##### 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, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-25251
 CENTRAL BANCORP, INC.
  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)
 N/A
 
  þ o
 o þ
 o þ
 Common Stock, $1.00 par value
    
    1,590,181 sharesClass
    
    Outstanding at November 10, 2005




---



CENTRAL BANCORP, INC.
 Table of Contents
 Page No.Part I.Financial InformationItem 1. Financial Statements (Unaudited)Consolidated Statements of Financial Condition at September 30, 2005 and March 31, 2005
    
    1Consolidated Statements of Income for the three and six months ended September 30, 2005 and 2004
    
    2Consolidated Statements of Changes in Stockholders Equity for the six months ended September 30, 2005
    
    3Consolidated Statements of Cash Flows for the six months ended September 30, 2005 and 2004
    
    4Notes to Unaudited Consolidated Financial Statements
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    10Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    16Item 4. Controls and Procedures
    
    17Part II. Other InformationItem 1. Legal Proceedings
    
    17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    17Item 3. Defaults Upon Senior Securities
    
    17Item 4. Submission of Matters to a Vote of Security Holders
    
    18Item 5. Other Information
    
    18Item 6. Exhibits
    
    18SignaturesEX-31.1 SECTION 302, CERTIFICATION OF THE CEOEX-31.2 SECTION 302, CERTIFICATION OF THE CFOEX-32 SECTION 906, CERTIFICATIONS




---



##### Table of Contents



Part I. Financial Information
 
   
  September 30,
    
    
    March 31,(Dollars in Thousands)
    
    2005
    
    
    2005(Unaudited)ASSETSCash and due from banks
    
    $
    6,818
    
    
    $
    6,158Short-term investments
    
    
    480
    
    
    
    225Cash and cash equivalents
    
    
    7,298
    
    
    
    6,383Certificates of deposit
    
    
    614
    
    
    
    606Investment securities available for sale (amortized cost of $101,611
at September 30, 2005 and $108,690 at March 31, 2005)
    
    
    100,978
    
    
    
    108,616Stock in Federal Home Loan Bank of Boston, at cost
    
    
    8,300
    
    
    
    8,300The Co-operative Central Bank Reserve Fund
    
    
    1,576
    
    
    
    1,576Total investments
    
    $
    110,854
    
    
    $
    118,492Loans held for sale
    
    
    264
    
    
    
    2,221Loans (Note 2)
    
    
    413,573
    
    
    
    386,382Less allowance for loan losses
    
    
    3,783
    
    
    
    3,681Net loans
    
    
    409,790
    
    
    
    382,701Accrued interest receivable
    
    
    2,443
    
    
    
    2,444Banking premises and equipment, net
    
    
    2,958
    
    
    
    2,807Deferred tax asset, net
    
    
    1,836
    
    
    
    1,639Goodwill, net
    
    
    2,232
    
    
    
    2,232Other assets
    
    
    1,498
    
    
    
    1,546Total assets
    
    $
    539,787
    
    
    $
    521,071LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits (Note 3)
    
    $
    350,281
    
    
    $
    333,215Short-term borrowings
    
    
    
    
    
    
    141Federal Home Loan Bank advances
    
    
    138,800
    
    
    
    138,135Subordinated debenture (Note 4)
    
    
    5,258
    
    
    
    5,258ESOP Loan
    
    
    2,727
    
    
    
    2,921Advance payments by borrowers for taxes and insurance
    
    
    1,375
    
    
    
    1,168Accrued expenses and other liabilities
    
    
    2,312
    
    
    
    1,994Total liabilities
    
    
    500,753
    
    
    
    482,832Commitments and Contingencies (Note 6)Stockholders equity (Note 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; 2,032,609 shares issued at September 30, 2005 and 2,031,026 shares issued at March 31, 2005
    
    
    2,033
    
    
    
    2,031Additional paid-in capital
    
    
    12,903
    
    
    
    12,883Retained income
    
    
    39,637
    
    
    
    38,728Treasury stock (442,428 shares at September 30, 2005 and at March 31, 2005), at cost
    
    
    (9,940
    )
    
    
    (9,907
    )Accumulated other comprehensive income (loss) (Note 5)
    
    
    (418
    )
    
    
    (56
    )Unearned compensation  ESOP
    
    
    (5,181
    )
    
    
    (5,440
    )Total stockholders equity
    
    
    39,034
    
    
    
    38,239Total liabilities and stockholders equity
    
    $
    539,787
    
    
    $
    521,071
 
 1




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Interest and dividend income:Mortgage loans
    
    $
    6,087
    
    
    $
    5,457
    
    
    $
    11,972
    
    
    $
    10,839Other loans
    
    
    104
    
    
    
    92
    
    
    
    207
    
    
    
    171Short-term investments
    
    
    53
    
    
    
    56
    
    
    
    66
    
    
    
    120Investments
    
    
    1,327
    
    
    
    1,321
    
    
    
    2,694
    
    
    
    2,410Total interest and dividend income
    
    
    7,571
    
    
    
    6,926
    
    
    
    14,939
    
    
    
    13,540Interest expense:Deposits
    
    
    1,507
    
    
    
    1,216
    
    
    
    2,859
    
    
    
    2,366Advances from Federal Home Loan Bank of Boston
    
    
    1,718
    
    
    
    1,713
    
    
    
    3,441
    
    
    
    3,431Other borrowings
    
    
    132
    
    
    
    51
    
    
    
    266
    
    
    
    90Total interest expense
    
    
    3,357
    
    
    
    2,980
    
    
    
    6,566
    
    
    
    5,887Net interest and dividend income
    
    
    4,214
    
    
    
    3,946
    
    
    
    8,373
    
    
    
    7,653Provision for loan losses
    
    
    50
    
    
    
    
    
    
    
    100
    
    
    
    50Net interest and dividend income after provision for loan losses
    
    
    4,164
    
    
    
    3,946
    
    
    
    8,273
    
    
    
    7,603Non-interest income:Deposit service charges
    
    
    235
    
    
    
    146
    
    
    
    467
    
    
    
    291Net gains from sales of investment securities
    
    
    96
    
    
    
    214
    
    
    
    213
    
    
    
    348Gain on sales of loans
    
    
    85
    
    
    
    56
    
    
    
    140
    
    
    
    119Other income
    
    
    190
    
    
    
    83
    
    
    
    280
    
    
    
    189Total non-interest income
    
    
    606
    
    
    
    499
    
    
    
    1,100
    
    
    
    947Non-interest expenses:Salaries and employee benefits
    
    
    2,374
    
    
    
    1,960
    
    
    
    4,440
    
    
    
    3,863Occupancy and equipment
    
    
    381
    
    
    
    303
    
    
    
    763
    
    
    
    625Data processing service fees
    
    
    240
    
    
    
    277
    
    
    
    478
    
    
    
    557Professional fees
    
    
    199
    
    
    
    341
    
    
    
    406
    
    
    
    608Advertising and marketing
    
    
    161
    
    
    
    265
    
    
    
    344
    
    
    
    403Other expenses
    
    
    450
    
    
    
    465
    
    
    
    888
    
    
    
    949Total non-interest expenses
    
    
    3,805
    
    
    
    3,611
    
    
    
    7,319
    
    
    
    7,005Income before income taxes
    
    
    965
    
    
    
    834
    
    
    
    2,054
    
    
    
    1,545Provision for income taxes (Note 6)
    
    
    341
    
    
    
    328
    
    
    
    724
    
    
    
    585Net income
    
    $
    624
    
    
    $
    506
    
    
    $
    1,330
    
    
    $
    960Earnings per common share  basic (Note 8)
    
    $
    .44
    
    
    $
    .33
    
    
    $
    .93
    
    
    $
    .62Earnings per common share  diluted (Note 8)
    
    $
    .43
    
    
    $
    .33
    
    
    $
    .93
    
    
    $
    .61Weighted average common shares outstanding  basic
    
    
    1,427
    
    
    
    1,538
    
    
    
    1,425
    
    
    
    1,549Weighted average common and equivalent shares
outstanding  diluted
    
    
    1,436
    
    
    
    1,550
    
    
    
    1,433
    
    
    
    1,562
  2




---



##### Table of Contents



AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Unearned
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Retained
    
    
    Treasury
    
    
    Comprehensive
    
    
    Compensation
    
    
    Stockholders(In Thousands)
    
    Stock
    
    
    Capital
    
    
    Income
    
    
    Stock
    
    
    Income
    
    
    ESOP
    
    
    EquitySix Months Ended September 30, 2005Balance at March 31, 2005
    
    $
    2,031
    
    
    $
    12,883
    
    
    $
    38,728
    
    
    $
    (9,907
    )
    
    $
    (56
    )
    
    $
    (5,440
    )
    
    $
    38,239Net income
    
    
    
    
    
    
    
    
    
    
    1,330
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,330Other comprehensive income net of tax:Unrealized gain on securities, net
of reclassification adjustment
(Note 5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (362
    )
    
    
    
    
    
    
    (362
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    968Proceeds from exercise
of stock options (1,583 shares)
    
    
    2
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25Tax benefit of stock option exercises
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Director deferred compensation
transactions
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    (33
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )Dividends paid ($0.12 per share)
    
    
    
    
    
    
    
    
    
    
    (421
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (421
    )Amortization of unearned compensation -
ESOP
    
    
    
    
    
    
    (38
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    259
    
    
    
    221Balance at September 30, 2005
    
    $
    2,033
    
    
    $
    12,903
    
    
    $
    39,637
    
    
    $
    (9,940
    )
    
    $
    (418
    )
    
    $
    (5,181
    )
    
    $
    39,034
  3




---



##### Table of Contents



Six Months EndedSeptember 30,(In thousands)
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    1,330
    
    
    $
    960Adjustments to reconcile net income to net cash provided
by (used in) operating activitiesDepreciation and amortization
    
    
    277
    
    
    
    189Amortization of premiums
    
    
    65
    
    
    
    95Provision for loan losses
    
    
    100
    
    
    
    50Stock-based compensation
    
    
    221
    
    
    
    218Net gains from sales and write-downs of
investment securities
    
    
    (213
    )
    
    
    (348
    )Gain on sales of loans held for sale
    
    
    (140
    )
    
    
    (119
    )Originations of loans held for sale
    
    
    (10,367
    )
    
    
    (9,678
    )Proceeds from sale of loans originated for sale
    
    
    12,464
    
    
    
    9,414Decrease (increase) in accrued interest receivable
    
    
    1
    
    
    
    (130
    )Decrease in other assets, net
    
    
    48
    
    
    
    300Increase in advance payments by borrowers for taxes and insurance
    
    
    207
    
    
    
    135Increase (decrease) in accrued expenses and other liabilities, net
    
    
    318
    
    
    
    (143
    )Net cash provided by operating activities
    
    
    4,311
    
    
    
    943Cash flows from investing activities:Increase in loans
    
    
    (27,189
    )
    
    
    (480
    )Principal payments on mortgage-backed securities
    
    
    6,053
    
    
    
    3,642Proceeds from sales of investment securities
    
    
    2,727
    
    
    
    5,485Purchases of investment securities
    
    
    (3,061
    )
    
    
    (36,499
    )Maturities and calls of investment securities
    
    
    1,500
    
    
    
    2,495Decrease in due to brokers
    
    
    
    
    
    
    (3,029
    )Purchase of banking premises and equipment
    
    
    (428
    )
    
    
    (376
    )Net cash used in investing activities
    
    
    (20,398
    )
    
    
    (28,762
    )Cash flows from financing activities:Increase in deposits
    
    
    17,066
    
    
    
    20,390Proceeds from advances from FHLB of Boston
    
    
    84,000
    
    
    
    Repayment of advances from FHLB of Boston
    
    
    (83,335
    )
    
    
    (3,000
    )Increase (decrease) in short-term borrowings
    
    
    (141
    )
    
    
    194Issuance of subordinated debenture
    
    
    
    
    
    
    5,258Repayment of ESOP loan
    
    
    (194
    )
    
    
    (195
    )Purchase of shares by ESOP
    
    
    
    
    
    
    (2,565
    )Proceeds from exercise of stock options
    
    
    25
    
    
    
    19Tax benefit from exercise of stock option
    
    
    5
    
    
    
    Dividends paid, net
    
    
    (421
    )
    
    
    (373
    )Net directors deferred compensation
    
    
    (3
    )
    
    
    5Net cash provided by financing activities
    
    
    17,002
    
    
    
    16,780Net decrease in cash and cash equivalents
    
    
    915
    
    
    
    (11,039
    )Cash and cash equivalents at beginning of year
    
    
    6,383
    
    
    
    34,337Cash and cash equivalents at end of period
    
    $
    7,298
    
    
    $
    23,298Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    6,589
    
    
    $
    5,878Income taxes
    
    $
    798
    
    
    $
    264
  4




---



##### Table of Contents



CENTRAL BANCORP, INC. AND SUBSIDIARY
 
 Notes to Unaudited Consolidated Financial Statements
 September 30, 2005
 (1) Basis of Presentation
    (2) Loans
  September 30,
    
    
    March 31,2005
    
    
    2005Real estate loans:Residential real estate
    
    $
    160,532
    
    
    $
    159,838Commercial real estate
    
    
    213,559
    
    
    
    194,326Construction
    
    
    23,741
    
    
    
    17,187Home equity lines of credit
    
    
    9,419
    
    
    
    9,194aaaaaaaaaaaaTotal real estate loans
    
    
    407,071
    
    
    
    380,545Commercial loans
    
    
    5,542
    
    
    
    4,786Consumer loans
    
    
    960
    
    
    
    1,051Total loans
    
    
    413,572
    
    
    
    386,382Less: allowance for loan losses
    
    
    (3,783
    )
    
    
    (3,681
    )Total loans, net
    
    $
    409,790
    
    
    $
    382,701
   5




---



##### Table of Contents



CENTRAL BANCORP, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
September 30, 2005
  Three Months EndedSeptember 30,2005
    
    
    2004Balance at beginning of period
    
    $
    3,731
    
    
    $
    3,599Provision charged to expense
    
    
    50
    
    
    
    Less: charge-offs
    
    
    (11
    )
    
    
    (1
    )Add: recoveries
    
    
    13
    
    
    
    8Balance at end of period
    
    $
    3,783
    
    
    $
    3,606
 Six Months EndedSeptember 30,2005
    
    
    2004Balance at beginning of period
    
    $
    3,681
    
    
    $
    3,537Provision charged to expense
    
    
    100
    
    
    
    50Less: charge-offs
    
    
    (20
    )
    
    
    (1
    )Add: recoveries
    
    
    23
    
    
    
    20Balance at end of period
    
    $
    3,783
    
    
    $
    3,606
 (3) Deposits
  September 30, 2005
    
    
    March 31, 2005Demand deposit accounts
    
    $
    40,457
    
    
    $
    33,982NOW accounts
    
    
    34,032
    
    
    
    39,205Passbook and other savings accounts
    
    
    69,952
    
    
    
    74,316Money market deposit accounts
    
    
    45,000
    
    
    
    50,051Total non-certificate accounts
    
    
    189,441
    
    
    
    197,554Term deposit certificatesCertificates of $100,000 and above
    
    
    57,664
    
    
    
    47,270Certificates of less than $100,000
    
    
    103,176
    
    
    
    88,391Total term deposit certificates
    
    
    160,840
    
    
    
    135,661Total deposits
    
    $
    350,281
    
    
    $
    333,215
 (4) Subordinated Debenture
  6




---



##### Table of Contents



CENTRAL BANCORP, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
September 30, 2005
  (5) Other Comprehensive Income (Loss)
   For the Six Months EndedSeptember 30, 2005Before-Tax
    
    
    Tax
    
    
    After-TaxAmount
    
    
    Effect
    
    
    AmountUnrealized losses on securities:Unrealized net holding losses during period
    
    $
    (346
    )
    
    $
    (125
    )
    
    $
    (221
    )Less: reclassification adjustment for net
gains included in net income
    
    
    213
    
    
    
    72
    
    
    
    141Other comprehensive loss
    
    $
    (559
    )
    
    $
    (197
    )
    
    $
    (362
    )
 For the Six Months EndedSeptember 30, 2004Before-Tax
    
    
    Tax
    
    
    After-TaxAmount
    
    
    Effect
    
    
    AmountUnrealized gains on securities:Unrealized net holding losses during period
    
    $
    (949
    )
    
    $
    (352
    )
    
    $
    (597
    )Less: reclassification adjustment for net
gains included in net income
    
    
    348
    
    
    
    126
    
    
    
    222Other comprehensive loss
    
    $
    (1,297
    )
    
    $
    (478
    )
    
    $
    (819
    )
 (6) Contingencies
 Legal Proceedings
  7




---



##### Table of Contents



CENTRAL BANCORP, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
September 30, 2005
 (7) Subsequent Event
  (8) Earnings per Share (EPS)
   Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Amounts in thousands, except per share amounts)Net income available to common shareholders
    
    $
    624
    
    
    $
    506
    
    
    $
    1,330
    
    
    $
    960Weighted average number of common shares outstanding
    
    
    1,590
    
    
    
    1,666
    
    
    
    1,590
    
    
    
    1,665Weighted average number of unallocated ESOP shares
    
    
    (163
    )
    
    
    (128
    )
    
    
    (165
    )
    
    
    (116
    )Weighted average number of common shares outstanding used in calculation of basic earnings per share
    
    
    1,427
    
    
    
    1,538
    
    
    
    1,425
    
    
    
    1,549Incremental shares from the assumed exercise of dilutive stock options
    
    
    9
    
    
    
    2
    
    
    
    8
    
    
    
    13Weighted average number of common shares outstanding used in calculating diluted earnings per share
    
    
    1,436
    
    
    
    1,550
    
    
    
    1,433
    
    
    
    1,562Earnings per shareBasic
    
    $
    .44
    
    
    $
    .33
    
    
    $
    .93
    
    
    $
    .62Diluted
    
    $
    .43
    
    
    $
    .33
    
    
    $
    .93
    
    
    $
    .61
 8




---



##### Table of Contents



CENTRAL BANCORP, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
September 30, 2005
 (9) Recent Accounting Pronouncements
   9




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Forward-Looking Statements
   General
   Critical Accounting Policies
   10




---



##### Table of Contents



Comparison of Financial Condition at September 30, 2005 and March 31, 2005
     Comparison of Operating Results for the Quarters Ended September 30, 2005 and 2004
  Net Interest Income.
  Interest Income.
 11




---



##### Table of Contents



Interest Expense.
  Three Months Ended September 30,2005
    
    
    2004Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Interest-earning assets:Mortgage loans
    
    $
    397,706
    
    
    
    6,087
    
    
    
    6.12
    %
    
    $
    354,393
    
    
    $
    5,457
    
    
    
    6.16
    %Other loans
    
    
    5,852
    
    
    
    105
    
    
    
    7.18
    
    
    
    5,812
    
    
    
    92
    
    
    
    6.33Investment securities
    
    
    113,816
    
    
    
    1,327
    
    
    
    4.66
    
    
    
    114,955
    
    
    
    1,321
    
    
    
    4.60Short-term investments
    
    
    6,450
    
    
    
    53
    
    
    
    3.29
    
    
    
    18,694
    
    
    
    56
    
    
    
    1.20Total interest-earning assets
    
    
    523,824
    
    
    
    7,572
    
    
    
    5.78
    
    
    
    493,854
    
    
    
    6,926
    
    
    
    5.61Allowance for loan losses
    
    
    (3,747
    )
    
    
    
    
    
    
    
    
    
    
    (3,618
    )Noninterest-earning assets
    
    
    17,251
    
    
    
    
    
    
    
    
    
    
    
    16,063Total assets
    
    $
    537,328
    
    
    
    
    
    
    
    
    
    
    $
    506,299Interest-bearing liabilities:Deposits
    
    $
    304,262
    
    
    
    1,507
    
    
    
    1.98
    
    
    $
    285,017
    
    
    
    1,216
    
    
    
    1.71Advances from FHLB of Boston
    
    
    141,507
    
    
    
    1,718
    
    
    
    4.86
    
    
    
    138,780
    
    
    
    1,713
    
    
    
    4.94Other borrowings
    
    
    8,560
    
    
    
    133
    
    
    
    6.15
    
    
    
    3,636
    
    
    
    51
    
    
    
    5.61Total interest-bearing liabilities
    
    
    454,419
    
    
    
    3,358
    
    
    
    2.96
    
    
    
    427,433
    
    
    
    2,980
    
    
    
    2.79Noninterest-bearing liabilities
    
    
    43,780
    
    
    
    
    
    
    
    
    
    
    
    38,398Total liabilities
    
    
    498,189
    
    
    
    
    
    
    
    
    
    
    
    465,831Stockholders equity
    
    
    39,129
    
    
    
    
    
    
    
    
    
    
    
    40,468Total liabilities and stockholders equity
    
    $
    537,328
    
    
    
    
    
    
    
    
    
    
    $
    506,299Net interest and dividend income
    
    
    
    
    
    $
    4,214
    
    
    
    
    
    
    
    
    
    
    $
    3,946Net interest spread
    
    
    
    
    
    
    
    
    
    
    2.82
    %
    
    
    
    
    
    
    
    
    
    
    2.82
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.22
    %
    
    
    
    
    
    
    
    
    
    
    3.20
    %
 Provision for Loan Losses.
 12




---



##### Table of Contents



Non-interest Income.
 Non-interest Expense.
       Income Taxes.
 Comparison of Operating Results for the Six Months Ended September 30, 2005 and 2004
  13




---



##### Table of Contents



Interest Income.
 Interest Expense.
   Six Months Ended September 30,2005
    
    
    2004Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Interest-earning assets:Mortgage loans
    
    $
    393,648
    
    
    $
    11,972
    
    
    
    6.08
    %
    
    $
    353,660
    
    
    $
    10,839
    
    
    
    6.13
    %Other loans
    
    
    5,999
    
    
    
    207
    
    
    
    6.90
    
    
    
    5,417
    
    
    
    171
    
    
    
    6.31Investment securities
    
    
    115,611
    
    
    
    2,694
    
    
    
    4.66
    
    
    
    102,900
    
    
    
    2,409
    
    
    
    4.68Short-term investments
    
    
    4,484
    
    
    
    66
    
    
    
    2.94
    
    
    
    22,826
    
    
    
    120
    
    
    
    1.05Total interest-earning assets
    
    
    519,742
    
    
    
    14,939
    
    
    
    5.75
    
    
    
    484,803
    
    
    
    13,540
    
    
    
    5.59Allowance for loan losses
    
    
    (3,722
    )
    
    
    
    
    
    
    
    
    
    
    (3,618
    )Noninterest-earning assets
    
    
    16,873
    
    
    
    
    
    
    
    
    
    
    
    18,508Total assets
    
    $
    532,893
    
    
    
    
    
    
    
    
    
    
    $
    499,693Interest-bearing liabilities:Deposits
    
    $
    301,724
    
    
    
    2,859
    
    
    
    1.90
    
    
    $
    277,950
    
    
    
    2,366
    
    
    
    1.70Advances from FHLB of Boston
    
    
    142,275
    
    
    
    3,442
    
    
    
    4.84
    
    
    
    140,294
    
    
    
    3,431
    
    
    
    4.89Other borrowings
    
    
    9,197
    
    
    
    266
    
    
    
    5.78
    
    
    
    3,469
    
    
    
    90
    
    
    
    5.19Total interest-bearing liabilities
    
    
    453,196
    
    
    
    6,567
    
    
    
    2.90
    
    
    
    421,713
    
    
    
    5,887
    
    
    
    2.79Noninterest-bearing liabilities
    
    
    40,865
    
    
    
    
    
    
    
    
    
    
    
    36,517Total liabilities
    
    
    494,061
    
    
    
    
    
    
    
    
    
    
    
    458,230Stockholders equity
    
    
    38,832
    
    
    
    
    
    
    
    
    
    
    
    41,463Total liabilities and stockholders equity
    
    $
    532,893
    
    
    
    
    
    
    
    
    
    
    $
    499,693Net interest and dividend income
    
    
    
    
    
    $
    8,372
    
    
    
    
    
    
    
    
    
    
    $
    7,653Net interest spread
    
    
    
    
    
    
    
    
    
    
    2.85
%

    
    
    


    
    
    
    
    
    
    2.80
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.22
%

    
    
    


    
    
    
    
    
    
    3.16
    %
 14




---



##### Table of Contents



Provision for Loan Losses.
  Non-interest Income.
  Non-interest Expense.
       15




---



##### Table of Contents



Income Taxes.
 Liquidity and Capital Resources
    Company
    
    
    BankTier 1 Capital (to average assets)
    
    
    7.91
    %
    
    
    7.27
    %Tier 1 Capital (to risk-weighted assets)
    
    
    11.84
    
    
    
    10.88Total Capital (to risk-weighted assets)
    
    
    12.90
    
    
    
    11.95
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
     16




---



##### Table of Contents



September 30,
    
    
    March 31,2005
    
    
    2005Amount
    
    
    % Change
    
    
    Amount
    
    
    % Change(Dollars in thousands)300 basis point increase in rates
    
    $
    (2,595
    )
    
    
    (15.69
    )%
    
    $
    (2,361
    )
    
    
    (13.8
    )%150 basis point decrease in rates
    
    
    
    
    
    
    
    %
    
    
    (455
    )
    
    
    (2.7
    )200 basis point decrease in rates
    
    
    211
    
    
    
    1.27
    %
    
    
    
    
    
    
    
  
 Item 4. Controls and Procedures
   
 Part II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  17




---



##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  ELECTION OF DIRECTORS
    
    FOR
    
    
    WITHHELDPaul E. Bulman
    
    
    1,119,341
    
    
    
    343,116James F. Linnehan
    
    
    1,114,286
    
    
    
    348,170John J. Morrissey
    
    
    1,109,756
    
    
    
    352,702
  
 Item 5. Other Information
  
 Item 6. Exhibits
 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
 18




---



##### Table of Contents



SIGNATURES
  CENTRAL BANCORP, INC.
               RegistrantNovember 14, 2005
    By:
    /s/ John D. DohertyJohn D. DohertyChairman, President and Chief Executive Officer November 14, 2005
    By:
    /s/ Paul S. FeeleyPaul S. FeeleySenior Vice President, Treasurer and
Chief Financial Officer