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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number 000-52240



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Ben Franklin Financial, Inc.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Federal                                                        |  | 20,5838969                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
|                                                               | 
|14 N. Dryden Place, Arlington Heights, Illinois                |  | 60004                            
|(Address of principal executive offices)                       |  | (Zip Code)                       

(847) 398-0990

(Registrants telephone number, including area code)



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Check whether the registrant (1) filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ̈No  x

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

Number of outstanding shares of common stock as of November 13,
2006: 1,983,750 shares

Transitional Small Business Disclosure format (check one)    Yes ̈No  x



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##### Table of Contents

BEN FRANKLIN BANK OF ILLINOIS

INDEX

Separate financial statements for Ben Franklin Financial, Inc. (in formation) have not been included in this report because, as of September 30, 2006, Ben Franklin Financial, Inc. had not engaged in any significant activities, had no
significant assets, and had no contingent liabilities, revenue or expenses. On October 18, 2006, Ben Franklin Bank of Illinois created Ben Franklin Financial, Inc. upon the completion of its reorganization into the mutual holding company
structure and became its only subsidiary.



|                                                                                                  |  |         
|------------------------------------------------------------------------------------------------- |  | --------
|                                                                                                  |  | PAGE NO.
|PART I 
Financial Information                                                                    |  |         
|                                                                                                  | 
|Item 1.
Financial Statements of Ben Franklin Bank of Illinois                                     |  |         
|                                                                                                  | 
|Statements of Financial Condition (Unaudited) as of September 30, 2006 and December 31, 2005      |  | 1       
|                                                                                                  | 
|Statements of Income (Unaudited) for the three and nine months ended September 30, 2006 and 2005  |  | 2       
|                                                                                                  | 
|Statements of Changes in Equity (Unaudited) for the nine months ended September 30, 2006 and 2005 |  | 3       
|                                                                                                  | 
|Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2006 and 2005        |  | 4       
|                                                                                                  | 
|Notes to Financial Statements (Unaudited)                                                         |  | 5       
|                                                                                                  | 
|Item 2.
Managements Discussion and Analysis or Plan of Operation                                 |  | 8       
|                                                                                                  | 
|Item 3.
Controls and Procedures                                                                   |  | 17      
|                                                                                                  | 
|PART II -
Other Information                                                                       |  |         
|                                                                                                  | 
|Item 1.
Legal Proceedings                                                                         |  | 18      
|Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds                               |  | 18      
|Item 3.
Defaults Upon Senior Securities                                                           |  | 18      
|Item 4.
Submission of Matters to a Vote of Security Holders                                       |  | 18      
|Item 5.
Other Information                                                                         |  | 18      
|Item 6.
Exhibits                                                                                  |  | 18      
|Form 10-QSB Signatures                                                                            |  | 19      



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##### Table of Contents

PART I  Financial Information

Item 1. Financial Statements

BEN FRANKLIN BANK OF ILLINOIS

STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands)

(Unaudited)



|                                                                                                            |  |                   |         |   |                  |   |         |  
|----------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                            |  | September 30,2006 |         |   | December 31,2005 |  
|ASSETS                                                                                                      |  |                   |         |   |                  |   |         |  
|Cash and due from banks                                                                                     |  | $                 | 1,374   |   |                  | $ | 1,718   |  
|Interest-bearing deposit accounts                                                                           |  |                   | 4,303   |   |                  |   | 1,121   |  
|Federal funds sold                                                                                          |  |                   | 22,560  |   |                  |   | 4,200   |  
|                                                                                                            |  |                   |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                   |  |                   | 28,237  |   |                  |   | 7,039   |  
|Securities available-for-sale                                                                               |  |                   | 5,201   |   |                  |   | 7,163   |  
|Loans receivable, net of allowance for loan losses of $508 at September 30, 2006; $509 at December 31, 2005 |  |                   | 93,564  |   |                  |   | 89,982  |  
|Federal Home Loan Bank stock                                                                                |  |                   | 1,588   |   |                  |   | 2,077   |  
|Premises and equipment, net                                                                                 |  |                   | 621     |   |                  |   | 658     |  
|Accrued interest receivable                                                                                 |  |                   | 546     |   |                  |   | 489     |  
|Other assets                                                                                                |  |                   | 859     |   |                  |   | 361     |  
|                                                                                                            |  |                   |         |   |                  |   |         |  
|Total assets                                                                                                |  | $                 | 130,616 |   |                  | $ | 107,769 |  
|                                                                                                            |  |                   |         |   |                  |   |         |  
|LIABILITIES AND EQUITY                                                                                      |  |                   |         |   |                  |   |         |  
|Liabilities                                                                                                 |  |                   |         |   |                  |   |         |  
|Demand-noninterest-bearing                                                                                  |  | $                 | 1,899   |   |                  | $ | 1,609   |  
|Demand-interest-bearing                                                                                     |  |                   | 8,554   |   |                  |   | 8,267   |  
|Savings                                                                                                     |  |                   | 31,839  |   |                  |   | 11,416  |  
|Money Market                                                                                                |  |                   | 11,944  |   |                  |   | 14,656  |  
|Certificates of deposit                                                                                     |  |                   | 65,449  |   |                  |   | 60,212  |  
|                                                                                                            |  |                   |         |   |                  |   |         |  
|Total deposits                                                                                              |  |                   | 119,685 |   |                  |   | 96,160  |  
|Advances from Federal Home Loan Bank                                                                        |  |                   | 2,000   |   |                  |   | 2,000   |  
|Advances from borrowers for taxes and insurance                                                             |  |                   | 189     |   |                  |   | 616     |  
|Other liabilities                                                                                           |  |                   | 295     |   |                  |   | 659     |  
|                                                                                                            |  |                   |         |   |                  |   |         |  
|Total liabilities                                                                                           |  |                   | 122,169 |   |                  |   | 99,435  |  
|                                                                                                            |  |                  
|Commitments and contingent liabilities                                                                      |  |                   |        |   |                  |   |        |  
|Equity                                                                                                      |  |                   |         |   |                  |   |         |  
|Retained earnings, substantially restricted                                                                 |  |                   | 8,504   |   |                  |   | 8,410   |  
|Accumulated other comprehensive loss                                                                        |  |                   | (57     | ) |                  |   | (76     | )
|                                                                                                            |  |                   |         |   |                  |   |         |  
|Total equity                                                                                                |  |                   | 8,447   |   |                  |   | 8,334   |  
|                                                                                                            |  |                   |         |   |                  |   |         |  
|Total liabilities and equity                                                                                |  | $                 | 130,616 |   |                  | $ | 107,769 |  
|                                                                                                            |  |                   |         |   |                  |   |         |  

See accompanying notes to financial statements



1



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##### Table of Contents

BEN FRANKLIN BANK OF ILLINOIS

STATEMENTS OF INCOME

(Dollars in thousands)

(Unaudited)



|                                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|------------------------------------------------------------ |  | ------------------------------- | ----- | ------------------------------ | - | ----- |  | - | ----- | - |  | - | -----
|                                                             |  | Three Months EndedSeptember 30, |       | Nine Months EndedSeptember 30,
|                                                             |  | 2006                            |       | 2005                           |   | 2006  |  |   | 2005 
|Interest and dividend income                                 |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|Loans                                                        |  | $                               | 1,414 |                                | $ | 1,259 |  | $ | 4,082 |   |  | $ | 3,699
|Securities                                                   |  |                                 | 74    |                                |   | 101   |  |   | 234   |   |  |   | 490  
|Federal funds sold                                           |  |                                 | 91    |                                |   | 47    |  |   | 213   |   |  |   | 97   
|Interest-bearing deposit accounts and other                  |  |                                 | 62    |                                |   | 7     |  |   | 128   |   |  |   | 21   
|                                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|                                                             |  |                                 | 1,641 |                                |   | 1,414 |  |   | 4,657 |   |  |   | 4,307
|Interest expense                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|Deposits                                                     |  |                                 | 843   |                                |   | 571   |  |   | 2,323 |   |  |   | 1,582
|Federal Home Loan Bank advances                              |  |                                 | 23    |                                |   | 23    |  |   | 69    |   |  |   | 121  
|                                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|                                                             |  |                                 | 866   |                                |   | 594   |  |   | 2,392 |   |  |   | 1,703
|                                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|Net interest income                                          |  |                                 | 775   |                                |   | 820   |  |   | 2,265 |   |  |   | 2,604
|                                                             |  |                                 |       |                               
|Provision (credit) for loan losses                           |  |                                 |      |                                |   | 4     |  |   | (1    | ) |  |   | 13   
|                                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|Net interest income after provision (credit) for loan losses |  |                                 | 775   |                                |   | 816   |  |   | 2,266 |   |  |   | 2,591
|                                                             |  |                                 |       |                               
|Noninterest income                                           |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|Service fee income                                           |  |                                 | 54    |                                |   | 33    |  |   | 141   |   |  |   | 100  
|Gain on sale of loans                                        |  |                                 |      |                                |   | 6     |  |   |      |   |  |   | 27   
|Other                                                        |  |                                 | 12    |                                |   | 6     |  |   | 34    |   |  |   | 20   
|                                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|                                                             |  |                                 | 66    |                                |   | 45    |  |   | 175   |   |  |   | 147  
|Noninterest expenses                                         |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|Compensation and employee benefits                           |  |                                 | 451   |                                |   | 439   |  |   | 1,322 |   |  |   | 1,293
|Occupancy expenses                                           |  |                                 | 132   |                                |   | 139   |  |   | 398   |   |  |   | 413  
|Data processing services                                     |  |                                 | 95    |                                |   | 64    |  |   | 223   |   |  |   | 183  
|Professional fees                                            |  |                                 | 24    |                                |   | 25    |  |   | 77    |   |  |   | 84   
|Regulatory fees                                              |  |                                 | 12    |                                |   | 24    |  |   | 61    |   |  |   | 75   
|Other                                                        |  |                                 | 76    |                                |   | 65    |  |   | 211   |   |  |   | 203  
|                                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|                                                             |  |                                 | 790   |                                |   | 756   |  |   | 2,292 |   |  |   | 2,251
|                                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|Income before income taxes                                   |  |                                 | 51    |                                |   | 105   |  |   | 149   |   |  |   | 487  
|                                                             |  |                                 |       |                               
|Provision for income taxes                                   |  |                                 | 18    |                                |   | 36    |  |   | 55    |   |  |   | 166  
|                                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|Net income                                                   |  | $                               | 33    |                                | $ | 69    |  | $ | 94    |   |  | $ | 321  
|                                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      
|Total comprehensive income                                   |  | $                               | 113   |                                | $ | 38    |  | $ | 113   |   |  | $ | 287  
|                                                             |  |                                 |       |                                |   |       |  |   |       |   |  |   |      

See accompanying notes to financial statements



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BEN FRANKLIN BANK OF ILLINOIS OF ILLINOIS

STATEMENTS OF CHANGES IN EQUITY

For the Nine Months Ended September 30, 2006 and 2005  (Unaudited)



|                                                                          |  |                  |       |                                            |   |     |       |  |   |                            |   |  |   |     |  
|------------------------------------------------------------------------- |  | ---------------- | ----- | ------------------------------------------ | - | --- | ----- |  | - | -------------------------- | - |  | - | --- | -
|                                                                          |  | RetainedEarnings |       | AccumulatedOtherComprehensiveIncome (Loss) |   |     | Total |  |   | ComprehensiveIncome (Loss) |  
|Balance at January 1, 2005                                                |  | $                | 8,022 |                                            | $ | (11 | )     |  | $ | 8,011                      |   |  |   |     |  
|                                                                          |  |                  |       |                                           
|Comprehensive income:                                                     |  |                  |       |                                            |   |     |       |  |   |                            |   |  |   |     |  
|Net income                                                                |  |                  | 321   |                                            |   |    |       |  |   | 321                        |   |  | $ | 321 |  
|                                                                          |  |                  |       |                                           
|Change in unrealized loss on securities available- for-sale, net of taxes |  |                  |      |                                            |   | (34 | )     |  |   | (34                        | ) |  |   | (34 | )
|                                                                          |  |                  |       |                                            |   |     |       |  |   |                            |   |  |   |     |  
|Total comprehensive income                                                |  |                  |       |                                            |   |     |       |  |   |                            |   |  | $ | 287 |  
|                                                                          |  |                  |       |                                            |   |     |       |  |   |                            |   |  |   |     |  
|Balance at September 30, 2005                                             |  | $                | 8,343 |                                            | $ | (45 | )     |  | $ | 8,298                      |   |  |   |     |  
|                                                                          |  |                  |       |                                            |   |     |       |  |   |                            |   |  |   |     |  
|Balance at January 1, 2006                                                |  | $                | 8,410 |                                            | $ | (76 | )     |  | $ | 8,334                      |   |  |   |     |  
|                                                                          |  |                  |       |                                           
|Comprehensive income:                                                     |  |                  |       |                                            |   |     |       |  |   |                            |   |  |   |     |  
|Net income                                                                |  |                  | 94    |                                            |   |    |       |  |   | 94                         |   |  | $ | 94  |  
|                                                                          |  |                  |       |                                           
|Change in unrealized loss on securities available-for-sale, net of taxes  |  |                  |      |                                            |   | 19  |       |  |   | 19                         |   |  |   | 19  |  
|                                                                          |  |                  |       |                                            |   |     |       |  |   |                            |   |  |   |     |  
|Total comprehensive income                                                |  |                  |       |                                            |   |     |       |  |   |                            |   |  | $ | 113 |  
|                                                                          |  |                  |       |                                            |   |     |       |  |   |                            |   |  |   |     |  
|Balance at September 30, 2006                                             |  | $                | 8,504 |                                            | $ | (57 | )     |  | $ | 8,447                      |   |  |   |     |  
|                                                                          |  |                  |       |                                            |   |     |       |  |   |                            |   |  |   |     |  

See accompanying notes to financial statements



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##### Table of Contents

BEN FRANKLIN BANK OF ILLINOIS

STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)



|                                                                          |  |                                 |         |   |      |   |        |  
|------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------ | -
|                                                                          |  | Nine Months Ended September 30, |        
|                                                                          |  | 2006                            |         |   | 2005 |  
|Cash flows from operating activities                                      |  |                                 |         |   |      |   |        |  
|Net income                                                                |  | $                               | 94      |   |      | $ | 321    |  
|Adjustments to reconcile net income to net cash from operating activities |  |                                 |         |   |      |   |        |  
|Depreciation and amortization                                             |  |                                 | 106     |   |      |   | 123    |  
|Amortization of premiums and discounts                                    |  |                                 | 26      |   |      |   | 40     |  
|Provision (credit) for loan losses                                        |  |                                 | (1      | ) |      |   | 13     |  
|Loans originated for sale                                                 |  |                                 | (1,262  | ) |      |   | (5,155 | )
|Proceeds from the sale of loans                                           |  |                                 | 1,262   |   |      |   | 5,181  |  
|Gain on sale of loans                                                     |  |                                 |        |   |      |   | (27    | )
|FHLB stock dividends                                                      |  |                                 |        |   |      |   | (242   | )
|Changes in:                                                               |  |                                 |         |   |      |   |        |  
|Deferred loan costs                                                       |  |                                 | 44      |   |      |   | 80     |  
|Accrued interest receivable                                               |  |                                 | (57     | ) |      |   | (27    | )
|Other assets                                                              |  |                                 | (514    | ) |      |   | 140    |  
|Other liabilities                                                         |  |                                 | (364    | ) |      |   | 123    |  
|                                                                          |  |                                 |         |   |      |   |        |  
|Net cash from operating activities                                        |  |                                 | (666    | ) |      |   | 570    |  
|                                                                          |  |                                
|Cash flows from investing activities                                      |  |                                 |         |   |      |   |        |  
|Principal repayments on mortgage-backed securities                        |  |                                 | 1,963   |   |      |   | 1,969  |  
|Net decrease in loans                                                     |  |                                 | 8,523   |   |      |   | 2,271  |  
|Purchase of loans                                                         |  |                                 | (12,140 | ) |      |   | (3,507 | )
|Redemption of Federal Home Loan Bank stock                                |  |                                 | 489     |   |      |   | 4,700  |  
|Capital expenditures                                                      |  |                                 | (69     | ) |      |   | (29    | )
|                                                                          |  |                                 |         |   |      |   |        |  
|Net cash from investing activities                                        |  |                                 | (1,234  | ) |      |   | 5,404  |  
|                                                                          |  |                                
|Cash flows from financing activities                                      |  |                                 |         |   |      |   |        |  
|Net increase in deposits                                                  |  |                                 | 23,525  |   |      |   | (1,302 | )
|Net change in advances from FHLB                                          |  |                                 |        |   |      |   | (5,000 | )
|Net change in advances from borrowers for taxes and insurance             |  |                                 | (427    | ) |      |   | 328    |  
|                                                                          |  |                                 |         |   |      |   |        |  
|Net cash from financing activities                                        |  |                                 | 23,098  |   |      |   | (5,974 | )
|                                                                          |  |                                 |         |   |      |   |        |  
|Net change in cash and cash equivalents                                   |  |                                 | 21,198  |   |      |   |       |  
|                                                                          |  |                                
|Cash and cash equivalents at beginning of year                            |  |                                 | 7,039   |   |      |   | 5,941  |  
|                                                                          |  |                                 |         |   |      |   |        |  
|Cash and cash equivalents at end of year                                  |  | $                               | 28,237  |   |      | $ | 5,941  |  
|                                                                          |  |                                 |         |   |      |   |        |  
|Supplemental disclosures of cash flow information                         |  |                                 |         |   |      |   |        |  
|Interest paid                                                             |  | $                               | 2,431   |   |      | $ | 1,629  |  
|Income taxes paid                                                         |  |                                 | 467     |   |      |   | 134    |  

See accompanying notes to financial statements



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NOTES TO FINANCIAL STATEMENTS

Note 1 - Basis of Financial statement Presentation

The financial statements of Ben Franklin Financial, Inc. (in formation) (the Holding Company) have been omitted because, as of September 30, 2006, Ben
Franklin Financial, Inc. had not yet issued any stock, had no assets or liabilities, and had not conducted any business other than that of an organizational nature. The accompanying financial statements of Ben Franklin Bank of Illinois (the
Bank) have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) and with the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly they do not
include all of the information and footnotes required for complete financial statements. In the opinion of the Banks management, all adjustments consisting of normal recurring accruals necessary for a fair presentation of the financial
condition and results of operations for the interim periods included herein have been made. These statements should be read in conjunction with the financial statements and notes thereto included in the Holding Companys Registration Statement
on Form SB-2 (File No. 333-135562). Interim results are not necessarily indicative of results for a full year.

In preparing the financial statements,
management is required to make estimates and assumptions that affect the recorded amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses for the period. Actual results could differ from those estimates. For further information with respect to significant accounting policies followed by the Bank in preparation of the financial statements, refer to the Holding Companys
Registration Statement on Form SB-2.

Ben Franklin Bank of Illinois is a federally chartered mutual savings bank and a member of the Federal Home Loan Bank
(FHLB) system. The Bank maintains insurance on savings accounts with the Deposit Insurance Fund (DIF) of the Federal Deposit Insurance Corporation.

Note 2 - Adoption of Plan of Reorganization and Stock Issuance

The Board of Directors of the Bank adopted a Plan of Reorganization and Stock Issuance (the Plan) to reorganize the Bank into the mutual holding company structure under which Ben Franklin Financial, MHC
(the MHC), would become the federal mutual holding company parent of Ben Franklin Financial, Inc. a federal corporation, which in turn would own 100% of the stock of the Bank. Concurrently with the reorganization, the Holding Company
offered and sold 892,688 shares of its common stock in a public offering (including 77,763 shares sold to its employee stock ownership plan) representing 45% of its shares outstanding after the offering. The MHC retained 1,091,062 shares
representing 55% of the outstanding shares of common stock of the Holding Company. The common stock was offered on a priority basis to eligible depositors with the remaining shares offered to the public in a community offering or a syndicated
community offering, or a combination thereof. The MHC will continue to own at least a majority of the common stock of the Holding Company as long as the MHC exists.

Offering costs have been deferred and will be deducted from the proceeds of the shares sold in the offering. If the offering is not completed, all costs will be charged to expense. At September 30, 2006
(unaudited), $492,000 of offering costs had been incurred and deferred. No offering costs had been incurred at December 31, 2005.

Note 3 - New Accounting Standards

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



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##### Table of Contents

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

In February 2006, SFAS
No. 155, Accounting for Certain Hybrid Financial Instruments an amendment of FASB Statements No. 133 and 140, was issued. FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, establishes, among other
things, the accounting for certain derivatives embedded in other financial instruments.. The primary objectives of this Statement with respect to Statement 133 are to: a. Simplify accounting for certain hybrid financial instruments by permitting
fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation and eliminate the interim guidance in Statement 133 Implementation Issue No. D1, Application of
Statement 133 to Beneficial Interests in Securitized Financial Assets, which provides that beneficial interests in securitized financial assets are not subject to the provisions of Statement 133. The primary objective of this Statement with
respect to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, is to eliminate a restriction on the passive derivative instruments that a qualifying special-purpose entity (SPE)
may hold. This Statement is effective for fiscal years that begin after September 15, 2006. Management does not believe the adoption of SFAS No. 155 will have a material impact on the results of operations or financial condition of Ben
Franklin Financial, Inc.

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

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes (FIN 48), which was issued to require that all tax positions be evaluated using consistent criteria and measurement and further supplemented by enhanced disclosure. FIN 48, an interpretation of FASB Statement
No. 109, Accounting for Income Taxes, prescribes the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. This interpretation provides clear criteria for subsequently
recognizing, derecognizing, and measuring such tax positions for financial statement purposes, as well as provides guidance on accrual of interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for
fiscal years beginning after December 15, 2006 or January 1, 2007 for calendar year-end companies. Differences between the amounts recognized in the statements of financial position prior to the adoption of FIN 48 and the amounts reported
after adoption would be accounted for as a cumulative-effect adjustment recorded to the beginning balance of retained earnings. The cumulative-effect adjustment would not apply to those items that would not have been recognized in earnings, such as
the effect of adopting FIN 48 on tax positions related to business combinations. Management is currently evaluating the impact of this interpretation on its financial condition and results of operations.

In September 2006, SFAS No.157, Fair Value Measurements, was issued. This Statement defines fair value, establishes a framework for measuring fair value, and expands
disclosures about fair value measurements. Where applicable, this Statement simplifies and codifies related guidance within GAAP. This Statement applies under other accounting pronouncements that require or permit fair value measurements, except
this Statement does not apply under accounting pronouncements that address share-based payment transactions: FASB Statement No. 123



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(revised 2004), Share-Based Payment,and its related interpretive accounting pronouncements that address
share-based payment transactions and this Statement does not eliminate the practicability exceptions to fair value measurements in accounting pronouncements within the scope of this Statement. Management does not believe the adoption of SFAS
No. 157 will have a material impact on the results of operations or financial condition of Ben Franklin Financial, Inc.

In September 2006, SFAS
No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans an amendment of FASB Statements No. 87, 88, 106, and 132(R), was issued. This Statement results from the initial phase of a comprehensive
project to improve an employers accounting for defined benefit pension and other postretirement plans. The objectives of this Statement are for an employer to: recognize the overfunded or underfunded status of a single-employer defined benefit
postretirement plan (benefit plan or plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in comprehensive income (for a business entity) or changes in unrestricted net assets (for a
not-for-profit organization) in the year in which the changes occur, and measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. This Statement does not change the accounting for a
multiemployer plan. SFAS No. 158 does not apply to Ben Franklin Financial, Inc.

In September 2006, SAB No.108, Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements was issued. The statement addresses the diversity in practice in quantifying financial statement misstatements and the potential under current practice for the build
up of improper amounts on the balance sheet. Management does not believe the adoption of SAB No. 108 will have a material impact on the results of operations or financial condition of Ben Franklin Financial, Inc.



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Item 2. Managements Discussion and Analysis or Plan of Operation

Ben Franklin Financial, Inc. completed its initial
public offering on October 18, 2006 and consequently, the information herein at and for the periods ending on September 30, 2006 does not contain any per share information. The Holding Company sold 892,688, or 45% of its outstanding shares
of common stock, to subscribers in the offering including 77,763 shares purchased by the Ben Franklin Bank Employee Stock Ownership Plan. Ben Franklin Financial MHC, the Holding Companys federally chartered mutual holding company parent, holds
1,091,062 shares, or 55% of the Holding Companys stock. Net proceeds from the initial offering were approximately $8.1 million.

Forward-Looking Statements

This quarterly report on Form 10-QSB may contain statements relating to the future
results of the Bank (including certain projections and business trends) that are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 (the PSLRA). Such forward-looking
statements, in addition to historical information, which involve risk and uncertainties, are based on the beliefs, assumptions and expectations of management of the Bank. Words such as expects, believes, should,
plans, anticipates, will, potential, could, intend, may, outlook, predict, project, would, estimates,
assumes, likely, and variations of such similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements include, but are not limited to: statements of our goals,
intentions, and expectations; statements regarding our business plans and prospects and growth and operating strategies; statements regarding the asset quality of our loan and investment portfolios; and estimates of our risks and future costs and
benefits. For this presentation, the Bank claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

Factors that
could cause future results to vary from current management expectations include, but are not limited to: our ability to manage the increased risk from our multi-family and commercial real estate lending; significantly increased competition among
depository and other financial institutions; our ability to execute our plan to grow our assets on a profitable basis; our ability to execute on a favorable basis any plan we may have to acquire other institutions or branches or establish new
offices; changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments and inflation; general economic conditions, either nationally or in our market area; adverse changes in the securities and
national and local real estate markets (including real estate values); legislative or regulatory changes that adversely affect our business; our ability to enter new markets successfully and take advantage of growth opportunities; changes in
consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies and the authoritative accounting and auditing bodies; and changes in our organization, compensation and
benefit plans; and other factors discussed elsewhere in this report and set forth under Risk Factors in our Registration Statement on Form SB-2. The forward-looking statements are made as of the date of this report, and the Bank assumes no
obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

General

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

Our principal business activity is the origination
and purchase of mortgage loans secured by one- to four-family residential real estate. We also invest in commercial real estate, multi-family, construction, land and home equity loans. Ben Franklin Bank of Illinois offers a variety of deposit
accounts, including checking, money market savings and certificates of deposit, and it emphasizes personal and efficient service for its customers. Deposits have traditionally been our primary source of funds for use in lending and investment
activities. We also use borrowings, primarily Federal Home Loan Bank of Chicago advances, to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and to manage the cost of funds. In addition, we receive
funds from scheduled loan payments, investment maturities, loan prepayments, retained earnings and income on earning assets.



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

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

Critical Accounting Policies

Certain of our accounting policies are important to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently
uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but are not limited to, changes in
interest rates, changes in performance of the economy and changes in the financial condition of borrowers. Management believes that its critical accounting policies include determining the allowance for loan losses and accounting for deferred income
taxes.

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

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

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

The analysis of the allowance for loan losses has two components:
specific and general allocations. Specific allocations are made for loans that are determined to be impaired. Impairment loss is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair
value of the collateral adjusted for market conditions and selling expenses. The general allocation is determined by segregating special mention and



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classified loans from the remaining loans, and then categorizing each group by type of loan. Loans within each type
exhibit common characteristics including terms, collateral type, and other risk characteristics. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis
establishes factors that are applied to the loan groups to determine the amount of the general allocations. Actual loan losses may be significantly more than the allowance for loan losses we have established which could have a material negative
effect on our financial results.

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

Comparison of Financial Condition at September 30, 2006 and December 31, 2005

Assets.Total
assets at September 30, 2006 were $130.6 million compared to $107.8 million at December 31, 2005, an increase of $22.8 million or 21.2%. This increase reflects subscription funds received by the Bank from depositors totaling $21.1 million
at September 30, 2006 relating to the Banks plan of reorganization, and were primarily responsible for the $21.2 million increase in cash and cash equivalents. Loan balances and other assets increased $3.6 million and $498,000
respectively and were offset by a decreases in securities of $2.0 million and Federal Home Loan Bank of Chicago stock of $489,000.

For the first nine
months of 2006, loan balances increased $3.6 million to $93.6 million at September 30, 2006 compared to $90.0 million at December 31, 2005. Our one-to four family mortgage loans increased $2.4 million or 4.9% to $51.2 million as of
September 30, 2006. Similarly our commercial real estate loans increased $1.5 million or 12.1% to $14.0 million and our commercial loans increased $1.8 million or 103.8% to $3.6 million, both as of September 30, 2006. These increases were
offset by decreases in our multi-family real estate loans of $1.7 million or 11.1% to $13.5 million and construction loans of $1.0 million or 19.4% to $4.2 million, both as of September 30, 2006. Our home equity lines-of-credit decreased
$622,000 or 7.5% to $7.6 million at September 30, 2006 compared to $8.3 million at December 31, 2005. To supplement our originations and deploy excess liquidity into higher yielding assets, we purchased $8.0 million of adjustable-rate
single-family loans during the nine months ended September 30, 2006. During that same period we also purchased $5.1 million in participations of multi-family and commercial real estate loans in the Chicago area as management continues to focus
on these shorter term higher yielding loans. At September 30, 2006 and December 31, 2005, we had no non-performing loans

Securities balances
decreased $2.0 million from December 31, 2005 to September 30, 2006 due to payments on mortgage-backed securities and the Federal Home Loan Bank of Chicago stock balance decreased $489,000 due to redemption of stock. Given the low dividend
rate on Federal Home Loan Bank of Chicago stock, we may consider requesting redemption of additional shares of stock when permitted by the Federal Home Loan Bank of Chicago.

Cash and cash equivalents have increased $21.2 million or 302.9% to $28.2 million at September 30, 2006 compared to $7.0 million at December 31, 2005. The increase is due to $21.1 million increase in deposit
accounts related to subscription funds received for the public offering. Upon closing of the stock offering on October 18, 2006, approximately $13.9 million were returned to depositors due to the over subscription. We intend to use the proceeds
as outline in the prospectus to enhance products and services offered to our customers and implement a controlled growth strategy.

Our other assets
increased $498,000 or 138.0% to $859,000 due to offering costs related to the Banks reorganization which totaled $492,000 at September 30, 2006.

Liabilities. Deposit balances increased $23.5 million or 24.4% to $119.7 million at September 30, 2006 from $96.2 million at December 31, 2005. The increase was primarily due to $21.1 million of subscription funds
for the stock offering which were deposit in a savings account. This caused a $20.4 million or 178.9% increase in savings accounts to $31.8 million at September 30, 2006 compared to $11.4 million at December 31, 2005. Our certificates



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of deposit accounts increased $5.2 million or 8.7% to $65.4 million and our demand accounts increased $577,000 or 5.8% to
$10.5 million, both as of September 30, 2006. A substantial portion of the subscription funds were either converted to equity or refunded upon completion of the stock offering. These increases were offset by a decrease in money market accounts
of $2.8 million or 19.0% to 11.9 million at September 30, 2006. The increase in certificates of deposit was due to promotional rates offered during the first quarter of 2006 to retain $16.4 million of maturing deposits, which resulted in
additional funds being deposited. The decrease in money market accounts reflects managements decision to conservatively price these deposit accounts as well as the increased attractiveness to customers of competitively priced certificates of
deposit in a higher interest rate environment. The increase in demand accounts was primarily due to a promotional rate offered for these accounts.

Equity. Total equity at September 30, 2006 was $8.4 million compared to 8.3 million at December 31, 2005. Equity increased by $94,000 due to net income and increased $19,000 due to a decrease in the unrealized
loss on securities available-for-sale net of taxes.

Interest Rate Risk.An important measure of interest rate risk is the amount by which
the net present value of an institutions cash flow from assets, liabilities and off balance sheet items (the institutions net portfolio value or NPV) changes in the event of a range of assumed changes in market interest
rates. We have utilized the Office of Thrift Supervision net portfolio value model (NPV) to provide an analysis of estimated changes in our NPV under the assumed instantaneous changes in the United States treasury yield curve. The
financial model uses a discounted cash flow analysis and an option-based pricing approach to measuring the interest rate sensitivity of the NPV. Set forth below is an analysis of the changes that would occur to our NPV as of June 30, 2006, the
most recent information available, in the event of designated changes in the United States treasury yield curve. Management does not believe there is a material change in market risk since June 30, 2006.



|                                            |  |                        |              |                                     |         |                        |                                                    |  |     |    |  |       |   |  |      |  
|------------------------------------------- |  | ---------------------- | ------------ | ----------------------------------- | ------- | ---------------------- | -------------------------------------------------- |  | --- | -- |  | ----- | - |  | ---- | -
|Change in Interest Rates (basis points) (1) |  | EstimatedNPV (2)       |              | Estimated Increase(Decrease) in NPV |         |                        | NPV as a Percentage of
Present Value of Assets (3) | 
|                                            |  |                        | NPV Ratio(4) |                                     |         | Change in Basis Points |                                                   
|                                            |  | Amount                 |              |                                     | Percent |                        |                                                    | 
|                                            |  | (Dollars in thousands) |             
|+300                                        |  | $                      | 8,217        |                                     | $       | (3,581                 | )                                                  |  | (30 | )% |  | 7.63  | % |  | (281 | )
|+200                                        |  |                        | 9,547        |                                     |         | (2,251                 | )                                                  |  | (19 | )  |  | 8.71  |   |  | (173 | )
|+100                                        |  |                        | 10,765       |                                     |         | (1,033                 | )                                                  |  | (9  | )  |  | 9.66  |   |  | (78  | )
|0                                           |  |                        | 11,798       |                                     |         |                       |                                                    |  |    |    |  | 10.44 |   |  |     |  
|-100                                        |  |                        | 12,565       |                                     |         | 767                    |                                                    |  | 7   |    |  | 10.98 |   |  | 54   |  
|-200                                        |  |                        | 12,911       |                                     |         | 1,113                  |                                                    |  | 9   |    |  | 11.18 |   |  | 74   |  

---

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

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

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

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

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



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Comparison of Operating Results for the Three Months Ended September 30, 2006
and September 30, 2005

General.Net income decreased 52.2% to $33,000 for the three months ended September 30, 2006 compared to
$69,000 for the three months ended September 30, 2005. This decrease reflects a decline in our net interest margin from 3.08% for the three months ended September 30, 2005 to 2.83% for the three months ended September 30, 2006. The
primary reasons for the decline were higher interest rates paid on certificates of deposit during a period of rising short-term interest rates which contributed to a 97 basis point increase in the cost of interest-bearing liabilities, and an
increase in the balance of lower yielding interest-earning deposits in 2006 along with a decrease in the Federal Home Loan Bank of Chicago stock dividend, both of which limited the increase in yield on interest-earning assets to 68 basis points.
Management does not expect to see any significant improvement in our interest margin until economic conditions, particularly the current flat yield curve, improve. Non-interest income increased $21,000 or 46.7% to $66,000 for the three
months ended September 30, 2006 compared to $45,000 for the three months ended September 30, 2005 due to an increase in the fixed rate residential loans originated for other financial institutions as we limit our exposure to long term
fixed rate loans in connection with our asset/liability management efforts. Non-interest expense increased $34,000 or 4.5% to $790,000 from $756,000 the prior year quarter primarily due to data processing charges related to a system conversion.

Interest Income. Interest income increased $227,000 for the three months ended September 30, 2006 compared with the prior
year period or 16.1% to $1.6 million. Interest income from loans increased $155,000 or 12.3% to $1.4 million for the three months ended September 30, 2006 due primarily to an increase in yield due to rising market rates. The average yield on
loans for the three months ended September 30, 2006 increased to 6.25% compared to 5.63% for the three months ended September 30, 2005 due to upward repricing of certain adjustable rate loans, higher rates on new originations, and a change
in the mix of our loan portfolio. The average loan balance increased $1.0 million or 1.1% to $90.6 million for the three months ended September 30, 2006 compared to $89.6 million for the three months ended September 30, 2005.

The average balance of our multi-family real estate, commercial real estate and land loans increased $1.8 million or 6.9% to $27.8 million. Average
yield on such loans was 6.65% for the three months ended September 30, 2006 compared to 6.45% for the three months ended September 30, 2005. These factors resulted in an increase in interest income of $43,000. The average balance of
commercial loans increased $1.3 million or 57.1% to $3.5 million at September 30, 2006 with an average yields for the three months ended September 30, 2006 of 10.62% compared to 7.52% the prior year quarter resulting in a $51,000 increase
in interest income. The increase in commercial loan interest included $15,000 from a nonperforming loan which was brought current in the quarter. These increases were offset by a decrease in the average balance of home equity lines-of-credit of $1.2
million or 13.4% to $7.9 million. The average yield on equity line-of-credit loans for the three months ended September 30, 2006 was 7.73% compared to 5.83% the prior year quarter resulting in an increase in interest income of $20,000. The
average balance of all remaining loans decreased $854,000 to $51.4 million and included declines in one-to four-family residential loans of $546,000 or 1.1% and construction loans of $321,000 or 9.3%, for the three months ended September 30,
2006 compared to the prior year quarter. The average yield on such loans was 5.52% for the three months ended September 30, 2006 compared to 5.11% for the three months ended September 30, 2005, resulting in an increase in interest income
of $41,000.

Interest income from securities decreased $27,000 or 26.7% to $74,000 for the three months ended September 30, 2006 from $101,000 for
three months ended September 30, 2005. Dividend income from Federal Home Loan Bank of Chicago stock declined $9,000 or 37.5% primarily due to the rate paid. For the dividend received for the three months ended September 30, 2005 the rate
of 5.50% was paid as compared to the rate of 3.10% that was paid for the dividend received for three months ended September 30, 2006. The average balance of our securities decreased $3.2 million to $7.2 million for the three months ended
September 30, 2006 compared to $10.4 million for three months ended September 30, 2005 due primarily to the payments on mortgage-backed securities and the redemption of $489,000 of Federal Home Loan Bank of Chicago stock in the second
quarter of 2006. The yield on securities for the three months ended September 30, 2006 was 4.09% compared to 3.89% for the three months ended September 30, 2005 due to the repricing of adjustable mortgage-backed securities.



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Interest from other interest-earning assets for the three months ended September 30, 2006 increased $99,000 or
183.3% to $153,000 from $54,000 for the three months ended September 30, 2005 due to higher balances and higher interest rates. The average balance for the three months ended September 30, 2006 was $11.7 million with an average yield of
5.25%. For the three months ended September 30, 2005, the average balance was $6.4 million with an average yield of 3.39%. Of the $5.3 million increase in balance, approximately $3.1 million related to subscription funds from the stock
offering.

Interest Expense. Interest expense for the three months ended September 30, 2006 was $866,000, an increase of $272,000 or
45.8% from $594,000 for the three months ended September 30, 2005. Interest expense on deposit accounts increased $272,000 or 47.6% to $843,000 from $571,000 for the prior year period due primarily to an increase in average cost to 3.38% for
the three months ended September 30, 2006 compared to 2.39% for the prior year period. This increase was due to an increase in general interest rates, a highly competitive market for certificates of deposit combined with a higher percentage of
our deposits in certificates of deposit. The average balance of deposit accounts increased $3.9 million or 4.1% to $99.9 million for the three months ended September 30, 2006 compared to $96.0 million for the three months ended
September 30, 2005. For the three months ended September 30, 2006, average certificates of deposit increased $6.2 million or 10.5% to $65.0 million from $58.8 million and average savings accounts increased $1.3 million or 10.5% to $13.7
million for the three months ended September 30, 2006 from $12.4 million for the three months ended September 30, 2005. Savings account balances were impacted by the subscription funds on deposit. The increase in savings and certificate of
deposit accounts was offset by a decrease in demand and money market accounts of $3.5 million or 14.2% to $21.2 million for the three months ended September 30, 2006 from $24.7 million for the prior year quarter. The changes in deposit balances
were the result of our decision to withhold rate increases on certain non-certificate of deposit accounts and customer preference for higher yielding instruments in a rising interest rate environment.

Net Interest Income. Net interest income for the three months ended September 30, 2006 was $775,000 compared to $820,000 for the three months ended
September 30, 2005, a decrease of $45,000 or 5.5%. The average yield on interest-earning assets for the three months ended September 30, 2006 was 6.01% compared to 5.33% for the prior year period. The average cost of interest-bearing
liabilities increased to 3.41% for the three months ended September 30, 2006 from 2.44% for the three months ended September 30, 2005. The net interest rate spread decreased to 2.60% for the three months ended September 30, 2006
compared to 2.89% for the three months ended September 30, 2005. To the extent that the yield curve remains flat, as certain certificates of deposit mature and are renewed and replaced, we are likely to experience continued compression of our
interest rate margin which will have an adverse impact on our results of operations.

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

There was no provision for loan losses for the three months ended September 30, 2006 compared
to a provision for loan losses of $4,000 for the three months ended September 30, 2005. While our methodology takes into account higher risk factors for multi-family real estate, commercial real estate and land lending, other factors including
our experience with our borrowers and community, our underwriting standards and the repayment performance of our portfolio loans may offset these risks. The unchanged allowance for the three months ended September 30, 2006 reflects the
continued low level of non-performing and past due loans in our portfolio and the modest increase in our portfolio balance.

Non-interest
Income. For the three months ended September 30, 2006, non-interest income was $66,000 compared to $45,000 for the three months ended September 30, 2005, a 46.7% increase. There was no gain on sale of loans for the three months
ended September 30, 2006 compared with $6,000 for the prior year period. Fees received from providing loan origination services for other financial institutions totaled $25,000 for the three months ended September 30, 2006 compared to
$2,000 for the three months ended September 30, 2005.

Non-interest Expense. For the three months ended September 30, 2006,
non-interest expense totaled $790,000 compared to $756,000 for the prior year period, a 4.5% increase. Compensation and benefits expense increased $12,000 or 2.7% for the three months ended September 30, 2006 from the three months ended
September 30, 2005



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due to normal salary increases. Data processing costs increased $31,000 or 48.4% for the three months ended
September 30, 2006 from the three months ended September 30, 2005 due to charges related to system conversions. All other components of non-interest expense increase $3,000 or 1.3% from the prior year period. Compensation expense is
expected to increase in future quarters due to the establishment of our employee stock ownership plan on October 18, 2006. Professional fees are also expected to increase due to our status as a public company.

Income Tax Provision.The provision for income taxes was $18,000 for the three months ended September 30, 2006 compared to $36,000 for the three
months ended September 30, 2005. The decrease in the provision was due to the decrease in pretax income of $54,000.

Comparison of Operating Results for the Nine Months Ended September 30, 2006 and September 30, 2005

General. Net
income decreased $227,000 or 70.7% to $94,000 for the nine months ended September 30, 2006 compared to $321,000 for the nine months ended September 30, 2005. The primary reasons for this decrease were higher interest rates paid on
certificates of deposit during a period of rising short-term interest rates which contributed to a 93 basis points increase in yield on interest-bearing liabilities, and an increase in the balance of lower yielding interest-earning deposits along
with a decrease in the Federal Home Loan Bank of Chicago stock dividend rate, both of which limited the increase in yield on interest-earning assets to 43 basis points Non-interest income increased for the nine months ended September 30, 2006
by $28,000 or 19.1% to $175,000 from $147,000 for the nine months end September 30, 2005 due to higher service fee and other fee income. Non-interest expense for the nine months ended September 30, 2006 was $2.3 million, the same as the
prior year period.

Interest Income.Interest income for the nine months ended September 30, 2006 increased $350,000 or 8.1% to $4.7
million from $4.3 million for the nine months ended September 30, 2005. Interest income from loans increased $383,000 or 10.4% to $4.1 million for the nine months ended September 30, 2006 from $3.7 million for the same period in 2005. This
increase was due to an increase in loan yields resulting from higher market rates and an increased emphasis on higher yielding multi-family real estate, commercial real estate and land loans. Our average loan balance remained unchanged for the nine
months ended September 30, 2006 from the prior year period at $90.0 million. The average yield on loans for the nine months ended September 30, 2006 was 6.06% compared to 5.49% for the prior year period as higher market interest rates
resulted in originations at higher rates and caused our variable rate loans to reprice at higher rates. The change in our portfolio mix also contributed to the increase in yield.

The average balance of our multi-family real estate, commercial real estate and land portfolios increased $4.2 million or 17.9% to $27.7 million for the nine months ended September 30, 2006 compared to $23.5
million for the same period in 2005. Average yield on such loans was 6.60% for the nine months ended September 30, 2006 compared to 6.29% for the nine months ended September 30, 2005. These factors resulted in an increase in interest
income of $261,000. Similarly, the average balance of commercial loans increased $901,000 or 47.2% to $2.8 million for the nine months ended September 30, 2006 with a yield of 8.75% compared to the average balance of $1.9 million with a yield
of 6.85% for the same period in 2005. This resulted in an increase in interest income of $86,000. These increased balances were offset by decreases in the average balance of our single-family and equity-line of credit loans. The average balance of
our single-family loans decreased $2.8 million or 5.6% to $48.0 million for the nine months ended September 30, 2006 compared to $50.8 million for the nine months ended September 30, 2005. Our equity lines-of-credit decreased $1.5 million
or 16.0% to $7.9 million for the nine months ended September 30, 2006 compared to $9.4 million for the same period in 2005. The average yield on single-family and equity line-of-credit loans were 5.09% and 7.15% respectively for the nine months
ended September 30, 2006 compared to 4.85% and 5.24% respectively for the nine months ended September 30, 2005, resulting in a decrease in interest income of $16,000 for single-family loans and an increase in interest income of $55,000 for
equity line-of-credit loans

Interest income from securities declined $256,000 or 52.2% to $234,000 for the nine months ended September 30, 2006 from
$490,000 for the nine months ended September 30, 2005. The average balance of securities for the nine months ended September 30, 2006 was $8.2 million compared to $11.9 million for the prior year due to the redemption of Federal Home Loan
Bank of Chicago stock and payments received on mortgage-backed securities. Our Federal Home Loan Bank of Chicago stock dividends decreased $196,000 or 80.6% to $47,000 for the nine months ended September 30, 2006 from $243,000 for the prior
year period due to an average balance decrease of



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$1.9 million or 35.5% related to the redemption of $4.7 million of excess stock during the first quarter of 2005 and
$489,000 in the second quarter of 2006, as well as a decline in the dividend rate paid on such stock from 5.50% in the first quarter of 2005 declining to 3.10% in 2006. With the decrease in Federal Home Loan Bank of Chicago dividends, the yield on
our securities for the nine months ended September 30, 2006 was 3.80% compared to 5.49% for the nine months ended September 30, 2005.

For the
nine months ended September 30, 2006, interest from other interest-earning assets increased $223,000 or 189.0% to $341,000 from $118,000 for the nine months ended September 30, 2005 due to higher balances and an increase in yields. The
average balance increased during the first nine months of 2006 by $3.8 million to $9.3 million or 69.1% from $5.5 million for the first nine months of 2005. The average balance of subscriptions funds for the nine months ended September 30, 2006
totaled $1.0 million, contributing to the increase. For the nine months ended September 30, 2006, the yield on interest-earning deposits increased to 4.90% from 2.89% in the prior year period reflecting changes in general interest rates. During
this period of rising rates, we increased our liquidity pending reinvestment into higher yielding loans and other investments.

Interest
Expense. Interest expense for the nine months ended September 30, 2006 was $2.4 million, an increase of $689,000 or 40.1% from the nine months ended September 30, 2005. Interest expense on deposit accounts increased $741,000 or
46.3% to $2.3 million for the nine months ended September 30, 2006 from $1.6 million for the nine months ended September 30, 2005. This increase was due to an increase in general interest rates, a highly competitive market for certificates
of deposit, and a higher percentage of our customer deposits in certificates of deposit. The average cost of deposits increased to 3.19% in the first nine months of 2006 compared to 2.19% in the first nine months of 2005 due to an increase in market
rates. Our average balance of deposit accounts was $97.4 million for the nine months ended September 30, 2006, an increase of $1.0 million or 1.0% from the prior year period. An increase during the nine months ended September 30, 2006 in
the average balance of certificates of deposit accounts of $5.9 million or 10.3% offset in part by a decrease in savings, demand, and money market accounts of $4.9 million or 12.7% accounted for the overall increase in the balance of deposit
accounts. This increase resulted from our decision to withhold rate increases on certain non-certificates of deposit accounts and customer preference for higher yielding certificates of deposit in a higher interest rate environment.

Interest expense on Federal Home Loan Bank of Chicago advances was $69,000 for the nine months ended September 30, 2006, a decrease of $52,000 or 43.0% from
$121,000 for the prior year period. The average balance of advances for the nine months ended September 30, 2006 was $2.0 million compared to $3.0 million for the nine months ended September 30, 2005. During 2005, we paid off $5.0 million
of the $7.0 million advance that matured and extended the balance for five years. The average cost for Federal Home Loan Bank of Chicago advances decreased to 4.64% for the nine months ended September 30, 2006 from 5.40% for the nine months
ended September 30, 2005 as we paid down our higher cost borrowings.

Net Interest Income. Net interest income for the nine months ended
September 30, 2006 decreased $339,000 or 13.0% to $2.3 million from $2.6 million for the prior year. The average yield on interest-earning assets for nine months ended September 30, 2006 was 5.79% compared to 5.36% for the prior year
period. The average cost of interest-bearing liabilities increased to 3.22% for the nine months ended September 30, 2006 from 2.29% for the nine months ended September 30, 2005. The result was a net interest rate spread of 2.57% for the
nine months ended September 30, 2006 compared to 3.07% for the prior year period.

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

A credit of $1,000 for loan losses was recorded for the nine months ended
September 30, 2006 compared to a provision for loan losses of $13,000 for the nine months ended September 30, 2005. The credit for the nine months ended September 30, 2006 reflected the continued low level of non-performing and past
due loans in our portfolio and a stable loan portfolio balance.

Non-interest Income. Non-interest income increased $28,000 or 19.1% to
$175,000 for the nine months ended September 30, 2006 compared to $147,000 for the prior year period. Fees for deposit and loan related services were



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$141,000 for the nine months ended September 30, 2006 compared to $100,000 for the prior year period, a 41.0%
increase. This increase was primarily due to a $51,000 increase in fees received from providing loan origination services for other financial institutions. This was offset by a $27,000 decrease in gain on sale of loans.

Non-interest Expense. Non-interest expense totaled $2.3 million for the nine months ended September 30, 2006, unchanged from the nine months ended
September 30, 2005. The largest component of non-interest expenses, compensation and benefits expense, increased $29,000 or 2.2% primarily due to an increase in salaries of $15,000 due to normal salary increases. Data processing expense
increased $40,000 or 21.9% for the nine months ended September 30, 2006 to $223,000 due to charges related to system conversions in the thirds quarter of 2006. All other components of non-interest expense decreased $28,000 or 3.6%.

Income Tax Provision. The provision for income taxes was $55,000 for the nine months ended September 30, 2006 compared to $166,000 for the nine
months ended September 30, 2005. The decrease in the provision was due to the decrease in pretax income of $338,000.

Liquidity and Capital
Resources

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

Liquidity management is both a daily and long-term
responsibility of management. We adjust our investments in liquid assets based upon managements assessment of (i) expected loan demand, (ii) expected deposit flows, (iii) yields available on interest-earning deposits and
investment securities, and (iv) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest-earning overnight deposits, Federal funds sold, and short and intermediate-term U.S. Government
and agency obligations and mortgage-backed securities of short duration. If we require funds beyond our ability to generate them internally, we have additional borrowing capacity with the Federal Home Loan Bank of Chicago.

Our cash flows are comprised of three primary classifications: (i) cash flows from operating activities, (ii) investing activities, and (iii) financing
activities. Net cash from operating activities were $(666,000) and $570,000 for the nine months ended September 30, 2006 and 2005, respectively. Net cash from investing activities consisted primarily of disbursements for loan originations and
purchases, offset by principal collections on loans and mortgage-backed securities, and proceeds from Federal Home Loan Bank stock redemption. Net cash from investing activities were $(1.2) million and $5.4 million for the nine months ended
September 30, 2006 and 2005, respectively. Net cash from financing activities consisted primarily of the activity in deposit, borrowing, and escrow accounts. The net cash from financing activities was $23.1 million and $(6.0) million for the
nine moths ended September 30, 2006 and 2005, respectively.

At September 30, 2006, the Bank exceeded all of its regulatory capital requirements
with a Tier 1 (core) capital level of $8.3 million, or 6.39% of adjusted total assets which was $3.1 million above the required level of $5.2 million, or 4.00%; and total risk-based capital of $8.9 million or 10.92% of risk weighted assets, which
was $2.4 million above the required level of $6.5 million or 8.00%. The Bank at September 30, 2006 was categorized as well capitalized. Management is not aware of any conditions or events since the most recent notification that would change the
Banks category.

Our most liquid assets are cash and short-term investments. The levels of these assets are dependent on our operating, financing,
lending, and investing activities during any given period. We may also utilize the sale of securities available-for-sale, federal funds purchased, Federal Home Loan Bank of Chicago advances and other borrowings as sources of funds. At
September 30, 2006, cash and cash equivalents totaled $28.2 million.

At September 30, 2006, we had outstanding commitments to originate loans of
$361,000. We anticipate that we will have sufficient funds available to meet our current loan commitments. Loan commitments have, in recent periods, been funded through liquidity and normal deposit flows. Certificates of deposit scheduled to mature
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less from September 30, 2006 totaled $41.0 million. Management believes, based on past experience that a significant
portion of such deposits will remain with us. In addition, $13.9 million in oversubscriptions will be refunded to depositors upon the closing of the transaction. Based on the foregoing, in addition to our level of core deposits and capital, we
consider our liquidity and capital resources sufficient to meet our outstanding short-term and long-term needs.

Off-Balance Sheet Arrangements.

In the normal course of operations, we engage in a variety of financial transactions that, in accordance
with generally accepted accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage
customers requests for funding and take the form of loan commitments and lines of credit. For the nine months ended September 30, 2006, we did not engage in any off-balance sheet transactions other than loan origination commitments in the
normal course of our lending activities.

Item 3. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the
Banks management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Banks disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e)
promulgated under the Securities and Exchange Act of 1934, as amended) as of September 30, 2006. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer, have concluded that our disclosure controls and procedures are
designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SECs rules and
regulations and are operating in an effective manner.

No change in our internal controls over financial reporting (as defined in Rules 13a-15(f) or
15(d)-15(f) under the Securities Exchange Act of 1934) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II Other Information

Item 1 Legal Proceedings

There are no material pending legal proceedings to which the Holding Company or the Bank is a
party other than ordinary routine litigation incidental to their respective businesses.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

The Holding Company began selling its common stock to
the Banks depositors and employee stock ownership plan in a subscription offering beginning on or about August 24, 2006. The stock offering closed October 18, 2006 resulting in net proceeds of approximately $8.1 million. The offering
proceeds will be invested as set forth in our Registration Statement on Form SB-2 (File No. 333-135562) as declared effective by the SEC on August 14, 2006. The Holding Company registered 892,688 shares of its common stock for sale at an
aggregate amount of $8,926,880.

Item 3 Defaults upon 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

(a) Exhibits



| | 31.1 | Rule 13(a)  14(a) Certification (Chief Executive Officer)
| | ---- | ----------------------------------------------------------



| | 31.2 | Rule 13(a)  14(a) Certification (Chief Financial Officer)
| | ---- | ----------------------------------------------------------



| | 32.1 | Section 1350 Certification (Chief Executive Officer)
| | ---- | ----------------------------------------------------



| | 32.2 | Section 1350 Certification (Chief Financial Officer)
| | ---- | ----------------------------------------------------



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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                        |  |  |  |                                      
|----------------------- |  |  |  | -------------------------------------
|                        |  |  |  | BEN FRANKLIN FINANCIAL, INC.         
|                        |  |  |  | (Registrant)                         
|                        |  | 
|Date: November 13, 2006 |  |  |  | /s/ C. Steven Sjogren                
|                        |  |  |  | C. Steven Sjogren                    
|                        |  |  |  | President and Chief Executive Officer



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