Benjamin Franklin Bancorp Reports Results for Third Quarter of 2006; Increases Quarterly Dividend.

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 $.15 per share (basic and diluted), for the quarter ended September 30, 2006. For the nine months ended September 30, 2006, the Company reported earnings of $3.7 million or $.46 per share (basic and diluted). In the comparable 2005 quarter, the Company earned $1.3 million or $.16 per share (basic and diluted). Results for the nine months ended September 30, 2005 were affected by two non-recurring charges, resulting in a loss of $882,000 for the period.

The Company also today announced that its Board of Directors declared a quarterly cash dividend of $.04 per common share, which represents an increase of 33% over the amount paid in prior quarters. This dividend will be payable on November 24, 2006 to stockholders of record as of November 10, 2006.

Thomas R. Venables, President and CEO, noted: "We are continuing to execute our growth strategy, through investments in new branches and personnel designed to stimulate business loan and deposit growth. We are making progress, particularly in commercial lending where we have achieved solid growth in 2006. Our momentum is being hampered by the flat yield curve and related narrowing of our net interest margin. Though margin relief appears unlikely in the near term, we remain committed to our expansion plan."

In the first nine months of 2006, the Company's balance sheet increased by $35.2 million, or 4.1%, to $902.3 million. Asset growth was focused primarily in loans, which increased by $30.5 million or 5.0% during the nine month period. This growth was funded by increases in deposit balances totaling $14.6 million or 2.4%, and in borrowed funds, which increased by $19.6 million or 14.0% in the first nine months of 2006.

Deposit growth was focused almost entirely in time deposit accounts, which increased by $37.2 million or 14.1% in the nine month period ended September 30, 2006, offset by decreases in savings (down $11.7 million or 12.0%), NOW accounts (down $7.2 million or 22.4%), and money market accounts (down $4.7 million or 5.0%). Demand deposits increased by $1.0 million during the nine-month period, and continue to represent 20% of the Company's total deposit balances. With increases in short-term market interest rates, customers continue to exhibit a preference for short-term time deposits, causing the shift away from lower-rate savings and transaction accounts.

The increase in loans during the first nine months of 2006 was largely the result of growth in the Bank's commercial loan portfolio, as commercial real estate loans increased by $21.5 million or 10.3% and commercial business loans increased by $3.6 million or 18.9%. Consumer loans also grew during the period, rising by $5.9 million or 17.0%, due to growth in the Company's portfolio of home equity loans and lines of credit.

Non-performing assets as a percentage of total assets stood at 0.21% at September 30, 2006. The allowance for loan losses as a percent of total loans was unchanged at 0.93% as of September 30, 2006 and 2005.

The Company's net interest margin ("NIM") was 3.05% for the three months ended September 30, 2006, a decrease of 29 basis points compared to the third quarter of 2005. Included in interest income for the third quarter of 2006 was an extra quarterly FHLBB stock dividend payment, which had the effect of increasing the NIM by 5 basis points. The reduction in the NIM compared to the year earlier period is due to increases in funding costs, which have outpaced increases in yields earned on loans and securities. Overall, increases in rates paid on interest-bearing deposits have risen by 91 basis points compared to the third quarter of 2005, as customers have transferred funds into short-term time deposits from lower-rate savings and transaction accounts. The intense competitive pressure in the Bank's market area, coupled with the increases in short-term market interest rates over the past year, has driven up interest rates paid on time deposit products significantly over the past twelve months.

Third quarter results benefited from an increase in non-interest income, which rose by $405,000 or 30.8%, when measured against the comparable 2005 period. Most of this growth is attributable to a $355,000 or 72.0% increase in fee revenue generated by CSSI, the Bank's ATM servicing subsidiary.

The Company's adjusted efficiency ratio for the quarter (excluding amortization of the core deposit intangible and gains/losses on sales of bank assets) increased to 71.9% compared to 64.6% in the year earlier period. Nearly half of the increase between periods is attributable to the expense associated with stock options and restricted stock, incurred for the first time during the most recent quarter. In the twelve months, total expense for these awards will amount to $1.5 million, a figure that reflects the Company's recognition of stock compensation expense using an accelerated method allowed by SFAS No. 123R.

The remainder of the increase in the efficiency ratio is primarily staffing-related, consistent with the Company's growth plans, including establishing new branch locations in Massachusetts. The Company's new Wellesley office opened in August of 2006. A new branch location in Watertown is expected to open early in the second quarter of 2007, while a third new location is also likely in the first half of 2007. These new branch openings will adversely affect the Company's profits in the year 2007.

Without those non-GAAP adjustments, the efficiency ratio based on GAAP numbers for the quarter was 74.0% versus 69.9% for the comparable quarter in 2005. For a reconciliation, see the table at the end of this release.

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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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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