##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 (Mark one)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 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 organization)
    
    (I.R.S. Employer Identification No.)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
  o o þ
 o þ
 Common Stock, $1.00 par value
    
    1,639,951Class
    
    Outstanding at November 12, 2007




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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 September 30, 2007 and
March 31, 2007
    
    
    1Consolidated Statements of Income for the Three and Six Months Ended
September 30, 2007 and 2006
    
    
    2Consolidated Statements of Changes in Stockholders Equity for the Six
Months Ended September 30, 2007
    
    
    3Consolidated Statements of Cash Flows for the Six Months Ended
September 30, 2007 and 2006
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results
Of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 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 CERTIFICATION OF CHIEF EXECUTIVE OFFICEREX-31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICEREX-32 SECTION 1350 CERTIFICATIONS




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
  
   (Dollars in Thousands, Except Share Data)
    
    September 30, 2007
    
    
    March 31, 2007ASSETSCash and due from banks
    
    $
    6,932
    
    
    $
    6,147Short-term investments
    
    
    5,872
    
    
    
    14,470Cash and cash equivalents
    
    
    12,804
    
    
    
    20,617Investment securities available for sale (amortized cost of $62,915
at September 30, 2007 and $66,033 at March 31, 2007)
    
    
    63,013
    
    
    
    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
    
    
    72,375
    
    
    
    74,705Loans held for sale
    
    
    
    
    
    
    575Loans (Note 2)
    
    
    458,200
    
    
    
    460,542Less allowance for loan losses
    
    
    3,378
    
    
    
    3,881Loans, net
    
    
    454,822
    
    
    
    456,661Accrued interest receivable
    
    
    2,353
    
    
    
    2,415Banking premises and equipment, net
    
    
    4,318
    
    
    
    4,756Deferred tax asset, net
    
    
    1,967
    
    
    
    2,212Goodwill, net
    
    
    2,232
    
    
    
    2,232Other assets
    
    
    1,839
    
    
    
    1,967Total assets
    
    $
    552,710
    
    
    $
    566,140LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits (Note 3)
    
    $
    358,996
    
    
    $
    388,573Short-term borrowings
    
    
    823
    
    
    
    712Federal Home Loan Bank advances
    
    
    140,000
    
    
    
    125,000Subordinated debenture (Note 4)
    
    
    11,341
    
    
    
    11,341Advanced payments by borrowers for taxes and insurance
    
    
    1,401
    
    
    
    1,229Accrued expenses and other liabilities
    
    
    1,599
    
    
    
    1,583Total liabilities
    
    
    514,160
    
    
    
    528,438Commitments and Contingencies (Note 6)Stockholders equity (Note 7):Preferred stock $1.00 par value; 5,000,000 shares authorized; and none issued or
outstanding
    
    
    
    
    
    
    Common stock $1.00 par value; 15,000,000 shares authorized; and
1,639,951 shares issued at September 30, 2007 and March 31, 2007, respectively
    
    
    1,591
    
    
    
    1,591Additional paid-in capital
    
    
    3,622
    
    
    
    3,528Retained income
    
    
    40,578
    
    
    
    40,394Accumulated other comprehensive loss (Note 5)
    
    
    206
    
    
    
    (20
    )Unearned compensation  ESOP
    
    
    (7,447
    )
    
    
    (7,791
    )Total stockholders equity
    
    
    38,550
    
    
    
    37,702Total liabilities and stockholders equity
    
    $
    552,710
    
    
    $
    566,140
  1




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest and dividend income:Mortgage loans
    
    $
    6,753
    
    
    $
    6,630
    
    
    $
    13,562
    
    
    $
    12,771Other loans
    
    
    235
    
    
    
    146
    
    
    
    385
    
    
    
    273Short-term investments
    
    
    65
    
    
    
    121
    
    
    
    258
    
    
    
    216Investments
    
    
    880
    
    
    
    1,344
    
    
    
    1,766
    
    
    
    2,470Total interest and dividend income
    
    
    7,933
    
    
    
    8,241
    
    
    
    15,971
    
    
    
    15,730Interest expense:Deposits
    
    
    2,746
    
    
    
    2,877
    
    
    
    5,599
    
    
    
    5,409Advances from Federal Home Loan Bank of Boston
    
    
    1,727
    
    
    
    1,329
    
    
    
    3,351
    
    
    
    2,557Other borrowings
    
    
    207
    
    
    
    159
    
    
    
    428
    
    
    
    310Total interest expense
    
    
    4,680
    
    
    
    4,365
    
    
    
    9,378
    
    
    
    8,276Net interest and dividend income
    
    
    3,253
    
    
    
    3,876
    
    
    
    6,593
    
    
    
    7,454Provision for loan losses
    
    
    (300
    )
    
    
    
    
    
    
    (300
    )
    
    
    50Net interest and dividend income after
provision for loan losses
    
    
    3,553
    
    
    
    3,876
    
    
    
    6,893
    
    
    
    7,404Non-interest income:Deposit service charges
    
    
    251
    
    
    
    249
    
    
    
    503
    
    
    
    505Net gains from sales of investment securities
    
    
    172
    
    
    
    116
    
    
    
    288
    
    
    
    228Net gains on sales of loans
    
    
    25
    
    
    
    25
    
    
    
    77
    
    
    
    59Other income
    
    
    86
    
    
    
    57
    
    
    
    191
    
    
    
    145Total non-interest income
    
    
    534
    
    
    
    447
    
    
    
    1,059
    
    
    
    937Non-interest expenses:Salaries and employee benefits
    
    
    1,939
    
    
    
    2,177
    
    
    
    4,038
    
    
    
    4,356Occupancy and equipment
    
    
    526
    
    
    
    543
    
    
    
    1,076
    
    
    
    1,047Data processing fees
    
    
    219
    
    
    
    254
    
    
    
    442
    
    
    
    487Professional fees
    
    
    198
    
    
    
    220
    
    
    
    402
    
    
    
    457Advertising and marketing
    
    
    3
    
    
    
    100
    
    
    
    7
    
    
    
    322Other expenses
    
    
    498
    
    
    
    493
    
    
    
    934
    
    
    
    964Total non-interest expenses
    
    
    3,383
    
    
    
    3,787
    
    
    
    6,899
    
    
    
    7,633Income before income taxes
    
    
    704
    
    
    
    536
    
    
    
    1,053
    
    
    
    708Provision for income taxes
    
    
    239
    
    
    
    185
    
    
    
    363
    
    
    
    244Net income
    
    $
    465
    
    
    $
    351
    
    
    $
    690
    
    
    $
    464Earnings per
common share  basic (Note 8)
    
    $
    0.33
    
    
    $
    0.24
    
    
    $
    0.50
    
    
    $
    0.32Earnings per
common share  diluted (Note 8)
    
    $
    0.33
    
    
    $
    0.24
    
    
    $
    0.49
    
    
    $
    0.32Weighted
average common shares outstanding  basic
    
    
    1,394
    
    
    
    1,444
    
    
    
    1,393
    
    
    
    1,442Weighted average common and equivalent shares
outstanding  diluted
    
    
    1,399
    
    
    
    1,457
    
    
    
    1,400
    
    
    
    1,455
  2




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##### Table of Contents



AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    Unearned
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Compensation
    
    
    Stockholders(In Thousands)
    
    Stock
    
    
    Capital
    
    
    Income
    
    
    Loss
    
    
    ESOP
    
    
    EquitySix Months Ended September 30, 2007Balance at March 31, 2007
    
    $
    1,591
    
    
    $
    3,528
    
    
    $
    40,394
    
    
    $
    (20
    )
    
    $
    (7,791
    )
    
    $
    37,702Net income
    
    
    
    
    
    
    
    
    
    
    690
    
    
    
    
    
    
    
    
    
    
    
    690Other comprehensive income net of tax:Unrealized loss on securities, net
of reclassification adjustment (Note 5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    226
    
    
    
    
    
    
    
    226Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    916Dividends paid ($0.36 per share)
    
    
    
    
    
    
    
    
    
    
    (506
    )
    
    
    
    
    
    
    
    
    
    
    (506
    )Stock option expense (Note 9)
    
    
    
    
    
    
    161
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161Amortization
of unearned compensation  ESOP
    
    
    
    
    
    
    (67
    )
    
    
    
    
    
    
    
    
    
    
    344
    
    
    
    277Balance at September 30, 2007
    
    $
    1,591
    
    
    $
    3,622
    
    
    $
    40,578
    
    
    $
    206
    
    
    $
    (7,447
    )
    
    $
    38,550
  3




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##### Table of Contents



Six Months EndedSeptember 30,(In thousands)
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    690
    
    
    $
    464Adjustments
to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    483
    
    
    
    379Amortization of premiums
    
    
    34
    
    
    
    49Provision for loan losses
    
    
    (300
    )
    
    
    50Stock-based compensation
    
    
    438
    
    
    
    256Net gains from sales of investment securities
    
    
    (288
    )
    
    
    (228
    )Gain on sales of loans held for sale
    
    
    (77
    )
    
    
    (59
    )Originations of loans held for sale
    
    
    (5,814
    )
    
    
    (5,266
    )Proceeds from sale of loans originated for sale
    
    
    6,466
    
    
    
    5,370Decrease in accrued interest receivable
    
    
    62
    
    
    
    123Decrease in other assets, net
    
    
    231
    
    
    
    76Increase in advance payments by borrowers for taxes and insurance
    
    
    172
    
    
    
    94Increase (decrease) in accrued expenses and other liabilities, net
    
    
    16
    
    
    
    (344
    )Net cash provided by (used by) operating activities
    
    
    2,113
    
    
    
    964Cash flows from investing activities:Decrease (increase) in loans
    
    
    2,139
    
    
    
    (19,370
    )Principal payments on mortgage-backed securities
    
    
    3,110
    
    
    
    4,430Purchases of restricted equity-FHLB
    
    
    (420
    )
    
    
    (385
    )Proceeds from sales of restricted equity-FHLB
    
    
    
    
    
    
    2,367Proceeds from sales of investment securities
    
    
    3,145
    
    
    
    3,550Purchases of investment securities
    
    
    (2,883
    )
    
    
    (10,020
    )Maturities and calls of investment securities
    
    
    
    
    
    
    6,900Purchase of banking premises and equipment
    
    
    (45
    )
    
    
    (1,429
    )Net cash provided by (used in) investing activities
    
    
    5,046
    
    
    
    (13,957
    )Cash flows from financing activities:Decrease in deposits
    
    
    (29,577
    )
    
    
    (4,666
    )Proceeds from advances from FHLB of Boston
    
    
    90,000
    
    
    
    56,000Repayment of advances from FHLB of Boston
    
    
    (75,000
    )
    
    
    (43,000
    )Increase in short-term borrowings
    
    
    111
    
    
    
    6Repayment of ESOP loan
    
    
    
    
    
    
    (195
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    13Tax benefit from exercise of stock options
    
    
    
    
    
    
    4Dividends paid, net
    
    
    (506
    )
    
    
    (518
    )Net cash (used by) provided by financing activities
    
    
    (14,972
    )
    
    
    7,644Net decrease in cash and cash equivalents
    
    
    (7,813
    )
    
    
    (5,349
    )Cash and cash equivalents at beginning of year
    
    
    20,617
    
    
    
    15,263Cash and cash equivalents at end of period
    
    $
    12,804
    
    
    $
    9,914Supplementary disclosure of cash flows information:Cash paid during the period for:Interest
    
    $
    8,862
    
    
    $
    8,287Income taxes
    
    $
    340
    
    
    $
    578
  4




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##### Table of Contents



CENTRAL BANCORP AND SUBSIDIARY
 
 Notes to Unaudited Consolidated Financial Statements
 September 30, 2007
 (1) Basis of Presentation
    (2) Loans
  September 30,
    
    
    March 31,2007
    
    
    2007Real estate loans:Residential real estate (1-4 family)
    
    $
    175,180
    
    
    $
    175,259Commercial real estate
    
    
    237,333
    
    
    
    235,535Construction
    
    
    26,017
    
    
    
    35,011Home equity lines of credit
    
    
    6,922
    
    
    
    6,901Total real estate loans
    
    
    445,452
    
    
    
    452,706Commercial loans
    
    
    11,634
    
    
    
    6,605Consumer loans
    
    
    1,114
    
    
    
    1,231Total loans
    
    
    458,200
    
    
    
    460,542Less: allowance for loan losses
    
    
    (3,378
    )
    
    
    (3,881
    )Total loans, net
    
    $
    454,822
    
    
    $
    456,661
  5




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##### Table of Contents



Three Months EndedSeptember 30,2007
    
    
    2006Balance at beginning of period
    
    $
    3,848
    
    
    $
    3,843Provision charged to expense
    
    
    (300
    )
    
    
    Less: charge-offs
    
    
    (187
    )
    
    
    (12
    )Add: recoveries
    
    
    17
    
    
    
    19Balance at end of period
    
    $
    3,378
    
    
    $
    3,850
 Six Months EndedSeptember 30,2007
    
    
    2006Balance at beginning of period
    
    $
    3,881
    
    
    $
    3,788Provision charged to expense
    
    
    (300
    )
    
    
    50Less: charge-offs
    
    
    (233
    )
    
    
    (20
    )Add: recoveries
    
    
    30
    
    
    
    32Balance at end of period
    
    $
    3,378
    
    
    $
    3,850
 (3) Deposits
  September 30,
    
    
    March 31,2007
    
    
    2007Demand deposit accounts
    
    $
    38,474
    
    
    $
    40,026NOW accounts
    
    
    29,310
    
    
    
    28,591Passbook and other savings accounts
    
    
    51,696
    
    
    
    56,495Money market deposit accounts
    
    
    58,444
    
    
    
    45,586Total non-certificate accounts
    
    
    177,924
    
    
    
    170,698Term deposit certificates:Certificates of $100,000 and above
    
    
    67,467
    
    
    
    82,159Certificates of less than $100,000
    
    
    113,605
    
    
    
    135,716Total term deposit certificates
    
    
    181,072
    
    
    
    217,875Total deposits
    
    $
    358,996
    
    
    $
    388,573
 (4) Subordinated Debentures
  6




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##### Table of Contents



(5) Other Comprehensive Income (Loss)
   For the Six Months EndedSeptember 30, 2007Before-Tax
    
    
    Tax
    
    
    After-TaxAmount
    
    
    Effect
    
    
    AmountUnrealized gains (losses) on securities:Unrealized net holding gains during period
    
    $
    656
    
    
    $
    241
    
    
    $
    415Less: reclassification adjustment for net
gains included in net income
    
    
    288
    
    
    
    99
    
    
    
    189Other comprehensive gain
    
    $
    368
    
    
    $
    142
    
    
    $
    226
 For the Six Months EndedSeptember 30, 2006Before-Tax
    
    
    Tax
    
    
    After-TaxAmount
    
    
    Effect
    
    
    AmountUnrealized gains (losses) on securities:Unrealized net holding gains during period
    
    $
    1,311
    
    
    $
    469
    
    
    $
    842Less: reclassification adjustment for net
gains included in net income
    
    
    228
    
    
    
    79
    
    
    
    149Other comprehensive gain
    
    $
    1,083
    
    
    $
    390
    
    
    $
    693
 7




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##### Table of Contents



(6) Contingencies
 Legal Proceedings.
 (7) Subsequent Events
  (8) Earnings per Share (EPS)
   Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(Amounts in thousands, except per share amounts)Net income available to common shareholders
    
    $
    465
    
    
    $
    351
    
    
    $
    690
    
    
    $
    464Weighted average number of common shares outstanding
    
    
    1,640
    
    
    
    1,591
    
    
    
    1,640
    
    
    
    1,591Weighted average number of unallocated ESOP shares
    
    
    (246
    )
    
    
    (147
    )
    
    
    (247
    )
    
    
    (149
    )Weighted average number of common shares outstanding
used in calculation of basic earnings per share
    
    
    1,394
    
    
    
    1,444
    
    
    
    1,393
    
    
    
    1,442Incremental shares from the assumed exercise of dilutive
stock options
    
    
    5
    
    
    
    13
    
    
    
    7
    
    
    
    13Weighted average number of common shares outstanding
used in calculating diluted earnings per share
    
    
    1,399
    
    
    
    1,457
    
    
    
    1,400
    
    
    
    1,455Earnings per shareBasic
    
    $
    0.33
    
    
    $
    0.24
    
    
    $
    0.50
    
    
    $
    0.32Diluted
    
    $
    0.33
    
    
    $
    0.24
    
    
    $
    0.49
    
    
    $
    0.32
  (9) Stock-Based Compensation
  8




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9




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##### Table of Contents



Number of
    
    
    WeightedShares
    
    
    Exercise PriceBalance at March 31, 2007
    
    
    69,121
    
    
    $
    25.411Exercised
    
    
    0Cancelled
    
    
    (903
    )
    
    
    28.990Granted
    
    
    0Balance at September 30, 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)
    
    
    3.2
    
    
    $
    16.625
    
    
    $
    76,99120.250
    
    
    
    13,745
    (2)
    
    
    2.1
    
    
    
    20.250
    
    
    
    37,79928.990
    
    
    
    32,396
    (2)
    
    
    7.4
    
    
    
    28.990
    
    
    
    31.200
    
    
    
    10,000
    (3)
    
    
    8.9
    
    
    
    31.200
    
    
    
    Average/Total
    
    $
    25.364
    
    
    
    68,218
    
    
    
    5.9
    
    
    $
    25.364
    
    
    $
    114,790
 
 (1)
    
    Represents the total intrinsic value, based on the Companys closing stock price of $23.00 on
September 30, 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, 0% vested at September 30, 2007. 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Forward-Looking Statements
  10




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www.sec.gov
 General
      Critical Accounting Policies
   11




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##### Table of Contents



Comparison of Financial Condition at September 30, 2007 and March 31, 2007
    12




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##### Table of Contents



Comparison of Operating Results for the Quarters Ended September 30, 2007 and 2006
  Net Interest Income.
 Interest and Dividend Income.
 Interest Expense
 13




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##### Table of Contents



Three Months Ended September 30,2007
    
    
    2006Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Interest-earning assets:Mortgage loans
    
    $
    447,721
    
    
    $
    6,753
    
    
    
    6.03
    %
    
    $
    415,562
    
    
    $
    6,630
    
    
    
    6.38
    %Other loans
    
    
    10,991
    
    
    
    235
    
    
    
    8.55
    
    
    
    7,228
    
    
    
    146
    
    
    
    8.08Investment securities
    
    
    72,753
    
    
    
    880
    
    
    
    4.84
    
    
    
    100,303
    
    
    
    1,344
    
    
    
    5.36Short-term investments
    
    
    4,978
    
    
    
    65
    
    
    
    5.22
    
    
    
    9,004
    
    
    
    121
    
    
    
    5.38Total interest-earning assets
    
    
    536,443
    
    
    
    7,933
    
    
    
    5.92
    
    
    
    532,097
    
    
    
    8,241
    
    
    
    6.20Allowance for loan losses
    
    
    (3,844
    )
    
    
    
    
    
    
    
    
    
    
    (3,844
    )Non-interest-earning assets
    
    
    18,734
    
    
    
    
    
    
    
    
    
    
    
    18,632Total assets
    
    $
    551,333
    
    
    
    
    
    
    
    
    
    
    $
    546,885Interest-bearing liabilities:Deposits
    
    $
    328,204
    
    
    
    2,746
    
    
    
    3.35
    
    
    $
    360,475
    
    
    
    2,877
    
    
    
    3.19Advances from FHLB of Boston
    
    
    131,736
    
    
    
    1,727
    
    
    
    5.24
    
    
    
    96,176
    
    
    
    1,329
    
    
    
    5.53Other borrowings
    
    
    12,028
    
    
    
    207
    
    
    
    6.88
    
    
    
    8,486
    
    
    
    159
    
    
    
    7.49Total interest-bearing liabilities
    
    
    471,968
    
    
    
    4,680
    
    
    
    3.97
    
    
    
    465,137
    
    
    
    4,365
    
    
    
    3.75Non-interest-bearing liabilities
    
    
    41,229
    
    
    
    
    
    
    
    
    
    
    
    42,213Total liabilities
    
    
    513,197
    
    
    
    
    
    
    
    
    
    
    
    507,350Stockholders equity
    
    
    38,136
    
    
    
    
    
    
    
    
    
    
    
    39,535Total liabilities and stockholders
equity
    
    $
    551,333
    
    
    
    
    
    
    
    
    
    
    $
    546,885Net interest and dividend income
    
    
    
    
    
    $
    3,253
    
    
    
    
    
    
    
    
    
    
    $
    3,876Net interest spread
    
    
    
    
    
    
    
    
    
    
    1.95
    %
    
    
    
    
    
    
    
    
    
    
    2.45
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.43
    %
    
    
    
    
    
    
    
    
    
    
    2.91
    %
 Provision for Loan Losses.
 14




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##### Table of Contents



Non-Interest Income
 Non-Interest Expenses
      Income Taxes
 15




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##### Table of Contents



Comparison of Operating Results for the Six Months Ended September 30, 2007 and 2006
  Interest and Dividend Income.
 Interest Expense.
  16




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##### Table of Contents



Six Months Ended September 30,2007
    
    
    2006Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Interest-earning assets:Mortgage loans
    
    $
    448,400
    
    
    $
    13,562
    
    
    
    6.05
    %
    
    $
    410,871
    
    
    $
    12,771
    
    
    
    6.22
    %Other loans
    
    
    9,358
    
    
    
    385
    
    
    
    8.23
    
    
    
    6,826
    
    
    
    273
    
    
    
    8.00Investment securities
    
    
    73,581
    
    
    
    1,766
    
    
    
    4.80
    
    
    
    101,159
    
    
    
    2,470
    
    
    
    4.88Short-term investments
    
    
    9,239
    
    
    
    258
    
    
    
    5.59
    
    
    
    9,085
    
    
    
    216
    
    
    
    4.76Total interest-earning assets
    
    
    540,578
    
    
    
    15,971
    
    
    
    5.91
    
    
    
    527,941
    
    
    
    15,730
    
    
    
    5.96Allowance for loan losses
    
    
    (3,849
    )
    
    
    
    
    
    
    
    
    
    
    (3,825
    )Noninterest-earning assets
    
    
    18,908
    
    
    
    
    
    
    
    
    
    
    
    19,001Total assets
    
    $
    555,637
    
    
    
    
    
    
    
    
    
    
    $
    543,117Interest-bearing liabilities:Deposits
    
    $
    334,023
    
    
    $
    5,599
    
    
    
    3.35
    
    
    $
    358,489
    
    
    $
    5,409
    
    
    
    3.02Advances from FHLB of Boston
    
    
    130,050
    
    
    
    3,351
    
    
    
    5.15
    
    
    
    95,146
    
    
    
    2,557
    
    
    
    5.37Other borrowings
    
    
    12,081
    
    
    
    428
    
    
    
    7.09
    
    
    
    8,199
    
    
    
    310
    
    
    
    7.56Total interest-bearing liabilities
    
    
    476,154
    
    
    
    9,378
    
    
    
    3.94
    
    
    
    461,834
    
    
    
    8,276
    
    
    
    3.58Non-interest-bearing liabilities
    
    
    41,492
    
    
    
    
    
    
    
    
    
    
    
    41,863Total liabilities
    
    
    517,646
    
    
    
    
    
    
    
    
    
    
    
    503,697Stockholders equity
    
    
    37,991
    
    
    
    
    
    
    
    
    
    
    
    39,420Total
liabilities and stockholders equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    543,117$
    555,637Net interest and dividend income
    
    
    
    
    
    $
    6,593
    
    
    
    
    
    
    
    
    
    
    $
    7,454Net interest spread
    
    
    
    
    
    
    
    
    
    
    1.97
    %
    
    
    
    
    
    
    
    
    
    
    2.38
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.44
    %
    
    
    
    
    
    
    
    
    
    
    2.82
    %
 Provision for Loan Losses.
 17




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##### Table of Contents



Non-interest Income.
  Non-interest Expenses.
      Income Taxes.
 18




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##### Table of Contents



Liquidity and Capital Resources
    Company
    
    BankTier 1 Capital (to average assets)
    
    8.58%
    
    7.09%Tier 1 Capital (to risk-weighted assets)
    
    11.95%
    
    9.90%Total Capital (to risk-weighted assets)
    
    12.86%
    
    10.81%
  Off-Balance Sheet Arrangements
   Item 3. Quantitative and Qualitative Disclosures About Market Risk
    19




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##### Table of Contents



September 30,
    
    March 31,2007
    
    2007Amount
    
    % Change
    
    Amount
    
    % Change(Dollars in thousands)200 basis point increase in rates
    
    $
    (1,597
    )
    
    
    (11.68
    )%
    
    $
    (1,956
    )
    
    
    (13.39
    )%200 basis point decrease in rates
    
    
    340
    
    
    
    2.48
    
    
    
    320
    
    
    
    2.19
  
 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
   ELECTION OF DIRECTORS
    
    FOR
    
    WITHHELDJohn D. Doherty
    
    
    1,219,702
    
    
    
    329,592Gregory W. Boulos
    
    
    1,224,032
    
    
    
    329,592Albert J. Mercuri, Jr.
    
    
    1,224,032
    
    
    
    329,592
  
 Item 5. Other Information
  
 Item 6. Exhibits
 3.2
    
    Amended and Restated Bylaws of Central Bancorp, Inc. (Incorporated by
reference to the Exhibits filed with the Companys Form 8-K filed with the SEC on
October 22, 2007.)31.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer32
    
    Section 1350 Certifications
 21




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##### Table of Contents



SIGNATURES
  CENTRAL BANCORP, INC.
               RegistrantNovember 14, 2007
    By:

/s/
John D. DohertyJohn D. DohertyChairman, President and Chief Executive OfficerNovember 14, 2007
    By:

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