Central Bancorp Reports Fiscal Second Quarter and Year-To-Date Earnings Increases of 83.0% and 22.4%.

SOMERVILLE, Mass.--(BUSINESS WIRE)--Oct. 26, 1999--

Central Bancorp, Inc., (NASDAQ National Market: CEBK) today reported net income of $1,032,000, or 54 cents per diluted share, for the three months ended September 30, 1999 -- representing an 83.0% increase compared to the net income of $564,000, or 29 cents per diluted share, for the corresponding period of the previous year. The company reported net income after extraordinary item of $1,511,000, or 78 cents per diluted share, compared to $1,235,000, or 63 cents per diluted share, for the six months ended September 30, 1999 and 1998, respectively, representing an increase of 22.4%.

The improved performance for the 1999 quarter compared to the 1998 quarter was primarily due to increases of $473,000 in net gains from sales of investment securities and $315,000 in net interest and dividend income. The year-to-date improvement in earnings included increases of $543,000 in net interest and dividend income and $428,000 in net gains from sales of investment securities. In addition, the results for the six months ended September 30, 1999, included a one-time charge of $234,000, net of taxes, for costs associated with the establishment on January 8, 1999, of Central Bancorp, Inc., as the holding company for Central Bank. This charge, which was previously reported, represented the balance of unamortized organization costs outstanding as of April 1, 1999, that were required to be written off in accordance with a new accounting rule regarding reporting costs of organization activities. Excluding this extraordinary item, Central Bancorp's net income for the six months ended September 30, 1999 was $1,745,000, or 91 cents per diluted share.

Between March 31, 1999 and September 30, 1999, the company's total loans and total assets grew to $298,246,000 and $371,970,000, respectively. "The continuing improvement in our company's performance is very gratifying in view of the competitive environment," remarked President & Chief Executive Officer John D. Doherty. "We are pleased to report these results which further support the Board of Directors' decision to increase our quarterly cash dividend by 25% to 10 cents a share from 8 cents a share, as we previously announced on October 14, 1999." The first increased dividend will be paid on November 19, 1999, to stockholders of record as of November 5, 1999.

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. -0-

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

                           Quarter Ended     Six Months Ended
                           September 30,       September 30,
                          1999      1998      1999       1998
Net interest
 and dividend income     $3,276    $2,961    $6,406     $5,863
Non-interest income         660       188       938        519
Operating expenses        2,268     2,210     4,501      4,321
 Income before
  income taxes            1,668       939     2,843      2,061
Income tax expense          636       375     1,098        826
 Net income before
  extraordinary item      1,032       564     1,745      1,235
Extraordinary item,
 net of taxes              --        --        (234)      --
 Net income              $1,032      $564    $1,511     $1,235
Earnings per common
 share before
 extraordinary item       $0.54     $0.29     $0.91      $0.64
Earnings per common
 share before
 extraordinary item -
 assuming dilution        $0.54     $0.29     $0.91      $0.64
Earnings per common
 share after
 extraordinary item       $0.54     $0.29     $0.79      $0.63
Earnings per common
 share after
 extraordinary item -
 assuming dilution        $0.54     $0.29     $0.78      $0.63

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

                           September 30,           March 31,
                              1999                    1999

         (Unaudited)
Total assets                $371,970                $364,696
Total loans                  298,246                 280,346
Allowance for loan losses      2,950                   2,913
Deposits                     256,347                 266,463
Borrowings                    74,435                  57,000
Stockholders' equity          38,194                  38,742