Central Bancorp Reports Earnings for Its Quarter and Fiscal Year Ended March 31, 2002.

Business Editors

SOMERVILLE, Mass.--(BUSINESS WIRE)--April 25, 2002

Central Bancorp, Inc., (NASDAQ National Market: CEBK) today reported that its net income improved by more than 44% to $817,000, or $.50 per diluted share, for the three months ended March 31, 2002, from $567,000, or $.34 per diluted share, for the corresponding 2001 quarter. For the fiscal years ended March 31, 2002 and 2001, the Company's net income was $2,860,000, or $1.72 per diluted share, and $3,109,000, or $1.81 per diluted share, respectively.

During the quarters ended March 31, 2002 and December 31, 2001, the Company recorded write-downs of $457,000 and $186,000, respectively, in its equity securities portfolio to recognize an impairment in the value of certain securities deemed to be other than temporary. Exclusive of these items, net income would have been $1,119,000 for the quarter and $3,285,000 for the year.

The 44.1% earnings increase for the March 31, 2002 quarter, as compared to the year earlier period, primarily resulted from an increase of $745,000 in net interest and dividend income. With the series of interest rate reductions initiated by the Federal Reserve Board beginning in January 2001 and a steep yield curve, the Company has been able to replace maturing certificates of deposit and borrowings with lower cost funds. The Company also benefited during the quarter from a reduction of non-interest expenses of $250,000 -- largely caused by higher than normal costs in the fourth quarter of fiscal 2001 attributable to the conversion to a new computer processing system.

Exclusive of the write-downs of equity securities noted above, net income for the 2002 year would have increased to $3,285,000 compared to $3,109,000 in 2001. The lagging effect of the rate reductions referred to in the preceding paragraph had a greater effect on the fourth quarter of 2002, but contributed to an increase of $500,000 in net interest and dividend income for the full year. Partially offsetting this increase was a decline in net gains on sales of securities of $187,000 and an increase in non-interest expenses of $134,000.

John D. Doherty, President & Chief Executive Officer of Central Bancorp noted, "We are pleased with the continuing improvement in net interest and dividend income during each successive quarter of 2002. During the fourth quarter, this income increased 11% compared to the preceding quarter. This favorable development continued to reflect higher lending activity, a favorable yield curve and a reduction in the costs of our deposits because of lower interest rates. While deposits decreased $25.3 million during 2002, we actually increased our core deposits by nearly 13%."

Mr. Doherty also commented, "Consistent with our business strategy, our commercial real estate loan portfolio increased about $11 million during the fourth quarter. We are particularly pleased with this accomplishment. Our ongoing efforts to maintain the quality of Central Bank's loan portfolio have proved successful, as evidenced by our having no non-performing loans at year-end and no foreclosures during the past two fiscal years. As we move forward, we will continue to concentrate on loan quality, controlling our non-interest expenses, and providing appropriate products and services to our customers."

As previously announced, Central Bancorp completed its fourth common stock buyback program during the fourth quarter of fiscal 2002, during which it purchased 16,490 shares. The shares repurchased since the first buyback program was adopted in April 1999 totaled 365,294, at an average cost of $19.56 per share, representing 18.5% of the common stock issued and outstanding prior to the adoption of the program.

Central Bancorp, Inc., is the holding company for Central Bank, whose legal name is Central Co-operative Bank, a Massachusetts-chartered co-operative bank operating eight full-service banking offices in suburban Boston.

(See accompanying tables.)

This earnings report may contain certain forward-looking statements, which are based on management's current expectations regarding economic, legislative and regulatory issues that may impact the Company's earnings in future periods. Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, real estate values and competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing, products and services.

                         Central Bancorp, Inc.
                      Consolidated Operating Data
                 (In Thousands, Except Per Share Data)

                               Quarter Ended           Year Ended
                                  March 31,             March 31,
                               2002       2001      2002        2001
                                 (Unaudited)
Net interest and
 dividend income             $ 4,110    $ 3,365   $ 14,414    $ 13,914

Net gain (loss) on sales
 and writedowns of
 investment securities          (489)        29       (150)        680

Other non-interest income        186        123        837         608

Non-interest expenses          2,379      2,629     10,464      10,330

  Income before taxes          1,428        888      4,637       4,872

Provision for income taxes       611        321      1,777       1,763

  Net income                 $   817    $   567   $  2,860    $  3,109

Earnings per share:

  Basic                      $  0.50    $  0.34   $   1.73    $   1.81
  Diluted                    $  0.50    $  0.34   $   1.72    $   1.81

Weighted average number of
 shares outstanding:
  Basic                        1,628      1,660      1,650       1,717
  Diluted                      1,647      1,666      1,665       1,719




                    Consolidated Balance Sheet Data
                            (In Thousands)

                              March 31,          March 31,
                                2002               2001

Total assets                 $ 468,221          $ 449,337
Total loans                    371,707            345,793
Allowance for loan losses        3,292              3,106
Deposits                       261,907            287,167
Borrowings                     164,000            121,000
Stockholders' equity            38,954             38,212