UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 2008

FOR THE QUARTER ENDED MARCH 31, 2007


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

Commission file number 000-51194

Benjamin Franklin Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

Massachusetts		04-3336598
Massachusetts (State or Other Jurisdiction of Incorporation or Organization)		04-3336598 (I.R.S. Employer Identification No.)
(State or Other Jurisdiction of		(I.R.S. Employer
58 Main Street, Franklin, MA (Address of Principal Executive Offices)		02038 (Zip Code)
Incorporation or Organization)		Identification No.)
58 Main Street, Franklin, MA		02038
(Address of Principal Executive Offices)		(Zip Code)

~~Indicate~~Registrant’s bytelephone ~~check~~number, ~~mark~~including ~~whether~~area ~~the~~code: ~~registrant~~ (1617) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o 528-7000

Indicate by check mark whether the registrant is(1) has afiled ~~large~~all ~~accelerated~~reports ~~filer,~~required anto ~~accelerated~~be filed ~~filer,~~by Section 13 or a15(d) ~~non-accelerated~~of ~~filer.~~the ~~See~~Securities ~~definition~~Exchange Act of ~~“accelerated~~1934 ~~filer~~during ~~and~~the ~~large~~preceding ~~accelerated~~12 months (or ~~filer”~~for insuch ~~Rule 12b-2~~shorter ofperiod that the ~~Exchange~~registrant ~~Act.~~was ~~(Check~~required ~~one~~to file such reports):, and (2) has been subject to such filing requirements for the past 90 days. Yes þ Noo

~~Large~~ Indicate by check mark whether the registrant is a large accelerated filer, ~~o Accelerated~~an accelerated filer, ~~þ Non~~a non-accelerated filer oor a smaller reporting company. See the definitions of “large accelerated filer,” “ accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o ~~No þ~~ Noþ

Shares outstanding of the registrant’s common stock (no par value) at ~~May~~August 98, ~~2007~~2008: 8 7,~~177~~666,~~202~~172

	Page			~~Page~~
PART I — FINANCIAL INFORMATION
			Item 1. Consolidated Financial Statements
Item 1. Financial Statements
			Consolidated Balance Sheets at March 31, 2007 and December 31, 2006		3
Consolidated Balance Sheets at June 30, 2008 and December 31, 2007		3
			Consolidated Statements of Income for the three months ended March 31, 2007 and 2006		4
Consolidated Statements of Income for the three and six months ended June 30, 2008 and 2007		4
			Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2007 and 2006		5
Consolidated Statements of Changes in Stockholders’ Equity for the six months ended June 30, 2008 and 2007		5
			Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2006		6
Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007		6
Notes to Condensed Consolidated Financial Statements		8	~~Notes to Condensed Consolidated Financial Statements~~		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11	~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~		9
Item 3. Quantitative and Qualitative Disclosures about Market Risk		28	~~Item 3. Quantitative and Qualitative Disclosures about Market Risk~~		23
Item 4. Controls and Procedures		29	~~Item 4. Controls and Procedures~~		24
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		30	~~Item 1. Legal Proceedings~~		26
			Item 1A Risk Factors That May Affect Future Results		26
Item 1A Risk Factors		30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		30	~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~		26
Item 3. Defaults on Senior Securities		30	~~Item 3. Defaults on Senior Securities~~		26
Item 4. Submission of Matters to a Vote of Security Holders		30	~~Item 4. Submission of Matters to a Vote of Security Holders~~		26
Item 5. Other Information		31	~~Item 5. Other Information~~		26
Item 6. Exhibits		31	~~Item 6. Exhibits~~		26
SIGNATURES		34			29
EX-31.1 SECTION 302 CERTIFICATION OF CEO
EX-31.1 SECTION 302 CERTIFICATION OF THE CEO
EX-31.2 SECTION 302 CERTIFICATION OF CFO
EX-31.2 SECTION 302 CERTIFICATION OF THE CFO
EX-32.1 SECTION 906 CERTIFICATION OF CEO
EX-32.1 SECTION 906 CERTIFICATION OF THE CEO
EX-32.2 SECTION 906 CERTIFICATION OF CFO
EX-32.2 SECTION 906 CERTIFICATION OF THE CFO

PART I. FINANCIAL INFORMATION


Item 1.		Financial Statements

BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	March 31,			December 31,
	June 30,			December 31,
	2007			2006
	2008			2007
	(Unaudited)			(Audited)
ASSETS
Cash and due from banks	$	2012,~~383~~235		$	1612,~~115~~226
Cash supplied by CSSI to ATM customers		33,783			39,732
Cash supplied to ATM customers		25,970			42,002
Short-term investments		9,~~432~~474			1610,~~748~~363
Total cash and cash equivalents		6347,~~598~~679			7264,~~595~~591
Securities available for sale, at fair value		~~159~~178,~~880~~920			~~126~~156,~~982~~761
Securities held to maturity, at amortized cost		29			31
Restricted equity securities, at cost		12,908			11,591
Restricted equity securities, at cost		11,184			10,951
Total securities		191,828			168,352
Total securities		171,093			137,964
Loans
Residential real estate		~~209~~224,~~436~~665			~~212~~188,~~131~~654
Commercial real estate		~~248~~175,~~768~~135			~~231~~168,~~372~~649
Construction		6750,~~498~~307			6855,~~877~~763
Commercial business		32179,~~551~~982			28159,~~871~~233
Consumer		3840,~~909~~453			3940,~~656~~436
Net deferred loan costs		905			913
Total loans, gross		670,542			612,735
Total loans, gross		598,067			581,820
Allowance for loan losses		(6,431	)		(5,789	)
Allowance for loan losses		(5,929	)		(5,781	)
Loans, net		664,111			606,946
Loans, net		592,138			576,039
Premises and equipment, net		5,156			5,410
Loans held for sale, net		—			63,730
Accrued interest receivable		3,641			3,648
Premises and equipment, net		5,115			5,202
Bank-owned life insurance		10,903			10,700
Accrued interest receivable		3,768			3,480
Bank-owned life insurance		10,395			10,298
Goodwill		33,763			33,763
Other intangible assets		2,~~852~~209			32,~~069~~474
Other assets		87,~~442~~739			7,~~538~~394
	$	~~891~~967,~~164~~029		$	~~913~~903,~~678~~278
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Regular savings accounts	$	8382,~~816~~219		$	8179,~~569~~167
Money market accounts		~~103~~126,~~369~~119			93110,~~988~~544
NOW accounts		3665,~~613~~415			2852,~~606~~000
Demand deposit accounts		~~119~~118,~~072~~182			~~120~~113,~~966~~023
Time deposit accounts		~~288~~262,~~777~~980			~~308~~262,~~050~~634
Total deposits		~~631~~654,~~647~~915			~~633~~617,~~179~~368
Short-term borrowings		~~600~~1,200			102,~~000~~500
Long-term debt		~~138~~191,~~934~~169			~~148~~162,~~969~~784
Deferred gain on sale of premises		3,~~720~~405			3,~~783~~531
Other liabilities		710,~~282~~276			89,~~342~~651
Total liabilities		~~782~~860,~~183~~965			~~804~~795,~~273~~834
Common stock, no par value; 75,000,000 shares authorized; 8,418,137 shares issued and 8,199,802 shares outstanding at March 31, 2007; 8,468,137 shares issued and 8,249,802 shares outstanding at December 31, 2006		—			—
Common stock, no par value; 75,000,000 shares authorized; 7,840,415 shares issued and 7,666,172 shares outstanding at June 30, 2008; 8,030,415 shares issued and 7,856,172 shares outstanding at December 31, 2007		—			—
Additional paid-in capital		8274,~~382~~985			8277,~~909~~370
Retained earnings		3639,~~889~~663			3638,~~634~~515
Unearned compensation		(76,~~728~~699	)		(7,~~938~~094	)
Accumulated other comprehensive loss		(21,~~562~~885	)		(21,~~200~~347	)
Total stockholders’ equity		~~108~~106,~~981~~064			~~109~~107,~~405~~444
	$	~~891~~967,~~164~~029		$	~~913~~903,~~678~~278

See accompanying notes to condensed consolidated financial statements

BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except ~~share and~~ per share data)

	Three Months Ended				Six Months Ended
	March 31,
	June 30,				June 30,
	2007		2006
	2008		2007		2008		2007
	(Unaudited)				(Unaudited)
Interest and dividend income:
Loans, including fees	$	9,~~706~~962	$	89,~~842~~712	$	19,853	$	19,418
Debt securities		1,~~686~~917		1,~~262~~953		3,924		3,639
Dividends		~~166~~124		~~120~~165		284		331
Short-term investments		~~281~~96		~~216~~222		338		503
Total interest and dividend income		1112,~~839~~099		1012,~~440~~052		24,399		23,891
Interest expense:
Interest on deposits		43,~~156~~410		34,~~102~~308		7,269		8,464
Interest on borrowings		1,857		1,426
Interest on short-term borrowings		10		18		39		147
Total interest expense		6,013		4,528
Interest on long-term debt		2,183		1,674		4,289		3,402
Net interest income		5,826		5,912
Total interest expense		5,603		6,000		11,597		12,013
Provision for loan losses		170		6
Net interest income		6,496		6,052		12,802		11,878
Net interest income, after provision for loan losses		5,656		5,906
Provision for loan losses		368		230		682		412
Other income:
Net interest income, after provision for loan losses		6,128		5,822		12,120		11,466
ATM servicing fees		697		625
Other income:
Deposit service fees		340		329
ATM servicing fees		321		622		664		1,319
Loan servicing fees		331		122
Deposit servicing fees		475		369		838		709
Gain on sale of loans, net		103		65
Other loan-related fees		170		141		423		472
Gain on sale of bank-owned premises, net		250		—
Gain on sale of loans, net		82		193		186		296
Income from bank-owned life insurance		97		65
Gain on sale of bank-owned premises, net		63		63		126		313
Miscellaneous		154		204
Gain on sale of CSSI customer list		92		100		92		100
Total other income		1,972		1,410
Income from bank-owned life insurance		94		99		195		195
Operating expenses:
Miscellaneous		207		206		458		361
Salaries and employee benefits		3,613		2,721
Total other income		1,504		1,793		2,982		3,765
Occupancy and equipment		908		666
Operating expenses:
Data processing		604		448
Salaries and employee benefits		3,405		3,829		6,636		7,442
Professional fees		237		378
Occupancy and equipment		842		836		1,786		1,744
Marketing and advertising		128		162
Data processing		569		598		1,169		1,202
Amortization of core deposit intangible		217		301
Professional fees		182		235		357		472
Other general and administrative		1,092		655
Marketing and advertising		103		201		181		329
Total operating expenses		6,799		5,331
Amortization of intangible assets		161		205		332		422
Income before income taxes		829		1,985
Other general and administrative		648		521		1,229		1,601
Provision for income taxes		238		717
Total operating expenses		5,910		6,425		11,690		13,212
Net income	$	591	$	1,268
Income before income taxes		1,722		1,190		3,412		2,019
Weighted-average shares outstanding:
Provision for income taxes		551		361		1,129		599
Basic		7,814,438		8,026,644
Net income	$	1,171	$	829	$	2,283	$	1,420
Diluted		7,837,969		8,026,644
Weighted-average shares outstanding:
Earnings per share:
Basic		7,271,431		7,663,634		7,306,789		7,739,036
Basic	$	0.08	$	0.16
Diluted		7,352,265		7,699,363		7,381,938		7,768,666
Diluted	$	0.08	$	0.16
Earnings per share:
Basic	$	0.16	$	0.11	$	0.31	$	0.19
Diluted	$	0.16	$	0.11	$	0.31	$	0.18

See accompanying notes to condensed consolidated financial statements

BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in thousands, except per share data)

(Unaudited)

															Accumulated
						Additional									Other			Total
	Common Stock					Paid-in			Retained			Unearned			Comprehensive			Stockholders’
	Shares			Amount		Capital			Earnings			Compensation			Loss			Equity
Balance at December 31, 2005		8,488,898		$	—	$	82,849		$	32,942		$	(5,353	)	$	(2,326	)	$	108,112
Comprehensive income:
Net income		—			—		—			1,268			—			—			1,268
Net unrealized loss on securities available for sale, net of reclassification adjustment and tax effects		—			—		—			—			—			(421	)		(421	)
Total comprehensive income																			847
Release of ESOP stock		—			—		8			—			46			—			54
Dividends declared ($.03 per share)		—			—		—			(254	)		—			—			(254	)
Balance at March 31, 2006		8,488,898		$	—	$	82,857		$	33,956		$	(5,307	)	$	(2,747	)	$	108,759
Balance at December 31, 2006		8,249,802		$	—	$	82,909		$	36,634		$	(7,938	)	$	(2,200	)	$	109,405
Comprehensive income:
Net income		—			—		—			~~591~~1,420			—			—			~~591~~1,420
Net unrealized loss on securities available for sale, net of reclassification adjustment and tax effects		—			—		—			—			—			(~~362~~1,127	)		(~~362~~1,127	)
Total comprehensive income																			~~229~~293
Common stock repurchased		(50163,~~000~~850	)		—		(~~747~~2,449	)		—			—			—			(~~747~~2,449	)
Restricted stock expense		—			—		—			—			~~164~~330			—			~~164~~330
Stock option expense		—			—		~~205~~413			—			—			—			~~205~~413
Release of ESOP stock		—			—		1527			—			4692			—			61119
Dividends declared ($.04 per share)		—			—		—			(336	)		—			—			(336	)
FASB Statement No. 158 tax effect adjustment		—			—		—			—			—			101			101
Balance at March 31, 2007		8,199,802		$	—	$	82,382		$	36,889		$	(7,728	)	$	(2,562	)	$	108,981
Dividends declared ($.10 per share)		—			—		—			(844	)		—			—			(844	)
Balance at June 30, 2007		8,085,952		$	—	$	80,900		$	37,210		$	(7,516	)	$	(3,226	)	$	107,368
Balance at December 31, 2007		7,856,172		$	—	$	77,370		$	38,515		$	(7,094	)	$	(1,347	)	$	107,444
Comprehensive income:
Net income		—			—		—			2,283			—			—			2,283
Net unrealized gain on securities available for sale, net of tax effects		—			—		—			—			—			(538	)		(538	)
Total comprehensive income																			1,745
Common stock repurchased		(190,000	)		—		(2,608	)		—			—			—			(2,608	)
Restricted stock expense		—			—		—			—			303			—			303
Stock option expense		—			—		207			—			—			—			207
Release of ESOP stock		—			—		16			—			92			—			108
Dividends declared ($.14 per share)		—			—		—			(1,135	)		—			—			(1,135	)
Balance at June 30, 2008		7,666,172		$	—	$	74,985		$	39,663		$	(6,699	)	$	(1,885	)	$	106,064

See accompanying notes to condensed consolidated financial statements

BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Three Months Ended March 31,
	Six Months Ended June 30,
	2007			2006
	2008			2007
Cash flows from operating activities:
Net income	$	~~591~~2,283		$	1,~~268~~420
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion of securities, net		(181	)		(177	)
Amortization (accretion) of securities, net		55			(341	)
Amortization (accretion) of loans, net		19			(46	)
Amortization of loans, net		167			64
Gain on sale of bank-owned premises, net		(250	)		—
Amortization of deferred gain on sale of premises		(126	)		(126	)
Provision for loan losses		170			6
Gain on sale of premises, net		—			(187	)
Accretion of deposit and borrowings, net		(3	)		(17	)
Provision for loan losses		682			412
Amortization of mortgage servicing rights		62			64
Accretion of deposits and borrowing discounts, net		(6	)		(6	)
Depreciation and amortization		237			250
Amortization of mortgage servicing rights		144			152
Amortization of core deposit intangible		217			301
Depreciation expense		415			465
Stock-based compensation and ESOP expense		430			54
Amortization of intangible assets		332			422
Income from bank-owned life insurance		(97	)		(65	)
Stock-based compensation and ESOP		618			862
Gain on sales of loans, net		(103	)		(65	)
Income from bank-owned life insurance		(195	)		(195	)
Loans originated for sale		(9,886	)		(5,879	)
Gains on sales of loans, net		(186	)		(296	)
Proceeds from sales of loans		9,989			5,944
Loans originated for sale		(1,353	)		(26,560	)
Increase in accrued interest receivable		(288	)		(190	)
Proceeds from sales of loans		1,539			26,856
Other, net		(2,113	)		433
Decrease (increase) in accrued interest receivable		7			(19	)
Net cash provided by (used for) operating activities		(1,206	)		1,881
Other, net		386			(963	)
Net cash provided by operating activities		4,762			1,960
Cash flows from investing activities:
Activity in available-for-sale securities:
Maturities, calls, and principal repayments		1556,~~206~~119			1230,~~577~~224
Purchases		(4879,~~287~~130	)		(1956,~~843~~342	)
Principal repayments on held-to-maturity securities		2			29
Net change in restricted equity securities		(1,317	)		(233	)
Net change in restricted equity securities		(233	)		—
Loan originations, net		(58,014	)		(20,036	)
Purchases of mortgage loans		—			(16,118	)
Proceeds from sales of loans held for sale		—			62,122
Loan repayments (originations), net		(15,225	)		5,199
Proceeds from sales of premises and equipment		—			821
Proceeds from sales of loans held for sale		62,122			—
Purchases of identifiable intangible assets		(67	)		(180	)
Proceeds from sales of bank-owned premises		821			—
Additions to premises and equipment		(161	)		(692	)
Additions to premises and equipment		(150	)		(220	)
Net cash provided by (used for) investing activities		(82,570	)		15,684
Net cash provided by (used for) investing activities		14,256			(18,376	)

(Continued)

See accompanying notes to condensed consolidated financial statements

BENJAMIN FRANKLIN BANCORP,INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)

(Dollars in thousands)

(Unaudited)

	Three Months Ended March 31,
	Six Months Ended June 30,
	2007			2006
	2008			2007
Cash flows from financing activities:
Net increase (decrease) in deposits		(1,523	)		40,506
Net increase in deposits		37,559			1,726
Net repayments of short-term borrowings		(9,400	)		—
Net change in short-term borrowings		(1,300	)		(7,000	)
Net repayments of long-term debt		(10,041	)		(12,403	)
Proceeds from long-term debt		44,500			10,000
Common stock repurchased		(747	)		—
Repayment of long-term debt		(16,120	)		(20,097	)
Dividends paid on common stock		(336	)		(254	)
Common stock repurchased		(2,608	)		(2,449	)
Net cash provided by (used for) financing activities		(22,047	)		27,849
Dividends paid on common stock		(1,135	)		(844	)
Net change in cash and cash equivalents		(8,997	)		11,354
Net cash provided by (used for) financing activities		60,896			(18,664	)
Cash and cash equivalents at beginning of period		72,595			65,750
Net change in cash and cash equivalents		(16,912	)		(1,020	)
Cash and cash equivalents at end of period	$	63,598		$	77,104
Cash and cash equivalents at beginning of period		64,591			72,595
Cash and cash equivalents at end of period	$	47,679		$	71,575
Supplemental cash flow information:
Interest paid on deposits	$	47,~~260~~304		$	38,~~655~~591
Interest paid on short-term borrowings		129			—
Interest paid on borrowings		4,293			3,576
Interest paid on long-term debt		1,750			1,382
Income taxes paid		2,044			989
Income taxes paid		965			132
Loans held for sale transferred to loans, net		—			1,063
Loans held for sale transferred to loans, net		1,063			—
Loans held for sale transferred to other assets		—			545
Loans held for sale transferred to other assets		545			—

See accompanying notes to condensed consolidated financial statements

BENJAMIN FRANKLIN BANCORP, INC AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Unaudited)

1.		*Basis of presentation and consolidation*

		The accompanying unaudited consolidated interim financial statements include the accounts of Benjamin Franklin Bancorp, Inc. (the “Company’’) and its wholly-owned subsidiary, Benjamin Franklin Bank (the “Bank’’). These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation have been included.

		The Company operates as one reportable segment for financial reporting purposes. All significant intercompany items are eliminated in consolidation. Certain amounts previously reported have been reclassified to conform to the current year’s presentation.

		These consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2007.

		*Recent Accounting Pronouncements*

		In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement No. 141 (revised), “Business Combinations.” This Statement replaces FASB Statement No. 141, and applies to all business entities, including mutual entities that previously used the pooling-of-interests method of accounting for certain business combinations. Under Statement No. 141 (revised) an acquirer is required to recognize at fair value the assets acquired, liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date. This replaces the cost allocation process under Statement No. 141, which resulted in the non-recognition of some assets and liabilities at the acquisition date and in measuring some assets and liabilities at amounts other than their fair values at the acquisition date. This Statement requires that acquisition costs and expected restructuring costs be recognized separately from the acquisition, and that the acquirer in a business combination achieved in stages recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values. This Statement also requires an acquirer to recognize assets acquired and liabilities assumed arising from contractual contingencies as of the acquisition date, while Statement 141 allowed for the deferred recognition of pre-acquisition contingencies until certain recognition criteria were met, and an acquirer is only required to recognize assets or liabilities arising from all other contingencies if it is more likely than not that they meet the definition of an asset or a liability. Under this Statement, an acquirer is required to recognize contingent consideration at the acquisition date, whereas contingent consideration obligations usually were not recognized at the acquisition date under Statement 141. Further, this Statement eliminates the concept of negative goodwill and requires gain recognition in instances in which the total acquisition-date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred plus any non-controlling interest in the acquiree. This Statement makes significant amendments to other Statements and other authoritative guidance, and applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date.

		In December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.” This Statement establishes accounting and

1. Basis of presentation and consolidation

The accompanying unaudited consolidated interim financial statements include the accounts of Benjamin Franklin Bancorp, Inc. (the “Company’’) and its wholly-owned subsidiary, Benjamin Franklin Bank (the “Bank’’). These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation have been included.

These consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2006.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”, to permit all entities to choose to elect to measure eligible financial instruments at fair value. A business entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings. Eligible items include any recognized financial assets and liabilities with certain exceptions including but not limited to, deposit liabilities, investments in subsidiaries, and certain deferred compensation arrangements. The decision about whether to elect the fair value option is generally applied on an instrument-by-instrument basis, is generally irrevocable, and is applied only to an entire instrument and not to only specified risks, specific cash flows, or portions of that instrument. This Statement is effective as of the beginning of each reporting entity’s first fiscal year that begins after November 15, 2007. Management is currently analyzing the impact of making this election for any of the Company’s eligible financial assets or liabilities.

In March 2006, the FASB issued Statement No. 156, “Accounting for Servicing of Financial Assets”, which amends FASB Statement No. 140. This Statement requires that all separately recognized servicing rights be initially measured at fair value, if practicable. For each class of separately recognized servicing assets and liabilities, this Statement permits an entity to choose either of the following subsequent measurement methods: (1) amortize servicing assets or liabilities in proportion to and over the period of estimated net servicing income or net servicing loss, or (2) report servicing assets or liabilities at fair value at each reporting date and report changes in fair value in earnings in the period in which the changes occur (the “fair value method”). This Statement also requires additional disclosures for all separately recognized servicing rights. The Company adopted SFAS No. 156 effective January 1, 2007. Adoption had no effect on the Company’s financial statements.

In July 2006, the FASB issued Financial Accounting Standards Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement No. 109, “Accounting

reporting standards for ~~Income~~the ~~Taxes”~~noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. ~~FIN~~It 48clarifies ~~prescribes~~that a ~~recognition~~noncontrolling ~~threshold~~interest ~~and~~in ~~measurement~~a ~~attribute~~subsidiary ~~for~~ is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial ~~statement~~statements. ~~recognition~~This ~~and~~Statement ~~measurement~~is ofeffective afor ~~tax~~fiscal ~~position~~years ~~taken~~beginning on or ~~expected~~after December 15, 2008. 2. Commitments Outstanding loan commitments totaled $115.0 million at June 30, 2008, compared to be$116.4 ~~taken~~million as of December 31, 2007. Loan commitments consist of commitments to originate new loans as well as the outstanding undrawn portions of lines of credit. 3. Earnings per share Basic earnings per share (“EPS”) excludes dilution and is calculated by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted EPS is computed in a ~~tax~~manner ~~return~~similar to that of basic EPS except that the weighted-average number of common shares outstanding is increased to include the number of incremental common shares (computed using the treasury stock method) that would have been outstanding if all potentially dilutive common stock equivalents (such as stock options and unvested restricted stock) were issued during the period. ~~FIN~~For 48the ~~also~~three ~~provides~~and ~~guidance~~six onmonth ~~derecognition~~periods ending June 30, ~~classification~~2008, ~~interest~~ potentially dilutive common stock equivalents totaled 80,834 and ~~penalties~~75,149 ~~accounting~~shares, inrespectively, ~~interim~~representing the effect of dilutive common stock equivalents. For the three and six month periods ending June 30, ~~disclosures~~2007, potentially dilutive common stock equivalents totaled 35,729 and ~~transitions~~29,630 shares, respectively. ~~FIN~~Unallocated ~~48 is~~common ~~effective~~shares held by the ESOP are shown as a reduction in stockholders’ equity and are not included in the weighted-average number of common shares outstanding for ~~fiscal~~either ~~years~~basic ~~beginning~~or ~~after~~diluted ~~December 15~~earnings per share calculations. 4. Fair Values of Assets and Liabilities Effective January 1, ~~2006~~2008, the Company adopted Statement of Financial Accounting Standards No. 157 (“SFAS 157”), “Fair Value Measurements”, which provides a framework for measuring fair value under generally accepted accounting principles. The Company ~~has~~also ~~determined that~~adopted ~~the~~SFAS ~~adoption~~No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of ~~FIN~~FASB 48Statement No. 115.” SFAS 159 allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. The Company did not ~~have~~elect afair ~~material~~value ~~effect~~treatment for any financial assets or liabilities upon adoption. In accordance with SFAS 157, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial ~~statements~~instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

~~2. Commitments~~9

OutstandingTable loan commitments totaled $109.3 million at March 31, 2007, compared to $108.1 million as of December 31, 2006. Loan commitments consist of commitments to originate new loans as well as the outstanding undrawn portions of lines of credit. Contents

~~The~~Assets ~~Bank~~measured ~~has~~at ~~received~~fair ~~approval~~value ~~from~~on ~~the Massachusetts Commissioner of Banks and the FDIC to open~~ a ~~new~~recurring ~~branch~~basis inare ~~Watertown,~~summarized ~~Massachusetts~~below. ItThere isare ~~anticipated~~no ~~that~~liabilities ~~this~~measured ~~branch~~at ~~will become~~fair ~~operational~~value inon ~~the~~a ~~third~~recurring ~~quarter~~basis ~~of 2007. The annual direct costs of operating this branch are estimated~~ at ~~$700,000,~~June ~~including annual lease payments for the new branch facility of approximately $127~~30,~~000~~ ~~per annum for the initial ten-year term of the lease.~~ 2008:

3. Earnings per share


	June 30, 2008
							Assets at
	Level 1		Level 2		Level 3		Fair Value
	(Dollars in thousands)
Assets
Securities available for sale	$	—	$	178,920	$	—	$	178,920

Total assets	$	—	$	178,920	$	—	$	178,920

~~Basic~~Securities ~~earnings~~classified ~~per~~as ~~share~~available ~~(“EPS”)~~for ~~excludes~~sale ~~dilution~~are ~~and~~reported isat ~~calculated~~fair byvalue ~~dividing~~utilizing ~~net~~Level ~~income available~~2 toinputs. ~~common~~For ~~stockholders~~these bysecurities, the ~~weighted-average~~Company ~~number~~obtains offair ~~shares~~value ofmeasurements ~~common~~from ~~stock~~an ~~outstanding during~~independent ~~the~~pricing ~~period~~service that subscribes to multiple third-party pricing vendors. ~~Diluted~~The ~~EPS~~pricing isservice ~~computed~~conducts ina series of quality assurance activities on a ~~manner~~monthly ~~similar~~basis to ~~that~~select ofthe ~~basic~~most ~~EPS~~appropriate ~~except~~pricing ~~that~~vendor ~~the weighted-average~~for ~~number~~each sector of ~~common~~the ~~shares~~bond ~~outstanding~~market. isThe ~~increased~~fair tovalue measurements consider observable market data that may include, ~~the~~among ~~number~~other ~~of incremental~~data, ~~common~~benchmark ~~shares~~yields ~~(computed~~and ~~using~~spread ~~the~~relationships, ~~treasury~~cash ~~stock~~flows, ~~method)~~collateral ~~that~~attributes, ~~would~~market ~~have~~consensus ~~been outstanding~~prepayment ifspeeds, ~~all~~and ~~potentially~~credit ~~dilutive~~risk ~~common~~information ~~stock~~as ~~equivalents~~well as terms and conditions relevant to the individual bond (such as ~~stock~~issuer, ~~options~~coupon, maturity and ~~unvested~~ ~~restricted~~credit ~~stock~~rating). ~~were~~Also, ~~issued~~the ~~during~~Company ~~the~~may ~~period.~~be ~~For~~required, ~~the~~from ~~quarter~~time ~~ended~~to ~~March 31~~time, ~~2007,~~ ~~potentially~~to ~~dilutive~~measure ~~common~~certain ~~stock~~other ~~equivalents~~financial ~~totaled~~assets ~~23,531~~on ~~shares,~~a ~~representing~~nonrecurring ~~the effect~~basis ofin ~~dilutive~~accordance ~~restricted~~with ~~stock~~GAAP. ~~There~~These ~~were~~adjustments noto ~~potentially~~fair ~~dilutive~~value ~~common~~usually ~~stock equivalents~~result ~~outstanding~~from ~~during~~application ~~the~~of ~~quarter~~lower-of-cost-or-market ~~ended~~accounting ~~March 31,~~or ~~2006~~write-downs of individual assets. ~~Unallocated~~The ~~common~~following ~~shares held~~table bysummarizes the ~~ESOP~~fair ~~are~~value ~~shown~~hierarchy asused ato ~~reduction~~determine ineach ~~stockholders’~~adjustment ~~equity~~ and ~~are not included in~~ the ~~weighted-average~~carrying ~~number~~value of ~~common~~the ~~shares~~related ~~outstanding~~individual ~~for~~assets ~~either~~as ~~basic~~of orJune ~~diluted earnings~~30, ~~per share calculations~~2008.


								Quarter ended
	June 30, 2008							June 30, 2008
								Total
	Level 1		Level 2		Level 3			Gains/(Losses)
	(Dollars in thousands)
Assets
Impaired loans	$	—	$	—	$	1,187	(A)	$	(178	)

Total assets	$	—	$	—	$	1,187		$	(178	)


(A)		Represents impaired loans totaling $1,429, net of specific valuation reserves for those loans totaling $242. There were no specific valuation reserves allocated to the remainder of the Bank’s impaired loans ($8.7 million) as of June 30 , 2008.

The amount of loans represents the carrying value (loan balance net of related allocated reserves) for impaired loans, for which adjustments are based on the appraised value of the collateral. Appraised values are typically based on a blend of (a) an income approach using unobservable cash flows to measure fair value, and (b) a market approach using observable market comparables. These appraised values may be discounted based on management’s historical knowledge, expertise or changes in market conditions from the time of valuation. For these reasons, impaired loans are categorized as Level 3 assets.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following analysis discusses the changes in financial position and results of operations of the Company, and should be read in conjunction with the Company’s unaudited consolidated interim financial statements and the notes thereto, appearing in Part I, Item 1 of this document.

Forward-Looking Statements

Certain statements herein constitute “forward-looking statements” and actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged and changes in the securities market.

Critical Accounting Policies

Critical accounting policies are those that involve significant judgments and assessments by management, and which could potentially result in materially different results under different assumptions and conditions. As discussed in the Company’s ~~2006~~2007 Annual Report on Form 10-K, the Company considers its critical accounting policies to be those associated with ~~income~~the ~~taxes,~~allowance for loan losses, the valuation of goodwill and other intangible assets and the ~~determination~~valuation of ~~the~~deferred tax ~~allowance for loan losses~~assets. The Company’s critical accounting policies have not changed since December 31, ~~2006~~2007.

Comparison of Financial Condition at ~~March~~June 3130, ~~2007~~2008 and December 31, ~~2006~~2007

Overview

Total assets ~~decreased~~increased by $2263.58 million, or 27.51%, to $~~891~~967.20 million at ~~March~~June 3130, ~~2007~~2008 from $~~913~~903.73 million at December 31, ~~2006~~2007. The ~~reduction~~increase in assets was primarily attributable to aincreases ~~decrease~~ in net loans, ~~including~~(up ~~loans held for sale, of~~ $4757.62 million or 79.4%) and asecurities ~~decrease~~(up ~~in cash and cash equivalents of~~ $923.05 million or 1213.49%~~. Offsetting these decreases~~), offset in part, ~~was~~by ana decrease ~~increase~~ in ~~securities~~ ~~totaling~~cash and cash equivalents (down $3316.19 million or 2426.02%, ~~during~~in ~~the~~total). ~~first~~Funding ~~quarter~~the ofincrease in ~~2007.~~total ~~Sales~~assets ofwas ~~loans~~growth ~~held for~~in ~~sale~~deposits, ~~during~~which ~~the~~increased ~~quarter~~by ~~allowed~~$37.5 million ~~the~~or ~~Bank~~6.1%, toand ~~pay~~in ~~down borrowings~~borrowed funds, which ~~decreased~~increased ~~in total~~ by $1927.41 million or 1216.24%.

On May 1, 2007, the Bank and its subsidiary, Creative Strategic Solutions, Inc. (“CSSI”), entered into an agreement to sell certain of CSSI’s assets (principally its customer list and rights and obligations under its customer contracts) to another bank with an ATM servicing division. Although most rights and obligations of CSSI and the Bank under its various customer contracts were assigned to the buyer as part of this transaction, the Bank has retained the right to continue to supply ATM cash in accordance with the needs of its former customers, for a minimum of 30 months. At May 1, 2007, the cash needs of CSSI customers approximated $33 million. The Bank will earn fees for supplying this cash at a rate that is tied to the prime rate of interest. This rate will vary over time with changes in prime and with changes in the blended rate paid by former CSSI customers to the buyer. The purchase price for this sale is structured as a series of payments over 24 months, subject to adjustment up or down based on a) former CSSI customer cash balances outstanding, and b) rates paid by former CSSI customers for the use of that cash. If former CSSI customer balances and rates remain at levels outstanding at closing, payments to the Bank over the 24-month period will aggregate approximately $400,000.

Investment Activities

Cash and cash equivalent balances decreased by $916.09 million to $6347.67 million at ~~March~~June 3130, ~~2007~~2008, compared to $7264.6 million at December 31, ~~2006~~2007. OfThat ~~that~~ decrease, ~~$7.3 million~~ was principally due to a ~~decrease~~ ~~in short-term investments, offset by a~~ $416.3 0 million ~~increase~~decrease in cash ~~balances~~supplied onto ~~hand, both~~ATMs ~~changes~~owned ~~the~~by ~~result~~ATM ~~of normal fluctuations~~customers. ~~Cash~~The ~~supplied~~decline toin ~~CSSI’s~~ ATM ~~customers~~cash ~~declined~~was ~~by $5.9 million or~~due ~~15.0%~~to ~~during~~seasonal ~~the~~fluctuations ~~first~~as ~~quarter,~~well ~~due~~as to ~~seasonal~~the ~~fluctuations~~loss ~~and~~of totwo acustomers ~~contraction~~ in the ~~business of~~first ~~one~~six ~~CSSI~~months ~~customer~~of 2008.

10At June 30, 2008, the Company’s securities portfolio amounted to $191.8 million, or 19.8% of total assets. When compared to year-end 2007, securities increased by $23.5 million, or 13.9%. The increase primarily consisted of increases in government-sponsored enterprise insured mortgage-backed securities, which grew by $19.5 million or 28.1% in the first six months of 2008. The following table sets forth certain information regarding the amortized cost and fair values of the Company’s securities at the dates indicated:

	March 31, 2007				December 31, 2006
	June 30,				December 31,
	2008				2007
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(In thousands)
	(Dollars in thousands)
Securities available for sale:
Government-sponsored enterprise obligations	$	9789,~~121~~025	$	9789,~~061~~182	$	9785,~~723~~972	$	9786,~~502~~178
Municipal obligations		~~1,707~~885		~~1,691~~885		1,~~707~~206		1,~~687~~202
Mortgage-backed securities		63,540		61,128		29,677		27,793
		89,910		90,067		87,178		87,380
Total securities available for sale	$	162,368	$	159,880	$	129,107	$	126,982
Mortgage-backed securities		91,063		88,853		70,839		69,381
Securities held to maturity:
Total debt securities		180,973		178,920		158,017		156,761
Mortgage-backed securities	$	29	$	29	$	31	$	31
Total available for sale securities	$	180,973	$	178,920	$	158,017	$	156,761
Restricted equity securities:
Federal Home Loan Bank of Boston stock	$	810,~~703~~427	$	810,~~703~~427	$	89,~~470~~110	$	89,~~470~~110
Access Capital Strategies Community Investment Fund		1,965		1,965		1,965		1,965
Access Capital Strategies
Community Investment Fund		1,965		1,965		1,965		1,965
SBLI & DIF stock		516		516		516		516
Total restricted equity securities	$	1112,~~184~~908	$	1112,~~184~~908	$	1011,~~951~~591	$	1011,~~951~~591

Lending Activities

11The Company’s net loan portfolio aggregated $664.1 million on June 30, 2008, or 68.7% of total assets on that date. As of December 31, 2007, the net loan portfolio totaled $606.9 million, or 67.2% of total assets. The main components of the growth of $57.2 million in the first six months of 2008 were a $36.0 million (19.1%) increase in residential mortgage loans, a $20.7 million (13.0 %) increase in commercial business loans and a $6.5 million (3.8%) increase in commercial real estate loans. Offsetting these increases was a reduction of $5.5 million (9.8%) in construction loans outstanding. The growth in residential loans reflects the Company’s decision in late 2007 to retain most new residential originations (fixed-rate and adjustable-rate) in portfolio, due to the recent widening of market spreads available on most residential mortgage products. Previously, for much of 2006 and 2007, the Company had sold most fixed-rate residential loan production in the secondary market. While demand for commercial business loans remained strong in the first half of 2008, management considers it likely that demand will lessen in future quarters as a result of the economic downturn currently occurring in New England and nationally. The following table sets forth the composition of the loan portfolio at the dates indicated:

	March 31, 2007						December 31, 2006
	June 30, 2008						December 31, 2007
	Amount			Percent			Amount			Percent
	~~(Dollars in thousands)~~			(Dollars in thousands)
Mortgage loans on real estate:
Residential	$	~~209~~223,~~436~~921			3533.145	%	$	~~212~~187,~~131~~991			3630.573	%
Commercial		~~248~~174,~~768~~934			4126.713	%		~~231~~168,~~372~~463			3927.854	%
Construction		6750,~~498~~307			117.351	%		6855,~~877~~763			~~11.~~9.11	%
Home equity		3637,~~116~~988			65.067	%		3637,~~546~~768			6.317	%
		561,818			94.1	%		548,926			94.5	%
		487,150			72.76	%		449,985			73.55	%
Other loans:
Commercial business		32179,~~551~~982			526.489	%		28159,~~871~~233			526.003	%
Consumer		2,~~793~~356			0.535	%		32,~~110~~592			0.542	%
		35,344			5.9	%		31,981			5.5	%
		182,338			27.24	%		161,825			26.45	%
Total loans, gross		597,162			100.0	%		580,907			100.0	%
Total loans		669,488			100.00	%		611,810			100.00	%
Other items:
Net deferred loan costs		~~905~~1,054						~~913~~925
Allowance for loan losses		(56,~~929~~431	)					(5,~~781~~789	)
Total loans, net	$	~~592~~664,~~138~~111					$	~~576~~606,~~039~~946

Non-performing Assets

12The table below sets forth the amounts and categories of the Company’s non-performing assets at the dates indicated:

	March 31, 2007			December 31, 2006
	June 30, 2008			December 31, 2007
	(Dollars in thousands)
Non-accrual loans:
Residential mortgage	$	~~808~~958		$	~~230~~712
Commercial mortgage		14,~~685~~980			~~1,257~~658
Construction		—1,945			—
Commercial business		—			—
Commercial		575			—
Consumer		164			61
Consumer and other		173			228
Total non-accrual loans (2)	$	2,657		$	1,548
Total non-accrual loans	$	8,631		$	1,598
Loans greater than 90 days delinquent and still accruing:	$	—		$	—
Residential mortgage	$	260		$	—
	$	—		$	—
Commercial mortgage		—			—
Total non-performing loans and assets	$	8,631		$	1,598
Construction		—			—
Total restructured loans	$	1,186		$	—
Commercial business		—			—
Consumer		—			—
Total loans 90 days and still accruing	$	260		$	—
Total non-performing assets	$	2,917		$	1,548
Ratios:
Non-performing loans to total loans (1)		0.49	%		0.24	%
Non-performing loans to total loans		1.29	%		0.26	%
Non-performing assets to total assets		0.3389	%		0.1718	%

(1)		Total loans include loans held for sale.
(2)		The increase in non-accrual loans at March 31, 2007 from year end 2006 is due primarily to the addition of one commercial relationship, consisting of three loans totaling $1.7 million.

The $7.0 million increase in non-performing loans since year-end 2007 is primarily due to the addition of one $6.4 million loan relationship to non-performing status during the second quarter of 2008. Within this loan relationship, two loans totaling $5.9 million (one for $4.0 million in the commercial mortgage category and one for $1.9 million reported within the construction loan category; construction on the building is complete with the exception of tenant fit-up in some areas) are secured by a mixed-use building located in Boston, MA. The remainder of this relationship consists of two commercial business loans aggregating $492,000, both of which were underwritten under the Massachusetts Capital Access Program (“MCAP”). These loans are secured primarily by equipment and the Bank’s specific reserves accumulated as a result of its participation in the MCAP program. Based on a review of all relevant factors, including the collateral securing these loans, no specific loan loss reserves have been allocated for this loan relationship.

Restructured loans represent performing loans for which concessions (such as extension of repayment terms or reductions of interest rates to below market rates) are granted due to a borrower’s financial condition. The balance in restructured loans at June 30, 2008 represents one residential real estate mortgage loan that was modified to lengthen the borrower’s repayment period. This loan was performing in accordance with its modified terms at June 30, 2008.

Allowance for Loan Losses

In originating loans, the Company recognizes that losses will be experienced on loans and that the risk of loss will vary with many factors, including the type of loan being made, the creditworthiness of the borrower over the term of the loan, general economic conditions and, in the case of a secured loan, the quality of the security for the loan over the term of the loan. The Company maintains an allowance for loan losses to absorb losses inherent in the loan portfolio, and as such, this allowance represents management’s best estimate of the probable known and inherent credit losses in the loan portfolio as of the date of the financial statements.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, portfolio volume and mix, geographic and large borrower concentrations, estimated credit losses based on internal and external portfolio reviews, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.

13The allowance consists of specific, general and unallocated components. The specific component relates to loans that are impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors. Qualitative factors considered include general business and economic conditions, the level of real estate values in our market area, the tenure and experience of the Company’s lending staff, the seasoning of the loan portfolio, and delinquency trends in the loan portfolio. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

The following tables set forth Benjamin Franklin Bank’s allowance by loan category and the percent of the loans to total loans in each of the categories listed at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories:


	At June 30,							At December 31,
	2008							2007
					Percent							Percent
					of Loans							of Loans
			Loan		in Each					Loan		in Each
	Allowance		Balances		Category to			Allowance		Balances		Category to
	for Loan		by		to Total			for Loan		by		to Total
	Losses		Category		Loans			Losses		Category		Loans
	(Dollars in thousands)
Mortgage loans on real estate:
Residential	$	733	$	223,921		33.45	%	$	499	$	187,991		30.73	%
Commercial		2,085		174,934		26.13	%		1,959		168,463		27.54	%
Construction		854		50,307		7.51	%		850		55,763		9.11	%
Home equity		142		37,988		5.67	%		142		37,768		6.17	%

		3,814		487,150		72.76	%		3,450		449,985		73.55	%

Other loans:
Commercial		2,168		179,982		26.89	%		1,874		159,233		26.03	%
Consumer		63		2,356		0.35	%		80		2,592		0.42	%
Unallocated ⁽¹⁾		386		0		0.00	%		385		0		0.00	%

		2,617		182,338		27.24	%		2,339		161,825		26.45	%


Total	$	6,431	$	669,488		100.00	%	$	5,789	$	611,810		100.00	%


⁽¹⁾		The unallocated portion of the allowance for loan losses is intended to capture the exposure, if any, that may exist as a result of a number of qualitative factors that are difficult to quantify with precision.

The Massachusetts economy has slowed, as labor market conditions and residential real estate values have deteriorated. Default rates are increasing for sub-prime residential mortgages. Residential real estate values in the towns where the Bank’s offices are located have declined on average by nine percent since the market price peak in 2005 (The Warren Group). Unemployment in Massachusetts over the past six months has increased from 4.3%

~~the~~to ~~level~~4.9% of(Federal ~~real~~Reserve ~~estate~~New ~~values~~England inEconomic ~~Massachusetts~~Indicators, July ~~the~~2008). ~~tenure~~Management ~~and~~monitors ~~experience~~these oftrends ~~the Company’s lending staff~~closely, ~~the~~as ~~seasoning~~well ofas ~~the~~many ~~loan~~ portfolio, ~~and~~characteristics, ~~delinquency~~including ~~trends in~~ the ~~loan~~level ~~portfolio. An unallocated component is maintained to cover uncertainties that could affect management’s estimate~~ of ~~probable~~delinquencies, ~~losses.~~charge-offs, ~~The~~and ~~unallocated component~~other ofmeasures ~~the allowance reflects the margin~~ of ~~imprecision~~risk ~~inherent~~within in the ~~underlying~~loan ~~assumptions~~portfolio. ~~used~~Several inof the ~~methodologies~~key ~~for~~elements ~~estimating~~of ~~specific~~that ~~and~~analysis ~~general losses in the portfolio.~~are:

A• ~~loan~~Loan isdelinquency: ~~considered~~At ~~impaired~~June ~~when~~30, ~~based~~2008, onportfolio ~~current~~delinquency ~~information~~(percentage ~~and~~of ~~events,~~total itloans isgreater ~~probable~~than ~~that the~~30 ~~Company~~days ~~will~~past bedue) ~~unable~~stood at 1.55%, compared to ~~collect~~0.91% ~~the~~at ~~scheduled~~March ~~payments~~31, 2008, and an average of ~~principal~~1.07% orfor ~~interest~~all ~~when~~of ~~due according~~2007. toThe ~~the~~increase ~~contractual~~in ~~terms~~delinquency ofat June 30, 2008 was caused by the ~~loan~~addition ~~agreement~~of one $6.4 ~~Factors~~million ~~considered~~commercial byrelationship, ~~management~~discussed earlier in ~~determining~~ ~~impairment~~“Non-performing ~~include~~Assets”. ~~payment~~For ~~status~~all other loans, ~~collateral~~delinquency ~~value~~at June 30, ~~and~~2008 ~~the~~was ~~probability~~0.63% of ~~collecting scheduled~~total ~~principal~~loans. ~~and~~• ~~interest~~Level ~~payments~~of ~~when~~charge-offs: ~~due.~~Net ~~Impairment~~charge-offs isare ~~measured~~little onchanged ain ~~loan-by-loan~~2008 ~~basis for~~to ~~commercial~~date, ~~loans~~compared byto ~~either~~2007. For the ~~present~~three ~~value~~and ofsix ~~expected~~months ~~future~~ended ~~cash~~June ~~flows~~30, ~~discounted~~2008, atnet ~~the loan’s~~charge-offs ~~effective~~were ~~interest~~$27,000 ~~rate~~and or$40,000, respectively. For the ~~fair~~comparable ~~value~~2007 ofperiods, ~~the~~net ~~collateral~~charge-offs ifwere $18,000 and $39,000, respectively. For both the ~~loan~~2007 isand ~~collateral dependent~~2008 periods, net charge-offs represented a negligible 0.1% ~~Large~~(or ~~groups~~less) of ~~smaller~~average ~~balance~~loans ~~homogeneous~~outstanding. ~~loans~~• ~~are~~Real ~~collectively~~estate ~~evaluated~~collateral values: Management monitors loan-to-value ratios for ~~impairment.~~ ~~Accordingly~~its residential mortgage loan portfolio, ~~the~~as ~~Company~~well ~~does~~as ~~not~~for ~~separately~~its ~~identify~~construction ~~individual~~portfolio, ~~consumer~~which ~~and residential~~is ~~loans~~a ~~for~~mix ~~impairment~~of ~~disclosures~~commercial and residential construction credits. At ~~March 31~~June 30, ~~2007~~2008, ~~and~~the ~~December 31,~~weighted ~~2006,~~average loan-to-value ratio of the ~~Company~~ Bank’s ~~impaired~~construction ~~loans~~loan ~~totaled~~portfolio ~~$1.7 million~~was ~~and~~approximately $172%.~~3 million,~~ ~~respectively.~~The Noweighted ~~specific~~average ~~valuation allowance~~loan-to value ratio of the Bank’s residential mortgage loan portfolio on that date was ~~carried~~approximately ~~within~~55%. Loan-to-value ratios are computed using the ~~allowance~~appraised ~~for~~value of collateral on the date of loan ~~losses~~origination. ~~for~~• ~~impaired~~Underwriting ~~loans~~criteria: atThe ~~March 31,~~Bank ~~2007~~has ~~or December 31,~~not ~~2006~~originated and does not hold any sub-prime mortgages in its loan portfolio.

In the second quarter of 2008, the analysis performed by management did not result in any significant change in the overall level of the allowance for loan losses, which stands at 0.96% of total loans at June 30, 2008 compared to 0.94% at December 31, 2007 and 0.95% at June 30, 2007. Although unemployment has recently increased and residential property values in some areas of Massachusetts have declined, thus far these factors have not had an appreciable effect on the Bank’s loan portfolio, as outlined in the discussion above.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Impairment is measured on a loan-by-loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and home equity loans for impairment disclosures. At June 30, 2008 and December 31, 2007, the Company’s impaired loans totaled $10.1 million and $880,000 respectively. The increase in impaired loans as of June 30, 2008 is primarily the result of the addition of: a) one $6.4 million commercial loan relationship (see “Non-performing Assets” on pages 13-14 for further discussion of this loan), b) one $1.2 million restructured residential mortgage loan that is performing in accordance with its modified terms, and c) several smaller commercial and residential loans that are currently performing, for which management believes there exists some possibility of loss. The specific valuation allowances carried within the allowance for loan losses for impaired loans at June 30, 2008 and December 31, 2007 were $242,000 and $37,000, respectively.

While the Company believes that it has established adequate specific and general allowances for losses on loans, adjustments to the allowance may be necessary if future conditions differ substantially from the information used in making the evaluations. In addition, as an integral part of their examination process, the Company’s regulators periodically review the allowance for loan losses.

14The following table sets forth activity in the Company’s allowance for loan losses for the periods indicated:

	Three Months Ended						Six Months Ended
	March 31,
	June 30,						June 30,
	2007			2006
	2008			2007			2008			2007
	(Dollars in thousands)
Balance at beginning of period	$	56,~~781~~090		$	5,~~670~~498		$	5,789		$	5,337
Charge-offs:
Mortgage loans on real estate		—			—
Residential mortgage loans		—			—			—			—
Other loans:
Commercial loans		—			(2	)		—			(7	)
Commercial business		(5	)		—
Consumer loans		(30	)		(29	)		(67	)		(61	)
Consumer		(32	)		(29	)
Total charge-offs		(30	)		(31	)		(67	)		(68	)
Total other loans		(37	)		(29	)
Recoveries:
Total charge-offs		(37	)		(29	)
Commercial loans		—			2			12			4
Recoveries:
Consumer loans		3			11			15			25
Mortgage loans on real estate		—			—
Total recoveries		3			13			27			29
Other loans:
Net charge-offs		(27	)		(18	)		(40	)		(39	)
Commercial business		2			8
Provision for loan losses		368			230			682			412
Consumer		13			11
Balance at end of period	$	6,431		$	5,710		$	6,431		$	5,710
Total other loans		15			19
Ratios:
Total recoveries		15			19
Net (charge-offs)/recoveries to average loans outstanding		0.00	%		0.00	%		-0.01	%		-0.01	%
Net charge-offs		(22	)		(10	)
Allowance for loan losses to non-performing loans at end of period		74.51	%		158.74	%		74.51	%		158.74	%
Provision for loan losses		170			6
Allowance for loan losses to total loans at end of period		0.96	%		0.95	%		0.96	%		0.95	%
Balance at end of period	$	5,929		$	5,666
Ratios:
Net (charge-offs) to average loans outstanding (annualized)		-0.01	%		-0.01	%
Allowance for loan losses to non-performing loans at end of period		203.24	%		1671.29	%
Allowance for loan losses to total loans at end of period		0.99	%		0.91	%

Deposits

15The following table sets forth the Company’s deposit accounts at the dates indicated:

	March 31,		% of			December 31,		% of
	June 30,		% of			December 31,		% of
	2007		Total			2006		Total
	2008		Total			2007		Total
	(Dollars in thousands)
Deposit type:
Demand deposit accounts	$	119,072		18.8	%	$	120,966		19.1	%
Demand deposits	$	118,182		18.0	%	$	113,023		18.3	%
NOW accounts		3665,~~613~~415		510.80	%		2852,~~606~~000		48.54	%
Regular savings accounts		83,816		13.3	%		81,569		12.9	%
Regular and other savings		82,219		12.6	%		79,167		12.8	%
Money market accounts		103,369		16.4	%		93,988		14.8	%
Money market deposits		126,119		19.2	%		110,544		17.9	%
Total non-certificate accounts		~~342~~391,~~870~~935		5459.38	%		~~325~~354,~~129~~734		5157.34	%
Term certificates less than $100,000		~~170~~158,~~088~~938		2624.93	%		~~176~~159,~~677~~272		2725.98	%
Term certificates of $100,000 or more		~~118~~104,~~689~~042		1815.89	%		~~131~~103,~~373~~362		2016.8	%
Total certificate accounts		~~288~~262,~~777~~980		4540.72	%		~~308~~262,~~050~~634		4842.76	%
Total deposits	$	~~631~~654,~~647~~915		100.0	%	$	~~633~~617,~~179~~368		100.0	%

~~Total~~The ~~deposits~~Company ~~decreased~~has bymade ~~$1.5 million,~~significant orprogress ~~0.2%,~~in ~~when~~the ~~compared~~first tosix ~~December 31,~~months ~~2006.~~of ~~Despite~~2008 ~~the small~~in ~~decrease,~~growing ~~the~~its ~~mix~~“core” deposit ofaccounts ~~deposits~~(savings, ~~improved~~money market, asdemand ~~core~~and ~~deposit~~NOW accounts), which increased ~~in the aggregate~~ by $1737.72 million or 510.5% during the ~~quarter~~period. ~~This~~Certificate ~~growth~~accounts ~~was~~were ~~primarily~~essentially ~~the~~flat ~~result~~over ofthat ~~increased~~time frame, ~~commercial~~increasing ~~cash~~negligibly ~~management~~by ~~offerings~~$346,000 ~~and~~or ~~associated~~0.1%. ~~sales~~These ~~efforts,~~results aswith ~~well~~respect asto core deposit growth are attributable, in part, to the ~~introduction~~ opening of two new ~~retail~~branch ~~deposit~~locations ~~product~~in ~~offerings~~the past 18 months. AThe Bank’s Wellesley, MA branch, opened in September of 2006, had $1921.36 million ~~decrease~~ in ~~time~~total deposits ~~during the~~($13.4 ~~quarter~~million ~~occurred~~in “core” accounts) as of June 30, 2008, and the Bank’s ~~cut~~Watertown, ~~back~~MA ~~its~~branch, ~~premium-rate~~opened ~~promotional~~in August 2007 ~~certificate~~had ~~offerings~~$11.4 million in total deposits ($9.6 million in “core” accounts) on that date. Also contributing to “core” account growth over the past six months have been increases in commercial deposits, which have grown in conjunction with growth in commercial business loans during the period.

Borrowed Funds

~~Borrowed~~The Company’s borrowed funds ~~decreased~~increased by $1927.41 million, or 1216.24%, ~~during~~to ~~the~~a ~~first~~total ~~quarter~~ of ~~2007~~$192.4 million ~~The~~at ~~reduction~~June 30, ~~was~~2008, ~~the~~compared ~~result~~to ofDecember 31, ~~the repayment of $9~~2007.~~4 million~~ inThese ~~short-term~~additional ~~borrowings~~borrowed ~~with~~funds ~~the~~(which ~~Federal~~were primarily ~~Home~~a ~~Loan~~blend ~~Bank~~ of ~~Boston~~two ~~(“FHLBB”)~~to ~~and~~seven ~~the~~year ~~repayment~~Federal ofHome ~~$10.0 million~~Loan Bank of ~~long-~~Boston term ~~FHLBB~~ advances~~. These~~) ~~repayments~~ were ~~made~~used ~~with~~principally to ~~the~~fund ~~liquidity~~growth ~~provided~~in byfixed ~~loan~~rate ~~sales~~residential mortgage loans during the ~~quarter~~six-month period.

Stockholder’s Equity

Total stockholders’ equity was $~~109~~106.01 million as of ~~March~~June 3130, ~~2007~~2008, a decrease of $~~424,000~~1.4 million when compared to the balance at December 31, ~~2006~~2007. The decrease was primarily attributable to the repurchase of 50190,000 shares ($~~747,000~~2.6 million), dividends paid ($~~336,000~~1.1 million), ~~stock-based compensation~~ and ~~ESOP~~ ~~expense~~a ($~~430~~538,000), ~~and a~~ decrease in the fair value of securities available for sale (~~$362,000~~net of tax), offset in part by earnings of $~~591~~2.3 million and stock-based compensation and ESOP expense ($618,000).

Comparison of Operating Results for the Three and Six Months Ended ~~March~~June 3130, ~~2007~~2008 and ~~2006~~2007

The Company earned net income of $~~591,000~~1.2 million for the quarter ended ~~March~~June 3130, ~~2007~~2008, aan ~~decrease~~increase of $~~677~~342,000, asor 41.3%, compared to net income of $~~1.3 million~~829,000 earned in the ~~first~~second quarter of ~~2006~~2007. The increased earnings ~~decline~~ largely reflected ~~significantly~~lower ~~higher~~ operating expenses, ~~partially~~and ~~offset~~higher ~~by growth~~net ~~in non-~~interest income., partially ~~Results~~offset ~~were~~by ~~also~~an ~~adversely~~increase ~~impacted~~in bythe aprovision ~~decline~~for inloan ~~net~~losses ~~interest income~~ and ana ~~increase~~drop in ~~the~~other ~~loan loss provision~~income.

The Company’s net income for the six months ended June 30, 2008 was $2.3 million, an increase of $863,000, or 60.8%, over the $1.4 million earned in the first six months of 2007. Similar to the quarterly results, the increased earnings primarily reflected lower operating expenses and growth in net interest income, partially offset by an increase in the provision for loan losses and a reduction in other income.

Analysis of Net Interest Income

Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income also depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them.

16The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. Most average balances are daily average balances. Non-accrual loans are included in the computation of average balances, but are reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense:


	Three Months Ended June 30,
	2008							2007
	Average							Average
	Outstanding							Outstanding
	Balance		Interest		Yield/Rate⁽¹⁾			Balance		Interest		Yield/Rate⁽¹⁾
					(Dollars in thousands)
Interest-earning assets:
Loans	$	659,601	$	9,962		6.00	%	$	604,459	$	9,712		6.38	%
Securities		188,621		2,041		4.33	%		169,543		2,118		5.00	%
Short-term investments		22,504		96		1.69	%		12,891		222		6.81	%

Total interest-earning assets		870,726		12,099		5.53	%		786,893		12,052		6.09	%

Non-interest-earning assets		96,330							109,495

Total assets	$	967,056						$	896,388


Interest-bearing liabilities:
Savings accounts	$	81,338		81		0.40	%	$	83,086		103		0.50	%
Money market accounts		132,152		557		1.70	%		108,825		748		2.76	%
NOW accounts		60,599		265		1.76	%		38,269		217		2.27	%
Certificates of deposit		265,260		2,507		3.80	%		284,314		3,240		4.57	%

Total deposits		539,349		3,410		2.54	%		514,494		4,308		3.36	%
Borrowings		191,849		2,193		4.52	%		140,225		1,692		4.77	%

Total interest-bearing liabilities		731,198		5,603		3.06	%		654,719		6,000		3.66	%

Non-interest bearing liabilities		128,334							132,490

Total liabilities		859,532							787,209
Equity		107,524							109,179

Total liabilities and equity	$	967,056						$	896,388


Net interest income			$	6,496						$	6,052

Net interest rate spread ⁽²⁾						2.47	%						2.43	%
Net interest-earning assets ⁽³⁾	$	139,528						$	132,174

Net interest margin ⁽⁴⁾						3.00	%						3.08	%
Average interest-earning assets to interest-bearing liabilities						119.08	%						120.19	%


⁽¹⁾		Yields and rates for the three months ended June 30, 2008 and 2007 are annualized.

⁽²⁾		Net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities.

⁽³⁾		Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

⁽⁴⁾		Net interest margin represents net interest income divided by average total interest-earning assets.

The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. Most average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense:


	Six Months Ended June 30,
	2008							2007
	Average							Average
	Outstanding							Outstanding
	Balance		Interest		Yield/Rate⁽¹⁾			Balance		Interest		Yield/Rate⁽¹⁾
					(Dollars in thousands)
Interest-earning assets:
Loans	$	641,495	$	19,853		6.15	%	$	615,099	$	19,418		6.30	%
Securities		182,189		4,208		4.62	%		160,220		3,970		4.96	%
Short-term investments		28,030		338		2.39	%		17,600		503		5.69	%

Total interest-earning assets		851,714		24,399		5.70	%		792,919		23,891		6.01	%
Non-interest-earning assets		98,935							109,016

Total assets	$	950,649						$	901,935


Interest-bearing liabilities:
Savings accounts	$	80,084		159		0.40	%	$	83,315		205		0.50	%
Money market accounts		124,550		1,178		1.90	%		103,693		1,368		2.66	%
NOW accounts		57,922		560		1.94	%		33,390		307		1.86	%
Certificates of deposit		265,985		5,372		4.06	%		290,765		6,585		4.57	%

Total deposits		528,541		7,269		2.77	%		511,163		8,465		3.34	%
Borrowings		187,551		4,328		4.56	%		149,136		3,548		4.73	%

Total interest-bearing liabilities		716,092		11,597		3.24	%		660,299		12,013		3.65	%
Non-interest bearing liabilities		126,969							132,130

Total liabilities		843,061							792,429
Equity		107,588							109,506

Total liabilities and equity	$	950,649						$	901,935


Net interest income			$	12,802						$	11,878

Net interest rate spread ⁽²⁾						2.46	%						2.36	%
Net interest-earning assets ⁽³⁾	$	135,622						$	132,620

Net interest margin ⁽⁴⁾						3.02	%						3.02	%
Average interest-earning assets to interest-bearing liabilities						118.94	%						120.08	%

	Three Months Ended March 31,
(1)	Yields and rates for the six months ended June 30, 2008 and 2007 are annualized.
	2007							2006
(2)	Net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities.
	Average							Average
(3)	Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
	Outstanding							Outstanding
(4)	Net interest margin represents net interest income divided by average total interest-earning assets.
	Balance		Interest		Yield/Rate(1)			Balance		Interest		Yield/Rate(1)
					(Dollars in thousands)
Interest-earning assets:
Loans	$	625,857	$	9,706		6.21	%	$	606,510	$	8,842		5.91	%
Securities		150,793		1,852		4.92	%		136,805		1,382		4.10	%
Short-term investments		22,361		281		5.03	%		19,697		216		4.45	%
Total interest-earning assets		799,011		11,839		5.93	%		763,012		10,440		5.55	%
Non-interest-earning assets		108,532							115,936
Total assets	$	907,543						$	878,948
Interest-bearing liabilities:
Savings deposits	$	83,546		102		0.50	%	$	96,624		118		0.50	%
Money market accounts		98,504		620		2.55	%		98,587		510		2.10	%
NOW accounts		28,458		90		1.28	%		27,155		10		0.15	%
Certificates of deposit		297,288		3,344		4.56	%		275,787		2,464		3.62	%
Total deposits		507,796		4,156		3.32	%		498,153		3,102		2.53	%
Borrowings		158,145		1,857		4.70	%		141,797		1,426		4.08	%
Total interest-bearing liabilities		665,941		6,013		3.65	%		639,950		4,528		2.87	%
Non-interest bearing liabilities		131,766							130,530
Total liabilities		797,707							770,480
Equity		109,836							108,468
Total liabilities and equity	$	907,543						$	878,948
Net interest income			$	5,826						$	5,912
Net interest rate spread (2)						2.28	%						2.68	%
Net interest-earning assets (3)	$	133,070						$	123,062
Net interest margin (4)						2.96	%						3.14	%
Average interest-earning assets to interest-bearing liabilities						119.98	%						119.23	%

(1)		Yields and rates for the three months ended March 31, 2007 and 2006 are annualized.
(2)		Net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities.
(3)		Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(4)		Net interest margin represents net interest income divided by average total interest-earning assets.

The following table presents the dollar amount of changes in interest income and interest expense for the major categories of the Company’s interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to changes in volume (i.e., changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.

~~The following table presents the dollar amount of changes in interest income and interest~~20 expense for the major categories of the Company’s interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to changes in volume (i.e., changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). For purposes of this

table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.


	Three Months Ended June 30,
	2008 vs. 2007
	Increase (Decrease)						Total
	Due to						Increase
	Volume			Rate			(Decrease)
	(In thousands)
Interest-earning assets:
Loans	$	854		$	(604	)	$	250
Securities		224			(301	)		(77	)
Short-term investments		104			(230	)		(126	)

Total interest-earning assets		1,182			(1,135	)		47

Interest-bearing liabilities:
Savings accounts		(2	)		(20	)		(22	)
Money market accounts		138			(329	)		(191	)
NOW accounts		106			(58	)		48
Certificates of deposit		(207	)		(526	)		(733	)

Total deposits		35			(933	)		(898	)
Borrowings		594			(93	)		501

Total interest-bearing liabilities		629			(1,026	)		(397	)

Change in net interest income	$	553		$	(109	)	$	444

	Three Months Ended March 31,
	Six Months Ended June 30,
	2007 vs. 2006
	2008 vs. 2007
	Increase (Decrease)						Total
	Due to						~~Total~~Increase
							Increase
	Volume			Rate			(Decrease)
	(In thousands)			~~(In thousands)~~
Interest-earning assets:
Loans	$	~~288~~822		$	~~576~~(387	)	$	~~864~~435
Securities		~~151~~520			~~319~~(282	)		~~470~~238
Short-term investments		31211			34(376	)		65(165	)
Total interest-earning assets		~~470~~1,553			~~929~~(1,045	)		~~1,399~~508
Interest-bearing liabilities:
Savings accounts		(168	)		—(38	)		(1646	)
Money market accounts		—243			~~110~~(433	)		~~110~~(190	)
NOW accounts		1236			7917			80253
Certificates of deposit		~~204~~(533	)		~~676~~(679	)		~~880~~(1,212	)
Total deposits		~~189~~(62	)		~~865~~(1,133	)		(1,~~054~~195	)
Borrowings		~~176~~888			~~255~~(109	)		~~431~~779
Total interest-bearing liabilities		~~365~~826			(1,~~120~~242	)		~~1,485~~(416	)
Change in net interest income	$	~~105~~727		$	~~(191~~197	)	$	~~(86~~924	)

Net interest income for the quarter ended ~~March~~June 3130, ~~2007~~2008 was $56.85 million, aan ~~decrease~~increase of $86444,000 or 1or 7.53% ~~when~~as compared to net interest income of $56.91 million for the three months ended ~~March~~June 3130, ~~2006~~2007. The $86444,000 ~~decrease was primarily the result of an 18 basis point decline in the net~~increase ~~interest margin, which exceeded the positive benefit of overall balance sheet growth. Average interest-earning assets increased by $36.0 million, or 4.7%, comparing the two quarters year-over-year.~~

~~The Company’s net interest margin was 2.96% for the three months ended March 31, 2007. While the~~21 2.96% margin was 18 basis points less than the year-earlier period, it was 16 basis points better than its recent low of 2.80% in the fourth quarter of 2006. Throughout much of a nearly two-year period, increased price competition for time deposits and money market accounts, as well as a flattening, flat or inverted yield curve, has contributed to a decrease in the net interest margin. Management actions taken in the past two quarters to interrupt the downward trend in margin included the sale of $62.7 million of low-rate residential mortgages and a six-branch sale/leaseback transaction. The sale/leaseback transaction converted non-earning real estate to earning assets, but also increased the Company’s operating expenses.

Interest income for the quarter ended March 31, 2007 was $11.8 million, an increase of $1.4 million or 13.4% compared to $10.4 million earned in the quarter ended March 31, 2006. The $1.4 million increase stems both from a 38 basis point increase in the yield earned on average interest-earning assets and $36.0 million of growth in the average balance of those assets. The largest increase in average interest-earning assets between the two periods was in loans, at $19.3 million. An increase in the loan yield of 30 basis points, comparing the year-over-year quarterly periods, was caused largely by a shift in loan mix toward higher-yielding assets. The commercial loan portfolio, on average, grew by $55.0 million, or 19.2%, while the residential mortgage portfolio, on average,

~~decreased~~was byprimarily the result of an $4183.8 million, or 1410.67%., ~~The~~increase in average ~~balances of securities and short~~interest-~~term investments~~earning ~~increased by $13.9 and $2.7 million, respectively, when comparing the quarter ended~~assets ~~March 31,~~between ~~2007 to~~ the ~~same~~two ~~period~~quarterly ~~in 2006~~periods. ~~Increases~~The inasset ~~yields~~growth ~~earned~~helped onto ~~securities~~offset ~~and~~a ~~short-term investments~~decline of 82eight ~~and 58~~ basis points, ~~respectively,~~in ~~were due largely to~~ the ~~increase~~net ~~in market~~ interest ~~rates~~margin ~~year-over-year.~~between ~~In addition,~~ the ~~Company~~two ~~increased its mortgage-backed securities portfolio in the first quarter of 2007 by $33~~periods.~~3 million. These new holdings helped to diversify the~~ ~~mix of the securities portfolio while increasing its overall yield.~~

~~Interest~~The ~~expense~~Company’s ~~for~~net ~~the~~interest ~~quarter~~margin ~~ended March 31, 2007~~ was $63.~~0 million, an increase of $1.5 million or 32.8~~00% ~~over~~for the ~~comparable~~three ~~quarter~~months ofended ~~the prior year. The $1.5~~June ~~million~~30, ~~addition~~2008, tofour ~~interest expense arose primarily from a 78~~ basis ~~point increase in the cost of average interest-bearing~~ ~~liabilities,~~points ~~supplemented~~lower bythan ~~$26.0 million of growth in~~ the ~~average~~first ~~balance~~quarter of ~~those~~2008 ~~liabilities. Growth~~and ineight ~~average~~basis ~~interest-bearing~~points ~~liabilities~~less ~~between~~than the ~~comparable 2007 and 2006 quarters consisted of borrowed funds ($16.~~3 ~~million) and deposits ($9~~.~~6 million).~~08% ~~Within the deposit~~margin ~~portfolio,~~achieved ~~on average, time accounts increased by $21.5 million, while other interest-bearing deposits dropped by $11.9 million. The 78 basis point increase~~ in the ~~cost of interest~~year-~~bearing liabilities~~earlier ~~was~~quarterly ~~due~~period. ~~largely~~As ~~to the increase in short-term~~ market interest rates ~~year-over-year~~, ~~and depositor~~particularly ~~preference for~~ short-term rates, ~~accounts.~~declined ~~Customer~~substantially ~~demand~~in ~~for~~the ~~time~~past ~~accounts~~twelve ~~as an alternative to savings products~~months, the Company’s ~~desire~~was toable ~~use deposits~~ to ~~fund~~offset ~~asset~~much ~~growth,~~of the ~~short duration~~ ofensuing ~~the~~reduction ~~Company’s~~in ~~time~~earning-asset ~~deposit~~yields ~~portfolio,~~with ~~and~~decreases ~~intense~~in ~~pricing~~its ~~competition~~deposit ~~all~~costs. ~~fueled~~However, agrowth ~~94 basis~~in ~~point~~higher-costing ~~climb~~FHLB indebt, and the ~~cost~~use of ~~time accounts, year-over-year~~$6.4 million ~~The~~in ~~cost~~investable offunds ~~borrowed~~over ~~funds~~the ~~also~~last ~~increased~~twelve ~~between~~months ~~periods,~~to byrepurchase 62common ~~basis points~~shares, aswere ~~new~~factors ~~borrowings and rollovers of existing borrowings bore higher prices than~~ in the ~~comparable~~margin ~~2006 period~~contraction.

Interest income for the quarter ended June 30, 2008 was $12.1 million, a minimal increase of $47,000 or 0.4% compared to the three months ended June 30, 2007. This small increase resulted from an $83.8 million increase in average interest-earning assets between the two periods, offset nearly entirely by a 56 basis point decrease in the yield earned on those assets. The largest growth in average interest-earning assets between the two periods was in loans, at $55.1 million, while securities and short-term investments increased on average by $19.1 million and $9.6 million, respectively. Average loan growth was concentrated in higher-yielding commercial loans, which increased by $42.7 million, or 11.9%. Yield decreases reflected the significant reduction in market interest rates since July 2007, and were more pronounced for assets of shorter duration. The decrease in yield earned on loans totaled 38 basis points when comparing the two quarters, while yields on securities and short-term investments declined by 108 basis points on a combined basis.

Interest expense for the three months ended June 30, 2008 was $5.6 million, a decrease of $397,000 or 6.6% from the $6.0 million incurred in the second quarter of 2007. The decrease arose primarily from a 60 basis point drop in the cost of average interest-bearing liabilities, which more than offset a $76.5 million increase in the average balance of those liabilities ($51.6 million in borrowings and $24.9 million in deposits). However, within the deposit portfolio, the average balances of ‘core’ accounts (money market, NOW and savings accounts) increased on average by $44.0 million, while certificate balances decreased on average by $19.1 million. This favorable change in deposit mix, coupled with the decline in short-term market interest rates, helped to reduce the weighted average rate on interest-bearing deposits by 82 basis points quarter over quarter. Growth in borrowings, while bearing higher interest rates than deposits, have provided longer-term sources of funds that are useful in mitigating the interest-rate risk associated with the Company’s growth in fixed-rate residential mortgage loans and mortgage-backed securities.

Net interest income earned during the first six months of 2008 was $12.8 million, an increase of $924,000, or 7.8%, over the total earned in the first half of 2007. The increase was the result of balance sheet growth and changes in mix, as the net interest margin was unchanged at 3.02% when comparing the two periods.

Interest income for the six months ended June 30, 2008 was $24.4 million, an increase of $508,000 or 2.1% compared to $23.9 million earned during the same six-month period of 2007. The $508,000 increase arose from $58.8 million (or 7.4%) of growth in average interest-earning assets, which more than offset a 31 basis point decline in the yield earned on those assets. Average asset growth included $26.4 million in loans and $32.4 million combined in securities and short-term investments. The decline in average earning-asset yield included decreases of 15 basis points on loans and 71 basis points for securities and short-term investments on a combined basis. A change in mix toward higher-yielding commercial loans helped limit the decline in loan yield, despite the significant decline in market interest rates. On average, commercial loans grew by $43.7 million, or 12.5%, while residential mortgages decreased by $17.6 million, or 7.8%. The decrease in average residential mortgages comparing these two six-month periods was largely the result of the Company’s bulk sale of over $62 million in adjustable-rate mortgages in the first quarter of 2007. The Company also increased its security portfolio allocation in mortgage-backed securities (MBS), which grew on average by $33.8 million when comparing the

two periods. The MBS portfolio has been fairly well-protected from the downward market rate movement, with average yields declining by just four basis points in comparing the two six-month periods.

Interest expense for the six months ended June 30, 2008 was $11.6 million, a decrease of $416,000 or 3.5% from a total of $12.0 million in the comparable period in 2007. The $416,000 decrease resulted from a 41 basis point reduction in the cost of average interest-bearing liabilities (including 57 and 17 basis points in interest-bearing deposits and borrowings, respectively). The cost reduction more than offset a $55.8 million increase in the average balance of those liabilities ($38.4 million in borrowed funds and $17.4 million in deposits). However, within the deposit portfolio, the average balance of savings, NOW, and money market accounts increased by $42.2 million (or 19.1%) while higher-cost certificate accounts dropped by $24.8 million, or 8.5%.

Provision for Loan Losses

The ~~loan~~Company’s ~~loss~~ provision for ~~the~~loan ~~first~~losses ~~quarter of 2007~~ was $~~170~~368,000 for the three months ended June 30, 2008, compared to $6230,000 ~~provided~~ in the comparable quarter inof ~~2006~~2007. ~~The~~For ~~small size of~~ the ~~2006~~first ~~provision~~six ~~was~~months ~~due~~of ~~primarily~~2008 ~~to a reduction in construction loans~~ and ~~impaired loans during~~ 2007, the ~~quarter. The higher~~ provision infor ~~the first~~loan ~~quarter~~losses ofamounted ~~2007 largely reflects year-~~to~~-date~~ ~~growth~~$682,000 ofand $~~19.7 million~~412,000, ~~in the commercial loan portfolio~~respectively.

AtIncreased ~~March 31,~~provisions ~~2007,~~in the ~~allowance~~2008 ~~for~~periods largely reflected loan ~~losses~~portfolio ~~totaled~~growth ~~$5.9 million,~~and orchanges in mix.~~99%~~ ofIn the ~~loan portfolio~~first six months of 2008, total gross loans increased by $57.8 million as compared to $521.70 million, orin the first six months of 2007.~~91%~~ There was also a marked difference in the mix of ~~total~~the loan ~~loans,~~growth atwhen ~~March 31~~comparing the two periods: In 2008, ~~2006~~62.5% ~~The~~of ~~increase~~loan growth has been in residential ~~the~~mortgages, ~~allowance~~ for ~~loan~~which ~~losses~~the asCompany reserves a lower estimated loss percentage ofthan for commercial loans. In the first six months of 2007, nearly all loan growth was in commercial loans, and the residential portfolio asactually ofdeclined ~~March~~by $12.2 ~~31,~~million ~~2007~~over ~~compared~~the six-month period. At June 30, to2008, athe ~~year~~allowance ~~earlier~~for ~~was~~loan ~~primarily~~losses ~~due~~totaled to$6.4 million, anor ~~increase~~.96% inof the ~~proportion~~loan portfolio, as compared to $5.7 million, or .95% of ~~commercial~~total loans, inat ~~the portfolio~~June 30, 2007.

Non-interest Income

Non-interest income of $21.05 million for the three~~-month~~ ~~period~~months ended ~~March~~June 3130, ~~2007~~2008 ~~represented~~was ~~an increase of~~ $~~562~~289,000, or 3916.91%, less ~~over~~than the $1.48 million earned ~~during~~in the ~~same~~comparable 2007 quarter. inNon-interest ~~2006.~~income ~~The~~of $3.0 ~~primary~~million ~~reasons~~ for the ~~increase~~six-month ~~were~~period ~~higher~~ended ~~ATM~~June 30, ~~and~~2008 ~~loan~~was ~~servicing~~$783,000 ~~fees~~(or ~~and~~20.8%) anless ~~$187,000~~than ~~net~~the ~~gain~~$3.8 onmillion earned in the ~~sale~~identical ofperiod ~~bank-owned~~in ~~land~~2007.

~~Loan~~The ~~servicing~~most ~~fees~~significant ~~were~~decline ~~$209,000~~in ~~higher~~both intime ~~2007~~periods was in ~~comparison~~ATM toservicing ~~the~~fees. ~~year-earlier~~ATM ~~period.~~servicing ~~During~~fees ~~the~~decreased ~~first~~by ~~quarter of 2007, the Company collected~~ $~~235~~301,000, inor ~~prepayment~~48.4% ~~penalties~~in ~~for~~comparing the ~~early payoff~~second quarter of ~~two~~2008 ~~large~~to ~~commercial~~2007, ~~loans.~~and ~~ATM~~by ~~servicing fees increased~~ $72655,000, or 1149.57%, in comparing the ~~first~~two ~~three~~six-month ~~months~~periods offor ~~2007~~those ~~to 2006~~years. ~~Servicing~~The Company earns ATM servicing fees ~~are~~based ~~collected~~on ~~from~~average cash balances supplied to ATMs owned by independent ~~sales~~ service organizations, ~~nationwide~~at a ~~for~~variable ~~managing~~rate indexed off the ~~ATMs~~prime ~~and~~rate ~~for~~of interest. Since the ~~use~~second quarter of 2007, the prime ~~cash~~rate inhas ~~the~~declined ~~machines.~~by ~~The Company~~325 ~~recorded~~basis ~~$250~~points,~~000~~ inand ~~gains~~average oncash balances supplied have decreased by over 30%. Excluding the ~~sale~~ATM ofservicing ~~bank~~fees, non-~~owned~~interest ~~premises~~income infor the ~~first~~second quarter of ~~2007, including~~2008 was $~~187~~12,000 on(or ~~land~~1.0%) ~~for~~higher ~~which~~than ~~there~~the ~~were~~year-earlier noquarter. ~~plans~~Deposit ~~for~~service ~~future~~fees ~~use.~~increased ~~The~~in ~~remaining~~this time frame by $63106,000, ~~in income~~or 28.7%, largely from higher fees earned for ~~the~~checking ~~category~~products ~~represented~~and ~~accretion~~cash management ofservices ~~the~~provided ~~deferred~~to ~~gain~~business oncustomers. aOffsetting ~~six~~this ~~branch~~increase, ~~sale~~gains ~~/ leaseback~~on ~~transaction~~loan ~~completed~~sales dropped $111,000 in comparing the ~~fourth~~two ~~quarter~~quarters. ofIn ~~2006.~~late ~~The~~2007, ~~remaining~~management ~~deferred~~decided ~~gain~~to ofhold ~~$3.7~~most new ~~million~~fixed-rate ~~will~~residential bemortgage ~~accreted~~loan ~~into~~production ~~income~~on ~~over~~its ~~the~~balance ~~duration~~sheet ofrather athan ~~15-year~~sell ~~lease~~the ~~term~~loans into the secondary market.

~~Quarter-over-quarter,~~Excluding the ~~Company~~ATM ~~also~~servicing ~~benefited~~fees, ~~from~~non-interest ~~increases~~income for the first six months of 2008 was $38128,000 (or in5.2%) ~~gains~~less onthan ~~loan~~the ~~sales~~comparable 2007 period. In large part, this decline can be attributed to ~~and~~an $32187,000 non-recurring gain on the sale of land in ~~income~~the ~~from~~first ~~bank-owned~~quarter ~~life~~of ~~insurance~~2007. ~~Miscellaneous~~Otherwise, deposit ~~income~~service ~~declined~~fees increased by $50129,000 ~~quarter-over-quarter~~, ~~predominantly~~or ~~from~~18.2%, awhile gains on loan sales declined by $54110,000, ~~drop~~or in37.2%. ~~investment~~The ~~sales~~volume ~~commissions (non~~of fixed-~~deposit~~rate ~~investment~~residential ~~products).~~mortgage ~~The~~loans ~~Company~~sold isinto ~~currently~~the ~~considering~~secondary market ~~options~~dropped to ~~revitalize~~$1.5 million ~~its~~in the first six months of 2008, or 6% of the 2007 ~~investment~~six-month total. However, the Company’s reverse mortgage sales program, which was introduced to market in the second quarter of 2007, contributed a year-over-year increase of $115,000 in gains.

1923

The sale of certain CSSI assets in May of 2007 will negatively affect ATM servicing fee revenue in the future. The Company will continue to earn fees for providing cash to former CSSI customers, but those fees will be lower, since the Company will no longer be providing full administrative and operational service for these customers. In the future, cash provided to independent ATM owners will earn a rate that is tied to the prime rate of interest (currently set at prime minus 1.48%, or 6.77%). In contrast, for the past six months, CSSI has earned fees based on blended adjustable rates that have approximated the prime rate plus 5 basis points (8.30%). Operating expenses associated with providing cash to ATM owners will also decline in the future (see below).

Non-interest Expense

Non-interest expenses oftotaled $65.89 million for the three-month period ended ~~March~~June 3130, ~~2007~~2008, ~~represent an~~a ~~increase~~decrease of $~~1.5 million~~515,000, or 278.50%, ~~over~~from the $56.34 million incurred ~~during~~in the same ~~period~~quarter ofin ~~2006~~2007. ~~The~~Non-interest ~~primary~~expenses ~~factors~~were ~~for~~$11.7 million ~~this~~in ~~increase~~the ~~include~~first ~~investments~~six inmonths ~~human~~of ~~resources~~2008, ~~new~~$1.5 million ~~customer~~or ~~product~~11.5% ~~offerings,~~less ~~and~~than ~~expansion of~~ the ~~geographic~~total ~~footprint~~for of the ~~Company.~~six ~~The~~months ~~Company~~ended ~~has~~June 30, ~~been aggressive in making resource commitments in order to improve business opportunities long-term~~2007.

~~Comparing~~The ~~the~~largest ~~first~~contributor ~~quarter of 2007~~ to ~~2006,~~ the ~~largest~~$515,000 ~~increase~~decline in non-interest ~~expense~~expenses between the second (quarters of 2008 and 2007 was $~~892~~424,000, (or 3211.81%) ~~was~~ in salaries and employee benefits. ~~The~~In ~~Company~~late ~~has~~June of ~~added~~2007, ~~staff~~the ~~for~~Company ~~one~~reduced ~~new branch~~its ~~location,~~staff ~~business~~by ~~development~~8% ~~(such~~and asrecorded ~~commercial~~$148,000 ~~and~~in ~~residential~~related ~~loan~~severance ~~origination,~~costs. ~~loan~~The ~~support,~~Company ~~marketing,~~also ~~and~~instituted ~~product~~a ~~sales~~number ~~and~~of ~~development)~~benefit ~~and~~cost ~~for~~containment ~~the~~measures ~~audit~~in ~~function~~January 2008, ~~needed~~resulting toin ~~satisfy~~reductions ~~growing~~of ~~regulatory~~employee ~~compliance~~retirement ~~requirements~~costs and medical insurance. In addition, stock incentive plan expense decreased by $89,000; the Company ~~began~~has torecognized ~~accrue~~ stock ~~compensation~~ option expense using an accelerated method, which has resulted in ~~conformity~~lower ~~with~~expenses ~~FAS~~as ~~123R~~the ~~accounting~~multi-year ~~guidelines,~~vesting inperiods ~~August 2006.~~begin ~~The~~to ~~stock~~lapse. ~~compensation~~Excluding ~~expense~~salaries ~~recorded~~and inbenefits, all other non-interest expenses for the ~~first~~second quarter of ~~2007~~2008 were ~~was~~ $~~369~~91,000, or 3.5%, ~~The~~less ~~Company~~than isthe ~~using~~second anquarter of 2007. Other general and administrative ~~accelerated~~expenses ~~method~~increased ofby ~~expense~~$127,000 year-over-year, ~~recognition~~primarily resulting from an increase in the reserve for ~~stock~~losses ~~compensation~~on unfunded loan commitments, ~~resulting~~offset in ~~higher~~part ~~expenses~~by decreases in expenses associated with the ~~earlier~~Company’s ~~portion~~ATM cash management program. However, there were offsetting reductions of $98,000 in marketing and advertising expenses, $53,000 in professional fees and $44,000 in amortization of intangible assets between the ~~multi-year~~two ~~vesting~~quarterly periods. The Company also reduced its data processing expenses by $29,000 (or 4.8%), pursuant primarily to a re-negotiated contract with its core systems vendor.

~~Excluding~~Salaries ~~salaries~~ and employee benefits, ~~all~~expense ~~other~~represented ~~non-interest expenses combined increased by~~ $~~576~~806,000 ~~in the first three months~~ of ~~2007,~~the ~~compared~~total ~~to 2006. Occupancy and equipment expenses increased by~~ $~~242,000 or 36~~1.~~3%, mainly due to the inception of rental expense at six branch locations in December~~5 ~~2006.~~million ~~The~~decrease ~~rental expense at these locations (which were involved~~ in ~~a sale / leaseback~~ ~~transaction)~~non-interest ~~exceeds the depreciation~~ expense ~~incurred~~ when comparing the ~~buildings were Bank~~six-~~owned.~~month ~~A $156,000,~~periods orended ~~34.8% increase in data processing costs between the two quarters was largely attributable to higher product development~~June 30, ~~software~~2008 ~~licensing~~ and ~~support,~~2007. ~~and~~In ~~service~~June ~~bureau~~of ~~costs. A $437~~2007,~~000~~ ~~increase~~the inCompany ~~other~~reduced ~~general~~its ~~and~~staff ~~administrative~~by ~~expense~~8%, ~~was~~contributing ~~largely~~significantly ~~attributable~~ to ~~two~~ ~~causes.~~a ~~The~~reduction ~~Company accelerated its amortization~~ of ~~capitalized~~5.5% ~~debt issuance costs~~ in ~~connection~~base ~~with~~salaries ~~its~~and ~~assessment~~commissions ~~that~~when itcomparing ~~intends~~the totwo ~~prepay~~six-month $9periods.~~0 million~~ ofThe ~~subordinated~~Company ~~debt in~~also ~~November 2007,~~instituted ~~resulting in~~ a ~~charge~~number of ~~$176,000.~~benefit Incost ~~addition,~~containment ~~the~~measures ~~Company~~in ~~reserved $125~~January 2008,~~000~~ ~~for estimated~~including ~~costs~~reductions ~~($68,000~~ of ~~which are included in other general and administrative expense) that it expected~~ toemployee ~~realize~~retirement ~~upon~~costs ~~the sale of CSSI’s ATM cash management business. In addition to these atypical events, the cost of loan underwriting~~ and ~~servicing~~medical ~~expenses increased by $66,000 year-over-year~~insurance. ~~Offsetting~~ ~~these~~Stock ~~increases,~~incentive ~~amortization~~plan ofexpense ~~the core deposit intangible asset created in the Chart Bank acquisition~~ decreased by $84233,000 ~~from~~comparing the ~~comparable~~two ~~period~~six-month ~~in 2006~~periods; the ~~accelerated~~Company ~~amortization schedule~~has ~~used~~recognized ~~for~~stock ~~this~~option ~~asset will cause this~~ expense ~~to continue to decline in future periods. In~~using ~~addition,~~an ~~professional~~accelerated ~~fees decreased by $141~~method,~~000~~ ~~from~~which ~~the~~has ~~comparable~~resulted ~~year-earlier~~in ~~period,~~lower ~~due primarily~~expenses toas the ~~expiration~~multi-year ofvesting ~~consulting~~periods ~~contracts entered into in connection with the 2005 Chart Bank~~begin ~~merger~~to lapse.

~~The~~Excluding ~~Company~~salaries ~~opened~~and abenefits, ~~new~~all ~~branch~~other innon-interest ~~Wellesley~~expenses for the six months ended June 30, 2008 ~~Massachusetts~~were $716,000, or 12.4%, less than the first six months of 2007. A $115,000, or 24.4% decrease in ~~September 2006~~professional fees was attributable to declines in audit costs and legal fees. Marketing ~~The~~and advertising expenses declined by 45.0% or $148,000; in 2007, the Company ~~also~~brought ~~has~~to ~~regulatory~~market ~~approval~~several tonew ~~open~~deposit and loan products. Amortization of a ~~new~~core ~~branch~~deposit intangible asset created in ~~Watertown~~the 2005 acquisition of Chart Bank fell $111,000 ~~Massachusetts~~from the comparable six-month period in 2007, and itwill iscontinue ~~anticipated~~to ~~that~~decline at a lesser pace in future periods. Finally, other general and administrative expense dropped by $372,000 or 23.2% between the two six-month periods. Within this particular ~~branch~~category, ~~will~~various ~~open~~costs largely associated with operating the ATM cash management business decreased by $269,000. In addition, the Company absorbed a $176,000 non-recurring charge in the ~~third~~first quarter of 2007. ~~The~~representing ~~direct~~the write-off of capitalized debt issuance costs in advance of ~~operating~~its ~~this~~November ~~branch~~prepayment ~~are~~of $9.0 million of subordinated debt. These savings were offset ~~estimated~~somewhat atby an increase of $~~700~~222,000 ~~annually~~in the provision for losses on unfunded loan commitments.

The sale of certain CSSI assets in May of 2007 will have the effect of reducing the Company’s operating expenses in the future. The total direct operating expenses of CSSI were $947,000 and $363,000 in the year ended December 31, 2006 and the quarter ended March 31, 2007, respectively. Measured against operating expenses incurred in the first quarter of 2007, CSSI-related operating expenses are expected to decline by approximately 90%, beginning in the third quarter of 2007.

Income Taxes

~~The~~Income ~~income~~ tax ~~provision~~expense of $~~238~~551,000 recorded for the ~~three~~second ~~months~~quarter ~~ended~~of ~~March 31,~~2008 ~~2007~~ resulted in an effective tax rate of 2832.70%., Inwhile the ~~first quarter of 2006,~~ income tax expense of $~~717~~361,000 ~~equated~~ in the comparable quarter of 2007 equated to an effective tax rate of 3630.13%. ~~The~~Income ~~lower~~tax ~~effective~~expense ~~tax~~of ~~rate~~$1.1 million infor the ~~2007~~six ~~period~~months ended ~~partially~~June 30, ~~reflects~~2008 ~~favorable~~resulted ~~income~~in ~~tax~~an ~~treatment~~effective ontax ~~the~~rate ~~gain on sale~~ of ~~bank-owned land~~33.1%, aswhile ~~well as~~for athe ~~higher~~same ~~relative~~six-month ~~proportion~~period ofin 2007 ~~taxable~~the income ~~being~~tax ~~earned~~expense atwas ~~the Benjamin Franklin Securities Corporation~~$599,000, ~~whose~~resulting ~~earnings are taxed at lower state rates.~~in

an effective tax rate of 29.7%. The lower effective tax rate in the 2007 periods in large part reflected favorable tax treatment of the gain on sale of certain assets, including bank-owned land.

On July 3, 2008, the state of Massachusetts enacted a law that included reducing the tax rate on net income applicable to financial institutions. The rate drops from the current rate of 10.5% to 10% for tax years beginning on January 1, 2010, 9.5% for tax years beginning on or after January 1, 2011, and to 9% for tax years beginning on or after January 1, 2012 and thereafter. The Company continues to analyze the impact of this law and, as a result of revaluing its net deferred tax asset, management estimates that the impact on the consolidated financial statements to be recognized in the third quarter will not be material.

Liquidity and Capital Resources

The Company’s primary sources of funds are from deposits, borrowings, amortization of loans, loan prepayments and the maturity of loans, mortgage-backed securities and other investments, and other funds provided by operations. While scheduled payments from amortization of loans and mortgage-backed securities and maturing loans and investment securities are relatively predictable sources of funds, deposit flows and loan and mortgage-backed security prepayments can be greatly influenced by general interest rates, economic conditions and competition. The Company maintains excess funds in cash and short-term interest-bearing assets that provide additional liquidity. At ~~March~~June 3130, ~~2007~~2008, cash and due from banks, short-term investments and debt securities maturing within one year totaled $8772.17 million (excluding cash supplied to ~~CSSI’s~~ ATM customers) or 97.85% of total assets.

The Company borrows from the Federal Home Loan Bank of Boston as an additional funding source. As of ~~March~~June 3130, ~~2007~~2008, the Company had the ability to borrow an additional $48101.4 million from the Federal Home Loan Bank of Boston.

The Company uses its liquidity to fund existing and future loan commitments, to fund maturing certificates of deposit and borrowings, to fund other deposit withdrawals, to invest in other interest-earning assets and to meet operating expenses. The Company anticipates that it will continue to have sufficient funds and alternative funding sources to meet its current commitments.

The following tables present information indicating various contractual obligations and commitments of the Company as of the dates indicated and the respective maturity dates:

Contractual Obligations:

	March 31, 2007
					More than		More than
					One Year		Three Years
			One Year		through Three		through five		Over Five
	Total		or Less		Years		Years		Years
					(In thousands)
Federal Home Loan Bank advances(1)	$	130,534	$	13,600	$	53,975	$	55,000	$	7,959
Subordinated debt		9,000		—		—		—		9,000
Operating leases (2)		13,512		1,197		2,056		1,930		8,329
Other contractual obligations(3)		7,392		3,439		3,953		—		—
Total contractual obligations	$	160,438	$	18,236	$	59,984	$	56,930	$	25,288

(1)		Secured under a blanket security agreement on qualifying assets, principally 1-4 Family Residential mortgage loans. An advance in the amount of $10.0 million maturing in June, 2010, will become immediately payable if 3-month LIBOR rises above 6.0% (measured on a quarterly basis, beginning in June 2006).
(2)		Represents non-cancelable operating leases for branch offices.
(3)		Represents contracts for technology services and employment agreements.

Loan Commitments


	June 30, 2008
					More than		More than
					One Year		Three Years
			One Year		through Three		through Five		Over Five
	Total		or Less		Years		Years		Years
			(Dollars in thousands)

Federal Home Loan Bank advances⁽¹⁾	$	192,369	$	25,200	$	136,200	$	16,500	$	14,469
Operating leases ⁽²⁾		13,743		1,187		2,324		2,189		8,043
Non-qualified pension ⁽³⁾		11,695		2,842		2,098		1,774		4,981
Other contractual obligations⁽⁴⁾		8,503		2,855		4,746		902		—

Total contractual obligations	$	226,310	$	32,084	$	145,368	$	21,365	$	27,493

	March 31, 2007
(1)	Secured under a blanket security agreement on qualifying assets, principally 1-4 family residential mortgage loans. One advance in the amount of $10 million maturing in June, 2010 will become immediately payable if 3-month LIBOR rises above 6.0% (measured on a quarterly basis).
					More than		More than
(2)	Represents non-cancelable operating leases for branch offices.
					One Year		Three Years
(3)	Pension obligations include expected payments under the Company’s Director Fee Continuation Plan and expected contributions to the Company’s supplemental executive retirement plans.
			One Year		through		through		Over Five
(4)	Represents contracts for technology services and employment agreements.
	Total		or Less		Three Years		Five Years		Years
					(In thousands)
Commitments to grant loans (1)	$	19,863	$	19,863	$	—	$	—	$	—
Unused portion of commercial loan lines of credit		24,220		21,490		2,730		—		—
Unused portion of home equity lines of credit (2)		40,781		—		—		—		40,781
Unused portion of construction lines of credit (3)		20,550		16,810		3,562		—		178
Unused portion of personal lines of credit (4)		2,459		—		—		—		2,459
Commercial letter of credit		1,460		1,460		—		—		—
Total loan commitments	$	109,333	$	59,623	$	6,292	$	—	$	43,418

~~General:~~Loan Commitments ~~to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract, and generally have fixed expiration~~: ~~dates or other termination clauses.~~

(1)	Commitments to grant loans are extended to customers for up to 180 days after which they expire.
	June 30, 2008
(2)	Unused portions of home equity lines of credit are available to the borrower for up to 10 years.
					More than		More than
(3)	Unused portions of construction lines of credit are available to the borrower for up to 2 years for development loans and up to 1 year for other construction loans.
					One Year		Three Years
(4)	Unused portions of personal lines of credit are available to customers in “good standing” indefinitely.
			One Year		through Three		through Five		Over Five
	Total		or Less		Years		Years		Years
					(Dollars in thousands)
Commitments to grant loans (1)	$	8,311	$	8,311	$	—	$	—	$	—
Unused portion of commercial loan lines of credit		37,325		31,233		6,092		—		—
Unused portion of home equity lines of credit (2)		45,024		—		—		—		45,024
Unused portion of construction loans (3)		20,805		18,505		2,300		—		—
Unused portion of personal lines of credit (4)		2,451		—		—		—		2,451
Commercial letters of credit		1,038		1,038		—		—		—
Total loan commitments	$	114,954	$	59,087	$	8,392	$	—	$	47,475


General:		Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract, and generally have fixed expiration dates or other termination clauses.

⁽¹⁾		Commitments for loans are extended to customers for up to 180 days after which they expire.

⁽²⁾		Unused portions of home equity lines of credit are available to the borrower for up to 10 years.

⁽³⁾		Unused portions of construction loans are available to the borrower for up to 2 years for development loans and up to 1 year for other construction loans.

⁽⁴⁾		Unused portion of checking overdraft lines of credit are available to customers in “good standing” indefinitely.

Minimum Regulatory Capital Requirements:

As of ~~March~~June 3130, ~~2007~~2008, the most recent notification from the Federal Deposit Insurance ~~Corporation~~ Corporation categorized the Bank as well capitalized under the regulatory framework for prompt ~~corrective~~ corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since the notification that management believes have changed the Bank’s category. Prompt corrective action provisions are not applicable to bank holding companies. The Company’s and the Bank’s actual capital amounts and ratios as of ~~March~~June 3130, 2008 ~~2007~~ and December 31, ~~2006~~ 2007 are also presented in this table:


											Minimum
											To Be Well
						Minimum					Capitalized Under
						Capital					Prompt Corrective
	Actual					Requirements					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
June 30, 2008:

Total capital to risk weighted assets:
Consolidated	$	78,547		11.7	%	$	53,854		8.0	%		N/A		N/A
Bank		70,689		10.5			53,804		8.0		$	67,256		10.0	%

Tier 1 capital to risk weighted assets:
Consolidated		71,978		10.7			26,927		4.0			N/A		N/A
Bank		64,120		9.5			26,902		4.0			40,353		6.0

Tier 1 capital to average assets:
Consolidated		71,978		7.7			37,243		4.0			N/A		N/A
Bank		64,120		6.9			37,269		4.0			46,587		5.0

December 31, 2007:

Total capital to risk weighted assets:
Consolidated	$	78,526		12.3	%	$	50,982		8.0	%		N/A		N/A
Bank		71,154		11.2			50,944		8.0		$	63,680		10.0	%

Tier 1 capital to risk weighted assets:
Consolidated		72,554		11.4			25,491		4.0			N/A		N/A
Bank		65,182		10.2			25,472		4.0			38,208		6.0

Tier 1 capital to average assets:
Consolidated		72,554		8.3			34,898		4.0			N/A		N/A
Bank		65,182		7.5			35,006		4.0			43,757		5.0

											Minimum
											To Be Well
						Minimum					Capitalized Under
						Capital					Prompt Corrective
	Actual					Requirements					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						(Dollars in thousands)
March 31, 2007:
Total capital to risk weighted assets:
Consolidated	$	89,560		14.7	%	$	48,682		8.0	%		N/A		N/A
Bank		67,603		11.1			48,685		8.0		$	60,857		10.0	%
Tier 1 capital to risk weighted assets:
Consolidated		83,631		13.7			24,341		4.0			N/A		N/A
Bank		61,674		10.1			24,343		4.0			36,514		6.0
Tier 1 capital to average assets:
Consolidated		83,631		9.6			36,302		4.0			N/A		N/A
Bank		61,674		7.1			36,273		4.0			45,341		5.0
December 31, 2006:
Total capital to risk weighted assets:
Consolidated	$	89,256		14.4	%	$	49,473		8.0	%		N/A		N/A
Bank		66,632		10.8			49,408		8.0		$	61,761		10.0	%
Tier 1 capital to risk weighted assets:
Consolidated		83,475		13.5			24,737		4.0			N/A		N/A
Bank		60,851		9.9			24,704		4.0			37,056		6.0
Tier 1 capital to average assets:
Consolidated		83,475		9.6			34,710		4.0			N/A		N/A
Bank		60,851		7.0			34,793		4.0			43,491		5.0


Item 3.		Quantitative and Qualitative Disclosures about Market Risk.

The Company’s Asset/Liability Committee’s primary method for measuring and evaluating interest rate risk is income simulation analysis. This analysis considers the maturity and ~~repricing~~re-pricing characteristics of assets and liabilities, as well as the relative sensitivities of these balance sheet components over a range of interest rate scenarios. Interest rate scenarios tested generally include instantaneous rate shocks, ~~rate~~compared ~~ramps~~against ~~over a one year period, and~~ static (or ~~flat~~ unchanged) rates. The simulation analysis is used to measure the exposure of net interest income to changes in interest rates over a specified time horizon, usually a two-year period.

The following table ~~below~~ sets forth, as of ~~March~~June 3130, ~~2007~~2008, the estimated changes in ~~the Company’s~~ net interest income over ~~that~~the ~~would~~next ~~result~~twelve ~~from~~months ~~the~~comparing ~~designated~~an ~~instantaneous~~unchanged ~~changes~~rate inscenario ~~the~~to ~~U.S.~~projected ~~Treasury~~results using various ~~yield~~parallel ~~curve~~shifts in market interest rates. ~~Computations~~These computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions ~~including relative levels of market interest rates, loan prepayments~~ and ~~deposit~~ ~~decay, and~~ should not be relied upon as being indicative of actual future results.


	Percentage Change in Estimated
	Net Interest Income over 12 months (1)
200 basis point increase in rates		(7.64	)%
100 basis point increase in rates		(3.22	)%
Flat interest rates		—
100 basis point decrease in rates		0.51	%
200 basis point decrease in rates		(3.08	)%


(1)		For purposes of income simulation analysis only, the Company includes cash supplied to ATM customers as an interest-earning asset and related ATM servicing fees as a component of net interest income. ATM servicing income is based on average cash balances outstanding and a floating interest rate that is tied to the prime rate index.

The Company’s income simulation analysis contains important assumptions regarding the rate sensitivity of interest-bearing non-maturity deposit accounts. These assumptions are based on the Company’s past experience with the changes in rates paid on these non-maturity deposits coincident with changes in market interest rates. Rate sensitivities for several product groups are tied to changes in market interest rates and these sensitivities are also assumed to vary between upward and downward rate movements. For example, the Company assumes that rates on certain money market accounts would increase by 36 basis points for each 100 basis point increase in market interest rates, but would decrease by 20 basis points for each 100 basis point decrease in market interest rates. For each major product group, there are also assumptions regarding rate floors below which rates will not fall. There can be no assurance that the deposit pricing assumptions used in the simulation analysis will actually occur.

As indicated in the table above, the result of an immediate 100 basis point parallel increase in interest rates is estimated to decrease net interest income by 3.22% over a 12-month horizon, when compared to the unchanged rate scenario. For an immediate 200 basis point parallel increase in the level of interest rates, net interest income is estimated to decrease by 7.64% over a 12-month horizon, when compared against the unchanged rate scenario. The exposure of net interest income to rising rates as compared to an unchanged rate scenario results from the difference between anticipated increases in asset yields and somewhat more rapid increases in funding costs. The Company assumes that certain premium-rate NOW and money market deposit products, that demonstrated strong growth in 2007 and 2008 and comprise a larger proportion of interest-bearing deposits, bear full sensitivity to increases in market rates for simulation purposes. In addition, much of the Company’s asset growth in 2008 has been in fixed or adjustable rate commercial loans and residential mortgages, which by definition bear constraints to re-pricing opportunities should market rates move upward.

Compared to the unchanged rate scenario, the estimated change in net interest income over a 12-month horizon for a 100 basis point parallel decline in the level of interest rates is an increase of .51%. For an immediate 200

	Percentage Change in Estimated
	Net Interest Income over 12
	months
200 basis point increase in rates		(5.03	)%
100 basis point increase in rates		(2.41	)%
Flat interest rates		—
100 basis point decrease in rates		2.46	%
200 basis point decrease in rates		1.84	%

basis point parallel decrease in the level of interest rates, net interest income is estimated to decrease by 3.08% over a 12-month horizon, when compared against the unchanged rate scenario. Often in the past, interest rate decreases have resulted in a modeled favorable change in net interest income over a 12-month time horizon, because the Company’s funding costs tend to re-price more rapidly than do the yields on its earning assets. However, as short-term market interest rates have declined sharply over the past twelve months, Management believes rate floors on many non-maturity deposit accounts would come into effect for simulation purposes. In addition, asset yields may decline more than funding costs as cash flow from prepayments of mortgage-related products, and redemption of callable securities, could increase significantly as market rates fall, exposing the Company to higher re-investment risk.

AsThere ~~indicated~~are ininherent ~~the~~shortcomings ~~table~~in ~~above~~income simulation, given the ~~result~~number ofand anvariety ~~immediate~~of ~~100~~assumptions that ~~basis~~must ~~point~~be ~~increase~~made in ~~interest rates~~performing isthe ~~estimated to decrease net interest income by 2~~analysis.~~41%~~ ~~over~~The aassumptions ~~12-month~~relied ~~horizon,~~upon ~~when~~in ~~compared~~making these tocalculations ~~the~~of ~~flat~~interest rate ~~scenario.~~sensitivity ~~For~~include anthe ~~immediate~~level ~~200~~of ~~basis~~market ~~point~~interest ~~parallel~~rates, ~~increase in~~ the ~~level~~shape of ~~interest~~the ~~rates~~yield curve, ~~net~~the ~~interest~~degree ~~income is estimated~~ to ~~decline~~which bycertain ~~5.03%~~assets ~~over~~and aliabilities ~~12-month~~with ~~horizon,~~similar ~~when~~maturities or ~~compared~~periods ~~against~~to ~~the~~re-pricing ~~flat~~react ~~rate~~to ~~scenario.~~changes ~~The estimated change~~ in ~~net~~market interest ~~income~~rates, ~~from~~ the ~~flat rate~~degree ~~scenario~~to ~~for~~which ~~100~~non-maturity deposits ~~basis~~react ~~point~~to ~~and~~changes ~~200~~in ~~basis~~market ~~point~~rates, ~~declines in~~ the ~~level~~expected ofprepayment ~~interest~~ rates ~~are increases~~on ofloans ~~2.46%~~ and mortgage-backed ~~1.84%~~securities, ~~respectively.~~the ~~Inherent~~degree into ~~these~~which ~~estimates~~early iswithdrawals ~~the~~occur ~~assumption~~on ~~that savings~~certificates of deposit and ~~money~~the ~~market~~volume ~~account~~of other deposit ~~rates~~flows. ~~would~~As ~~change~~such, byalthough 25the ~~basis~~analysis ~~points~~shown ~~and~~above 37provides ~~basis points,~~an ~~respectively,~~indication ~~for~~of ~~each~~the ~~100~~Company’s ~~basis~~sensitivity ~~point~~to ~~change in market~~ interest ~~rates.~~rate ~~These~~changes ~~scenarios~~at ~~also~~a ~~assume no~~point ~~change~~ in ~~NOW~~time, ~~account~~these estimates ~~interest~~are ~~rates.~~not ~~Interest~~intended ~~rates~~to ~~for certain premium checking~~ and ~~money market~~do ~~accounts~~not ~~are~~provide ~~expected~~a toprecise ~~vary~~forecast toof the ~~full~~effect ~~extent~~ of ~~any~~changes ~~increase or decrease~~ in ~~market~~ market interest rates. ~~These assumptions are based~~ on the ~~Bank~~Company’s ~~past~~net ~~experience~~interest ~~with~~income ~~the~~and ~~changes~~will indiffer ~~rates paid~~from onactual ~~these non-maturity deposits coincident with changes in market interest rates~~results.

There are inherent shortcomings in income simulation, given the number and variety of assumptions that must be made in performing the analysis. The assumptions relied upon in making these calculations of interest rate sensitivity include the level of market interest rates, the shape of the yield curve, the degree to which certain assets and liabilities with similar maturities or periods to repricing react to changes in market interest rates, the degree to which non-maturity deposits react to changes in market rates, the expected prepayment rates on loans and mortgage-backed securities, the degree to which early withdrawals occur on certificates of deposit and the volume of other deposit flows. As such, although the analysis shown above provides an indication of the Company’s sensitivity to interest rate changes at a point in time, these estimates are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on the Company’s net interest income and will differ from actual results.


Item 4.		Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. The Company’s President and Chief Executive Officer, its Chief Financial Officer, and other members of its senior management team have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on such evaluation, the President and Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this report, were adequate and effective to provide reasonable assurance that information required to be disclosed by the Benjamin Franklin Bancorp, including its consolidated subsidiaries, in reports that are filed or submitted under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

The effectiveness of a system of disclosure controls and procedures is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Due to such inherent limitations, there can be no assurance that any system of disclosure controls and procedures will be successful in preventing all errors or fraud, or in making all material information known in a timely manner to the appropriate levels of management.

24(b) Changes in Internal Controls Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2008 that have materially affected, or that are reasonably likely to materially affect, our internal controls over financial reporting.

risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Due to such inherent limitations, there can be no assurance that any system of disclosure controls and procedures will be successful in preventing all errors or fraud, or in making all material information known in a timely manner to the appropriate levels of management.

(b) Changes in Internal Controls Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended March 31, 2007 that have materially affected, or that are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Benjamin Franklin Bancorp is not involved in any legal proceedings other than routine legal proceedings occurring the ordinary course of business. Management believes that those routine legal proceedings involve, in the aggregate, amounts that are immaterial to the financial condition and results of operations of Benjamin Franklin Bancorp.

Item 1A. Risk Factors That May Affect Future Results

Risk factors that may affect future results were discussed in the Company’s ~~2006~~2007 Annual Report on Form 10-K. The Company’s analysis of its risk factors has not changed since December 31, ~~2006~~2007.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Unregistered Sale of Equity Securities. Not applicable. (b) Use of Proceeds. Not applicable. (c) Repurchases of Our Equity Securities. On November 1429, ~~2006~~2007, ~~Benjamin~~the ~~Franklin~~Company’s ~~Bancorp announced that its~~ Board of Directors ~~had~~ authorized a repurchase plan, topermitting the repurchase of up to ~~412~~a maximum of 394,~~490~~200 shares. ~~(approximately~~As ~~5%)~~ of ~~the~~July ~~Company’s~~31, ~~outstanding~~2008, ~~common~~total ~~shares,~~repurchases atunder the ~~discretion~~plan ofwere ~~management~~219,400 ~~through~~at ~~open~~an ~~market~~average ~~transactions~~price orof ~~negotiated~~$13.62 ~~block~~per ~~transactions~~share. In the ~~first~~second quarter of ~~2007~~2008, the Company purchased 504,~~000~~400 shares ~~under this plan~~, as follows:

	(a) Total				(c) Total Number of		(d) Maximum number (or
							(d) Maximum number
	Number of		(b) Average		Shares Purchased as Part		approximate dollar value) of
							(or approximate
	Shares		Price Paid per		of Publicly Announced		shares that may yet be purchased
					(c) Total Number of		dollar value) of
Period	Purchased		Share		Plans or Programs		under the Plans or Programs
					Shares Purchased as		shares that may yet
January 1-31		—		—		—		412,490
					Part of Publicly		be purchased under
February 1-28		—		—		—		412,490
	(a) Total Number of		(b) Average Price		Announced Plans or		the Plans or
March 1-31		50,000	$	14.93		50,000		362,490
Period	Shares Purchased		Paid per Share		Programs		Programs
April 1-30		4,400	$	13.55		4,400		174,800
May 1-31		—		—		—		174,800
June 1-30		—		—		—		174,800
Total		4,400	$	13.55		4,400		174,800

In the period from April 1, 2007 to May 9, 2007, the Company repurchased an additional 22,600 shares under this plan at an average price of $14.89 per share.

Item 3. Defaults on Senior Securities.

Not applicable.

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

~~Not~~The ~~applicable.~~Company held its annual meeting of stockholders on May 8, 2008 at which time the four nominees for director, as set forth in the proxy materials for the meeting, were elected with the following votes cast:


Name	For		Withheld
Dr. Mary Ambler		6,559,249		318,749
Richard E. Bolton, Jr.		6,704,427		173,571
Daniel F. O’Brien		6,575,413		302,585
Charles F. Oteri		6,563,987		314,011

In addition, the stockholders approved the ratification of Wolf & Company, P.C. as our independent public accounting firm with the following votes cast:


	Ratification of Wolf & Co.
For		6,816,454
Against		58,489
Abstentions		3,055
Broker Non-Votes		0

Item 5. Other Information.

Not applicable

Item 6. Exhibits.

The following exhibits, required by Item 601 of Regulation S-K, are filed as part of this Quarterly Report on Form 10-Q. Exhibit numbers, where applicable, in the left column correspond to those of Item 601 of Regulation S-K.


Exhibit No.		Description	Footnotes

	2.1	Plan of Conversion of Benjamin Franklin Bancorp.		3

	2.2	Agreement and Plan of Merger among Benjamin Franklin Bancorp, M.H.C., Benjamin Franklin Savings Bank and Chart Bank, a Cooperative Bank, dated as of September 1, 2004.		2

	3.1	Articles of Organization of Benjamin Franklin Bancorp, Inc.		2

	3.2	Bylaws of Benjamin Franklin Bancorp, Inc.		7

	4.1	Form of Common Stock Certificate of Benjamin Franklin Bancorp, Inc.		5

	10.1.1	Form of Amended and Restated Employment Agreement with Thomas R. Venables. *		12

	10.1.2	Form of Amended and Restated Employment Agreement with Claire S. Bean. *		12

	10.2	Form of Amended and Restated Change in Control Agreement with three Executive Officers and two other officers, providing one year’s severance to Michael J. Piemonte and two other officers, and two years’ severance to Mariane E. Broadhurst and Rose M. Buckley. The only differences among the several agreements are the name and contact information of the officer who is party to the agreement and the number of years of severance provided. *		12

	10.3	Form of Benjamin Franklin Bank Benefit Restoration Plan. *		2

	10.4.1	Amended and Restated Supplemental Executive Retirement Agreement between Benjamin Franklin Bank and Thomas R. Venables dated as of March 26, 2008. *		12

	10.4.2	Amended and Restated Supplemental Executive Retirement Agreement between Benjamin Franklin Bank and Claire S. Bean dated as of March 26, 2008. *		12

	10.5	Benjamin Franklin Bancorp Director Fee Continuation Plan. *		4

	10.6	Benjamin Franklin Bancorp Employee Salary Continuation Plan. *		2

Exhibit No.		~~Description~~	~~Footnotes~~Description		Footnotes
2.1		Plan of Conversion of Benjamin Franklin Bancorp.		3
	10.7.1		Payments and Waiver Agreement among Richard E. Bolton, Jr., Benjamin Franklin Bancorp, M.H.C., Benjamin Franklin Savings Bank and Chart Bank, a Cooperative Bank, dated as of September 1, 2004.*			2
2.2		Agreement and Plan of Merger among Benjamin Franklin Bancorp, M.H.C., Benjamin Franklin Savings Bank and Chart Bank, a Cooperative Bank, dated as of September 1, 2004.		2
	10.7.2		Consulting and Noncompetition Agreement between Richard E. Bolton, Jr. and Benjamin Franklin Bancorp, M.H.C., dated as of September 1, 2004. *			2
3.1		Articles of Organization of Benjamin Franklin Bancorp, Inc.		2
	10.8		Benjamin Franklin Bancorp, Inc. 2006 Stock Incentive Plan *			9
3.2		Bylaws of Benjamin Franklin Bancorp, Inc.		7
	10.8.1		Form of Incentive Stock Option Agreement *			10
4.1		Form of Common Stock Certificate of Benjamin Franklin Bancorp, Inc.		5
	10.8.2		Form of Non-Statutory Stock Option Agreement (Officer) *			10
10.1.1		Form of Employment Agreement with Thomas R. Venables. *		6
	10.8.3		Form of Non-Statutory Stock Option Agreement (Director) *			10
10.1.2		Form of Employment Agreement with Claire S. Bean. *		6
	10.8.4		Form of Restricted Stock Agreement (Officer) *			10
10.2		Form of Change in Control Agreement with five other Executive Officers, providing one year’s severance to Brian E. Ledwith, Michael J. Piemonte and Kathleen P. Sawyer, and two years’ severance to Mariane E. Broadhurst and Rose M. Buckley. This form contains all material information concerning the agreement and the only differences are the name and contact information of the executive officer who is party to the agreement and the number of years of severance provided. *		2
	10.8.5		Form of Restricted Stock Agreement (Director) *			10
10.3		Form of Benjamin Franklin Bank Benefit Restoration Plan. *		2
	10.9		Purchase and Sale Agreement dated December 19, 2006.			11
10.4.1		Amended and Restated Supplemental Executive Retirement Agreement between Benjamin Franklin Bank and Thomas R. Venables dated as of March 22, 2006. *		8
	11		See Note 3 to the Condensed Consolidated Financial Statements for a discussion of earnings per share.		—
10.4.2		Amended and Restated Supplemental Executive Retirement Agreement between Benjamin Franklin Bank and Claire S. Bean dated as of March 22, 2006. *		8
	21		Subsidiaries of Registrant			8
10.5		Benjamin Franklin Bancorp Director Fee Continuation Plan. *		4
	31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.			1
10.6		Benjamin Franklin Bancorp Employee Salary Continuation Plan. *		2
	31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.			1
10.7.1		Payments and Waiver Agreement among Richard E. Bolton, Jr., Benjamin Franklin Bancorp, M.H.C., Benjamin Franklin Savings Bank and Chart Bank, a Cooperative Bank, dated as of September 1, 2004. *		2
	32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.			1
10.7.2		Consulting and Noncompetition Agreement between Richard E. Bolton, Jr. and Benjamin Franklin Bancorp, M.H.C., dated as of September 1, 2004. *		2
	32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.			1
10.8		Benjamin Franklin Bancorp, Inc. 2006 Stock Incentive Plan *		9
10.8.1		Form of Incentive Stock Option Agreement *		10
10.8.2		Form of Non-Statutory Stock Option Agreement (Officer) *		10
10.8.3		Form of Non-Statutory Stock Option Agreement (Director) *		10
10.8.4		Form of Restricted Stock Agreement (Officer) *		10
10.8.5		Form of Restricted Stock Agreement (Director) *		10
11		See Note 3 to the Financial Statements for a discussion of earnings per share.	-
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		1
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		1

Exhibit No.	Description	Footnotes
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		1
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		1


*		Relates to compensation.

1. Filed herewith. 2. Incorporated by reference to the Registrant’s Registration Statement on Form S-1, File No. 333-121154, filed on December 10, 2004. 3. Incorporated by reference to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1, File No. 333-121154, filed on January 24, 2005. 4. Incorporated by reference to the Registrant’s Registration Statement on Form S-4, File No. 333-121608, filed on December 23, 2004. 5. Incorporated by reference to the Registrant’s Registration Statement on Form 8-A, File No. 000-51194, filed on March 9, 2005. 6. Incorporated by reference to the Registrant’s Annual Report on Form 10-K, filed on March 29, 2005. 7. Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on March 3, 2006. 8. Incorporated by reference to the Registrant’s Annual Report on Form 10-K, filed on March 28, 2006 9. Incorporated by reference to Appendix B to the Registrant’s Proxy Statement for the 2006 Annual Meeting of Stockholders, filed on March 28, 2006. ~~10. Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q/A, filed on August 18, 2006.~~

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10.		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q/A, filed on August 18, 2006.

11.		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on December 26, 2006.

12.		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, filed on May 8, 2008.

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.

	Benjamin Franklin Bancorp, Inc.	~~Benjamin Franklin Bancorp, Inc.~~
Date: May 9, 2007		By:	/s/ Thomas R. Venables
Date: August 11, 2008	By:	/s/ Thomas R. Venables
		Thomas R. Venables	~~Thomas R. Venables~~
		President and Chief Executive Officer	~~President and Chief Executive Officer~~
Date: May 9, 2007		By:	/s/ Claire S. Bean
Date: August 11, 2008	By:	/s/ Claire S. Bean
		Claire S. Bean	~~Claire S. Bean~~
		Treasurer and Chief Financial Officer	~~Treasurer and Chief Financial Officer~~

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EXHIBIT INDEX


Exhibit No.		Item

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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OutstandingTable loan commitments totaled $109.3 million at March 31, 2007, compared to $108.1 million as of December 31, 2006. Loan commitments consist of commitments to originate new loans as well as the outstanding undrawn portions of lines of credit. Contents

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Filing Compare · Benjamin Franklin Bancorp, Inc.