Benjamin Franklin Bancorp Reports Results for First Quarter of 2008; Increases Quarterly Dividend

Business Wire, April 24, 2008

FRANKLIN, Mass. -- 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 $1.1 million, or $.15 per share (basic and diluted), for the quarter ended March 31, 2008. In the comparable 2007 quarter, the Company earned $591,000 or $.08 per basic share and $.07 per diluted share.

The Company also today announced that its Board of Directors declared a quarterly cash dividend of $.08 per common share, which represents an increase of 33% over the amount paid in the most recent quarter. This dividend will be payable on May 22, 2008 to stockholders of record as of May 8, 2008.

Thomas R. Venables, President and CEO, noted: "We are very pleased that the momentum we established in 2007 has continued into the current quarter, despite the many challenges buffeting our industry at present. In just three months, we increased core deposits and loans by 5.9% and 5.4% respectively. While this growth rate may not be sustainable in the near term given current market conditions, we are nonetheless encouraged about the longer-term business-generation ability of the resources put in place over the past three years. We are also very pleased to see that cost containment measures taken in late 2007 have had a significant positive effect on the Company's overall efficiency and productivity."

The Company's loan portfolio increased by $33.1 million or 5.4% in the first three months of 2008. The main components of that growth were a $21.7 million (11.5%) increase in residential mortgage loans and a $17.9 million (11.2 %) increase in commercial business loans. Offsetting these increases was a reduction of $5.2 million (9.4%) in construction loans outstanding. The growth in residential loans reflects a decision made in late 2007 to retain most new residential originations 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 residential loan production in the secondary market. While demand for commercial business loans remained strong in the first quarter 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 Company also continued to make progress in growing its core deposit accounts (savings, money market, demand and NOW accounts), which increased by $21.0 million or 5.9% in the first quarter of 2008. Certificate accounts also increased, by $5.1 million, bringing total deposit growth in the quarter to $26.1 million, representing a 4.2% increase over deposit balances at year end 2007. These results are primarily attributable to the opening of two new branch locations in the past 18 months and increases in commercial deposits in conjunction with growth in commercial loans.

The Company's borrowed funds increased by $29.4 million, or 17.8%, to a total of $194.7 million at March 31, 2008, compared to December 31, 2007. These additional borrowed funds (which were primarily a blend of 2 to 7 year FHLBB term advances) were used to fund the growth in fixed rate residential mortgage loans during the quarter.

During the first quarter of 2008, the Company repurchased 185,600 shares of its common stock at an average price of $13.73 per share. These repurchases bring the total repurchased under the Company's second repurchase plan to 215,000 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 at March 31, 2008 was 0.20%, compared to 0.33% at the end of the 2007 first quarter and 0.18% at year end 2007. The allowance for loan losses as a percent of loans was .94% at March 31, 2008, the same percentage as at December 31, 2007. Although non-performing loans were little changed compared to one year ago, the Bank's "watch loans" (loans rated special mention or substandard) increased by $7.4 million during the quarter. This increase is the result of weakness exhibited in one $7.5 million commercial real estate loan relationship, for which the primary source of repayment has recently ceased due to the loss of a tenant. Based on a review of all relevant factors, including the collateral securing this loan, no specific reserve has been allocated for this loan as of March 31, 2008. The provision for loan losses was $314,000 in the first quarter of 2008, compared to $183,000 in the comparable 2007 quarter. The increase is primarily related to the growth in loans in the quarter ended March 31, 2008. The Bank has not originated and does not own any sub-prime residential mortgage loans. The Bank's portfolio of mortgage-backed securities was originated by government-sponsored enterprises, such as Fannie Mae, and is not collateralized by any sub-prime loans.

Net interest income increased by $480,000 or 8.2% in the first quarter of 2008 compared to the comparable 2007 period. This increase is due to a) the widening of the Bank's net interest margin ("NIM"), which increased to 3.04% in the 2008 first quarter from 2.96% in the first quarter of 2007, and b) an increase in average interest earning assets of $33.7 million when comparing the two periods. Asset yields and funding costs have both decreased year over year, in reaction to sharp declines in market interest rates over the past six months. The Company's cost of interest-bearing liabilities has decreased by 23 bps when comparing the two quarters, while the yield on earning assets has fallen by only six bps. The Bank's ATM cash asset ($29.3 million at March 31, 2008) also affects the Bank's NIM, since income associated with those cash balances is recorded in fee income instead of interest income. Had income (and corresponding average balances) earned on that asset been included in the Company's NIM calculation in the first quarter of 2008 and 2007, the NIM would have been 3.09% and 3.12%, respectively.