UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

Commission file number 000-51194

Benjamin Franklin Bancorp, Inc.

Registrant’s telephone number, including area code: (617) 528-7000

     Indicate by check mark whether the registrant (1) 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

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     Shares outstanding of the registrant’s common stock (par value $0.01) at May 10, 2005: 8,488,898

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

See accompanying notes to condensed consolidated financial statements

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

See accompanying notes to condensed consolidated financial statements

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN RETAINED EARNINGS

(Unaudited)

See accompanying notes to condensed consolidated financial statements

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Continued)

See accompanying notes to condensed consolidated financial statements

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)

(Unaudited)

See accompanying notes to condensed consolidated financial statements

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	Basis of presentation and consolidation
	The accompanying unaudited consolidated interim financial statements include the accounts of Benjamin Franklin Bancorp, M.H.C. and subsidiaries (the “Company’’) including its main wholly-owned subsidiary, Benjamin Franklin Bank (the “Bank’’). These financial statements have been prepared in accordance with generally accepted accounting principles (“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, 2004.
	Stock Conversion and Merger The Company completed its mutual-to-stock conversion and related stock offering with the issuance of 5,977,419 shares (including 400,000 shares contributed to the Benjamin Franklin Bank Charitable Foundation) on April 4, 2005. An additional 2,511,479 shares were issued in connection with the acquisition of Chart Bank, which was consummated immediately following the stock conversion. The cash portion of the consideration paid to Chart Bank shareholders totaled $21,392,960 (net of amounts received by Chart Bank upon the exercise of stock options prior to the merger). The Company’s stock began trading on April 5, 2005, on the Nasdaq National Market, under the symbol “BFBC”.
	Recent Accounting Pronouncements On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R, “Share-Based Payment,” which is an amendment of FASB Statement Nos. 123 and 95. SFAS No. 123R changes, among other things, the manner in which share-based compensation, such as stock options, will be accounted for by both public and non-public companies, and will be effective beginning with the first interim or annual reporting period of the Company’s first fiscal year that begins after June 15, 2005, which would be January 1, 2006 for the Company. For public companies, the cost of employee services received in exchange for equity instruments including options and restricted stock awards generally will be measured at fair value at the grant date. The grant date fair value will be estimated using option-pricing models adjusted for the unique characteristics of those options and instruments, unless observable market prices for the same or similar options are available. The cost will be recognized over the requisite service period, often the vesting period, and will be re-measured subsequently at each reporting date through settlement date. On March 29, 2005, the SEC staff issued Staff Accounting Bulletin No. 107 (“SAB 107”). SAB 107 expresses the views of the SEC staff regarding SFAS No. 123R and certain rules and regulations and provides the SEC’s view regarding the valuation of share-based payment arrangements for public companies. The provisions of SFAS No. 123R and SAB 107 do not have an impact on the Company’s results of operations at this time.
2.	Loan Commitments
	Outstanding loan commitments totaled $30.6 million at March 31, 2005 compared to $15.5 million as of December 31, 2004. Commitments to grant loans are extended to customers for up to 180 days, after which they expire.
3.	Short-term Investments and Other Liabilities
	As of March 31, 2005, short-term investment balances of $59.6 million included $51.6 million of subscription funds received during the Company’s stock offering in March. The mutual-to-stock

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conversion was completed on April 4, 2005; in the interim subscription funds received were recorded in other liabilities on the Company’s balance sheet.

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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 2004 Annual Report on Form 10-K, the Company considers its critical accounting policies to be those associated with income taxes, intangible assets and the determination of the allowance for loan losses. The Company’s critical accounting policies have not changed since December 31, 2004.

Comparison of Financial Condition at March 31, 2005 and December 31, 2004

Total assets increased by $65.4 million, or 12.6%, from $517.4 million at December 31, 2004 to $582.8 million at March 31, 2005. The largest increases were in short-term investments (primarily attributable to the $51.6 million of subscription funds received during the Company’s stock offering in March) and loans, offset by a modest decline in investment securities. Funding the growth in the balance sheet were increases in deposits and an increase in other liabilities, the latter increase consisting primarily of the $51.6 million of stock offering subscription funds that were invested in short-term investments.

Investment Activities

At March 31, 2005, the Company’s short-term investments totaled $59.6 million, consisting of $57.7 million in overnight fed funds sold and $1.9 million in money market funds. The increase of $54.1 million when compared with the aggregate balance of $5.5 million at December 31, 2004, was caused primarily by a $51.6 million influx of funds in the month of March, 2005 related to the Company’s common stock offering.

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At March 31, 2005, the Company’s investment portfolio amounted to $91.8 million, or 15.8% of total assets. The following table sets forth certain information regarding the amortized cost and market values of the Company’s investment securities at the dates indicated:

Overall, the securities portfolio declined by $1.4 million over the first three months of 2005. Increases in U.S. Government and agency obligations (increase of $1.3 million) and corporate bonds (increase of $1.6 million) were offset by a $4.4 million reduction in mortgage-backed securities. This decrease was the result of scheduled payments and prepayments during the quarter aggregating $3.6 million coupled with an $800,000 increase in market value depreciation on these securities.

Lending Activities

The Company’s net loan portfolio aggregated $394.4 million on March 31, 2005, or 67.7% of total assets on that date. The following table sets forth the composition of the loan portfolio at the dates indicated:

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The gross loan portfolio increased by $11.2 million, or 2.8%, over the first quarter of 2005. Commercial real estate lending activities were responsible for virtually all of that increase, as commercial real estate loans grew by $12.7 million during the quarter, offset by small declines in residential mortgage loans and construction loans. The lack of growth in residential lending and construction lending was in part seasonal, and in the case of residential mortgage lending, a reflection of the recent rise in market interest rates and aggressive pricing by the Bank’s local competition. The growth in commercial real estate loans is a result of the Bank’s increased focus on commercial lending generally, and the addition to staff of two new commercial lenders in January of 2005.

Non-performing Assets

The table below sets forth the amounts and categories of the Company’s non-performing assets at the dates indicated. At each date presented, the Company had no troubled debt restructurings (loans for which a portion of interest or principal has been forgiven and loans modified at interest rates materially less than current market rates):

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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.

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as doubtful, substandard or special mention. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. 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.

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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 residential loans for impairment disclosures. At March 31, 2005, impaired loans totaled $ 292,000 and in the aggregate carried a specific reserve allocation of $170,000, as compared to $334,000 of impaired loans with a specific reserve allocation of $210,000 at December 31, 2004 and $279,000 of impaired loans with a specific reserve allocation of $220,000 at March 31, 2004.

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. These regulatory agencies may require the Company to recognize additions to the allowance based on their judgments of information available to them at the time of their examination, thereby negatively affecting the Company’s financial condition and earnings.

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

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Deposits

The following table sets forth the Company’s deposit accounts for the periods indicated:

Overall, deposits increased by $18.2 million, or 4.6%, during the first quarter of 2005. The largest increases came in certificates of deposit ($10.5 million), money market accounts ($3.7 million) and demand deposit accounts ($2.8 million). The deposit increases were the result of the Bank’s continued marketing and promotional efforts in its market area, including efforts to remain competitive in all of its deposit offerings.

Borrowed Funds

Funds borrowed from the Federal Home Loan Bank of Boston (“FHLBB”) decreased during the first quarter by $4.3 million to $72.0 million at March 31, 2005. This decrease occurred as the Bank paid off short-term FHLBB advances using funds provided by increases in deposit accounts. The $9.0 million balance in subordinated debt remained unchanged during the first quarter of 2005.

Retained Earnings

Retained earnings decreased by $528,000 during the quarter, as net income of $330,000 was offset by an increase of $858,000 in the net unrealized loss on marketable securities. This decline in market value of the Company’s investments was centered primarily in the portfolio of mortgage-backed securities, which have declined in value as market interest rates have risen. It remains the intention of the Company to hold its portfolio of mortgage-backed securities until their respective final maturities.

Comparison of Operating Results for the Three Months Ended March 31, 2005 and 2004

Net income declined to $330,000 in the first quarter of 2005 from $454,000 in the year-earlier quarter, primarily as a result of lower levels of fee income earned and higher operating expenses, offset in part by an increase in net interest income.

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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.

The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All 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:

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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 Company earned net interest income of $3.6 million and $3.3 million in the three months ended March 31, 2005 and 2004, respectively. The increase between the two periods of $375,000, or 11.5%, is due to a $68.9 million, or 16.1%, increase in average interest-earning assets, offset in part by a 9 basis point decrease in the net interest margin.

Interest income rose by $853,000, or 17.5%, between periods, to $5.7 million for the quarter ended March 31, 2005. The increase was due primarily to a $94.3 million increase in average loan balances outstanding, offset in part by declines in the average balances outstanding of investment securities (down $19.1 million) and short-term investments (down $6.4 million). Although the yield on loans declined from 5.36% in the first three months of 2004 to 5.11% in the first quarter of 2005, the overall yield on interest earning assets rose to 4.67% in the first quarter of 2005 from 4.58% in the year-earlier period, due to a higher percentage of loans in the mix of interest earning assets in the first quarter of 2005 when compared to the same period in 2004.

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Interest expense for the three months ended March 31, 2005 increased $478,000, or 29.7%, to $2.1 million from $1.6 million in the first quarter of 2004. The increase was due to increases in the average balances outstanding of deposits (up $17.3 million) and borrowed funds (up $36.1 million), as well as to an increase in the average cost of deposits, which rose from 1.40% in the first three months of 2004 to 1.58% in the quarter ended March 31, 2005. The increase in deposit rates was caused primarily by increases in rates paid by the Bank on its money market deposit accounts, which have proven to be the most sensitive to increases in short-term market interest rates such as have occurred in the past year. Offsetting these factors was a decline in the weighted average cost of long-term debt, which fell from 5.05% in the first three months of 2004 to 4.27% in the first quarter of 2005. This decline was the result of the addition of $36.0 million of 2 – 3 year FHLBB borrowings in the second half of 2004 bearing lower interest rates than the existing longer-term borrowings already held by the Company.

Provision for Loan Losses

The Company recorded provisions for loan losses of $168,000 and $170,000 for the three months ended March 31, 2005 and 2004, respectively. The provisions were reflective of growth in the loan portfolio and a small amount of net recoveries recorded in each period. At March 31, 2005, the allowance for loan losses totaled $3.4 million, or .85% of the loan portfolio, as compared to $3.2 million, or .89% of total loans, at December 31, 2004 and $2.7 million, or .88% of total loans, at March 31, 2004.

Non-interest Income

Non-interest income for the three month period ended March 31, 2005 declined to $493,000, a reduction of $201,000, or 29.0%, when compared to non-interest income of $694,000 earned during the first quarter of 2004. A $73,000 decline in loan servicing fees, a $51,000 decrease in gains on loan sales, a $47,000 decrease in deposit service fees and a $32,000 reduction in miscellaneous income accounted for the decline. The decline in loan servicing fee income and in gains realized on loan sales was attributable to the rise in market interest rates in 2004 and early 2005, which in turn caused a decline in the origination of fixed rate residential mortgage loans that the Bank typically sells at a small gain in the secondary market, with servicing rights retained. Deposit service fees have declined as the Bank has reduced or eliminated service charges on certain transaction accounts as a result of competitive pressures. Miscellaneous income decreased from period to period due primarily to a lower level of fees on investment product sales in the first quarter of 2005 when compared to the same period in 2004.

Non-interest Expense

Non-interest expense increased $337,000, or 10.8%, to $3.5 million in the first three months of 2005 as compared to $3.1 million in the first quarter of 2004. Nearly half of this increase was in salaries and employee benefits, which rose due to increases in staffing levels over the past year as the Company moved to convert to a stock institution, accomplish the acquisition of Chart Bank and make the staffing investments necessary to continue the growth of its loan portfolio. Occupancy and equipment expenses increased by $61,000, or 16.1%, due to the unusually high snow removal costs incurred in the first quarter of 2005. Other increases in operating expenses were incurred in the areas of audit and legal expense (up $76,000) and in marketing costs (up $21,000), as the Bank increased its promotional efforts for both loans and deposits in the first quarter of 2005.

Income Taxes

Income tax expense was $159,000 for the three months ended March 31, 2005, representing a decline of $37,000, or 18.9%, when compared to $196,000 recorded for the first quarter of 2004. The effective tax rates for the 2005 and 2004 periods were 32.4% and 30.1%, respectively. The higher rate in the 2005 period was due largely to a decrease in income recorded in the Bank’s securities corporation, which is subject to a significantly lower rate of state tax than is the Bank.

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Liquidity and Capital Resources

The Company’s primary sources of funds are from deposits, 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 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 31, 2005, cash and due from banks, short-term investments (excluding $51.6 million of subscription funds related to the Company’s common stock offering) and debt securities maturing within one year totaled $53.0 million or 9.1% of total assets.

The Company also relies on outside borrowings from the Federal Home Loan Bank of Boston, as an additional funding source. As of March 31, 2005, the Company had the ability to borrow an additional $91.2 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:

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Loan Commitments

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 date or other termination clauses.

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Minimum Regulatory Capital Requirements:

As of March 31, 2005, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt 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. The Company’s and the Bank’s actual capital amounts and ratios as of March 31, 2005 and December 31, 2004 are also presented in this table: