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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 September 30, 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 þ     Indicate 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 November 14, 2006:8,249,802  
 

 
               **Page****PART I — FINANCIAL INFORMATION**               Item 1. Consolidated Financial Statements                 Consolidated Balance Sheets at September 30, 2006 and December 31, 2005  3              Consolidated Statements of Operations for the three and nine months endedSeptember 30, 2006 and 2005  4              Consolidated Statements of Changes in Stockholders’ Equity for the nine months endedSeptember 30, 2006 and 2005  5              Consolidated Statements of Cash Flows for the nine months endedSeptember 30, 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  10            Item 3. Quantitative and Qualitative Disclosures about Market Risk  27            Item 4. Controls and Procedures  30          **PART II — OTHER INFORMATION**               Item 1. Legal Proceedings  32            Item 1A Risk Factors That May Affect Future Results  32            Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  32            Item 3. Defaults on Senior Securities  32            Item 4. Submission of Matters to a Vote of Security Holders  32            Item 5. Other Information  33            Item 6. Exhibits  33          **SIGNATURES**  37  EX-31.1 SECTION 302 CERTIFICATION OF THE C.E.O. EX-31.2 SECTION 302 CERTIFICATION OF THE C.F.O. EX-32.1 SECTION 906 CERTIFICATION OF THE C.E.O. EX-32.2 SECTION 906 CERTIFICATION OF THE C.F.O.
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     **PART I. FINANCIAL INFORMATION****Item 1. Financial Statements****BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY****CONSOLIDATED BALANCE SHEETS**(Dollars in thousands)           September 30,  December 31,   2006  2005   (Unaudited)  (Audited) **ASSETS**                 Cash and due from banks $15,305  $16,499 Cash supplied to ATM customers  39,409   37,200 Short-term investments  10,090   12,051        Total cash and cash equivalents  64,804   65,750          Securities available for sale, at fair value  123,851   122,379 Securities held to maturity, at amortized cost  43   109 Restricted equity securities, at cost  10,952   10,012        Total securities  134,846   132,500          Loans        Residential real estate  286,486   286,204 Commercial real estate  230,466   209,009 Construction  59,964   60,399 Commercial business  22,792   19,162 Consumer  40,734   34,814 Net deferred loan costs  1,161   1,214        Total loans, gross  641,603   610,802 Allowance for loan losses  (5,941)  (5,670)       Loans, net  635,662   605,132          Premises and equipment, net  11,722   11,167 Accrued interest receivable  3,583   3,045 Bank-owned life insurance  10,200   7,451 Goodwill  33,763   33,763 Identifiable intangible asset  3,301   4,133 Other assets  4,400   4,116          $902,281  $867,057                 **LIABILITIES AND STOCKHOLDERS’ EQUITY**                 Deposits:        Regular savings $86,240  $97,960 Money market accounts  89,620   94,347 NOW accounts  24,954   32,147 Demand deposit accounts  125,424   124,396 Time deposit accounts  299,986   262,823        Total deposits  626,224   611,673          Short-term borrowings  8,000   — Long-term debt  151,963   140,339 Other liabilities  7,723   6,933        Total liabilities  793,910   758,945                 Common stock, no par value; 75,000,000 shares authorized;8,468,137 shares issued and 8,249,802 shares outstandingat September 30, 2006; 8,488,898 shares issued andoutstanding at December 31, 2005  —   — Additional paid-in capital  82,689   82,849 Retained earnings  35,867   32,942 Unearned compensation  (8,150)  (5,353)Accumulated other comprehensive loss  (2,035)  (2,326)       Total stockholders’ equity  108,371   108,112          $902,281  $867,057        See accompanying notes to condensed consolidated financial statements
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**BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY****CONSOLIDATED STATEMENTS OF OPERATIONS****(Dollars in thousands, except share and per share data)**                   Three Months Ended  Nine Months Ended   September 30,  September 30,   2006  2005  2006  2005   (Unaudited)  (Unaudited) Interest and dividend income:                Loans, including fees $9,620  $8,716  $27,698  $21,656 Debt securities  1,396   1,103   4,035   2,657 Dividends  245   110   388   271 Short-term investments  134   100   536   344              Total interest and dividend income  11,395   10,029   32,657   24,928                  Interest expense:                Interest on deposits  3,691   2,375   10,328   5,798 Interest on borrowings  1,719   1,334   4,518   3,123              Total interest expense  5,410   3,709   14,846   8,921              Net interest income  5,985   6,320   17,811   16,007                  Provision for loan losses  200   152   327   648                               Net interest income, after provision for loan losses  5,785   6,168   17,484   15,359                               Other income:                ATM servicing fees  848   493   2,182   1,002 Deposit service fees  375   356   1,044   857 Loan servicing fees  106   126   382   331 Investment sales commissions  13   66   110   212 Gain on sale of loans, net  110   52   249   72 Gain on sale of securities  10   —   10   — Security impairment writedown  —   —   (35)  — Loss on sale/write-down of bank-ownedland, net  —   —   —   (1,020)Income from bank-owned life insurance  99   83   250   204 Miscellaneous  158   138   471   393              Total other income  1,719   1,314   4,663   2,051                               Operating expenses:                Salaries and employee benefits  3,063   2,529   8,509   7,010 Occupancy and equipment  662   654   1,970   1,753 Data processing  512   468   1,413   1,339 Professional fees  232   257   965   624 Marketing and advertising  214   273   525   546 Contribution to Benjamin Franklin BankCharitable Foundation  —   —   —   4,000 Amortization of core deposit intangible  254   445   832   1,044 Other general and administrative  767   713   2,165   1,628              Total operating expenses  5,704   5,339   16,379   17,944                               Income (loss) before income taxes  1,800   2,143   5,768   (534)                 Provision for income taxes  632   814   2,073   348              Net income (loss) $1,168  $1,329  $3,695  $(882)                              Weighted-average shares outstanding:                Basic  7,931,455   8,148,113   7,996,242   N/A Diluted  7,937,021   8,148,113   7,998,098   N/A                  Earnings per share:                Basic $0.15  $0.16  $0.46   N/A Diluted $0.15  $0.16  $0.46   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, except per share data)****(Unaudited)**                                                   Accumulated              Additional          Other  Total   Common Stock  Paid-in  Retained  Unearned  Comprehensive  Stockholders’   Shares  Amount  Capital  Earnings  Compensation  Loss  Equity Balance at December31, 2004  —  $—  $—  $32,997  $—  $(1,669) $31,328                              Comprehensive loss:                            Net loss  —   —   —   (882)  —   —   (882)Net unrealizedloss on securitiesavailable forsale, net oftax effects  —   —   —   —   —   (507)  (507)                            Totalcomprehensive loss                          (1,389)                            Dividends declared($.03 per share)  —   —   —   (255)  —   —   (255)Issuance of commonstock for initialpublic offering, netof expenses of$2.1 million  5,577,419   —   53,721   —   —   —   53,721 Issuance of commonstock to BenjaminFrankin BankCharitableFoundation  400,000   —   4,000   —   —   —   4,000 Issuance of commonstock for acquisitionof Chart Bank, ACooperative Bank  2,511,479   —   25,115   —   —   —   25,115 Stock purchased forESOP                  (4,911)      (4,911)Release of ESOP stock  —   —   9   —   114   —   123                                                    Balance at September30, 2005  8,488,898  $—  $82,845  $31,860  $(4,797) $(2,176) $107,732                                                    Balance at December31, 2005  8,488,898  $—  $82,849  $32,942  $(5,353) $(2,326) $108,112                                                          Comprehensive income:                            Net income  —   —   —   3,695   —   —   3,695 Net unrealized losson securitiesavailable forsale, net ofreclassification adjustmentand tax effects  —   —   —   —   —   291   291                             Totalcomprehensive income                          3,986                             Dividends declared($.09 per share)  —   —   —   (770)  —   —   (770)Common stockrepurchased  (239,096)  —   (3,373)  —   —   —   (3,373)Issuance of commonstock in connectionwith StockIncentive Plan  —   —   3,046   —   (3,046)  —   — Restricted stockexpense  —   —       —   111   —   111 Stock option expense  —   —   139   —   —   —   139 Release of ESOP stock  —   —   28   —   138   —   166                                                    Balance at September30, 2006  8,249,802  $—  $82,689  $35,867  $(8,150) $(2,035) $108,371                       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)**           Nine Months Ended September 30,   2006  2005 Cash flows from operating activities:        Net income (loss) $3,695  $(882)Adjustments to reconcile net income (loss) to net cashprovided by operating activities:        Amortization (accretion) of securities, net  (582)  99 Accretion of loans, net  (50)  (88)Gain on sales of securities, net  (10)  — Provision for loan losses  327   648 Accretion of deposit and borrowings, net  (30)  (249)Amortization of mortgage servicing rights  181   214 Depreciation and amortization  752   709 Amortization of core deposit intangible  832   1,044 Amortization of unearned compensation  416   123 Income from bank-owned life insurance  (250)  (204)Gains on sales of loans, net  (249)  (72)Loans originated for sale  (23,660)  (11,203)Proceeds from sales of loans  23,909   11,275 Increase in accrued interest receivable  (538)  (1,498)Security impairment writedown  35   — Loss on sale / writedown of bank-owned land, net  —   1,020 Contribution to Benjamin Franklin BankCharitable Foundation  —   4,000 Other, net  293   220        Net cash provided by operating activities  5,071   5,156                 Cash flows from investing activities:        Activity in available-for-sale securities:        Sales  10   — Maturities, calls, and principal repayments  53,123   34,127 Purchases  (53,691)  (33,495)Principal repayments on held-to-maturity securities  66   84 Net change in restricted equity securities  (974)  798 Purchases of mortgage loans  (16,118)  — Loan originations, net  (14,689)  (36,237)Proceeds from sales of bank-owned land  —   868 Purchases of bank-owned life insurance  (2,500)  — Additions to premises and equipment  (1,306)  (343)       Net cash used for investing activities  (36,079)  (34,198)       See accompanying notes to condensed consolidated financial statements
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(Continued)**BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY****CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)****(Dollars in thousands)****(Unaudited)**           Nine Months Ended September 30,   2006  2005 Cash flows from financing activities:        Net increase (decrease) in deposits  14,608   (9,406)Net proceeds from (repayments of) short-term borrowings  8,000   (4,250)Net proceeds from long-term debt  11,597   31,500 Net proceeds from common stock offering  —   53,721 Retirement of common stock  (3,373)  — Dividends paid on common stock  (770)  — Acquisition of common stock by ESOP  —   (4,911)       Net cash provided by financing activities  30,062   66,654                 Net change in cash and cash equivalents  (946)  37,612 Cash and cash equivalents acquired in the purchase of Chart Bank  —   9,879 Cash and cash equivalents at beginning of period  65,750   14,204                 Cash and cash equivalents at end of period $64,804  $61,695                 Supplemental cash flow information:        Interest paid on deposits $10,390  $5,794 Interest paid on short-term borrowings  154   55 Interest paid on long-term debt  4,291   2,873 Income taxes paid  2,860   665 Premises and equipment transferred to other assets  —   634          Assets acquired and liabilities assumed were as follows:        Fair value of noncash assets acquired  —  $259,008 Fair value of liabilities assumed  —   243,772 Fair value of common stock issued  —   25,115 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, BenjaminFranklin Bank (the “Bank’’). These financial statements have been prepared in accordancewith accounting principles generally accepted in the United States of America (“GAAP”) forinterim financial statements and the instructions for Form 10-Q and Article 10 of RegulationS-X. Accordingly, they do not include all of the information and footnotes required by GAAPfor complete financial statements. In the opinion of management, all adjustments (consistingof only normal recurring adjustments) necessary for a fair presentation 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***   In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156,*“Accounting for Servicing of Financial Assets”*(SFAS 156). This statement amends SFAS No.140, “*Accounting for Transfers and Servicing of Financial Assets and Extinguishments ofLiabilities,”*with respect to the accounting for separately recognized servicing assets andservicing liabilities. Consistent with SFAS No. 140, SFAS 156 requires companies torecognize a servicing asset or servicing liability each time it undertakes an obligation toservice a financial asset by entering into a servicing contract. However, the statementpermits a company to choose either the amortized cost method or fair value measurementmethod for each class of separately recognized servicing assets. This statement is effectiveas of the beginning of a company’s first fiscal year after September 15, 2006. Earlieradoption is permitted as of the beginning of an entity’s fiscal year, provided the entityhas not yet issued financial statements, including interim financial statements. TheCompany plans to adopt SFAS 156 at the beginning of 2007 and does not expect the adoption ofthis statement to have a material impact on its consolidated financial statements.   In September 2006, the FASB Issued Statement of Financial Account Standards No. 157, *“FairValue Measurements.”*(SFAS 157). This statement defines fair value, establishes a frameworkfor measuring fair value in generally accepted accounting principles, and expandsdisclosures about fair value measurements. SFAS 157 is effective for the Company on January1, 2008 and is not expected to have a significant impact on the Company’s financialstatements.   In July, 2006 the FASB issued Financial Accounting Standards Interpretation No. 48,“Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 clarifies the accounting foruncertainty in income taxes recognized in an entities’ financial statements in accordancewith FASB Statement No. 109, “Accounting for Income Taxes”. FIN 48 prescribes a recognitionthreshold and measurement attributable for the financial statement recognition andmeasurement of a tax position taken or expected to be taken in a tax return. FIN 48 alsoprovides guidance on derecognition, classification, interest and penalties, accounting ininterim periods, disclosures and transitions. FIN 48 is effective for fiscal years beginningafter December 15, 2006. The Company is currently analyzing the effects of FIN 48.   On September 13, 2006, the Securities and Exchange Commission “SEC” issued Staff AccountingBulleting No. 108 (“SAB 108”). SAB 108 provides interpretive guidance on how the effects ofthe
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  carryover or reversal of prior year misstatements should be considered in quantifying apotential current year misstatement. Prior to SAB 108, Companies might evaluate themateriality of financial-statement misstatements using either the income statement orbalance approach, with the income statement approach focusing on new misstatements added inthe current year, and the balance sheet approach focusing on the cumulative amount ofmisstatement present in a company’s balance sheet. Misstatements that would be materialunder one approach could be viewed as immaterial under another approach, and not becorrected. SAB 108 now requires that companies view financial statement misstatements asmaterial if they are material according to either the income statement or balance sheetapproach. SAB 108 will be applicable to all financial statements issued by the Company afterNovember 15, 2006. The Company does not expect that SAB 108 will have a significant impacton the reported results of operations or financial condition. ***2.*** ***Commitments***   Outstanding loan commitments totaled $107.6 million at September 30, 2006, compared to$118.2 million as of December 31, 2005. Loan commitments consist of commitments to originatenew loans as well as the outstanding undrawn portions of lines of credit.   The Bank recently received approval from the Massachusetts Commissioner of Banks and theFDIC to open a new branch in Watertown, Massachusetts. It is anticipated that this branchwill become operational in the second quarter of 2007. The annual direct costs of operatingthis branch are estimated at $700,000, including annual lease payments for the new branchfacility of approximately $127,000 per annum.   On May 2, 2006, the Company entered into a purchase and sales agreement to sell the propertyit owns at 500 West Central St., Franklin, MA. The sales price is $825,000 and the closingis expected within the next six months. The Company’s carrying value for this property is$634,000. ***3.*** ***Earnings per share***   The basic earnings per share calculation excludes dilution and is computed by dividingincome available to common shareholders by the weighted-average common shares outstandingduring the period. The diluted earnings per share calculation takes into account (using thetreasury stock method) the potential dilution that could occur if all potentially dilutivecommon shares (such as stock options and unvested restricted stock) were issued during theperiod. Unallocated common shares held by the ESOP are shown as a reduction in stockholders’equity and are not included in the weighted-average number of common shares outstanding foreither basic or diluted earnings per share calculations. Earnings per share are notpresented for the nine months ended September 30, 2005, because the Company did not completeits public offering and had no shares outstanding until April 4, 2005. ***4.*** ***Stock-based compensation***   In accordance with the Company’s 2006 Stock Incentive Plan, approved by shareholders on May11, 2006, the Company’s Compensation Committee awarded 448,750 stock options with anexercise price of $13.95 per share and 218,335 shares of restricted stock with a grant datefair value of $13.95 per share to directors and certain employees on July 28, 2006. TheStock Incentive Plan provides for total awards of 597,741 stock options and 239,096 sharesof restricted stock, leaving 148,991 stock options and 20,761 shares of restricted stockavailable for future awards. The shares of common stock underlying any awards that areforfeited, cancelled, reacquired by Benjamin Franklin Bancorp or otherwise terminated (otherthan by exercise), shares that are tendered or withheld in payment of the exercise price ofany award, and shares that are tendered or withheld for tax withholding obligations will beadded back to the shares of common stock with respect to which new awards may be grantedunder the plan.
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  Stock options awarded are for a term of seven years. Of the 448,750 stock options awarded,393,750 will vest over five years and 55,000 will vest over a three-year period. Upon achange in control (as defined in the plan) or the death or disability of the individual towhom options or shares were awarded, all options and restricted shares awarded immediatelyvest. Of the options awarded, 100,250 were incentive stock options and 348,500 werenon-statutory options. All 448,750 options granted during the quarter remain outstanding atSeptember 30, 2006, and no options have yet vested. The exercise price of all optionsoutstanding is $13.95 and the weighted average remaining contractual life at the end of theperiod is 6.83 years. The following table presents the fair value and related assumptionsusing the Black-Scholes Option Pricing Model for stock options granted:     Fair value $3.86 Risk-free interest rate  4.94%Expected dividend yield  0.85%Expected volatility  14.66%Expected life 7 yearsOf the restricted stock awards made on July 28, 2006, 188,735 shares vest over five yearsand 29,600 shares vest over a three-year period. Of the 218,335 shares awarded during thequarter, all remain unvested, and there have been no forfeitures through September 30, 2006.The grant date fair value of these shares was $13.95.For the quarter ended September 30, 2006, the Company recognized compensation cost on stockoptions of $138,728. The Company is employing an accelerated method of expense recognitionfor options, whereby compensation cost is measured on a straight-line basis over therequisite service period for each separately vesting portion of the award, as if the awardwas, in-substance, multiple awards. For restricted stock awards, the cost recognized duringthe quarter amounted to $110,702. The estimated amount and timing of compensation cost to berecognized for awards made to date under the plan is as follows:                             (in thousands) **2006** **2007** **2008** **2009** **2010** **2011** **Total**   Stock options $343  $668  $371  $210  $105  $35  $1,732 Restricted stock  277   664   664   607   527   307   3,046      $620  $1,332  $1,035  $817  $632  $343  $4,778 **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.
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**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.**Comparison of Financial Condition at September 30, 2006 and December 31, 2005****Overview**In the first nine months of 2006, the Company’s balance sheet increased by $35.2 million, or 4.1%,to $902.3 million. Asset growth was focused primarily in loans, which increased by $30.5 million or5.0% during the nine-month period. Smaller increases occurred in securities, which rose by $2.3million or 1.8%, and in bank-owned life insurance, which rose by $2.7 million or 36.9%. Assetgrowth was funded by increases in deposit balances aggregating $14.6 million or 2.4%, and inborrowed funds, which increased by $19.6 million or 14.0%.**Investment Activities**Cash and cash equivalent balances declined by $946,000, or 1.4%, to $64.8 million at September 30,2006 when compared to December 31, 2005. The largest portion of the decrease was in short-terminvestments, which fell by $2.0 million, or 16.3%, when compared to year-end 2005. This decreasewas the result of normal fluctuations in the Company’s overnight investments, which includeovernight fed funds sold ($4.3 million) and money market funds ($5.8 million) at September 30,2006. Cash supplied to customers of Creative Strategic Solutions, Inc. (“CSSI”), the Bank’s ATMservicing subsidiary, increased by $2.2 million or 5.9%, due primarily to growth in existingcustomer relationships.At September 30, 2006, the Company’s investment portfolio amounted to $134.8 million, or 14.9% oftotal assets. When compared to year-end 2005, securities increased by $2.3 million, or 1.8%, atSeptember 30, 2006. The increase was generally consistent with overall growth in the balance sheetduring the first nine months of 2006. The following table sets forth certain information regardingthe amortized cost and market values of the Company’s securities at the dates indicated:
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                   **September 30, 2006**  **December 31, 2005**   **Amortized**  **Fair**  **Amortized**  **Fair**   **Cost**  **Value**  **Cost**  **Value**   (In thousands) **Securities available for sale:**                Government-sponsored enterpriseobligations $93,672  $93,397  $86,141  $85,494 State agency and municipal obligations  2,207   2,187   2,211   2,191 Corporate bonds and other obligations  —   —   2,508   2,500 Mortgage-backed securities  30,237   28,267   34,107   32,194                               Total securities available for sale $126,116  $123,851  $124,967  $122,379                               **Securities held to maturity:**                                 Mortgage-backed securities $43  $43  $109  $109                               **Restricted equity securities:**                Federal Home Loan Bank of Boston stock $8,471  $8,471  $7,496  $7,496 Access Capital StrategiesCommunity Investment Fund  1,965   1,965   2,000   2,000 SBLI & DIF stock  516   516   516   516                               Total restricted equity securities $10,952  $10,952  $10,012  $10,012              **Lending Activities**The Company’s net loan portfolio aggregated $635.7 million on September 30, 2006, or 70.5% 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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                   **September 30, 2006**  **December 31, 2005**   **Amount**  **Percent**  **Amount**  **Percent**   (Dollars in thousands) Mortgage loans on real estate:                Residential $286,486   44.7% $286,204   47.0%Commercial  230,466   36.0%  209,009   34.3%Construction  59,964   9.4%  60,399   9.9%Home equity  37,518   5.9%  32,419   5.3%                614,434   95.9%  588,031   96.5%             Other loans:                Commercial business  22,792   3.6%  19,162   3.1%Consumer  3,216   0.5%  2,395   0.4%                26,008   4.1%  21,557   3.5%              Total loans  640,442   100.0%  609,588   100.0%                                Other items:                Net deferred loan costs  1,161       1,214     Allowance for loan losses  (5,941)      (5,670)                                    Total loans, net $635,662      $605,132                    The net loan portfolio increased by $30.5 million, or 5.0%, during the first nine months of2006. The increase in loans during this period was principally the result of growth inthe Bank’s commercial loan portfolio, as commercial real estate loans increased by $21.5 million or10.3% and commercial business loans increased by $3.6 million or 18.9%. Consumer loans (principallyhome equity loans and lines of credit) also increased during the period, rising by $5.9 million or17.0%. The Company’s portfolio of residential loans, at $286.5 million on September 30, 2006,remained virtually unchanged when compared to year-end 2005, as run-off was replaced bynew adjustable-rate mortgage loan originations. Additionally, $23.7 million in fixed-rate mortgageloans were originated and sold in the first nine months of 2006.**Non-performing Assets**The table below sets forth the amounts and categories of the Company’s non-performing assets at thedates indicated. The amount of loans on-accrual status as of September 30, 2006 increased by $1.4million compared to December 31, 2005, due to the addition of one commercial real estate loan inthe amount of $1.8 million. In management’s opinion, this loan is well secured by collateralsufficient to cover all principal and interest due under the loan agreement. At each datepresented, the Company had no troubled debt restructurings (loans for which a portion of interestor principal has been forgiven and loans modified at interest rates materially less than currentmarket rates):
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           **September 30, 2006**  **December 31, 2005**   (Dollars in thousands) **Non-accrual loans:**        Residential mortgage $59  $184 Commercial mortgage  1,759   — Construction  —   — Commercial business  —   256 Consumer  69   25        **Total non-accrual loans** $1,887  $465                 **Loans greater than 90 days delinquentand still accruing:**        Residential mortgage $—  $— Commercial mortgage  —   — Construction  —   — Commercial business  —   — Consumer  —   2        **Total loans 90 days and still accruing** $—  $2                 **Total non-performing loans** $1,887  $467                 **Ratios:**        Non-performing loans to total loans  0.29%  0.08%Non-performing assets to total assets  0.21%  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 portfolioreviews, adverse situations that may affect the borrower’s ability to repay, estimated value of anyunderlying collateral and prevailing economic conditions. This evaluation is inherentlysubjective, as it requires estimates that are susceptible to significant revision as moreinformation 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 due accordingto the contractual terms of the loan agreement. Factors considered by management in determiningimpairment include payment status, collateral value, and the probability of collecting scheduledprincipal and interest payments due. Impairment is measured on a loan-by-loan basis for commercialloans by either the present value of expected future cash flows discounted at the loan’s effectiveinterest rate or the fair value of the collateral if the loan is collateral dependent. Largegroups of smaller balance homogeneous loans are collectively evaluated for impairment.Accordingly, the Company does not separately identify individual consumer and residential loans forimpairment disclosures. At September 30, 2006, the Company had no impaired loans. At December 31,2005, impaired loans totaled $264,000 and in the aggregate carried a valuation allowance within theallowance 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 integralpart of their examination process, the Company’s regulators periodically review the allowance forloan losses. These regulatory agencies may require the Company to recognize additions to theallowance based on their judgments of information available to them at the time of theirexamination, thereby negatively 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**  **Nine Months Ended**   **September 30,**  **September 30,**   **2006**  **2005**  **2006**  **2005**   (Dollars in thousands) **Balance at beginning of period** $5,797  $5,531  $5,670  $3,172                               **Allowance added from acquisitionof Chart Bank**  —   —   —   1,812                               **Charge-offs:**                Mortgage loans on real estate:  —   —   —   —              Other loans:                Commercial business  (40)  (57)  (40)  (68)Consumer  (32)  (5)  (78)  (8)             Total other loans  (72)  (62)  (118)  (76)             Total charge-offs  (72)  (62)  (118)  (76)             **Recoveries:**                Mortgage loans on real estate:  —   —   —   —              Other loans:                Commercial business  7   8   31   68 Consumer  9   2   31   7              Total other loans  16   10   62   75              Total recoveries  16   10   62   75              Net charge-offs  (56)  (52)  (56)  (1)Provision for loan losses  200   152   327   648              **Balance at end of period** $5,941  $5,631  $5,941  $5,631                               **Ratios:**                Net charge-offs to averageloans outstanding (annualized)  0.04%  0.03%  0.01%  0.00%Allowance for loan losses tonon-performing loans at end of period  314.84%  1208.37%  314.84%  1208.37%Allowance for loan losses tototal loans at end of period  0.93%  0.93%  0.93%  0.93%**Deposits**The following table sets forth the Company’s deposit accounts for the periods indicated:
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                   **September 30,**  **% of**  **December 31,**  **% of**   **2006**  **Total**  **2005**  **Total**   (Dollars in thousands) **Deposit type:**                Demand deposit accounts $125,424   20.0% $124,396   20.3%NOW accounts  24,954   4.0%  32,147   5.3%Regular savings accounts  86,240   13.8%  97,960   16.0%Money market accounts  89,620   14.3%  94,347   15.4%             Total non-certificate accounts  326,238   52.1%  348,850   57.0%                              Term certificates less than $100,000  172,341   27.5%  157,933   25.8%Term certificates of $100,000 or more  127,645   20.4%  104,890   17.1%             Total certificate accounts  299,986   47.9%  262,823   43.0%                              Total deposits $626,224   100.0% $611,673   100.0%             Total deposits increased by $14.6 million, or 2.4%, when compared to December 31, 2005. Growth intime deposit accounts, which increased by $37.2 million or 14.1% in the nine-months ended September30, 2006, caused nearly all of the increase in total deposits, supplemented by a $1.0 million or0.8% increase in demand deposit accounts. Offsetting these increases were decreases in savingsaccounts (down $11.7 million or 12.0%), NOW accounts (down $7.2 million or 22.4%) and money marketaccounts (down $4.7 million or 5.0%). With increases in short-term market interest rates, customershave continued to exhibit a preference for short-term time deposits, causing the shift away fromlower-rate savings and transaction accounts. Management expects that this trend will continue,absent changes in the current interest rate environment.**Borrowed Funds**Borrowed funds increased by $19.6 million, or 14.0%, during the first nine months of 2006. Thisincrease funded, in part, the growth in loans and securities during the nine months ended September30, 2006.**Stockholder’s Equity**Total stockholders’ equity was $108.4 million as of September 30, 2006, an increase of $259,000when compared to the balance at December 31, 2005. The increase was primarily attributable toearnings of $3.7 million, an increase of $291,000 in the fair value of securities available forsale, net of dividends declared of $770,000 and the repurchase and retirement of 239,096 shares inconnection with the 2006 Stock Incentive Plan. These share repurchases were made at an averageprice of $14.11, for a total purchase price of $3.4 million.**Comparison of Operating Results for the Three and Nine Months Ended September 30, 2006 and 2005**The Company earned net income of $1.2 million for the quarter ended September 30, 2006, a declineof $161,000 or 12.1% when compared to net income of $1.3 million earned in the third quarter of2005. The earnings decline largely reflected lower net interest income and higher operatingexpenses, partially offset by strong growth in non-interest income.The Company earned net income of $3.7 million for the nine months ended September 30, 2006, anincrease of $4.6 million when compared to a net loss of $882,000 incurred in the first nine monthsof 2005. The net loss in the 2005 period was primarily a result of two non-recurring charges: a$4.0 million contribution made to the
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Benjamin Franklin Bank Charitable Foundation, and a $1.0million net loss from the sale/write-down of bank-owned land. Excluding the $5.0 million innon-recurring charges, and their related income tax benefit of $1.4 million, net income increased$917,000, or 33.0%, over the comparable 2005 nine-month period. There were significant increasesin net interest income and non-interest income when compared to the 2005 nine-month period, due tointernally generated balance sheet growth and to the acquisition of Chart Bank on April 4, 2005,which only impacted part of the 2005 period. Operating expenses also increased significantly whencompared to the nine-month period ended September 30, 2005, due to the addition of Chart Bank’soperations, as well as to higher costs related to generating internal growth and meeting the newdemands of operating as a public company.**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 depends upon the relative amounts ofinterest-earning assets and interest-bearing liabilities and the interest rates earned or paid onthem.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 ofdeferred fees, discounts and premiums that are amortized or accreted to interest income or expense:
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                           **Three Months Ended September 30,**   **2006**  **2005**   **Average**          **Average**         **Outstanding**          **Outstanding**         **Balance**  **Interest**  **Yield/Rate**(1)  **Balance**  **Interest**  **Yield/Rate**(1)   (Dollars in thousands)**Interest-earning assets:**                        Loans $633,064  $9,620   6.00% $607,136  $8,716   5.70%Securities  136,104   1,641   4.10%  128,734   1,213   3.74%Short-term investments  10,562   134   4.96%  15,139   100   2.62%                     Total interest-earning assets  779,730   11,395   5.66%  751,009   10,029   5.30%Non-interest-earning assets  113,101           111,195                                Total assets $892,831          $862,204                                                         **Interest-bearing liabilities:**                        Savings deposits $90,143   113   0.50% $106,123   133   0.50%Money market accounts  94,712   502   2.10%  106,015   432   1.62%NOW accounts  25,941   9   0.15%  36,438   12   0.13%Certificates of deposit  290,595   3,067   4.19%  247,960   1,798   2.88%                     Total deposits  501,391   3,691   2.92%  496,536   2,375   1.90%Borrowings  147,866   1,719   4.55%  121,854   1,334   4.34%                     Total interest-bearing liabilities  649,257   5,410   3.29%  618,390   3,709   2.38%Non-interest bearing liabilities  134,481           134,899                                Total liabilities  783,738           753,289         Equity  109,093           108,915                                Total liabilities and equity $892,831          $862,204                                                         Net interest income     $5,985          $6,320                            Net interest rate spread (2)          2.37%          2.92%Net interest-earning assets (3) $130,473          $132,619                                Net interest margin (4)          3.05%          3.34%Average interest-earning assets tointerest-bearing liabilities          120.10%          121.45% (1) Yields and rates for the three months ended September 30, 2006 and 2005 areannualized. (2) Net interest rate spread represents the difference between the yield on averageinterest-earning assets and the cost of average 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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                           **Nine Months Ended September 30,**   **2006**  **2005**   **Average**          **Average**         **Outstanding**          **Outstanding**         **Balance**  **Interest**  **Yield/Rate**(1)  **Balance**  **Interest**  **Yield/Rate**(1)   (Dollars in thousands) **Interest-earning assets:**                        Loans $621,074  $27,698   5.91% $528,411  $21,656   5.48%Securities  137,547   4,423   4.29%  116,350   2,928   3.37%Short-term investments  15,221   536   4.64%  19,230   344   2.39%                     Total interest-earning assets  773,842   32,657   5.60%  663,991   24,928   5.02%Non-interest-earning assets  113,255           84,433                                Total assets $887,097          $748,424                                                         **Interest-bearing liabilities:**                        Savings deposits $93,835   352   0.50% $103,492   391   0.50%Money market accounts  103,106   1,728   2.24%  93,744   1,099   1.57%NOW accounts  27,111   30   0.15%  31,584   52   0.22%Certificates of deposit  281,552   8,218   3.90%  211,602   4,256   2.69%                     Total deposits  505,604   10,328   2.73%  440,422   5,798   1.76%Borrowings  136,892   4,518   4.35%  100,931   3,123   4.14%                     Total interest-bearing liabilities  642,496   14,846   3.08%  541,353   8,921   2.20%Non-interest bearing liabilities  135,763           125,076                                Total liabilities  778,259           666,429         Equity  108,838           81,995                                Total liabilities and equity $887,097          $748,424                                                         Net interest income     $17,811          $16,007                            Net interest rate spread (2)          2.52%          2.82%Net interest-earning assets (3) $131,346          $122,638                                Net interest margin (4)          3.08%          3.22%Average interest-earning assets tointerest-bearing liabilities          120.44%          122.65% (1) Yields and rates for the nine months ended September 30, 2006 and 2005 areannualized. (2) Net interest rate spread represents the difference between the yield on averageinterest-earning assets and the cost of average 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.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.
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               **Three Months Ended September 30,**   **2006 vs. 2005**   **Increase (Decrease)**      **Due to**  **Total**           **Increase**   **Volume**  **Rate**  **(Decrease)**   (Dollars in thousands) Interest-earning assets:            Loans $381  $523  $904 Securities  73   355   428 Short-term investments  (37)  71   34           Total interest-earning assets  417   949   1,366                        Interest-bearing liabilities:            Savings accounts  (20)  —   (20)Money market accounts  (50)  120   70 NOW accounts  (4)  1   (3)Certificates of deposit  348   921   1,269           Total deposits  274   1,042   1,316 Borrowings  298   87   385           Total interest-bearing liabilities  572   1,129   1,701           Change in net interest income $(155) $(180) $(335)                         **Nine Months Ended September 30,**   **2006 vs. 2005**   **Increase (Decrease)**      **Due to**  **Total**           **Increase**   **Volume**  **Rate**  **(Decrease)**   (Dollars in thousands) Interest-earning assets:            Loans $4,020  $2,022  $6,042 Securities  592   903   1,495 Short-term investments  (84)  276   192           Total interest-earning assets  4,528   3,201   7,729                        Interest-bearing liabilities:            Savings accounts  (36)  (3)  (39)Money market accounts  119   510   629 NOW accounts  (7)  (15)  (22)Certificates of deposit  1,675   2,287   3,962           Total deposits  1,751   2,779   4,530 Borrowings  1,175   220   1,395           Total interest-bearing liabilities  2,926   2,999   5,925           Change in net interest income $1,602  $202  $1,804           
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Net interest income for the quarter ended September 30, 2006 was $6.0 million, a decrease of$335,000 or 5.3% when compared to net interest income of $6.3 million for the three months endedSeptember 30, 2005. The $335,000 decrease was primarily the result of a 29 basis point decrease inthe net interest margin, which exceeded the positive benefit of overall balance sheet growth.Interest income for the quarter ended September 30, 2006 was $11.4 million, an increase of $1.4million or 13.6% compared to $10.0 million for the quarter ended September 30, 2005. The increasearose largely from a 36 basis point increase in the yield earned on average interest-earningassets, augmented by a $28.7 million increase in the average balance of those assets. The largestincrease in average interest-earning assets was in loans, at $25.9 million. An increase in theloan yield of 30 basis points comparing the year-over-year quarterly periods was caused largely bythe increase in market interest rates, supplemented by greater balance growth in higher-yieldingcommercial loans than in residential mortgages and consumer loans. Increases (decreases) in theaverage balances of securities and short-term investments were $7.4 million and ($4.6) million,respectively. Increases inyields earned on securities and short-term investments of 36 and 234 basis points, respectively,were due mainly to the increase in market interest rates year-over-year. Securities interestincome for the 2006 quarter also included two quarterly dividend payments by the Federal Home LoanBank of Boston (FHLBB) on FHLBB stock held by the Company. In the prior 2006 quarter, the FHLBBdeferred the declaration of its quarterly stock dividend, due to a one-time change in its dividendschedule. An estimate of the dividend income deferred from the second to third quarters of 2006 is$97,000.Interest expense for the quarter ended September 30, 2006 was $5.4 million, an increase of $1.7million or 45.9% over the comparable quarter of the prior year. The $1.7 million increase stemsboth from a 91 basis point increase in the cost of average interest-bearing liabilities and a $30.9million increase in the average balance of those liabilities. The increase in averageinterest-bearing liabilities between the comparable 2006 and 2005 quarters consists of growth inborrowed funds ($26.0 million) and deposits ($4.9 million). Within the deposit portfolio, timeaccounts increased on average by $42.6 million, while other interest-bearing deposits decreased onaverage by $37.7 million. The 91 basis point increase in the cost of interest-bearing liabilitieswas due largely to the increase in market interest rates year-over-year. The Company was able tohold its rate on certain non-maturity deposit product lines (Savings and NOW accounts)year-over-year. However, customer demand for time accounts as an alternative to savings products,the Company’s desire to use deposits to fund loan growth, the short duration of the Company’s timedeposit portfolio, and intense pricing competition all fueled a 131 basis point increase in thecost of time accounts, year-over-year. The cost of borrowed funds also increased between periods,by 21 basis points, as new borrowings and rollovers of existing borrowings were more expensive thanin the comparable 2005 period due to increases in market interest rates.Net interest income for the first nine months of 2006 was $17.8 million, an increase of $1.8million, or 11.3%, over the $16.0 million earned in the first nine months of 2005. The improvementin net interest income was largely the result of overall balance sheet growth, offset in part bythe effect of a decline in the net interest margin. Year-over-year, over the nine-month period,average interest-earning assets increased by $109.9 million, or 16.5%, and average interest-bearingliabilities increased by $101.1 million, or 18.7%. The increase in balance sheet footings canlargely be attributed to the Chart Bank acquisition on April 4, 2005. On that date, $184.0 millionof loans and $36.1 million of securities were added to the Company’s balance sheet. Deposits of$217.4 million and borrowings of $25.4 million were assumed as well, including $37.0 million ofnon-interest bearing demand deposits.The net interest margin dropped 14 basis points (from 3.22% to 3.08%) when comparing the first ninemonths of 2006 to the comparable period in 2005. The decline was the net result of a favorable 58basis point increase in the yield on average interest-earning assets, an unfavorable 88 basis pointincrease in the cost of average interest- bearing liabilities, and a favorable $8.7 millionincrease in the excess of average interest-earning assets over
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average interest-bearingliabilities. The basis point increases for both assets and liabilities are largely the result ofmarket interest rate movements, including a flattening yield curve that has put pressure on theCompany’s net interest margin.**Provision for Loan Losses**The Company recorded provisions for loan losses of $200,000 and $152,000 for the three monthsended September 30, 2006 and 2005, respectively. For the first nine months of 2006 and 2005,provisions for loan losses amounted to $327,000 and $648,000, respectively. The lower provision inthe nine months ended September 30, 2006 largely reflects slower loan growth as compared to theidentical 2005 period. The Company’s credit quality continues to be very strong, with nominal netcharge-offs of $56,000 recorded in the first nine months of 2006. At September 30, 2006, theallowance for loan losses totaled $5.9 million, or 0.93% of total loans, as compared to $5.7million, or .93% of total loans, at December 31, 2005.**Non-interest Income**Non-interest income of $1.7 million for the three-month period ended September 30, 2006 representedan increase of $405,000, or 30.8%, over the $1.3 million earned in the same period of 2005.Non-interest income also increased by $2.6 million, or 127.4%, comparing the first nine months of2006 to the same time period in 2005. The primary causes of the increases were higher ATM servicingfees, higher gains on residential mortgage loan sales, and a $1.0 million net loss/write-downrecognized in June of 2005 on bank-owned land.Non-interest income increased $405,000 in the third quarter of 2006 over the same quarter in 2005.Approximately 88% of the total increase, or $355,000, represents increased fees for ATM servicingperformed by CSSI. CSSI provides cash to ATMs owned by independent sales organizations (ISOs)nationwide. Fees are collected from the ISOs for managing the ATMs and for the use of the cash inthe machines. ATM servicing fees are generally based upon the amount of cash utilized, and amarket-based floating interest-rate pricing structure. The average balance of the ATM cashdeployed in the third quarter of 2006 was $36.0 million, compared to $27.4 million in theyear-earlier period. Quarter-over-quarter, the Company also benefited from a $58,000 increase ingains on loan sales, while investment sales commissions (non-deposit investment products) declinedby $53,000, due to staff turnover in 2006.Non-interest income of $4.7 million in the first nine months of 2006 was $2.6 million higher thanthe comparable year-earlier period. Excluding the $1.0 million net loss/write-down on bank-ownedland recorded in 2005, non-interest income would have increased year-over-year by $1.6 million, or51.8%. Approximately $1.2 million of the increase represents growth in fees for ATM servicingperformed by CSSI. These ATM servicing fees reflect the full nine-month period in 2006, but onlysix months in the 2005 period. Deposit servicing fees increased by $187,000, or 21.8%, whencompared to the first nine months of 2005. This increase was largely the result of growth in theCompany’s overdraft checking account product and the addition of the Chart Bank deposit accountsand branch locations in April 2005. Loan servicing fees and gains on sales of loans increased by$51,000 and $177,000, respectively, when comparing the first nine months of 2006 to 2005. Theseincreases were largely the result of collection of prepayment penalties and other transactionalfees, and growth in sales of fixed rate residential mortgage loans originated for and sold toothers.**Non-interest Expense**Non-interest expenses of $5.7 million for the three-month period ended September 30, 2006 representan increase of $365,000, or 6.8%, over the $5.3 million incurred in the same period of 2005. Forthe same nine-month comparable period, non-interest expense decreased by $1.6 million, or 8.7%, to$16.4 million. The 2005 results include a $4.0 million contribution in the second quarter to theBenjamin Franklin Bank Charitable Foundation. The Company has not since, and does not intend tomake future contributions to the Foundation. Excluding the
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effect of the Foundation contribution,non-interest expenses increased $2.4 million or 17.5% in the first nine months of 2006 compared tothe 2005 nine-month period.Comparing the quarterly periods of 2006 to 2005, the largest increase in non-interest expense($534,000, or 21.1%), was in salaries and employee benefits. Excluding salaries and benefits, allother non-interest expenses combined decreased by $169,000 in those two periods. The Company hasadded staff judiciously for business development, such as commercial loan origination, loansupport, and marketing, and for the accounting and audit functions, needed to satisfy growingregulatory demands associated with being a public company. In addition, the Company began toaccrue stock compensation expense in August 2006, upon the recent approval of its new stockincentive plan by the Company’s shareholders and the Board of Directors. The stock compensationexpense recorded in the quarter, computed in conformity with FAS-123R accounting guidelines, was$250,000, or $125,000 on a monthly basis. Amortization of the core deposit intangible assetcreated in the Chart Bank acquisition decreased $191,000 from the comparable period in 2005; theaccelerated amortization schedule used for this asset will cause this expense to continue todecline in future periods. A $44,000, or 9.4% increase in dataprocessing costs between the two quarters was partially attributable to both higher productdevelopment and ATM transaction processing costs.Non-interest expenses decreased by $1.6 million in the first nine months of 2006 compared to theidentical year earlier period. However, excluding the $4.0 million non-recurring contribution tothe Foundation, non-interest expenses would have increased by $2.4 million (or 17.5%). TheCompany’s non-interest expense base rose significantly beginning in the second quarter of 2005, dueto the acquisition of Chart Bank. The largest increase comparing the two nine-month periods was insalaries and employee benefits, which rose by $1.5 million or 21.4%, attributable primarily to theassimilation of Chart Bank’s employees. Adds to staffing in the lending, marketing, accounting andaudit functions, pricing increases and other changes to certain benefit plans, and the onset ofstock compensation expense in August 2006 also contributed to the increase. Professional fees alsoincreased by $341,000, or 54.6%, over the comparable 2005 nine-month period. The Company hasincurred substantial increases in audit, consulting and legal fees associated with its new publiccompany status. For example, the Company required legal assistance in 2006 to implement its newstock compensation plans and prepare for its first annual meeting of shareholders, and has engagedoutside consulting and audit firms to assist in its first-time Sarbanes-Oxley Act Section 404compliance program. Occupancy and equipment expenses increased by $217,000 or 12.4% over thecomparable 2005 nine-month period, mainly due to the addition of costs associated with Chart Bank’sthree branches and its former corporate headquarters. An increase of $537,000 (or 33.0%) in othergeneral and administrative expenses also largely reflected the addition of Chart Bank’s operations.This included adding several of Chart Bank’s former directors to the Company’s Board, and highersupplies, postage, insurance, business development and other operating costs associated withrunning a larger company.The Company opened a new branch in Wellesley, Massachusetts in September 2006. The annual directcosts of operating this branch are estimated at $610,000. The Company also recently receivedregulatory approval to open a new branch in Watertown, Massachusetts. It is anticipated that thisbranch will become operational in the second quarter of 2007. The direct costs of operating thisbranch are estimated at $700,000 annually. The Company intends to continue its search for promisingde novo branch locations, with the goal of identifying one or two additional sites over the nexttwo years.**Income Taxes**Income tax expense of $632,000 recorded for the third quarter of 2006 resulted in an effective taxrate of 35.1%. In the third quarter of 2005, income tax expense of $814,000 equated to aneffective tax rate of 38.0%. Income tax expense of $2.1 million for the nine months endedSeptember 30, 2006 resulted in an effective tax rate of 35.9%. The Company recorded income taxexpense of $348,000 in the first nine months of 2005 despite
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incurring a pre-tax loss of $534,000for the period. This anomaly occurred because no tax benefit was recognized on the $1.0 millionnet loss on sale/write-down of bank-owned land.**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 September 30, 2006, cashand due from banks, short-term investments and debt securities maturing within one year totaled$75.5 million (excluding cash supplied by CSSI to ATM customers) or 8.4% of total assets.The Company borrows from the Federal Home Loan Bank of Boston (“FHLBB”) as an additional fundingsource. As of September 30, 2006, the Company had $151.0 million in outstanding FHLBB borrowingsand had the ability to borrow an additional $67.4 million from the FHLBB.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:***                       **September 30, 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 Bankadvances(1)  $150,963  $42,000  $59,963  $49,000  $— Subordinated debt  9,000   —   —   —   9,000 Operating leases (2)  1,806   301   523   379   603 Investment security purchases  3,782   3,782   —   —   — Other contractualobligations(3)  6,284   2,686   3,598   —   —                 Total contractual obligations $171,835  $48,769  $64,084  $49,379  $9,603                  (1) Secured under a blanket security agreement on qualifying assets, principally 1-4Family Residential mortgage loans.An advance in the amount of $10.0 million maturing in June, 2010, will become immediatelypayable 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***                       **September 30, 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) $6,825  $6,825  $—  $—  $— Unadvanced funds on commercial lines of credit  23,154   19,798   3,356   —   — Unadvanced funds on home equity lines ofcredit (3)  38,741   —   —   —   38,741 Unadvanced funds on construction loans(4)  35,087   22,978   11,637   —   472 Unadvanced funds on personal lines of credit(2)  2,410   —   —   —   2,410 Commercial letter of credit  1,396   1,396                                                  Total loan commitments $107,613  $50,997  $14,993  $—  $41,623                 General: Commitments to extend credit are agreements to lend to a customer as long as there is noviolation of any conditionestablished in the contract. Commitments generally have fixed expiration dates or othertermination 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 10years. (4) Unused portions of construction loans are available to the borrower for up to 2years for development loans and upto 1 year for other construction loans.
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     ***Minimum Regulatory Capital Requirements:***As of September 30, 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 September 30, 2006 and December31, 2005 are also presented in this table:                                           Minimum                  To Be Well          Minimum Capitalized Under          Capital Prompt Corrective  Actual Requirements Action Provisions  Amount Ratio Amount Ratio Amount Ratio  (dollars in thousands)**September 30, 2006:**                                                 Total capital to risk weighted assets:                        Consolidated $88,285   14.5% $48,858   8.0%  N/A   N/A Bank  66,116   10.8   48,793   8.0  $60,991   10.0%                         Tier 1 capital to risk weighted assets:                        Consolidated  82,344   13.5   24,429   4.0   N/A   N/A Bank  60,175   9.9   24,397   4.0   36,595   6.0                          Tier 1 capital to average assets:                        Consolidated  82,344   9.6   34,231   4.0   N/A   N/A Bank  60,175   7.0   34,254   4.0   42,817   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 weighted assets:                        Consolidated  81,543   14.3   22,807   4.0   N/A   N/A Bank  55,724   9.8   22,764   4.0   34,146   6.0                          Tier 1 capital to average assets:                        Consolidated  81,543   9.9   33,115   4.0   N/A   N/A Bank  55,724   6.7   33,085   4.0   41,356   5.0 **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
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period, and static (or flat) rates. The simulation analysis is used to measure the exposure of netinterest income to changes in interest rates over a specified time horizon, usually a two-yearperiod.The table below sets forth, as of August 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 (note: differences between August 31, 2006 and September 30, 2006 balance sheets arenot material for purposes of this analysis, or the gap analysis, below). Computations ofprospective effects of hypothetical interest rate changes are based on numerous assumptionsincluding relative levels of market interest rates, loan prepayments and deposit decay, and shouldnot be relied upon as indicative of actual results.       **Percentage Change in Estimated**  **Net Interest Income over 12**  **months**200 basis point increase in rates  (3.94)%100 basis point increase in rates  (1.88)%Flat interest rates  — 100 basis point decrease in rates  2.12%As indicated in the table above, the result of an immediate 100 basis point parallel increase ininterest rates is estimated to decrease net interest income by 1.88% over a 12-month horizon, whencompared to the flat rate scenario. For an immediate 200 basis point parallel increase in thelevel of interest rates, net interest income is estimated to decline by 3.94% over a 12-monthhorizon, when compared against the flat rate scenario. Inherent in these estimates is theassumption that savings account deposit rates would increase by 25 basis points and that moneymarket deposit transaction account rates would increase by 37 basis points, for each 100 basispoint increase in market interest rates. These scenarios also assume no change in checking accountinterest rates. These assumptions are based on the Bank’s past experience with the changes in ratespaid on these non-maturity deposits coincident with changes in market interest rates. The estimatedchange in net interest income from the flat rate scenario for a 100 basis point parallel decline inthe level of interest rates is an increase of 2.12%, which assumes no decrease in interest-bearingchecking rates or in savings rates and an average decrease in money market rates of 37 basispoints.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 between the amount of interest-earning assets andinterest-bearing liabilities that mature or reprice within specified timeframes. Anasset-sensitive position (positive gap) exists when there are more rate-sensitive assets thanrate-sensitive liabilities maturing or repricing within a particular time horizon, and generallysignifies a favorable effect on net interest income during periods of rising interest rates and anegative effect during periods of falling interest rates. Conversely, a liability-sensitiveposition (negative gap) would generally indicate a negative effect on net interest income duringperiods of rising rates and a positive effect during periods of falling rates.
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The table below shows the Company’s interest sensitivity gap position as of August 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 August 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) $249,601  $103,359  $105,592  $78,553  $32,578  $64,984  $634,667 Securities (2)  54,188   37,263   10,065   15,982   4,108   14,816   136,422 Short-term investments  6,711   —   —   —   —   —   6,711                       Total interest-earning assets  310,500   140,622   115,657   94,535   36,686   79,800   777,800                                                    **Interest-bearing liabilities:**                            Savings accounts  34,107   21,044   12,984   8,011   4,943   7,963   89,053 Money market accounts  62,096   17,466   7,074   2,865   1,160   790   91,451 NOW accounts  2,705   2,457   2,231   2,025   1,839   18,150   29,407 Certificates of deposit  258,423   23,122   7,966   5,076   1,634   —   296,221 Short-term borrowings  10,700   —   —   —   —   —   10,700 Long-term debt  33,000   25,000   35,000   22,000   27,000   —   142,000                       Total interest-bearing liabilities $401,031  $89,089  $65,255  $39,977  $36,576  $26,903  $658,832                                                    Interest rate sensitivity gap  (90,531)  51,533   50,402   54,558   110   52,897   118,968                       **Interest rate sensitivity gapas a % of total assets**  **-10.10****%**  **5.75****%**  **5.62****%**  **6.09****%**  **0.01****%**  **5.90****%**    Cumulative interest ratesensitivity gap  (90,531)  (38,998)  11,404   65,961   66,071   118,968                            **Cumulative interest ratesensitivity gap as a %of total assets**  **-10.10****%**  **-4.35****%**  **1.27****%**  **7.36****%**  **7.37****%**  **13.28****%**     (1) Excludes the allowance for loan losses, deferred fees and costs, and non-performing loans. (2) Investment 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 the Company 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 ofborrowers to 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 theeffectiveness of the Company’s disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)). Based on such evaluation, the President and Chief ExecutiveOfficer and Chief Financial Officer have concluded that the Company’s disclosure controls andprocedures, 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 andprocedures will be successful in preventing all errors or fraud, or in making all materialinformation known in a timely manner to the appropriate levels of management.     (b) *Changes in Internal Controls Over Financial Reporting.*There were no changes in theCompany’s internal control over financial reporting during the first nine 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 analysis of its risk factors has not changed 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 repurchased 239,096 sharesin connection with anticipated awards of restricted stock under the Company’s 2006Stock Incentive Plan, as follows:                   (a) Total     (c) Total Number of (d) Maximum number or  Number of (b) Average Shares Purchased as Part approximate dollar value) of  Shares Price Paid per of Publicly Announced shares that may yet be purchasedPeriod Purchased Share Plans or Programs under the Plans or ProgramsJuly 1-31  2,000  $14.00   2,000   237,096 August 1-31  178,400  $14.07   178,400   58,696 September 1-30  58,696  $14.21   58,696   0 **Item 3. Defaults on Senior Securities.**     Not applicable.**Item 4. Submission of Matters to a Vote of Security Holders.**     None.**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, aCooperative Bank, dated as of September 1, 2004.  2 
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       Exhibit No. Description Footnotes3.1 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 ExecutiveOfficers, 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 formcontains all material information concerning the agreement and theonly differences are the name and contact information of theexecutive officer who is party to the agreement and the number ofyears of severance provided. *  2        10.3 Form of Benjamin Franklin Bank Benefit Restoration Plan. *  2        10.4.1 Amended and Restated Supplemental Executive Retirement Agreementbetween Benjamin Franklin Bank and Thomas R. Venables dated as ofMarch 22, 2006.  8        10.4.2 Amended and Restated Supplemental Executive Retirement Agreementbetween Benjamin Franklin Bank and Claire S. Bean dated as ofMarch 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 Franklin Bancorp, M.H.C., Benjamin Franklin Savings Bankand Chart Bank, a Cooperative Bank, dated as of September 1, 2004.*  2        10.7.2 Consulting and Noncompetition Agreement between Richard E. Bolton,Jr. and Benjamin Franklin Bancorp, M.H.C., dated as of September1, 2004. *  2        10.8 Benjamin Franklin Bancorp, Inc. 2006 Stock Incentive Plan *  9        10.8.1 Form of Incentive Stock Option Agreement *  10        10.8.2 Form of Non-Statutory Stock Option Agreement (Officer) *  10        10.8.3 Form of Non-Statutory Stock Option Agreement (Director) *  10        10.8.4 Form of Restricted Stock Agreement (Officer) *  10        10.8.5 Form of Restricted Stock Agreement (Director) *  10        11 See Note 3 to the Financial Statements for a discussion ofearnings per share. —       31.1 Certification of Chief Executive Officer pursuant to Section 302of the Sarbanes-Oxley Act of 2002.  1        31.2 Certification of Chief Financial Officer pursuant to Section 302of the Sarbanes-Oxley Act of 2002.  1        32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of theSarbanes-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 theSarbanes-Oxley Act of 2002.  1  * Relates to compensation.1. Filed herewith.
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 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 the Registrant’s Proxy Statementfor the 2006 Annual Meeting of Stockholders, filed on March 28, 2006.  10. Incorporated by reference to the Registrant’s Quarterly Report on Form10-Q/A, filed on August 18, 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: November 14, 2006 By: /s/ Thomas R. Venables     Thomas R. Venables    President and Chief Executive Officer         Date: November 14, 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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