U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTER ENDED DECEMBER 31, 2002
                              -----------------

                         Commission File Number: 0-25251
                                                 -------

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

                                  MASSACHUSETTS
         --------------------------------------------------------------
         (State or Other Jurisdiction of Incorporation or Organization)

                  I.R.S. Employer Identification No. 04-3447594

                   399 HIGHLAND AVENUE, SOMERVILLE, MA. 02144
                   ------------------------------------------
                    (Address of Principal Executive Offices)

                                 (617) 628-4000
                          -----------------------------
                          Registrant's Telephone Number



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 Company 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                         1,662,433
   -----------------------------               ---------------------------------
              Class                            Outstanding at February 12, 2003
<PAGE>

                              CENTRAL BANCORP, INC.

                                TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION                                          PAGE NO.

         Item 1.  Financial Statements (Unaudited)

                  Consolidated Statements of Financial Condition at
                  December 31, 2002 and March 31, 2002                      1

                  Consolidated Statements of Income for the three
                  and nine months ended December 31, 2002 and 2001          2

                  Consolidated Statements of Changes in Stockholders'
                  Equity for the nine months ended December 31, 2002
                  and 2001                                                  3

                  Consolidated Statements of Cash Flows for the nine
                  months ended December 31, 2002 and 2001                   4

                  Notes to Unaudited Consolidated Financial Statements      5

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of  Operations                      9

                  Liquidity and Capital Resources                           13

         Item 3.  Quantitative and Qualitative Disclosures about Market
                  Risk                                                      13

         Item 4.  Controls and Procedures                                   14



PART II.  OTHER INFORMATION

         Item 1.  Legal Proceedings                                         15

         Item 2.  Changes in Securities and Use of Proceeds                 15

         Item 3.  Defaults upon Senior Securities                           15

         Item 4.  Submission of Matters to a Vote of Security Holders       15

         Item 5.  Other Information                                         15

         Item 6.  Exhibits and Reports on Form 8-K                          15

SIGNATURES AND CERTIFICATIONS

<PAGE>

Item 1. Financial Statements

                      CENTRAL BANCORP, INC. AND SUBSIDIARY
                 Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
                                                                                 December 31,         March 31,
 (Dollars in Thousands)                                                             2002                2002
---------------------------------------------------------------------------------------------------------------------
ASSETS                                                                           (Unaudited)
<S>                                                                               <C>                 <C>
Cash and due from banks                                                           $   7,555           $   5,109
Short-term investments                                                                  798               2,455
                                                                                  ---------           ---------
     Cash and cash equivalents                                                        8,353               7,564
                                                                                  ---------           ---------

Investment securities available for sale (amortized cost of $63,801
     at December 31, 2002 and $74,935 at March 31, 2002)                             65,182              73,884
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                                                                75,058              83,760
                                                                                  ---------           ---------

Loans held for sale (Note 2)                                                         19,494                  --

Loans (Note 2)                                                                      380,494             371,707
Less allowance for loan losses                                                        3,276               3,292
                                                                                  ---------           ---------
     Net loans                                                                      377,218             368,415
                                                                                  ---------           ---------
Accrued interest receivable                                                           2,574               2,530
Banking premises and equipment, net                                                   1,865               1,836
Deferred tax asset, net                                                                 752               1,289
Goodwill, net (Note 1)                                                                2,232               2,232
Other assets                                                                            501                 593
                                                                                  ---------           ---------
    Total assets                                                                  $ 488,047           $ 468,219
                                                                                  =========           =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Deposits (Note 3)                                                               $ 286,721           $ 261,907
  Short-term borrowings                                                                 457                  --
  Advances from Federal Home Loan Bank of Boston                                    155,400             164,000
  Advance payments by borrowers for taxes and insurance                                 990               1,111
  Accrued expenses and other liabilities                                              3,389               2,247
                                                                                  ---------           ---------
    Total liabilities                                                               446,957             429,265
                                                                                  ---------           ---------
Commitments and Contingencies (Note 5)
Stockholders' equity (Notes 6 and 7):
  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 December 31, 2002 and
     1,999,588 shares issued at March 31, 2002                                        2,028               2,000
  Additional paid-in capital                                                         12,697              11,934
  Retained income                                                                    35,218              33,141
  Treasury stock (365,294 shares at December 31, 2002 and
     at March 31, 2002), at cost                                                     (7,204)             (7,189)
  Accumulated other comprehensive income (loss) (Note 4)                                886                (626)
  Unearned compensation - ESOP                                                       (2,535)               (306)
                                                                                  ---------           ---------
    Total stockholders' equity                                                       41,090              38,954
                                                                                  ---------           ---------
    Total liabilities and stockholders' equity                                    $ 488,047           $ 468,219
                                                                                  =========           =========
</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               Nine Months Ended
                                                                       December 31,                    December 31,
                                                              --------------------------         -----------------------
                                                                 2002            2001              2002           2001
                                                              ----------      ----------         ---------      --------
<S>                                                           <C>             <C>                <C>            <C>
Interest and dividend income:
  Mortgage loans                                              $    6,220      $    5,564         $  18,512      $ 17,510
  Other loans                                                        145             157               438           521
  Short-term investments                                              23              47               118           848
  Investments                                                      1,212           1,284             3,540         2,953
                                                              ----------      ----------         ---------      --------
    Total interest and dividend income                             7,600           7,052            22,608        21,831
                                                              ----------      ----------         ---------      --------
Interest expense:
  Deposits                                                         1,385           1,743             4,366         6,557
  Advances from Federal Home Loan Bank of Boston                   1,863           1,601             5,494         4,970
                                                              ----------      ----------         ---------      --------
    Total interest expense                                         3,248           3,344             9,860        11,527
                                                              ----------      ----------         ---------      --------

    Net interest and dividend income                               4,352           3,708            12,748        10,304
Provision for loan losses                                             --              --                --            --
                                                              ----------      ----------         ---------      --------
    Net interest and dividend income after
      provision for loan losses                                    4,352           3,708            12,748        10,304
                                                              ----------      ----------         ---------      --------
Non-interest income:
  Deposit service charges                                            151             136               413           364
  Net gains (losses) from sales and write-downs
      of investment securities                                        14              16              (196)          339
  Gain on sales of loans                                              27              --                28            --
  Other income                                                       114              92               342           288
                                                              ----------      ----------         ---------      --------
    Total non-interest income                                        306             244               587           991
                                                              ----------      ----------         ---------      --------
Non-interest expenses:
  Salaries and employee benefits                                   1,759           1,334             5,050         4,382
  Occupancy and equipment                                            265             273               834           868
  Data processing service fees                                       268             248               814           738
  Professional fees                                                  438             232             1,141           786
  Goodwill amortization (Note 1)                                      --              72                --           216
  Other expenses                                                     470             308             1,384         1,096
                                                              ----------      ----------         ---------      --------
    Total non-interest expenses                                    3,200           2,467             9,223         8,086
                                                              ----------      ----------         ---------      --------

    Income before income taxes                                     1,458           1,485             4,112         3,209
Provision for income taxes                                           548             536             1,507         1,166
                                                              ----------      ----------         ---------      --------
      Net income                                              $      910      $      949         $   2,605      $  2,043
                                                              ==========      ==========         =========      ========
Earnings per common share - basic                             $     0.58      $     0.57         $    1.64      $   1.23
                                                              ==========      ==========         =========      ========
Earnings per common share - diluted                           $     0.58      $     0.57         $    1.63      $   1.22
                                                              ==========      ==========         =========      ========
Weighted average common shares outstanding - basic                 1,569           1,657             1,584         1,661

Weighted average common and equivalent shares
   outstanding - diluted                                           1,580           1,672             1,600         1,676

</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>

                                                                Additional
                                                  Common          Paid-In       Retained       Treasury
                    (In Thousands)                 Stock          Capital        Income          Stock
----------------------------------------------------------------------------------------------------------
<S>                                              <C>           <C>           <C>              <C>
Nine Months Ended December 31, 2002
-----------------------------------

     Balance at March 31, 2002                   $   2,000     $    11,934   $    33,141      $   (7,189)

     Net income                                         --              --         2,605              --
     Other comprehensive income net of tax:
         Unrealized gain on securities, net
           of reclassification adjustment               --              --            --              --

            Comprehensive income

     Proceeds from exercise of stock options            28             488            --              --
     Tax benefit of stock options                       --              66            --              --
     Purchase of shares by ESOP                         --              --            --              --
     Director deferred compensation
         transactions                                   --              20            --             (15)
     Dividends paid ($.32 per share)                    --              --          (528)             --
     Amortization of unearned compensation -
         ESOP                                           --             189            --              --
                                                 ---------     -----------   -----------      ----------
     Balance at December 31, 2002                $   2,028     $    12,697   $    35,218      $   (7,204)
                                                 =========     ===========   ===========      ==========
Nine Months Ended December 31, 2001
-----------------------------------

     Balance at March 31, 2001                   $   1,970     $    11,190   $    30,950      $   (5,230)

     Net income                                         --              --         2,043              --
     Other comprehensive income net of tax:
         Unrealized loss on securities, net
           of reclassification adjustment               --              --            --              --

            Comprehensive income

     Proceeds from exercise of stock options            30             462            --              --
     Purchase of treasury stock                         --              --            --          (1,449)
     Dividends paid ($.30 per share)                    --              --          (509)             --
     Amortization of unearned compensation -
         ESOP                                           --             140            --              --
                                                 ---------     -----------   -----------      ----------
     Balance at December 31, 2001                $   2,000     $    11,792   $    32,484      $   (6,679)
                                                 =========     ===========   ===========      ==========


<CAPTION>
                                                    Accumulated
                                                       Other               Unearned              Total
                                                   Comprehensive         Compensation        Stockholders'
                    (In Thousands)                 Income (Loss)             ESOP               Equity
----------------------------------------------------------------------------------------------------------
<S>                                                <C>                  <C>                 <C>
Nine Months Ended December 31, 2002
-----------------------------------

     Balance at March 31, 2002                     $      (626)         $     (306)         $    38,954

     Net income                                             --                  --                2,605
     Other comprehensive income net of tax:
         Unrealized gain on securities, net
           of reclassification adjustment                1,512                  --                1,512
                                                                                            -----------
            Comprehensive income                                                                  4,117
                                                                                            -----------
     Proceeds from exercise of stock options                --                  --                  516
     Tax benefit of stock options                           --                  --                   66
     Purchase of shares by ESOP                             --              (2,358)              (2,358)
     Director deferred compensation
         transactions                                       --                  --                    5
     Dividends paid ($.32 per share)                        --                  --                 (528)
     Amortization of unearned compensation -
         ESOP                                               --                 129                  318
                                                   -----------          ----------          -----------
     Balance at December 31, 2002                  $       886          $   (2,535)         $    41,090
                                                   ===========          ==========          ===========
Nine Months Ended December 31, 2001
-----------------------------------

     Balance at March 31, 2001                     $      (431)         $     (237)         $    38,212

     Net income                                             --                  --                2,043
     Other comprehensive income net of tax:
         Unrealized loss on securities, net
           of reclassification adjustment                 (111)                 --                 (111)
                                                                                            -----------
            Comprehensive income                                                                  1,932
                                                                                            -----------
     Proceeds from exercise of stock options                --                  --                  492
     Purchase of treasury stock                             --                  --               (1,449)
     Dividends paid ($.30 per share)                        --                  --                 (509)
     Amortization of unearned compensation -
         ESOP                                               --                  97                  237
                                                   -----------          ----------          -----------
     Balance at December 31, 2001                  $      (542)         $     (140)         $    38,915
                                                   ===========          ==========          ===========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       3
<PAGE>
                      CENTRAL BANCORP, INC. AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                 Nine Months Ended
                                                                                    December 31,
                           (In thousands)                                     2002                 2001
----------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                   <C>
Cash flows from operating activities:

Net income                                                             $     2,605           $     2,043

   Adjustments to reconcile net income to net cash provided
      by (used in) operating activities
         Depreciation and amortization                                         239                   298
         Amortization of premiums                                              189                   118
         Amortization of goodwill                                               --                   216
         Stock-based compensation                                              318                   237
         Net (gains) losses from sales and write-downs of
             investment securities                                             196                  (339)
         Gain on sale of loans held for sale                                   (28)                   --
         Originations of loans held for sale                               (21,309)                   --
         Proceeds from sale of loans originated for sale                     1,843                    --
Increase in accrued interest receivable                                        (44)                  (60)
(Increase) decrease in other assets, net                                      (700)                  195
Decrease in advance payments by borrowers for taxes and insurance             (121)                 (232)
Increase (decrease) in accrued expenses and other liabilities                  142                   (32)
                                                                       -----------           -----------
         Net cash provided by (used in) operating activities               (16,670)                2,444
                                                                       -----------           -----------

Cash flows from investing activities:

Net (increase) decrease in loans                                            (8,787)               17,146
Principal payments on mortgage-backed securities                             5,293                 5,337
Purchases of investment securities                                          (5,210)              (63,858)
Maturities and calls of investment securities                                4,000                26,000
Proceeds from sales of investment securities                                 8,126                 2,625
Purchase of stock in Federal Home Loan Bank of Boston                           --                  (211)
Purchase of banking premises and equipment                                    (269)                 (164)
                                                                       -----------           -----------
         Net cash provided by (used in) investing activities                 3,153               (13,125)
                                                                       -----------           -----------

Cash flows from financing activities:

Increase (decrease) in deposits                                             24,814               (25,135)
Proceeds from advances from FHLB of Boston                                  39,000                24,000
Repayments on advances from FHLB of Boston                                 (47,600)              (18,000)
Net increase in short-term advances from FHLB of Boston                         --                 2,206
Increase in short-term borrowings                                              457                    --
Proceeds from exercise of stock options                                        516                   492
Purchase of treasury stock                                                      --                (1,449)
Purchase of shares by ESOP                                                  (2,358)                   --
Dividends paid                                                                (528)                 (509)
Net directors deferred compensation                                              5                    --
                                                                       -----------           -----------
         Net cash provided by (used in) financing activities                14,306               (18,395)
                                                                       -----------           -----------

Net increase (decrease) in cash and cash equivalents                           789               (29,076)
Cash and cash equivalents at beginning of period                             7,564                39,880
                                                                       -----------           -----------
Cash and cash equivalents at end of period                             $     8,353           $    10,804
                                                                       ===========           ===========
Supplemental disclosure of cash flow information:
     Cash paid during the period for:
       Interest                                                        $     9,834           $    11,576
       Income taxes                                                    $     2,095           $     1,194
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                       4
<PAGE>
                      CENTRAL BANCORP, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

(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, 2002,  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, 2002. For interim reporting  purposes,  the Company follows
the same  significant  accounting  policies.  As set forth in Note 1 of the Form
10-K, the Company  initially  applied the requirements of Statement of Financial
Accounting  Standards No. 142,  "Goodwill and Other Intangible Assets" (SFAS No.
142) beginning April 1, 2002 and,  accordingly,  no amortization of goodwill was
recorded  for the nine months ended  December 31, 2002.  Net income and earnings
per share for the three and nine month  periods  ended  December  31, 2001 would
have  been as  follows  had  the  requirements  of SFAS  No.  142  been  applied
retroactively (in thousands, except per share amounts):
<TABLE>
<CAPTION>
                                                     Three Months Ended         Nine Months Ended
                                                     December 31, 2001          December 31, 2001
                                                     ------------------         -----------------
         <S>                                              <C>                       <C>
         Net income                                       $  1,021                  $ 2,259
         Earnings per share - basic                       $   0.62                  $  1.36
         Earnings per share - diluted                     $   0.61                  $  1.35
</TABLE>

     In accordance  with SFAS No. 142,  goodwill is subject to ongoing  periodic
impairment  testing using various fair value techniques,  such as price/earnings
ratios,  present values and other fair value methods.  The Company has completed
the  transitional  impairment  test specified by SFAS No. 142 and concluded that
the amount of recorded  goodwill  was not  impaired as of April 1, 2002.  In the
opinion of management, based upon its assessment, there was no impairment in the
carrying value of goodwill at December 31, 2002.

     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 AND LOANS HELD FOR SALE

     Loans, excluding loans held for sale, as of December 31, 2002 and March 31,
2002 are summarized below (in thousands):
<TABLE>
<CAPTION>
                                                              December 31,               March 31,
                                                                  2002                      2002
                                                              -----------               -----------
       <S>                                                    <C>                       <C>
       Real estate loans:
          Residential real estate                             $   235,954               $   239,396
          Commercial real estate                                   98,736                    93,662
          Construction                                             27,361                    20,998
          Second mortgage and home equity lines of credit           9,792                     9,154
                                                              -----------               -----------
               Total real estate loans                            371,843                   363,210
                                                              -----------               -----------
       Commercial loans                                             6,785                     6,901
       Consumer loans                                               1,866                     1,596
                                                              -----------               -----------
                Total loans                                       380,494                   371,707
        Less:  allowance for loan losses                           (3,276)                   (3,292)
                                                              -----------               -----------
                Total loans, net                              $   377,218               $   368,415
                                                              ===========               ===========
</TABLE>

                                       5
<PAGE>
                      CENTRAL BANCORP, INC. AND SUBSIDIARY
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 2002


(2)  LOANS AND LOANS HELD FOR SALE (CONTINUED)

     There were no non-accrual loans at December 31, 2002 and March 31, 2002.

     During the quarter ended  December 31, 2002, the Company began to implement
its  program  to sell  certain  fixed  rate  residential  mortgage  loans to the
secondary  market.  In connection  therewith,  the Company  entered into certain
commitments  with  investors to sell such loans on a servicing  released  basis.
Loans which were  outstanding at December 31, 2002 and which were designated for
sale to investors have been separately  classified in the  accompanying  balance
sheet as "loans held for sale" and  accounted for at the lower of cost or market
value.

(3)  DEPOSITS

     Deposits at December 31, 2002 and March 31, 2002 are  summarized as follows
(in thousands):
<TABLE>
<CAPTION>
                                                              December 31,               March 31,
                                                                  2002                      2002
                                                              -----------               -----------
<S>                                                           <C>                       <C>
Demand deposit accounts                                       $    31,120               $    25,370
NOW accounts                                                       37,849                    36,277
Regular, Club and 90 day notice accounts                           71,201                    72,944
Money market deposit accounts                                      40,901                    17,997
                                                              -----------               -----------
         Total non certificate accounts                           181,071                   152,588
                                                              -----------               -----------
Term deposit certificates
      Certificates of $100 and above                               27,345                    27,233
      Certificates less than $100                                  78,305                    82,086
                                                              -----------               -----------
         Total term deposit certificates                          105,650                   109,319
                                                              -----------               -----------
         Total deposits                                       $   286,721               $   261,907
                                                              ===========               ===========
</TABLE>

(4)  REPORTING COMPREHENSIVE INCOME

     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 is
as follows (in thousands):
<TABLE>
<CAPTION>
                                                                   For the Nine Months Ended
                                                                       December 31, 2002
                                                              -----------------------------------
                                                              Before-
                                                                Tax       Tax(Benefit)  After-Tax
                                                              Amount         Expense     Amount
                                                              --------    ------------  ---------
<S>                                                           <C>          <C>           <C>
Unrealized gains (losses) on securities:
  Unrealized net holding gains arising during period          $2,236       $   845       $1,391
   Less: reclassification adjustment for net
            losses included in net income                        (196)         (75)        (121)
                                                              -------      -------       ------
   Other comprehensive income                                 $ 2,432      $   920       $1,512
                                                              =======      =======       ======
</TABLE>

                                       6
<PAGE>

                      CENTRAL BANCORP, INC. AND SUBSIDIARY
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2002

(4)  REPORTING COMPREHENSIVE INCOME (CONTINUED)
<TABLE>
<CAPTION>
                                                                   For the Nine Months Ended
                                                                       December 31, 2001
                                                              -----------------------------------
                                                              Before-
                                                                Tax       Tax(Benefit)  After-Tax
                                                              Amount         Expense     Amount
                                                              --------    ------------  ---------
<S>                                                           <C>          <C>           <C>
Unrealized gains (losses) on securities:
  Unrealized holding gains arising during period              $   142      $    37       $   105
   Less: reclassification adjustment for net
            gains included in net income                          339          123           216
                                                              -------      -------       -------
   Other comprehensive loss                                   $  (197)     $   (86)      $  (111)
                                                              =======      =======       =======
</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. Except as described herein, none
of  these  actions  are  believed  to  be  material,   either   individually  or
collectively,  to the  results of  operations  and  financial  condition  of the
Company.

     Central Co-operative Bank (the Bank) has been named as defendant in a civil
suit filed March 28, 2002 in  Middlesex  Superior  Court under the caption Yi v.
Central  Bank in which it is alleged,  inter alia,  that the Bank  committed  an
unfair or  deceptive  trade  practice  by  failing  to pay  surplus  foreclosure
proceeds to a junior lien holder in 1994.  Plaintiff  seeks  damages of $160,000
plus interest of  approximately  $150,000 and has applied for a multiple  damage
award under Chapter 93A of the Massachusetts  General Laws which provides for up
to treble  damages if a violation  is found to be willful or  knowing.  The Bank
believes  that it has  meritorious  defenses  to all such  claims and intends to
vigorously defend against them.

State Income Taxes

     In June 2002,  the Bank received  from the  Commonwealth  of  Massachusetts
Department  of  Revenue  ("DOR") a Notice of Intent to Assess  additional  state
excise taxes of $535,000 plus interest with respect to its tax years ended March
31, 2000 and 2001. In October 2002, the DOR sent the Bank a Notice of Assessment
for the same amount and in December 2002 sent a demand for payment. The Bank has
submitted an application for abatement to the DOR for the full amount  assessed.
For the period April 1, 2001 to December 31, 2002, additional state excise taxes
would be $530,000 applying the methodology set forth in the DOR's aforementioned
notices.  The Bank is aware that the DOR has sent  similar  notices to  numerous
other  financial  institutions  in  Massachusetts  that reported a deduction for
dividends  received from a REIT during this period.  Assessed amounts ultimately
paid, if any, would be deductible expenses for federal income tax purposes.

     The DOR contends that dividend distributions by the Bank's REIT to the Bank
are fully taxable in  Massachusetts.  The Bank  believes that the  Massachusetts
statute that provides for a dividends received deduction equal to 95% of certain
dividend  distributions  applies to the  distributions  made by the Bank's REIT.
Accordingly,  no provision has been made in the Company's consolidated financial
statements for the amounts assessed or additional amounts that might be assessed
in the future.  The Company  intends to vigorously  appeal the assessment and to
pursue all available means to defend its position.

                                       7
<PAGE>

                      CENTRAL BANCORP, INC. AND SUBSIDIARY
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2002

(5)  CONTINGENCIES (CONTINUED)

     On January 30, 2003,  the Governor of  Massachusetts  proposed  legislation
that would amend state law by eliminating the 95% dividends  received  deduction
for distributions by a REIT. As currently proposed, this change in the law would
be retroactive to tax years ending on or after December 31, 1999.

     If this  proposed  legislation  is  adopted,  the Bank,  along  with  other
Massachusetts  financial  institutions  with  a  REIT  subsidiary,   intends  to
challenge  the  new  statute,   particularly   its   retroactive   feature,   on
constitutional  grounds. It is uncertain what impact this recent development may
have on the related pending abatement application discussed above.

(6)  ESOP STOCK PURCHASES

     During fiscal 2002, the Company's Board of Directors authorized the Central
Co-operative  Bank Employee Stock  Ownership Plan Trust (the ESOP) to acquire up
to an  additional 5% of  outstanding  shares of Company  stock.  During the nine
months ended  December  31, 2002,  the ESOP  completed  the purchase  program by
acquiring 76,913 shares at a cost of $2,358,000.

(7)  SUBSEQUENT EVENT

     On January 9, 2003, the Board of Directors voted the payment of a quarterly
cash dividend of $.12 per share. The dividend is payable on February 14, 2003 to
stockholders of record on January 31, 2003.

(8)  RECENT ACCOUNTING PRONOUNCEMENT

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition  and Disclosure-an amendment of FASB Statement No. 123."
SFAS No. 148 provides  alternative  methods of transition for a voluntary change
to  the  fair  value  based  method  of  accounting  for  stock-based   employee
compensation.  SFAS No. 148 also amends the disclosure  requirements of SFAS No.
123 to  require  prominent  disclosures  in both  annual and  interim  financial
statements about the method of accounting for stock-based employee  compensation
and the effect of the method  used on  reported  results.  SFAS No. 148 does not
permit the use of the original SFAS No.123  prospective method of transition for
changes to the fair value based  method  made in fiscal  years  beginning  after
December 15, 2003. The Company does not expect to change to the fair value based
method of accounting for stock-based employee compensation, and does not believe
the  adoption  of SFAS No.  148 will have a  material  impact  on the  Company's
Consolidated Financial Statements.

                                       8
<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 DECEMBER 31, 2002 AND MARCH 31, 2002

     Total assets  increased by $19.8  million from $468.2  million at March 31,
2002 to $488.0 million at December 31, 2002. This increase  occurred as a result
of net  deposit  growth of $24.8  million  which was  partially  used to paydown
maturing FHLB advances.

     During the nine months ended  December 31, 2002,  loans  increased by $28.3
million,  including  $19.5  million in loans held for sale.  All of this  growth
occurred during the most recent quarter as the Company implemented its secondary
mortgage  market  program.  This  program  allows the  Company  to compete  more
effectively  for residential  mortgage loan  originations by using the secondary
mortgage  market as an outlet  for that  portion  of  originations  in excess of
targeted loan portfolio  needs.  During the nine months ended December 31,

                                       9
<PAGE>

2002, the Company originated $130.7 million in loans, including $44.6 million in
commercial real estate and construction loans.

     During the nine months ended  December 31,  2002,  the Company  experienced
core deposit growth of $28.5 million,  or 18.7%. The majority of this growth was
in money market  deposits,  the Company's  highest-paying  core deposit account.
While deposit  flows can vary  significantly  on a daily basis,  the Company has
experienced  steady growth in core deposits  during the past six quarters.  This
growth has been aided by the  introduction and promotion of the Bank's Community
Package Account  product,  low interest rates and the continuing  uncertainty in
the stock market.

     FHLB  advances  were reduced by $8.6  million  during the nine months ended
December  31, 2002.  This  decrease is  consistent  with the  Company's  current
strategy of reducing its  utilization  of FHLB  advances.  In January  2003,  an
additional  $11.0 million in advances were repaid with proceeds from the sale of
loans.

     The increase in  stockholders'  equity of $2.1 million to $41.1  million at
December 31, 2002  resulted  primarily  from net income of $2.6  million,  other
comprehensive  income of $1.5  million and  proceeds  from the exercise of stock
options of $516,000. These increases were partially offset by cash dividends and
stock  purchases by the  Employee  Stock  Ownership  Plan (ESOP)  totaling  $2.9
million.  During the first nine months of the year, an additional  76,913 shares
were purchased by the ESOP for a total purchase price of $2,358,000  ($30.67 per
share) which was funded by an internal loan.

COMPARISON  OF OPERATING  RESULTS FOR THE QUARTERS  ENDED  DECEMBER 31, 2002 AND
2001

     Net income  decreased by $39,000,  or 4.1%, to $910,000  ($0.58 per diluted
share) for the quarter ended December 31, 2002,  compared to $949,000 ($0.57 per
diluted share) in the same quarter in the prior year. Included in net income for
the quarter ended  December 31, 2002,  are  professional  fees of  approximately
$250,000   attributable  to  litigation  relating  to  the  most  recent  annual
stockholders  meeting.  Exclusive of the after-tax  impact of such  professional
fees, net income would have increased  $126,000,  or 13.3% for the quarter ended
December 31, 2002 compared to the same quarter in the prior year.  This increase
was primarily due to an increase of $644,000 in net interest and dividend income
and  an  increase  of  $64,000  in  non-interest  income  (excluding  securities
transactions),  partially  offset by an increase  of  $483,000  in  non-interest
expenses, excluding the professional fees noted in the preceding sentence.

Interest  Income.  Interest  income for the quarter ended  December 31, 2002 was
$7.6  million,  an increase of $548,000  over the same quarter in the prior year
despite a decrease  in the yield on  interest-earning  assets  from 6.88% in the
third  quarter  of the  prior  year to 6.51%  in the  current  quarter.  Average
interest-earning  assets increased by $57.2 million, or 14.0%, to $467.0 million
during the quarter ended  December 31, 2002 from $409.8  million for the quarter
ended December 31, 2001.

     The  principal  area of growth in average  balances  for the quarter  ended
December 31, 2002 was in real estate loans (up $62.7 million,  or 20.1%),  which
was  partially  offset by a decrease  in  investments  of $5.6  million,  all as
compared to average balances for the quarter ended December 31, 2001.

Interest  Expense.  Interest expense for the quarter ended December 31, 2002 was
$3.2 million compared to $3.3 million for the quarter ended December 31, 2001, a
decrease of $96,000,  or 2.9%.  This  decrease  resulted  from a 59 basis points
decrease in the cost of funds from 3.79% in the quarter ended  December 31, 2001
to 3.20% in the quarter ended December 31, 2002. This decrease was substantially
offset by an increase in average  interest-bearing  liabilities of $51.9 million
in the current year period.

     The  significant  decrease  in the cost of funds in the  third  quarter  of
fiscal 2003  reflected the impact of the series of rate  decreases  initiated by
the Federal Reserve Board beginning in January 2001, the repricing of a majority
of  certificates  of deposit  during the past year and a shift in deposits  from
higher cost  certificates of deposit which  represented 44.8% of deposits at the
beginning of the third quarter of the prior fiscal year compared to 38.6% at the
beginning of the third quarter of the current fiscal year.

                                       10
<PAGE>

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 using an approach that is summarized in the preceding  section entitled
"Critical Accounting Policies."

     Due to the high level of asset  quality,  as  measured  by low  delinquency
rates and the absence of  non-performing  loans  during the past two years,  the
Company made no provision for loan losses during the quarters ended December 31,
2002 and 2001.

Non-interest Income. Exclusive of securities  transactions,  non-interest income
was $292,000 for the quarter ended December 31, 2002 compared to $228,000 in the
same period of 2001. The primary reasons for the current  quarter  increase were
gains on the sale of loans ($27,000) and other loan related income.

     Net gains (losses) from sales and write-downs of investment securities were
$14,000 for the quarter ended December 31, 2002 compared to $16,000 in the prior
year period.  Included in such amounts are  write-downs of $248,000 and $185,000
in  certain  equity  securities  which had  experienced  a decline in fair value
judged to be other than  temporary  during the quarters  ended December 31, 2002
and 2001, respectively.

Non-interest  Expenses.  Non-interest  expenses  increased  $733,000  during the
quarter  ended  December  31,  2002 as  compared  to the same  quarter  in 2001.
Exclusive of the elimination of the amortization of goodwill in the current year
as  required  by  generally  accepted  accounting  principles  (SFAS  No.  142),
non-interest expenses increased $805,000, or 33.6%, due principally to increases
in salaries and employee benefits of $425,000, additional costs of approximately
$250,000 (primarily professional fees) attributable to litigation resulting from
the contested  election of directors at the 2003 Annual Meeting of  Stockholders
and additional advertising expense of $68,000.

     The  increase in salaries  and  employee  benefits of  $425,000,  or 31.9%,
during the quarter ended December 31, 2002, was due to overall salary  increases
averaging   4%,   increases  in  staffing  to  support   higher   mortgage  loan
originations,   additional  expense  accrued  under  the  Management   Incentive
Compensation  Plan  ($199,000) and an increase in ESOP expense  ($58,000) due to
both an increase in market value of the  Company's  stock and the  allocation of
shares under the ESOP's recent stock purchase program.

     The increase in other  expenses of $162,000,  or 52.6%,  during the quarter
ended December 31, 2002 was primarily due to increases in advertising  and other
costs associated with lending  activities and, to a lesser extent,  increases in
communication costs and charitable contributions.

Income Taxes.  The effective tax rates for the quarters  ended December 31, 2002
and 2001 were 37.6% and 36.1%, respectively. These rates vary from the statutory
income tax rate for banks of approximately  41% due to the Company's use of both
a securities corporation and a REIT subsidiary for state tax purposes.

     In June 2002,  the Bank received  from the  Commonwealth  of  Massachusetts
Department  of  Revenue  ("DOR") a Notice of Intent to Assess  additional  state
excise taxes of $535,000 plus interest with respect to its tax years ended March
31, 2000 and 2001. In October 2002, the DOR sent the Bank a Notice of Assessment
for the same amount and in December 2002 sent a demand for payment. The Bank has
submitted an application for abatement to the DOR for the amount  assessed.  For
the period  April 1, 2001 to December 31,  2002,  additional  state excise taxes
would be $530,000 applying the methodology set forth in the DOR's aforementioned
notices.  The Bank is aware that the DOR has sent  similar  notices to  numerous
other  financial  institutions  in  Massachusetts  that reported a deduction for
dividends  received from a REIT during this period.  Assessed amounts ultimately
paid, if any, would be deductible expenses for federal income tax purposes.

     The DOR contends that dividend distributions by the Bank's REIT to the Bank
are fully taxable in  Massachusetts.  The Bank  believes that the  Massachusetts
statute that provides for a dividends received deduction equal to 95% of certain
dividend  distributions  applies to the  distributions  made by the Bank's REIT.
Accordingly,  no provision has been made in the Company's consolidated financial
statements for the amounts assessed or additional amounts that might be assessed
in the future.  The Company  intends to vigorously  appeal the assessment and to
pursue all available means to defend its position.

                                       11
<PAGE>

     On January 30, 2003,  the Governor of  Massachusetts  proposed  legislation
that would amend state law by eliminating the 95% dividends  received  deduction
for distributions by a REIT. As currently proposed, this change in the law would
be retroactive to tax years ending on or after December 31, 1999.

     If this  proposed  legislation  is  adopted,  the Bank,  along  with  other
Massachusetts  financial  institutions  with  a  REIT  subsidiary,   intends  to
challenge  the  new  statute,   particularly   its   retroactive   feature,   on
constitutional  grounds. It is uncertain what impact this recent development may
have on the Bank's related pending abatement application.

COMPARISON OF OPERATING  RESULTS FOR THE NINE MONTHS ENDED DECEMBER 31, 2002 AND
2001

     Net income  increased by  $562,000,  or 27.5%,  to $2.6 million  ($1.63 per
diluted  share) for the nine months ended  December  31, 2002,  compared to $2.0
million  ($1.22  per  diluted  share)  in the same  period  in the  prior  year.
Exclusive  of the  after  tax  impact  of gains  and  losses  on the  sales  and
write-downs of investment  securities,  which adversely affected the increase in
net income  between  years by  $341,000,  net income  would  have  increased  by
$903,000,  or 49.5%, for the nine months ended December 31, 2002 compared to the
same period in the prior year. The significant  increase was primarily due to an
increase of $2.4 million in net interest and dividend  income and an increase of
$131,000 in non-interest income (excluding securities  transactions),  partially
offset by an increase of $1.1 million in non-interest expenses.

Interest Income. Interest income for the nine months ended December 31, 2002 was
$22.6 million,  or $777,000 greater than the amount earned in the same period in
the prior year despite a decrease in the yield on  interest-earning  assets from
6.90% in the first nine  months of the prior year to 6.53% in the same period of
the current year. Average interest-earning assets increased by $39.7 million, or
9.4%,  to $461.9  million  during the nine months  ended  December 31, 2002 from
$422.2 million for the nine months ended December 31, 2001.

     The principal area of growth in average  balances for the nine months ended
December  31, 2002 was in real estate loans (up $43.2  million,  or 13.5%) which
was  partially  offset by a decrease  in  investments  of $3.8  million,  all as
compared to average balances for the nine months ended December 31, 2001.

Interest  Expense.  Interest expense for the nine months ended December 31, 2002
was $9.9 million  compared to $11.5  million for the nine months ended  December
31,  2001,  a decrease of $1.7  million,  or 14.5%.  This  significant  decrease
resulted from a 91 basis points  decrease in the cost of funds from 4.19% in the
nine months ended  December 31, 2001 to 3.28% in the nine months ended  December
31,  2002.  This  decrease  was  partially  offset  by an  increase  in  average
interest-bearing liabilities of $34.5 million in the current year period.

     The significant  decrease in the cost of funds in the nine months of fiscal
2003  reflected  the impact of the  series of rate  decreases  initiated  by the
Federal  Reserve Board beginning in January 2001, the repricing of a majority of
certificates of deposit during the past year and a shift in deposits from higher
cost  certificates  of  deposit  which  represented  52.9%  of  deposits  at the
beginning of the prior year  compared to 41.7`% at the  beginning of the current
year.

Provisions for Loan Losses. Due to the high level of asset quality,  as measured
by low delinquency rates and the absence of non-performing loans during the past
two years,  the Company made no provision for loan losses during the nine months
ended December 31, 2002 and 2001.

Non-interest  Income.  Exclusive  of  securities  transactions,   as  previously
discussed,  non-interest  income was $783,000 for the nine months ended December
31, 2002 compared to $652,000 in the same period of 2001.  The primary causes of
the  $131,000  increase  in  the  current  year  were  prepayment  penalties  on
commercial real estate loans ($66,000), higher deposit service charges ($49,000)
and gains on the sale of loans ($28,000).

     Net gains (losses) from sales and write-downs of investment securities were
($196,000)  for the nine months ended  December 31, 2002 compared to $339,000 in
the comparable  prior year period.  Included in such amounts are  write-downs of
$688,000 and  $185,000 in certain  equity  securities  which had  experienced  a
decline in fair value judged to be other than  temporary  during the nine months
ended December 31, 2002 and 2001, respectively.

                                       12
<PAGE>

Non-interest  Expenses.  Non-interest expenses increased $1.1 million during the
nine months ended December 31, 2002 as compared to the  corresponding  period in
the prior year.  Exclusive of the elimination of the amortization of goodwill in
the current year as required by generally accepted  accounting  principles (SFAS
No.  142),   non-interest   expenses  increased  $1.4  million,  or  17.2%,  due
principally  to  increases  in salaries  and  employee  benefits of $668,000 and
additional  costs  of  approximately  $600,000  (primarily   professional  fees)
incurred in  connection  with the  contested  election of  directors at the 2002
annual meeting of stockholders and related  litigation  costs. Also contributing
to the growth in  non-interest  expenses  were  increases in  advertising  costs
primarily  associated with lending activities and to a lesser extent,  increases
in communication costs and charitable contributions.

     The  increase in salaries  and  employee  benefits of  $668,000,  or 15.2%,
during the nine  months  ended  December  31,  2002,  was due to overall  salary
increases  averaging 4%,  increases in staffing to support higher  mortgage loan
originations,  expense accrued under the Management Incentive  Compensation Plan
($246,000) and additional ESOP expense due to an increase in market value of the
Company's  stock and the  allocation  of shares  under the ESOP's  recent  stock
purchase program.

Income Taxes.  The  effective  tax rates for the nine months ended  December 31,
2002 and 2001 were  36.6% and  36.3%,  respectively.  These  rates vary from the
statutory  income tax rate for banks of  approximately  41% due to the Company's
use of  both a  securities  corporation  and a REIT  subsidiary  for  state  tax
purposes.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's  principal sources of liquidity are loan  amortization,  loan
prepayments,  increases  in deposits,  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 and funds on deposit at the FHLB of Boston. At December 31,
2002, the Bank had approximately  $35.7 million in unused borrowing  capacity at
the FHLB of Boston.

     At December  31, 2002,  the Company had  commitments  to  originate  loans,
unused  outstanding  lines of credit and undisbursed  proceeds of loans totaling
$77.9  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 December 31, 2002 were as
follows:
<TABLE>
<CAPTION>
                                                                Company    Bank
                                                                -------    ----
<S>                                                             <C>       <C>
Total Capital (to risk-weighted assets)                         12.70%    11.81%

Tier 1 Capital (to risk-weighted assets)                        11.68     10.79

Tier 1 Capital (to average assets)                               7.89      7.29
</TABLE>

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

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.

                                       13
<PAGE>

     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 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 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 150/100 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:
<TABLE>
<CAPTION>
                                                                  December 31,   March 31,
                                                                     2002          2002
                                                                  -----------    ---------

                  <S>                                                <C>         <C>
                  300 basis point increase in rates.........         (4.0)%      (12.9)%

                  150 basis point decrease in rates
                  (March 31 only)..............................                    0.5%

                  100 basis point decrease in rates
                  (December 31 only)..........................       (3.0)%
</TABLE>

     For each one percentage point change in net interest income in the December
2002 projections,  the effect on net income would be $112,000 assuming a 36% tax
rate.

ITEM  4.     CONTROLS AND PROCEDURES

     The Company's  Chief  Executive  Officer and Chief  Financial  Officer have
evaluated  the Company's  disclosure  controls and  procedures  (as such term is
defined in Rule 13a-14(c) under the Exchange Act) as of a date within 90 days of
the date of filing of this Form 10-Q. Based upon such evaluation,  the Company's
Chief  Executive  Officer and Chief  Financial  Officer have concluded that such
controls and procedures are effective to ensure that the information required to
be  disclosed  by the Company in the reports it files under the  Exchange Act is
gathered, analyzed and disclosed with adequate timeliness.

     There have been no significant  changes in the Company's  internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of the evaluation described above.

                                       14
<PAGE>

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

     The Company and each of its  directors  were named as  defendants in a suit
filed on October  1, 2002 by Richard  Lashley  and PL  Capital,  LLC in the U.S.
District  Court for the  District of  Massachusetts.  The suit  alleged that the
adjournment  of the 2002 Annual Meeting of  Stockholders  until October 11, 2002
violated  Massachusetts law and the Company's Bylaws and constituted a breach of
fiduciary duty by the defendant  directors.  The suit sought  declaratory relief
and the issuance of a temporary restraining order and preliminary injunction. On
October 8, 2002, the Court declined to issue a temporary  restraining  order and
denied injunctive  relief.  The Company moved for dismissal of the suit as moot.
On November 12, 2002,  the  plaintiffs  responded  to the  Company's  motion for
dismissal by amending  their  complaint to allege  breaches of fiduciary duty by
the directors  for their failure to elect PL Capital's  nominees to the Board of
the Company's  principal  subsidiary,  Central  Co-operative Bank, their alleged
failure to conduct a reasonable  investigation into the sale of the Company, and
their alleged  consenting to the  reimbursement of legal fees of Joseph and John
Doherty and to allege unfair and deceptive trade practices within the meaning of
chapter 93A of the  Massachusetts  General Laws. On November 13, 2002,  the U.S.
District  Court  dismissed the suit in its entirety and on December 12, 2002 the
Court denied PL Capital's  motion to open the case and for  reconsideration.  On
January 21,  2003,  the Board of  Directors  received a demand  from  Richard J.
Lashley and PL Capital,  LLC in their capacities as stockholders calling for the
Board  of  Directors  to  take  prompt  remedial  action  with  respect  to  the
allegations  contained in their November 12, 2002  amendment to their  dismissed
complaint.  The demand has been referred to a special  committee of  independent
directors  of the  Company's  Board of  Directors  for their  investigation  and
recommendation.

     See Note 5 of the  Notes to  Unaudited  Consolidated  Financial  Statements
presented elsewhere herein.

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
          99.1 Certification under Section 906 of Sarbanes-Oxley Act of 2002
     (b)  Reports on Form 8-K
          On October 10, 2002, the Registrant  filed a Form 8-K reporting  under
          Item 5 that it had increased in its  quarterly  cash dividend to $0.12
          per share.

          On October 25, 2002, the Registrant  filed a Form 8-K reporting  under
          Item 9 its earnings for the quarter ended September 30, 2002.

          On November 8, 2002, the Registrant  filed a Form 8-K reporting  under
          Item 5 the Board of Directors'  determination  that it was in the best
          interests of  stockholders  for the Registrant to remain  independent,
          that John D.  Doherty  had been named  Chairman  of the Board and that
          Paul  Bulman,  Marat  Santini and John Gilgun had been  elected to the
          Board of Directors of the Registrant's  principal subsidiary,  Central
          Co-operative Bank.

          On January 28, 2003, the Registrant  filed a Form 8-K reporting  under
          Item 9 its earnings for the quarter ended December 31, 2002.


                                       15
<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




February 12, 2003               /s/ John D. Doherty
-----------------               ---------------------------------------
Date                            John D. Doherty
                                President and Chief Executive Officer




February 12, 2003               /s/ Michael K. Devlin
-----------------               ---------------------------------------
Date                            Michael K. Devlin
                                Senior Vice President, Treasurer
                                and Chief Financial Officer


<PAGE>

                                  CERTIFICATION


I, John D. Doherty,  President and Chief Executive  Officer of Central  Bancorp,
Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Central Bancorp, Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     (a)  Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within these
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
the  registrant's  board or  directors  (or persons  fulfilling  the  equivalent
functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date: February 12, 2003


                                        /s/ John D. Doherty
                                        --------------------------------------
                                        John D. Doherty
                                        President and Chief Executive Officer

<PAGE>

                                  CERTIFICATION


I, Michael K.  Devlin,  Senior Vice  President,  Treasurer  and Chief  Financial
Officer of Central Bancorp, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Central Bancorp, Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     (a)  Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within these
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
the  registrant's  board or  directors  (or persons  fulfilling  the  equivalent
functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date: February 12, 2003

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