##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 2005
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number 000-51194
 
 Benjamin Franklin Bancorp, Inc.
  Massachusetts
(State or Other Jurisdiction of
Incorporation or Organization)
    
    04-3336598
(I.R.S. Employer
Identification No.)58 Main Street, Franklin, MA
(Address of Principal Executive Offices)
    
    02038
(Zip Code)
 (617) 528-7000
 
 þ o
 o þ




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PagePART I  FINANCIAL INFORMATIONItem 1.
    
    Consolidated Financial StatementsConsolidated Balance Sheets at June 30, 2005 and December 31, 2004
    
    
    3Consolidated Statements of Income for the three and six months ended June 30, 2005 and 2004
    
    
    4Consolidated Statements of Changes in Stockholders Equity for the six months ended June 30, 2005 and 2004
    
    
    5Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and 2004
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    30Item 4.
    
    Controls and Procedures
    
    
    32PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    33Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3.
    
    Defaults on Senior Securities
    
    
    33Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    33Item 5.
    
    Other Information
    
    
    33Item 6.
    
    Exhibits
    
    
    33SIGNATURES
    
    
    35EX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 June 30,
    
    
    December 31,2005
    
    
    2004(In thousands)ASSETSCash and due from banks
    
    $
    15,052
    
    
    $
    8,691Cash supplied by CSSI to ATM customers
    
    
    27,192
    
    
    
    Short-term investments
    
    
    18,424
    
    
    
    5,513Total cash and cash equivalents
    
    
    60,668
    
    
    
    14,204Securities available for sale, at fair value
    
    
    120,029
    
    
    
    86,070Securities held to maturity, at amortized cost
    
    
    161
    
    
    
    217Restricted equity securities, at cost
    
    
    9,115
    
    
    
    6,975Total securities
    
    
    129,305
    
    
    
    93,262Loans
    
    
    613,982
    
    
    
    386,545Allowance for loan losses
    
    
    (5,531
    )
    
    
    (3,172
    )Loans, net
    
    
    608,451
    
    
    
    383,373Premises and equipment, net
    
    
    11,338
    
    
    
    11,147Accrued interest receivable
    
    
    2,818
    
    
    
    1,490Goodwill
    
    
    33,762
    
    
    
    4,248Core deposit intangible
    
    
    4,934
    
    
    
    45Bank-owned life insurance
    
    
    7,303
    
    
    
    7,182Other assets
    
    
    5,205
    
    
    
    2,442$
    863,784
    
    
    $
    517,393LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Regular savings
    
    $
    107,557
    
    
    $
    95,875Money market accounts
    
    
    105,586
    
    
    
    53,167Now accounts
    
    
    36,697
    
    
    
    22,460Demand deposit accounts
    
    
    126,632
    
    
    
    87,776Time deposit accounts
    
    
    252,373
    
    
    
    137,221Total deposits
    
    
    628,845
    
    
    
    396,499Short-term borrowings
    
    
    
    
    
    
    4,250Long-term debt
    
    
    117,915
    
    
    
    81,000Other liabilities
    
    
    7,795
    
    
    
    4,316Total liabilities
    
    
    754,555
    
    
    
    486,065Common stock, no par value; authorized
75,000,000 shares;
issued 8,488,898 shares at June 30, 2005
    
    
    
    
    
    
    Additional paid-in capital
    
    
    82,837
    
    
    
    Retained earnings
    
    
    30,785
    
    
    
    32,997Unallocated
common stock held by ESOP
    
    
    (2,990
    )
    
    
    Accumulated other comprehensive loss
    
    
    (1,403
    )
    
    
    (1,669
    )Total stockholders equity
    
    
    109,229
    
    
    
    31,328$
    863,784
    
    
    $
    517,393
  3




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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 Three
Months Ended
 June 30,
    
    

Six
Months Ended
 June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)
    
    
    (In thousands)Interest and dividend income:Loans, including fees
    
    $
    8,048
    
    
    $
    4,073
    
    
    $
    12,940
    
    
    $
    7,989Debt securities
    
    
    893
    
    
    
    786
    
    
    
    1,554
    
    
    
    1,630Equity securities
    
    
    94
    
    
    
    47
    
    
    
    162
    
    
    
    99Short-term investments
    
    
    151
    
    
    
    37
    
    
    
    244
    
    
    
    86Total interest and dividend income
    
    
    9,186
    
    
    
    4,943
    
    
    
    14,900
    
    
    
    9,804Interest expense:Interest on deposits
    
    
    2,193
    
    
    
    1,094
    
    
    
    3,424
    
    
    
    2,136Interest on short-term borrowings
    
    
    21
    
    
    
    
    
    
    
    22
    
    
    
    Interest on long-term debt
    
    
    914
    
    
    
    567
    
    
    
    1,767
    
    
    
    1,132Total interest expense
    
    
    3,128
    
    
    
    1,661
    
    
    
    5,213
    
    
    
    3,268Net interest income
    
    
    6,058
    
    
    
    3,282
    
    
    
    9,687
    
    
    
    6,536Provision for loan losses
    
    
    328
    
    
    
    150
    
    
    
    496
    
    
    
    320Net interest income, after provision for loan
losses
    
    
    5,730
    
    
    
    3,132
    
    
    
    9,191
    
    
    
    6,216Other income (charges):Deposit service fees
    
    
    298
    
    
    
    231
    
    
    
    504
    
    
    
    485Loan servicing fees
    
    
    132
    
    
    
    32
    
    
    
    204
    
    
    
    176CSSI ATM servicing fees
    
    
    509
    
    
    
    
    
    
    
    509
    
    
    
    Gain on sale of loans, net
    
    
    4
    
    
    
    31
    
    
    
    20
    
    
    
    98Gain (loss) on sales of securities, net
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    8Loss on sale/write-down of bank-owned
land, net
    
    
    (1,020
    )
    
    
    
    
    
    
    (1,020
    )
    
    
    Income from bank-owned life insurance
    
    
    59
    
    
    
    49
    
    
    
    118
    
    
    
    97Miscellaneous
    
    
    263
    
    
    
    186
    
    
    
    402
    
    
    
    358Total other income
    
    
    245
    
    
    
    528
    
    
    
    737
    
    
    
    1,222Operating expenses:Salaries and employee benefits
    
    
    2,466
    
    
    
    1,866
    
    
    
    4,480
    
    
    
    3,717Occupancy and equipment
    
    
    658
    
    
    
    366
    
    
    
    1,099
    
    
    
    745Data processing
    
    
    535
    
    
    
    366
    
    
    
    872
    
    
    
    702Professional fees
    
    
    238
    
    
    
    52
    
    
    
    367
    
    
    
    118Contribution to Benjamin Franklin BankCharitable Foundation
    
    
    4,000
    
    
    
    
    
    
    
    4,000
    
    
    
    Amortization of core deposit intangible
    
    
    554
    
    
    
    45
    
    
    
    599
    
    
    
    91Other general and administrative
    
    
    691
    
    
    
    489
    
    
    
    1,189
    
    
    
    938Total operating expenses
    
    
    9,142
    
    
    
    3,184
    
    
    
    12,606
    
    
    
    6,311Income (loss) before income taxes
    
    
    (3,167
    )
    
    
    476
    
    
    
    (2,678
    )
    
    
    1,127Provision (benefit) for income taxes
    
    
    (625
    )
    
    
    153
    
    
    
    (466
    )
    
    
    349Net income (loss)
    
    $
    (2,542
    )
    
    $
    323
    
    
    $
    (2,212
    )
    
    $
    778
  4




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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(Unaudited)
 Unallocated
    
    
    
    
    
    
    AccumulatedAdditional
    
    
    Common
    
    
    
    
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Stock Held
    
    
    Retained
    
    
    Comprehensive
    
    
    Stockholders'Shares
    
    
    Amount
    
    
    Capital
    
    
    by ESOP
    
    
    Earnings
    
    
    Loss
    
    
    EquityBalance at December 31, 2003
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    31,308
    
    
    $
    (2,007
    )
    
    $
    29,301Comprehensive
income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    778
    
    
    
    
    
    
    
    778Net unrealized loss on securities
available for
sale, net of reclassification
adjustment
and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,436
    )
    
    
    (1,436
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (658
    )Balance at June 30, 2004
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    32,086
    
    
    $
    (3,443
    )
    
    $
    28,643Balance at December 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    32,997
    
    
    $
    (1,669
    )
    
    $
    31,328Comprehensive income (loss):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,212
    )
    
    
    
    
    
    
    (2,212
    )Net unrealized gain on securities
available for
sale, net of reclassification
adjustment
and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    266
    
    
    
    266Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,946
    )Issuance of common stock for initial
public offering, net of expenses of
$2.1 million
    
    
    5,577,419
    
    
    
    
    
    
    
    53,721
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,721Issuance of common stock to Benjamin
Frankin Bank Charitable Foundation
    
    
    400,000
    
    
    
    
    
    
    
    4,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,000Issuance of common stock for acquisition
of Chart Bank, A Cooperative Bank
    
    
    2,511,479
    
    
    
    
    
    
    
    25,115
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,115Stock purchased for ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,044
    )
    
    
    
    
    
    
    
    
    
    
    (3,044
    )Release of ESOP stock
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    55Balance at June 30, 2005
    
    
    8,488,898
    
    
    $
    
    
    
    $
    82,837
    
    
    $
    (2,990
    )
    
    $
    30,785
    
    
    $
    (1,403
    )
    
    $
    109,229
  5




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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended June 30,2005
    
    
    2004(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    (2,212
    )
    
    $
    778Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Amortization of securities, net
    
    
    69
    
    
    
    498Amortization (accretion) of loans, net
    
    
    (44
    )
    
    
    39Loss (gain) on sales of securities, net
    
    
    
    
    
    
    (8
    )Provision for loan losses
    
    
    496
    
    
    
    320Accretion of certificates of deposit and borrowings
    
    
    (129
    )
    
    
    Amortization of mortgage servicing rights
    
    
    140
    
    
    
    241Depreciation expense
    
    
    441
    
    
    
    375Amortization of core deposit intangible
    
    
    599
    
    
    
    91Amortization of unearned compensation
    
    
    55
    
    
    
    Deferred income tax benefit
    
    
    (1,646
    )
    
    
    (1
    )Income from bank-owned life insurance
    
    
    (118
    )
    
    
    (97
    )Gains on sales of loans, net
    
    
    (20
    )
    
    
    (98
    )Loans originated for sale
    
    
    (7,314
    )
    
    
    (25,398
    )Proceeds from sales of loans
    
    
    7,334
    
    
    
    25,496Decrease (increase) in accrued interest receivable
    
    
    (653
    )
    
    
    (238
    )Gain on sale of bank-owned land
    
    
    (380
    )
    
    
    Writedown of bank-owned land
    
    
    1,400
    
    
    
    Charitable Foundation Contribution
    
    
    4,000
    
    
    
    Other, net
    
    
    632
    
    
    
    (1,060
    )Net cash provided by operating activities
    
    
    2,650
    
    
    
    938Cash flows from investing activities:Activity in available-for-sale securities:Sales
    
    
    
    
    
    
    1,000Maturities, calls, and principal repayments
    
    
    15,461
    
    
    
    25,721Purchases
    
    
    (16,373
    )
    
    
    (28,433
    )Principal repayments on
held-to-maturity securities
    
    
    56
    
    
    
    94Net change in restricted equity securities
    
    
    (102
    )
    
    
    1,000Purchases of mortgage loans
    
    
    
    
    
    
    (19,871
    )Loan originations, net
    
    
    (41,259
    )
    
    
    (30,401
    )Proceeds from sales of bank-owned land
    
    
    868
    
    
    
    Additions to premises and equipment
    
    
    (101
    )
    
    
    (417
    )Net cash purchased in acquisition of Chart Bank
    
    
    (9,879
    )
    
    
    Net cash used for investing activities
    
    
    (31,571
    )
    
    
    (51,307
    )
  6




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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Unaudited)
 Six Months Ended June 30,2005
    
    
    2004(In thousands)Cash flows from financing activities:Net increase in deposits
    
    
    17,458
    
    
    
    29,447Net proceeds (repayments) from short-term borrowings
    
    
    (24,750
    )
    
    
    5,000Proceeds from long-term debt
    
    
    32,000
    
    
    
    10,000Net proceeds from common stock offering
    
    
    53,721
    
    
    
    Acquisition of Common Stock by ESOP
    
    
    (3,044
    )Net cash provided by financing activities
    
    
    75,385
    
    
    
    44,447Net change in cash and cash equivalents
    
    
    46,464
    
    
    
    (5,922
    )Cash and cash equivalents at beginning of the period
    
    
    14,204
    
    
    
    35,485Cash and
cash equivalents at end of the period
    
    $
    60,668
    
    
    $
    29,563Supplemental cash flow information:Interest paid on deposits
    
    $
    3,333
    
    
    $
    2,048Interest paid on short-term borrowings
    
    
    22
    
    
    
    Interest paid on long-term debt
    
    
    1,565
    
    
    
    996Income taxes paid (refunded)
    
    
    601
    
    
    
    495Assets
acquired and liabilities assumed were as follows:Fair value
on noncash assets acquired
    
    $
    259,008Fair value
of liabilities assumed
    
    
    243,772Fair value
of common stock issued
    
    
    25,115
  7




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##### Table of Contents



BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1.
    
    Basis of presentation and consolidationThe accompanying unaudited consolidated interim financial statements include the accounts of
Benjamin Franklin Bancorp, Inc and subsidiaries (the Company) including its main
wholly-owned subsidiary, Benjamin Franklin Bank (the Bank). These financial statements
have been prepared in accordance with accounting principles generally accepted in the United
States of America (GAAP) for interim financial statements and the instructions for Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial statements. In the opinion
of management, all adjustments (consisting of only normal recurring adjustments) necessary
for a fair presentation have been included.These consolidated interim financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto included in the Companys Annual
Report on Form 10-K as of and for the year ended December 31, 2004.Stock Conversion and Merger
The Company completed its mutual-to-stock conversion and related stock offering with the
issuance of 5,977,419 shares (including 400,000 shares contributed to the Benjamin Franklin
Bank Charitable Foundation) on April 4, 2005. An additional 2,511,479 shares were issued in
connection with the acquisition of Chart Bank, which was consummated immediately following
the stock conversion. The cash portion of the consideration paid to Chart Bank shareholders
totaled $21,534,960. The Companys stock began trading on April 5, 2005, on the Nasdaq
National Market, under the symbol BFBC.In connection with the stock conversion, the Company established the Benjamin Franklin Bank
Charitable Foundation (the Foundation), funded with a contribution of 400,000 shares of
newly-issued Benjamin Franklin common stock. This contribution resulted in the recognition
of expense in the second quarter of 2005 equal to the $10 offering price for each of the
shares contributed, net of tax benefits. The effect of this transaction on the Companys
results for the second quarter was $2.6 million ($4.0 million expense, net of $1.4 million
in tax benefits). The Foundation provides funding to support charitable causes and community
development activities in the communities served by Benjamin Franklin.The acquisition of Chart Bank was accounted for using the purchase method of accounting in
accordance with Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations. The allocation of purchase price is as follows:
 8




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##### Table of Contents



Chart Bank
    
    
    Purchase
    
    
    Final Allocation ofBalance at
    
    
    Accounting
    
    
    PurchaseApril 4, 2005
    
    
    Adjustments
    
    
    Price(In thousands)Assets:Cash and cash equivalents
    
    $
    35,643
    
    
    $
    (4,229
    )
    
    $
    31,414Securities
    
    
    36,743
    
    
    
    (607
    )
    
    
    36,136Loans, less allowance for loan losses
    
    
    185,022
    
    
    
    (987
    )
    
    
    184,035Premises and equipment
    
    
    2,054
    
    
    
    569
    
    
    
    2,623Goodwill
    
    
    
    
    
    
    29,515
    
    
    
    29,515Core deposit intangible
    
    
    
    
    
    
    5,488
    
    
    
    5,488Other assets
    
    
    1,211
    
    
    
    
    
    
    
    1,211260,673
    
    
    
    29,749
    
    
    
    290,422Liabilities:Deposits
    
    
    216,903
    
    
    
    473
    
    
    
    217,376Borrowed funds
    
    
    25,500
    
    
    
    (101
    )
    
    
    25,399Other liabilities
    
    
    725
    
    
    
    272
    
    
    
    997243,128
    
    
    
    644
    
    
    
    243,772Net assets acquired
    
    
    
    
    
    
    
    
    
    $
    46,650
 The goodwill created in the acquisition of Chart Bank, in the amount of $29.5 million,
is not tax deductible. In accordance with SFS No. 142, Goodwill and Other Intangibles,
goodwill will not be amortized, but will be subject to periodic testing for impairment. Any
impairment detected in the future as a result of such testing would result in a charge to
earnings. Certain other purchase accounting adjustments are being amortized/accreted into
income over the estimated lives of those adjustments. The following table summarizes the
Companys current estimates for the future amortization or accretion of the most significant
of the purchase accounting adjustments:
 Estimated Accretion/(Amortization)Actual -Quarter
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Year Ended
    
    
    Year Ended
    
    
    Year Ended
    
    
    Year Ended
    
    
    AfterJune 30,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2005
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2009
    
    
    Total(In thousands)Core deposit intangible
    
    $
    (554
    )
    
    $
    (801
    )
    
    $
    (1,064
    )
    
    $
    (779
    )
    
    $
    (574
    )
    
    $
    (408
    )
    
    $
    (1,308
    )
    
    $
    (5,488
    )Loan discount
    
    
    136
    
    
    
    270
    
    
    
    337
    
    
    
    154
    
    
    
    53
    
    
    
    21
    
    
    
    16
    
    
    
    987Investments discount
    
    
    91
    
    
    
    194
    
    
    
    252
    
    
    
    62
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    607Time deposit premium
    
    
    145
    
    
    
    198
    
    
    
    66
    
    
    
    31
    
    
    
    20
    
    
    
    13
    
    
    
    
    
    
    
    473Borrowed funds discount
    
    
    (16
    )
    
    
    (21
    )
    
    
    (33
    )
    
    
    (20
    )
    
    
    (11
    )
    
    
    
    
    
    
    
    
    
    
    (101
    )
 The forecasted accretion and amortization of the fair market value adjustments for loans,
investments, time deposits and borrowed funds approximates the level yield method and may
vary in the future if actual prepayments or other dispositions differ from current
estimates. The core deposit intangible is
 9




---



##### Table of Contents



being amortized on an accelerated basis over its estimated life of 15 years. The core
deposit intangible will be tested periodically for impairment which, if detected, would
result in a charge to earnings.
 The results of Chart Bank are included in the results of the Company subsequent to April 3,
2005. The unaudited condensed pro forma consolidated statements of operations presented
below for the three months ended June 30, 2005 and 2004 assume that the Company had acquired
Chart Bank as of April 1, 2005 and 2004. The unaudited condensed pro forma consolidated
statements of operations for the six months ended June 30, 2005 and 2004 assume that Chart
Bank had been acquired as of January 1, 2005 and 2004. The pro forma information is
theoretical in nature and is not necessarily indicative of future consolidated results of
operations of the Company or the consolidated results of operations that would have resulted
had the Company acquired the stock of Chart Bank during the periods presented:
 10




---



##### Table of Contents



For the Three Months Ended June 30,2005
    
    
    2004(In thousands except per share amounts)Interest and dividend income
    
    $
    9,327
    
    
    $
    7,895Interst expense
    
    
    3,174
    
    
    
    2,465Net interest income
    
    
    6,153
    
    
    
    5,430Provision for loan losses
    
    
    328
    
    
    
    180Non-interest income
    
    
    250
    
    
    
    1,142Non-interest expense
    
    
    9,733
    
    
    
    5,484Income (loss) before income taxes
    
    
    (3,658
    )
    
    
    908Income tax provision (benefit)
    
    
    (676
    )
    
    
    327Net income (loss)
    
    $
    (2,982
    )
    
    $
    581Earnings (loss) per share  diluted
    
    $
    (0.38
    )
    
    $
    0.07Weighted average shares outstanding  diluted
    
    
    7,941,497
    
    
    
    7,941,497
 For the Six Months Ended June 30,2005
    
    
    2004(In thousands except per share amounts)Interest and dividend income
    
    $
    18,317
    
    
    $
    15,518Interst expense
    
    
    6,214
    
    
    
    4,720Net interest income
    
    
    12,103
    
    
    
    10,798Provision for loan losses
    
    
    526
    
    
    
    380Non-interest income
    
    
    1,462
    
    
    
    2,406Non-interest expense
    
    
    15,893
    
    
    
    10,870Income (loss) before income taxes
    
    
    (2,854
    )
    
    
    1,954Income tax provision (benefit)
    
    
    (257
    )
    
    
    674Net income (loss)
    
    $
    (2,597
    )
    
    $
    1,280Earnings (loss) per share  diluted
    
    $
    (0.32
    )
    
    $
    0.16Weighted average shares outstanding  diluted
    
    
    8,112,406
    
    
    
    8,112,406
 11




---



##### Table of Contents



The pro forma results of operations for the three months ended June 30, 2005 include a net
$1.0 million loss/write-down of bank-owned land and a $4.0 expense item for the contribution
of 400,000 shares of Benjamin Franklin Bancorp common stock to the Foundation. Tax benefits
have been reflected for the $4.0 million Foundation contribution but no tax benefit has been
recognized for the $1.0 loss/write-down of bank owned land. These results also include
$367,000 of non-tax deductible merger-related expenses recorded by Chart Bank in the first
three days of April, 2005.The pro forma results of operations for the six months ended June 30, 2005 include the
one-time Foundation contribution and the loss/write-down on bank-owned land, as well as a
total of $709,000 of non-tax deductible merger-related expenses recorded by Chart Bank
during the period from January 1, 2005 to April 4, 2005.Recent Accounting Pronouncements
On December 16, 2004, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment, which changes,
among other things, the manner in which share-based compensation, such as stock options,
will be accounted for by both public and non-public companies. SFAS No. 123R will be
effective beginning with the first interim or annual reporting period of the Companys first
fiscal year that begins after June 15, 2005, which would be January 1, 2006 for the Company.
For public companies, the cost of employee services received in exchange for equity
instruments including options and restricted stock awards generally will be measured at fair
value at the grant date. The grant date fair value will be estimated using option-pricing
models adjusted for the unique characteristics of those options and instruments, unless
observable market prices for the same or similar options are available. The cost will be
recognized over the requisite service period, often the vesting period, and will be
re-measured subsequently at each reporting date through settlement date. On March 29, 2005,
the SEC staff issued Staff Accounting Bulletin No. 107 (SAB 107). SAB 107 expresses the
views of the SEC staff regarding SFAS No. 123R and certain rules and regulations and
provides the SECs view regarding the valuation of share-based payment arrangements for
public companies. The provisions of SFAS No. 123R and SAB 107 do not have an impact on the
Companys results of operations at this time.2.
    
    Loan CommitmentsOutstanding loan commitments totaled $126.0 million at
June 30, 2005, compared to $70.6 million as of
December 31, 2004. Loan commitments consist of commitments to
originate new loans as well as the outstanding undrawn portions of
lines of credit.3.
    
    Earnings per shareBasic earnings per share excludes dilution and is computed by dividing income available to
common shareholders by the weighted-average common shares outstanding during the period.
Diluted earnings per share takes into account the potential dilution that could occur if
securities or other contracts to issue common stock were exercised and converted into common
stock. Earnings per share were not meaningful for the quarter ended June 30, 2005 and for
the other periods presented, because the Company did not complete its public offering until
April 4, 2005.
 12




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Forward-Looking Statements
  Critical Accounting Policies
  Comparison of Financial Condition at June 30, 2005 and December 31, 2004
 Overview
  Investment Activities
  13




---



##### Table of Contents



At June 30, 2005
    
    
    At December 31, 2004Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value(In thousands)Securities available for sale:U.S. Government and agency
obligations
    
    $
    73,684
    
    
    $
    73,504
    
    
    $
    33,607
    
    
    $
    33,306Corporate bonds and other obligations
    
    
    6,007
    
    
    
    5,973
    
    
    
    5,056
    
    
    
    5,014Mortgage-backed securities
    
    
    41,864
    
    
    
    40,552
    
    
    
    49,246
    
    
    
    47,750Total available for sale securities
    
    $
    121,555
    
    
    $
    120,029
    
    
    $
    87,909
    
    
    $
    86,070Securities held to maturity:Mortgage-backed securities
    
    $
    161
    
    
    $
    162
    
    
    $
    217
    
    
    $
    221Restricted equity securities:Federal Home Loan Bank of Boston stock
    
    $
    6,597
    
    
    $
    6,597
    
    
    $
    4,459
    
    
    $
    4,459Access Capital Strategies
Community Investment Fund
    
    
    2,000
    
    
    
    2,000
    
    
    
    2,000
    
    
    
    2,000SBLI & DIF stock
    
    
    518
    
    
    
    518
    
    
    
    516
    
    
    
    516Total equity securities
    
    $
    9,115
    
    
    $
    9,115
    
    
    $
    6,975
    
    
    $
    6,975
  Lending Activities
  14




---



##### Table of Contents



At June 30, 2005
    
    
    At December 31, 2004Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Mortgage loans on real estate:Residential
    
    $
    299,553
    
    
    
    48.90
    %
    
    $
    241,090
    
    
    
    62.56
    %Commercial
    
    
    226,339
    
    
    
    36.94
    %
    
    
    85,911
    
    
    
    22.29
    %Construction
    
    
    36,434
    
    
    
    5.95
    %
    
    
    28,651
    
    
    
    7.43
    %Home equity
    
    
    33,377
    
    
    
    5.45
    %
    
    
    23,200
    
    
    
    6.02
    %595,703
    
    
    
    97.24
    %
    
    
    378,852
    
    
    
    98.30
    %Other loans:Commercial
    
    
    14,487
    
    
    
    2.36
    %
    
    
    4,375
    
    
    
    1.14
    %Consumer
    
    
    2,448
    
    
    
    0.40
    %
    
    
    2,170
    
    
    
    0.56
    %16,935
    
    
    
    2.76
    %
    
    
    6,545
    
    
    
    1.70
    %Total loans
    
    
    612,638
    
    
    
    100.00
    %
    
    
    385,397
    
    
    
    100.00
    %Other items:Deferred loan origination costs
    
    
    1,344
    
    
    
    
    
    
    
    1,148Allowance for loan losses
    
    
    (5,531
    )
    
    
    
    
    
    
    (3,172
    )Total loans, net
    
    $
    608,451
    
    
    
    
    
    
    $
    383,373
   Non-performing Assets
  15




---



##### Table of Contents



At June 30, 2005
    
    
    At December 31, 2004(In thousands)Non-accrual loans:Residential mortgage
    
    $
    123
    
    
    $
    Commercial mortgage
    
    
    3
    
    
    
    Construction
    
    
    
    
    
    
    Commercial
    
    
    221
    
    
    
    334Consumer and other
    
    
    
    
    
    
    Total non-performing loans
    
    
    347
    
    
    
    334Loans greater than 90 days delinquent
and still accruing:Residential mortgage
    
    
    
    
    
    
    Commercial mortgage
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    Commercial
    
    
    
    
    
    
    Consumer and other
    
    
    
    
    
    
    3Total loans 90 days and still accruing
    
    
    
    
    
    
    3Total non-performing assets
    
    $
    347
    
    
    $
    337Ratios:Non-performing loans to total loans
    
    
    0.06
    %
    
    
    0.09
    %Non-performing assets to total assets
    
    
    0.04
    %
    
    
    0.07
    %
 Allowance for Loan Losses
    16




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17




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##### Table of Contents



At or For the
    
    
    At or For theThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)
    
    
    (In thousands)Balance at beginning of period
    
    $
    3,351
    
    
    $
    2,704
    
    
    $
    3,172
    
    
    $
    2,523Allowance added from acquisition
of Chart Bank
    
    
    1,812
    
    
    
    
    
    
    
    1,812
    
    
    
    Charge-offs:Mortgage loans on real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other loans:Commercial
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )
    
    
    Consumer
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )
    
    
    (4
    )(14
    )
    
    
    0
    
    
    
    (14
    )
    
    
    (4
    )Total charge-offs
    
    
    (14
    )
    
    
    0
    
    
    
    (14
    )
    
    
    (4
    )Recoveries:Mortgage loans on real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other loans:Commercial
    
    
    53
    
    
    
    11
    
    
    
    60
    
    
    
    21Consumer
    
    
    1
    
    
    
    2
    
    
    
    5
    
    
    
    754
    
    
    
    13
    
    
    
    65
    
    
    
    28Total recoveries
    
    
    54
    
    
    
    13
    
    
    
    65
    
    
    
    28Net recoveries
    
    
    40
    
    
    
    13
    
    
    
    51
    
    
    
    24Provision for loan losses
    
    
    328
    
    
    
    144
    
    
    
    496
    
    
    
    314Balance at end of period
    
    $
    5,531
    
    
    $
    2,861
    
    
    $
    5,531
    
    
    $
    2,861Ratios:Net recoveries to average loans
outstanding (annualized)
    
    
    0.03
    %
    
    
    0.02
    %
    
    
    0.02
    %
    
    
    0.02
    %Allowance for loan losses to
non-performing loans at end of period
    
    
    1593.89
    %
    
    
    729.76
    %
    
    
    1593.89
    %
    
    
    729.87
    %Allowance for loan losses to
total loans at end of period
    
    
    0.91
    %
    
    
    0.84
    %
    
    
    0.91
    %
    
    
    0.84
    %
 18




---



##### Table of Contents



Deposits
  June 30,
    
    
    % of
    
    
    December 31,
    
    
    % of2005
    
    
    Total
    
    
    2004
    
    
    Total(In thousands)
    
    
    
    
    
    
    (In thousands)Deposit type:Demand deposits
    
    $
    126,632
    
    
    
    20
    %
    
    $
    87,776
    
    
    
    22
    %NOW deposits
    
    
    36,697
    
    
    
    6
    %
    
    
    22,460
    
    
    
    6
    %Regular and other savings
    
    
    107,557
    
    
    
    17
    %
    
    
    95,875
    
    
    
    24
    %Money market deposits
    
    
    105,586
    
    
    
    17
    %
    
    
    53,167
    
    
    
    13
    %Total non-certificate accounts
    
    
    376,472
    
    
    
    60
    %
    
    
    259,278
    
    
    
    65
    %Term certificates less than $100,000
    
    
    154,331
    
    
    
    24
    %
    
    
    97,114
    
    
    
    25
    %Term certificates of $100,000 or more
    
    
    98,042
    
    
    
    16
    %
    
    
    40,107
    
    
    
    10
    %Total certificate accounts
    
    
    252,373
    
    
    
    40
    %
    
    
    137,221
    
    
    
    35
    %Total deposits
    
    $
    628,845
    
    
    
    100.00
    %
    
    $
    396,499
    
    
    
    100.00
    %
  Borrowed Funds
  Stockholders Equity
  19




---



##### Table of Contents



Comparison of Operating Results for the Three Months and Six Months Ended June 30, 2005 and 2004
  Analysis of Net Interest Income
   20




---



##### Table of Contents



Three Months Ended June 30, 2005
    
    
    
    
    
    
    Three Months Ended June 30, 2004Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    
    
    
    
    
    
    
    
    OutstandingBalance
    
    
    Interest
    
    
    Yield/Rate(1)
    
    
    Balance
    
    
    Interest
    
    
    Yield/Rate(1)(In thousands)
    
    
    (In thousands)Interest-earning assets:Loans
    
    $
    589,869
    
    
    $
    8,048
    
    
    
    5.47
    %
    
    $
    320,864
    
    
    $
    4,073
    
    
    
    5.11
    %Investment securities
    
    
    128,698
    
    
    
    987
    
    
    
    3.08
    %
    
    
    115,064
    
    
    
    833
    
    
    
    2.91
    %Short-term investments
    
    
    26,429
    
    
    
    151
    
    
    
    2.29
    %
    
    
    16,565
    
    
    
    37
    
    
    
    0.89
    %Total interest-earning assets
    
    
    744,996
    
    
    
    9,186
    
    
    
    4.95
    %
    
    
    452,493
    
    
    
    4,943
    
    
    
    4.39
    %Non-interest-earning assets
    
    
    106,428
    
    
    
    
    
    
    
    
    
    
    
    30,059Total assets
    
    $
    851,424
    
    
    
    
    
    
    
    
    
    
    $
    482,552Interest-bearing liabilities:Savings deposits
    
    $
    109,318
    
    
    
    142
    
    
    
    0.52
    %
    
    $
    100,505
    
    
    
    125
    
    
    
    0.50
    %Money market
    
    
    117,969
    
    
    
    458
    
    
    
    1.56
    %
    
    
    51,601
    
    
    
    104
    
    
    
    0.81
    %NOW accounts
    
    
    36,240
    
    
    
    32
    
    
    
    0.36
    %
    
    
    24,804
    
    
    
    9
    
    
    
    0.15
    %Certificates of deposits
    
    
    244,490
    
    
    
    1,561
    
    
    
    2.56
    %
    
    
    136,581
    
    
    
    856
    
    
    
    2.52
    %Total deposits
    
    
    508,017
    
    
    
    2,193
    
    
    
    1.73
    %
    
    
    313,491
    
    
    
    1,094
    
    
    
    1.40
    %Short-term borrowings
    
    
    9,509
    
    
    
    21
    
    
    
    0.89
    %
    
    
    110
    
    
    
    0
    
    
    
    0.00
    %Long-term debt
    
    
    90,348
    
    
    
    914
    
    
    
    4.06
    %
    
    
    45,549
    
    
    
    567
    
    
    
    5.00
    %Total interest-bearing liabilities
    
    
    607,874
    
    
    
    3,128
    
    
    
    2.06
    %
    
    
    359,150
    
    
    
    1,661
    
    
    
    1.86
    %Non-interest bearing liabilities
    
    
    138,073
    
    
    
    
    
    
    
    
    
    
    
    93,675Total liabilities
    
    
    745,947
    
    
    
    
    
    
    
    
    
    
    
    452,825Equity
    
    
    105,477
    
    
    
    
    
    
    
    
    
    
    
    29,727Total liabilities and equity
    
    $
    851,424
    
    
    
    
    
    
    
    
    
    
    $
    482,552Net interest income
    
    
    
    
    
    $
    6,058
    
    
    
    
    
    
    
    
    
    
    $
    3,282Net interest rate spread (2)
    
    
    
    
    
    
    
    
    
    
    2.89
    %
    
    
    
    
    
    
    
    
    
    
    2.53
    %Net interest-earning assets (3)
    
    $
    137,122
    
    
    
    
    
    
    
    
    
    
    $
    93,343Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    3.26
    %
    
    
    
    
    
    
    
    
    
    
    2.92
    %Average interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    122.56
    %
    
    
    
    
    
    
    
    
    
    
    125.99
    %
 
 (1)
    
    Yields and rates for the three months ended June 30, 2005 and 2004 are annualized.(2)
    
    Net interest rate spread represents the difference between
the yield on average interest-earning assets and the cost of average interest-bearing liabilities.(3)
    
    Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.(4)
    
    Net interest margin represents net interest income divided by average total interest-earning assets. 21




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##### Table of Contents



Six Months Ended June 30, 2005
    
    
    Six Months Ended June 30, 2004Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    
    
    
    
    
    
    
    
    OutstandingBalance
    
    
    Interest
    
    
    Yield/Rate(1)
    
    
    Balance
    
    
    Interest
    
    
    Yield/Rate(1)(In thousands)
    
    
    (In thousands)Interest-earning assets:Loans
    
    $
    489,108
    
    
    $
    12,940
    
    
    
    5.34
    %
    
    $
    308,729
    
    
    $
    7,989
    
    
    
    5.20
    %Investment securities
    
    
    110,167
    
    
    
    1,716
    
    
    
    3.14
    %
    
    
    112,887
    
    
    
    1,729
    
    
    
    3.08
    %Short-term investments
    
    
    21,272
    
    
    
    244
    
    
    
    2.32
    %
    
    
    19,525
    
    
    
    86
    
    
    
    0.89
    %Total interest-earning assets
    
    
    620,547
    
    
    
    14,900
    
    
    
    4.84
    %
    
    
    441,141
    
    
    
    9,804
    
    
    
    4.47
    %Non-interest-earning assets
    
    
    71,073
    
    
    
    
    
    
    
    
    
    
    
    31,361Total assets
    
    $
    691,619
    
    
    
    
    
    
    
    
    
    
    $
    472,502Interest-bearing liabilities:Savings deposits
    
    $
    102,177
    
    
    
    258
    
    
    
    0.51
    %
    
    $
    98,602
    
    
    
    244
    
    
    
    0.50
    %Money market
    
    
    87,618
    
    
    
    668
    
    
    
    1.54
    %
    
    
    51,414
    
    
    
    207
    
    
    
    0.81
    %NOW accounts
    
    
    29,161
    
    
    
    40
    
    
    
    0.28
    %
    
    
    24,065
    
    
    
    18
    
    
    
    0.15
    %Certificates of deposits
    
    
    193,450
    
    
    
    2,458
    
    
    
    2.56
    %
    
    
    132,406
    
    
    
    1,667
    
    
    
    2.53
    %Total deposits
    
    
    412,405
    
    
    
    3,424
    
    
    
    1.67
    %
    
    
    306,487
    
    
    
    2,136
    
    
    
    1.40
    %Short-term borrowings
    
    
    4,811
    
    
    
    22
    
    
    
    0.92
    %
    
    
    55
    
    
    
    0
    
    
    
    0.00
    %Long-term debt
    
    
    85,674
    
    
    
    1,767
    
    
    
    4.16
    %
    
    
    45,275
    
    
    
    1,132
    
    
    
    5.03
    %Total interest-bearing liabilities
    
    
    502,890
    
    
    
    5,213
    
    
    
    2.09
    %
    
    
    351,816
    
    
    
    3,268
    
    
    
    1.87
    %Non-interest bearing liabilities
    
    
    120,171
    
    
    
    
    
    
    
    
    
    
    
    90,815Total liabilities
    
    
    623,061
    
    
    
    
    
    
    
    
    
    
    
    442,631Equity
    
    
    68,558
    
    
    
    
    
    
    
    
    
    
    
    29,870Total liabilities and equity
    
    $
    691,619
    
    
    
    
    
    
    
    
    
    
    $
    472,502Net interest income
    
    
    
    
    
    $
    9,687
    
    
    
    
    
    
    
    
    
    
    $
    6,536Net interest rate spread (2)
    
    
    
    
    
    
    
    
    
    
    2.75
    %
    
    
    
    
    
    
    
    
    
    
    2.60
    %Net interest-earning assets (3)
    
    $
    117,657
    
    
    
    
    
    
    
    
    
    
    $
    89,325Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    3.15
    %
    
    
    
    
    
    
    
    
    
    
    2.98
    %Average interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    123.40
    %
    
    
    
    
    
    
    
    
    
    
    125.39
    %
 
 (1)
    
    Yields and rates for the six months ended June 30, 2005 and 2004 are annualized.(2)
    
    Net interest rate spread represents the difference between
the yield on average interest-earning assets and the cost of average interest-bearing liabilities.(3)
    
    Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.(4)
    
    Net interest margin represents net interest income divided by average total interest-earning assets.  22




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Three Months Ended June 30,2005 vs. 2004Increase (Decrease)Due to
    
    
    TotalIncreaseVolume
    
    
    Rate
    
    
    (Decrease)(In thousands)Interest-earning assets:Loans
    
    $
    3,650
    
    
    $
    326
    
    
    $
    3,976Investment securities
    
    
    103
    
    
    
    50
    
    
    
    153Interest-earning deposits
    
    
    32
    
    
    
    82
    
    
    
    114Total interest-earning assets
    
    
    3,785
    
    
    
    458
    
    
    
    4,243Interest-bearing liabilities:Savings deposits
    
    
    11
    
    
    
    7
    
    
    
    18Money Market
    
    
    206
    
    
    
    148
    
    
    
    354NOW accounts
    
    
    6
    
    
    
    17
    
    
    
    23Certificates of deposits
    
    
    688
    
    
    
    16
    
    
    
    704Total deposits
    
    
    911
    
    
    
    188
    
    
    
    1,099Short-term borrowings and long-term debt
    
    
    470
    
    
    
    (102
    )
    
    
    368Total interest-bearing liabilities
    
    
    1,381
    
    
    
    86
    
    
    
    1,467Change in net interest income
    
    $
    2,404
    
    
    $
    372
    
    
    $
    2,776
 Six Months Ended June 30,2005 vs. 2004Increase (Decrease)Due to
    
    
    TotalIncreaseVolume
    
    
    Rate
    
    
    (Decrease)(In thousands)Interest-earning assets:Loans
    
    $
    4,768
    
    
    $
    183
    
    
    $
    4,951Investment securities
    
    
    (41
    )
    
    
    28
    
    
    
    (13
    )Interest-earning deposits
    
    
    8
    
    
    
    150
    
    
    
    158Total interest-earning assets
    
    
    4,735
    
    
    
    361
    
    
    
    5,096Interest-bearing liabilities:Savings deposits
    
    
    9
    
    
    
    5
    
    
    
    14Money Market
    
    
    203
    
    
    
    258
    
    
    
    461NOW accounts
    
    
    4
    
    
    
    19
    
    
    
    23Certificates of deposits
    
    
    776
    
    
    
    14
    
    
    
    790Total deposits
    
    
    992
    
    
    
    296
    
    
    
    1,288Short-term borrowings and long-term debt
    
    
    862
    
    
    
    (205
    )
    
    
    657Total interest-bearing liabilities
    
    
    1,854
    
    
    
    91
    
    
    
    1,945Change in net interest income
    
    $
    2,881
    
    
    $
    270
    
    
    $
    3,151
 23




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24




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Provision for Loan Losses
  Non-interest Income
    25




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##### Table of Contents



For the ThreeMonths EndedJune 30, 2005(In thousands)Income:Fees earned on ATM servicing contracts
    
    $
    509Expenses:Interest expense
    
    
    253Personnel costs
    
    
    92Occupancy and equipment
    
    
    7Services, supplies and other
    
    
    18Total expenses
    
    
    370Pre-tax contribution margin
    
    $
    139
  Non-interest Expense
    26




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Income Taxes
  Liquidity and Capital Resources
     27




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##### Table of Contents



Contractual Obligations:
 At June 30, 2005More than
    
    
    More thanOne Year
    
    
    Three YearsOne Year
    
    
    through Three
    
    
    through five
    
    
    Over FiveTotal
    
    
    or Less
    
    
    Years
    
    
    Years
    
    
    Years(In thousands)Federal Home Loan Bank advances(1)
    
    $
    109,000
    
    
    
    
    
    
    $
    48,000
    
    
    $
    31,000
    
    
    $
    30,000Subordinated Debt
    
    
    9,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,000Other (2)
    
    
    5,978
    
    
    
    1,744
    
    
    
    3,370
    
    
    
    864
    
    
    
    Total Contractual Obligations
    
    $
    123,978
    
    
    $
    1,744
    
    
    $
    51,370
    
    
    $
    31,864
    
    
    $
    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. One knock-out 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. Amounts shown exclude the purchase accounting adjustment for Chart Bank borrowings.(2)
    
    Represents contracts for technology services and employee compensation. Loan Commitments
 At June 30, 2005More than
    
    
    More thanOne Year
    
    
    Three YearsOne Year
    
    
    through Three
    
    
    through five
    
    
    Over FiveTotal
    
    
    or Less
    
    
    Years
    
    
    Years
    
    
    Years(In thousands)Commitments to grant loans (1)
    
    $
    38,765
    
    
    $
    38,765
    
    
    $
    
    
    
    $
    
    
    
    $
    Commercial loan lines of credit
    
    
    21,375
    
    
    
    21,375
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of home equity loans (3)
    
    
    37,811
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,811Unused portion of construction loans (4)
    
    
    25,619
    
    
    
    20,059
    
    
    
    5,560
    
    
    
    
    
    
    
    Unused portion of personal lines of credit (2)
    
    
    2,476
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,476Total Loan Commitments
    
    $
    126,046
    
    
    $
    80,199
    
    
    $
    5,560
    
    
    $
    
    
    
    $
    40,287
  
 (1)
    
    Commitments for loans are typically 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 loans 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. 28




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Minimum Regulatory Capital Requirements:
  MinimumTo Be WellMinimum
    
    
    Capitalized UnderCapital
    
    
    Prompt CorrectiveActual
    
    
    Requirements
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioJune 30, 2005:Total capital to risk weighted assets:Consolidated
    
    $
    86,468
    
    
    
    15.3
    %
    
    $
    45,103
    
    
    
    8.0
    %
    
    
    N/A
    
    
    
    N/ABank
    
    
    60,543
    
    
    
    10.8
    
    
    
    44,941
    
    
    
    8.0
    
    
    $
    56,176
    
    
    
    10.0
    %Tier 1 capital to risk weighted assets:Consolidated
    
    
    80,937
    
    
    
    14.4
    
    
    
    22,552
    
    
    
    4.0
    
    
    
    N/A
    
    
    
    N/ABank
    
    
    55,012
    
    
    
    9.8
    
    
    
    22,470
    
    
    
    4.0
    
    
    
    33,706
    
    
    
    6.0Tier 1 capital to average assets:Consolidated
    
    
    80,937
    
    
    
    10.0
    
    
    
    32,509
    
    
    
    4.0
    
    
    
    N/A
    
    
    
    N/ABank
    
    
    55,012
    
    
    
    8.2
    
    
    
    26,722
    
    
    
    4.0
    
    
    
    33,403
    
    
    
    5.0December 31, 2004:Total capital to risk weighted assets:Consolidated
    
    $
    40,875
    
    
    
    12.5
    %
    
    $
    26,200
    
    
    
    8.0
    %
    
    
    N/A
    
    
    
    N/ABank
    
    
    40,022
    
    
    
    12.3
    
    
    
    26,125
    
    
    
    8.0
    
    
    $
    32,656
    
    
    
    10.0
    %Tier 1 capital to risk weighted assets:Consolidated
    
    
    37,703
    
    
    
    11.5
    
    
    
    13,100
    
    
    
    4.0
    
    
    
    N/A
    
    
    
    N/ABank
    
    
    36,850
    
    
    
    11.3
    
    
    
    13,062
    
    
    
    4.0
    
    
    
    19,594
    
    
    
    6.0Tier 1 capital to average assets:Consolidated
    
    
    37,703
    
    
    
    7.3
    
    
    
    20,545
    
    
    
    4.0
    
    
    
    N/A
    
    
    
    N/ABank
    
    
    36,850
    
    
    
    7.2
    
    
    
    20,513
    
    
    
    4.0
    
    
    
    25,641
    
    
    
    5.0
 29




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
   Percentage Change in EstimatedNet Interest Income over 12 months200 basis point increase in rates
    
    
    2.29
    %100 basis point increase in rates
    
    
    1.28
    %Flat interest rates
    
    
    100 basis point decrease in rates
    
    
    (4.02
    )%
    30




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##### Table of Contents



Up to
    
    
    More than
    
    
    More than
    
    
    More than
    
    
    More than
    
    
    More thanone
    
    
    one year to
    
    
    two years to
    
    
    three years to
    
    
    four years to
    
    
    fiveyear
    
    
    two years
    
    
    three years
    
    
    four years
    
    
    five years
    
    
    years
    
    
    Total(Dollars in thousands)Interest-earning assets:Loans (1)
    
    $
    241,716
    
    
    $
    84,069
    
    
    $
    71,956
    
    
    $
    57,518
    
    
    $
    113,288
    
    
    $
    44,391
    
    
    $
    612,938Investment securities (2)
    
    
    55,437
    
    
    
    32,928
    
    
    
    11,061
    
    
    
    6,660
    
    
    
    2,215
    
    
    
    22,552
    
    
    
    130,853Short-term investments
    
    
    18,424
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,424Total interest-earning assets
    
    
    315,577
    
    
    
    116,997
    
    
    
    83,017
    
    
    
    64,178
    
    
    
    115,503
    
    
    
    66,943
    
    
    
    762,215Interest-bearing liabilities:Savings deposits
    
    
    41,194
    
    
    
    25,417
    
    
    
    15,682
    
    
    
    9,676
    
    
    
    5,970
    
    
    
    9,617
    
    
    
    107,556Money market
    
    
    62,824
    
    
    
    25,444
    
    
    
    10,305
    
    
    
    4,173
    
    
    
    1,690
    
    
    
    1,150
    
    
    
    105,586NOW accounts
    
    
    3,376
    
    
    
    3,066
    
    
    
    2,783
    
    
    
    2,527
    
    
    
    2,295
    
    
    
    22,650
    
    
    
    36,697Certificates of deposits
    
    
    195,776
    
    
    
    38,391
    
    
    
    11,181
    
    
    
    3,904
    
    
    
    3,121
    
    
    
    
    
    
    
    252,373Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    
    
    
    
    19,000
    
    
    
    38,000
    
    
    
    9,000
    
    
    
    22,000
    
    
    
    30,000
    
    
    
    118,000Total interest-bearing liabilities
    
    $
    303,170
    
    
    $
    111,317
    
    
    $
    77,951
    
    
    $
    29,281
    
    
    $
    35,076
    
    
    $
    63,418
    
    
    $
    620,212Interest rate sensitivity gap
    
    
    12,407
    
    
    
    5,680
    
    
    
    5,066
    
    
    
    34,897
    
    
    
    80,427
    
    
    
    3,525
    
    
    
    142,003Interest rate sensitivity gap as a %
of total assets
    
    
    1.44
    %
    
    
    0.66
    %
    
    
    0.59
    %
    
    
    4.04
    %
    
    
    9.31
    %
    
    
    0.41
    %Cum. interest rate sensitivity gap
    
    
    12,407
    
    
    
    18,087
    
    
    
    23,153
    
    
    
    58,051
    
    
    
    138,478
    
    
    
    142,003Cum. interest rate sensitivity gap
as a % of total assets
    
    
    1.44
    %
    
    
    2.09
    %
    
    
    2.68
    %
    
    
    6.72
    %
    
    
    16.03
    %
    
    
    16.44
    %
 
 (1)
    
    Excludes the allowance for loan losses, deferred fees and costs, and non-performing loans.(2)
    
    Investment securities are shown at amortized cost.  31




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##### Table of Contents



Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures.
  Changes in Internal Controls Over Financial Reporting.
 32




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 (a)
    
    Unregistered Sale of Equity Securities.Not applicable.(b)
    
    Use of Proceeds. Not applicable. The Use of Proceeds from the Companys stock
offering, which closed on April 4, 2005, was reported in the Companys Quarterly Report
on Form 10-Q for the Quarter ended March 31, 2005..(c)
    
    Repurchases of Our Equity Securities.The Companys employee stock ownership
plan, an affiliated purchaser, purchased the following shares of the Companys common
stock during the quarter:
 (d) Maximum number(or approximate(c) Total Number of
    
    dollar value) ofShares Purchased as
    
    shares that may yetPart of Publicly
    
    be purchased under(a) Total Number of
    
    (b) Average Price
    
    Announced Plans or
    
    the Plans orPeriod
    
    Shares Purchased
    
    Paid per Share
    
    Programs (1)
    
    Programs (1)April 1-30
    
    
    278,800
    
    
    $
    10.14
    
    
    
    278,800
    
    
    
    199,394May 1-31
    
    
    21,200
    
    
    $
    10.20
    
    
    
    21,200
    
    
    
    178,194June 1-30
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    
    178,194
 
 (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. There is no expiration
date for these planned purchases. These purchases have been and will continue to be
effected by the independent corporate trustee of the Companys ESOP. 
 Item 3. Defaults on Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
  Exhibit No.
    
    Description
    
    Footnotes2.1
    
    
    Plan of Conversion of Benjamin Franklin Bancorp.
    
    
    32.2
    
    
    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
 33




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##### Table of Contents



Exhibit No.
    
    Description
    
    Footnotes3.1
    
    
    Articles of Organization of Benjamin Franklin Bancorp, Inc.
    
    
    23.2
    
    
    Bylaws of Benjamin Franklin Bancorp, Inc.
    
    
    24.1
    
    
    Form of Common Stock Certificate of Benjamin Franklin Bancorp, Inc.
    
    
    510.1.1
    
    
    Form of Employment Agreement with Thomas R. Venables. *
    
    
    610.1.2
    
    
    Form of Employment Agreement with Claire S. Bean. *
    
    
    610.2
    
    
    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. *
    
    
    210.3
    
    
    Form of Benjamin Franklin Bank Benefit Restoration Plan. *
    
    
    210.4.1
    
    
    Benjamin Franklin Bank Salary Continuation Agreement with Thomas
R. Venables dated as of August 22, 2002. *
    
    
    210.5
    
    
    Benjamin Franklin Bancorp Director Fee Continuation Plan. *
    
    
    410.6
    
    
    Benjamin Franklin Bancorp Employee Salary Continuation Plan. *
    
    
    210.7.1
    
    
    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. *
    
    
    210.7.2
    
    
    Consulting and Noncompetition Agreement between Richard E. Bolton,
Jr. and Benjamin Franklin Bancorp, M.H.C., dated as of September
1, 2004. *
    
    
    211
    
    
    See Note 3 to the Financial Statements for a discussion of
earnings per share.31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
    
    
    131.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
    
    
    132.1
    
    
    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.
    
    
    132.2
    
    
    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 Forma 10-K,
filed on March 29, 2005.
 34




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##### Table of Contents



SIGNATURES
  Benjamin Franklin Bancorp, Inc.Date: August 8, 2005
    By:
    /s/ Thomas R. VenablesThomas R. VenablesPresident and Chief Executive Officer Date:  August 8, 2005
    By:
    /s/ Claire S. BeanClaire S. BeanTreasurer and Chief Financial Officer 35




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Item31.1
    
    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.