##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from  to
 Commission file number: 0-25251
 CENTRAL BANCORP, INC.
  Massachusetts
    
    04-3447594(State or other jurisdiction of incorporation or
    
    (I.R.S. Employer Identification No.)organization)399 Highland Avenue, Somerville, Massachusetts
    
    02144(Address of principal executive offices)
    
    (Zip Code)
 (617) 628-4000
 (Registrants telephone number, including area code)
 Not applicable
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
  Large accelerated filer o
    
    Accelerated filer oNon-accelerated filer o
    
    Smaller Reporting Company þ(Do not check if a smaller reporting company)
  o þ
 Common Stock, $1.00 par value
    
    1,639,951Class
    
    Outstanding at February 11, 2008




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##### 



CENTRAL BANCORP, INC.
 Form 10-Q
 Table of Contents
 Page No.Part I. Financial InformationItem 1. Financial Statements (Unaudited)Consolidated Statements of Financial Condition at December 31, 2007 and
March 31, 2007
    
    
    1Consolidated Statements of Income for the Three and Nine Months Ended
December 31, 2007 and 2006
    
    
    2Consolidated Statements of Changes in Stockholders Equity for the Nine
Months Ended December 31, 2007
    
    
    3Consolidated Statements of Cash Flows for the Nine Months Ended
December 31, 2007 and 2006
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results
Of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    20Part II. Other InformationItem 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3. Defaults Upon Senior Securities
    
    
    21Item 4. Submission of Matters to a Vote of Security Holders
    
    
    21Item 5. Other Information
    
    
    21Item 6. Exhibits
    
    
    21SignaturesEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32 SECTION 906 CERTIFICATION OF THE CEO AND CFO




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##### Table of Contents



Part I.
Financial Information Item 1. Financial Statements
 (Dollars in Thousands, Except Share Data)
    
    December 31, 2007
    
    
    March 31, 2007ASSETSCash and due from banks
    
    $
    5,916
    
    
    $
    6,147Short-term investments
    
    
    1,893
    
    
    
    14,470Cash and cash equivalents
    
    
    7,809
    
    
    
    20,617Investment securities available for sale (amortized cost of $54,414
at December 31, 2007 and $66,033 at March 31, 2007)
    
    
    54,520
    
    
    
    65,763Stock in Federal Home Loan Bank of Boston, at cost
    
    
    7,786
    
    
    
    7,366The Co-operative Central Bank Reserve Fund, at cost
    
    
    1,576
    
    
    
    1,576Total investments
    
    
    63,882
    
    
    
    74,705Loans held for sale
    
    
    
    
    
    
    575Loans (Note 2)
    
    
    467,820
    
    
    
    460,542Less allowance for loan losses
    
    
    3,379
    
    
    
    3,881Loans, net
    
    
    464,441
    
    
    
    456,661Accrued interest receivable
    
    
    2,044
    
    
    
    2,415Banking premises and equipment, net
    
    
    4,160
    
    
    
    4,756Deferred tax asset, net
    
    
    1,983
    
    
    
    2,212Goodwill, net
    
    
    2,232
    
    
    
    2,232Bank owned life insurance (Note 10)
    
    
    6,049
    
    
    
    Other assets
    
    
    2,071
    
    
    
    1,967Total assets
    
    $
    554,671
    
    
    $
    566,140LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits (Note 3)
    
    $
    354,867
    
    
    $
    388,573Short-term borrowings
    
    
    443
    
    
    
    712Federal Home Loan Bank advances
    
    
    145,800
    
    
    
    125,000Subordinated debenture (Note 4)
    
    
    11,341
    
    
    
    11,341Advanced payments by borrowers for taxes and insurance
    
    
    1,341
    
    
    
    1,229Accrued expenses and other liabilities
    
    
    1,702
    
    
    
    1,583Total liabilities
    
    
    515,494
    
    
    
    528,438Commitments and Contingencies (Note 6)Stockholders equity (Note 7):Preferred stock $1.00 par value; 5,000,000 shares authorized;
none issued or outstanding
    
    
    
    
    
    
    Common stock $1.00 par value; 15,000,000 shares authorized; and
1,639,951 shares issued at December 31, 2007 and March 31, 2007
    
    
    1,640
    
    
    
    1,640Additional paid-in capital
    
    
    3,602
    
    
    
    3,479Retained income
    
    
    40,979
    
    
    
    40,394Accumulated other comprehensive income (loss) (Note 5)
    
    
    231
    
    
    
    (20
    )Unearned compensation  ESOP
    
    
    (7,275
    )
    
    
    (7,791
    )Total stockholders equity
    
    
    39,177
    
    
    
    37,702Total liabilities and stockholders equity
    
    $
    554,671
    
    
    $
    566,140
 
 1




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest and dividend income:Mortgage loans
    
    $
    6,798
    
    
    $
    6,904
    
    
    $
    20,360
    
    
    $
    19,680Other loans
    
    
    252
    
    
    
    154
    
    
    
    637
    
    
    
    427Short-term investments
    
    
    62
    
    
    
    26
    
    
    
    321
    
    
    
    242Investments
    
    
    950
    
    
    
    1,268
    
    
    
    2,715
    
    
    
    3,738Total interest and dividend income
    
    
    8,062
    
    
    
    8,352
    
    
    
    24,033
    
    
    
    24,087Interest expense:Deposits
    
    
    2,664
    
    
    
    2,881
    
    
    
    8,263
    
    
    
    8,289Advances from Federal Home Loan Bank of Boston
    
    
    1,726
    
    
    
    1,695
    
    
    
    5,077
    
    
    
    4,257Other borrowings
    
    
    215
    
    
    
    156
    
    
    
    643
    
    
    
    461Total interest expense
    
    
    4,605
    
    
    
    4,732
    
    
    
    13,983
    
    
    
    13,007Net interest and dividend income
    
    
    3,457
    
    
    
    3,620
    
    
    
    10,050
    
    
    
    11,080Provision for (reduction of provision for) loan losses
    
    
    
    
    
    
    
    
    
    
    (300
    )
    
    
    50Net interest and dividend income after
provision for loan losses
    
    
    3,457
    
    
    
    3,620
    
    
    
    10,350
    
    
    
    11,030Non-interest income:Deposit service charges
    
    
    263
    
    
    
    281
    
    
    
    766
    
    
    
    786Net gains from sales of investment securities
    
    
    359
    
    
    
    131
    
    
    
    647
    
    
    
    359Net gains on sales of loans
    
    
    41
    
    
    
    
    
    
    
    118
    
    
    
    59Bank owned life insurance income
    
    
    23
    
    
    
    
    
    
    
    23
    
    
    
    Other income
    
    
    100
    
    
    
    63
    
    
    
    291
    
    
    
    203Total non-interest income
    
    
    786
    
    
    
    475
    
    
    
    1,845
    
    
    
    1,407Non-interest expenses:Salaries and employee benefits
    
    
    1,983
    
    
    
    1,917
    
    
    
    6,021
    
    
    
    6,273Occupancy and equipment
    
    
    533
    
    
    
    518
    
    
    
    1,609
    
    
    
    1,565Data processing fees
    
    
    219
    
    
    
    232
    
    
    
    661
    
    
    
    720Professional fees
    
    
    186
    
    
    
    203
    
    
    
    588
    
    
    
    660Advertising and marketing
    
    
    1
    
    
    
    58
    
    
    
    8
    
    
    
    380Other expenses
    
    
    418
    
    
    
    382
    
    
    
    1,352
    
    
    
    1,346Total non-interest expenses
    
    
    3,340
    
    
    
    3,310
    
    
    
    10,239
    
    
    
    10,944Income before income taxes
    
    
    903
    
    
    
    785
    
    
    
    1,956
    
    
    
    1,493Provision for income taxes
    
    
    247
    
    
    
    271
    
    
    
    610
    
    
    $
    515Net income
    
    $
    656
    
    
    $
    514
    
    
    $
    1,346
    
    
    
    978Earnings per common share  basic (Note 8)
    
    $
    0.48
    
    
    $
    0.36
    
    
    $
    1.00
    
    
    $
    0.68Earnings per common share  diluted (Note 8)
    
    $
    0.48
    
    
    $
    0.35
    
    
    $
    0.99
    
    
    $
    0.67Weighted average common shares outstanding  basic
    
    
    1,354
    
    
    
    1,448
    
    
    
    1,347
    
    
    
    1,445Weighted average common and equivalent shares
outstanding  diluted
    
    
    1,358
    
    
    
    1,463
    
    
    
    1,354
    
    
    
    1,459
  2




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##### Table of Contents



AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    Unearned
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Compensation
    
    
    Stockholders(In Thousands)
    
    Stock
    
    
    Capital
    
    
    Income
    
    
    Income/(Loss)
    
    
    ESOP
    
    
    EquityNine Months Ended December 31, 2007Balance at March 31, 2007
    
    $
    1,640
    
    
    $
    3,479
    
    
    $
    40,394
    
    
    $
    (20
    )
    
    $
    (7,791
    )
    
    $
    37,702Net income
    
    
    
    
    
    
    
    
    
    
    1,346
    
    
    
    
    
    
    
    
    
    
    
    1,346Other comprehensive income net of tax:Unrealized gain on securities, net
of reclassification adjustment (Note 5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    251
    
    
    
    
    
    
    
    251Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,597Dividends paid ($0.54 per share)
    
    
    
    
    
    
    
    
    
    
    (761
    )
    
    
    
    
    
    
    
    
    
    
    (761
    )Stock-based compensation (Note 9)
    
    
    
    
    
    
    242
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    242Amortization of unearned compensation  ESOP
    
    
    
    
    
    
    (119
    )
    
    
    
    
    
    
    
    
    
    
    516
    
    
    
    397Balance at December 31, 2007
    
    $
    1,640
    
    
    $
    3,602
    
    
    $
    40,979
    
    
    $
    231
    
    
    $
    (7,275
    )
    
    $
    39,177
  3




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##### Table of Contents



Nine Months EndedDecember 31,(In thousands)
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    1,346
    
    
    $
    978Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    721
    
    
    
    595Amortization of premiums
    
    
    44
    
    
    
    63Provision for loan losses
    
    
    (300
    )
    
    
    50Stock-based compensation
    
    
    639
    
    
    
    443Net gains from sales of investment securities
    
    
    (647
    )
    
    
    (359
    )Bank owned life insurance income
    
    
    (23
    )
    
    
    Gain on sales of loans held for sale
    
    
    (118
    )
    
    
    (59
    )Originations of loans held for sale
    
    
    (9,713
    )
    
    
    (6,021
    )Proceeds from sale of loans originated for sale
    
    
    10,406
    
    
    
    5,370Decrease in accrued interest receivable
    
    
    371
    
    
    
    117Increase in other assets, net
    
    
    (103
    )
    
    
    (78
    )Increase in advance payments by borrowers for taxes and insurance
    
    
    112
    
    
    
    34Increase (decrease) in accrued expenses and other liabilities, net
    
    
    223
    
    
    
    (72
    )Net cash provided by operating activities
    
    
    2,958
    
    
    
    1,061Cash flows from investing activities:Loan principal (originations) collections, net
    
    
    (7,480
    )
    
    
    (40,731
    )Principal payments on mortgage-backed securities
    
    
    4,320
    
    
    
    6,349Decrease in certificate of deposit
    
    
    
    
    
    
    627Purchases of restricted equity-FHLB
    
    
    (420
    )
    
    
    Proceeds from sales of restricted equity-FHLB
    
    
    
    
    
    
    1,391Proceeds from sales of investment securities
    
    
    17,406
    
    
    
    5,266Purchases of investment securities
    
    
    (11,503
    )
    
    
    (11,549
    )Maturities and calls of investment securities
    
    
    1,999
    
    
    
    13,900Purchase of bank owned life insurance
    
    
    (6,027
    )
    
    
    Purchase of banking premises and equipment
    
    
    (125
    )
    
    
    (1,648
    )Net cash used in investing activities
    
    
    (1,830
    )
    
    
    (26,395
    )Cash flows from financing activities:Net decrease in deposits
    
    
    (33,706
    )
    
    
    (6,239
    )Proceeds from advances from FHLB of Boston
    
    
    117,800
    
    
    
    85,000Repayment of advances from FHLB of Boston
    
    
    (97,000
    )
    
    
    (65,500
    )Net short-term borrowings (repayments)
    
    
    (269
    )
    
    
    3,702Repayment of ESOP loan
    
    
    
    
    
    
    (292
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    13Tax benefit from exercise of stock options
    
    
    
    
    
    
    4Cash dividends paid
    
    
    (761
    )
    
    
    (814
    )Net cash (used in) provided by financing activities
    
    
    (13,936
    )
    
    
    15,874Net (decrease) increase in cash and cash equivalents
    
    
    (12,808
    )
    
    
    9,460Cash and cash equivalents at beginning of period
    
    
    20,617
    
    
    $
    15,263Cash and cash equivalents at end of period
    
    $
    7,809
    
    
    $
    5,803Supplementary disclosure of cash flows information:Cash paid during the period for:Interest
    
    $
    13,249
    
    
    $
    13,077Income taxes
    
    
    470
    
    
    
    645
  4




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##### Table of Contents



CENTRAL BANCORP AND SUBSIDIARY
 
 Notes to Unaudited Consolidated Financial Statements
 December 31, 2007
 (1) Basis of Presentation
    (2) Loans
  December 31,
    
    
    March 31,2007
    
    
    2007Real estate loans:Residential real estate (1-4 family)
    
    
    $172,170
    
    
    $
    175,259Commercial real estate
    
    
    244,899
    
    
    
    235,535Construction
    
    
    29,094
    
    
    
    35,011Home equity lines of credit
    
    
    6,740
    
    
    
    6,901Total real estate loans
    
    
    452,903
    
    
    
    452,706Commercial loans
    
    
    13,840
    
    
    
    6,605Consumer loans
    
    
    1,077
    
    
    
    1,231Total loans
    
    
    467,820
    
    
    
    460,542Less: allowance for loan losses
    
    
    (3,379
    )
    
    
    (3,881
    )Total loans, net
    
    
    $464,441
    
    
    $
    456,661
  5




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##### Table of Contents



Three Months EndedDecember 31,2007
    
    
    2006Balance at beginning of period
    
    $
    3,378
    
    
    $
    3,850Provision charged to expense
    
    
    
    
    
    
    Less: charge-offs
    
    
    (11
    )
    
    
    (19
    )Add: recoveries
    
    
    12
    
    
    
    16Balance at end of period
    
    $
    3,379
    
    
    $
    3,847
 Nine Months EndedDecember 31,2007
    
    
    2006Balance at beginning of period
    
    $
    3,881
    
    
    $
    3,788(Reduction of provision) provision
charged to expense
    
    
    (300
    )
    
    
    50Less: charge-offs
    
    
    (244
    )
    
    
    (39
    )Add: recoveries
    
    
    42
    
    
    
    48Balance at end of period
    
    $
    3,379
    
    
    $
    3,847
 (3) Deposits
  December 31,
    
    
    March 31,2007
    
    
    2007Demand deposit accounts
    
    
    $  35,697
    
    
    $
    40,026NOW accounts
    
    
    28,349
    
    
    
    28,591Passbook and other savings accounts
    
    
    49,793
    
    
    
    56,495Money market deposit accounts
    
    
    61,969
    
    
    
    45,586Total non-certificate accounts
    
    
    175,808
    
    
    
    170,698Term deposit certificates:Certificates of $100,000 and above
    
    
    72,458
    
    
    
    82,159Certificates of less than $100,000
    
    
    106,601
    
    
    
    135,716Total term deposit certificates
    
    
    179,059
    
    
    
    217,875Total deposits
    
    
    $354,867
    
    
    $
    388,573
 (4) Subordinated Debentures
  6




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##### Table of Contents



(5) Other Comprehensive Income (Loss)
   For the Nine Months EndedDecember 31, 2007Before-Tax
    
    
    Tax
    
    
    After-TaxAmount
    
    
    Effect
    
    
    AmountUnrealized gains (losses) on securities:Unrealized net holding gains during period
    
    $
    1,023
    
    
    $
    330
    
    
    $
    693Less: reclassification adjustment for net
gains included in net income
    
    
    647
    
    
    
    205
    
    
    
    442Other comprehensive gain
    
    $
    376
    
    
    $
    125
    
    
    $
    251
 For the Nine Months EndedDecember 31, 2006Before-Tax
    
    
    Tax
    
    
    After-TaxAmount
    
    
    Effect
    
    
    AmountUnrealized losses on securities:Unrealized net holding losses during period
    
    $
    1,864
    
    
    $
    679
    
    
    $
    1,185Less: reclassification adjustment for net
gains included in net income
    
    
    359
    
    
    
    125
    
    
    
    234Other comprehensive loss
    
    $
    1,505
    
    
    $
    554
    
    
    $
    951
 7




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##### Table of Contents



(6) Contingencies
 Legal Proceedings.
 (7) Subsequent Events
  (8) Earnings per Share (EPS)
   Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(Amounts in thousands, except per share amounts)Net income available to common shareholders
    
    $
    656
    
    
    $
    514
    
    
    $
    1,346
    
    
    $
    978Weighted average number of common shares outstanding
    
    
    1,599
    
    
    
    1,590
    
    
    
    1,593
    
    
    
    1,590Weighted average number of unallocated ESOP shares
    
    
    (245
    )
    
    
    (142
    )
    
    
    (246
    )
    
    
    (145
    )Weighted average number of common shares outstanding
used in calculation of basic earnings per share
    
    
    1,354
    
    
    
    1,448
    
    
    
    1,347
    
    
    
    1,445Incremental shares from the assumed exercise of dilutive
stock options
    
    
    4
    
    
    
    15
    
    
    
    7
    
    
    
    14Weighted average number of common shares outstanding
used in calculating diluted earnings per share
    
    
    1,358
    
    
    
    1,463
    
    
    
    1,354
    
    
    
    1,459Earnings per shareBasic
    
    $
    0.48
    
    
    $
    0.36
    
    
    $
    1.00
    
    
    $
    0.68Diluted
    
    $
    0.48
    
    
    $
    0.35
    
    
    $
    0.99
    
    
    $
    0.67
  (9) Stock-Based Compensation
  8




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9




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##### Table of Contents



Number of
    
    WeightedShares
    
    AverageShares
    
    Exercise PriceBalance at March 31, 2007
    
    
    69,121
    
    
    $
    25.411Exercised
    
    
    
    
    
    
    Cancelled
    
    
    (903
    )
    
    
    28.990Granted
    
    
    
    
    
    
    Balance at December 31, 2007
    
    
    68,218
    
    
    
    25.364
  WeightedAverageRemaining
    
    
    WeightedNumber
    
    
    Contractual
    
    
    Average
    
    
    AggregateExercise
    
    
    of Shares
    
    
    Life
    
    
    Exercise
    
    
    IntrinsicPrice
    
    
    Outstanding
    
    
    (Years)
    
    
    Price
    
    
    Value (1)$
    16.625
    
    
    
    12,077
    (2)
    
    
    2.9
    
    
    $
    16.625
    
    
    $
    42,57120.250
    
    
    
    13,745
    (2)
    
    
    1.8
    
    
    
    20.250
    
    
    
    28.990
    
    
    
    32,396
    (2)
    
    
    7.1
    
    
    
    28.990
    
    
    
    31.200
    
    
    
    10,000
    (3)
    
    
    8.7
    
    
    
    31.200
    
    
    
    Average/Total
    
    $
    25.364
    
    
    
    68,218
    
    
    
    5.6
    
    
    $
    25.364
    
    
    $
    42,571
 
 (1)
    
    Represents the total intrinsic value, based on the Companys closing stock price of $20.15 on
December 31, 2007, which would have been received by the option holders had all option holders
exercised their options as of that date.(2)
    
    Fully vested and exercisable at the time of grant.(3)
    
    Subject to vesting over five years, 20% vested at December 31, 2007.  Weighted AverageNumber of
    
    Grant DateShares
    
    Fair ValueBalance at March 31, 2007
    
    
    49,000
    
    
    $
    31.20Granted
    
    
    
    
    
    
    Vested
    
    
    9,800
    
    
    
    31.20Forfeited
    
    
    
    
    
    
    Non-vested at December 31, 2007
    
    
    39,200
    
    
    $
    31.20
 (10) Bank-Owned Life Insurance
  10




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Forward-Looking Statements
  General
     11




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##### Table of Contents



Critical Accounting Policies
   Comparison of Financial Condition at December 31, 2007 and March 31, 2007
  12




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##### Table of Contents



Comparison of Operating Results for the Quarters Ended December 31, 2007 and 2006
  13




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##### Table of Contents



Net Interest Income.
 Interest and Dividend Income.
 Interest Expense
 14




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##### Table of Contents



Three Months Ended December 31,2007
    
    
    2006Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Interest-earning assets:Mortgage loans
    
    $
    449,420
    
    
    $
    6,798
    
    
    
    6.05
    %
    
    $
    433,571
    
    
    $
    6,904
    
    
    
    6.37
    %Other loans
    
    
    14,024
    
    
    
    252
    
    
    
    7.19
    
    
    
    7,515
    
    
    
    154
    
    
    
    8.20Investment securities
    
    
    67,508
    
    
    
    950
    
    
    
    5.63
    
    
    
    101,047
    
    
    
    1,268
    
    
    
    5.02Short-term investments
    
    
    4,622
    
    
    
    62
    
    
    
    5.37
    
    
    
    2,306
    
    
    
    26
    
    
    
    4.51Total interest-earning assets
    
    
    535,574
    
    
    
    8,062
    
    
    
    6.02
    
    
    
    544,439
    
    
    
    8,352
    
    
    
    6.14Allowance for loan losses
    
    
    (3,375
    )
    
    
    
    
    
    
    
    
    
    
    (3,851
    )Non-interest-earning assets
    
    
    18,771
    
    
    
    
    
    
    
    
    
    
    
    17,414Total assets
    
    $
    550,970
    
    
    
    
    
    
    
    
    
    
    $
    558,002Interest-bearing liabilities:Deposits
    
    $
    320,709
    
    
    
    2,664
    
    
    
    3.32
    
    
    $
    344,443
    
    
    
    2,881
    
    
    
    3.35Advances from FHLB of Boston
    
    
    138,666
    
    
    
    1,726
    
    
    
    4.98
    
    
    
    123,812
    
    
    
    1,695
    
    
    
    5.48Other borrowings
    
    
    11,801
    
    
    
    215
    
    
    
    7.29
    
    
    
    7.729
    
    
    
    156
    
    
    
    8.07Total interest-bearing liabilities
    
    
    471,176
    
    
    
    4,605
    
    
    
    3.91
    
    
    
    475,984
    
    
    
    4,732
    
    
    
    3.98Non-interest-bearing liabilities
    
    
    40,953
    
    
    
    
    
    
    
    
    
    
    
    41,586Total liabilitiesStockholders equity
    
    
    38,841
    
    
    
    
    
    
    
    
    
    
    
    40,432Total liabilities and stockholders
equity
    
    $
    550,970
    
    
    
    
    
    
    
    
    
    
    $
    558,002Net interest and dividend income
    
    
    
    
    
    $
    3,457
    
    
    
    
    
    
    
    
    
    
    $
    3,620Net interest spread
    
    
    
    
    
    
    
    
    
    
    2.11
    %
    
    
    
    
    
    
    
    
    
    
    2.16
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.58
    %
    
    
    
    
    
    
    
    
    
    
    2.66
    %
 Provision for Loan Losses.
  15




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##### Table of Contents



Non-Interest Income
 Non-Interest Expenses
      16




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##### Table of Contents



Income Taxes
 Comparison of Operating Results for the Nine Months Ended December 31, 2007 and 2006
  Interest and Dividend Income.
 Interest Expense.
  17




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##### Table of Contents



Nine Months Ended December 31,2007
    
    
    2006Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Interest-earning assets:Mortgage loans
    
    $
    448,334
    
    
    $
    20,360
    
    
    
    6.06
    %
    
    $
    418,465
    
    
    $
    19,680
    
    
    
    6.27
    %Other loans
    
    
    11,354
    
    
    
    637
    
    
    
    7.48
    
    
    
    7,057
    
    
    
    427
    
    
    
    8.07Investment securities
    
    
    71,770
    
    
    
    2,715
    
    
    
    5.04
    
    
    
    102,357
    
    
    
    3,738
    
    
    
    4.87Short-term investments
    
    
    8,078
    
    
    
    321
    
    
    
    5.30
    
    
    
    6,817
    
    
    
    242
    
    
    
    4.73Total interest-earning assets
    
    
    539,536
    
    
    
    24,033
    
    
    
    5.94
    
    
    
    534,696
    
    
    
    24,087
    
    
    
    6.01Allowance for loan losses
    
    
    (3,690
    )
    
    
    
    
    
    
    
    
    
    
    (3,834
    )Noninterest-earning assets
    
    
    18,522
    
    
    
    
    
    
    
    
    
    
    
    17,235Total assets
    
    $
    554,368
    
    
    
    
    
    
    
    
    
    
    $
    548,097Interest-bearing liabilities:Deposits
    
    $
    328,640
    
    
    $
    8,263
    
    
    
    3.35
    
    
    
    353,790
    
    
    $
    8,289
    
    
    
    3.12Advances from FHLB of Boston
    
    
    134,235
    
    
    
    5,077
    
    
    
    5.04
    
    
    
    105,046
    
    
    
    4,257
    
    
    
    5.40Other borrowings
    
    
    11,946
    
    
    
    643
    
    
    
    7.18
    
    
    
    7,732
    
    
    
    461
    
    
    
    7.95Total interest-bearing
liabilities
    
    
    474,821
    
    
    
    13,983
    
    
    
    3.93
    
    
    
    466,568
    
    
    
    13,007
    
    
    
    3.72Non-interest-bearing liabilities
    
    
    41,080
    
    
    
    
    
    
    
    
    
    
    
    41,585Total liabilities
    
    
    515,901
    
    
    
    
    
    
    
    
    
    
    
    508,153Stockholders equity
    
    
    38,467
    
    
    
    
    
    
    
    
    
    
    
    39,944Total liabilities and
stockholders equity
    
    $
    554,368
    
    
    
    
    
    
    
    
    
    
    $
    548,097Net interest and dividend income
    
    
    
    
    
    $
    10,050
    
    
    
    
    
    
    
    
    
    
    $
    11,080Net interest spread
    
    
    
    
    
    
    
    
    
    
    2.01
    %
    
    
    
    
    
    
    
    
    
    
    2.29
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.48
    %
    
    
    
    
    
    
    
    
    
    
    2.76
    %
 Provision for Loan Losses.
 18




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##### Table of Contents



Non-interest Income.
  Non-interest Expenses.
      19




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##### Table of Contents



Income Taxes.
 Liquidity and Capital Resources
    Company
    
    BankTier 1 Capital (to average assets)
    
    
    8.69
    %
    
    
    7.23
    %Tier 1 Capital (to risk-weighted assets)
    
    
    11.80
    %
    
    
    9.82
    %Total Capital (to risk-weighted assets)
    
    
    12.67
    %
    
    
    10.70
    %
  Off-Balance Sheet Arrangements
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
  20




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##### Table of Contents



Part II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 3.2
    
    Amended and Restated Bylaws of Central Bancorp, Inc. (1)10.1
    
    Employment Agreement by and between Central Cooperative Bank and John D.
Doherty (2)10.2
    
    Employment Agreement by and between Central Cooperative Bank and William
P. Morrissey (2)10.3
    
    Executive Salary Continuation Agreement by and between Central
Cooperative Bank and John D. Doherty, as amended (2)10.4
    
    Executive Salary Continuation Agreement by and between Central
Cooperative Bank and William P. Morrissey, as amended (2)10.5
    
    Life Insurance Endorsement Method Split Dollar Plan Agreement (2)10.6
    
    Executive Health Insurance Plan Agreement by and between Central
Cooperative Bank and John D. Doherty (2)
 21




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##### Table of Contents



10.7
    
    Executive Health Insurance Plan Agreement by and between Central Cooperative Bank and
William P. Morrissey (2)31.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer32
    
    Section 1350 Certifications
 
 (1)
    
    Incorporated by reference to the exhibits filed with the Companys Current
Report on Form 8-K filed with the SEC on October 22, 2007.(2)
    
    Incorporated by reference to the exhibits filed with the Companys Current Report on Form 8-K
filed with the SEC on December 21, 2007. 22




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##### Table of Contents



SIGNATURES
  CENTRAL BANCORP, INC.
           RegistrantFebruary 14, 2008
    By:

/s/
John D. DohertyJohn D. DohertyChairman, President and Chief Executive OfficerFebruary 14, 2008
    By:

/s/
Paul S. FeeleyPaul S. FeeleySenior Vice President, Treasurer and
Chief Financial Officer