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

Business Wire, July 23, 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 $1.2 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.