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  **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 THESECURITIES EXCHANGE ACT OF 1934******FOR THE QUARTER ENDED MARCH 31, 2006******OR**   o **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934****Commission file number 000-51194** **Benjamin Franklin Bancorp, Inc.**(Exact Name of Registrant as Specified in its Charter)   **Massachusetts** **04-3336598**(State or Other Jurisdiction of (I.R.S. EmployerIncorporation or Organization) Identification No.)   **58 Main Street, Franklin, MA** **02038**(Address of Principal Executive Offices) (Zip Code)Registrant’s telephone number, including area code: **(617) 528-7000**      Indicate by check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes þ No o     Indicate by check mark whether the registrant is a large accelerated filer, an acceleratedfiler, or a non-accelerated filer. See definition of “accelerated filer and large acceleratedfiler” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer o                                       Accelerated filer o                                       Non-accelerated filer þIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).Yes o                No þ               Shares outstanding of the registrant’s common stock (no par value) at May 9, 2006: 8,488,898  
 

 
       **Page****PART I – FINANCIAL INFORMATION**         Item 1. Consolidated Financial Statements         Consolidated Balance Sheets at March 31, 2006 and December 31, 2005  3      Consolidated Statements of Income for the three months endedMarch 31, 2006 and 2005  4      Consolidated Statements of Changes in Stockholders’ Equity for the three months endedMarch 31, 2006 and 2005  5      Consolidated Statements of Cash Flows for the three months endedMarch 31, 2006 and 2005  6      Notes to Condensed Consolidated Financial Statements  8      Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations  9      Item 3. Quantitative and Qualitative Disclosures about Market Risk  23      Item 4. Controls and Procedures  25      **PART II – OTHER INFORMATION**         Item 1. Legal Proceedings  27      Item 1A Risk Factors That May Affect Future Results  27      Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  27      Item 3. Defaults on Senior Securities  27      Item 4. Submission of Matters to a Vote of Security Holders  27      Item 5. Other Information  27      Item 6. Exhibits  27      **SIGNATURES**  29  Ex-31.1 Section 302 Certification of CEO Ex-31.2 Section 302 Certification of CFO Ex-32.1 Section 906 Certification of CEO Ex-32.2 Section 906 Certification of CFO
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     **PART I. FINANCIAL INFORMATION****Item 1. Financial Statements****BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY****CONSOLIDATED BALANCE SHEETS****(Dollars in thousands)**           March 31,  December 31,   2006  2005   (Unaudited)  (Audited) **ASSETS**                 Cash and due from banks $19,247  $16,499 Cash supplied to ATM customers  33,137   37,200 Short-term investments  24,720   12,051        Total cash and cash equivalents  77,104   65,750                 Securities available for sale, at fair value  129,349   122,379 Securities held to maturity, at amortized cost  80   109 Restricted equity securities, at cost  10,012   10,012        Total securities  139,441   132,500                 Loans        Residential real estate  296,476   286,204 Commercial real estate  217,227   209,009 Construction  51,191   60,399 Commercial business  19,409   19,162 Consumer  36,272   34,814 Net deferred loan costs  1,188   1,214        Total loans, gross  621,763   610,802 Allowance for loan losses  (5,666)  (5,670)       Total loans, net  616,097   605,132          Premises and equipment, net  11,152   11,167 Accrued interest receivable  3,235   3,045 Bank-owned life insurance  7,516   7,451 Goodwill  33,763   33,763 Identifiable intangible asset  3,832   4,133 Other assets  3,938   4,116          $896,078  $867,057                 **LIABILITIES AND STOCKHOLDERS’ EQUITY**                 Deposits:        Regular savings $98,706  $97,960 Money market accounts  117,753   94,347 Now accounts  30,790   32,147 Demand deposit accounts  123,940   124,396 Time deposit accounts  280,964   262,823        Total deposits  652,153   611,673          Long-term debt  127,945   140,339 Other liabilities  7,221   6,933        Total liabilities  787,319   758,945                 Common stock, no par value; 75,000,000 sharesauthorized;8,488,898 shares issued and outstanding  —   — Additional paid-in capital  82,857   82,849 Retained earnings  33,956   32,942 Unearned compensation  (5,307)  (5,353)Accumulated other comprehensive loss  (2,747)  (2,326)       Total stockholders’ equity  108,759   108,112          $896,078  $867,057        See accompanying notes to condensed consolidated financial statements
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**BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY****CONSOLIDATED STATEMENTS OF INCOME****(Dollars in thousands, except share and per share data)**           Three Months Ended   March 31,   2006  2005   (Unaudited) Interest and dividend income:        Loans, including fees $8,842  $4,892 Debt securities  1,262   661 Dividends  120   68 Short-term investments  216   93        Total interest and dividend income  10,440   5,714                 Interest expense:        Interest on deposits  3,102   1,232 Interest on borrowings  1,426   853        Total interest expense  4,528   2,085        Net interest income  5,912   3,629 Provision for loan losses  6   168        Net interest income, after provision for loanlosses  5,906   3,461                 Non-interest income:        ATM servicing fees  625   — Deposit service fees  329   207 Loan servicing fees  122   72 Gain on sale of loans, net  65   15 Income from bank-owned life insurance  65   59 Miscellaneous  191   140        Total non-interest income  1,397   493                 Non-interest expense:        Salaries and employee benefits  2,721   2,014 Occupancy and equipment  666   440 Data processing  448   337 Professional fees  365   129 Amortization of core deposit intangible  301   45 Other general and administrative  817   500        Total non-interest expense  5,318   3,465        Income before income taxes  1,985   489 Provision for income taxes  717   159        Net income $1,268  $330                 Weighted-average shares outstanding:        Basic  8,026,644   n/a Diluted  8,026,644   n/a          Earnings per share:        Basic $0.16   n/a Diluted $0.16   n/a See accompanying notes to condensed consolidated financial statements
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**BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY****CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY****(Dollars in thousands)****(Unaudited)**                                                   Accumulated              Additional          Other  Total   Common Stock  Paid-in  Retained  Unearned  Comprehensive  Stockholders’   Shares  Amount  Capital  Earnings  Compensation  Loss  Equity Balance at December 31, 2004  —  $—  $—  $32,997  $—  $(1,669) $31,328                             Comprehensive income (loss):                            Net income  —   —   —   330   —   —   330 Net unrealized loss onsecurities availablefor sale, net of tax effects              —       (858)  (858)                            Total comprehensive loss                          (528)                      Balance at March 31, 2005  —  $—  $—  $33,327  $—  $(2,527) $30,800                                                    Balance at December 31, 2005  8,488,898  $—  $82,849  $32,942  $(5,353) $(2,326) $108,112                             Comprehensive income (loss):                            Net income  —   —   —   1,268   —   —   1,268 Net unrealized loss onsecurities availablefor sale, net of tax effects  —   —   —   —   —   (421)  (421)                            Total comprehensive income                          847                             Dividends declared ($.03 per share)  —   —   —   (254)  —   —   (254)Release of ESOP stock  —   —   8   —   46   —   54                       Balance at March 31, 2006  8,488,898  $—  $82,857  $33,956  $(5,307) $(2,747) $108,759                       See accompanying notes to condensed consolidated financial statements
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**BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY****CONSOLIDATED STATEMENTS OF CASH FLOWS****(Dollars in thousands)****(Unaudited)**           Three Months Ended March 31,   2006  2005 Cash flows from operating activities:        Net income $1,268  $330 Adjustments to reconcile net income to net cashprovided by operating activities:        Amortization (accretion) of securities, net  (177)  118 Amortization (accretion) of loans, net  (46)  39 Provision for loan losses  6   168 Accretion of deposit and borrowings, net  (17)  — Amortization of mortgage servicing rights  64   76 Depreciation and amortization  250   184 Amortization of core deposit intangible  301   45 Amortization of unearned compensation  54   — Deferred income tax benefit  (174)  (22)Income from bank-owned life insurance  (65)  (59)Gains on sales of loans, net  (65)  (15)Loans originated for sale  (5,879)  (4,425)Proceeds from sales of loans  5,944   4,440 Increase in accrued interest receivable  (190)  (102)Other, net  607   (165)       Net cash provided by operating activities  1,881   612                 Cash flows from investing activities:        Activity in available-for-sale securities:        Maturities, calls, and principal repayments  12,577   4,477 Purchases  (19,843)  (3,647)Principal repayments on held-to-maturity securities  29   30 Purchases of mortgage loans  (16,118)  (288)Loan repayments (originations), net  5,199   (10,884)Additions to premises and equipment  (220)  (231)       Net cash used for investing activities  (18,376)  (10,543)       (Continued)See accompanying notes to condensed consolidated financial statements
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**BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY****CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)****(Dollars in thousands)****(Unaudited)**           Three Months Ended March 31,   2006  2005 Cash flows from financing activities:        Net increase in deposits  40,506   18,211 Funds received in stock subscription offering,net of costs incurredin connection with stock offering andimpending merger  —   50,778 Net repayments of short-term borrowings  —   (4,250)Net repayments of long-term debt  (12,403)  — Dividends paid on common stock  (254)  —        Net cash provided by financing activities  27,849   64,739                 Net change in cash and cash equivalents  11,354   54,808 Cash and cash equivalents at beginning of period  65,750   14,204         Cash and cash equivalents at end of period $77,104  $69,012                 Supplemental cash flow information:        Interest paid on deposits $3,655  $1,231 Interest paid on short-term borrowings  —   1 Interest paid on long-term debt  1,382   849 Income taxes paid  132   193 See accompanying notes to condensed consolidated financial statements
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**BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARY****NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS****(Unaudited)*****1.*** ***Basis of presentation and consolidation***   The accompanying unaudited consolidated interim financial statements include the accounts ofBenjamin Franklin Bancorp, Inc. (the “Company’’) and its wholly-owned subsidiary,Benjamin Franklin Bank (the “Bank’’). These financial statements have been prepared inaccordance 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 10of Regulation S-X. Accordingly, they do not include all of the information and footnotesrequired by GAAP for complete financial statements. In the opinion of management, alladjustments (consisting of only normal recurring adjustments) necessary for a fairpresentation have been included.   These consolidated interim financial statements should be read in conjunction with theaudited consolidated financial statements and notes thereto included in the Company’s AnnualReport on Form 10-K as of and for the year ended December 31, 2005.   ***Recent Accounting Pronouncements***   On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued Statement ofFinancial 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 becameeffective as of January 1, 2006 for the Company. For public companies, the cost of employeeservices received in exchange for equity instruments including options and restricted stockawards generally is now measured at fair value at the grant date. The grant date fair valueis required to be estimated using option-pricing models adjusted for the uniquecharacteristics of those options and instruments, unless observable market prices for thesame or similar options are available. The cost must be recognized over the requisiteservice period, often the vesting period.   The provisions of SFAS No. 123R do not have an impact on the Company’s results of operationsat this time. However, as anticipated in the prospectus used in the Company’s stock offeringrelated to the mutual-to-stock conversion, the Board of Directors has adopted a stock-basedincentive plan, subject to shareholder approval, which will be sought at the annual meetingon May 11, 2006. The granting of restricted stock awards and stock options under thestock-based incentive plan will increase the Company’s compensation costs in the periods inwhich such awards and options vest.   In August 2005, the FASB issued an exposure draft that would amend FASB Statement No. 140,*Accounting for Transfers and Servicing of Financial Assets and Extinguishments ofLiabilities*, with respect to the accounting for servicing of financial assets. This proposedStatement would require that all separately recognized servicing rights be initiallymeasured at fair value, if practicable. For each class of separately recognized servicingassets and liabilities, this proposed Statement would permit an entity to choose either ofthe following subsequent measurement methods: (1) amortize servicing assets or liabilitiesin proportion to and over the period of estimated net servicing income or net servicingloss, or (2) report servicing assets or liabilities at fair value at each reporting date andreport changes in fair value in earnings in the period in which the changes occur. Thisproposed Statement also would require additional disclosures for all separately recognizedservicing rights. This proposed Statement would be effective for new transactions occurringand for subsequent measurement in the earlier of the first fiscal year that begins afterSeptember 15, 2006, or fiscal years beginning during the fiscal quarter in which the finalStatement is issued. This Statement is not expected to have a material impact on theCompany’s consolidated financial statements.
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 ***2.*** ***Commitments***    Outstanding loan commitments totaled $128.5 million at March 31, 2006, compared to $118.2million as of December 31, 2005. Loan commitments consist of commitments to originate newloans as well as the outstanding undrawn portions of lines of credit. Further, on April 28,2006, the Company committed to purchase a pool of adjustable-rate mortgage loans with anaggregate principal balance of approximately $20 million.    On May 2, 2006, the Company entered into a purchase andsale agreement to sell the property itowns at 500 West Central St., Franklin, MA. The sale price is $825,000 and the closing isexpected within the next twelve months. The Company’s carrying value for this property is$634,000.  ***3.*** ***Earnings per share***    Basic earnings per share excludes dilution and is computed by dividing income available tocommon shareholders by the weighted-average common shares outstanding during the period.Diluted earnings per share takes into account the potential dilution that could occur ifsecurities or other contracts to issue common stock were exercised and converted into commonstock. There were no potentially dilutive common stock equivalents outstanding during thequarter ended March 31, 2006. Unallocated common shares held by the ESOP are shown as areduction in stockholders’ equity and are not included in the weighted-average number ofcommon shares outstanding for either basic or diluted earnings per share calculations.Earnings per share are not presented for the three months ended March 31, 2005, because theCompany did not complete its public offering until April 4, 2005.**Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations**The following analysis discusses the changes in financial position and results of operations of theCompany, and should be read in conjunction with the Company’s unaudited consolidated interimfinancial statements and the notes thereto, appearing in Part I, Item 1 of this document.**Forward-Looking Statements**Certain statements herein constitute “forward-looking statements” and actual results may differfrom those contemplated by these statements. Forward-looking statements can be identified by thefact that they do not relate strictly to historical or current facts. They often include words like“believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as“will,” “would,” “should,” “could” or “may.” Certain factors that could cause actual results todiffer materially from expected results include changes in the interest rate environment, changesin general economic conditions, legislative and regulatory changes that adversely affect thebusinesses in which the Company is engaged and changes in the securities market.**Critical Accounting Policies**Critical accounting policies are those that involve significant judgments and assessments bymanagement, and which could potentially result in materially different results under differentassumptions and conditions. As discussed in the Company’s 2005 Annual Report on Form 10-K, theCompany considers its critical accounting policies to be those associated with income taxes,intangible assets and the determination of the allowance for loan losses. The Company’s criticalaccounting policies have not changed since December 31, 2005.
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**Comparison of Financial Condition at March 31, 2006 and December 31, 2005****Overview**Total assets increased by $29.0 million, or 3.3%, from $867.1 million at December 31, 2005 to$896.1 million at March 31, 2006. Asset growth was nearly evenly split between cash/cashequivalents, which increased by $11.4 million or 17.3% and loans, which increased by $11.0 millionor 1.8% during the quarter. Growth in assets was funded primarily by increases in deposit balancesaggregating $40.5 million, or 6.6%, offset by a $12.4 million, or 8.8%, decrease in borrowed funds.**Investment Activities**Cash and cash equivalent balances increased by $11.4 million to $77.1 million at March 31, 2006when compared to December 31, 2005. Of that increase, $2.7 million was due to an increase in cashand correspondent balances, exclusive of a $4.1 million decrease in cash supplied to customers ofCreative Strategic Solutions, Inc. (“CSSI”), the Bank’s ATM servicing subsidiary. The decline inCSSI-managed cash was the result of normal seasonal fluctuations. Over the same period, short-terminvestments, comprised of overnight fed funds sold ($22.1 million) and money market funds ($2.6million), increased $12.7 million to $24.7 million at March 31, 2006. The higher level ofshort-term investments at quarter-end was the result of the Bank’s successful deposit accountpromotions during the quarter. The Company expects to invest the majority of those funds in loansduring the second quarter of 2006.At March 31, 2006, the Company’s investment portfolio amounted to $139.4 million, or 15.6% of totalassets. When compared to year end 2005, securities increased by $6.9 million, or 5.2%, at March 31,2006. The increase was generally consistent with overall growth in the balance sheet during thequarter. The following table sets forth certain information regarding the amortized cost and marketvalues of the Company’s securities at the dates indicated:
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                   **March 31, 2006**  **December 31, 2005**   **Amortized**  **Fair**  **Amortized**  **Fair**   **Cost**  **Value**  **Cost**  **Value**   (In thousands) **Securities available for sale:**                Government-sponsored enterpriseobligations $97,183  $96,437  $86,141  $85,494 State agency and municipal obligations  2,210   2,183   2,211   2,191 Corporate bonds and other obligations  —   —   2,508   2,500 Mortgage-backed securities  33,017   30,729   34,107   32,194              Total securities available for sale $132,410  $129,349  $124,967  $122,379                               **Securities held to maturity:**                                 Mortgage-backed securities $80  $80  $109  $109                               **Restricted equity securities:**                Federal Home Loan Bank of Boston stock $7,496  $7,496  $7,496  $7,496 Access Capital StrategiesCommunity Investment Fund  2,000   2,000   2,000   2,000 SBLI & DIF stock  516   516   516   516              Total equity securities $10,012  $10,012  $10,012  $10,012              **Lending Activities**The Company’s net loan portfolio aggregated $616.1 million on March 31, 2006, or 68.8% of totalassets on that date. As of December 31, 2005, the net loan portfolio totaled $605.1 million, or69.8% of total assets. The following table sets forth the composition of the loan portfolio at thedates indicated:
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                   **March 31, 2006**  **December 31, 2005**   **Amount**  **Percent**  **Amount**  **Percent**   (Dollars in thousands) Mortgage loans on real estate:                Residential $296,476   47.77% $286,204   46.95%Commercial  217,227   35.00%  209,009   34.29%Construction  51,191   8.25%  60,399   9.91%Home equity  34,038   5.48%  32,419   5.32%                598,932   96.51%  588,031   96.46%                              Other loans:                Commercial  19,409   3.13%  19,162   3.14%Consumer  2,234   0.36%  2,395   0.39%                21,643   3.49%  21,557   3.54%                              Total loans  620,575   100.00%  609,588   100.00%                                Other items:                Deferred loan origination costs  1,188       1,214     Allowance for loan losses  (5,666)      (5,670)                   Total loans, net $616,097      $605,132                    The net loan portfolio increased by $11.0 million, or 1.8%, during the first three months of2006. The increase was principally a result of growth in residential mortgage loans (up$10.3 million or 3.6%) and commercial real estate loans (up $8.2 million or 3.9%), offset by adecrease in construction loans outstanding of $9.2 million, areduction of 15.2%. The decrease in construction loans representsnormal fluctuation in this portfolio, and is likely temporary. The increase inresidential mortgage loans resulted primarily from the purchase of two whole loan pools, consistingof adjustable rate loans collateralized by Massachusetts properties. On April 28, 2006, the Bankfurther committed to the purchase of a whole loan pool of adjustable-rate mortgage loans in theamount of approximately $20.0 million. With regard to commercial lending, although the net increasein commercial credits during the quarter was small, the Company remains committed to expanding thissegment of its lending business over the next several years.**Non-performing Assets**The table below sets forth the amounts and categories of the Company’s non-performing assets at thedates indicated. At each date presented, the Company had no troubled debt restructurings (loans forwhich a portion of interest or principal has been forgiven and loans modified at interest ratesmaterially less than current market rates):
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           **March 31, 2006**  **December 31, 2005**   (Dollars in thousands) **Non-accrual loans:**        Residential mortgage $61  $184 Commercial mortgage  25   — Construction  —   — Commercial  245   256 Consumer and other  —   25        **Total non-accrual loans**  331   465                 **Loans greater than 90 days delinquentand still accruing:**        Residential mortgage  0   0 Commercial mortgage  0   0 Construction  0   0 Commercial  0   0 Consumer and other  8   2        **Total loans 90 days and still accruing**  8   2        **Total non-performing loans** $339  $467                 **Ratios:**        Non-performing loans to total loans  0.05%  0.08%Non-performing loans to total assets  0.04%  0.05%**Allowance for Loan Losses**In originating loans, the Company recognizes that losses will be experienced on loans and that therisk of loss will vary with many factors, including the type of loan being made, thecreditworthiness of the borrower over the term of the loan, general economic conditions and, in thecase of a secured loan, the quality of the security for the loan over the term of the loan. TheCompany maintains an allowance for loan losses to absorb losses inherent in the loan portfolio, andas such, this allowance represents management’s best estimate of the probable known and inherentcredit losses in the loan portfolio as of the date of the financial statements.The allowance for loan losses is evaluated on a regular basis by management and is based uponmanagement’s periodic review of the collectibility of the loans in light of historical experience,portfolio volume and mix, geographic and large borrower concentrations, estimated credit lossesbased on internal and external portfolio reviews, adverse situations that may affect the borrower’sability to repay, estimated value of any underlying collateral and prevailing economic conditions.This evaluation is inherently subjective, as it requires estimates that are susceptible tosignificant revision as more information becomes available.The allowance consists of specific, general and unallocated components. The specific componentrelates to loans that are classified as doubtful, substandard or special mention. The generalcomponent covers non-classified loans and is based on historical loss experience adjusted forqualitative factors. An unallocated component is maintained to cover uncertainties that couldaffect management’s estimate of probable losses. The unallocated component of the allowancereflects the margin of imprecision inherent in the underlying assumptions used in the methodologiesfor estimating specific and general losses in the portfolio.
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A loan is considered impaired when, based on current information and events, it is probable thatthe Company will be unable to collect the scheduled payments of principal or interest when dueaccording to the contractual terms of the loan agreement. Factors considered by management indetermining impairment include payment status, collateral value, and the probability of collectingscheduled principal and interest payments when due. Impairment is measured on a loan-by-loan basisfor commercial loans by either the present value of expected future cash flows discounted at theloan’s effective interest rate or the fair value of the collateral if the loan is collateraldependent. Large groups of smaller balance homogeneous loans are collectively evaluated forimpairment. Accordingly, the Company does not separately identify individual consumer andresidential loans for impairment disclosures. At March 31, 2006, the Company had no impaired loans.At December 31, 2005, impaired loans totaled $264,000 and in the aggregate carried a valuationallowance within the allowance for loan losses of $140,000.While the Company believes that it has established adequate specific and general allowances forlosses on loans, adjustments to the allowance may be necessary if future conditions differsubstantially from the information used in making the evaluations. In addition, as an integral partof their examination process, the Company’s regulators periodically review the allowance for loanlosses. These regulatory agencies may require the Company to recognize additions to the allowancebased on their judgments of information available to them at the time of their examination, therebynegatively affecting the Company’s financial condition and earnings.The following table sets forth activity in the Company’s allowance for loan losses for the periodsindicated:
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           **Three Months Ended**   **March 31,**   **2006**  **2005**   (In thousands) **Balance at beginning of period** $5,670  $3,172        **Charge-offs:**        Mortgage loans on real estate  —   —           —   — Other loans:        Commercial  —   — Consumer  (29)  —        Total other loans  (29)  0        Total charge-offs  (29)  0        **Recoveries:**        Mortgage loans on real estate  —   —           —   — Other loans:        Commercial  8   8 Consumer  11   3        Total other loans  19   11        Total recoveries  19   11        Net (charge-offs) recoveries  (10)  11 Provision for loan losses  6   168        **Balance at end of period** $5,666  $3,351        **Ratios:**        Net (charge-offs) recoveries to averageloans outstanding (annualized)  -0.01%  0.01%Allowance for loan losses tonon-performing loans at end of period  1671.29%  1147.60%Allowance for loan losses tototal loans at end of period  0.91%  0.84%**Deposits**The following table sets forth the Company’s deposit accounts for the periods indicated:
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                   **March 31,**  **% of**  **December 31,**  **% of**   **2006**  **Total**  **2005**  **Total**   (In thousands)      (In thousands)     **Deposit type:**                Demand deposit accounts $123,940   19% $124,396   20%NOW accounts  30,790   5%  32,147   5%Regular savings accounts  98,706   15%  97,960   16%Money market accounts  117,753   18%  94,347   15%             Total non-certificate accounts  371,189   57%  348,850   57%                              Term certificates less than $100,000  160,017   25%  157,933   26%Term certificates of $100,000 or more  120,947   19%  104,890   17%             Total certificate accounts  280,964   43%  262,823   43%             Total deposits $652,153   100% $611,673   100%             Total deposits increased by $40.5 million, or 6.6%, when compared to December 31, 2005. Theincrease in deposits came primarily in money market accounts, which increased by $23.4 million or24.8%, and time deposit accounts, which rose by $18.1 million or 6.9% during the quarter. Productpromotions with an emphasis on premium rates were responsible for most of the increases in thesetwo deposit categories.**Borrowed Funds**Borrowed funds decreased by $12.4 million, or 8.8%, during the first quarter of 2006. The reductionwas primarily the result of the repayment of a $10.0 million Federal Home Loan Bank of Boston(“FHLBB”) borrowing bearing an interest rate of 3.99% that was called by the FHLBB. The Company didnot replace that borrowing due to the success of its deposit-gathering efforts during the quarter.At March 31, 2006, the Company had $36.0 million remaining in callable FHLBB advances. Of thatamount, $20.0 million, bearing an interest rate of 4.58%, was called on May 5, 2006 and replacedwith a short-term advance bearing an interest rate of 5.14%.**Stockholder’s Equity**Total stockholders’ equity was $108.8 million as of March 31, 2006, an increase of $647,000 whencompared to the balance at December 31, 2005. The increase was primarily attributable to earningsof $1.3 million, net of dividends paid of $254,000 and a decrease of $421,000 in the fair value ofsecurities available for sale.**Comparison of Operating Results for the Three Months Ended March 31, 2006 and 2005**The Company earned net income of $1.3 million for the quarter ended March 31, 2006, an increase of$937,000 when compared to net income of $331,000 earned in the first quarter of 2005. This growthin net income was primarily the result of the acquisition of Chart Bank on April 4, 2005, thereceipt of $53.7 million in net proceeds as a result of the Company’s mutual-to-stock conversionand related stock offering on that same date, and internally-generated business developmentefforts.**Analysis of Net Interest Income**Net interest income represents the difference between income on interest-earning assets and expenseon interest-bearing liabilities. Net interest income also depends upon the relative amounts ofinterest-earning assets and interest-bearing liabilities and the interest rates earned or paid onthem.
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The following tables set forth average balance sheets, average yields and costs, and certain otherinformation for the periods indicated. Most average balances are daily average balances.Non-accrual loans were included in the computation of average balances, but have been reflected inthe table as loans carrying a zero yield. The yields set forth below include the effect of deferredfees, discounts and premiums that are amortized or accreted to interest income or expense:                           **Three Months Ended March 31,**   **2006**  **2005**   **Average**          **Average**         **Outstanding**          **Outstanding**         **Balance**  **Interest**  **Yield/Rate**(1)  **Balance**  **Interest**  **Yield/Rate**(1)   (Dollars in thousands) **Interest-earning assets:**                        Loans $606,510  $8,842   5.91% $388,346  $4,892   5.11%Securities  136,805   1,382   4.10%  91,636   729   3.23%Short-term investments  19,697   216   4.45%  16,115   93   2.34%                     Total interest-earning assets  763,012   10,440   5.55%  496,097   5,714   4.67%Non-interest-earning assets  115,936           35,717                                Total assets $878,948          $531,814                                 **Interest-bearing liabilities:**                        Savings deposits $96,624   118   0.50% $95,036   116   0.50%Money market  98,587   510   2.10%  57,267   210   1.49%NOW accounts  27,155   10   0.15%  22,081   9   0.16%Certificates of deposits  275,787   2,464   3.62%  142,409   897   2.55%                     Total deposits  498,153   3,102   2.53%  316,793   1,232   1.58%Borrowings  141,797   1,426   4.08%  81,112   853   4.26%                     Total interest-bearingliabilities  639,950   4,528   2.87%  397,905   2,085   2.13%Non-interest bearing liabilities  130,530           102,270                                Total liabilities  770,480           500,175         Equity  108,468           31,639                                Total liabilities and equity $878,948          $531,814                                Net interest income     $5,912          $3,629                            Net interest rate spread(2)          2.68%          2.54%Net interest-earning assets(3) $123,062          $98,192                                Net interest margin (4)          3.14%          2.97%Average interest-earning assets tointerest-bearing liabilities          119.23%          124.68% (1) Yields and rates for the three months ended March 31, 2006 and 2005 areannualized. (2) Net interest rate spread represents the difference between the weighted-averageyield on interest-earning assets and the weighted-average cost of interest-bearing liabilities. (3) Net interest-earning assets represents total interest-earning assets less totalinterest-bearing liabilities. (4) Net interest margin represents net interest income divided by average totalinterest-earning assets.
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The following table presents the dollar amount of changes in interest income and interestexpense for the major categories of the Company’s interest-earning assets and interest-bearingliabilities. Information is provided for each category of interest-earning assets andinterest-bearing liabilities with respect to (i) changes attributable to changes in volume (i.e.,changes in average balances multiplied by the prior-period average rate) and (ii) changesattributable to rate (i.e., changes in average rate multiplied by prior-period average balances).For purposes of this table, changes attributable to both rate and volume, which cannot besegregated, have been allocated proportionately to the change due to volume and the change due torate.               **Three Months Ended March 31,**   **2006 vs. 2005**   **Increase (Decrease)**  **Total**   **Due to**  **Increase**   **Volume**  **Rate**  **(Decrease)**   (Inthousands)       Interest-earning assets:            Loans $3,086  $864  $3,950 Securities  422   231   653 Short-term investments  25   98   123           Total interest-earning assets  3,533   1,193   4,726                        Interest-bearing liabilities:            Savings deposits  2   —   2 Money market accounts  191   109   300 NOW accounts  2   (1)  1 Certificates of deposit  1,083   484   1,567           Total deposits  1,278   592   1,870              Borrowings  613   (40)  573           Total interest-bearing liabilities  1,891   552   2,443           Change in net interest income $1,642  $641  $2,283           Net interest income for the quarter ended March 31, 2006 was $5.9 million, an increase of $2.3million when compared to net interest income of $3.6 million for the three months ended March 31,2005. This increase was the result of an increase in average interest-earning assets of $266.9million, greater than the $242.0 million increase in interest-bearing liabilities, coupled with a17 basis point increase in the net interest margin. The funds received in the Company’s publicstock offering and an increase in non-interest bearing deposit accounts were the primary reasonsthat average interest-earning assets increased by more than average interest-bearing liabilities,when compared to the comparable quarter in 2005.The Company’s net interest margin (“NIM”) was 3.14% for the three months ended March 31, 2006,which, as noted above, represents an increase of 17 basis points compared to the first quarter of2005. While the NIM increased when compared to the year earlier period, it has narrowed from itsmore recent high of 3.34% in the third quarter of 2005. The widening of the NIM in mid-2005 was dueto the Chart Bank acquisition on April 4, 2005 and the addition of its more commercially-orientedbalance sheet to that of the Company. More recently, increased price competition for time depositsand money market accounts has caused the NIM to narrow. The
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continued flattening of the Treasuryyield curve has also contributed to a decrease in the margin, in that arelatively flat yield curve has the effect of reducing the spread between the Company’s earningassets and its core deposit accounts. Management believes that the Company’s NIM may contractfurther in 2006 as a result of the relatively flat yield curve and continued competitive pressureon both certificate and money market account interest rates.Interest income for the quarter ended March 31, 2006 was $10.4 million, compared to $5.7 millionfor the quarter ended March 31, 2005, an increase of $4.7 million or 82.7%. Most of the increasewas the result of the $266.9 million increase in average interest-earning assets, augmented by an88 basis point increase in the yield earned on average interest-earning assets. The increase inaverage interest-earning assets was primarily the result of the acquisition of Chart Bank and theCompany’s public stock offering. The largest increase was seen in average loan balances, whichincreased by $218.2 million due to the acquisition of the $184.0 million Chart Bank loan portfolioand internally generated growth. Increases in average balances of securities and short-terminvestments of $45.2 million and $3.6 million, respectively, were also related to both theacquisition of Chart Bank and the stock offering. The increases in yields earned on securities andshort-term investments of 0.87% and 2.11%, respectively, were due mainly to the increase in marketinterest rates during the twelve months ended March 31, 2006. The increase in the loan yield of 80basis points was due to the increase in market interest rates, to the addition of the Chart Bankloan portfolio, which was more heavily weighted toward higher-yielding commercial loans than thatof Benjamin Franklin, and to internally-generated growth in higher-yielding commercial loans.Interest expense for the quarter increased $2.3 million compared to the prior year, due in largemeasure to the Chart Bank acquisition, which added $242.8 million to the Company’s fundingliabilities. Also contributing was the overall cost of interest-bearing deposits, which increasedby 95 basis points in the first quarter of 2006 compared to the first quarter of 2005. This is duein part to the increase in market interest rates over the twelve months ended March 31, 2006, toincreased local competition for deposits, and to the composition of the Chart Bank deposit base,which had a greater proportion of higher-cost certificate balances than did that of BenjaminFranklin Bank. The cost of borrowed funds decreased between periods, by 18 basis points, as newborrowings and rollovers of existing borrowings were less expensive than the 4.26% weighted averagecost of borrowings in the first quarter of 2005.**Provision for Loan Losses**The loan loss provision for the first quarter of 2006 was $6,000, a significant reduction from the$168,000 provided in the comparable 2005 quarter. The small size of the provision in the 2006quarter was due primarily to a 15.2% reduction in construction loans and to a reduction in impairedloans during the quarter, offset in part by increases in residential and commercial mortgageloans. At March 31, 2006, the allowance for loan losses totaled $5.7 million, or .91% ofthe loan portfolio, as compared to $3.4 million, or .84% of total loans, at March 31, 2005. Theincrease in the allowance for loan losses as a percentage of the loan portfolio as of March 31,2006 compared to March 31, 2005 was primarily due to an increase in the proportion of commercialloans in the portfolio.**Non-interest Income**Non-interest income for the three-month period ended March 31, 2006 rose to $1.4 million, anincrease of $904,000, or 183.4%, when compared to non-interest income of $493,000 earned during thefirst quarter of 2005. This increase was produced by growth in fee-based deposit accounts and theacquisition of Chart Bank.In the first quarter of 2006, fees earned on deposit accounts and other miscellaneous incomeincreased by 58.9% and 36.4%, respectively, when compared to the first quarter of 2005. This growthwas mainly the result of the addition of the Chart Bank deposit accounts and branch locations, plusthe addition of a new overdraft checking account offering to the Bank’s product line. Loanservicing fees and gains on sales of loans increased by $100,000 in the aggregate in the firstquarter of 2006 compared to the 2005 quarter. This increase was largely independent
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of the ChartBank acquisition and was instead the result of growth in sales of fixed rate loans serviced forothers.The Chart Bank acquisition also provided a new non-interest income source, fees earned on ATMservicing performed by CSSI, which yielded $625,000 in the first quarter of 2006. CSSI suppliescash to ATMs owned by independent service organizations nationwide.**Non-interest Expense**Non-interest expenses increased significantly in the first quarter of 2006 when compared to thesame period in 2005, due primarily to the acquisition of Chart Bank, expansion of the Company’slending capabilities and the stock conversion, which has brought new costs associated withoperating a public company. Expenses increased by $1.9 million, or 53.5%, to $5.3 million in thefirst quarter of 2006, compared to $3.5 million recorded in the three months ended March 31, 2005.The largest increase was in salaries and employee benefits expense, which rose by $707,000 or35.1%, attributable to the acquisition of Chart Bank and to a lesser degree to the addition of loanorigination and support staff in 2005. Amortization of the core deposit intangible asset created inthe Chart Bank acquisition added $301,000 to expense for the quarter, an increase of $256,000 overthe comparable period in 2005. Occupancy and equipment expenses increased by $226,000 or 51.4%,mainly due to the addition of costs associated with Chart Bank’s three branch locations. Increasesin data processing costs ($111,000 or 32.9%) and miscellaneous expenses ($318,000 or 63.7%) wereboth due primarily to the effect of adding Chart Bank operations. Professional fees for the firstquarter of 2006 amounted to $365,000, an increase of $236,000 over the comparable period in 2005,due to increased legal, consulting and audit fees that for the most part were related to theCompany’s conversion to public company status, including compliance costs in 2006 related torequirements of Section 404 of the Sarbanes-Oxley Act.The Bank recently received approval from the Massachusetts Commissioner of Banks to open a newbranch in Wellesley Hills, Massachusetts. It is anticipated that this branch will becomeoperational in the second quarter of 2006. The annual direct costs of operating this branch areestimated at $610,000. The Company will continue to search for promising de novo branch locations,with the goal of identifying two to three additional sites over the next two years.**Income Taxes**The income tax provision of $717,000 recorded for the three months ended March 31, 2006 resulted inan effective tax rate of 36.1%, compared to a provision of $159,000 recorded for the three monthsended March 31, 2005, which resulted in an effective tax rate of 32.4%. In the quarter ended March31, 2005, the favorable tax effect of the Company’s BOLI investments and the effect of therelatively low state tax rate for income earned on investments held in the Benjamin FranklinSecurities Corp. were more pronounced than in the current quarter, accounting for the highereffective tax rate in the quarter ended March 31, 2006.**Liquidity and Capital Resources**The Company’s primary sources of funds are from deposits, borrowings, amortization of loans, loanprepayments and the maturity of loans, mortgage-backed securities and other investments, and otherfunds provided by operations. While scheduled payments from amortization of loans andmortgage-backed securities and maturing loans and investment securities are relatively predictablesources of funds, deposit flows and loan prepayments can be greatly influenced by general interestrates, economic conditions and competition. The Company maintains excess funds in cash andshort-term interest-bearing assets that provide additional liquidity. At March 31, 2006, cash anddue from banks, short-term investments and debt securities maturing within one year totaled $98.1million (excluding cash supplied by CSSI to ATM customers, which isnot a liquid asset) or 10.9% of total assets.
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The Company borrows from the Federal Home Loan Bank of Boston as an additional funding source. Asof March 31, 2006, the Company had the ability to borrow an additional $83.3 million from theFederal Home Loan Bank of Boston.The Company uses its liquidity to fund existing and future loan commitments, to fund maturingcertificates of deposit and borrowings, to fund other deposit withdrawals, to invest in otherinterest-earning assets and to meet operating expenses. The Company anticipates that it willcontinue to have sufficient funds and alternative funding sources to meet its current commitments.The following tables present information indicating various contractual obligations and commitmentsof the Company as of the dates indicated and the respective maturity dates:***Contractual Obligations:***                       **At March 31, 2006**           **More than**  **More than**              **One Year**  **Three Years**          **One Year**  **through Three**  **through five**  **Over Five**   **Total**  **or Less**  **Years**  **Years**  **Years**   (In thousands) Federal Home Loan Bank advances(1)  $118,945  $19,000  $39,945  $60,000  $— Subordinated debt  9,000   —   —   —   9,000 Operating leases (2)  741   235   334   172     Other contractual obligations(3)  6,013   2,353   3,660                         Total contractual obligations $134,699  $21,588  $43,939  $60,172  $9,000                  (1) Secured under a blanket security agreement on qualifying assets, principally 1-4Family Residential mortgage loans.At March 31, 2006, advances totalling $26 million were callable at the sole option of theFHLB. On May 5, 2006,one of those advances, in the amount of $20.0 million bearing a rate of 4.58%, was called bythe FHLB.Another callable advance in the amount of $10.0 million maturing in June, 2010, will becomeimmediately payable if3-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.
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     ***Loan Commitments***                       **March 31, 2006**           **More than**  **More than**              **One Year**  **Three Years**          **One Year**  **through**  **through**  **Over Five**   **Total**  **or Less**  **Three Years**  **Five Years**  **Years**   (In thousands) Commitments to grant loans (1) $41,008  $41,008  $—  $—  $— Unadvanced funds on commercial lines of credit  19,840   18,332   1,508   —   — Unadvanced funds on home equity lines of credit (3)  40,319   —   —   —   40,319 Unadvanced funds on construction loans (4)  23,580   15,168   7,891   —   521 Unadvanced funds on personal lines of credit (2)  2,410   —   —   —   2,410 Commercial letter of credit  1,327   1,327   —   —   —                                      Total loan commitments $128,484  $75,835  $9,399  $—  $43,250                 General: Commitments to extend credit are agreements to lend to a customer as long as there is noviolation of any condition established in the contract. Commitments generally have fixedexpiration dates or other termination clauses. (1) Commitments for loans are extended to customers for up to 180 days after whichthey expire. (2) Unused portion of checking overdraft lines of credit are available to customersin “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.***Minimum Regulatory Capital Requirements:***As of March 31, 2006, the most recent notification from the Federal Deposit InsuranceCorporation categorized the Bank as well capitalized under the regulatory framework for promptcorrective action. To be categorized as well capitalized, the Bank must maintain minimum totalrisk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. Thereare no conditions or events since the notification that management believes have changed the Bank’scategory. Prompt corrective action provisions are not applicable to bank holding companies. TheCompany’s and the Bank’s actual capital amounts and ratios as of March 31, 2006 and December 31,2005 are also presented in this table:
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                                           Minimum                  To Be Well          Minimum Capitalized Under          Capital Prompt Corrective  Actual Requirements Action Provisions  Amount Ratio Amount Ratio Amount Ratio**March 31, 2006:**                                                 Total capital to risk weighted assets:                        Consolidated $88,578   15.2% $46,656   8.0%  N/A   N/A Bank  62,855   10.8   46,591   8.0  $58,239   10.0%                         Tier 1 capital to risk weightedassets:                        Consolidated  82,912   14.5   23,328   4.0   N/A   N/A Bank  57,189   9.5   23,295   4.0   34,943   6.0                          Tier 1 capital to average assets:                        Consolidated  82,912   9.9   33,654   4.0   N/A   N/A Bank  57,189   6.5   33,622   4.0   42,027   5.0                          **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 weightedassets:                        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 **Item 3. Quantitative and Qualitative Disclosures about Market Risk**.The Company’s Asset/Liability Committee’s primary method for measuring and evaluating interest raterisk is income simulation analysis. This analysis considers the maturity and repricingcharacteristics of assets and liabilities, as well as the relative sensitivities of these balancesheet components over a range of interest rate scenarios. Interest rate scenarios tested generallyinclude instantaneous rate shocks, rate ramps over a one year period, and static (or flat) rates.The simulation analysis is used to measure the exposure of net interest income to changes ininterest rates over a specified time horizon, usually a two-year period.The table below sets forth, as of March 31, 2006 the estimated changes in the Company’s netinterest income that would result from the designated instantaneous changes in the U.S. Treasuryyield curve. Computations of prospective effects of hypothetical interest rate changes are based onnumerous assumptions including relative levels of market interest rates, loan prepayments anddeposit decay, and should not be relied upon as indicative of actual results.
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       **Percentage Change in Estimated**  **Net Interest Income over 12**  **months**200 basis point increase in rates  (2.83)%100 basis point increase in rates  (1.32)%Flat interest rates  — 100 basis point decrease in rates  1.04%As indicated in the table above, the result of an immediate 100 basis point increase in interestrates is estimated to decrease net interest income by 1.32% over a 12-month horizon, when comparedto the flat rate scenario. For an immediate 200 basis point parallel increase in the level ofinterest rates, net interest income is estimated to decline by 2.83% over a 12-month horizon, whencompared against the flat rate scenario. Inherent in these estimates is the assumption that savingsaccount deposit rates would increase by 25 basis points and that money market deposit account rateswould increase by 37 basis points for each 100 basis point increase in market interest rates. These scenarios also assume no change in checking account interest rates. These assumptions arebased on the Bank’s past experience with the changes in rates paid on these non-maturity depositscoincident with changes in market interest rates. The estimated change in net interest income fromthe flat rate scenario for a 100 basis point decline in the level of interest rates is an increaseof 1.04%, which assumes no decrease in interest-bearing checking rates or in savings rates and anaverage decrease in money market rates of 37 basis points.There are inherent shortcomings in income simulation, given the number and variety of assumptionsthat must be made in performing the analysis. The assumptions relied upon in making thesecalculations of interest rate sensitivity include the level of market interest rates, the shape ofthe yield curve, the degree to which certain assets and liabilities with similar maturities orperiods to repricing react to changes in market interest rates, the degree to which non-maturitydeposits react to changes in market rates, the expected prepayment rates on loans andmortgage-backed securities, the degree to which early withdrawals occur on certificates of depositand the volume of other deposit flows. As such, although the analysis shown above provides anindication of the Company’s sensitivity to interest rate changes at a point in time, theseestimates are not intended to and do not provide a precise forecast of the effect of changes inmarket interest rates on the Company’s net interest income and will differ from actual results.In its management of interest rate risk, the Company also relies on the analysis of its interestrate “gap,” which is the measure of the mismatch betweenthe amount of the Company’s interest-earning assets and interest-bearing liabilities that mature or reprice within specifiedtimeframes. An asset-sensitive position (positive gap) exists when there are more rate-sensitiveassets than rate-sensitive liabilities maturing or repricing within a particular time horizon, andgenerally signifies a favorable effect on net interest income during periods of rising interestrates and a negative effect during periods of falling interest rates. Conversely, aliability-sensitive position (negative gap) would generally indicate a negative effect on netinterest income during periods of rising rates and a positive effect during periods of fallingrates.The table below shows the Company’s interest sensitivity gap position as of March 31, 2006,indicating the amount of interest-earning assets and interest-bearing liabilities that areanticipated to mature or reprice in each of the future time periods shown. Generally, these assetsand liabilities are shown in the table based on the earlier of the time remaining to repricing orcontractual maturity. However, residential mortgage loans and mortgage-backed securities have beenpresented in a manner that also incorporates the estimated effects of prepayment assumptions.Interest-bearing checking, savings, money market checking and money market savings deposit accountsare assumed to have annual rates of withdrawal (decay rates) of 9.2%, 38.3%, 59.5% and 100.0%,respectively.
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**Repricing Gap as of March 31, 2006**                               **Up to**  **More than**  **More than**  **More than**  **More than**  **More than**      **one**  **one year to**  **two years to**  **three years to**  **four years to**  **five**      **year**  **two years**  **three years**  **four years**  **five years**  **years**  **Total**   **(Dollars in thousands)** **Interest-earning assets:**                            Loans (1) $214,556  $114,665  $106,720  $84,651  $40,587  $59,057  $620,236 Securities (2)  59,041   39,350   8,820   5,198   4,054   26,039   142,502 Short-term investments  24,720                       24,720                       Total interest-earning assets  298,317   154,015   115,540   89,849   44,641   85,096   787,458                                                    **Interest-bearing liabilities:**                            Savings deposits  37,804   23,325   14,392   8,880   5,479   8,826   98,706 Money market  82,400   21,035   8,519   3,450   1,397   951   117,753 NOW accounts  2,833   2,572   2,335   2,121   1,925   19,004   30,790 Certificates of deposits  235,890   30,753   7,925   4,705   1,691       280,964 Long-term debt  45,000   22,000   26,945   —   34,000       127,945                       Total interest-bearing liabilities $403,927  $99,685  $60,116  $19,156  $44,493  $28,781  $656,158                                                    Interest rate sensitivity gap  (105,610)  54,330   55,424   70,693   148   56,315   131,300                       **Interest rate sensitivity gap as a %of total assets**  **-11.79****%**  **6.06****%**  **6.19****%**  **7.89****%**  **0.02****%**  **6.28****%**    Cum. interest rate sensitivity gap  (105,610)  (51,281)  4,143   74,837   74,985   131,300                            **Cum. interest rate sensitivity gapas a % of total assets**  **-11.79****%**  **-5.72****%**  **0.46****%**  **8.35****%**  **8.37****%**  **14.65****%**     (1) Excludes the allowance for loan losses, deferred fees and costs, and non-performingloans. (2) Securities are shown at amortized cost.Certain factors may serve to limit the usefulness of the measurement of the interest rate gap.For example, interest rates on certain assets and liabilities are discretionary and may change inadvance of, or may lag behind, changes in market rates. The gap analysis does not give effect tochanges Benjamin Franklin may undertake to mitigate interest rate risk. Certain assets, such asadjustable-rate loans, have features that may restrict the magnitude of changes in interest ratesboth on a short-term basis and over the life of the assets. Further, in the event of changes ininterest rates, prepayment and early withdrawal levels would likely deviate significantly fromthose assumed in the gap analysis. Lastly, should interest rates increase, the ability of borrowersto service their debt may decrease.**Item 4. Controls and Procedures.**     (a) *Evaluation of Disclosure Controls and Procedures.*The Company’s President and ChiefExecutive Officer, its Chief Financial Officer, and other members of its senior management teamhave evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)). Based on such evaluation, the President and ChiefExecutive Officer and Chief Financial Officer have concluded that the Company’s disclosure controlsand procedures, as of the end of the periods covered by this report, were adequate and effective toprovide reasonable assurance that information required to be disclosed by the Company, includingits consolidated subsidiaries, in reports that the Company files or submits under the Exchange Act,is recorded, processed, summarized and reported, within the time periods specified in theCommission’s rules and forms.     The effectiveness of a system of disclosure controls and procedures is subject to variousinherent limitations, including cost limitations, judgments used in decision making, assumptionsabout the likelihood of future events, the soundness of internal controls, and fraud. Due to suchinherent limitations, there can be no assurance that any
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system of disclosure controls and procedures will be successful in preventing all errors orfraud, or in making all material information known in a timely manner to the appropriate levels ofmanagement.     (b) *Changes in Internal Controls Over Financial Reporting.*There were no changes in theCompany’s internal control over financial reporting during the first three months of 2006 that havematerially affected, or that are reasonably likely to materially affect, its internal controls overfinancial reporting.
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**PART II. OTHER INFORMATION****Item 1. Legal Proceedings.**     None.**Item 1A. Risk Factors That May Affect Future Results**Risk factors that may affect future results were discussed in the Company’s 2005 AnnualReport on Form 10-K. The Company’s evaluation of its riskfactors has not changed materially sinceDecember 31, 2005.**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.** (a) *Unregistered Sale of Equity Securities.*Not applicable.  (b) *Use of Proceeds*. Not applicable.  (c) *Repurchases of Our Equity Securities.*The Company had no share repurchasesduring the quarter.**Item 3. Defaults on Senior Securities.**     Not applicable.**Item 4. Submission of Matters to a Vote of Security Holders.**     Not applicable.**Item 5. Other Information.**     Not applicable**Item 6. Exhibits.**The following exhibits, required by Item 601 of Regulation S-K, are filed as part of thisQuarterly Report on Form 10-Q. Exhibit numbers, where applicable, in the left columncorrespond to those of Item 601 of Regulation S-K.       Exhibit No. Description Footnotes2.1 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 asof 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        10.2 Form of Change in Control Agreement with five other Executive Officers,  2 
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       Exhibit No. Description Footnotes  providing one year’s severance to Brian E. Ledwith, Michael J. Piemonte andKathleen P. Sawyer, and two years’ severance to Mariane E. Broadhurst andRose M. Buckley. This form contains all material information concerning theagreement and the only differences are the name and contact information ofthe executive officer who is party to the agreement and the number of yearsof severance provided. *           10.3 Form of Benjamin Franklin Bank Benefit Restoration Plan. *  2        10.4.1 Amended and Restated Supplemental Executive Retirement Agreement betweenBenjamin Franklin Bank and Thomas R. Venables dated as of March 22, 2006.  8        10.4.2 Amended and Restated Supplemental Executive Retirement Agreement betweenBenjamin Franklin Bank and Claire S. Bean dated as of March 22, 2006.  8        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 FranklinBancorp, M.H.C., Benjamin Franklin Savings Bank and Chart Bank, a CooperativeBank, dated as of September 1, 2004. *  2        10.7.2 Consulting and Noncompetition Agreement between Richard E. Bolton, Jr. andBenjamin Franklin Bancorp, M.H.C., dated as of September 1, 2004. *  2        10.8 Benjamin Franklin Bancorp, Inc.2006 Stock Incentive Plan 9       11 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 theSarbanes-Oxley Act of 2002.  1        31.2 Certification of Chief Financial Officer pursuant to Section 302 of theSarbanes-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 FormS-1, File No. 333-121154, filed on December 10, 2004. 3 Incorporated by reference to Amendment No. 1 to the Registrant’s RegistrationStatement on Form S-1, File No. 333-121154, filed on January 24, 2005. 4 Incorporated by reference to the Registrant’s Registration Statement on FormS-4, File No. 333-121608, filed on December 23, 2004. 5 Incorporated by reference to the Registrant’s Registration Statement on Form8-A, File No. 000-51194, filed on March 9, 2005. 6 Incorporated by reference to the Registrant’s Annual Report on Form 10-K,filed on March 29, 2005. 7 Incorporated by reference to the Registrant’s Current Report on Form 8-K,filed on March 3, 2006. 8 Incorporated by reference to the Registrant’s Annual Report on Form 10-K,filed on March 28, 2006 9 Incorporated by reference to Appendix B to theRegistrant’s Proxy Statement for the 2006 Annual Meeting ofStockholders, filed on March 28, 2006.
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**SIGNATURES**     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto duly authorized.         **Benjamin Franklin Bancorp, Inc.**       Date: May 9, 2006 By:      /s/ Thomas R. Venables             Thomas R. Venables      President and Chief Executive Officer         Date: May 9, 2006 By:      /s/ Claire S. Bean             Claire S. Bean      Treasurer and Chief Financial Officer  
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**EXHIBIT INDEX**   **Exhibit**  **No.** **Item** 31.1 Certification of Chief Executive Officer pursuant to Section 302of the Sarbanes-Oxley Act of 2002.   31.2 Certification of Chief Financial Officer pursuant to Section 302of 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 theSarbanes-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 theSarbanes-Oxley Act of 2002.
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