UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                  ------------

                                   FORM 10-Q

(Mark One)

/X/  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15 (D)  OF  THE  SECURITIES
     EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004
                               -------------

                                       OR

     TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  AND
     EXCHANGE ACT OF 1934

For the transition period from ______________________ to _______________________

                         Commission file number: 0-25251
                                                 -------


                              CENTRAL BANCORP, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

               MASSACHUSETTS                                04-3447594
------------------------------------------------        --------------------
(State or Other Jurisdiction of Incorporation or        (I.R.S. Employer
               Organization)                             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)

                                       N/A
--------------------------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                         if Changed Since Last Report)

     Indicate by check mark  whether the  Registrant:  (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934 during the preceding 12 months (or such shorter  period that the Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

Yes      X        No
    -------------    ----------

     Indicate by check mark whether the Registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes                 No     X
    -------------      ----------

  Common Stock, $1.00 par value                         1,665,732
  -----------------------------                ------------------------------
  Class                                        Outstanding at August 13, 2004


<PAGE>

                              CENTRAL BANCORP, INC.

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION                                                                  PAGE NO.
<S>                                                                                               <C>
         Item 1.  Financial Statements (Unaudited)

                  Consolidated Statements of Financial Condition at June 30, 2004 and            1
                  March 31, 2004

                  Consolidated Statements of Income for the three months ended                   2
                  June 30, 2004 and 2003

                  Consolidated Statements of Changes in Stockholders' Equity for the three       3
                  months ended June 30, 2004 and 2003

                  Consolidated Statements of Cash Flows for the three months ended               4
                  June 30, 2004 and 2003

                  Notes to Unaudited Consolidated Financial Statements                           5

         Item 2.  Management's Discussion and Analysis of Financial Condition and Results        8
                  of  Operations

                  Liquidity and Capital Resources                                                11

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk                     12

         Item 4.  Controls and Procedures                                                        12


PART II.  OTHER INFORMATION

         Item 1.  Legal Proceedings                                                              13

         Item 2.  Changes in Securities and Use of Proceeds                                      13

         Item 3.  Defaults upon Senior Securities                                                13

         Item 4.  Submission of Matters to a Vote of Security Holders                            13

         Item 5.  Other Information                                                              13

         Item 6.  Exhibits and Reports on Form 8-K                                               13

SIGNATURES
</TABLE>



<PAGE>

Item 1. Financial Statements
                      CENTRAL BANCORP, INC. AND SUBSIDIARY
                 Consolidated Statements of Financial Condition
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                     June 30,            March 31,
 (Dollars in Thousands)                                                               2004                  2004
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>                   <C>
ASSETS
Cash and due from banks                                                             $   6,153              $  7,113
Short-term investments                                                                 23,856                27,224
                                                                                    ---------              --------
     Cash and cash equivalents                                                         30,009                34,337
                                                                                    ---------              --------
Certificate of deposit                                                                  1,217                 1,211
Investment securities available for sale (amortized cost of $105,019
     at June 30, 2004 and $80,201 at March 31, 2004)                                  106,700                83,771
Stock in Federal Home Loan Bank of Boston, at cost                                      8,300                 8,300
The Co-operative Central Bank Reserve Fund                                              1,576                 1,576
                                                                                    ---------              --------
    Total investments                                                                 116,576                93,647
                                                                                    ---------              --------
Loans held for sale                                                                       925                   799

Loans (Note 2)                                                                        354,868               356,625
Less allowance for loan losses                                                          3,599                 3,537
                                                                                    ---------              --------
     Net loans                                                                        351,269               353,088
                                                                                    ---------              --------
Accrued interest receivable                                                             2,108                 2,203
Banking premises and equipment, net                                                     2,146                 2,113
Deferred tax asset, net                                                                   920                   243
Goodwill, net                                                                           2,232                 2,232
Other assets                                                                              932                 1,024
                                                                                    ---------              --------
    Total assets                                                                    $ 508,334              $490,897
                                                                                    =========              ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Deposits (Note 3)                                                                 $ 314,167              $295,920
  Short-term borrowings                                                                   928                   845
  Federal Home Loan Bank advances                                                     138,100               141,100
  ESOP Loan                                                                             3,214                 3,311
  Advance payments by borrowers for taxes and insurance                                 1,095                 1,182
  Accrued expenses and other liabilities                                                8,196                 5,085
                                                                                    ---------              --------
    Total liabilities                                                                 465,700               447,443
                                                                                    ---------              --------
Commitments and Contingencies (Note 5)
Stockholders' equity (Note 6):
  Preferred stock $1.00 par value; authorized 5,000,000 shares;
     none issued or outstanding                                                            --                    --
  Common stock $1.00 par value; authorized 15,000,000 shares;
     2,027,727 shares issued at June 30, 2004 and
     March 31, 2004                                                                     2,030                 2,030
  Additional paid-in capital                                                           12,947                12,920
  Retained income                                                                      37,123                36,855
  Treasury stock (365,294 shares at June 30, 2004 and
     March 31, 2004), at cost                                                          (7,312)               (7,311)
  Accumulated other comprehensive income (Note 4)                                       1,082                 2,293
  Unearned compensation - ESOP                                                         (3,236)               (3,333)
                                                                                    ---------              --------
    Total stockholders' equity                                                         42,634                43,454
                                                                                    ---------              --------
    Total liabilities and stockholders' equity                                      $ 508,334              $490,897
                                                                                    =========              ========
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                       1
<PAGE>

                      CENTRAL BANCORP, INC. AND SUBSIDIARY
                        Consolidated Statements of Income
                      (In Thousands, Except Per Share Data)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                   Three Months Ended
                                                                                        June 30,
                                                                             ------------------------------
                                                                                 2004               2003
                                                                              ---------          ----------
<S>                                                                             <C>                   <C>
Interest and dividend income:
  Mortgage loans                                                              $    5,383             6,039
  Other loans                                                                         79               126
  Short-term investments                                                              64                18
  Investments                                                                      1,088               840
                                                                              ----------         ---------
    Total interest and dividend income                                             6,614             7,023
                                                                              ----------         ---------
Interest expense:
  Deposits                                                                         1,150             1,157
  Advances from Federal Home Loan Bank of Boston                                   1,718             1,756
  Other borrowings                                                                    39                 1
                                                                              ----------         ---------
    Total interest expense                                                         2,907             2,914
                                                                              ----------         ---------

    Net interest and dividend income                                               3,707             4,109
Provision for loan losses                                                             50                50
                                                                              ----------         ---------
    Net interest and dividend income after
      provision for loan losses                                                    3,657             4,059
                                                                              ----------         ---------
Non-interest income:
  Deposit service charges                                                            145               161
  Net gains (losses) from sales of investment securities                             134                (5)
  Gain on sales of loans                                                              63               141
  Other income                                                                       106               117
                                                                              ----------         ---------
    Total non-interest income                                                        448               414
                                                                              ----------         ---------
Non-interest expenses:
  Salaries and employee benefits                                                   1,903             1,800
  Occupancy and equipment                                                            322               270
  Data processing service fees                                                       280               281
  Professional fees                                                                  268               130
  Marketing                                                                          138               121
  Other expenses                                                                     483               401
                                                                              ----------         ---------
    Total non-interest expenses                                                    3,394             3,003
                                                                              ----------         ---------

    Income before income taxes                                                       711             1,470
Provision for income taxes (Note 5)                                                  257               182
                                                                              ----------         ---------
      Net income                                                              $      454         $   1,288
                                                                              ==========         =========

Earnings per common share - basic (Note 7)                                    $     0.29         $    0.83
                                                                              ==========         =========

Earnings per common share - diluted (Note 7)                                  $     0.29         $    0.83
                                                                              ==========         =========

Weighted average common shares outstanding - basic                                 1,559             1,546

Weighted average common and equivalent shares
   outstanding - diluted                                                           1,573             1,559
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                       2
<PAGE>


                      CENTRAL BANCORP, INC. AND SUBSIDIARY
           Consolidated Statements of Changes in Stockholders' Equity
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                                                Accumulated
                                                                Additional                                         Other
                                                  Common          Paid-In       Retained       Treasury        Comprehensive
                    (In Thousands)                 Stock          Capital        Income          Stock            Income
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>             <C>            <C>               <C>
Three Months Ended June 30, 2004
--------------------------------

     Balance at March 31, 2004                   $   2,030     $    12,920   $    36,855      $   (7,311)      $     2,293

     Net income                                         --              --           454              --                --
     Other comprehensive income net of tax:
         Unrealized loss on securities, net
           of reclassification adjustment               --              --            --              --            (1,211)
            Comprehensive income (loss)

     Director deferred compensation
         transactions                                   --              12            --              (1)               --
     Dividends paid ($.12 per share)                    --              --          (186)             --                --
     Amortization of unearned compensation -
         ESOP                                           --              15            --              --                --
                                                 ---------     -----------   -----------      ----------       -----------

     Balance at June 30, 2004                    $   2,030     $    12,947   $    37,123      $   (7,312)      $     1,082
                                                 =========     ===========   ===========      ==========       ===========



Three Months Ended June 30, 2003
--------------------------------

     Balance at March 31, 2003                   $   2,028     $    12,751   $    34,601      $   (7,249)      $     1,002

     Net income                                         --              --         1,288              --                --
     Other comprehensive income net of tax:
         Unrealized gain on securities, net
           of reclassification adjustment               --              --            --              --             1,005

            Comprehensive income

     Proceeds from exercise of stock options            --              13            --              --                --
     Tax benefit of stock options                       --               4            --              --                --
     Director deferred compensation
         transactions                                   --              23            --              --                --
     Dividends paid ($.12 per share)                    --              --          (126)             --                --
     Amortization of unearned compensation -
         ESOP                                           --              14            --              --                --
                                                 ---------     -----------   -----------      ----------       -----------

     Balance at June 30, 2003                    $   2,028     $    12,805   $    35,763      $   (7,249)      $     2,007
                                                 =========     ===========   ===========      ===========      ===========
<CAPTION>
                                                 Unearned              Total
                                               Compensation        Stockholders'
                                                   ESOP               Equity
                                               ---------------------------------
<S>                                                <C>                  <C>
Three Months Ended June 30, 2004
--------------------------------

     Balance at March 31, 2004                  $   (3,333)         $    43,454

     Net income                                         --                  454
     Other comprehensive income net of tax:
         Unrealized loss on securities, net
           of reclassification adjustment               --               (1,211)
                                                                    -----------
            Comprehensive income (loss)                                    (757)
                                                                    -----------
     Director deferred compensation
         transactions                                   --                   11
     Dividends paid ($.12 per share)                    --                 (186)
     Amortization of unearned compensation -
         ESOP                                           97                  112
                                                ----------          -----------
                                                $   (3,236)         $    42,634
     Balance at June 30, 2004                   ==========          ===========



Three Months Ended June 30, 2003
--------------------------------

     Balance at March 31, 2003                  $   (3,690)         $    39,443

     Net income                                         --                1,288
     Other comprehensive income net of tax:
         Unrealized gain on securities, net
           of reclassification adjustment               --                1,005
                                                                    -----------
            Comprehensive income                                          2,293
                                                                    -----------
     Proceeds from exercise of stock options            --                   13
     Tax benefit of stock options                       --                    4
     Director deferred compensation
         transactions                                   --                   23
     Dividends paid ($.12 per share)                    --                 (126)
     Amortization of unearned compensation -
         ESOP                                           97                  111
                                                ----------          -----------

     Balance at June 30, 2003                   $   (3,593)         $    41,761
                                                ==========          ===========


</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       3
<PAGE>
                      CENTRAL BANCORP, INC. AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                              Three Months Ended
                                                                                   June 30,
                                                                       ----------------------------------
                           (In thousands)                                  2004                 2003
---------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                 <C>
Cash flows from operating activities:

Net income                                                             $       454           $     1,288
   Adjustments to reconcile net income to net cash provided
      by (used in) operating activities
         Depreciation and amortization                                          92                    79
         Amortization of premiums                                               51                    65
         Provision for loan losses                                              50                    50
         Stock-based compensation                                              112                   111
         Net (gains) losses from sales of
             investment securities                                            (134)                    5
         Gain on sales of loans held for sale                                  (63)                 (141)
         Originations of loans held for sale                                (5,818)              (10,984)
         Proceeds from sale of loans originated for sale                     5,755                 6,721
Decrease in accrued interest receivable                                         95                    16
Decrease (increase) in other assets, net                                        87                (2,028)
Decrease in advance payments by borrowers for taxes and insurance              (87)                  (61)
Increase in accrued expenses and other liabilities, net                        140                    40
                                                                       -----------           -----------
         Net cash provided by (used in) operating activities                   734                (4,839)
                                                                       -----------           -----------

Cash flows from investing activities:

Net decrease in loans                                                        1,769                16,939
Principal payments on mortgage-backed securities                             1,516                 1,365
Proceeds from sales of investment securities                                   593                   482
Purchases of investment securities                                         (26,844)                   --
Increase in due to brokers                                                   2,971                    --
Purchase of banking premises and equipment                                    (125)                  (61)
                                                                       ------------          -----------
         Net cash provided by (used in) investing activities               (20,120)               18,725
                                                                       -----------           -----------

Cash flows from financing activities:

Increase (decrease) in deposits                                             18,247                (1,104)
Repayment of advances from FHLB of Boston                                   (3,000)                   --
Increase (decrease) in short-term borrowings                                    83                  (176)
Repayment of ESOP loan                                                         (97)                   --
Proceeds from exercise of stock options                                         --                    13
Dividends paid, net                                                           (186)                 (126)
Net directors deferred compensation                                             11                    23
                                                                       -----------           -----------
         Net cash provided by (used in) financing activities                15,058                (1,370)
                                                                       -----------           -----------

Net increase (decrease) in cash and cash equivalents                        (4,328)               12,516
Cash and cash equivalents at beginning of year                              34,337                11,222
                                                                       -----------           -----------
Cash and cash equivalents at end of period                             $    30,009           $    23,738
                                                                       ===========           ===========

Supplemental disclosure of cash flow information:
       Cash paid during the period for:
       Interest                                                        $     2,901           $     2,919
       Income taxes                                                    $        25           $       546
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                       4
<PAGE>


                      CENTRAL BANCORP, INC. AND SUBSIDIARY
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2004

(1)  BASIS OF PRESENTATION

     The unaudited  consolidated  financial statements of Central Bancorp,  Inc.
and its wholly-owned subsidiary Central Co-operative Bank (collectively referred
to as "the Company")  presented  herein should be read in  conjunction  with the
consolidated  financial  statements  of the Company as of and for the year ended
March 31, 2004,  included in the Company's Annual Report on Form 10-K filed with
the  Securities  and  Exchange  Commission.  In the opinion of  management,  the
accompanying   unaudited   consolidated   financial   statements   reflect   all
adjustments,  consisting of normal recurring  adjustments,  necessary for a fair
presentation.  Interim results are not  necessarily  indicative of results to be
expected for the entire year.

     The Company's  significant  accounting  policies are described in Note 1 of
the Notes to Consolidated Financial Statements included in its Form 10-K for the
year ended March 31, 2004. For interim reporting  purposes,  the Company follows
the same significant accounting policies.

     Certain  reclassifications  have  been  made to the  prior  year  financial
statements to conform to the current year presentation.  Such  reclassifications
have no effect on previously reported net income.

(2)  LOANS

     Loans,  excluding  loans held for sale,  as of June 30,  2004 and March 31,
2004 are summarized below (in thousands):
<TABLE>
<CAPTION>

                                                                June 30,                  March 31,
                                                                   2004                      2004
                                                              -------------             --------------
         <S>                                                      <C>                        <C>
       Real estate loans:
          Residential real estate                              $  162,853                   171,682
          Commercial real estate                                  159,510                   146,107
          Construction                                             18,178                    25,112
          Home equity lines of credit                               8,801                     9,397
                                                               ----------                ----------
               Total real estate loans                            349,342                   352,298
                                                               ----------                ----------
       Commercial loans                                             4,500                     3,198
       Consumer loans                                               1,026                     1,129
                                                               ----------                ----------
                Total loans                                       354,868                   356,625
        Less:  allowance for loan losses                           (3,599)                   (3,537)
                                                               ----------                ----------
                Total loans, net                               $  351,269                $  353,088
                                                               ==========                ==========
</TABLE>

     There were no non-accrual loans at June 30, 2004 and March 31, 2004.


                                       5
<PAGE>


                      CENTRAL BANCORP, INC. AND SUBSIDIARY
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2004

(3)  DEPOSITS

     Deposits at June 30, 2004 and March 31, 2004 are  summarized as follows (in
thousands):

<TABLE>
<CAPTION>

                                                                 June 30,                 March 31,
                                                                   2004                     2004
                                                              --------------            -----------
<S>                                                                 <C>                      <C>
Demand deposit accounts                                       $    31,027               $    27,881
NOW accounts                                                       35,876                    37,106
Passbook and other savings accounts                                74,840                    73,737
Money market deposit accounts                                      62,732                    56,084
                                                              -----------               -----------
         Total non certificate accounts                           204,475                   194,808
                                                              -----------               -----------
Term deposit certificates
      Certificates of $100 and above                               31,098                    27,607
      Certificates less than $100                                  78,594                    73,505
                                                              -----------               ------------
         Total term deposit certificates                          109,692                   101,112
                                                              -----------               -----------
         Total deposits                                       $   314,167               $   295,920
                                                              ===========               ===========
</TABLE>


(4)  OTHER COMPREHENSIVE INCOME (LOSS)

     The  Company  has  established   standards  for  reporting  and  displaying
comprehensive  income,  which  is  defined  as  all  changes  to  equity  except
investments by, and distributions to, shareholders. Net income is a component of
comprehensive  income,  with all other components referred to, in the aggregate,
as other comprehensive income.

     The Company's other comprehensive  income (loss) and related tax effect for
the three months ended June 30, 2004 and 2003 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                  For the Three Months Ended
                                                                          June 30, 2004
                                                              ------------------------------------
                                                              Before-
                                                               Tax           Tax         After-Tax
                                                              Amount        Effect         Amount
                                                              -------       ------       ---------
<S>                                                             <C>          <C>             <C>
Unrealized gains on securities:
  Unrealized net holding losses during period                 $(1,755)     $   632        $(1,123)
   Add: reclassification adjustment for net
            gains included in net income                          134           46             88
                                                              -------      -------        -------
   Other comprehensive loss                                   $(1,889)     $   678        $(1,211)
                                                              =======      =======        =======
</TABLE>


                                       6
<PAGE>

                      CENTRAL BANCORP, INC. AND SUBSIDIARY
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 2004

(4)  OTHER COMPREHENSIVE INCOME (LOSS) (CONTINUED)
<TABLE>
<CAPTION>

                                                                   For the Three Months Ended
                                                                          June 30, 2003
                                                              ------------------------------------
                                                              Before-
                                                                Tax          Tax         After-Tax
                                                              Amount        Effect         Amount
                                                              -------       ------       ---------
<S>                                                             <C>          <C>            <C>
Unrealized gains on securities:
  Unrealized net holding gains during period                  $ 1,623      $   621        $ 1,002
   Add: reclassification adjustment for net
            losses included in net income                           5            2              3
                                                              -------      -------        -------
   Other comprehensive income                                 $ 1,628      $   623        $ 1,005
                                                              =======      =======        =======
</TABLE>

(5)  CONTINGENCIES

LEGAL PROCEEDINGS

     The Company  from time to time is involved as  plaintiff  or  defendant  in
various  legal  actions  incident  to its  business.  None of these  actions are
believed to be material, either individually or collectively,  to the results of
operations and financial condition of the Company.

TAX SETTLEMENT

     During 2003, the Massachusetts Department of Revenue ("DOR") issued notices
of  intent  to  assess  additional  state  excise  taxes to  numerous  financial
institutions  in  Massachusetts  that had received  dividends from a real estate
investment trust (REIT) subsidiary. The DOR contended that dividends received by
the banks from such subsidiaries were fully taxable in Massachusetts.

     In June 2003, a settlement  of this matter was reached  between the DOR and
the majority of affected financial  institutions.  The settlement  provided that
50% of all dividends received from REIT subsidiaries from 1999 through 2002 were
subject to state taxation.  Interest on such additional taxes was also assessed.
Payment of such taxes and interest totaling $431,000 was made in June 2003. As a
result of this  settlement,  the  Company  recognized  a recovery of $374,000 in
income taxes, which increased net income by the same amount in the quarter ended
June 30, 2003.

(6)  SUBSEQUENT EVENT

     On July 8, 2004,  the Board of  Directors  voted the payment of a quarterly
cash dividend of $0.12 per share.  The dividend is payable on August 13, 2004 to
stockholders of record on July 30, 2004.

(7)  EARNINGS PER SHARE (EPS)

     Unallocated  ESOP  shares  are not  treated  as  being  outstanding  in the
computation of either basic or diluted EPS. At June 30, 2004 and March 31, 2004,
there  were   approximately   104,000  and  107,000   unallocated  ESOP  shares,
respectively.
                                       7
<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD-LOOKING STATEMENTS

     When used in this discussion and elsewhere in this Quarterly Report on Form
10-Q,  the words or phrases  "will  likely  result,"  "are  expected  to." "will
continue," "is anticipated,"  "estimate,"  "project," or similar expressions are
intended  to  identify  "forward-looking  statements"  within the meaning of the
Private  Securities  Litigation Reform Act of 1995. The Company cautions readers
not to place undue reliance on any such forward-looking statements,  which speak
only as of the date made, and to advise readers that various factors,  including
changes in regional  and  national  economic  conditions,  unfavorable  judicial
decisions,  substantial  changes in levels of market interest rates,  credit and
other risks of lending and investment  activities and competitive and regulatory
factors,  could affect the Company's  financial  performance and could cause the
Company's  actual  results for future  periods to differ  materially  from those
anticipated or projected.

     The Company does not undertake and specifically disclaims any obligation to
update any  forward-looking  statements to reflect  occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.

CRITICAL ACCOUNTING POLICIES

     Accounting  policies  involving  significant  judgments and  assumptions by
management,  which have, or could have, a material  impact on the carrying value
of  certain  assets  and  impact  income,  are  considered  critical  accounting
policies. The Company considers the allowance for loan losses to be its critical
accounting  policy.  There have been no  significant  changes in the  methods or
assumptions used in the accounting  policies that require material estimates and
assumptions.

     Arriving at an appropriate  level of allowance for loan losses  necessarily
involves a high degree of judgment.  The ongoing  evaluation  process includes a
formal  analysis of the allowance  each quarter,  which  considers,  among other
factors,  the  character and size of the loan  portfolio,  business and economic
conditions,  loan  growth,  delinquency  trends,   nonperforming  loans  trends,
charge-off  experience and other asset quality  factors.  The Company  evaluates
specific loan status reports on certain  commercial  and commercial  real estate
loans  rated  "substandard"  or worse in excess of a  specified  dollar  amount.
Estimated  reserves for each of these credits is determined by reviewing current
collateral value, financial  information,  cash flow, payment history and trends
and other  relevant facts  surrounding  the  particular  credit.  Provisions for
losses on the remaining commercial and commercial real estate loans are based on
pools of similar loans using a combination  of historical  loss  experience  and
qualitative  adjustments.  For the  residential  real estate and  consumer  loan
portfolios,   the  range  of  reserves  is  calculated  by  applying  historical
charge-off and recovery  experience to the current  outstanding  balance in each
loan category.  Although management uses available  information to establish the
appropriate  level of the  allowance  for loan losses,  future  additions to the
allowance may be necessary  based on estimates that are susceptible to change as
a result of changes in  economic  conditions  and other  factors.  In  addition,
various regulatory  agencies,  as an integral part of their examination process,
periodically  review the Company's  allowance for loan losses. Such agencies may
require the Company to recognize  adjustments  to the  allowance  based on their
judgments about information available to them at the time of their examination.

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2004 AND MARCH 31, 2004

     Total assets  increased by $17.4  million from $490.9  million at March 31,
2004 to $508.3 million at June 30, 2004. During the quarter ended June 30, 2004,
loans (excluding loans held for sale) decreased by $1.8 million due primarily to
$8.8 million decrease in residential  mortgage loans and a $6.9 million decrease
in  construction  loans,  partially  offset  by  a  $13.4  million  increase  in
commercial  real  estate  loans.  During the  current  quarter,  prepayments  of
residential  mortgage  loans  were  significant   amounting  to  $18.8  million.
Management  regularly  assesses the  desirability  of holding  newly  originated
long-term,  fixed-rate  residential  mortgage loans in portfolio or selling such
loans in the  secondary  market.  A number of factors are evaluated to determine
whether or not to hold such loans in portfolio including,  current and projected
liquidity,  current and  projected  interest  rates,  projected  growth in other
interest-earning  assets  and the  current  and  projected  interest  rate  risk
profile. Based on its consideration of these factors, management determined that
fixed-rate  residential  mortgage loans  originated  during

                                       8
<PAGE>

the  current  quarter  should be sold in the  secondary  market.  This  decision
contributed to the aforementioned  decrease in residential  mortgage loans and a
$22.9 million increase in investments during the quarter ended June 30, 2004.

     The Company  experienced  growth of $9.7 million in core  deposits and $8.6
million in term  deposits  resulting  in an increase in total  deposits of $18.3
million.  The growth in core deposits was principally related to the increase of
$6.6 million in money market deposit  accounts.  Because of the  continuation of
the low interest  rates for deposits in recent years and the tiered pricing used
with this type of account,  money market  accounts have attracted  large average
balances.  The  growth in core  deposits  was also aided by growth in most other
types of accounts.  The Company began a major marketing initiative in March 2004
to promote a new free checking account product which contributed to this growth.

     During the current quarter,  the Company promoted a 15-month certificate of
deposit which  resulted in new funds of  approximately  $12.0 million as of June
30,  2004.  Exclusive  of this  special  promotion,  the  Company  continued  to
experience a decline in certificates of deposit due primarily to the current low
rate environment.

     The decrease in  stockholders'  equity of $820 thousand to $42.6 million at
June 30, 2004 resulted  primarily  from net income of $454 thousand  offset by a
net decrease of $1.2 million in the  unrealized  gain on investment  securities.
This  decrease  is due to the  increase  in longer  term  rates  which  occurred
subsequent to March 31, 2004.

COMPARISON OF OPERATING RESULTS FOR THE QUARTERS ENDED JUNE 30, 2004 AND 2003

     Net income  decreased  by $834  thousand to $454  thousand  for the quarter
ended June 30, 2004, compared to the same quarter in the prior year. Included in
net income in the prior year quarter, was a recovery of income taxes of $374,000
resulting from the settlement of the REIT tax dispute among  Massachusetts banks
and the Massachusetts  Department of Revenue (DOR).  Exclusive of this item, net
income for the quarter ended June 30, 2004 decreased  $460  thousand,  or 50.3%,
compared  to the  corresponding  quarter in the prior  year.  This  decline  was
primarily attributable to the reduction in net interest income and margin in the
current quarter.

     The Company's net interest  margin  decreased 47 basis points from 3.57% in
the prior year quarter to 3.10% in the current quarter. The unfavorable trend in
the net interest  margin is primarily  reflective of the limitations the Company
has in  reducing  its  overall  cost of  funds.  This  limitation  is due to two
factors.  First,  the Company's  utilization of long-term  FHLB advances,  which
represented 33.8% of  interest-bearing  liabilities in the current quarter,  has
provided  for limited  repricing  opportunities  during the period of  declining
rates.  These advances can not be prepaid without a substantial  penalty,  which
management has elected not to pay.  Second,  the ability to reduce deposit rates
continues to be limited after the past several years of rate  reductions as well
as competitive market factors.

     The reduction in the net interest margin is also partially  attributable to
the  shift  in the mix of  interest-earning  assets  from  loans  to  short-term
investments  and  investment  securities.  During  the  current  quarter,  loans
represented  74.6%  of the  average  balance  of total  interest-earning  assets
compared to 84.0% in the prior year quarter.  This shift to shorter-term,  lower
yielding  assets  results  from the  Company's  decision to sell most  long-term
fixed-rate  residential mortgages loans originated during the past two years due
to the historically low rates which existed during much of this period.

Interest  Income.  Interest  income for the quarter ended June 30, 2004 was $6.6
million  compared  to $7.0  million in the prior  year  quarter.  This  decrease
occurred due to the continuing  decline in interest rates  experienced  over the
past year, which has caused an unprecedented  level of loan refinancing and loan
modification  activity.  As a  result,  the  yield  on  interest-earning  assets
decreased  from 6.11% in the quarter ended June 30, 2003 to 5.54% in the current
quarter.   This  decrease  was  partially  offset  by  an  increase  in  average
interest-earning assets of $17.5 million in the current year period.

                                       9
<PAGE>

Interest  Expense.  Interest  expense  for the  quarter  ended June 30, 2004 was
unchanged  at $2.9  million  compared  to the  quarter  ended June 30,  2003.  A
decrease of 13 basis points in the cost of funds from 2.92% in the quarter ended
June 30,  2003 to 2.79% in the  quarter  ended  June 30,  2004 was  offset by an
increase in average interest-bearing liabilities of $17.7 million in the current
year period. The factors contributing to the modest decrease in the rate paid on
interest-bearing liabilities were set forth on the prior page.

     The following table presents average balances and average rates earned/paid
by the Company for the quarter ended June 30, 2004 compared to the quarter ended
June 30, 2003:
<TABLE>
<CAPTION>

                                                                    Three Months Ended June 30,
                                             -------------------------------------------------------------------------------
                                                           2004                                     2003
                                             -----------------------------------       -------------------------------------
                                               Average                   Average       Average                     Average
                                               Balance      Interest       Rate        Balance       Interest        Rate
                                             ----------    ----------   ---------      -------       --------      --------
   <S>                                          <C>            <C>          <C>          <C>            <C>           <C>
                                                                            (Dollars in thousands)
Interest-earning assets:
Mortgage loans                               $  351,421     $5,383        6.13%        $  378,812    $  6,039        6.38%
Other loans                                       4,949         79        6.39              7,699         126        6.55
Investment securities                            94,092      1,088        4.63             68,601         840        4.90
Short-term investments                           27,217         64        0.94              5,026          18        1.43
                                             ----------     ------                     ----------    --------
    Total interest-earning assets               477,679      6,614        5.54            460,138       7,023        6.11
                                             ----------     ------                     ----------    --------

Allowance for loan losses                        (3,557)                                   (3,301)
Noninterest-earning assets                       19,000                                    18,791
                                             ----------                                ----------
Total assets                                 $  493,122                                $  475,628
                                             ==========                                ==========

Interest-bearing liabilities:
Deposits                                     $  272,264      1,150        1.69         $  254,835       1,157        1.82
Advances from FHLB of Boston                    141,067      1,718        4.87            144,400       1,756        4.87
Other borrowings                                  3,955         39        3.94                392           1        1.02
                                             ----------     ------                     ----------    --------
Total interest-bearing liabilities              417,286      2,907        2.79            399,627       2,914        2.92
                                                            ------                                   --------

Noninterest-bearing liabilities                  32,803                                    35,399
                                             ----------                                ----------
Total liabilities                               450,089                                   435,026

Stockholders' equity                             43,033                                    40,602
                                             ----------                                ----------
    Total liabilities and
     stockholders' equity                    $  493,122                                $  475,628
                                             ==========                                ==========

Net interest and dividend income                            $3,707                                   $  4,109
                                                            ======                                   ========
Net interest spread                                                       2.75%                                      3.19%
                                                                          ====                                       ====
Net interest margin                                                       3.10%                                      3.57%
                                                                          ====                                       ====
</TABLE>

Provisions  for Loan  Losses.  The Company  provides for loan losses in order to
maintain the allowance for loan losses at a level that  management  estimates is
adequate to absorb  probable losses based on an evaluation of known and inherent
risks in the portfolio.  In determining the  appropriate  level of the allowance
for loan losses,  management  considers past and  anticipated  loss  experience,
evaluations of underlying collateral, prevailing economic conditions, the nature
and  volume of the loan  portfolio  and the levels of  non-performing  and other
classified loans. The amount of the allowance is based on estimates and ultimate
losses may vary from such estimates.  Management assesses the allowance for loan
losses on a quarterly  basis and  provides  for loan losses  monthly in order to
maintain the adequacy of the allowance.

     During the quarter ended June 30, 2004 and 2003,  the Company  provided $50
thousand for loan losses. The Company's asset quality,  as measured  principally
by delinquency  rates,  charge-offs  and loan  classifications,  continues to be
outstanding.

                                       10
<PAGE>

Non-interest Income. Total non-interest income was $448 thousand for the quarter
ended June 30, 2004  compared to $414  thousand in the same period of 2003.  The
primary reason for the $34 thousand increase in the current year was the gain on
sales  of  securities   which  amounted  to  $134  thousand.   This   additional
non-interest  income was partially offset by a decline in loan sale gains of $78
thousand in the current quarter. Overall,  residential loan origination activity
has  declined in the current  quarter  compared to the same  quarter  last year,
especially fixed rate loan originations, resulting in fewer loans being sold.

Non-interest Expenses.  Non-interest expenses increased $391 thousand, or 13.0%,
during the quarter  ended June 30, 2004 as compared to the same  quarter in 2003
due principally to increases in professional fees ($138 thousand),  salaries and
employee  benefits  ($103  thousand)  and  other   non-interest   expenses  ($82
thousand).

     The increase in salaries and employee  benefits of $103 thousand,  or 5.7%,
during the quarter  ended June 30,  2004,  was due to overall  salary  increases
averaging  3.5%,  increases  in  staffing,  as well as  increases in pension and
health care costs.

     Professional fees increased $138 thousand during the current quarter due to
the  recognition  of a partial  reimbursement  of legal  defense  costs from the
Company's insurance carrier in the prior year quarter,  which reduced expense in
that  period  by $145  thousand.  The  legal  defense  costs  were  incurred  in
connection with shareholder litigation, which was settled in August 2003.

     Other  non-interest  expenses increased $82 thousand in the current quarter
due  principally  to  increases  in various  insurance  costs as well as smaller
increases in several categories of expense.

Income Taxes.  The effective tax rates for the quarters  ended June 30, 2004 and
2003 were  36.1% and 12.4%,  respectively.  As  previously  noted,  the  Company
recovered  $374,000 in taxes during the prior year as a result of the settlement
of the REIT tax dispute with the DOR.  Exclusive of this item, the effective tax
rate for the quarter ended June 30, 2003 would have been 37.8%.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  principal  sources  of  liquidity  are  customer  deposits,
short-term  investments,  loan  repayments,  advances from the Federal Home Loan
Bank (FHLB) of Boston and funds from operations.  The Bank is a voluntary member
of the FHLB of Boston and, as such, is entitled to borrow up to the value of its
qualified  collateral that has not been pledged to others.  Qualified collateral
generally  consists of residential  first mortgage  loans,  U. S. Government and
agencies securities, mortgage-backed securities and funds on deposit at the FHLB
of Boston.  At June 30, 2004,  the Company had  approximately  $29.8  million in
unused borrowing capacity at the FHLB of Boston.

     At June 30, 2004, the Company had  commitments to originate  loans,  unused
outstanding  lines of credit and  undisbursed  proceeds of loans  totaling $52.8
million.  Since many of the commitments may expire without being drawn upon, the
total commitment amounts do not necessarily  represent future cash requirements.
The Company anticipates that it will have sufficient funds available to meet its
current loan commitments.

     The  Company's  and the  Bank's  capital  ratios  at June 30,  2004 were as
follows:

                                                    Company          Bank
                                                    -------          ----

      Tier 1 Capital (to average assets)              8.01%          7.73%
      Tier 1 Capital (to risk-weighted assets)       11.25          10.85
      Total Capital (to risk-weighted assets)        12.30          11.90

     These ratios placed the Company in excess of  regulatory  standards and the
Bank in the "well capitalized" category as set forth by the FDIC.

                                       11
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's  earnings are largely  dependent on its net interest  income,
which is the  difference  between the yield on  interest-earning  assets and the
cost of interest-bearing  liabilities.  The Company seeks to reduce its exposure
to changes in interest  rate,  or market risk,  through  active  monitoring  and
management of its interest-rate  risk exposure.  The policies and procedures for
managing both on- and off-balance sheet activities are established by the Bank's
asset/liability  management  committee ("ALCO").  The Board of Directors reviews
and approves the ALCO policy  annually and  monitors  related  activities  on an
ongoing basis.

     Market risk is the risk of loss from adverse  changes in market  prices and
rates.  The  Company's  market risk arises  primarily  from  interest  rate risk
inherent in its lending, borrowing and deposit taking activities.

     The main  objective  in  managing  interest  rate risk is to  minimize  the
adverse impact of changes in interest rates on net interest  income and preserve
capital, while adjusting the asset/liability  structure to control interest-rate
risk.  However, a sudden and substantial  increase or decrease in interest rates
may  adversely  impact  earnings to the extent that the interest  rates borne by
assets and liabilities do not change at the same speed,  to the same extent,  or
on the same basis.

     The  Company   quantifies   its   interest-rate   risk  exposure   using  a
sophisticated  simulation  model.  Simulation  analysis  is used to measure  the
exposure of net  interest  income to changes in  interest  rates over a specific
time horizon. Simulation analysis involves projecting future interest income and
expense under various rate scenarios. The simulation is based on both actual and
forecasted cash flows and assumptions of management  about the future changes in
interest  rates and levels of activity  (loan  originations,  loan  prepayments,
deposit flows,  etc). The assumptions are inherently  uncertain and,  therefore,
actual results will differ from simulated  results due to timing,  magnitude and
frequency of interest rate changes as well as changes in market  conditions  and
strategies.  The net interest income projection resulting from use of actual and
forecasted cash flows and  management's  assumptions is compared to net interest
income projections based on an immediate shift of 300 basis points upward and 75
basis points downward.  Internal guidelines on interest rate risk state that for
every 100 basis points immediate shift in interest rates, estimated net interest
income over the next twelve months should decline by no more than 5%.

     The following  table indicates the estimated  exposure,  as a percentage of
estimated net interest  income,  for the twelve month period  following the date
indicated  assuming  an  immediate  shift in  interest  rates as set forth below
(dollars in thousands):
<TABLE>
<CAPTION>
                                                                      June 30,              March 31,
                                                                        2004                   2004
                                                               --------------------   ---------------------
                                                                  Amount  % Change     Amount      % Change
                                                                  ------  --------     ------      --------
                        <S>                                          <C>     <C>        <C>          <C>
                  300 basis point increase in rates.........    $(1,976)    (12.3)%  $ (1,236)      (8.1)%

                  75 basis point decrease in rates...........       (60)     (0.4)       (315)      (2.1)
</TABLE>

ITEM 4. CONTROLS AND PROCEDURES

     As of the end of the  period  covered  by this  report,  management  of the
Company  carried  out  an  evaluation,   under  the  supervision  and  with  the
participation  of  the  Company's  principal  executive  officer  and  principal
financial officer, of the effectiveness of the Company's disclosure controls and
procedures.  Based on this evaluation, the Company's principal executive officer
and principal financial officer concluded that the Company's disclosure controls
and  procedures  are  effective  in  ensuring  that  information  required to be
disclosed  by the  Company  in  reports  that it  files  or  submits  under  the
Securities Exchange Act of 1934, as amended, is recorded, processed,  summarized
and reported,  within the time periods  specified in the Securities and Exchange
Commission's rules and forms.

                                       12
<PAGE>

     In addition,  there have been no changes in the Company's  internal control
over financial  reporting (to the extent that elements of internal  control over
financial  reporting are subsumed  within  disclosure  controls and  procedures)
identified in connection  with the evaluation  described in the above  paragraph
that occurred  during the Company's  last fiscal  quarter,  that has  materially
affected,  or is reasonably likely to materially  affect, the Company's internal
control over financial reporting.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Not Applicable

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         Not Applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not Applicable

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not Applicable

ITEM 5.  OTHER INFORMATION

         None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

              31.1     Rule 13a-14(a) Certification of Chief Executive Officer
              31.2     Rule 13a-14(a) Certification of Chief Financial Officer
              32       Section 1350 Certification

         (b)  Reports on Form 8-K

              DATE OF REPORT     ITEM(S) REPORTED     FINANCIAL STATEMENTS FILED
              --------------     ----------------     --------------------------

              April 8, 2004           7,10                       N/A
              April 30, 2004          7,12                       N/A

                                       13
<PAGE>

                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                          CENTRAL BANCORP, INC.
                                          ---------------------
                                          Registrant




 August 13, 2004                          /s/ John D. Doherty
 ----------------------                   -------------------------------------
 Date                                     John D. Doherty
                                          Chairman, President and Chief
                                           Executive Officer




 August 13, 2004                          /s/ Michael K. Devlin
 ------------------                       --------------------------------------
 Date                                     Michael K. Devlin
                                          Senior Vice President, Treasurer
                                          and Chief Financial Officer