Benjamin Franklin Bancorp Reports 2008 Annual Results; Declares Quarterly Dividend

Business Wire, Jan 27, 2009

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 $3.7 million or $.50 per share (basic and diluted), for the year ended December 31, 2008. For the 2007 year, net income was $3.6 million, or $.48 and $.47 per share (basic and diluted, respectively). For the fourth quarter of 2008, net income was $164,000, or $.02 per share (basic and diluted), compared to $1.2 million or $.15 per share (basic and diluted) earned in the fourth quarter of 2007. The decline in quarterly earnings was primarily due to increases in the loan loss provision and operating expenses, the latter principally the result of costs incurred in connection with the Company's pending merger with Independent Bank Corp. ("Independent"). On November 8, 2008 the Company entered into an Agreement and Plan of Merger with Independent, a Massachusetts corporation (NASDAQ: INDB) and parent of Rockland Trust Company.

The Company also today announced that its Board of Directors declared a quarterly cash dividend of $.08 per common share, payable on February 24, 2009 to stockholders of record as of February 10, 2009.

Said Thomas R. Venables, President and CEO: "We are pleased to report a 6% increase in diluted EPS in 2008, especially in light of the challenges in the economic environment affecting all financial institutions. Despite the slowdown, we have been able to sustain our growth, with loans and core deposits up 14% and 15%, respectively. Our focus on our basic community banking strategy has been key to our success during these difficult economic times. Now, with our pending merger on the horizon, we are focused on ensuring a seamless transition for our customers."

Items of note in the Company's fourth quarter 2008 results are:

1. The net interest margin ("NIM") widened to 3.22%, as compared to 3.13% on a linked-quarter basis and 3.04% in the comparable 2007 quarter. Average earning assets increased by $105.7 million since the fourth quarter of 2007, which, in conjunction with the increased NIM resulted in an increase in net interest income of $1.2 million or 20.0% in the current quarter compared to the fourth quarter of 2007;

2. Operating expenses increased by $791,000 measured against the fourth quarter of 2007, due primarily to costs incurred in connection with the proposed merger with Independent, which totaled $550,000 during the quarter. Of that amount, $500,000 is not deductible for Federal and state income tax purposes, resulting in an after-tax impact on net income of approximately $530,000 or $.07 per share. The remainder of the year over year quarterly increase was largely the result of loan costs (legal, security, insurance) in connection with the work-out of one commercial loan relationship (see 3. below), as well as substantially higher FDIC deposit insurance premiums;

3. The Company's loan loss provision was $1.2 million for the quarter, compared to $447,000 in the third quarter of 2008 and $165,000 in the fourth quarter of 2007. The increase was due in large part to the addition of $726,000 in reserves for one $6.4 million non-performing commercial loan relationship secured primarily by a mixed use building in Boston MA;

4. Non-performing assets ("NPAs") were unchanged on a linked-quarter basis, at 0.90% of total assets as of December 31, 2008 and September 30, 2008. NPAs have increased from 0.18% of total assets at December 31, 2007, primarily due to the addition of the aforementioned $6.4 million commercial loan relationship to non-performing status at the end of the second quarter of 2008;

5. Other income rose to $1.4 million from $1.3 million in the previous quarter, but was less than the $2.0 million earned in the fourth quarter of 2007. In the comparable 2007 quarter, one-time gains aggregated $267,000. Further, fees for providing cash to independently owned ATMs, which are tied to the prime rate, were lower by $344,000 in the 2008 quarter, a change caused both by the sharp drop in the prime rate and in the loss of two customers in the past year.

In 2008, total assets increased by $94.5 million or 10.5%, driven primarily by growth in net loans outstanding, which increased by $81.9 million or 13.5% during the year. Commercial business loans grew by $21.0 million, or 13.2% and commercial real estate credits increased by $15.2 million or 9.0% during the year. Residential loans also increased significantly, by $52.3 million or 27.8%. Offsetting these increases was a reduction of $8.3 million (14.8%) in construction loans outstanding. While loan demand was generally strong in the first half of 2008, growth slowed in the third and fourth quarters, and in the fourth quarter of 2008, loans increased by a more modest 2.5% on a linked-quarter basis. The Bank has not originated and does not own any sub-prime residential mortgage loans.

The Company's core deposit accounts (savings, money market, demand and NOW accounts) grew significantly during 2008, increasing by a total of $54.7 million or 15.4% since year end 2007. This growth is primarily attributable to increases in commercial deposits in conjunction with growth in commercial business loans, growth in the Bank's premium NOW account product, municipal account growth and the opening of two new branch locations in the past two years.