Benjamin Franklin Bancorp Reports Results for Second Quarter of 2008; Declares Quarterly...

Benjamin Franklin Bancorp Reports Results for Second Quarter of 2008; Declares Quarterly Dividend

FRANKLIN, Mass.--(Business Wire)--
Benjamin Franklin Bancorp, Inc. (the "Company" or "Benjamin
Franklin") (Nasdaq: BFBC), the bank holding company for Benjamin
Franklin Bank (the "Bank"), today reported net income of $1.2 million,
or $.16 per share (basic and diluted), for the quarter ended June 30,
2008. In the comparable 2007 quarter, the Company earned $829,000 or
$.11 per share (basic and diluted). For the six months ended June 30,
2008, the Company reported net income of $2.3 million, or $.31 per
share (basic and diluted). For the comparable six-month period in
2007, net income was $1.4 million, or $.19 and $.18 per share (basic
and diluted, respectively).

The Company also today announced that its Board of Directors
declared a quarterly cash dividend of $.08 per common share, payable
on August 22, 2008 to stockholders of record as of August 8, 2008.

Thomas R. Venables, President and CEO, noted: "In the face of an
economic slowdown, continued market uncertainty, and volatility in
market interest rates, Benjamin Franklin has maintained a strong
balance sheet and increased quarterly EPS (year over year) by 45%. In
this environment, we are pleased to have produced loan growth of
nearly 10% year-to-date, significantly increased core deposits, and
maintained non-performing assets at less than 1% of total assets.
Sensible growth and preservation of asset quality remain our primary
focus in these challenging times."

Total assets increased by $63.8 million or 7.1% in the first six
months of 2008, driven primarily by growth in loans outstanding, which
increased by $57.2 million or 9.4% during the period. Commercial
business loans have grown by $20.7 million, or 13.0% year to date and
commercial real estate credits have increased by $6.5 million or 3.8%
in that period. Residential loans also increased by $36.0 million or
19.1% in the first half of 2008. Offsetting these increases was a
reduction of $5.5 million (9.8%) in construction loans outstanding.
While loan demand has been generally strong in the first half of 2008,
this trend may not be sustainable for the remainder of the year, given
current economic conditions, and in particular continued pressure on
both pricing and the volume of transactions within the residential
real estate market.

The Company's core deposit accounts (savings, money market, demand
and NOW accounts) have also grown significantly year to date,
increasing by a total of $37.2 million or 10.5% since year end 2007.
These results are primarily attributable to the opening of two new
branch locations in the past two years and increases in commercial
deposits in conjunction with growth in commercial business loans.

Federal Home Loan Bank of Boston ("FHLBB") borrowings increased by
$27.1 million (16.4%) in the six months ended June 30, 2008. These
additional borrowed funds (which were principally a blend of two to
seven year FHLBB term advances) were used primarily to fund the growth
in fixed rate residential mortgage loans during the period.

During the second quarter of 2008, the Company repurchased 4,400
shares of its common stock at an average price of $13.55 per share.
These repurchases bring the total repurchased under the Company's
second repurchase plan to 219,400 shares (out of a total of 394,200
permitted under the plan, which was authorized by the Company's Board
of Directors on November 29, 2007).

The ratio of non-performing assets to total assets was 0.89% at
June 30, 2008, compared to 0.40% at the end of the 2007 second quarter
and 0.18% at year end 2007. The allowance for loan losses as a percent
of loans was 0.96% at June 30, 2008, an increase from 0.94% at
December 31, 2007. The increase in non-performing assets is primarily
the result of weakness exhibited in one $6.4 million commercial real
estate loan relationship, for which the primary source of repayment
has ceased due to the loss of a tenant. Based on a review of all
relevant factors, including the collateral securing this credit, no
specific reserve has been allocated for this loan relationship as of
June 30, 2008. The provision for loan losses was $368,000 in the
second quarter of 2008, compared to a $230,000 provision recorded in
the comparable 2007 quarter. The Company's loan loss provision in the
second quarter of 2008 reflects both the growth in loans during the
quarter as well as specific reserves provided for several
non-performing residential and commercial business loans. The Bank has
not originated and does not own any sub-prime residential mortgage
loans. The Bank's portfolio of residential mortgage-backed securities
is also not collateralized by any sub-prime loans.

Net interest income increased by $444,000 or 7.3% in the second
quarter of 2008 compared to the comparable 2007 period. This increase
is due to an increase in average interest-earning assets of $83.8
million when comparing the two periods, offset by a narrowing of the
net interest margin (the "NIM"), which declined to 3.00% in the
quarter from 3.08% one year earlier. As market interest rates have
declined in the past nine months, the Company was able to offset much
of the corresponding reduction in asset yields with decreases in its
deposit costs. However, growth in higher-costing FHLB debt, planned
reductions in capital pursuant to repurchased common shares, and a
small decline in other non-interest bearing liabilities served to
reduce the margin by eight basis points, year-over-year.

Non-interest income decreased by $289,000, to $1.5 million in the
2008 second quarter from $1.8 million in the second quarter of 2007.
The most significant reason for the decline is a $301,000 decrease in
ATM servicing fees, caused by both a reduction in the average cash
outstanding under the program and contractual reductions in the yield
earned on those balances. The yield on ATM cash balances is tied to
the prime rate, which has declined by 325 basis points since the
second quarter of 2007. Other noteworthy changes in non-interest
income, comparing the second quarter of 2008 against 2007 were: a) a
$106,000 increase in deposit account service fees, caused primarily by
an increase in fees earned for cash management services provided to
business customers and in overdraft fees, and b) a $111,000 decrease
in gains earned on sales of residential mortgage loans, the result of
the Bank's decision in late 2007 to hold most new residential loan
production in portfolio.

The Company's operating expenses decreased by $515,000 or 8.0% in
the second quarter of 2008, compared to the second quarter of 2007.
The reduction in operating expenses contributed to a marked
improvement in the Company's efficiency ratio, to 72.6% from 80.3% in
the second quarter of 2007. The largest contributor to this $515,000
decline was a $424,000 decrease in salaries and benefits, supplemented
by smaller reductions in data processing, professional fees and
marketing expenses. These year-over-year savings are due primarily to
cost containment measures instituted by the Company in the second half
of 2007. Within salaries and benefits, most of the reduction was in
benefits costs (specifically in employee retirement costs, medical
benefits and stock incentive expenses). Other general and
administrative expenses increased by $127,000 year-over-year,
reflecting an increase in the reserve for losses on unfunded loan
commitments, offset in part by decreases in expenses associated with
the Bank's ATM cash management program.

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 Benjamin Franklin Bancorp is engaged
and changes in the securities market. The Company disclaims any intent
or obligation to update any forward-looking statements, whether in
response to new information, future events or otherwise.

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BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

June 30, December 31,
2008 2007
----------- ------------
ASSETS (Unaudited) (Audited)

Cash and due from banks $ 12,235 $ 12,226
Cash supplied to ATM customers 25,970 42,002
Short-term investments 9,474 10,363
----------- ------------
Total cash and cash equivalents 47,679 64,591

Securities available for sale, at fair value 178,920 156,761
Restricted equity securities, at cost 12,908 11,591
----------- ------------
Total securities 191,828 168,352

Loans
Residential real estate 224,665 188,654
Commercial real estate 175,135 168,649
Construction 50,307 55,763
Commercial business 179,982 159,233
Consumer 40,453 40,436
----------- ------------
Total loans, gross 670,542 612,735
Allowance for loan losses (6,431) (5,789)
----------- ------------
Loans, net 664,111 606,946

Premises and equipment, net 5,156 5,410
Accrued interest receivable 3,641 3,648
Bank-owned life insurance 10,903 10,700
Goodwill 33,763 33,763
Other intangible assets 2,209 2,474
Other assets 7,739 7,394
----------- ------------

$967,029 $903,278
=========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Regular savings accounts $ 82,219 $ 79,167
Money market accounts 126,119 110,544
NOW accounts 65,415 52,000
Demand deposit accounts 118,182 113,023
Time deposit accounts 262,980 262,634
----------- ------------
Total deposits 654,915 617,368

Short-term borrowings 1,200 2,500
Long-term debt 191,169 162,784
Deferred gain on sale of premises 3,405 3,531
Other liabilities 10,276 9,651
----------- ------------
Total liabilities 860,965 795,834
----------- ------------

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 74,985 77,370
Retained earnings 39,663 38,515
Unearned compensation (6,699) (7,094)
Accumulated other comprehensive loss (1,885) (1,347)
----------- ------------
Total stockholders' equity 106,064 107,444
----------- ------------

$967,029 $903,278
=========== ============
*T

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BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share and per share data)

Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2008 2007 2008 2007
----------- ---------- ----------- ----------
(Unaudited) (Unaudited)

Interest and dividend
income:
Loans, including fees $ 9,962 $ 9,712 $ 19,853 $ 19,418
Debt securities 1,917 1,953 3,924 3,639
Dividends 124 165 284 331
Short-term investments 96 222 338 503
----------- ---------- ----------- ----------
Total
interest
and
dividend
income 12,099 12,052 24,399 23,891

Interest expense:
Interest on deposits 3,410 4,308 7,269 8,464
Interest on short-term
borrowings 10 18 39 147
Interest on long-term
debt 2,183 1,674 4,289 3,402
----------- ---------- ----------- ----------
Total
interest
expense 5,603 6,000 11,597 12,013
----------- ---------- ----------- ----------
Net interest income 6,496 6,052 12,802 11,878

Provision for loan losses 368 230 682 412
----------- ---------- ----------- ----------

Net interest income,
after provision for loan
losses 6,128 5,822 12,120 11,466
----------- ---------- ----------- ----------

Other income:
ATM servicing fees 321 622 664 1,319
Deposit servicing
fees 475 369 838 709
Other loan-related
fees 170 141 423 472
Gain on sale of
loans, net 82 193 186 296
Gain on sale of bank-
owned premises, net 63 63 126 313
Gain on sale of CSSI
customer list 92 100 92 100
Income from bank-
owned life insurance 94 99 195 195
Miscellaneous 207 206 458 361
----------- ---------- ----------- ----------
Total
other
income 1,504 1,793 2,982 3,765
----------- ---------- ----------- ----------

Operating expenses:
Salaries and employee
benefits 3,405 3,829 6,636 7,442
Occupancy and
equipment 842 836 1,786 1,744
Data processing 569 598 1,169 1,202
Professional fees 182 235 357 472
Marketing and
advertising 103 201 181 329
Amortization of
intangible assets 161 205 332 422
Other general and
administrative 648 521 1,229 1,601
----------- ---------- ----------- ----------
Total
operating
expenses 5,910 6,425 11,690 13,212
----------- ---------- ----------- ----------

Income before income
taxes 1,722 1,190 3,412 2,019

Provision for income
taxes 551 361 1,129 599
----------- ---------- ----------- ----------
Net income$ 1,171 $ 829 $ 2,283 $ 1,420
=========== ========== =========== ==========

Weighted-average shares
outstanding:
Basic 7,271,431 7,663,634 7,306,789 7,739,036
Diluted 7,352,265 7,699,363 7,381,938 7,768,666

Earnings per share:
Basic $ 0.16 $ 0.11 $ 0.31 $ 0.19
Diluted $ 0.16 $ 0.11 $ 0.31 $ 0.18
*T

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BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Dollars in thousands, except share and per share data)

At or For the Three At or For the Six
Months Months
Ended June 30, Ended June 30,
----------------------- -----------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
Financial Highlights:
Net interest income $ 6,496 $ 6,052 $ 12,802 $ 11,878
Net income $ 1,171 $ 829 $ 2,283 $ 1,420
Weighted average
shares outstanding :
Basic 7,271,431 7,663,634 7,306,789 7,739,036
Diluted 7,352,265 7,699,363 7,381,938 7,768,666
Earnings per share:
Basic $ 0.16 $ 0.11 $ 0.31 $ 0.19
Diluted $ 0.16 $ 0.11 $ 0.31 $ 0.18
Stockholders' equity -
end of period $ 106,064 $ 107,368
Book value per share -
end of period $ 13.84 $ 13.28
Tangible book value
per share - end of
period $ 9.14 $ 8.75

Ratios and Other
Information:
Return on average
assets 0.49% 0.37% 0.48% 0.32%
Return on average
equity 4.38% 3.05% 4.27% 2.61%
Net interest rate
spread (1) 2.47% 2.43% 2.46% 2.36%
Net interest margin
(2) 3.00% 3.08% 3.02% 3.02%
Efficiency ratio (3) 72.59% 80.31% 72.33% 83.28%
Non-interest expense
to average total
assets 2.46% 2.87% 2.47% 2.95%
Average interest-
earning assets to
average interest-
bearing liabilities 119.08% 120.19% 118.94% 120.08%

At period end:
Non-performing assets
to total assets 0.89% 0.40%
Non-performing loans
to total loans 1.29% 0.60%
Allowance for loan
losses to total loans 0.96% 0.95%

Equity to total assets 10.97% 11.98%
Tier 1 leverage
capital ratio 7.73% 9.63%
Total risk-based
capital ratio 11.67% 14.07%

Number of full service
offices 11 10

----------------------
(1) The 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 for the period.
(2) The net interest margin represents net interest income as a
percent of average interest-earning assets for the period.
(3) The efficiency ratio represents non-interest expense minus
expenses related to the amortization of intangible assets divided by
the sum of net interest income (before the loan loss provision) plus
non-interest income (excluding non-recurring net gains (losses) on
sale of bank assets).
*T

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BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (Unaudited)
Three Months Ended June 30,
---------------------------------------------------------
2008 2007
---------------------------- ----------------------------
Average Average
Outstanding Outstanding
Balance Interest Yield/ Balance Interest Yield/
Rate(1) Rate(1)
----------- -------- ------- ----------- -------- -------

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.
*T

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BENJAMIN FRANKLIN BANCORP, INC. AND SUBSIDIARY
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (Unaudited)

Six Months Ended June 30,
---------------------------------------------------------
2008 2007
---------------------------- ----------------------------
Average Average
Outstanding Outstanding
Balance Interest Yield/ Balance Interest Yield/
Rate(1) Rate(1)
----------- -------- ------- ----------- -------- -------

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%

(1) Yields and rates for the six 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.
*T

Reconciliation of Non-GAAP Financial Measures

This press release contains financial information determined by
methods other than in accordance with accounting principles generally
accepted in the United States of America ("GAAP"). The Company's
management uses these non-GAAP measures in its analysis of the
Company's performance. These measures typically adjust GAAP
performance measures to exclude significant gains or losses that are
expected to be non-recurring and to exclude the effects of
amortization of intangible assets (in the case of the efficiency
ratio). Because these items and their impact on the Company's
performance are difficult to predict, management believes that
presentations of financial measures excluding the impact of these
items provide useful supplemental information that is essential to a
proper understanding of the operating results of the Company's core
businesses. These disclosures should not be viewed as a substitute for
operating results determined in accordance with GAAP, nor are they
necessarily comparable to non-GAAP performance measures that may be
presented by other companies.

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June 30, June 30,
------------- -------------
2008 2007 2008 2007
------------- -------------

Efficiency ratio based on GAAP numbers 73.88% 81.90% 74.06% 84.46%

Effect of amortization of intangible assets-2.03 -2.65 -2.11 -2.75

Effect of net gain/(loss/write-down) on
non-recurring sales of bank assets 0.75 1.06 0.38 1.57
------------- -------------
Efficiency ratio - Reported 72.59% 80.31% 72.33% 83.28%
============= =============
*T

Benjamin Franklin Bancorp, Inc.
Claire S. Bean, 508-520-8002
Executive Vice President and Chief Financial Officer

Copyright Business Wire 2008