##### 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 December 31, 2010
 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
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
 Common Stock, $1.00 par value
    
    1,667,151Class
    
    Outstanding at February 11, 2011




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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, 2010 and
March 31, 2010
    
    
    1Consolidated Statements of Income for the Three and Nine Months Ended
December 31, 2010 and 2009
    
    
    2Consolidated Statements of Changes in Stockholders Equity for the
Nine Months Ended December 31, 2010 and 2009
    
    
    3Consolidated Statements of Cash Flows for the Nine Months Ended
December 31, 2010 and 2009
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    38Item 4. Controls and Procedures
    
    
    38Part II. Other InformationItem 1. Legal Proceedings
    
    
    39Item 1A. Risk Factors
    
    
    39Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    39Item 3. Defaults Upon Senior Securities
    
    
    39Item 4. [Removed and Reserved]
    
    
    39Item 5. Other Information
    
    
    39Item 6. Exhibits
    
    
    39SignaturesEX-31.1EX-31.2EX-32




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 CENTRAL BANCORP, INC. AND SUBSIDIARY
 
 Consolidated Statements of Financial Condition  (Unaudited)
 (In Thousands, Except Share and Per Share Data)
    
    December 31, 2010
    
    
    March 31, 2010ASSETSCash and due from banks
    
    $
    3,852
    
    
    $
    4,328Short-term investments
    
    
    47,267
    
    
    
    12,208Cash and cash equivalents
    
    
    51,119
    
    
    
    16,536Investment securities available for sale, at fair value (Note 2)
    
    
    28,253
    
    
    
    34,368Stock in Federal Home Loan Bank of Boston, at cost (Note 2)
    
    
    8,518
    
    
    
    8,518The Co-operative Central Bank Reserve Fund, at cost
    
    
    1,576
    
    
    
    1,576Total investments
    
    
    38,347
    
    
    
    44,462Loans held for sale, at fair value
    
    
    410
    
    
    
    392Loans (Note 3)
    
    
    405,180
    
    
    
    461,510Less allowance for loan losses
    
    
    (3,748
    )
    
    
    (3,038
    )Loans, net
    
    
    401,432
    
    
    
    458,472Accrued interest receivable
    
    
    1,416
    
    
    
    1,896Banking premises and equipment, net
    
    
    2,851
    
    
    
    2,759Deferred tax asset, net
    
    
    3,302
    
    
    
    4,681Other real estate owned
    
    
    132
    
    
    
    60Goodwill, net
    
    
    2,232
    
    
    
    2,232Bank owned life insurance (Note 11)
    
    
    6,905
    
    
    
    6,686Other assets
    
    
    4,185
    
    
    
    4,268Total assets
    
    $
    512,331
    
    
    $
    542,444LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits (Note 4)
    
    $
    325,152
    
    
    $
    339,169Federal Home Loan Bank advances
    
    
    126,382
    
    
    
    143,469Subordinated debentures (Note 5)
    
    
    11,341
    
    
    
    11,341Advanced payments by borrowers for taxes and insurance
    
    
    1,605
    
    
    
    1,649Accrued expenses and other liabilities
    
    
    1,220
    
    
    
    1,703Total liabilities
    
    
    465,700
    
    
    
    497,331Commitments and Contingencies (Note 7)Stockholders equity:Preferred stock  Series A Cumulative Perpetual, $1.00 par value;
5,000,000 shares authorized; 10,000 shares issued and outstanding, with a
liquidation preference and redemption value of $10,063,889 at December
31, 2010 and March 31, 2010
    
    
    9,677
    
    
    
    9,589Common stock $1.00 par value; 15,000,000 shares authorized; and 1,667,151
shares issued and outstanding at December 31, 2010 and March 31, 2010,
respectively
    
    
    1,667
    
    
    
    1,667Additional paid-in capital
    
    
    4,268
    
    
    
    4,291Retained income
    
    
    35,279
    
    
    
    34,482Accumulated other comprehensive income (Note 6)
    
    
    950
    
    
    
    810Unearned compensation  ESOP
    
    
    (5,210
    )
    
    
    (5,726
    )Total stockholders equity
    
    
    46,631
    
    
    
    45,113Total liabilities and stockholders equity
    
    $
    512,331
    
    
    $
    542,444
 See accompanying notes to unaudited consolidated financial statements.
 
 1




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##### Table of Contents



CENTRAL BANCORP, INC. AND SUBSIDIARY
 
 Consolidated Statements of Income
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,(In Thousands, Except Share and Per Share Data)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Interest and dividend income:Mortgage loans
    
    $
    5,746
    
    
    $
    6,689
    
    
    $
    18,423
    
    
    $
    20,101Other loans
    
    
    49
    
    
    
    74
    
    
    
    183
    
    
    
    249Investments
    
    
    365
    
    
    
    317
    
    
    
    984
    
    
    
    1,109Short-term investments
    
    
    27
    
    
    
    8
    
    
    
    47
    
    
    
    41Total interest and dividend income
    
    
    6,187
    
    
    
    7,088
    
    
    
    19,637
    
    
    
    21,500Interest expense:Deposits
    
    
    573
    
    
    
    896
    
    
    
    1,962
    
    
    
    3,696Advances from Federal Home Loan Bank of Boston
    
    
    1,226
    
    
    
    1,675
    
    
    
    3,837
    
    
    
    4,954Other borrowings
    
    
    140
    
    
    
    140
    
    
    
    420
    
    
    
    440Total interest expense
    
    
    1,939
    
    
    
    2,711
    
    
    
    6,219
    
    
    
    9,090Net interest and dividend income
    
    
    4,248
    
    
    
    4,377
    
    
    
    13,418
    
    
    
    12,410Provision for loan losses
    
    
    300
    
    
    
    100
    
    
    
    900
    
    
    
    350Net interest and dividend income after
provision for loan losses
    
    
    3,948
    
    
    
    4,277
    
    
    
    12,518
    
    
    
    12,060Noninterest income:Deposit service charges
    
    
    266
    
    
    
    265
    
    
    
    777
    
    
    
    752Net gain (loss) from sales and write-downs
of investment securities
    
    
    13
    
    
    
    (81
    )
    
    
    (170
    )
    
    
    (81
    )Net gains on sales of loans
    
    
    111
    
    
    
    63
    
    
    
    241
    
    
    
    244Bank owned life insurance
    
    
    75
    
    
    
    76
    
    
    
    219
    
    
    
    228Other
    
    
    87
    
    
    
    56
    
    
    
    305
    
    
    
    181Total noninterest income
    
    
    552
    
    
    
    379
    
    
    
    1,372
    
    
    
    1,324Noninterest expenses:Salaries and employee benefits
    
    
    2,292
    
    
    
    2,021
    
    
    
    6,784
    
    
    
    5,969Occupancy and equipment
    
    
    523
    
    
    
    552
    
    
    
    1,548
    
    
    
    1,639Data processing fees
    
    
    212
    
    
    
    222
    
    
    
    629
    
    
    
    637Professional fees
    
    
    233
    
    
    
    201
    
    
    
    730
    
    
    
    569FDIC deposit premiums
    
    
    139
    
    
    
    489
    
    
    
    426
    
    
    
    969Advertising and marketing
    
    
    24
    
    
    
    70
    
    
    
    121
    
    
    
    154Other expenses
    
    
    402
    
    
    
    428
    
    
    
    1,268
    
    
    
    1,453Total noninterest expenses
    
    
    3,825
    
    
    
    3,983
    
    
    
    11,506
    
    
    
    11,390Income before income taxes
    
    
    675
    
    
    
    673
    
    
    
    2,384
    
    
    
    1,994Provision for income taxes
    
    
    330
    
    
    
    307
    
    
    
    900
    
    
    
    726Net income
    
    $
    345
    
    
    $
    366
    
    
    $
    1,484
    
    
    $
    1,268Net income available to common shareholders
    
    $
    191
    
    
    $
    213
    
    
    $
    1,021
    
    
    $
    809Earnings per common share  basic (Note 9)
    
    $
    0.13
    
    
    $
    0.15
    
    
    $
    0.68
    
    
    $
    0.56Earnings per common share  diluted (Note 9)
    
    $
    0.12
    
    
    $
    0.14
    
    
    $
    0.64
    
    
    $
    0.54Weighted average common shares outstanding  basic
    
    
    1,505,873
    
    
    
    1,457,136
    
    
    
    1,500,497
    
    
    
    1,451,780Weighted average common and equivalent shares
outstanding diluted
    
    
    1,633,165
    
    
    
    1,511,806
    
    
    
    1,608,120
    
    
    
    1,487,318
 See accompanying notes to unaudited consolidated financial statements.
 2




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CENTRAL BANCORP, INC. AND SUBSIDIARY
 
 Consolidated Statements of Changes in Stockholders Equity
 (Unaudited)
 (In Thousands, Except Share and Per Share Data)
 Number ofShares of
    
    
    
    
    
    
    Number of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedSeries A
    
    
    Series A
    
    
    Shares of
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    Unearned
    
    
    TotalPreferred
    
    
    Preferred
    
    
    Common
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Compensation-
    
    
    StockholdersStock
    
    
    Stock
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Income
    
    
    Income
    
    
    ESOP
    
    
    EquityNine Months Ended December 31, 2009Balance at March 31, 2009
    
    
    10,000
    
    
    $
    9,476
    
    
    
    1,639,951
    
    
    $
    1,640
    
    
    $
    4,371
    
    
    $
    33,393
    
    
    $
    (2,226
    )
    
    $
    (6,415
    )
    
    $
    40,239Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,268
    
    
    
    
    
    
    
    
    
    
    
    1,268Other comprehensive gain, net of tax expense of $1,503:Unrealized gain on securities, net
of reclassification adjustment (Note 6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,302
    
    
    
    
    
    
    
    2,302Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,570Dividends paid to common stockholders
($0.15 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (219
    )
    
    
    
    
    
    
    
    
    
    
    (219
    )Preferred stock accretion of discount and
issuance costs
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (83
    )
    
    
    
    
    
    
    
    
    
    
    Dividends paid on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (375
    )
    
    
    
    
    
    
    
    
    
    
    (375
    )Forfeiture of restricted common stock
    
    
    
    
    
    
    
    
    
    
    (2,800
    )
    
    
    (3
    )
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation (Note 10)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    237
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    237Amortization of unearned compensation  ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (397
    )
    
    
    
    
    
    
    
    
    
    
    517
    
    
    
    120Balance at December 31, 2009
    
    
    10,000
    
    
    $
    9,559
    
    
    
    1,637,151
    
    
    $
    1,637
    
    
    $
    4,214
    
    
    $
    33,984
    
    
    $
    76
    
    
    $
    (5,898
    )
    
    $
    43,572Nine Months Ended December 31, 2010Balance at March 31, 2010
    
    
    10,000
    
    
    $
    9,589
    
    
    
    1,667,151
    
    
    $
    1,667
    
    
    $
    4,291
    
    
    $
    34,482
    
    
    $
    810
    
    
    $
    (5,726
    )
    
    $
    45,113Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,484
    
    
    
    
    
    
    
    
    
    
    
    1,484Other
comprehensive gain, net of tax expense of $90:Unrealized gain on securities, net
of reclassification adjustment (Note 6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    140
    
    
    
    
    
    
    
    140Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,623Dividends paid to common stockholders
($0.15 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (224
    )
    
    
    
    
    
    
    
    
    
    
    (224
    )Preferred stock accretion of discount and
issuance costs
    
    
    
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88
    )
    
    
    
    
    
    
    Dividends paid on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (375
    )
    
    
    
    
    
    
    
    
    
    
    (375
    )Stock-based compensation (Note 10)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302Amortization of unearned compensation  ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (325
    )
    
    
    
    
    
    
    
    
    
    
    516
    
    
    
    191Balance at December 31, 2010
    
    
    10,000
    
    
    $
    9,677
    
    
    
    1,667,151
    
    
    $
    1,667
    
    
    $
    4,268
    
    
    $
    35,279
    
    
    $
    950
    
    
    $
    (5,210
    )
    
    $
    46,631
 See accompanying notes to unaudited consolidated financial statements.
 3




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##### Table of Contents



CENTRAL BANCORP, INC. AND SUBSIDIARY
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 Nine Months EndedDecember 31,(In thousands)
    
    2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    1,484
    
    
    $
    1,268Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    470
    
    
    
    597Amortization of premiums
    
    
    179
    
    
    
    250Provision for loan losses
    
    
    900
    
    
    
    350Deferred tax provision
    
    
    1,289
    
    
    
    92Stock-based compensation and amortization of unearned compensation  ESOP
    
    
    493
    
    
    
    357Net losses from sales and write-downs of investment securities
    
    
    170
    
    
    
    81Bank-owned life insurance income
    
    
    (219
    )
    
    
    (228
    )(Gain) loss on sale of OREO
    
    
    (2
    )
    
    
    60Gains on sales of loans held for sale
    
    
    (241
    )
    
    
    (244
    )Originations of loans held for sale
    
    
    (20,621
    )
    
    
    (31,673
    )Proceeds from sale of loans originated for sale
    
    
    20,844
    
    
    
    31,913Decrease in accrued interest receivable
    
    
    480
    
    
    
    93Decrease (increase) in other assets, net
    
    
    83
    
    
    
    (1,494
    )(Decrease) increase in advance payments by borrowers for taxes and insurance
    
    
    (44
    )
    
    
    127Decrease in accrued expenses and other liabilities, net
    
    
    (483
    )
    
    
    (184
    )Net cash provided by operating activities
    
    
    4,782
    
    
    
    1,365Cash flows from investing activities:Loan principal collections (originations), net
    
    
    56,008
    
    
    
    (7,758
    )Principal payments on mortgage-backed securities
    
    
    7,129
    
    
    
    10,412Proceeds from sales of investment securities
    
    
    2,090
    
    
    
    Purchases of investment securities
    
    
    (3,223
    )
    
    
    (11,026
    )Maturities and calls of investment securities
    
    
    
    
    
    
    1,500Proceeds from sales of OREO
    
    
    62
    
    
    
    2,926Purchase of banking premises and equipment
    
    
    (562
    )
    
    
    (81
    )Net cash provided (used in) by investing activities
    
    
    61,504
    
    
    
    (4,027
    )Cash flows from financing activities:Net decrease in deposits
    
    
    (14,017
    )
    
    
    (30,593
    )(Repayment of) proceeds from advances from FHLB of Boston
    
    
    (17,087
    )
    
    
    10,915Repayments of short-term borrowings
    
    
    
    
    
    
    (1,014
    )Cash dividends paid
    
    
    (599
    )
    
    
    (594
    )Net cash used in financing activities
    
    
    (31,703
    )
    
    
    (21,286
    )Net increase (decrease) in cash and cash equivalents
    
    
    34,583
    
    
    
    (23,948
    )Cash and cash equivalents at beginning of period
    
    
    16,536
    
    
    
    42,422Cash and cash equivalents at end of period
    
    $
    51,119
    
    
    $
    18,474Cash paid during the period for:Interest
    
    $
    6,312
    
    
    $
    9,097Income taxes
    
    
    
    
    
    
    Supplemental disclosure of non-cash investing and financing activities:Loans transferred to other real estate owned
    
    
    132
    
    
    
    77Accretion of Series A preferred stock issuance costs
    
    
    88
    
    
    
    83
 See accompanying notes to unaudited consolidated financial statements
 4




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##### Table of Contents



CENTRAL BANCORP AND SUBSIDIARY
 
 Notes to Unaudited Consolidated Financial Statements
 December 31, 2010
 (1) Basis of Presentation
  Transfers and Servicing
  Loans.
    5




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##### Table of Contents



Receivables
  Allowance for Loan Losses.
  Contingencies
 6




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##### Table of Contents



n     Apartmentsn     Officesn     Retailn     Mixed Usen     Industrial/Other
       7




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##### Table of Contents



Accounting for Goodwill and Impairment . Intangibles  Goodwill and Other e.g
 (2) Investments
  December 31, 2010Amortized
    
    
    Gross Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value( In Thousands)Government agency and government sponsored
agency mortgage-backed securities
    
    $
    20,176
    
    
    $
    868
    
    
    $
    (41
    )
    
    $
    21,003Trust preferred securities
    
    
    1,002
    
    
    
    71
    
    
    
    
    
    
    
    1,073Total debt securities
    
    
    21,178
    
    
    
    939
    
    
    
    (41
    )
    
    
    22,076Preferred stock
    
    
    3,073
    
    
    
    60
    
    
    
    (133
    )
    
    
    3,000Common stock
    
    
    2,780
    
    
    
    514
    
    
    
    (117
    )
    
    
    3,177Total
    
    $
    27,031
    
    
    $
    1,513
    
    
    $
    (291
    )
    
    $
    28,253
  March 31, 2010Amortized
    
    
    Gross Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(In Thousands)Corporate bonds
    
    $
    1,752
    
    
    $
    
    
    
    $
    
    
    
    $
    1,752Government agency and government sponsored
agency mortgage-backed securities
    
    
    24,253
    
    
    
    752
    
    
    
    (12
    )
    
    
    24,993Trust preferred securities
    
    
    1,002
    
    
    
    43
    
    
    
    
    
    
    
    1,045Total debt securities
    
    
    27,007
    
    
    
    795
    
    
    
    (12
    )
    
    
    27,790Preferred stock
    
    
    3,394
    
    
    
    56
    
    
    
    (195
    )
    
    
    3,255Common stock
    
    
    2,967
    
    
    
    508
    
    
    
    (152
    )
    
    
    3,323Total
    
    $
    33,368
    
    
    $
    1,359
    
    
    $
    (359
    )
    
    $
    34,368
 8




---



##### Table of Contents



Less Than or Equal to
    
    
    Greater Than12 Months
    
    
    12 MonthsFair
    
    
    Unrealized
    
    
    Fair

    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses(In Thousands)Government agency and government
sponsored enterprise mortgage-backed
securities
    
    $
    3,188
    
    
    $
    (35
    )
    
    $
    317
    
    
    $
    (6
    )Preferred stock
    
    
    1,008
    
    
    
    (15
    )
    
    
    903
    
    
    
    (118
    )Common stock
    
    
    390
    
    
    
    (76
    )
    
    
    512
    
    
    
    (41
    )Total temporarily impaired securities
    
    $
    4,586
    
    
    $
    (126
    )
    
    $
    1,732
    
    
    $
    (165
    )
     9




---



##### Table of Contents



Amortized
    
    
    Fair
    
    
    AnnualCost
    
    
    Value
    
    
    Yield(Dollars in Thousands)Government agency and government sponsored
enterprise mortgage-backed securitiesDue after one year but within five years
    
    $
    3,486
    
    
    $
    3,629
    
    
    
    4.18
    %Due after five years but within ten years
    
    
    11
    
    
    
    11
    
    
    
    4.40Due after ten years
    
    
    16,679
    
    
    
    17,363
    
    
    
    4.7820,176
    
    
    
    21,003Trust preferred securities:Due after ten years
    
    
    1,002
    
    
    
    1,073
    
    
    
    7.78
    %Total
    
    $
    21,178
    
    
    $
    22,076
     10




---



##### Table of Contents



(3) Loans
  December 31,
    
    
    March 31,2010
    
    

    2010Real estate loans:Residential real estate (1- 4 family)
    
    $
    186,678
    
    
    $
    217,053Commercial real estate
    
    
    205,832
    
    
    
    227,938Construction
    
    
    891
    
    
    
    2,722Home equity lines of credit
    
    
    8,460
    
    
    
    8.817Total real estate loans
    
    
    401,861
    
    
    
    456,530Commercial loans
    
    
    2,454
    
    
    
    4,037Consumer loans
    
    
    865
    
    
    
    943Total loans
    
    
    405,180
    
    
    
    461,510Less: allowance for loan losses
    
    
    (3,748
    )
    
    
    (3,038
    )Total loans, net
    
    $
    401,432
    
    
    $
    458,472
  Three Months EndedDecember 31,2010
    
    
    2009Balance at beginning of period
    
    $
    3,633
    
    
    $
    2,719Provision charged to expense
    
    
    300
    
    
    
    100Less: charge-offs
    
    
    (185
    )
    
    
    (44
    )Add: recoveries
    
    
    
    
    
    
    13Balance at end of period
    
    $
    3,748
    
    
    $
    2,788
 Nine Months EndedDecember 31,2010
    
    
    2009Balance at beginning of period
    
    $
    3,038
    
    
    $
    3,191Provision charged to expense
    
    
    900
    
    
    
    350Less: charge-offs
    
    
    (193
    )
    
    
    (770
    )Add: recoveries
    
    
    3
    
    
    
    17Balance at end of period
    
    $
    3,748
    
    
    $
    2,788
    
 December 31,
    
    
    March 31,2010
    
    
    2010Commercial real estate:Mixed Use
    
    $
    4,440
    
    
    $
    4,729Industrial-Other
    
    
    1,547
    
    
    
    Retail
    
    
    773
    
    
    
    Residential:Residential-1-4 family
    
    
    2,405
    
    
    
    1,199Condominium
    
    
    494
    
    
    
    318Commercial:
    
    
    225
    
    
    
    $
    9,884
    
    
    $
    6,246
 11




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##### Table of Contents



At December 31,
    
    
    At March 31,2010
    
    
    2010Impaired loans with a valuation allowance
    
    $
    4,666
    
    
    $
    3,009Impaired loans without a valuation allowance
    
    
    11,907
    
    
    
    13,506Total impaired loans
    
    $
    16,573
    
    
    $
    16,515Specific valuation allowance related to impaired loans
    
    $
    1,382
    
    
    $
    354
  Age Analysis of Past Due Financing Receivables As of December 31, 2010
 Greater30-59 Days
    
    
    60-89 Days
    
    
    than
    
    
    TotalPast Due
    
    
    Past Due
    
    
    90 Days
    
    
    Past Due
    
    
    Current
    
    
    TotalCommercial real estate:Mixed Use
    
    $
    
    
    
    $
    
    
    
    $
    4,440
    
    
    $
    4,440
    
    
    $
    36,542
    
    
    $
    40,982Apartments
    
    
    1,016
    
    
    
    
    
    
    
    
    
    
    
    1,016
    
    
    
    79,797
    
    
    
    80,813Industrial-Other
    
    
    
    
    
    
    
    
    
    
    1,547
    
    
    
    1,547
    
    
    
    36,740
    
    
    
    38,287Retail
    
    
    
    
    
    
    
    
    
    
    773
    
    
    
    773
    
    
    
    28,984
    
    
    
    29,757Offices
    
    
    729
    
    
    
    
    
    
    
    
    
    
    
    729
    
    
    
    15,264
    
    
    
    15,993Commercial real estate-construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    891
    
    
    
    891Residential:Residential-1-4 family
    
    
    23
    
    
    
    196
    
    
    
    2,405
    
    
    
    2,624
    
    
    
    158,018
    
    
    
    160,642Residential -Condominium
    
    
    191
    
    
    
    
    
    
    
    494
    
    
    
    685
    
    
    
    25,351
    
    
    
    26,036Residential- HELOC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,460
    
    
    
    8,460Commercial:
    
    
    9
    

    
    
    
    
    
    
    225
    
    
    
    234
    
    
    
    2,220
    
    
    
    2,454Consumer:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    865
    
    
    
    865Consumer-other$
    1,968
    
    
    $
    196
    
    
    $
    9,884
    
    
    $
    12,048
    
    
    $
    393,132
    
    
    $
    405,180
  Credit Quality Indicators.
 12




---



##### Table of Contents



HomeResidential
    
    
    EquityCommercial
    
    
    Real
    
    
    Lines of
    
    
    Commercial
    
    
    Commercial
    
    
    ConsumerLoans
    
    
    Estate
    
    
    Credit
    
    
    Real Estate
    
    
    Construction
    
    
    Loans
    
    
    TotalPass
    
    $
    2,454
    
    
    $
    183,677
    
    
    $
    8,425
    
    
    $
    191,135
    
    
    $
    666
    
    
    $
    865
    
    
    $
    387,222Special mention
    
    
    
    
    
    
    1,843
    
    
    
    35
    
    
    
    7,103
    
    
    
    
    
    
    
    
    
    
    
    8,981Substandard
    
    
    
    
    
    
    1,158
    
    
    
    
    
    
    
    7,594
    
    
    
    225
    
    
    
    
    
    
    
    8,977$
    2,454
    
    
    $
    186,678
    
    
    $
    8,460
    
    
    $
    205,832
    
    
    $
    891
    
    
    $
    865
    
    
    $
    405,180
  Apartments
    
    
    Offices
    
    
    Mixed Use
    
    
    Industrial - Other
    
    
    Retail
    
    
    Total< 40% LTV
    
    $
    12,606
    
    
    $
    1,327
    
    
    $
    10,554
    
    
    $
    6,740
    
    
    $
    5,478
    
    
    $
    36,70540% - 60% LTV
    
    
    24,544
    
    
    
    8,450
    
    
    
    12,104
    
    
    
    10,909
    
    
    
    17,528
    
    
    
    73,535> 60% LTV
    
    
    31,007
    
    
    
    5,802
    
    
    
    16,332
    
    
    
    9,156
    
    
    
    3,455
    
    
    
    65,752Loan particiations
    
    
    4,603
    
    
    
    
    
    
    
    
    
    
    
    9,414
    
    
    
    1,126
    
    
    
    15,143$
    72,760
    
    
    $
    15,579
    
    
    $
    38,990
    
    
    $
    36,219
    
    
    $
    27,587
    
    
    $
    191,135
  Commercial&Residential
    
    
    Construction
    
    
    Commercial
    
    
    ConsumerReal Estate
    
    
    Real Estate
    
    
    Loans
    
    
    Loans
    
    
    Unallocated
    
    
    TotalAllowance for loan
losses ending
balance:Individually
evaluated for
impairment
    
    $
    202
    
    
    $
    1,180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,382Collectively
evaluated for
impairment
    
    
    728
    
    
    
    1,569
    
    
    
    24
    
    
    
    18
    
    
    
    27
    
    
    
    2,366$
    930
    
    
    $
    2,749
    
    
    $
    24
    
    
    $
    18
    
    
    $
    27
    
    
    $
    3,748Loans ending balance:Individually
evaluated for
impairment
    
    $
    3,039
    
    
    $
    13,309
    
    
    $
    225
    
    
    
    
    
    
    
    
    
    
    $
    16,573Collectively
evaluated for
impairment
    
    
    192,099
    
    
    
    193,414
    
    
    
    2,229
    
    
    
    865
    
    
    
    
    
    
    
    388,607$
    195,138
    
    
    $
    206,723
    
    
    $
    2,454
    
    
    $
    865
    
    
    
    
    
    
    $
    405,180
 13




---



##### Table of Contents



UnpaidRecorded
    
    Principal
    
    RelatedInvestment *
    
    Balance
    
    AllowanceWith no related allowance recorded:Residential 1-4 Family
    
    $
    1,428
    
    
    $
    1,427
    
    
    $
    Commercial Real Estate and Multi-Family
    
    $
    10,307
    
    
    $
    10,492
    
    
    $
    Commercial Loans
    
    $
    225
    
    
    $
    225
    
    
    $
    With an allowance recorded:Residential 1-4 Family
    
    $
    1,618
    
    
    $
    1,787
    
    
    $
    202Commercial Real Estate and Multi-Family
    
    $
    3,041
    
    
    $
    3,217
    
    
    $
    1,180TotalResidential 1-4 Family
    
    $
    3,046
    
    
    $
    3,214
    
    
    $
    202Commercial Real Estate and Multi-Family
    
    $
    13,348
    
    
    $
    14,235
    
    
    $
    1,180Commercial Loans
    
    $
    225
    
    
    $
    225
    
    
    
    
  *
    
    Includes accrued interest, specific reserves and
net unearned deferred fees and costs.
 (4) Deposits
  December 31,
    
    
    March 31,2010
    
    
    2010Demand deposit accounts
    
    $
    42,764
    
    
    $
    41,959NOW accounts
    
    
    30,703
    
    
    
    29,358Passbook and other savings accounts
    
    
    54,184
    
    
    
    53,544Money market deposit accounts
    
    
    75,163
    
    
    
    79,745Total non-certificate accounts
    
    
    202,814
    
    
    
    204,606Term deposit certificates:Certificates of $100,000 and above
    
    
    48,408
    
    
    
    51,695Certificates of less than $100,000
    
    
    73,930
    
    
    
    82,868Total term deposit certificates
    
    
    122,338
    
    
    
    134,563Total deposits
    
    $
    325,152
    
    
    $
    339,169
 (5) Subordinated Debentures
  14




---



##### Table of Contents



(6) Other Comprehensive Income
   For the Three Months Ended
    
    
    For the Three Months EndedDecember 31, 2010
    
    
    December 31, 2009Before
    
    
    
    
    
    
    After
    
    
    Before
    
    
    
    
    
    
    AfterTax
    
    
    Tax
    
    
    Tax
    
    
    Tax
    
    
    Tax
    
    
    TaxAmount
    
    
    Effect
    
    
    Amount
    
    
    Amount
    
    
    Effect
    
    
    AmountUnrealized gains on securities:Unrealized net holding gains during
period
    
    $
    187
    
    
    $
    68
    
    
    $
    119
    
    
    $
    162
    
    
    $
    55
    
    
    $
    107Less: reclassification adjustment for
Net gains (losses) included in net
income
    
    
    13
    
    
    
    5
    
    
    
    8
    
    
    
    (81
    )
    
    
    (33
    )
    
    
    (48
    )Other comprehensive gain
    
    $
    174
    
    
    $
    63
    
    
    $
    111
    
    
    $
    243
    
    
    $
    88
    
    
    $
    155
 15




---



##### Table of Contents



For the Nine Months Ended
    
    
    For the Nine Months EndedDecember 31, 2010
    
    
    December 31, 2009Before
    
    
    
    
    
    
    After
    
    
    Before
    
    
    
    
    
    
    AfterTax
    
    
    Tax
    
    
    Tax
    
    
    Tax
    
    
    Tax
    
    
    TaxAmount
    
    
    Effect
    
    
    Amount
    
    
    Amount
    
    
    Effect
    
    
    AmountUnrealized (losses) gains on securities:Unrealized net holding gains during
period
    
    $
    60
    
    
    $
    20
    
    
    $
    40
    
    
    $
    3,724
    
    
    $
    1,470
    
    
    $
    2,254Less: reclassification adjustment for
net losses included in net income
    
    
    (170
    )
    
    
    (70
    )
    
    
    (100
    )
    
    
    (81
    )
    
    
    (33
    )
    
    
    (48
    )Other comprehensive gain
    
    $
    230
    
    
    $
    90
    
    
    $
    140
    
    
    $
    3,805
    
    
    $
    1,503
    
    
    $
    2,302
 (7) Contingencies
 Legal Proceedings.
 (8) Subsequent Events
   (9) Earnings Per Share (EPS)
  16




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(Amounts in thousands except
    
    
    (Amounts in thousands exceptper share amounts)
    
    
    per share amounts)Net income as reported
    
    $
    345
    
    
    $
    366
    
    
    $
    1,484
    
    
    $
    1,268Less preferred dividends and accretion
    
    
    (154
    )
    
    
    (153
    )
    
    
    (463
    )
    
    
    (459
    )Net income available to common stockholders
    
    $
    191
    
    
    $
    213
    
    
    $
    1,021
    
    
    $
    809Weighted average number of common shares
outstanding
    
    
    1,667,151
    
    
    
    1,639,921
    
    
    
    1,667,151
    
    
    
    1,639,941Weighted average number of unallocated ESOP shares
    
    
    (161,278
    )
    
    
    (182,785
    )
    
    
    (166,654
    )
    
    
    (188,161
    )Weighted average number of common shares
outstanding
used in calculation of basic earnings per share
    
    
    1,505,873
    
    
    
    1,457,136
    
    
    
    1,500,497
    
    
    
    1,451,780Incremental shares from the assumed exercise of
dilutive
securities
    
    
    127,292
    
    
    
    54,670
    
    
    
    107,623
    
    
    
    35,538Weighted average number of common shares
outstanding
used in calculating diluted earnings per share
    
    
    1,633,165
    
    
    
    1,511,806
    
    
    
    1,608,120
    
    
    
    1,487,318Earnings per common shareBasic
    
    $
    0.13
    
    
    $
    0.15
    
    
    $
    0.68
    
    
    $
    0.56Diluted
    
    $
    0.12
    
    
    $
    0.14
    
    
    $
    0.64
    
    
    $
    0.54
  (10) Stock-Based Compensation
 Compensation  Stock
Compensation
  17




---



##### Table of Contents



Number of
    
    
    Weighted AverageShares
    
    
    Exercise PriceOutstanding at March 31, 2010
    
    
    53,608
    
    
    $
    26.62Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (12,466
    )
    
    $
    23.64Expired
    
    
    (6,684
    )
    
    $
    16.63Outstanding at December 31, 2010
    
    
    34,458
    
    
    $
    29.63Exercisable at December 31, 2010
    
    
    32,458
    
    
    $
    29.53
   WeightedAverageRemainingNumber
    
    
    Contractual
    
    
    AggregateExercise
    
    
    of Shares
    
    
    Life
    
    
    IntrinsicPrice
    
    
    Outstanding
    
    
    (Years)
    
    
    Value (1)28.99
    
    
    
    24,458
    (2)
    
    
    4.2
    
    
    
    31.20
    
    
    
    10,000
    (3)
    
    
    5.7
    
    
    
    Average/Total
    
    $
    29.63
    
    
    
    34,458
    
    
    
    4.7
    
    
    $
    
 
 (1)
    
    Represents the total intrinsic value, based on the Companys closing stock price of $13.78 on
December 31, 2010, which would have been received by the option holders had all option holders
exercised their options as of that date. As of December 31, 2010, the intrinsic value of
outstanding stock options and exercisable stock options was $0.(2)
    
    Fully vested and exercisable at the time of grant.(3)
    
    Subject to vesting over five years, 80% vested at December 31, 2010. 18




---



##### Table of Contents



Number
    
    
    Weighted Averageof Restricted
    
    
    Grant DateShares
    
    
    Fair ValueNon-vested at March 31, 2010
    
    
    46,800
    
    
    $
    16.51GrantedVested
    
    
    (8,400
    )
    
    $
    31.20ForfeitedNon-vested at December 31, 2010
    
    
    38,400
    
    
    $
    13.30
 (11) Bank-Owned Life Insurance
 Investments  Other
 (12) Recent Accounting Pronouncements
 Accounting for Transfers of Financial Assets Transfers and Servicing,
 Amendments to
FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities,
 Improving
Disclosures About Fair Value Measurements
 Disclosures About the Credit Quality of Financing
Receivables Receivables
 19




---



##### Table of Contents



Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt
Restructurings in Update No. 2010-20. Receivables (Topic
310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit
Losses,
 (13) Fair Value Disclosures
 Fair Value Measurements and Disclosures
 Level 1 -
    
    Quoted prices for identical instruments in active marketsLevel 2 -
    
    Quoted prices for similar instruments in active or non-active
markets and model-derived valuations in which all significant
inputs and value drivers are observable in active marketsLevel 3 -
    
    Valuation derived from significant unobservable inputs
  20




---



##### Table of Contents



Carrying Value (In Thousands)At December 31, 2010
    
    Level 1
    
    Level 2
    
    Level 3
    
    TotalAssets recorded at fair value on a recurring basis:Securities available for saleGovernment agency and government sponsored
agency mortgage-backed securities
    
    $
    
    
    
    $
    21,003
    
    
    $
    
    
    
    $
    21,003Trust preferred securities
    
    
    
    
    
    
    1,073
    
    
    
    
    
    
    
    1,073Preferred stock
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    3,000Common stock
    
    
    3,177
    
    
    
    
    
    
    
    
    
    
    
    3,177Assets recorded at fair value on a nonrecurring basis:Impaired loans carried at fair value:CRE
    
    
    
    
    
    
    
    
    
    
    5,051
    
    
    
    5,051Residential
    
    
    
    
    
    
    
    
    
    
    544
    
    
    
    544OREO
    
    
    
    
    
    
    
    
    
    
    132
    
    
    
    132
 Carrying Value (In Thousands)At March 31, 2010
    
    Level 1
    
    Level 2
    
    Level 3
    
    TotalAssets recorded at fair value on a recurring basis:Securities available for saleCorporate bonds
    
    $
    
    
    
    $
    1,752
    
    
    $
    
    
    
    $
    1,752Government agency and government sponsored
agency mortgage-backed securities
    
    
    
    
    
    
    24,993
    
    
    
    
    
    
    
    24,993Trust preferred securities
    
    
    
    
    
    
    1,045
    
    
    
    
    
    
    
    1,045Preferred stock
    
    
    
    
    
    
    3,255
    
    
    
    
    
    
    
    3,255Common stock
    
    
    3,323
    
    
    
    
    
    
    
    
    
    
    
    3,323Assets recorded at fair value on a nonrecurring basis:Impaired loans carried at fair value:CRE
    
    
    
    
    
    
    
    
    
    
    6,604
    
    
    
    6,604Residential
    
    
    
    
    
    
    
    
    
    
    599
    
    
    
    599OREO
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    60
    21




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##### Table of Contents



Cash and Due from Banks 
 Short-Term Investments 
 Investment Securities Available for Sale 
 Loans and Loans Held for Sale 
 Accrued Interest Receivable 
 Stock in FHLBB 
 The Co-operative Central Bank Reserve Fund 
 Deposits 
 Advances from FHLBB 
 Subordinated Debentures 
 22




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##### Table of Contents



Short-Term Borrowings, Advance Payments by Borrowers for Taxes
and Insurance and Accrued Interest Payable 
 Off-Balance Sheet Instruments 
  December 31, 2010
    
    March 31, 2010Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueAssetsCash and due from banks
    
    $
    3,852
    
    
    $
    3,852
    
    
    $
    4,328
    
    
    $
    4,328Short-term investments
    
    
    47,267
    
    
    
    47,267
    
    
    
    12,208
    
    
    
    12,208Investment securities
    
    
    28,253
    
    
    
    28,253
    
    
    
    34,368
    
    
    
    34,368Loans held for sale
    
    
    410
    
    
    
    410
    
    
    
    392
    
    
    
    392Net loans
    
    
    401,432
    
    
    
    404,111
    
    
    
    458,472
    
    
    
    458,557Stock in Federal Home Loan Bank of Boston
    
    
    8,518
    
    
    
    8,518
    
    
    
    8,518
    
    
    
    8,518The Co-operative Central Bank Reserve Fund
    
    
    1,576
    
    
    
    1,576
    
    
    
    1,576
    
    
    
    1,576Accrued interest receivable
    
    
    1,416
    
    
    
    1,416
    
    
    
    1,896
    
    
    
    1,896LiabilitiesDeposits
    
    $
    325,152
    
    
    $
    325,987
    
    
    $
    339,169
    
    
    $
    329,749Advances from FHLB of Boston
    
    
    126,382
    
    
    
    135,180
    
    
    
    143,469
    
    
    
    150,949Subordinated debentures
    
    
    11,341
    
    
    
    8,689
    
    
    
    11,341
    
    
    
    8,226Advance payments by borrowers for taxes and insurance
    
    
    1,605
    
    
    
    1,605
    
    
    
    1,649
    
    
    
    1,649Accrued interest payable
    
    
    433
    
    
    
    433
    
    
    
    517
    
    
    
    517Off-Balance Sheet Instruments
    
    $
    22,245
    
    
    $
    22,245
    
    
    $
    27,257
    
    
    $
    27,257
 (14) Troubled Asset Relief Program Capital Purchase Program
   23




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##### Table of Contents



Derivatives and
Hedging Debt Equity
 Expected life in years
    
    
    10.00Expected volatility
    
    
    54.76
    %Dividend yield
    
    
    3.00
    %Risk-free interest rate
    
    
    2.67
    %
  
 Item 2.  Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Forward-Looking Statements
  24




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##### Table of Contents



General
      Critical Accounting Policies
  25




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##### Table of Contents



Loans.
    Receivables
  26




---



##### Table of Contents



Allowance for Loan Losses.
  Contingencies
  n Apartmentsn Officesn Retailn Mixed Usen Industrial/Other
   27




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##### Table of Contents



Accounting for Goodwill and Impairment . Intangibles  Goodwill and Other e.g
 Fair Value of Other Real Estate Owned
 28




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##### Table of Contents



Fair Value of Investments.
    Income Taxes .
 Stock-Based Compensation . Compensation-Stock Compensation
   Comparison of Financial Condition at December 31, 2010 and March 31, 2010
  29




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##### Table of Contents



Comparison of Operating Results for
the Quarters Ended December 31, 2010 and 2009  Provision for Loan Losses.
       30




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##### Table of Contents



Bank-Owned Life Insurance
    Comparison of Operating Results for the Quarters Ended December 31, 2010 and 2009
  Interest and Dividend Income.
 Interest Expense
 31




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##### Table of Contents



Three Months Ended December 31,2010
    
    
    2009Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Interest-earning assets:Mortgage loans
    
    $
    416,517
    
    
    $
    5,746
    
    
    
    5.52
    %
    
    $
    458,887
    
    
    $
    6,689
    
    
    
    5.83
    %Other loans
    
    
    3,955
    
    
    
    49
    
    
    
    4.96
    
    
    
    5,199
    
    
    
    74
    
    
    
    5.69Investment securities
    
    
    28,333
    
    
    
    365
    
    
    
    5.15
    
    
    
    38,619
    
    
    
    317
    
    
    
    3.28Federal Home Loan Bank Stock
    
    
    8,518
    
    
    
    
    
    
    
    
    
    
    
    8,518
    
    
    
    
    
    
    
    Short-term investments
    
    
    41,606
    
    
    
    27
    
    
    
    0.26
    
    
    
    12,063
    
    
    
    8
    
    
    
    0.27Total interest-earning assets
    
    
    498,929
    
    
    
    6,187
    
    
    
    4.96
    
    
    
    523,286
    
    
    
    7,088
    
    
    
    5.42Allowance for loan losses
    
    
    (3,733
    )
    
    
    
    
    
    
    
    
    
    
    (2,756
    )Noninterest-earning assets
    
    
    27,624
    
    
    
    
    
    
    
    
    
    
    
    27,691Total assets
    
    $
    522,820
    
    
    
    
    
    
    
    
    
    
    $
    548,221Interest-bearing liabilities:Deposits
    
    $
    289,535
    
    
    
    573
    
    
    
    0.79
    
    
    $
    298,688
    
    
    
    896
    
    
    
    1.20Advances from FHLB of Boston
    
    
    128,134
    
    
    
    1,226
    
    
    
    3.83
    
    
    
    149,334
    
    
    
    1,675
    
    
    
    4.49Other borrowings
    
    
    11,341
    
    
    
    140
    
    
    
    4.94
    
    
    
    11,357
    
    
    
    140
    
    
    
    4.93Total interest-bearing liabilities.
    
    
    429,010
    
    
    
    1,939
    
    
    
    1.81
    
    
    
    459,379
    
    
    
    2,711
    
    
    
    2.36Noninterest-bearing liabilities
    
    
    47,332
    
    
    
    
    
    
    
    
    
    
    
    45,473Total liabilities
    
    
    476,342
    
    
    
    
    
    
    
    
    
    
    
    504,852Stockholders equity
    
    
    46,478
    
    
    
    
    
    
    
    
    
    
    
    43,369Total liabilities and stockholders
equity
    
    $
    522,820
    
    
    
    
    
    
    
    
    
    
    $
    548,221Net interest and dividend income
    
    
    
    
    
    $
    4,248
    
    
    
    
    
    
    
    
    
    
    $
    4,377Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.15
    %
    
    
    
    
    
    
    
    
    
    
    3.06
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.41
    %
    
    
    
    
    
    
    
    
    
    
    3.35
    %
 Provision for Loan Losses. Provision
for Loan Losses
 32




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##### Table of Contents



Noninterest Income.
 Noninterest Expenses
      33




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##### Table of Contents



Income Taxes
 Comparison of Operating Results for the Nine Months Ended December 31, 2010 and 2009
  Interest and Dividend Income.
 Interest Expense.
 34




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##### Table of Contents



Nine Months Ended December 31,2010
    
    
    2009Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Interest-earning assets:Mortgage loans
    
    $
    435,555
    
    
    $
    18,423
    
    
    
    5.64
    %
    
    $
    457,505
    
    
    $
    20,101
    
    
    
    5.86
    %Other loans
    
    
    4,392
    
    
    
    183
    
    
    
    5.56
    
    
    
    5,746
    
    
    
    249
    
    
    
    5.78Investment securities
    
    
    30,654
    
    
    
    984
    
    
    
    4.28
    
    
    
    36,366
    
    
    
    1,109
    
    
    
    4.07Federal Home Loan Bank Stock
    
    
    8,518
    
    
    
    
    
    
    
    
    
    
    
    8,518
    
    
    
    
    
    
    
    Short-term investments
    
    
    24,685
    
    
    
    47
    
    
    
    0.25
    
    
    
    21,650
    
    
    
    41
    
    
    
    0.25Total interest-earning assets
    
    
    503,804
    
    
    
    19,637
    
    
    
    5.20
    
    
    
    529,785
    
    
    
    21,500
    
    
    
    5.41Allowance for loan losses
    
    
    (3,427
    )
    
    
    
    
    
    
    
    
    
    
    (3,008
    )Noninterest-earning assets
    
    
    27,380
    
    
    
    
    
    
    
    
    
    
    
    29,400Total assets
    
    $
    527,757
    
    
    
    
    
    
    
    
    
    
    $
    556,177Interest-bearing liabilities:Deposits
    
    $
    292,069
    
    
    
    1,962
    
    
    
    0.90
    
    
    $
    311,360
    
    
    
    3,696
    
    
    
    1.58Advances from FHLB of Boston
    
    
    132,084
    
    
    
    3,837
    
    
    
    3.87
    
    
    
    145,125
    
    
    
    4,954
    
    
    
    4.55Other borrowings
    
    
    11,341
    
    
    
    420
    
    
    
    4.94
    
    
    
    12,072
    
    
    
    440
    
    
    
    4.86Total interest-bearing liabilities
    
    
    435,494
    
    
    
    6,219
    
    
    
    1.90
    
    
    
    468,557
    
    
    
    9,090
    
    
    
    2.59Noninterest-bearing liabilities
    
    
    46,363
    
    
    
    
    
    
    
    
    
    
    
    45,287Total liabilities
    
    
    481,857
    
    
    
    
    
    
    
    
    
    
    
    513,844Stockholders equity
    
    
    45,900
    
    
    
    
    
    
    
    
    
    
    
    42,333Total liabilities and stockholders
equity
    
    $
    527,757
    
    
    
    
    
    
    
    
    
    
    $
    556,177Net interest and dividend income
    
    
    
    
    
    $
    13,418
    
    
    
    
    
    
    
    
    
    
    $
    12,410Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.30
    %
    
    
    
    
    
    
    
    
    
    
    2.82
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.55
    %
    
    
    
    
    
    
    
    
    
    
    3.12
    %
 Provision for Loan Losses.
 35




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##### Table of Contents



Noninterest Income.
 Noninterest Expenses.
     36




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##### Table of Contents



Income Taxes
 Liquidity and Capital Resources
   
  37




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##### Table of Contents



At December 31, 2010RegulatoryThresholdFor WellActual
    
    CapitalizedCentral Bancorp:Tier 1 Leverage
    
    
    10.16
    %
    
    
    5.0
    %Tier 1 Risk-Based Ratio
    
    
    16.82
    %
    
    
    6.0
    %Total Risk-Based Ratio
    
    
    18.07
    %
    
    
    10.0
    %Central Co-operative Bank:Tier 1 Leverage
    
    
    9.07
    %
    
    
    5.0
    %Tier 1 Risk-Based Ratio
    
    
    15.00
    %
    
    
    6.0
    %Total Risk-Based Ratio
    
    
    16.24
    %
    
    
    10.0
    %
 Off-Balance Sheet Arrangements
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
  38




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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. [Removed and Reserved]
 
 Item 5. Other Information
  
 Item 6. Exhibits
 31.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer32
    
    Section 1350 Certifications
 39




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##### Table of Contents



SIGNATURES
  CENTRAL BANCORP, INC.
RegistrantFebruary 15, 2011
    By:
    /s/ John D. DohertyJohn D. DohertyChairman and Chief Executive Officer

(Principal Executive Officer)February 15, 2011
    By:
    /s/ Paul S. FeeleyPaul S. FeeleySenior Vice President, Treasurer and

Chief Financial Officer

(Principal Financial and Accounting Officer)