Central Bancorp Reports Fiscal Third Quarter and Year-to-Date Earnings Increases of 52.2% and 32.7%; and Announces a New Stock Repurchase Program.

Business Editors

SOMERVILLE, Mass.--(BUSINESS WIRE)--Jan. 20, 2000

Central Bancorp, Inc., (NASDAQ:CEBK) today reported net income of $1,020,000, or 55 cents per diluted share, for the three months ended December 31, 1999 -- representing a 52.2% increase as compared to the net income of $671,000, or 35 cents per diluted share, for the corresponding period of the previous year. The company reported net income after extraordinary item of $2,531,000, or $1.33 per diluted share, for the nine months ended December 31, 1999, compared to net income of $1,906,000, or 98 cents per diluted share, for the comparable period of 1998, representing an increase of 32.7%.

The company also announced it is commencing a new stock repurchase program to acquire up to 93,583 shares of Central Bancorp, Inc.'s common stock over the next 12 months, which represents approximately 5% of the outstanding shares. The program will be dependent upon market conditions, and there is no guarantee as to the exact number of shares to be repurchased. The company completed its first stock repurchase program in November 1999, wherein it repurchased 98,350 shares of common stock.

The improved performance for the 1999 quarter compared to the same period in 1998 reflects an increase of $379,000 in net interest and dividend income, primarily as a result of increased loan income and lower interest expense. For the nine-month period, net interest and dividend income improved by $922,000. Although interest and dividend income was down, lower interest expense allowed us to report this improved performance. In addition, as previously reported, the June 30, 1999, quarterly results 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 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 nine months ended December 31, 1999 was $2,765,000, or $1.45 per diluted share.

Between March 31, 1999 and December 31, 1999, the company's total loans and assets grew to $314,934,000 and $395,568,000,representing increases of 12% and 8% respectively.

John D. Doherty, President &Chief Executive Officer of Central Bancorp, stated that the Board of Directors authorized the new stock repurchase program, indicating that the Board considers the common stock to be an attractive investment. In addition, the Board anticipates that the reduction in the amount of the company's outstanding stock will increase per-share earnings.

According to Mr. Doherty, the repurchases generally will be effected through open market purchases, although he did not rule out the possibility of unsolicited negotiated transactions or other types of repurchases.

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.

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

                                Quarter Ended      Nine Months Ended
                                 December 31,         December 31,
                                1999      1998      1999       1998
                                           (Unaudited)
Net interest
 and dividend income         $ 3,477   $ 3,098   $ 9,883    $ 8,961
Non-interest income              394       358     1,332        877
Operating expenses             2,248     2,331     6,749      6,652
  Income before
   income taxes                1,623     1,125     4,466      3,186
Income tax expense               603       454     1,701      1,280
  Net income before
   extraordinary item          1,020       671     2,765      1,906
Extraordinary item,
 net of taxes                   --        --        (234)      --
  Net income                 $ 1,020   $   671   $ 2,531    $ 1,906
Earnings per common
 share before
 extraordinary item          $  0.55   $  0.35   $  1.45    $  0.98
Earnings per common
 share before
 extraordinary item
 - assuming dilution         $  0.55   $  0.35   $  1.45    $  0.98
Earnings per common
 share after
 extraordinary item          $  0.55   $  0.35   $  1.33    $  0.98
Earnings per common
 share after
 extraordinary item -
 assuming dilution           $  0.55   $  0.35   $  1.33    $  0.98



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

                                December 31,              March 31,
                                       1999                   1999
                                 (Unaudited)

Total assets                      $ 395,568              $ 364,696
Total loans                         314,934                280,346
Allowance for loan losses             2,974                  2,913
Deposits                            244,583                266,463
Borrowings                          109,920                 57,000
Stockholders' equity                 38,125                 38,742