Central Bancorp Reports Earnings for Its September 30, 2000 Quarter and Update of Common Stock Buyback Program.

Business Editors

SOMERVILLE, Mass.--(BUSINESS WIRE)--Oct. 23, 2000

Central Bancorp, Inc., (NASDAQ National Market:CEBK) today reported net income of $877,000, or 51 cents per diluted share, for the three months ended September 30, 2000, compared to net income of $1,032,000, or 54 cents per diluted share, for the September 30, 1999 quarter. The Company's net income for the six months ended September 30, 2000 was $1,642,000, or 93 cents per diluted share, compared to $1,511,000, or 78 cents per diluted share for 1999 after the cumulative effect of a required change in accounting principle.

The principal reason for the decline in net income for the September 30, 2000 quarter compared to the same quarter of 1999 was a $301,000 decrease in net gains from sales of investment securities. This was partially offset by a $186,000 increase in net interest and dividend income.

The earnings improvement for the six-months ended September 30, 2000 as compared to same period in 1999 was principally attributable to an increase in net interest and dividend income, offset by a non-recurring charge incurred during 1999 for a required change in accounting principle and by an increase in operating expenses, principally for marketing and advertising.

John D. Doherty, President & Chief Executive Officer of Central Bancorp, Inc., noted, "Our improvement in core earnings primarily reflected an increased volume of lending activity and higher income from loans during the September 30, 2000 quarter as compared to the same period a year earlier. We also are pleased to report that the Company's financial position has further strengthened, as total loans of $351,493,000, deposits of $268,200,000, stockholders' equity of $38,048,000 and total assets of $429,113,000 all increased between our last fiscal year end that ended at March 31, 2000 and September 30, 2000."

During the quarter ended September 30, 2000, the Company repurchased 23,200 shares under the previously announced third buyback program authorized by the Board of Directors. The shares repurchased since the first buyback program was adopted in April 1999 total 221,333, at an average cost of $18.48 per share, representing 11.24% of the common stock issued and outstanding prior to the adoption of the first buyback program. The Company plans to acquire additional shares in the months ahead in accordance with the third buyback 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.

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     Six Months Ended
                                   September 30,       September 30,
                                  2000      1999      2000      1999
                                              (Unaudited)
Net interest and
 dividend income                $ 3,462   $ 3,276   $ 6,899   $ 6,406

Non-interest income                 354       660       692       938

Operating expenses                2,440     2,268     5,016     4,501

  Income before
   income taxes                   1,376     1,668     2,575     2,843

Income tax expense                  499       636       933     1,098

  Net income before
   cumulative effect
   of change in
   accounting principle             877     1,032     1,642     1,745

Cumulative effect
 of change in
 accounting principle,
 net of taxes                      --        --        --        (234)

  Net income                    $   877   $ 1,032   $ 1,642   $ 1,511

Earnings per common share:
  Before cumulative
   effect of change in
   accounting principle         $  0.51   $  0.54   $  0.93   $  0.91

  Before cumulative
   effect of change in
   accounting principle
   - assuming dilution          $  0.51   $  0.54   $  0.93   $  0.91

  After cumulative
   effect of change in
   accounting principle         $  0.51   $  0.54   $  0.93   $  0.79

  After cumulative effect
   of change in accounting
   principle -
   assuming dilution            $  0.51   $  0.54   $  0.93   $  0.78



                         Central Bancorp, Inc.
                    Consolidated Balance Sheet Data
                            (In Thousands)

                                  September 30,       March 31,
                                       2000             2000
                                   (Unaudited)

Total assets                       $ 429,113         $ 409,557
Total loans                          351,493           320,013
Allowance for loan losses              3,034             2,993
Deposits                             268,200           258,339
Borrowings                           119,000           111,000
Stockholders' equity                  38,048            37,397