898 |            |        | $ |         |   |  | $           | 82,849 |   |               | $     | 32,942 |               |  | $ | (5,353 | ) |  | $ | (2,326 | )      |   | $ | 108,112 |       
|                                                                                    |                                                                                                              |                            |           |            |        |   |          |   |  |             |        |   |               |       |        |               |  |   |        |   | 



F-5



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                 |                                                                                       |                                                       |                                           |         |         |         |         |         |         |         |         |         |          |         |  
|---------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | -------- | ------- | -
|                                                                 |                                                                                       | Years Ended December 31,                              |                                          
|                                                                 |                                                                                       |                                                       |                                          
|                                                                 |                                                                                       | 2005                                                  |                                           |         | 2004    |         |         | 2003    |        
|                                                                 |                                                                                       |                                                       |                                           |         |         |         |         |         |        
|                                                                 |                                                                                       | (Dollars in thousands)                                |                                          
|Cash flows from operating activities:                            |                                                                                       |                                                       |                                           |         |         |         |         |         |         |         |         |        
|                                                                 | Net income                                                                            |                                                       | $                                         | 431     |         |         | $       | 1,689   |         |         | $       | 1,688   |         
|                                                                 | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                       |                                           |         |         |         |         |         |         |         |         |         |         
|                                                                 |                                                                                       | Net amortization of securities                        |                                           |         | 9       |         |         |         | 855     |         |         |         | 833      |        
|                                                                 |                                                                                       | Amortization (accretion) of loans, net                |                                           |         | (64     | )       |         |         | 250     |         |         |         | 407      |        
|                                                                 |                                                                                       | Loss (gain) on sales of securities, net               |                                           |         |        |         |         |         | 24      |         |         |         | (86      | )      
|                                                                 |                                                                                       | Provision for loan losses                             |                                           |         | 686     |         |         |         | 620     |         |         |         | 625      |        
|                                                                 |                                                                                       | Accretion of deposit and borrowings, net              |                                           |         | (307    | )       |         |         |        |         |         |         |         |        
|                                                                 |                                                                                       | Amortization of mortgage servicing rights             |                                           |         | 282     |         |         |         | 450     |         |         |         | 892      |        
|                                                                 |                                                                                       | Depreciation expense                                  |                                           |         | 983     |         |         |         | 679     |         |         |         | 872      |        
|                                                                 |                                                                                       | Amortization of core deposit intangible               |                                           |         | 1,400   |         |         |         | 181     |         |         |         | 181      |        
|                                                                 |                                                                                       | Amortization of unearned compensation                 |                                           |         | 197     |         |         |         |        |         |         |         |         |        
|                                                                 |                                                                                       | Deferred income tax benefit                           |                                           |         | (1,944  | )       |         |         | (161    | )       |         |         | (169     | )      
|                                                                 |                                                                                       | Income from bank-owned life insurance                 |                                           |         | (269    | )       |         |         | (198    | )       |         |         | (181     | )      
|                                                                 |                                                                                       | Gains on sales of loans, net                          |                                           |         | (116    | )       |         |         | (123    | )       |         |         | (975     | )      
|                                                                 |                                                                                       | Loans originated for sale                             |                                           |         | (23,160 | )       |         |         | (31,185 | )       |         |         | (96,256  | )      
|                                                                 |                                                                                       | Proceeds from sales of loans                          |                                           |         | 23,276  |         |         |         | 31,308  |         |         |         | 97,231   |        
|                                                                 |                                                                                       | Increase in accrued interest receivable               |                                           |         | (1,555  | )       |         |         | (102    | )       |         |         | (89      | )      
|                                                                 |                                                                                       | Loss on sale/write-down of bank-owned land, net       |                                           |         | 1,020   |         |         |         |        |         |         |         |         |        
|                                                                 |                                                                                       | Contribution of common stock to Charitable Foundation |                                           |         | 4,000   |         |         |         |        |         |         |         |         |        
|                                                                 |                                                                                       | Other, net                                            |                                           |         | 3,360   |         |         |         | (1,211  | )       |         |         | (276     | )      
|                                                                 |                                                                                       |                                                       |                                           |         |         |         |         |         |        
|                                                                 |                                                                                       |                                                       | Net cash provided by operating activities |         |         | 8,229   |         |         |         | 3,076   |         |         |          | 4,697   |  
|                                                                 |                                                                                       |                                                       |                                           |         |         |         |         |         |        
|Cash flows from investing activities:                            |                                                                                       |                                                       |                                           |         |         |         |         |         |         |         |         |        
|                                                                 | Activity in available-for-sale securities:                                            |                                                       |                                           |         |         |         |         |         |         |         |         |         |         
|                                                                 |                                                                                       | Sales                                                 |                                           |         |        |         |         |         | 5,591   |         |         |         | 30,886   |        
|                                                                 |                                                                                       | Maturities, calls, and principal repayments           |                                           |         | 49,770  |         |         |         | 41,830  |         |         |         | 211,994  |        
|                                                                 |                                                                                       | Purchases                                             |                                           |         | (52,900 | )       |         |         | (31,278 | )       |         |         | (240,200 | )      
|                                                                 | Maturities of and principal repayments on held-to-maturity
    securities             |                                                       |                                           | 108     |         |         |         | 169     |         |         |         | 600     |         
|                                                                 | Net change in restricted equity securities                                            |                                                       |                                           | (653    | )       |         |         | 247     |         |         |         | (2,000  | )       
|                                                                 | Purchases of mortgage loans                                                           |                                                       |                                           |        |         |         |         | (34,207 | )       |         |         | (26,546 | )       
|                                                                 | Loan originations, net                                                                |                                                       |                                           | (38,346 | )       |         |         | (61,174 | )       |         |         | (1,415  | )       
|                                                                 | Proceeds from sales of bank-owned land                                                |                                                       |                                           | 785     |         |         |         |        |         |         |         |        |         
|                                                                 | Purchases of bank-owned life insurance                                                |                                                       |                                           |        |         |         |         | (1,400  | )       |         |         | (1,300  | )       
|                                                                 | Additions to premises and equipment                                                   |                                                       |                                           | (819    | )       |         |         | (627    | )       |         |         | (224    | )       
|                                                                 |                                                                                       |                                                       |                                           |         |         |         |         |         |        
|                                                                 |                                                                                       |                                                       | Net cash used for investing activities    |         |         | (42,055 | )       |         |         | (80,849 | )       |         |          | (28,205 | )
|                                                                 |                                                                                       |                                                       |                                           |         |         |         |         |         |        
|Cash flows from financing activities:                            |                                                                                       |                                                       |                                           |         |         |         |         |         |         |         |         |        
|                                                                 | Net increase (decrease) in deposits                                                   |                                                       |                                           | (1,858  | )       |         |         | 16,242  |         |         |         | 6,957   |         
|                                                                 | Net proceeds from (repayments of) short-term borrowings                               |                                                       |                                           | (4,250  | )       |         |         | 4,250   |         |         |         |        |         
|                                                                 | Net proceeds from long-term debt                                                      |                                                       |                                           | 33,903  |         |         |         | 36,000  |         |         |         |        |         
|                                                                 | Net proceeds from common stock offering                                               |                                                       |                                           | 53,721  |         |         |         |        |         |         |         |        |         
|                                                                 | Dividends paid on common stock                                                        |                                                       |                                           | (486    | )       |         |         |        |         |         |         |        |         
|                                                                 | Acquisition of common stock by ESOP                                                   |                                                       |                                           | (5,537  | )       |         |         |        |         |         |         |        |         
|                                                                 |                                                                                       |                                                       |                                           |         |         |         |         |         |        
|                                                                 |                                                                                       |                                                       | Net cash provided by financing activities |         |         | 75,493  |         |         |         | 56,492  |         |         |          | 6,957   |  
|                                                                 |                                                                                       |                                                       |                                           |         |         |         |         |         |        
|Net change in cash and cash equivalents                          |                                                                                       |                                                       | 41,667                                    |         |         |         | (21,281 | )       |         |         | (16,551 | )      
|Cash and cash equivalents acquired in the purchase of Chart Bank |                                                                                       |                                                       | 9,879                                     |         |         |         |        |         |         |         |        |        
|Cash and cash equivalents at beginning of year                   |                                                                                       |                                                       | 14,204                                    |         |         |         | 35,485  |         |         |         | 52,036  |        
|                                                                 |                                                                                       |                                                       |                                           |         |         |         |         |         |        
|Cash and cash equivalents at end of year                         |                                                                                       | $                                                     | 65,750                                    |         |         | $       | 14,204  |         |         | $       | 35,485  |        
|                                                                 |                                                                                       |                                                       |                                           |         |         |         |         |         |        
|Supplemental cash flow information:                              |                                                                                       |                                                       |                                           |         |         |         |         |         |         |         |         |        
|                                                                 | Interest paid on deposits                                                             |                                                       | $                                         | 8,476   |         |         | $       | 4,367   |         |         | $       | 4,492   |         
|                                                                 | Interest paid on short-term borrowings                                                |                                                       |                                           | 55      |         |         |         | 83      |         |         |         |        |         
|                                                                 | Interest paid on long-term debt                                                       |                                                       |                                           | 4,397   |         |         |         | 2,485   |         |         |         | 2,280   |         
|                                                                 | Income taxes paid                                                                     |                                                       |                                           | 1,238   |         |         |         | 865     |         |         |         | 942     |         
|                                                                 | Premises and equipment transferred to other assets                                    |                                                       |                                           | 634     |         |         |         |        |         |         |         |        |         
|Assets acquired and liabilities assumed were as follows:         |                                                                                       |                                                       |                                           |         |         |         |         |         |         |         |         |        
|                                                                 | Fair value of noncash assets acquired                                                 |                                                       | $                                         | 259,008 |         |         | $       |        |         |         | $       |        |         
|                                                                 | Fair value of liabilities assumed                                                     |                                                       |                                           | 243,772 |         |         |         |        |         |         |         |        |         
|                                                                 | Fair value of common stock issued                                                     |                                                       |                                           | 25,115  |         |         |         |        |         |         |         |        |         



F-6



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Years Ended December 31, 2005, 2004 and 2003


(Dollars in Thousands)




|   |                                           
|-- | ------------------------------------------
|1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



| |                                        
| | ---------------------------------------
| | Basis of presentation and consolidation







| |                                
| | -------------------------------
| | Business and operating segments







| |                 
| | ----------------
| | Use of estimates





| |                  
| | -----------------
| | Reclassifications





| |                          
| | -------------------------
| | Cash and cash equivalents



F-7



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




| |           
| | ----------
| | Securities



held-to






| |      
| | -----
| | Loans











| |                          
| | -------------------------
| | Allowance for loan losses





F-8



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)












| |          
| | ---------
| | Servicing





| |                       
| | ----------------------
| | Premises and equipment



F-9



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




| |                              
| | -----------------------------
| | Transfers of financial assets





| |                                            
| | -------------------------------------------
| | Goodwill and identifiable intangible assets





| |                                 
| | --------------------------------
| | Derivative financial instruments





| |                
| | ---------------
| | Retirement plan





| |             
| | ------------
| | Income taxes





F-10



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




| |                  
| | -----------------
| | Advertising costs





| |                     
| | --------------------
| | Comprehensive income



|                                                                       |                   |                          |      |      |      |   |     |      |  |   |        |        |  
|---------------------------------------------------------------------- | ----------------- | ------------------------ | ---- | ---- | ---- | - | --- | ---- |  | - | ------ | ------ | -
|                                                                       |                   | Years Ended December 31, |     
|                                                                       |                   |                          |     
|                                                                       |                   | 2005                     |      |      | 2004 |   |     | 2003 | 
|                                                                       |                   |                          |      |      |      |   |     |      | 
|Unrealized holding gains (losses) on securities available for
    sale |                   | $                        | (750 | )    |      | $ | 266 |      |  | $ | (2,361 | )     
|Tax effect                                                             |                   |                          | 93   |      |      |   | 44  |      |  |   | 237    |       
|                                                                       |                   |                          |      |      |      |   |     |      | 
|                                                                       | Net-of-tax amount |                          |      | (657 | )    |   |     | 310  |  |   |        | (2,124 | )
|                                                                       |                   |                          |      |      |      |   |     |      | 
|Reclassification adjustment for gains (losses) realized in income      |                   |                          |     |      |      |   | 24  |      |  |   | (86    | )     
|Tax effect                                                             |                   |                          |     |      |      |   | 4   |      |  |   | 9      |       
|                                                                       |                   |                          |      |      |      |   |     |      | 
|                                                                       | Net-of-tax amount |                          |      |     |      |   |     | 28   |  |   |        | (77    | )
|                                                                       |                   |                          |      |      |      |   |     |      | 
|                                                                       | Total change      |                          | $    | (657 | )    |   | $   | 338  |  |   | $      | (2,201 | )
|                                                                       |                   |                          |      |      |      |   |     |      | 



| |                   
| | ------------------
| | Earnings per share







| |                                 
| | --------------------------------
| | Recent accounting pronouncements



F-11



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




mutual-to


Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of
Liabilities




|   |                            
|-- | ---------------------------
|2. | STOCK CONVERSION AND MERGER

mutual-to






F-12



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)








|                                      |  |             |         | 
|------------------------------------- |  | ----------- | ------- | 
|                                      |  | Final       |        
|                                      |  | Allocation  |        
|                                      |  | of Purchase |        
|                                      |  | Price       |        
|                                      |  |             |        
|Assets:                               |  |             |         | 
|Cash and cash equivalents             |  | $           | 31,414  | 
|Securities                            |  |             | 36,136  | 
|Loans, less allowance for loan losses |  |             | 184,035 | 
|Premises and equipment                |  |             | 2,623   | 
|Goodwill                              |  |             | 29,515  | 
|Core deposit intangible               |  |             | 5,488   | 
|Other assets                          |  |             | 1,211   | 
|                                      |  |             |        
|                                      |  |             | 290,422 | 
|                                      |  |             |        
|                                     
|Liabilities:                         
|Deposits                              |  |             | 217,376 | 
|Borrowed funds                        |  |             | 25,399  | 
|Other liabilities                     |  |             | 997     | 
|                                      |  |             |        
|                                      |  |             | 243,772 | 
|                                      |  |             |        
|Net assets acquired                   |  | $           | 46,650  | 
|                                      |  |             |        



|                         |  |        |       | 
|------------------------ |  | ------ | ----- | 
|Year Ending December 31, |  | Amount |      
|                         |  |        |      
|2006                     |  | $      | 442   | 
|2007                     |  |        | 552   | 
|2008                     |  |        | 504   | 
|2009                     |  |        | 374   | 
|2010                     |  |        | 294   | 
|Thereafter               |  |        | 1,002 | 
|                         |  |        |      
|                         |  | $      | 3,168 | 
|                         |  |        |      

F-13



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|                             |                            |              |        |        |      |   |        |        | 
|---------------------------- | -------------------------- | ------------ | ------ | ------ | ---- | - | ------ | ------ | 
|                             |                            | Years Ended  |       
|                             |                            | December 31, |       
|                             |                            |              |       
|                             |                            | 2005         |        |        | 2004 |  
|                             |                            |              |        |        |      |  
|                             |                            | (Unaudited)  |       
|Interest and dividend income |                            | $            | 38,553 |        |      | $ | 32,675 |       
|Interest expense             |                            |              | 14,119 |        |      |   | 10,482 |       
|                             |                            |              |        |        |      |  
|                             | Net interest income        |              |        | 24,434 |      |   |        | 22,193 | 
|Provision for loan losses    |                            |              | 716    |        |      |   | 740    |       
|Non-interest income          |                            |              | 4,212  |        |      |   | 4,753  |       
|Non-interest expense         |                            |              | 26,564 |        |      |   | 22,124 |       
|                             |                            |              |        |        |      |  
|                             | Income before income taxes |              |        | 1,366  |      |   |        | 4,082  | 
|Income tax provision         |                            |              | 1,320  |        |      |   | 1,689  |       
|                             |                            |              |        |        |      |  
|                             | Net income                 |              | $      | 46     |      |   | $      | 2,393  | 
|                             |                            |              |        |        |      |  





|   |                                        
|-- | ---------------------------------------
|3. | RESTRICTIONS ON CASH AND DUE FROM BANKS





|   |                       
|-- | ----------------------
|4. | SHORT-TERM INVESTMENTS



|                      |  |              |        |  |      |   |       | 
|--------------------- |  | ------------ | ------ |  | ---- | - | ----- | 
|                      |  | December 31, |       
|                      |  |              |       
|                      |  | 2005         |        |  | 2004 |  
|                      |  |              |        |  |      |  
|Federal funds sold    |  | $            | 10,777 |  |      | $ | 4,380 | 
|Money market accounts |  |              | 1,274  |  |      |   | 1,133 | 
|                      |  |              |        |  |      |  
|                      |  | $            | 12,051 |  |      | $ | 5,513 | 
|                      |  |              |        |  |      |  

F-14



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|   |           
|-- | ----------
|5. | SECURITIES



|                                            |  |           |         |       |            |   |       |            |  |   |        |   |  |   |         | 
|------------------------------------------- |  | --------- | ------- | ----- | ---------- | - | ----- | ---------- |  | - | ------ | - |  | - | ------- | 
|                                            |  |           |         | Gross |            |   | Gross |            |  |  
|                                            |  | Amortized |         |       | Unrealized |   |       | Unrealized |  |   | Fair   |  
|                                            |  | Cost      |         |       | Gains      |   |       | Losses     |  |   | Value  |  
|                                            |  |           |         |       |            |   |       |            |  |   |        |  
|December 31, 2005:                          |  |           |         |       |            |   |       |            |  |   |        |   |  |   |         | 
|Securities available for sale:              |  |           |         |       |            |   |       |            |  |   |        |   |  |   |         | 
|Government-sponsored enterprise obligations |  | $         | 86,141  |       |            | $ | 1     |            |  | $ | (648   | ) |  | $ | 85,494  | 
|Other bonds and obligations                 |  |           | 4,719   |       |            |   |      |            |  |   | (28    | ) |  |   | 4,691   | 
|Mortgage-backed securities                  |  |           | 34,107  |       |            |   | 15    |            |  |   | (1,928 | ) |  |   | 32,194  | 
|                                            |  |           |         |       |            |   |       |            |  |   |        |  
|                                            |  | $         | 124,967 |       |            | $ | 16    |            |  | $ | (2,604 | ) |  | $ | 122,379 | 
|                                            |  |           |         |       |            |   |       |            |  |   |        |  
|Securities held to maturity:                |  |           |         |       |            |   |       |            |  |   |        |   |  |   |         | 
|Mortgage-backed securities                  |  | $         | 109     |       |            | $ |      |            |  | $ |       |   |  | $ | 109     | 
|                                            |  |           |         |       |            |   |       |            |  |   |        |  

|                                            |  |           |        |       |            |   |       |            |  |   |        |   |  |   |        | 
|------------------------------------------- |  | --------- | ------ | ----- | ---------- | - | ----- | ---------- |  | - | ------ | - |  | - | ------ | 
|                                            |  |           |        | Gross |            |   | Gross |            |  |  
|                                            |  | Amortized |        |       | Unrealized |   |       | Unrealized |  |   | Fair   |  
|                                            |  | Cost      |        |       | Gains      |   |       | Losses     |  |   | Value  |  
|                                            |  |           |        |       |            |   |       |            |  |   |        |  
|December 31, 2004:                          |  |           |        |       |            |   |       |            |  |   |        |   |  |   |        | 
|Securities available for sale:              |  |           |        |       |            |   |       |            |  |   |        |   |  |   |        | 
|Government-sponsored enterprise obligations |  | $         | 33,607 |       |            | $ | 2     |            |  | $ | (303   | ) |  | $ | 33,306 | 
|Other bonds and obligations                 |  |           | 5,055  |       |            |   |      |            |  |   | (41    | ) |  |   | 5,014  | 
|Mortgage-backed securities                  |  |           | 49,246 |       |            |   | 41    |            |  |   | (1,537 | ) |  |   | 47,750 | 
|                                            |  |           |        |       |            |   |       |            |  |   |        |  
|                                            |  | $         | 87,908 |       |            | $ | 43    |            |  | $ | (1,881 | ) |  | $ | 86,070 | 
|                                            |  |           |        |       |            |   |       |            |  |   |        |  
|Securities held to maturity:                |  |           |        |       |            |   |       |            |  |   |        |   |  |   |        | 
|Mortgage-backed securities                  |  | $         | 217    |       |            | $ | 4     |            |  | $ |       |   |  | $ | 221    | 
|                                            |  |           |        |       |            |   |       |            |  |   |        |  



|                             |  |           |        |  |       |   |        | 
|---------------------------- |  | --------- | ------ |  | ----- | - | ------ | 
|                             |  | Amortized |        |  | Fair  |  
|                             |  | Cost      |        |  | Value |  
|                             |  |           |        |  |       |  
|Within 1 year                |  | $         | 40,403 |  |       | $ | 40,158 | 
|After 1 year through 5 years |  |           | 50,457 |  |       |   | 50,027 | 
|                             |  |           |        |  |       |  
|                             |  | $         | 90,860 |  |       | $ | 90,185 | 
|                             |  |           |        |  |       |  



F-15



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|                                            |  |                  |     |  |                    |   |        |            |  |   |       |  |  |   |        | 
|------------------------------------------- |  | ---------------- | --- |  | ------------------ | - | ------ | ---------- |  | - | ----- |  |  | - | ------ | 
|                                            |  | Less Than Twelve |     |  |                   
|                                            |  | Months           |     |  | Over Twelve Months |  
|                                            |  |                  |     |  |                    |  
|                                            |  | Gross            |     |  |                    |   | Gross  |            |  |  
|                                            |  | Unrealized       |     |  | Fair               |   |        | Unrealized |  |   | Fair  | 
|                                            |  | Losses           |     |  | Value              |   |        | Losses     |  |   | Value | 
|                                            |  |                  |     |  |                    |   |        |            |  |   |       | 
|December 31, 2005:                          |  |                  |     |  |                    |   |        |            |  |   |       |  |  |   |        | 
|Government-sponsored enterprise obligations |  | $                | 235 |  |                    | $ | 36,670 |            |  | $ | 413   |  |  | $ | 48,824 | 
|Other bonds and obligations                 |  |                  | 10  |  |                    |   | 3,001  |            |  |   | 18    |  |  |   | 1,690  | 
|Mortgage-backed securities                  |  |                  |    |  |                    |   |       |            |  |   | 1,928 |  |  |   | 32,303 | 
|                                            |  |                  |     |  |                    |   |        |            |  |   |       | 
|Total temporarily impaired securities       |  | $                | 245 |  |                    | $ | 39,671 |            |  | $ | 2,359 |  |  | $ | 82,817 | 
|                                            |  |                  |     |  |                    |   |        |            |  |   |       | 
|December 31, 2004:                          |  |                  |     |  |                    |   |        |            |  |   |       |  |  |   |        | 
|Government-sponsored enterprise obligations |  | $                | 267 |  |                    | $ | 26,275 |            |  | $ | 36    |  |  | $ | 6,024  | 
|Other bonds and obligations                 |  |                  | 41  |  |                    |   | 5,014  |            |  |   |      |  |  |   |       | 
|Mortgage-backed securities                  |  |                  | 37  |  |                    |   | 3,031  |            |  |   | 1,500 |  |  |   | 43,629 | 
|                                            |  |                  |     |  |                    |   |        |            |  |   |       | 
|Total temporarily impaired securities       |  | $                | 345 |  |                    | $ | 34,320 |            |  | $ | 1,536 |  |  | $ | 49,653 | 
|                                            |  |                  |     |  |                    |   |        |            |  |   |       | 





|   |      
|-- | -----
|6. | LOANS



|                               |              |              |         |         |         |  |         |         |         | 
|------------------------------ | ------------ | ------------ | ------- | ------- | ------- |  | ------- | ------- | ------- | 
|                               |              | December 31, |        
|                               |              |              |        
|                               |              | 2005         |         |         | 2004    | 
|                               |              |              |         |         |         | 
|Mortgage loans on real estate: |              |              |         |         |         |  |         |        
|                               | Residential  |              | $       | 286,204 |         |  | $       | 241,090 |        
|                               | Commercial   |              |         | 209,009 |         |  |         | 85,911  |        
|                               | Construction |              |         | 60,399  |         |  |         | 28,651  |        
|                               | Home equity  |              |         | 32,419  |         |  |         | 23,199  |        
|                               |              |              |         |         |         | 
|                               |              |              | 588,031 |         |         |  | 378,851 |        
|                               |              |              |         |         |         | 
|Other loans:                   |              |              |         |         |         |  |         |        
|                               | Commercial   |              |         | 19,162  |         |  |         | 4,375   |        
|                               | Consumer     |              |         | 2,395   |         |  |         | 2,170   |        
|                               |              |              |         |         |         | 
|                               |              |              | 21,557  |         |         |  | 6,545   |        
|                               |              |              |         |         |         | 
|                               |              | Total loans  |         |         | 609,588 |  |         |         | 385,396 | 
|Allowance for loan losses      |              |              | (5,670  | )       |         |  | (3,172  | )      
|Net deferred loan costs        |              |              | 1,214   |         |         |  | 1,149   |        
|                               |              |              |         |         |         | 
|                               |              | Loans, net   |         | $       | 605,132 |  |         | $       | 383,373 | 
|                               |              |              |         |         |         | 

F-16



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|                                               |  |                          |       |   |      |   |       |      |  |   |       |  
|---------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                               |  | Years Ended December 31, |      
|                                               |  |                          |      
|                                               |  | 2005                     |       |   | 2004 |   |       | 2003 | 
|                                               |  |                          |       |   |      |   |       |      | 
|Balance at beginning of year                   |  | $                        | 3,172 |   |      | $ | 2,523 |      |  | $ | 2,312 |  
|Allowance added from acquisition of Chart Bank |  |                          | 1,812 |   |      |   |      |      |  |   |      |  
|Provision for loan losses                      |  |                          | 686   |   |      |   | 620   |      |  |   | 625   |  
|Recoveries                                     |  |                          | 79    |   |      |   | 46    |      |  |   | 123   |  
|Charge-offs                                    |  |                          | (79   | ) |      |   | (17   | )    |  |   | (537  | )
|                                               |  |                          |       |   |      |   |       |      | 
|Balance at end of year                         |  | $                        | 5,670 |   |      | $ | 3,172 |      |  | $ | 2,523 |  
|                                               |  |                          |       |   |      |   |       |      | 



|                                                         |  |              |     |  |      |   |     | 
|-------------------------------------------------------- |  | ------------ | --- |  | ---- | - | --- | 
|                                                         |  | December 31, |    
|                                                         |  |              |    
|                                                         |  | 2005         |     |  | 2004 |  
|                                                         |  |              |     |  |      |  
|Total impaired loans, all with valuation allowances      |  | $            | 264 |  |      | $ | 334 | 
|                                                         |  |              |     |  |      |  
|Valuation allowances related to impaired loans           |  | $            | 140 |  |      | $ | 210 | 
|                                                         |  |              |     |  |      |  
|Non-accrual loans                                        |  | $            | 465 |  |      | $ | 334 | 
|                                                         |  |              |     |  |      |  
|Loans greater than 90 days delinquent and still accruing |  | $            | 2   |  |      | $ | 3   | 
|                                                         |  |              |     |  |      |  

|                                                             |  |              |     |  |      |   |     |      |  |   |     | 
|------------------------------------------------------------ |  | ------------ | --- |  | ---- | - | --- | ---- |  | - | --- | 
|                                                             |  | Years Ended  |    
|                                                             |  | December 31, |    
|                                                             |  |              |    
|                                                             |  | 2005         |     |  | 2004 |   |     | 2003 | 
|                                                             |  |              |     |  |      |   |     |      | 
|Average recorded investment in impaired loans                |  | $            | 266 |  |      | $ | 395 |      |  | $ | 568 | 
|                                                             |  |              |     |  |      |   |     |      | 
|Interest income recognized on a cash basis on impaired loans |  | $            | 12  |  |      | $ |    |      |  | $ | 30  | 
|                                                             |  |              |     |  |      |   |     |      | 



Borrower-in




|   |          
|-- | ---------
|7. | SERVICING





|                                      |  |                          |  |      |  |     
|------------------------------------- |  | ------------------------ |  | ---- |  | ----
|                                      |  | Years Ended December 31,
|                                      |  |                         
|                                      |  | 2005                     |  | 2004 |  | 2003
|                                      |  |                          |  |      |  |     
|Mortgage servicing rights capitalized |  | $132                     |  | $241 |  | $865
|                                      |  |                          |  |      |  |     
|Mortgage servicing rights amortized   |  | $282                     |  | $450 |  | $892
|                                      |  |                          |  |      |  |     

F-17



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|   |                       
|-- | ----------------------
|8. | PREMISES AND EQUIPMENT



|                              |                            |              |        |        |           |   |        |              |  |  |            |            | 
|----------------------------- | -------------------------- | ------------ | ------ | ------ | --------- | - | ------ | ------------ |  |  | ---------- | ---------- | 
|                              |                            | December 31, |        |        |          
|                              |                            |              |        |        | Estimated |  
|                              |                            | 2005         |        |        | 2004      |   |        | Useful Lives | 
|                              |                            |              |        |        |           |   |        |              | 
|Premises:                     |                            |              |        |        |           |   |        |              |  |  |            |           
|                              | Land                       |              | $      | 3,121  |           |   | $      | 4,357        |  |  |            |            | 
|                              | Buildings and improvements |              |        | 11,264 |           |   |        | 10,614       |  |  |            | 5-39 years | 
|Equipment                     |                            |              | 6,174  |        |           |   | 4,585  |              |  |  | 2-10 years |           
|                              |                            |              |        |        |           |   |        |              | 
|                              |                            |              | 20,559 |        |           |   | 19,556 |              |  |  |            |           
|Less accumulated depreciation |                            |              | (9,392 | )      |           |   | (8,409 | )            |  |  |            |           
|                              |                            |              |        |        |           |   |        |              | 
|                              |                            | $            | 11,167 |        |           | $ | 11,147 |              |  |  |            |           
|                              |                            |              |        |        |           |   |        |              | 





|                         |  |        |     | 
|------------------------ |  | ------ | --- | 
|Year Ending December 31, |  | Amount |    
|                         |  |        |    
|2006                     |  | $      | 236 | 
|2007                     |  |        | 236 | 
|2008                     |  |        | 131 | 
|2009                     |  |        | 98  | 
|2010                     |  |        | 98  | 
|                         |  |        |    
|                         |  | $      | 799 | 
|                         |  |        |    





|   |                               
|-- | ------------------------------
|9. | IDENTIFIABLE INTANGIBLE ASSETS



|                         |  |              |        |   |      |   |        |  
|------------------------ |  | ------------ | ------ | - | ---- | - | ------ | -
|                         |  | December 31, |       
|                         |  |              |       
|                         |  | 2005         |        |   | 2004 |  
|                         |  |              |        |   |      |  
|Core deposit intangible  |  | $            | 6,756  |   |      | $ | 1,268  |  
|Accumulated amortization |  |              | (2,623 | ) |      |   | (1,223 | )
|                         |  |              |        |   |      |  
|                         |  | $            | 4,133  |   |      | $ | 45     |  
|                         |  |              |        |   |      |  

F-18



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|                         |  |        |       | 
|------------------------ |  | ------ | ----- | 
|Year Ending December 31, |  | Amount |      
|                         |  |        |      
|2006                     |  | $      | 1,064 | 
|2007                     |  |        | 779   | 
|2008                     |  |        | 574   | 
|2009                     |  |        | 408   | 
|2010                     |  |        | 310   | 
|Thereafter               |  |        | 998   | 
|                         |  |        |      
|                         |  | $      | 4,133 | 
|                         |  |        |      



|    |         
|--- | --------
|10. | DEPOSITS



|                                      |                                |              |         |         |      |   |        |         | 
|------------------------------------- | ------------------------------ | ------------ | ------- | ------- | ---- | - | ------ | ------- | 
|                                      |                                | December 31, |        
|                                      |                                |              |        
|                                      |                                | 2005         |         |         | 2004 |  
|                                      |                                |              |         |         |      |  
|Demand deposits                       |                                | $            | 124,396 |         |      | $ | 87,776 |        
|NOW                                   |                                |              | 32,147  |         |      |   | 22,460 |        
|Regular and other savings             |                                |              | 97,960  |         |      |   | 95,875 |        
|Money market deposits                 |                                |              | 94,347  |         |      |   | 53,167 |        
|                                      |                                |              |         |         |      |  
|                                      | Total non-certificate accounts |              |         | 348,850 |      |   |        | 259,278 | 
|                                      |                                |              |         |         |      |  
|Term certificates less than $100,000  |                                |              | 157,933 |         |      |   | 97,114 |        
|Term certificates of $100,000 or more |                                |              | 104,890 |         |      |   | 40,107 |        
|                                      |                                |              |         |         |      |  
|                                      | Total certificate accounts     |              |         | 262,823 |      |   |        | 137,221 | 
|                                      |                                |              |         |         |      |  
|                                      | Total deposits                 |              | $       | 611,673 |      |   | $      | 396,499 | 
|                                      |                                |              |         |         |      |  



|                        |  |                   |         |          |                   |  |      |        |          |   |         |  |  |  |      |  
|----------------------- |  | ----------------- | ------- | -------- | ----------------- |  | ---- | ------ | -------- | - | ------- |  |  |  | ---- | -
|                        |  | December 31, 2005 |         |          | December 31, 2004 | 
|                        |  |                   |         |          |                   | 
|                        |  |                   |         | Weighted |                   |  |      |        | Weighted |  
|                        |  |                   |         | Average  |                   |  |      |        | Average  |  
|                        |  | Amount            |         |          | Rate              |  |      | Amount |          |   | Rate    | 
|                        |  |                   |         |          |                   |  |      |        |          |   |         | 
|Within 1 year           |  | $                 | 204,459 |          |                   |  | 3.47 | %      |          | $ | 98,965  |  |  |  | 2.22 | %
|Over 1 year to 3 years  |  |                   | 51,066  |          |                   |  | 3.71 |        |          |   | 32,767  |  |  |  | 2.90 |  
|Over 3 years to 5 years |  |                   | 7,298   |          |                   |  | 4.17 |        |          |   | 5,489   |  |  |  | 3.30 |  
|                        |  |                   |         |          |                   |  |      |        |          |   |         | 
|                        |  | $                 | 262,823 |          |                   |  | 3.53 | %      |          | $ | 137,221 |  |  |  | 2.42 | %
|                        |  |                   |         |          |                   |  |      |        |          |   |         | 



|    |                      
|--- | ---------------------
|11. | SHORT-TERM BORROWINGS



F-19



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|    |               
|--- | --------------
|12. | LONG-TERM DEBT



|                                             |  |              |         |  |      |   |        | 
|-------------------------------------------- |  | ------------ | ------- |  | ---- | - | ------ | 
|                                             |  | December 31, |        
|                                             |  |              |        
|                                             |  | 2005         |         |  | 2004 |  
|                                             |  |              |         |  |      |  
|FHLB fixed-rate advances                     |  | $            | 128,936 |  |      | $ | 72,000 | 
|Subordinated debt issued to trust subsidiary |  |              | 9,000   |  |      |   | 9,000  | 
|Secured borrowing                            |  |              | 2,403   |  |      |   |       | 
|                                             |  |              |         |  |      |  
|                                             |  | $            | 140,339 |  |      | $ | 81,000 | 
|                                             |  |              |         |  |      |  



| |              
| | -------------
| | FHLB Advances



|              |  |                   |         |          |                   |  |      |        |          |   |        |  |  |  |      |  
|------------- |  | ----------------- | ------- | -------- | ----------------- |  | ---- | ------ | -------- | - | ------ |  |  |  | ---- | -
|              |  | December 31, 2005 |         |          | December 31, 2004 | 
|              |  |                   |         |          |                   | 
|              |  |                   |         | Weighted |                   |  |      |        | Weighted |  
|              |  |                   |         | Average  |                   |  |      |        | Average  |  
|Maturity Date |  | Amount            |         |          | Rate              |  |      | Amount |          |   | Rate   | 
|              |  |                   |         |          |                   |  |      |        |          |   |        | 
|2006          |  | $                 | 8,936   |          |                   |  | 3.00 | %      |          | $ | 7,000  |  |  |  | 3.05 | %
|2007          |  |                   | 23,000  |          |                   |  | 3.25 |        |          |   | 23,000 |  |  |  | 3.25 |  
|2008          |  |                   | 27,000  |          |                   |  | 4.09 |        |          |   | 6,000  |  |  |  | 3.53 |  
|2009*         |  |                   | 6,000   |          |                   |  | 4.91 |        |          |   | 6,000  |  |  |  | 4.91 |  
|2010*         |  |                   | 34,000  |          |                   |  | 4.19 |        |          |   |       |  |  |  |     |  
|2011*         |  |                   | 30,000  |          |                   |  | 4.38 |        |          |   | 30,000 |  |  |  | 4.38 |  
|              |  |                   |         |          |                   |  |      |        |          |   |        | 
|              |  | $                 | 128,936 |          |                   |  | 4.00 | %      |          | $ | 72,000 |  |  |  | 3.87 | %
|              |  |                   |         |          |                   |  |      |        |          |   |        | 






|  |                                                                         
|- | ------------------------------------------------------------------------
|* | Includes advances in aggregate of $46,000 that are callable in
    2006.







| |                  
| | -----------------
| | Subordinated Debt



F-20



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)








| |                  
| | -----------------
| | Secured Borrowing





|    |             
|--- | ------------
|13. | INCOME TAXES



|                            |         |                          |        |        |       |  |       |      |     |  |      |     |     | 
|--------------------------- | ------- | ------------------------ | ------ | ------ | ----- |  | ----- | ---- | --- |  | ---- | --- | --- | 
|                            |         | Years Ended December 31, |       
|                            |         |                          |       
|                            |         | 2005                     |        |        | 2004  |  |       | 2003 |    
|                            |         |                          |        |        |       |  |       |      |    
|Current tax provision:      |         |                          |        |        |       |  |       |      |     |  |      |    
|                            | Federal |                          | $      | 2,394  |       |  | $     | 809  |     |  | $    | 863 |    
|                            | State   |                          |        | 662    |       |  |       | 244  |     |  |      | 125 |    
|                            |         |                          |        |        |       |  |       |      |    
|                            |         |                          | 3,056  |        |       |  | 1,053 |      |     |  | 988  |    
|                            |         |                          |        |        |       |  |       |      |    
|Deferred tax benefit:       |         |                          |        |        |       |  |       |      |     |  |      |    
|                            | Federal |                          |        | (2,012 | )     |  |       | (139 | )   |  |      | (73 | )  
|                            | State   |                          |        | (365   | )     |  |       | (38  | )   |  |      | (44 | )  
|                            |         |                          |        |        |       |  |       |      |    
|                            |         |                          | (2,377 | )      |       |  | (177  | )    |     |  | (117 | )  
|Change in valuation reserve |         |                          | 433    |        |       |  | 16    |      |     |  | (52  | )  
|                            |         |                          |        |        |       |  |       |      |    
|                            |         |                          | (1,944 | )      |       |  | (161  | )    |     |  | (169 | )  
|                            |         |                          |        |        |       |  |       |      |    
|                            |         | Total tax provision      |        | $      | 1,112 |  |       | $    | 892 |  |      | $   | 819 | 
|                            |         |                          |        |        |       |  |       |      |    



|                                    |                                 |                          |      |      |      |  |      |      |   |  |      |      |  
|----------------------------------- | ------------------------------- | ------------------------ | ---- | ---- | ---- |  | ---- | ---- | - |  | ---- | ---- | -
|                                    |                                 | Years Ended December 31, |     
|                                    |                                 |                          |     
|                                    |                                 | 2005                     |      |      | 2004 |  |      | 2003 |  
|                                    |                                 |                          |      |      |      |  |      |      |  
|Statutory rate                      |                                 |                          | 34.0 | %    |      |  | 34.0 | %    |   |  | 34.0 | %   
|Increase (decrease) resulting from: |                                 |                          |      |      |      |  |      |      |   |  |      |     
|                                    | State taxes, net of federal tax |                          |      | 12.7 |      |  |      | 5.3  |   |  |      | 2.1  |  
|                                    | Change in valuation reserve     |                          |      | 28.1 |      |  |      | 0.6  |   |  |      | (2.1 | )
|                                    | Officers life insurance        |                          |      | (5.4 | )    |  |      | (2.4 | ) |  |      | (3.4 | )
|                                    | Other, net                      |                          |      | 2.7  |      |  |      | (2.9 | ) |  |      | 2.1  |  
|                                    |                                 |                          |      |      |      |  |      |      |  
|Effective tax rates                 |                                 |                          | 72.1 | %    |      |  | 34.6 | %    |   |  | 32.7 | %   
|                                    |                                 |                          |      |      |      |  |      |      |  

F-21



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|                        |         |              |        |        |      |   |        |        |  
|----------------------- | ------- | ------------ | ------ | ------ | ---- | - | ------ | ------ | -
|                        |         | December 31, |       
|                        |         |              |       
|                        |         | 2005         |        |        | 2004 |  
|                        |         |              |        |        |      |  
|Deferred tax liability: |         |              |        |        |      |   |        |       
|                        | Federal |              | $      | (2,371 | )    |   | $      | (1,181 | )
|                        | State   |              |        | (787   | )    |   |        | (384   | )
|                        |         |              |        |        |      |  
|                        |         |              | (3,158 | )      |      |   | (1,565 | )     
|                        |         |              |        |        |      |  
|Deferred tax asset:     |         |              |        |        |      |   |        |       
|                        | Federal |              |        | 5,873  |      |   |        | 3,547  |  
|                        | State   |              |        | 891    |      |   |        | 431    |  
|                        |         |              |        |        |      |  
|                        |         |              | 6,764  |        |      |   | 3,978  |       
|Valuation reserve       |         |              | (2,722 | )      |      |   | (2,289 | )     
|                        |         |              |        |        |      |  
|                        |         |              | 4,042  |        |      |   | 1,689  |       
|                        |         |              |        |        |      |  
|Net deferred tax asset  |         | $            | 884    |        |      | $ | 124    |       
|                        |         |              |        |        |      |  



|                                                     |  |              |        |   |      |   |        |  
|---------------------------------------------------- |  | ------------ | ------ | - | ---- | - | ------ | -
|                                                     |  | December 31, |       
|                                                     |  |              |       
|                                                     |  | 2005         |        |   | 2004 |  
|                                                     |  |              |        |   |      |  
|Allowance for loan losses                            |  | $            | 2,028  |   |      | $ | 1,212  |  
|Employee benefit plans                               |  |              | 465    |   |      |   | 177    |  
|Net unrealized loss on securities available for sale |  |              | 262    |   |      |   | 169    |  
|Depreciation and amortization                        |  |              | (937   | ) |      |   | (615   | )
|Net deferred loan costs                              |  |              | (497   | ) |      |   | (470   | )
|Mortgage servicing rights                            |  |              | (205   | ) |      |   | (267   | )
|Capital loss carryforward                            |  |              | 2,149  |   |      |   | 2,289  |  
|Write-down of land                                   |  |              | 573    |   |      |   |       |  
|Charitable contribution carryover                    |  |              | 1,113  |   |      |   |       |  
|Purchase accounting adjustments                      |  |              | (1,433 | ) |      |   | (121   | )
|Other, net                                           |  |              | 88     |   |      |   | 39     |  
|                                                     |  |              |        |   |      |  
|                                                     |  |              | 3,606  |   |      |   | 2,413  |  
|Valuation reserve                                    |  |              | (2,722 | ) |      |   | (2,289 | )
|                                                     |  |              |        |   |      |  
|Deferred tax asset                                   |  | $            | 884    |   |      | $ | 124    |  
|                                                     |  |              |        |   |      |  





F-22



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)






|    |                                    
|--- | -----------------------------------
|14. | OTHER COMMITMENTS AND CONTINGENCIES





| |                 
| | ----------------
| | Loan commitments

lines-of






|                                                |  |              |        |  |      |   |        | 
|----------------------------------------------- |  | ------------ | ------ |  | ---- | - | ------ | 
|                                                |  | December 31, |       
|                                                |  |              |       
|                                                |  | 2005         |        |  | 2004 |  
|                                                |  |              |        |  |      |  
|Commitments to grant loans                      |  | $            | 30,420 |  |      | $ | 15,470 | 
|Unadvanced funds on construction loans          |  |              | 24,420 |  |      |   | 20,338 | 
|Unadvanced funds on home equity lines-of-credit |  |              | 39,896 |  |      |   | 28,260 | 
|Unadvanced funds on commercial lines-of-credit  |  |              | 19,547 |  |      |   | 4,391  | 
|Unadvanced funds on personal lines-of-credit    |  |              | 2,457  |  |      |   | 2,130  | 
|Commercial letter of credit                     |  |              | 1,412  |  |      |   |       | 

lines-of lines-of lines-of lines-of


letters-of letters-of letters-of




| |                                 
| | --------------------------------
| | Derivative financial instruments



F-23



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)








| |                    
| | -------------------
| | Other contingencies





|    |                                        
|--- | ---------------------------------------
|15. | MINIMUM REGULATORY CAPITAL REQUIREMENTS





F-24



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|                                        |              |        |   |                 |              |  |                   |              |   |                  |       |        |  |        |  |     |       |  |   |        |  |  |  |      |  
|--------------------------------------- | ------------ | ------ | - | --------------- | ------------ |  | ----------------- | ------------ | - | ---------------- | ----- | ------ |  | ------ |  | --- | ----- |  | - | ------ |  |  |  | ---- | -
|                                        |              |        |   |                 |              |  |                   |              |   | Minimum to be    |      
|                                        |              |        |   |                 |              |  |                   |              |   | Well Capitalized |      
|                                        |              |        |   |                 |              |  |                   | Under Prompt |  
|                                        |              |        |   | Minimum Capital |              |  | Corrective Action |             
|                                        |              | Actual |   |                 | Requirements |  |                   | Provisions   |  
|                                        |              |        |   |                 |              |  |                   |              |  
|                                        |              | Amount |   |                 | Ratio        |  |                   | Amount       |   |                  | Ratio |        |  | Amount |  |     | Ratio | 
|                                        |              |        |   |                 |              |  |                   |              |   |                  |       |        |  |        |  |     |       | 
|December 31, 2005:                      |              |        |   |                 |              |  |                   |              |   |                  |       |        |  |        |  |     |       |  |   |        |  |  |  |     
|Total capital to risk weighted assets:  |              |        |   |                 |              |  |                   |              |   |                  |       |        |  |        |  |     |       |  |   |        |  |  |  |     
|                                        | Consolidated |        | $ | 87,212          |              |  |                   | 15.3         | % |                  | $     | 45,614 |  |        |  | 8.0 | %     |  |   | N/A    |  |  |  | N/A  |  
|                                        | Bank         |        |   | 61,393          |              |  |                   | 10.8         |   |                  |       | 45,528 |  |        |  | 8.0 |       |  | $ | 56,910 |  |  |  | 10.0 | %
|Tier 1 capital to risk weighted assets: |              |        |   |                 |              |  |                   |              |   |                  |       |        |  |        |  |     |       |  |   |        |  |  |  |     
|                                        | Consolidated |        |   | 81,543          |              |  |                   | 14.3         |   |                  |       | 22,807 |  |        |  | 4.0 |       |  |   | N/A    |  |  |  | N/A  |  
|                                        | Bank         |        |   | 55,724          |              |  |                   | 9.8          |   |                  |       | 22,764 |  |        |  | 4.0 |       |  |   | 34,146 |  |  |  | 6.0  |  
|Tier 1 capital to average assets:       |              |        |   |                 |              |  |                   |              |   |                  |       |        |  |        |  |     |       |  |   |        |  |  |  |     
|                                        | Consolidated |        |   | 81,543          |              |  |                   | 9.9          |   |                  |       | 33,115 |  |        |  | 4.0 |       |  |   | N/A    |  |  |  | N/A  |  
|                                        | Bank         |        |   | 55,724          |              |  |                   | 6.7          |   |                  |       | 33,085 |  |        |  | 4.0 |       |  |   | 41,356 |  |  |  | 5.0  |  
|December 31, 2004:                      |              |        |   |                 |              |  |                   |              |   |                  |       |        |  |        |  |     |       |  |   |        |  |  |  |     
|Total capital to risk weighted assets:  |              |        |   |                 |              |  |                   |              |   |                  |       |        |  |        |  |     |       |  |   |        |  |  |  |     
|                                        | Consolidated |        | $ | 40,876          |              |  |                   | 12.5         | % |                  | $     | 26,200 |  |        |  | 8.0 | %     |  |   | N/A    |  |  |  | N/A  |  
|                                        | Bank         |        |   | 40,022          |              |  |                   | 12.3         |   |                  |       | 26,125 |  |        |  | 8.0 |       |  | $ | 32,656 |  |  |  | 10.0 | %
|Tier 1 capital to risk weighted assets: |              |        |   |                 |              |  |                   |              |   |                  |       |        |  |        |  |     |       |  |   |        |  |  |  |     
|                                        | Consolidated |        |   | 37,704          |              |  |                   | 11.5         |   |                  |       | 13,100 |  |        |  | 4.0 |       |  |   | N/A    |  |  |  | N/A  |  
|                                        | Bank         |        |   | 36,850          |              |  |                   | 11.3         |   |                  |       | 13,062 |  |        |  | 4.0 |       |  |   | 19,594 |  |  |  | 6.0  |  
|Tier 1 capital to average assets:       |              |        |   |                 |              |  |                   |              |   |                  |       |        |  |        |  |     |       |  |   |        |  |  |  |     
|                                        | Consolidated |        |   | 37,704          |              |  |                   | 7.3          |   |                  |       | 20,545 |  |        |  | 4.0 |       |  |   | N/A    |  |  |  | N/A  |  
|                                        | Bank         |        |   | 36,850          |              |  |                   | 7.2          |   |                  |       | 20,513 |  |        |  | 4.0 |       |  |   | 25,641 |  |  |  | 5.0  |  

F-25



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|                                                    |                                                                 |                      |         |         |                   |   |        |              |        |   |        |        |        |   |        |        |        | 
|--------------------------------------------------- | --------------------------------------------------------------- | -------------------- | ------- | ------- | ----------------- | - | ------ | ------------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                    |                                                                 | December 31, 2005    |         |         | December 31, 2004 |  
|                                                    |                                                                 |                      |         |         |                   |  
|                                                    |                                                                 | Consolidated         |         |         | Bank              |   |        | Consolidated |        |   | Bank   |       
|                                                    |                                                                 |                      |         |         |                   |   |        |              |        |   |        |       
|                                                    |                                                                 | (In thousands)       |        
|Total stockholders equity per financial statements |                                                                 | $                    | 108,112 |         |                   | $ | 91,293 |              |        | $ | 31,328 |        |        | $ | 39,474 |       
|Adjustments for Tier 1 capital:                     |                                                                 |                      |         |         |                   |   |        |              |        |   |        |        |        |   |        |       
|                                                    | Goodwill                                                        |                      |         | (33,763 | )                 |   |        | (33,763      | )      |   |        | (4,248 | )      |   |        | (4,248 | )     
|                                                    | Intangible assets                                               |                      |         | (4,133  | )                 |   |        | (4,133       | )      |   |        | (45    | )      |   |        | (45    | )     
|                                                    | Trust preferred securities                                      |                      |         | 9,000   |                   |   |        |             |        |   |        | 9,000  |        |   |        |       |       
|                                                    | Accumulated losses on securities available for sale, net of tax |                      |         | 2,326   |                   |   |        | 2,326        |        |   |        | 1,669  |        |   |        | 1,669  |       
|                                                    |                                                                 |                      |         |         |                   |   |        |              |        |   |        |       
|                                                    |                                                                 | Total Tier 1 capital |         |         | 81,542            |   |        |              | 55,723 |   |        |        | 37,704 |   |        |        | 36,850 | 
|                                                    |                                                                 |                      |         |         |                   |   |        |              |        |   |        |       
|Adjustments for total capital:                      |                                                                 |                      |         |         |                   |   |        |              |        |   |        |        |        |   |        |       
|                                                    | Allowance for loan losses                                       |                      |         | 5,670   |                   |   |        | 5,670        |        |   |        | 3,172  |        |   |        | 3,172  |       
|                                                    |                                                                 |                      |         |         |                   |   |        |              |        |   |        |       
|Total capital per regulatory reporting              |                                                                 | $                    | 87,212  |         |                   | $ | 61,393 |              |        | $ | 40,876 |        |        | $ | 40,022 |       
|                                                    |                                                                 |                      |         |         |                   |   |        |              |        |   |        |       

16.     RESTRICTIONS ON DIVIDENDS,
LOANS AND ADVANCES










|    |                       
|--- | ----------------------
|17. | EMPLOYEE BENEFIT PLANS



| |            
| | -----------
| | 401(k) plan



F-26



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




| |                              
| | -----------------------------
| | Supplemental retirement plans





| |                               
| | ------------------------------
| | Director fee continuation plan



|                                              |                                                        |                   |      |      |  
|--------------------------------------------- | ------------------------------------------------------ | ----------------- | ---- | ---- | -
|                                              |                                                        | Year Ended        |     
|                                              |                                                        | December 31, 2005 |     
|                                              |                                                        |                   |     
|Change in benefit obligation:                 |                                                        |                   |      |     
|                                              | Benefit obligation at inception for prior service cost |                   | $    | 824  |  
|                                              | Service cost                                           |                   |      | 110  |  
|                                              | Interest cost                                          |                   |      | 34   |  
|                                              | Change in discount rate                                |                   |      | (10  | )
|                                              | Actuarial gain                                         |                   |      | (170 | )
|                                              |                                                        |                   |     
|                                              | Benefit obligation at end of year                      |                   |      | 788  |  
|                                              |                                                        |                   |     
|Fair value of plan assets at end of year      |                                                        |                   |     |     
|                                              |                                                        |                   |     
|Funded status                                 |                                                        |                   | (788 | )   
|Unrecognized net actuarial gain               |                                                        |                   | (179 | )   
|Unrecognized prior service cost               |                                                        |                   | 746  |     
|                                              |                                                        |                   |     
|Accrued pension cost                          |                                                        | $                 | (221 | )   
|                                              |                                                        |                   |     
|Accumulated benefit obligation at end of year |                                                        | $                 | (599 | )   
|                                              |                                                        |                   |     



|                     |  |              |       | 
|-------------------- |  | ------------ | ----- | 
|                     |  | December 31, |      
|                     |  | 2005         |      
|                     |  |              |      
|Discount rate        |  |              | 5.75% | 
|Rate of fee increase |  |              | 2.00% | 



|                                   |  |                         |     | 
|---------------------------------- |  | ----------------------- | --- | 
|                                   |  | Year Ended December 31, |    
|                                   |  | 2005                    |    
|                                   |  |                         |    
|Service cost                       |  | $                       | 110 | 
|Interest cost                      |  |                         | 34  | 
|Amortization of prior service cost |  |                         | 77  | 
|                                   |  |                         |    
|                                   |  | $                       | 221 | 
|                                   |  |                         |    

F-27



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|                       |  |                         |       | 
|---------------------- |  | ----------------------- | ----- | 
|                       |  | Year Ended December 31, |      
|                       |  | 2005                    |      
|                       |  |                         |      
|Discount rate          |  |                         | 5.75% | 
|Annual salary increase |  |                         | 2.00  | 



|                         |  |        |     | 
|------------------------ |  | ------ | --- | 
|Year Ending December 31, |  | Amount |    
|                         |  |        |    
|2006                     |  | $      | 23  | 
|2007                     |  |        | 112 | 
|2008                     |  |        | 165 | 
|2009                     |  |        | 184 | 
|2010                     |  |        | 184 | 
|Years 2011-2015          |  |        | 262 | 



| |                                                          
| | ---------------------------------------------------------
| | Executive employment and change in control
    agreements







| |                              
| | -----------------------------
| | Employee Stock Ownership Plan

30-year




|                         |  |        |       | 
|------------------------ |  | ------ | ----- | 
|Year Ending December 31, |  | Amount |      
|                         |  |        |      
|2006                     |  | $      | 76    | 
|2007                     |  |        | 79    | 
|2008                     |  |        | 83    | 
|2009                     |  |        | 88    | 
|2010                     |  |        | 94    | 
|Thereafter               |  |        | 4,906 | 
|                         |  |        |      
|                         |  | $      | 5,326 | 
|                         |  |        |      

F-28



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)






|                          |  |              |         | 
|------------------------- |  | ------------ | ------- | 
|                          |  | December 31, |        
|                          |  | 2005         |        
|                          |  |              |        
|Allocated                 |  |              |        | 
|Committed to be allocated |  |              | 15,940  | 
|Unallocated               |  |              | 462,254 | 
|                          |  |              |        
|                          |  |              | 478,194 | 
|                          |  |              |        





|    |                         
|--- | ------------------------
|18. | LOANS TO RELATED PARTIES



|                              |  |              |        |   |      |   |       |  
|----------------------------- |  | ------------ | ------ | - | ---- | - | ----- | -
|                              |  | Years Ended  |       
|                              |  | December 31, |       
|                              |  |              |       
|                              |  | 2005         |        |   | 2004 |  
|                              |  |              |        |   |      |  
|Beginning balance             |  | $            | 2,082  |   |      | $ | 2,563 |  
|Originations                  |  |              | 455    |   |      |   | 369   |  
|Payments and change in status |  |              | (1,189 | ) |      |   | (850  | )
|                              |  |              |        |   |      |  
|Ending balance                |  | $            | 1,348  |   |      | $ | 2,082 |  
|                              |  |              |        |   |      |  





|    |                                    
|--- | -----------------------------------
|19. | FAIR VALUE OF FINANCIAL INSTRUMENTS



F-29



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




Cash and cash equivalents:


Securities:


Loans:


Deposits:


Short-term borrowings:


Long-term debt:


Accrued interest:


Off-balance-sheet instruments:




|                       |                               |              |   |         |            |  |          |         |  |  |            |         |  |  |   |         | 
|---------------------- | ----------------------------- | ------------ | - | ------- | ---------- |  | -------- | ------- |  |  | ---------- | ------- |  |  | - | ------- | 
|                       |                               | December 31, |  
|                       |                               |              |  
|                       |                               | 2005         |   |         | 2004       | 
|                       |                               |              |   |         |            | 
|                       |                               | Carrying     |   |         |            |  | Carrying |         |  | 
|                       |                               | Amount       |   |         | Fair Value |  |          | Amount  |  |  | Fair Value |        
|                       |                               |              |   |         |            |  |          |         |  |  |            |        
|Financial assets:      |                               |              |   |         |            |  |          |         |  |  |            |         |  |  |   |        
|                       | Cash and cash equivalents     |              | $ | 65,750  |            |  | $        | 65,750  |  |  | $          | 14,204  |  |  | $ | 14,204  | 
|                       | Securities available for sale |              |   | 122,379 |            |  |          | 122,379 |  |  |            | 86,070  |  |  |   | 86,070  | 
|                       | Securities held to maturity   |              |   | 109     |            |  |          | 109     |  |  |            | 217     |  |  |   | 221     | 
|                       | Restricted equity securities  |              |   | 10,012  |            |  |          | 10,012  |  |  |            | 6,975   |  |  |   | 6,975   | 
|                       | Loans, net                    |              |   | 605,132 |            |  |          | 591,577 |  |  |            | 383,373 |  |  |   | 383,875 | 
|                       | Accrued interest receivable   |              |   | 3,045   |            |  |          | 3,045   |  |  |            | 1,490   |  |  |   | 1,490   | 
|Financial liabilities: |                               |              |   |         |            |  |          |         |  |  |            |         |  |  |   |        
|                       | Deposits                      |              |   | 611,673 |            |  |          | 610,456 |  |  |            | 396,499 |  |  |   | 395,947 | 
|                       | Short-term borrowings         |              |   |        |            |  |          |        |  |  |            | 4,250   |  |  |   | 4,250   | 
|                       | Long-term debt                |              |   | 140,339 |            |  |          | 136,715 |  |  |            | 81,000  |  |  |   | 80,337  | 
|                       | Accrued interest payable      |              |   | 553     |            |  |          | 553     |  |  |            | 324     |  |  |   | 324     | 

F-30



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)




|    |                                                 
|--- | ------------------------------------------------
|20. | CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY



BALANCE SHEETS


|                                                     |                                            |                |         |         |      |   |        |        | 
|---------------------------------------------------- | ------------------------------------------ | -------------- | ------- | ------- | ---- | - | ------ | ------ | 
|                                                     |                                            | December 31,   |        
|                                                     |                                            |                |        
|                                                     |                                            | 2005           |         |         | 2004 |  
|                                                     |                                            |                |         |         |      |  
|                                                     |                                            | (In thousands) |        
|Assets                                              
|Cash due from Benjamin Franklin Bank                 |                                            | $              | 17,432  |         |      | $ |       |       
|Investment in common stock of Benjamin Franklin Bank |                                            |                | 91,245  |         |      |   | 39,474 |       
|Loan to Benjamin Franklin Bank ESOP                  |                                            |                | 5,326   |         |      |   |       |       
|Other assets                                         |                                            |                | 3,142   |         |      |   | 933    |       
|                                                     |                                            |                |         |         |      |  
|                                                     | Total assets                               |                | $       | 117,145 |      |   | $      | 40,407 | 
|                                                     |                                            |                |         |         |      |  
|                                                    
|Liabilities and Stockholders Equity                
|$ 9,000 Subordinated debt issued to trust subsidiary |                                            | $              | 9,000   |         |      |   |        |       
|Other liabilities                                    |                                            |                | 33      |         |      |   | 79     |       
|                                                     |                                            |                |         |         |      |  
|                                                     | Total liabilities                          |                |         | 9,033   |      |   |        | 9,079  | 
|Stockholders equity                                 |                                            |                | 108,112 |         |      |   | 31,328 |       
|                                                     |                                            |                |         |         |      |  
|                                                     | Total liabilities and stockholders equity |                | $       | 117,145 |      |   | $      | 40,407 | 
|                                                     |                                            |                |         |         |      |  

STATEMENTS OF INCOME


|                                                                                                |                                       |                          |        |     |       |  |       |      |       |  |       |     |       | 
|----------------------------------------------------------------------------------------------- | ------------------------------------- | ------------------------ | ------ | --- | ----- |  | ----- | ---- | ----- |  | ----- | --- | ----- | 
|                                                                                                |                                       | Years Ended December 31, |       
|                                                                                                |                                       |                          |       
|                                                                                                |                                       | 2005                     |        |     | 2004  |  |       | 2003 |      
|                                                                                                |                                       |                          |        |     |       |  |       |      |      
|Income:                                                                                         |                                       |                          |        |     |       |  |       |      |       |  |       |    
|                                                                                                | Dividends from Benjamin Franklin Bank |                          | $      | 633 |       |  | $     | 635  |       |  | $     | 854 |      
|                                                                                                | Interest on investments               |                          |        | 464 |       |  |       | 6    |       |  |       |    |      
|                                                                                                |                                       |                          |        |     |       |  |       |      |      
|                                                                                                |                                       | Total income             |        |     | 1,097 |  |       |      | 641   |  |       |     | 854   | 
|Contribution to Benjamin Franklin Bank Charitable Foundation                                    |                                       |                          | 4,000  |     |       |  |      |      |       |  |      |    
|Other operating expenses                                                                        |                                       |                          | 642    |     |       |  | 646   |      |       |  | 700   |    
|                                                                                                |                                       |                          |        |     |       |  |       |      |      
|Income before income taxes and equity in undistributed net
    income of Benjamin Franklin Bank |                                       |                          | (3,545 | )   |       |  | (5    | )    |       |  | 154   |    
|Applicable income tax benefit                                                                   |                                       |                          | (1,420 | )   |       |  | (218  | )    |       |  | (237  | )  
|                                                                                                |                                       |                          |        |     |       |  |       |      |      
|                                                                                                |                                       |                          | (2,125 | )   |       |  | 213   |      |       |  | 391   |    
|Equity in undistributed net income of Benjamin Franklin Bank                                    |                                       |                          | 2,556  |     |       |  | 1,476 |      |       |  | 1,297 |    
|                                                                                                |                                       |                          |        |     |       |  |       |      |      
|                                                                                                |                                       | Net income               |        | $   | 431   |  |       | $    | 1,689 |  |       | $   | 1,688 | 
|                                                                                                |                                       |                          |        |     |       |  |       |      |      

F-31



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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


(Dollars in Thousands)


STATEMENTS OF CASH FLOWS


|                                                     |                                                                                       |                                                              |                                           |         |        |         |      |       |        |      |     |       |        |     | 
|---------------------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------------- | ------- | ------ | ------- | ---- | ----- | ------ | ---- | --- | ----- | ------ | --- | 
|                                                     |                                                                                       | Years Ended December 31,                                     |                                          
|                                                     |                                                                                       |                                                              |                                          
|                                                     |                                                                                       | 2005                                                         |                                           |         | 2004   |         |      | 2003  |       
|                                                     |                                                                                       |                                                              |                                           |         |        |         |      |       |       
|Cash flows from operating activities:                |                                                                                       |                                                              |                                           |         |        |         |      |       |        |      |     |      
|                                                     | Net income                                                                            |                                                              | $                                         | 431     |        |         | $    | 1,689 |        |      | $   | 1,688 |       
|                                                     | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                              |                                           |         |        |         |      |       |        |      |     |       |       
|                                                     |                                                                                       | Equity in undistributed net income of Benjamin Franklin Bank |                                           |         | (2,556 | )       |      |       | (1,476 | )    |     |       | (1,297 | )  
|                                                     |                                                                                       | Contribution to Benjamin Franklin Bank Charitable Foundation |                                           |         | 4,000  |         |      |       |       |      |     |       |        |    
|                                                     |                                                                                       | Decrease (increase) in other assets                          |                                           |         | (2,192 | )       |      |       | 157    |      |     |       | (174   | )  
|                                                     |                                                                                       | Increase (decrease) in other liabilities                     |                                           |         |       |         |      |       | (2     | )    |     |       | (24    | )  
|                                                     |                                                                                       | Other, net                                                   |                                           |         |       |         |      |       | (574   | )    |     |       |       |    
|                                                     |                                                                                       |                                                              |                                          |         |        |         |      |       |        |      |     |      
|                                                     |                                                                                       |                                                              |                                           |         |        |         |      |       |       
|                                                     |                                                                                       |                                                              | Net cash provided by operating activities |         |        | (317    | )    |       |        | (206 | )   |       |        | 193 | 
|                                                     |                                                                                       |                                                              |                                           |         |        |         |      |       |       
|Cash flows from investing activities:                |                                                                                       |                                                              |                                           |         |        |         |      |       |        |      |     |      
|                                                     | Investment in Benjamin Franklin Bank                                                  |                                                              |                                           | (30,120 | )      |         |      |      |        |      |     |      |       
|                                                     | Loan to ESOP                                                                          |                                                              |                                           | (5,538  | )      |         |      |      |        |      |     |      |       
|                                                     | Repayment of ESOP loan                                                                |                                                              |                                           | 212     |        |         |      |      |        |      |     |      |       
|                                                     | Other, net                                                                            |                                                              |                                           | (40     | )      |         |      |      |        |      |     |      |       
|                                                     |                                                                                       |                                                              |                                           |         |        |         |      |       |       
|                                                     |                                                                                       |                                                              | Net cash used for investing activities    |         |        | (35,486 | )    |       |        |     |     |       |        |    | 
|                                                     |                                                                                       |                                                              |                                           |         |        |         |      |       |       
|Cash flows from financing activities:                |                                                                                       |                                                              |                                           |         |        |         |      |       |        |      |     |      
|                                                     | Proceeds from issuance of common stock                                                |                                                              |                                           | 53,721  |        |         |      |      |        |      |     |      |       
|                                                     | Cash dividends paid on common stock                                                   |                                                              |                                           | (486    | )      |         |      |      |        |      |     |      |       
|                                                     |                                                                                       |                                                              |                                           |         |        |         |      |       |       
|                                                     |                                                                                       |                                                              | Net cash used for financing activities    |         |        | 53,235  |      |       |        |     |     |       |        |    | 
|                                                     |                                                                                       |                                                              |                                           |         |        |         |      |       |       
|Net increase (decrease) in cash and cash equivalents |                                                                                       |                                                              | 17,432                                    |         |        |         | (206 | )     |        |      | 193 |      
|Cash and cash equivalents at beginning of year       |                                                                                       |                                                              |                                          |         |        |         | 206  |       |        |      | 13  |      
|                                                     |                                                                                       |                                                              |                                           |         |        |         |      |       |       
|Cash and cash equivalents at end of year             |                                                                                       | $                                                            | 17,432                                    |         |        | $       |     |       |        | $    | 206 |      
|                                                     |                                                                                       |                                                              |                                           |         |        |         |      |       |       

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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)


(Dollars in Thousands)




|    |                           
|--- | --------------------------
|21. | QUARTERLY DATA (UNAUDITED)

|                                                     |         |                                       |        |      |         |   |        |         |  |   |         |     |  |         |       |     |         |   |       |         |  |   |         |     |  |   |       |     |  |   |       |     | 
|---------------------------------------------------- | ------- | ------------------------------------- | ------ | ---- | ------- | - | ------ | ------- |  | - | ------- | --- |  | ------- | ----- | --- | ------- | - | ----- | ------- |  | - | ------- | --- |  | - | ----- | --- |  | - | ----- | --- | 
|                                                     |         | Years Ended December 31,              |       
|                                                     |         |                                       |       
|                                                     |         | 2005                                  |        |      | 2004    |  
|                                                     |         |                                       |        |      |         |  
|                                                     |         | Fourth                                |        |      | Third   |   |        | Second  |  |   | First   |     |  | Fourth  |       |     | Third   |   |       | Second  |  |   | First   |    
|                                                     |         | Quarter                               |        |      | Quarter |   |        | Quarter |  |   | Quarter |     |  | Quarter |       |     | Quarter |   |       | Quarter |  |   | Quarter |    
|                                                     |         |                                       |        |      |         |   |        |         |  |   |         |     |  |         |       |     |         |   |       |         |  |   |         |    
|                                                     |         | (In thousands, except per share data) |       
|Interest and dividend income                         |         | $                                     | 10,207 |      |         | $ | 10,029 |         |  | $ | 9,186   |     |  | $       | 5,713 |     |         | $ | 5,572 |         |  | $ | 5,419   |     |  | $ | 4,943 |     |  | $ | 4,861 |    
|Interest expense                                     |         |                                       | 4,196  |      |         |   | 3,709  |         |  |   | 3,128   |     |  |         | 2,084 |     |         |   | 2,007 |         |  |   | 1,757   |     |  |   | 1,661 |     |  |   | 1,607 |    
|                                                     |         |                                       |        |      |         |   |        |         |  |   |         |     |  |         |       |     |         |   |       |         |  |   |         |    
|Net interest income                                  |         |                                       | 6,011  |      |         |   | 6,320  |         |  |   | 6,058   |     |  |         | 3,629 |     |         |   | 3,565 |         |  |   | 3,662   |     |  |   | 3,282 |     |  |   | 3,254 |    
|Provision for loan losses                            |         |                                       | 38     |      |         |   | 152    |         |  |   | 328     |     |  |         | 168   |     |         |   | 150   |         |  |   | 150     |     |  |   | 150   |     |  |   | 170   |    
|                                                     |         |                                       |        |      |         |   |        |         |  |   |         |     |  |         |       |     |         |   |       |         |  |   |         |    
|Net interest income, after provision for loan losses |         |                                       | 5,973  |      |         |   | 6,168  |         |  |   | 5,730   |     |  |         | 3,461 |     |         |   | 3,415 |         |  |   | 3,512   |     |  |   | 3,132 |     |  |   | 3,084 |    
|Non-interest income                                  |         |                                       | 1,436  |      |         |   | 1,314  |         |  |   | 245     |     |  |         | 492   |     |         |   | 457   |         |  |   | 444     |     |  |   | 528   |     |  |   | 695   |    
|Non-interest expenses                                |         |                                       | 5,332  |      |         |   | 5,339  |         |  |   | 9,142   | (1) |  |         | 3,463 |     |         |   | 3,230 |         |  |   | 3,145   |     |  |   | 3,184 |     |  |   | 3,127 |    
|                                                     |         |                                       |        |      |         |   |        |         |  |   |         |     |  |         |       |     |         |   |       |         |  |   |         |    
|Income (loss) before income taxes                    |         |                                       | 2,077  |      |         |   | 2,143  |         |  |   | (3,167  | )   |  |         | 490   |     |         |   | 642   |         |  |   | 811     |     |  |   | 476   |     |  |   | 652   |    
|Provision (benefit) for income taxes                 |         |                                       | 764    |      |         |   | 814    |         |  |   | (625    | )   |  |         | 159   |     |         |   | 266   |         |  |   | 277     |     |  |   | 153   |     |  |   | 196   |    
|                                                     |         |                                       |        |      |         |   |        |         |  |   |         |     |  |         |       |     |         |   |       |         |  |   |         |    
|Net income (loss)                                    |         | $                                     | 1,313  |      |         | $ | 1,329  |         |  | $ | (2,542  | )   |  | $       | 331   |     |         | $ | 376   |         |  | $ | 534     |     |  | $ | 323   |     |  | $ | 456   |    
|                                                     |         |                                       |        |      |         |   |        |         |  |   |         |     |  |         |       |     |         |   |       |         |  |   |         |    
|Earnings per common share:                           |         |                                       |        |      |         |   |        |         |  |   |         |     |  |         |       |     |         |   |       |         |  |   |         |     |  |   |       |     |  |   |       |    
|                                                     | Basic   |                                       | $      | 0.16 |         |   | $      | 0.16    |  |   |         | n/a |  |         |       | n/a |         |   |       | n/a     |  |   |         | n/a |  |   |       | n/a |  |   |       | n/a | 
|                                                     |         |                                       |        |      |         |   |        |         |  |   |         |     |  |         |       |     |         |   |       |         |  |   |         |    
|                                                     | Diluted |                                       | $      | 0.16 |         |   | $      | 0.16    |  |   |         | n/a |  |         |       | n/a |         |   |       | n/a     |  |   |         | n/a |  |   |       | n/a |  |   |       | n/a | 
|                                                     |         |                                       |        |      |         |   |        |         |  |   |         |     |  |         |       |     |         |   |       |         |  |   |         |    






|    |                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------
|(1) | Includes $4.0 million Foundation contribution and
    $1.0 million net loss on sale/writedown of bank-owned land.

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