##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 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
    
    1,639,951Class
    
    Outstanding at November 6, 2009




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##### 



CENTRAL BANCORP, INC.
 FORM 10-Q
 Table of Contents
 Page No.Part I. Financial InformationItem 1. Financial Statements (Unaudited)
    
    
    1Consolidated Statements of Financial Condition at
September 30, 2009 and
March 31, 2009
    
    
    1Consolidated Statements of Income for the Six
Months Ended September 30, 2009 and 2008
    
    
    2Consolidated Statements of Changes in
Stockholders Equity for the Six Months Ended
September 30, 2009
    
    
    3Consolidated Statements of Cash Flows for the Six
Months Ended September 30, 2009 and 2008
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4(T). Controls and Procedures
    
    
    32Part II. Other Information
    
    
    33Item 1. Legal Proceedings
    
    
    33Item 1A. Risk Factors
    
    
    33Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3. Defaults Upon Senior Securities
    
    
    33Item 4. Submission of Matters to a Vote of Security Holders
    
    
    33Item 5. Other Information
    
    
    34Item 6. Exhibits
    
    
    34SignaturesEX-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)
 (Dollars in Thousands, Except Share and Per Share Data)
    
    September 30, 2009
    
    
    March 31, 2009ASSETSCash and due from banks
    
    $
    5,286
    
    
    $
    5,099Short-term investments
    
    
    10,368
    
    
    
    37,323Cash and cash equivalents
    
    
    15,654
    
    
    
    42,422Investment securities available for sale (Note 2)
    
    
    36,026
    
    
    
    35,215Stock in Federal Home Loan Bank of Boston, at cost
    
    
    8,518
    
    
    
    8,518The Co-operative Central Bank Reserve Fund, at cost
    
    
    1,576
    
    
    
    1,576Total investments
    
    
    46,120
    
    
    
    45,309Loans held for sale
    
    
    732
    
    
    
    3,208Loans (Note 3)
    
    
    458,578
    
    
    
    460,670Less allowance for loan losses
    
    
    (2,719
    )
    
    
    (3,191
    )Loans, net
    
    
    455,959
    
    
    
    457,479Accrued interest receivable
    
    
    1,875
    
    
    
    1,859Banking premises and equipment, net
    
    
    2,978
    
    
    
    3,323Deferred tax asset, net
    
    
    6,168
    
    
    
    7,585Other real estate owned
    
    
    336
    
    
    
    2,986Goodwill, net
    
    
    2,232
    
    
    
    2,232Bank owned life insurance (Note 11)
    
    
    6,541
    
    
    
    6,391Other assets
    
    
    2,179
    
    
    
    3,033Total assets
    
    $
    540,674
    
    
    $
    575,827LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits (Note 4)
    
    $
    341,218
    
    
    $
    375,074Short-term borrowings
    
    
    141
    
    
    
    1,014Federal Home Loan Bank advances
    
    
    141,527
    
    
    
    144,583Subordinated debentures (Note 5)
    
    
    11,341
    
    
    
    11,341Advanced payments by borrowers for taxes and insurance
    
    
    1,730
    
    
    
    1,532Accrued expenses and other liabilities
    
    
    1,587
    
    
    
    2,044Total liabilities
    
    
    497,544
    
    
    
    535,588Commitments 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 September
30, 2009 and March 31, 2009
    
    
    9,531
    
    
    
    9,476Common stock $1.00 par value; 15,000,000 shares authorized; 1,639,951
shares issued and outstanding at September 30, 2009 and March 31, 2009
    
    
    1,640
    
    
    
    1,640Additional paid-in capital
    
    
    4,265
    
    
    
    4,371Retained income
    
    
    33,843
    
    
    
    33,393Accumulated other comprehensive loss (Note 6)
    
    
    (79
    )
    
    
    (2,226
    )Unearned compensation  ESOP
    
    
    (6,070
    )
    
    
    (6,415
    )Total stockholders equity
    
    
    43,130
    
    
    
    40,239Total liabilities and stockholders equity
    
    $
    540,674
    
    
    $
    575,827
 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
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,(In Thousands, Except Share and Per Share Data)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Interest and dividend income:Mortgage loans
    
    $
    6,714
    
    
    $
    6,884
    
    
    $
    13,412
    
    
    $
    13,737Other loans
    
    
    86
    
    
    
    140
    
    
    
    176
    
    
    
    330Investments
    
    
    412
    
    
    
    723
    
    
    
    792
    
    
    
    1,488Short-term investments
    
    
    13
    
    
    
    53
    
    
    
    33
    
    
    
    109Total interest and dividend income
    
    
    7,225
    
    
    
    7,800
    
    
    
    14,413
    
    
    
    15,664Interest expense:Deposits
    
    
    1,262
    
    
    
    1,737
    
    
    
    2,800
    
    
    
    3,744Advances from Federal Home Loan Bank of Boston
    
    
    1,629
    
    
    
    1,691
    
    
    
    3,279
    
    
    
    3,454Other borrowings
    
    
    148
    
    
    
    174
    
    
    
    300
    
    
    
    343Total interest expense
    
    
    3,039
    
    
    
    3,602
    
    
    
    6,379
    
    
    
    7,541Net interest and dividend income
    
    
    4,186
    
    
    
    4,198
    
    
    
    8,034
    
    
    
    8,123Provision for loan losses
    
    
    200
    
    
    
    900
    
    
    
    250
    
    
    
    1,100Net interest and dividend income after
provision for loan losses
    
    
    3,986
    
    
    
    3,298
    
    
    
    7,784
    
    
    
    7,023Noninterest income:Deposit service charges
    
    
    248
    
    
    
    252
    
    
    
    487
    
    
    
    499Net loss from sales and write-downs
of investment securities other than FNMA and
FHLMC
    
    
    
    
    
    
    (115
    )
    
    
    
    
    
    
    (144
    )Net loss from sales and write-downs
of FNMA and FHLMC
    
    
    
    
    
    
    (9,394
    )
    
    
    
    
    
    
    (9,394
    )Net gains on sales of loans
    
    
    32
    
    
    
    3
    
    
    
    181
    
    
    
    15Bank owned life insurance income
    
    
    76
    
    
    
    79
    
    
    
    151
    
    
    
    157Other income
    
    
    54
    
    
    
    81
    
    
    
    125
    
    
    
    201Total noninterest income
    
    
    410
    
    
    
    (9,094
    )
    
    
    944
    
    
    
    (8,666
    )Noninterest expenses:Salaries and employee benefits
    
    
    1,897
    
    
    
    2,080
    
    
    
    3,948
    
    
    
    4,298Occupancy and equipment
    
    
    552
    
    
    
    572
    
    
    
    1,088
    
    
    
    1,125Data processing fees
    
    
    205
    
    
    
    199
    
    
    
    415
    
    
    
    400Professional fees
    
    
    134
    
    
    
    204
    
    
    
    368
    
    
    
    384FDIC deposit premiums
    
    
    138
    
    
    
    16
    
    
    
    480
    
    
    
    26Advertising and marketing
    
    
    8
    
    
    
    59
    
    
    
    84
    
    
    
    89Other expenses
    
    
    551
    
    
    
    476
    
    
    
    1,025
    
    
    
    892Total noninterest expenses
    
    
    3,485
    
    
    
    3,606
    
    
    
    7,408
    
    
    
    7,214Income (loss) before income taxes
    
    
    911
    
    
    
    (9,402
    )
    
    
    1,320
    
    
    
    (8,857
    )Provision for income taxes
    
    
    307
    
    
    
    64
    
    
    
    419
    
    
    
    208Net income (loss)
    
    $
    604
    
    
    $
    (9,466
    )
    
    $
    901
    
    
    $
    (9,065
    )Net income (loss) available to common shareholders
    
    $
    451
    
    
    $
    (9,466
    )
    
    $
    901
    
    
    $
    (9,065
    )Earnings (loss) per common share  basic (Note 9)
    
    $
    0.31
    
    
    $
    (6.80
    )
    
    $
    0.41
    
    
    $
    (6.53
    )Earnings (loss) per common share  diluted (Note 9)
    
    $
    0.30
    
    
    $
    (6.80
    )
    
    $
    0.40
    
    
    $
    (6.53
    )Weighted average common shares outstanding  basic
    
    
    1,451,790
    
    
    
    1,391,083
    
    
    
    1,449,101
    
    
    
    1,388,395Weighted average common and equivalent shares
outstanding  diluted
    
    
    1,498,326
    
    
    
    1,391,083
    
    
    
    1,473,465
    
    
    
    1,388,395
 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)
 AccumulatedSeries A
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    Unearned
    
    
    TotalPreferred
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Compensation
    
    
    Stockholders(In Thousands, Except Per Share Data)
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Income
    
    
    Loss
    
    
    ESOP
    
    
    EquitySix Months Ended September 30, 2009Balance at March 31, 2009
    
    $
    9,476
    
    
    $
    1,640
    
    
    $
    4,371
    
    
    $
    33,393
    
    
    $
    (2,226
    )
    
    $
    (6,415
    )
    
    $
    40,239Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    901
    
    
    
    
    
    
    
    
    
    
    
    901Other comprehensive income, net of taxes:Unrealized gain on securities, net
of reclassification adjustment (Note 6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,147
    
    
    
    
    
    
    
    2,147Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,048Dividends paid to common stockholders
($0.05 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (146
    )
    
    
    
    
    
    
    
    
    
    
    (146
    )Preferred stock accretion of discount and
issuance costs
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    (55
    )Dividends paid on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (250
    )
    
    
    
    
    
    
    
    
    
    
    (250
    )Stock-based compensation (Note 10)
    
    
    
    
    
    
    
    
    
    
    161
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161Amortization of unearned compensation  ESOP
    
    
    
    
    
    
    
    
    
    
    (267
    )
    
    
    
    
    
    
    
    
    
    
    345
    
    
    
    78Balance at September 30, 2009
    
    $
    9,531
    
    
    $
    1,640
    
    
    $
    4,265
    
    
    $
    33,843
    
    
    $
    (79
    )
    
    $
    (6,070
    )
    
    $
    43,130
 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)
 Six Months EndedSeptember 30,(In thousands)
    
    2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    901
    
    
    $
    (9,065
    )Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation and amortization
    
    
    406
    
    
    
    460Amortization of premiums
    
    
    129
    
    
    
    29Provision for loan losses
    
    
    250
    
    
    
    1,100Stock-based compensation and amortization of unearned compensation  ESOP
    
    
    239
    
    
    
    312Decrease in deferred tax asset
    
    
    
    
    
    
    59Net losses from sales and write-downs of investment securities
    
    
    
    
    
    
    9,538Bank-owned life insurance income
    
    
    (151
    )
    
    
    (157
    )Loss on sale of OREO
    
    
    12
    
    
    
    Gains on sales of loans held for sale
    
    
    (181
    )
    
    
    (15
    )Originations of loans held for sale
    
    
    (23,122
    )
    
    
    (2,877
    )Proceeds from sale of loans originated for sale
    
    
    25,779
    
    
    
    1,847(Increase) decrease in accrued interest receivable
    
    
    (16
    )
    
    
    9Decrease (increase) in other assets, net
    
    
    855
    
    
    
    (155
    )Increase in advance payments by borrowers for taxes and insurance
    
    
    198
    
    
    
    217(Decrease) in accrued expenses and other liabilities, net
    
    
    (457
    )
    
    
    (420
    )Net cash provided by operating activities
    
    
    4,842
    
    
    
    882Cash flows from investing activities:Loan principal collections (originations), net
    
    
    1,293
    
    
    
    12,114Principal payments on mortgage-backed securities
    
    
    6,475
    
    
    
    2,724Proceeds from sales of investment securities
    
    
    
    
    
    
    3,616Purchases of investment securities
    
    
    (5,351
    )
    
    
    (3,002
    )Maturities and calls of investment securities
    
    
    1,500
    
    
    
    2,000Proceeds from sales of OREO
    
    
    2,715
    
    
    
    Purchase of banking premises and equipment
    
    
    (61
    )
    
    
    (208
    )Net cash provided by investing activities
    
    
    6,571
    
    
    
    17,244Cash flows from financing activities:Net decrease in deposits
    
    
    (33,856
    )
    
    
    (7,028
    )Repayment of advances from FHLB of Boston
    
    
    (3,056
    )
    
    
    (12,053
    )Net proceeds (repayments) from (of) short-term borrowings
    
    
    (873
    )
    
    
    19Cash dividends paid
    
    
    (396
    )
    
    
    (513
    )Net cash used in financing activities
    
    
    (38,181
    )
    
    
    (19,575
    )Net decrease in cash and cash equivalents
    
    
    (26,768
    )
    
    
    (1,449
    )Cash and cash equivalents at beginning of period
    
    
    42,422
    
    
    
    17,725Cash and cash equivalents at end of period
    
    $
    15,654
    
    
    $
    16,276Cash paid during the period for:Interest
    
    $
    6,426
    
    
    $
    7,591Income taxes
    
    $
    
    
    
    $
    600Supplemental disclosure of non-cash investing and financing activities:Loans transferred to other real estate owned
    
    $
    77
    
    
    $
    89Accretion of Series A preferred stock issuance costs
    
    $
    55
    
    
    $
    
 See accompanying notes to unaudited consolidated financial statements
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CENTRAL BANCORP AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
September 30, 2009
 (1) Basis of Presentation
  Consolidation of
Variable Interest Entities  an Interpretation of Accounting Research Bulletin No. 51, Transfers and Servicing The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles
  (2) Investments
  September 30, 2009Amortized
    
    
    Gross Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value( In Thousands)Corporate bonds
    
    $
    1,985
    
    
    $
    
    
    
    $
    (587
    )
    
    $
    1,398Mortgage-backed securities
    
    
    26,564
    
    
    
    731
    
    
    
    (21
    )
    
    
    27,274Trust preferred securities
    
    
    1,003
    
    
    
    13
    
    
    
    
    
    
    
    1,016Total debt securities
    
    
    29,552
    
    
    
    744
    
    
    
    (608
    )
    
    
    29,688Preferred stock
    
    
    3,771
    
    
    
    58
    
    
    
    (541
    )
    
    
    3,288Common stock
    
    
    3,159
    
    
    
    192
    
    
    
    (301
    )
    
    
    3,050Total
    
    $
    36,482
    
    
    $
    994
    
    
    $
    (1,450
    )
    
    $
    36,026
 5




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March 31, 2009Amortized
    
    
    Gross Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(In Thousands)U.S. Government and agency obligations
    
    $
    1,500
    
    
    $
    3
    
    
    $
    
    
    
    $
    1,503Corporate bonds
    
    
    1,984
    
    
    
    
    
    
    
    (1,283
    )
    
    
    701Mortgage-backed securities
    
    
    27,813
    
    
    
    572
    
    
    
    (32
    )
    
    
    28,353Trust preferred securities
    
    
    1,003
    
    
    
    
    
    
    
    (253
    )
    
    
    750Total debt securities
    
    
    32,300
    
    
    
    575
    
    
    
    (1,568
    )
    
    
    31,307Preferred stock
    
    
    3,775
    
    
    
    
    
    
    
    (2,125
    )
    
    
    1,650Common stock
    
    
    3,158
    
    
    
    3
    
    
    
    (903
    )
    
    
    3,258Total
    
    $
    39,233
    
    
    $
    578
    
    
    $
    (4,596
    )
    
    $
    35,215
   Less Than or Equal to
    
    
    Greater Than12 Months
    
    
    12 MonthsFair
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Fair Value
    
    
    Losses(In Thousands)Corporate bonds
    
    $
    
    
    
    $
    
    
    
    $
    1,398
    
    
    $
    (587
    )Mortgage-backed securities
    
    
    1,082
    
    
    
    (4
    )
    
    
    679
    
    
    
    (17
    )Preferred stock
    
    
    
    
    
    
    
    
    
    
    2,928
    
    
    
    (541
    )Common stock
    
    
    
    
    
    
    
    
    
    
    2,175
    
    
    
    (301
    )Total temporarily impaired securities
    
    $
    1,082
    
    
    $
    (4
    )
    
    $
    7,180
    
    
    $
    (1,450
    )
  6




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##### Table of Contents



Amortized
    
    
    Fair
    
    
    AnnualCost
    
    
    Value
    
    
    Yield(Dollars in Thousands)Due within one year
    
    $
    
    
    
    $
    
    
    
    
    
    %Due after one year but within five years
    
    
    6,262
    
    
    
    6,442
    
    
    
    4.20Due after five years but within ten years
    
    
    1,992
    
    
    
    1,405
    
    
    
    7.00Due after ten years
    
    
    21,298
    
    
    
    21,841
    
    
    
    5.52Total
    
    $
    29,552
    
    
    $
    29,688
  7




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##### Table of Contents



(3) Loans
 Loans, excluding loans held for sale, as of September 30, 2009 and March 31, 2009 are
summarized below (unaudited, in thousands):
 September 30,
    
    
    March 31,2009
    
    
    2009Real estate loans:Residential real estate (1- 4 family)
    
    $
    203,516
    
    
    $
    183,327Commercial real estate
    
    
    237,278
    
    
    
    249,941Construction
    
    
    3,671
    
    
    
    14,089Home equity lines of credit
    
    
    8,371
    
    
    
    7,347Total real estate loans
    
    
    452,836
    
    
    
    454,704Commercial loans
    
    
    4,667
    
    
    
    4,834Consumer loans
    
    
    1,075
    
    
    
    1,132Total loans
    
    
    458,578
    
    
    
    460,670Less: allowance for loan losses
    
    
    (2,719
    )
    
    
    (3,191
    )Total loans, net
    
    $
    455,859
    
    
    $
    457,479
  Receivables
  Three Months EndedSeptember 30,2009
    
    
    2008Balance at beginning of period
    
    $
    3,064
    
    
    $
    3,808Provision charged to expense
    
    
    200
    
    
    
    900Less: charge-offs
    
    
    (548
    )
    
    
    (41
    )Add: recoveries
    
    
    3
    
    
    
    6Balance at end of period
    
    $
    2,719
    
    
    $
    4,674
 Six Months EndedSeptember 30,2009
    
    
    2008Balance at beginning of period
    
    $
    3,191
    
    
    $
    3,613Provision charged to expense
    
    
    250
    
    
    
    1,100Less: charge-offs
    
    
    (726
    )
    
    
    (47
    )Add: recoveries
    
    
    4
    
    
    
    8Balance at end of period
    
    $
    2,719
    
    
    $
    4,674
 8




---



##### Table of Contents



(4) Deposits
  September 30,
    
    
    March 31,2009
    
    
    2009Demand deposit accounts
    
    $
    39,320
    
    
    $
    46,259NOW accounts
    
    
    27,652
    
    
    
    30,976Passbook and other savings accounts
    
    
    51,253
    
    
    
    50,737Money market deposit accounts
    
    
    80,291
    
    
    
    67,398Total non-certificate accounts
    
    
    198,516
    
    
    
    195,370Term deposit certificates:Certificates of $100,000 and above
    
    
    53,752
    
    
    
    85,497Certificates of less than $100,000
    
    
    88,950
    
    
    
    94,207Total term deposit certificates
    
    
    142,702
    
    
    
    179,704Total deposits
    
    $
    341,218
    
    
    $
    375,074
 (5) Subordinated Debentures
    9




---



##### Table of Contents



(6) Other Comprehensive Income
   For the Six Months EndedSeptember 30, 2009Before-Tax
    
    
    Tax
    
    
    After-TaxAmount
    
    
    Effect
    
    
    AmountUnrealized gains on securities:Unrealized net holding gains during period
    
    $
    3,562
    
    
    $
    1,415
    
    
    $
    2,147Less: reclassification adjustment for net
gains included in net income
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income
    
    $
    3,562
    
    
    $
    1,415
    
    
    $
    2,147
 For the Six Months EndedSeptember 30, 2008Before-Tax
    
    
    Tax
    
    
    After-TaxAmount
    
    
    Effect
    
    
    AmountUnrealized losses on securities:Unrealized net holding losses during period
    
    $
    (11,149
    )
    
    $
    (649
    )
    
    $
    (10,500
    )Less: reclassification adjustment for net
losses included in net income (loss)
    
    
    (9,538
    )
    
    
    
    
    
    
    (9,538
    )Other comprehensive loss
    
    $
    (1,611
    )
    
    $
    (649
    )
    
    $
    (962
    )
 (7) Contingencies
 Legal Proceedings.
 (8) Subsequent Events
   (9) Earnings Per Share (EPS)
  10




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Amounts in thousands, except per share amounts)Net income (loss) as reported
    
    $
    604
    
    
    $
    (9,466
    )
    
    $
    901
    
    
    $
    (9,065
    )Less preferred dividends and accretion
    
    
    (153
    )
    
    
    
    
    
    
    (305
    )
    
    
    Net income (loss) available to common stockholders
    
    $
    451
    
    
    $
    (9,466
    )
    
    $
    596
    
    
    $
    (9,065
    )Weighted average number of common shares outstanding
    
    
    1,640
    
    
    
    1,640
    
    
    
    1,640
    
    
    
    1,640Weighted average number of unallocated ESOP and
unvested restricted shares
    
    
    (188
    )
    
    
    (249
    )
    
    
    (191
    )
    
    
    (252
    )Weighted average number of common shares outstanding
used in calculation of basic earnings per share
    
    
    1,452
    
    
    
    1,391
    
    
    
    1,449
    
    
    
    1,388Incremental shares from the assumed exercise of dilutive
securities
    
    
    46
    
    
    
    
    
    
    
    24
    
    
    
    Weighted average number of common shares outstanding
used in calculating diluted earnings per share
    
    
    1,498
    
    
    
    1,391
    
    
    
    1,473
    
    
    
    1,388Earnings per common shareBasic
    
    $
    0.31
    
    
    $
    (6.80
    )
    
    $
    0.41
    
    
    $
    (6.53
    )Diluted
    
    $
    0.30
    
    
    $
    (6.80
    )
    
    $
    0.40
    
    
    $
    (6.53
    )
  (10) Stock-Based Compensation
   11




---



##### Table of Contents



Compensation  Stock Compensation
  Number of
    
    Weighted AverageShares
    
    Exercise PriceOutstanding at March 31, 2009
    
    
    68,218
    
    
    $
    25.364Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (865
    )
    
    
    28.990GrantedOutstanding at September 30, 2009
    
    
    67,353
    
    
    $
    25.317Exercisable at September 30, 2009
    
    
    61,353
    
    
    $
    24.742
 12




---



##### Table of Contents



WeightedAverageRemainingNumber
    
    
    Contractual
    
    
    AggregateExercise
    
    
    of Shares
    
    
    Life
    
    
    IntrinsicPrice
    
    
    Outstanding
    
    
    (Years)
    
    
    Value (1)$
    16.625
    
    
    
    12,077
    (2)
    
    
    1.2
    
    
    
    20.250
    
    
    
    13,745
    (2)
    
    
    0.1
    
    
    
    28.990
    
    
    
    31,531
    (2)
    
    
    5.4
    
    
    
    31.200
    
    
    
    10,000
    (3)
    
    
    7.0
    
    
    
    Average/Total
    
    $
    25.317
    
    
    
    67,353
    
    
    
    3.8
    
    
    $
    
 
 (1)
    
    Represents the total intrinsic value, based on the Companys closing stock price of $8.70 on
September 30, 2009, which would have been received by the option holders had all option
holders exercised their options as of that date. As of September 30, 2009, 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, 40% vested at September 30, 2009.  Weighted AverageNumber of
    
    
    Grant DateShares
    
    
    Fair ValueNon-vested at March 31, 2009
    
    
    29,400
    
    
    $
    31.20Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Non-vested at September 30, 2009
    
    
    29,400
    
    
    $
    31.20
 13




---



##### Table of Contents



(11) Bank-Owned Life Insurance
 Investments- Other
 (12) Recent Accounting Pronouncements
 Effective Date of FASB Statement No. 157 Financial
Instruments Fair Value Measurements
 Disclosures about Derivative Instruments and Hedging Activities Derivatives and
Hedging Accounting
for Derivative Instruments and Hedging Activities
 Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Earnings Per Share Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share
 Interim Disclosures about Fair
Value of Financial Instruments Financial Instruments . Disclosures
about Fair Value of Financial Instruments Interim Financial Reporting
 14




---



##### Table of Contents



Recognition and
Presentation of Other- Than-Temporary Impairments Investments-Debt and Equity Securities
 Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability have Significantly Decreased and Identifying
Transactions that are not Orderly Fair Value Measurements and Disclosures
 Subsequent Events Subsequent Events
 The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles  A replacement of FASB Statement No.
162 Generally Accepted Accounting Principles Financial
Accounting Standards Board Accounting Standards
 15




---



##### Table of Contents



Codification
 (13) Fair Value 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
   Carrying Value (in thousands)Level 1
    
    Level 2
    
    Level 3
    
    TotalAssets recorded at fair value on a recurring basis:Securities available for sale
    
    $
    3,050
    
    
    $
    32,976
    
    
    
    
    
    
    $
    36,026Assets recorded at fair value on a nonrecurring basis:Impaired loans carried at fair value
    
    
    
    
    
    
    
    
    
    $
    6,944
    
    
    $
    6,944OREO
    
    
    
    
    
    
    
    
    
    $
    336
    
    
    $
    336
   16




---



##### Table of Contents



InvestmentSecuritiesAvailable for SaleBalance at March 31, 2009
    
    $
    1,012Total realized and unrealized gains (losses) included in income
    
    
    Total unrealized losses included in other comprehensive income
    
    
    Net accretion of discount and repayment of principal
    
    
    Net transfers in/out of Level 3
    
    
    (1,012
    )Balance at September 30, 2009
    
    $
    
   Cash and Due from Banks 
 Short-Term Investments 
 Investments and Mortgage-Backed Securities 
 Loans and Loans Held for Sale 
 Other Real Estate Owned 
 17




---



##### Table of Contents



Goodwill Intangibles-Goodwill and Other e.g
 Accrued Interest Receivable 
 Stock in FHLB of Boston 
 The Co-operative Central Bank Reserve Fund 
 Deposits 
 Advances from FHLB of Boston 
 Subordinated Debentures 
 Short-Term Borrowings, Advance Payments by Borrowers for Taxes and Insurance and Accrued
Interest Payable 
 Off-Balance Sheet Instruments 
 18




---



##### Table of Contents



September 30, 2009
    
    March 31, 2009Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueAssetsCash and due from banks
    
    $
    5,286
    
    
    $
    5,286
    
    
    $
    5,099
    
    
    $
    5,099Short-term investments
    
    
    10,368
    
    
    
    10,368
    
    
    
    37,323
    
    
    
    37,323Investment securities
    
    
    36,026
    
    
    
    36,026
    
    
    
    35,215
    
    
    
    35,215Loans held for sale
    
    
    732
    
    
    
    732
    
    
    
    3,208
    
    
    
    3,208Net loans
    
    
    455,959
    
    
    
    451,904
    
    
    
    457,479
    
    
    
    453,974Stock 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
    
    
    1,875
    
    
    
    1,875
    
    
    
    1,859
    
    
    
    1,859LiabilitiesDeposits
    
    $
    341,218
    
    
    $
    332,092
    
    
    $
    375,074
    
    
    $
    366,052Short-term borrowings
    
    
    141
    
    
    
    141
    
    
    
    1,014
    
    
    
    1,014Advances from FHLB of Boston
    
    
    141,527
    
    
    
    151,304
    
    
    
    144,583
    
    
    
    153,318Subordinated debentures
    
    
    11,341
    
    
    
    8,981
    
    
    
    11,341
    
    
    
    9,013Advance payments by borrowers for taxes and insurance
    
    
    1,730
    
    
    
    1,730
    
    
    
    1,532
    
    
    
    1,532Accrued interest payable
    
    
    572
    
    
    
    572
    
    
    
    619
    
    
    
    619Off-Balance Sheet Instruments
    
    $
    39,739
    
    
    $
    39,739
    
    
    $
    43,378
    
    
    $
    43,378
 (14) Troubled Asset Relief Program Capital Purchase Program
   19




---



##### 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
  20




---



##### Table of Contents



www.sec.gov Part IIItem 1A.
Risk Factors
 General
      Critical Accounting Policies
  Allowance for Loan Losses
 21




---



##### Table of Contents



Contingencies
 Other Real Estate Owned
 Fair Value of Investments
    Income Taxes.
 Accounting for Goodwill and Impairment.
 22




---



##### Table of Contents



e.g
 Comparison of Financial Condition at September 30, 2009 and March 31, 2009
  Provision for
Loan Losses
   23




---



##### Table of Contents



Bank-Owned Life Insurance
    Comparison of Operating Results for the Quarters Ended September 30, 2009 and 2008
  Interest and Dividend Income.
 24




---



##### Table of Contents



Interest Expense
 25




---



##### Table of Contents



Three Months Ended September 30,2009
    
    
    2008Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Interest-earning assets:Mortgage loans
    
    $
    455,760
    
    
    $
    6,714
    
    
    
    5.89
    %
    
    $
    457,339
    
    
    $
    6,884
    
    
    
    6.03
    %Other loans
    
    
    5,881
    
    
    
    86
    
    
    
    5.85
    
    
    
    8,804
    
    
    
    140
    
    
    
    6.36Investment securities
    
    
    43,689
    
    
    
    412
    
    
    
    3.77
    
    
    
    57,210
    
    
    
    723
    
    
    
    5.06Short-term investments
    
    
    19,573
    
    
    
    13
    
    
    
    0.27
    
    
    
    11,025
    
    
    
    53
    
    
    
    1.92Total interest-earning assets
    
    
    524,903
    
    
    
    7,225
    
    
    
    5.51
    
    
    
    534,378
    
    
    
    7,800
    
    
    
    5.85Allowance for loan losses
    
    
    (3,092
    )
    
    
    
    
    
    
    
    
    
    
    (3,982
    )Noninterest-earning assets
    
    
    30,314
    
    
    
    
    
    
    
    
    
    
    
    25,563Total assets
    
    $
    552,125
    
    
    
    
    
    
    
    
    
    
    $
    555,959Interest-bearing liabilities:Deposits
    
    $
    311,074
    
    
    
    1,262
    
    
    
    1.62
    
    
    $
    318,915
    
    
    
    1,737
    
    
    
    2.18Advances from FHLB of Boston
    
    
    141,537
    
    
    
    1,629
    
    
    
    4.60
    
    
    
    146,223
    
    
    
    1,691
    
    
    
    4.63Other borrowings
    
    
    12,541
    
    
    
    148
    
    
    
    4.72
    
    
    
    11,998
    
    
    
    174
    
    
    
    5.80Total interest-bearing liabilities
    
    
    465,152
    
    
    
    3,039
    
    
    
    2.61
    
    
    
    477,136
    
    
    
    3,602
    
    
    
    3.02Noninterest-bearing liabilities
    
    
    44,403
    
    
    
    
    
    
    
    
    
    
    
    40,939Total liabilities
    
    
    509,555
    
    
    
    
    
    
    
    
    
    
    
    518,075Stockholders equity
    
    
    42,570
    
    
    
    
    
    
    
    
    
    
    
    37,884Total liabilities and stockholders
equity
    
    $
    552,125
    
    
    
    
    
    
    
    
    
    
    $
    555,959Net interest and dividend income
    
    
    
    
    
    $
    4,186
    
    
    
    
    
    
    
    
    
    
    $
    4,198Net interest spread
    
    
    
    
    
    
    
    
    
    
    2.90
    %
    
    
    
    
    
    
    
    
    
    
    2.82
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.19
    %
    
    
    
    
    
    
    
    
    
    
    3.14
    %
 Provision for Loan Losses.
  26




---



##### Table of Contents



Noninterest Income.
 Noninterest Expenses
        27




---



##### Table of Contents



Income Taxes
  Comparison of Operating Results for the Six Months Ended September 30, 2009 and 2008
  Interest and Dividend Income.
 Interest Expense.
 28




---



##### Table of Contents



Six Months Ended September 30,2009
    
    
    2008Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Interest-earning assets:Mortgage loans
    
    $
    453,819
    
    
    $
    13,412
    
    
    
    5.91
    %
    
    $
    459,625
    
    
    $
    13,737
    
    
    
    5.98
    %Other loans
    
    
    6,021
    
    
    
    176
    
    
    
    5.85
    
    
    
    10,414
    
    
    
    330
    
    
    
    6.34Investment securities
    
    
    43,751
    
    
    
    792
    
    
    
    3.62
    
    
    
    60,359
    
    
    
    1,488
    
    
    
    4.93Short-term investments
    
    
    25,780
    
    
    
    33
    
    
    
    0.26
    
    
    
    9,385
    
    
    
    109
    
    
    
    2.32Total interest-earning assets
    
    
    529,371
    
    
    
    14,413
    
    
    
    5.45
    
    
    
    539,783
    
    
    
    15,664
    
    
    
    5.80Allowance for loan losses
    
    
    (3,135
    )
    
    
    
    
    
    
    
    
    
    
    (3,799
    )Noninterest-earning assets
    
    
    33,941
    
    
    
    
    
    
    
    
    
    
    
    24,618Total assets
    
    $
    560,177
    
    
    
    
    
    
    
    
    
    
    $
    560,602Interest-bearing liabilities:Deposits
    
    $
    317,731
    
    
    
    2,800
    
    
    
    1.76
    
    
    $
    319,976
    
    
    
    3,744
    
    
    
    2.34Advances from FHLB of Boston
    
    
    143,009
    
    
    
    3,279
    
    
    
    4.59
    
    
    
    149,614
    
    
    
    3,454
    
    
    
    4.62Other borrowings
    
    
    12,431
    
    
    
    300
    
    
    
    4.83
    
    
    
    11,687
    
    
    
    343
    
    
    
    5.87Total interest-bearing liabilities
    
    
    473,171
    
    
    
    6,379
    
    
    
    2.70
    
    
    
    477,136
    
    
    
    7,541
    
    
    
    3.13Noninterest-bearing liabilities
    
    
    45,142
    
    
    
    
    
    
    
    
    
    
    
    40,393Total liabilities
    
    
    518,313
    
    
    
    
    
    
    
    
    
    
    
    521,670Stockholders equity
    
    
    41,864
    
    
    
    
    
    
    
    
    
    
    
    38,932Total liabilities and stockholders
equity
    
    $
    560,177
    
    
    
    
    
    
    
    
    
    
    $
    560,602Net interest and dividend income
    
    
    
    
    
    $
    8,034
    
    
    
    
    
    
    
    
    
    
    $
    8,123Net interest spread
    
    
    
    
    
    
    
    
    
    
    2.75
    %
    
    
    
    
    
    
    
    
    
    
    2.67
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.04
    %
    
    
    
    
    
    
    
    
    
    
    3.01
    %
 Provision for Loan Losses.
 29




---



##### Table of Contents



Noninterest Income.
 Noninterest Expenses.
     30




---



##### Table of Contents



Income Taxes
 Liquidity and Capital Resources
     31




---



##### Table of Contents



At September 30, 2009RegulatoryThresholdFor WellActual
    
    
    CapitalizedCentral Bancorp:Tier 1 Leverage
    
    
    8.64
    %
    
    
    5.0
    %Tier 1 Risk-Based Ratio
    
    
    13.15
    %
    
    
    6.0
    %Total Risk-Based Ratio
    
    
    13.90
    %
    
    
    10.0
    %Central Co-operative Bank:Tier 1 Leverage
    
    
    7.45
    %
    
    
    5.0
    %Tier 1 Risk-Based Ratio
    
    
    11.34
    %
    
    
    6.0
    %Total Risk-Based Ratio
    
    
    12.09
    %
    
    
    10.0
    %
 Off-Balance Sheet Arrangements
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4 (T). Controls and Procedures
  32




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
   ELECTION OF DIRECTORS
    
    FOR
    
    
    WITHHELDRobert J. Hardiman
    
    
    1,218,048
    
    
    
    291,995William P. Morrissey
    
    
    1,218,048
    
    
    
    291,995Edward F. Sweeney, Jr.
    
    
    1,170,248
    
    
    
    339,295
  33




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##### Table of Contents



FOR
    
    AGAINST
    
    ABSTAIN1,168,465
    
    287,296
    
    54,282
 
 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
 34




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##### Table of Contents



SIGNATURES
  CENTRAL BANCORP,
INC.            
RegistrantNovember 13, 2009
    By:
    /s/ John D. DohertyJohn D. DohertyChairman and Chief Executive OfficerNovember 13, 2009
    By:
    /s/ Paul S. FeeleyPaul S. FeeleySenior Vice President, Treasurer and
Chief Financial Officer