<PAGE> 1


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

                                    FORM 10-Q
(Mark One)

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

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

                                       OR

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

For the transition period from ______________ to _____________

                         Commission file number: 0-25251


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

        MASSACHUSETTS                                 04-3447594
--------------------------------           ------------------------------------
(State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
 Incorporation or 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
         --------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes   X       No
    -------      -------

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes            No     X
    --------      ---------

      Common Stock, $1.00 par value                        1,588,598
      -----------------------------           ----------------------------------
                 Class                         Outstanding at November 10, 2004


<PAGE> 2
<TABLE>
<CAPTION>


                                                  CENTRAL BANCORP, INC.

                                                     TABLE OF CONTENTS

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

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

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

                  Consolidated Statements of Changes in Stockholders' Equity for the six            3
                  months ended September 30, 2004

                  Consolidated Statements of Cash Flows for the six months ended                    4
                  September 30, 2004 and 2003

                  Notes to Unaudited Consolidated Financial Statements                              5

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

                  Liquidity and Capital Resources                                                  14

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk                       14

         Item 4.  Controls and Procedures                                                          15


PART II.  OTHER INFORMATION

         Item 1.  Legal Proceedings                                                                15

         Item 2.  Unregistered Sales of Equity 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                                                                         16

SIGNATURES
</TABLE>



<PAGE> 3
<TABLE>
<CAPTION>

PART I. FINANCIAL INFORMATION

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

                                                                                    September 30,         March 31,
 (Dollars in Thousands)                                                                 2004                2004
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                   <C>
ASSETS
Cash and due from banks                                                             $   5,737             $   7,113
Short-term investments                                                                 17,561                27,224
                                                                                    ---------             ---------
     Cash and cash equivalents                                                         23,298                34,337
                                                                                    ---------             ---------
Certificate of deposit                                                                  1,223                 1,211
Investment securities available for sale (amortized cost of $105,331
     at September 30, 2004 and $80,201 at March 31, 2004)                             107,604                83,771
Stock in Federal Home Loan Bank of Boston, at cost                                      8,300                 8,300
The Co-operative Central Bank Reserve Fund                                              1,576                 1,576
                                                                                    ---------             ---------
    Total investments                                                                 117,480                93,647
                                                                                    ---------             ---------
Loans held for sale                                                                     1,182                   799

Loans (Note 2)                                                                        357,124               356,625
Less allowance for loan losses                                                          3,606                 3,537
                                                                                    ---------             ---------
     Net loans                                                                        353,518               353,088
                                                                                    ---------              --------
Accrued interest receivable                                                             2,333                 2,203
Banking premises and equipment, net                                                     2,300                 2,113
Deferred tax asset, net                                                                   341                   243
Goodwill, net                                                                           2,232                 2,232
Other assets                                                                            1,092                 1,024
                                                                                    ---------             ---------
    Total assets                                                                    $ 504,999             $ 490,897
                                                                                    =========             =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Deposits (Note 3)                                                                 $ 316,310             $ 295,920
  Short-term borrowings                                                                   651                   845
  Federal Home Loan Bank advances                                                     138,100               141,100
  Subordinated debenture (Note 4)                                                       5,258                    --
  ESOP Loan                                                                             3,116                 3,311
  Advance payments by borrowers for taxes and insurance                                 1,317                 1,182
  Accrued expenses and other liabilities                                                1,913                 5,085
                                                                                    ---------             ---------
    Total liabilities                                                                 466,665               447,443
                                                                                    ---------             ---------
Commitments 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;
     2,031,026 shares issued at September 30, 2004 and 2,030,251
     shares issued at March 31, 2004                                                    2,031                 2,030
  Additional paid-in capital                                                           12,989                12,920
  Retained income                                                                      37,442                36,855
  Treasury stock (442,428 shares at September 30, 2004 and 365,294
     issued at March 31, 2004), at cost                                                (9,904)               (7,311)
  Accumulated other comprehensive income (Note 5)                                       1,474                 2,293
  Unearned compensation - ESOP                                                         (5,698)               (3,333)
                                                                                    ---------             ---------
    Total stockholders' equity                                                         38,334                43,454
                                                                                    ---------             ---------
    Total liabilities and stockholders' equity                                      $ 504,999             $ 490,897
                                                                                    =========             =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.

                                                        1


<PAGE> 4
<TABLE>
<CAPTION>



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

                                                                                 Three Months Ended            Six Months Ended
                                                                                     September 30,               September 30,
                                                                              --------------------------     ---------------------
                                                                                 2004             2003         2004         2003
                                                                              ---------         --------     ---------    --------
<S>                                                                           <C>               <C>          <C>          <C>
Interest and dividend income:
  Mortgage loans                                                              $    5,457        $  5,793     $  10,839    $ 11,814
  Other loans                                                                         92             104           171         248
  Short-term investments                                                              56              75           120          93
  Investments                                                                      1,321             844         2,410       1,684
                                                                              ----------        --------     ---------    --------
    Total interest and dividend income                                             6,926           6,816        13,540      13,839
                                                                              ----------        --------     ---------    --------
Interest expense:
  Deposits                                                                         1,216           1,100         2,366       2,257
  Advances from Federal Home Loan Bank of Boston                                   1,713           1,775         3,431       3,531
  Other borrowings                                                                    51              --            90           1
                                                                              ----------        --------     ---------    --------
    Total interest expense                                                         2,980           2,875         5,887       5,789
                                                                              ----------        --------     ---------    --------
    Net interest and dividend income                                               3,946           3,941         7,653       8,050
Provision for loan losses                                                             --              50            50         100
                                                                              ----------        --------     ---------    --------
    Net interest and dividend income after
      provision for loan losses                                                    3,946           3,891         7,603       7,950
                                                                              ----------        --------     ---------    --------
Non-interest income:
  Deposit service charges                                                            146             157           291         318
  Net gains (losses) from sales of investment securities                             214            (130)          348        (135)
  Gain on sales of loans                                                              56              68           119         209
  Other income                                                                        83              68           189         185
                                                                              ----------        --------     ---------    --------
    Total non-interest income                                                        499             163           947         577
                                                                              ----------        --------     ---------    --------
Non-interest expenses:
  Salaries and employee benefits                                                   1,960           1,723         3,863       3,523
  Occupancy and equipment                                                            303             270           625         540
  Data processing service fees                                                       277             265           557         546
  Professional fees                                                                  341            (117)          608          13
  Advertising and marketing                                                          265             126           403         247
  Other expenses                                                                     465             489           949         890
                                                                              ----------        --------     ---------    --------
    Total non-interest expenses                                                    3,611           2,756         7,005       5,759
                                                                              ----------        --------     ---------    --------

    Income before income taxes                                                       834           1,298         1,545       2,768
Provision for income taxes (Note 6)                                                  328             468           585         650
                                                                              ----------        --------     ---------    --------
      Net income                                                              $      506        $    830     $     960    $  2,118
                                                                              ==========        ========     =========    ========

Earnings per common share - basic (Note 8)                                    $      .33        $   0.54     $     .62    $   1.37
                                                                              ==========        ========     =========    ========

Earnings per common share - diluted (Note 8)                                  $      .33        $   0.53     $     .61    $   1.36
                                                                              ==========        ========     =========    ========

Weighted average common shares outstanding - basic                                 1,538           1,549         1,549       1,547

Weighted average common and equivalent shares
   outstanding - diluted                                                           1,550           1,563         1,562       1,561

</TABLE>

See accompanying notes to unaudited consolidated financial statements.


                                                        2
<PAGE> 5
<TABLE>
<CAPTION>


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

                                                                                       Accumulated
                                                   Additional                             Other          Unearned          Total
                                           Common   Paid-In     Retained   Treasury   Comprehensive    Compensation    Stockholders'
        (In Thousands)                      Stock   Capital      Income     Stock        Income            ESOP           Equity
------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended September 30, 2004
-----------------------------------
     <S>                                  <C>      <C>          <C>        <C>         <C>             <C>              <C>
     Balance at March 31, 2004            $ 2,030  $  12,920    $ 36,855   $ (7,311)   $   2,293       $  (3,333)       $  43,454

     Net income                                --         --         960         --           --              --              960
     Other comprehensive income net of tax:
         Unrealized loss on securities, net
           of reclassification adjustment      --         --          --         --         (819)             --             (819)
                                                                                                                        ----------
            Comprehensive income                                                                                              141
                                                                                                                        ----------
     Purchase of shares by ESOP
       (77,134 shares)                         --         --          --         --           --          (2,565)          (2,565)
     Proceeds from exercise of stock
       options (775 shares)                     1         15          --         --           --              --               16
     Tax benefit of stock option               --          3          --         --           --              --                3
     Director deferred compensation
         transactions                          --         33          --        (28)          --              --                5
     Dividends paid ($0.24 per share)          --         --        (373)        --           --              --             (373)
     Amortization of unearned
         compensation - ESOP                   --         18          --         --           --             200              218

     Purchase of treasury stock
         (77,134 shares)                       --         --          --     (2,565)          --              --           (2,565)
                                          -------  ---------    --------   ---------   ----------      ---------        ----------
     Balance at September 30, 2004        $ 2,031  $  12,989    $ 37,442   $ (9,904)   $    1,474      $  (5,698)       $  38,334
                                          =======  =========    ========   =========   ==========      ==========       =========

                            See accompanying notes to unaudited consolidate financial statements.

</TABLE>

                                                                3
<PAGE> 6
<TABLE>
<CAPTION>


                              CENTRAL BANCORP, INC. AND SUBSIDIARY
                              Consolidated Statements of Cash Flows
                                           (Unaudited)

                                                                                        Six Months Ended
                                                                                         September 30,
                                                                           --------------------------------------
                           (In thousands)                                         2004                 2003
-----------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                   <C>
Cash flows from operating activities:

Net income                                                                   $     960             $   2,118
   Adjustments to reconcile net income to net cash provided
      by (used in) operating activities
     Depreciation and amortization                                                 189                   154
     Amortization of premiums                                                       95                    97
     Provision for loan losses                                                      50                   100
     Stock-based compensation                                                      218                   127
     Net (gains) losses from sales of
         investment securities                                                    (348)                  135
     Gain on sales of loans held for sale                                         (119)                 (209)
     Originations of loans held for sale                                        (9,678)              (25,147)
     Proceeds from sale of loans originated for sale                             9,414                21,851
(Increase) decrease in accrued interest receivable                                (130)                  337
Decrease (increase) in other assets, net                                           300                   (94)
Increase (decrease) in advance payments by borrowers for taxes and insurance       135                    74
Increase (decrease) in accrued expenses and other liabilities, net                (143)               (1,313)
                                                                             ---------             ---------
         Net cash provided by (used in) operating activities                       943                (1,770)
                                                                             ---------             ---------

Cash flows from investing activities:

(Increase) decrease in loans                                                      (480)               39,843
Principal payments on mortgage-backed securities                                 3,642                 2,684
Proceeds from sales of investment securities                                     5,485                   482
Purchases of investment securities                                             (36,499)               (3,000)
Maturities and calls of investment securities                                    2,495                 4,000
Increase (decrease)in due to brokers                                            (3,029)                3,000
Purchase of banking premises and equipment                                        (376)                 (296)
                                                                             ---------             ---------
         Net cash provided by (used in) investing activities                   (28,762)               46,713
                                                                             ---------             ---------
Cash flows from financing activities:

Increase (decrease) in deposits                                                 20,390                (3,444)
Repayment of advances from FHLB of Boston                                       (3,000)                   --
Increase (decrease) in short-term borrowings                                      (194)                 (149)
Issuance of subordinated debenture                                               5,258                    --
Repayment of ESOP loan                                                            (195)                   --
Purchase of shares by ESOP                                                      (2,565)                   --
Proceeds from exercise of stock options                                             19                    13
Dividends paid, net                                                               (373)                 (311)
Net directors deferred compensation                                                  5                     4
Purchase of treasury stock                                                      (2,565)                   --
                                                                             ---------             ---------
         Net cash provided by (used in) financing activities                    16,780                (3,887)
                                                                             ---------             ---------

Net increase (decrease) in cash and cash equivalents                           (11,039)               41,056
Cash and cash equivalents at beginning of year                                  34,337                11,222
                                                                             ---------             ---------
Cash and cash equivalents at end of period                                   $  23,298             $  52,278
                                                                             =========             =========

Supplemental disclosure of cash flow information: Cash paid during the period
     for:
       Interest                                                              $   5,878             $   5,762
       Income taxes                                                          $     264             $   1,146

</TABLE>

See accompanying notes to unaudited consolidated financial statements.


                                                4
<PAGE> 7


                      CENTRAL BANCORP, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2004

(1)      BASIS OF PRESENTATION

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

         The Company  owns 100% of the common stock of Central  Bancorp  Capital
Trust I (the "Trust") which has issued trust preferred securities to the public.
In accordance with Financial Accounting Standards Board ("FASB")  Interpretation
("FIN") No. 46  "Consolidation of Variable Interest Entities - an Interpretation
of Accounting  Research  Bulletin No. 51", as revised by FIN No. 46R ("FIN 46R")
issued in December 2002, the Trust is not included in the Company's consolidated
financial statements.

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

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

(2)      LOANS

         Loans,  excluding  loans held for sale,  as of  September  30, 2004 and
March 31, 2004 are summarized below (in thousands):
<TABLE>
<CAPTION>
                                                               September 30,               March 31,
                                                                    2004                     2004
                                                              -----------------         --------------
       <S>                                                     <C>                       <C>
       Real estate loans:
          Residential real estate                              $  163,593                $  171,682
          Commercial real estate                                  165,039                   146,107
          Construction                                             13,503                    25,112
          Home equity lines of credit                               8,835                     9,397
                                                               ----------                ----------
               Total real estate loans                            350,970                   352,298
                                                               ----------                ----------
       Commercial loans                                             5,148                     3,198
       Consumer loans                                               1,006                     1,129
                                                               ----------                ----------
                Total loans                                       357,124                   356,625
        Less:  allowance for loan losses                           (3,606)                   (3,537)
                                                               ----------                ----------
                Total loans, net                               $  353,518                $  353,088
                                                               ==========                ==========
</TABLE>
         There were no non-accrual loans at September 30, 2004 and March 31,
2004.


                                       5

<PAGE> 8


                      CENTRAL BANCORP, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2004

 (3)     DEPOSITS

         Deposits at September 30, 2004 and March 31, 2004 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
                                                               September 30,             March 31,
                                                                   2004                    2004
                                                            ------------------        --------------
<S>                                                             <C>                     <C>
Demand deposit accounts                                         $  32,569               $  27,881
NOW accounts                                                       34,122                  37,106
Passbook and other savings accounts                                74,694                  73,737
Money market deposit accounts                                      63,514                  56,084
                                                                ---------               ---------
         Total non certificate accounts                           204,899                 194,808
                                                                ---------               ---------
Term deposit certificates
      Certificates of $100,000 and above                           35,140                  27,607
      Certificates less than $100,000                              76,271                  73,505
                                                                ---------               ---------
         Total term deposit certificates                          111,411                 101,112
                                                                ---------               ---------
         Total deposits                                         $ 316,310               $ 295,920
                                                                =========               =========
</TABLE>

(4)      SUBORDINATED DEBENTURE

         On September 16, 2004, Central Bancorp,  Inc. (the "Company") completed
a trust  preferred  securities  financing in the amount of $5.1 million.  In the
transaction,  the Company formed a Delaware  statutory  trust,  known as Central
Bancorp Capital Trust I (the "Trust"). The Trust issued and sold $5.1 million of
trust preferred  securities in a private  placement and issued $158,000 of trust
common securities to the Company. The Trust used the proceeds of these issuances
to purchase  $5,258,000  of the  Company's  floating  rate  junior  subordinated
debentures due September 16, 2034 (the  "Debentures").  The interest rate on the
Debentures  and the  trust  preferred  securities  is  variable  and  adjustable
quarterly at 2.44% over  three-month  LIBOR.  At September 30, 2004 the interest
rate  was  4.34%.  The  Debentures  are the sole  assets  of the  Trust  and are
subordinate to all of the Company's existing and future obligations for borrowed
money. The trust preferred  securities  generally rank equal to the trust common
securities  in  priority  of  payment,  but will rank prior to the trust  common
securities  if and so long as the Company  fails to make  principal  or interest
payments on the Debentures. Concurrently with the issuance of the Debentures and
the trust preferred  securities,  the Company issued a guarantee  related to the
trust securities for the benefit of the holders.

         On September 17, 2004,  the Company  completed the repurchase of 77,134
shares of its  outstanding  common  stock,  reducing the  Company's  outstanding
common stock to 1,588,598  shares.  In addition,  the Central  Co-operative Bank
Employee  Stock  Ownership  Trust (the "ESOP")  completed the purchase of 77,134
share of the  Company's  common  stock.  The Company and the ESOP  purchased the
shares  pursuant to the terms of the Stock Purchase  Agreement,  dated September
13, 2004, by and among the Company and the ESOP and PL Capital,  LLC,  Financial
Edge Fund, L.P., Financial Edge-Strategic Fund, L.P., Goodbody/PL Capital, L.P.,
Goodbody/PL Capital, LLC, Richard Lashley, John W. Palmer and Richard J. Fates.

(5)      OTHER COMPREHENSIVE INCOME (LOSS)

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


                                       6

<PAGE> 9


         The Company's other comprehensive income (loss) and related tax effect
for the six months ended September 30, 2004 and 2003 are as follows (in
thousands):
<TABLE>
<CAPTION>
                                                                For the Six Months Ended
                                                                    September 30, 2004
                                                             ---------------------------------
                                                              Before-
                                                               Tax          Tax      After-Tax
                                                              Amount       Effect     Amount
                                                             -------      --------   ---------
<S>                                                          <C>          <C>         <C>
Unrealized gains on securities:
  Unrealized net holding losses during period                $  (949)     $  (352)    $ (597)
   Add: reclassification adjustment for net
            gains included in net income                        (348)        (126)      (222)
                                                             --------     --------    -------
   Other comprehensive loss                                  $(1,297)     $  (478)    $ (819)
                                                             ========     ========    =======

                                                                For the Six Months Ended
                                                                    September 30, 2003
                                                             ---------------------------------
                                                              Before-
                                                               Tax          Tax      After-Tax
                                                              Amount       Effect     Amount
                                                             -------      --------   ---------
Unrealized gains on securities:
  Unrealized net holding gains during period                 $ 1,427      $   458     $  969
   Add: reclassification adjustment for net
            losses included in net income                        135           46         89
                                                             --------     --------    -------
   Other comprehensive income                                $ 1,562      $   504     $1,058
                                                             ========     ========    =======
</TABLE>

(6)      CONTINGENCIES

LEGAL PROCEEDINGS

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

TAX SETTLEMENT

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

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

(7)      SUBSEQUENT EVENT

         On October  21,  2004,  the Board of  Directors  voted the payment of a
quarterly cash dividend of $0.12 per share.  The dividend is payable on November
19, 2004 to stockholders of record on November 5, 2004.

(8)      EARNINGS PER SHARE (EPS)

         Unallocated  ESOP  shares are not treated as being  outstanding  in the
computation  of either basic or diluted EPS. At September 30, 2004 and March 31,
2004,  there were  approximately  178,000 and 107,000  unallocated  ESOP shares,
respectively.



                                       7

<PAGE> 10

(9)      RECENT ACCOUNTING PRONOUNCEMENTS

         In December 2003, the FASB issued Interpretation No. 46R "Consolidation
of Variable Interest Entities ? An Interpretation of ARB No. 51, "to expand upon
and strengthen existing accounting guidance that addresses when a company should
include in its financial  statements the assets,  liabilities  and activities of
another entity.  Until now, a company  generally has included  another entity in
its combined  financial  statements  only if it  controlled  the entity  through
voting interests. FIN 46R changes that guidance by requiring a variable interest
entity, as defined,  to be combined by a company if that company is subject to a
majority of the risk of loss from the variable interest  entity's  activities or
is entitled to receive a majority of the entity's  residual returns or both. FIN
46R also requires  disclosure about variable  interest entities that the company
is not  required  to  consolidate  but in  which it has a  significant  variable
interest. Application of FIN 46R is required in financial statements for periods
ending after March 15, 2004. The adoption did not have a material  impact on the
Company's results of operations or financial position.

         In March 2004, the Securities  and Exchange  Commission  ("SEC") issued
Staff  Accounting  Bulletin ("SAB") No. 105. SAB No. 105 summarizes the views of
the SEC regarding the application of Generally  Accepted  Accounting  Principles
("GAAP")  to loan  commitments  for  mortgage  loans  that will be held for sale
accounted for as  derivatives.  The guidance  requires the  measurement  at fair
value  of such  loan  commitments  include  only  the  differences  between  the
guaranteed  interest rate in the loan  commitment  and a market  interest  rate;
future cash flows  related to servicing  the loan or the  customer  relationship
should not be recorded as a part of the loan commitment derivative.  SAB No. 105
is effective for said loan commitments accounted for as derivatives entered into
beginning  April 1,  2004.  The Bank  adopted  this  SAB on April 1,  2004.  The
adoption of SAB No. 105 did not have an impact on the Company as the Company was
valuing loan commitments to be accounted for as derivatives consistent with this
guidance.

         In June 2004, the FASB's  Emerging  Issues Task Force  ("EITF")  issued
EITF Issue  03-01,  "The  Meaning  of  Other-Than-Temporary  Impairment  and Its
Application  to  Certain  Investments."  EITF  03-1  contains  new  guidance  on
other-than-temporary impairments of investment securities. The guidance dictates
when  impairment  is  deemed to  exist,  provides  guidance  on  determining  if
impairment  is other than  temporary,  and directs how to  calculate  impairment
loss.  Issue 03-1 also details  expanded annual  disclosure  rules. In September
2004,  the FASB issued FASB staff  position  FSP EITF 03-1-1  which  delayed the
effective  date  of  the  new  guidance  on   recognizing   other-than-temporary
impairments  indefinitely.  The Company will evaluate the impact of EITF 03-1 on
the Company's  financial position and results of operations upon the issuance of
FSB EITF 03-1-a.

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.

                                       8

<PAGE> 11


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 SEPTEMBER 30, 2004 AND MARCH 31, 2004

         Total assets  increased by $14.1  million from $490.9  million at March
31, 2004 to $505.0  million at  September  30,  2004.  During the quarter  ended
September  30, 2004,  loans  (excluding  loans held for sale)  increased by $0.5
million due  primarily to an $18.9 million  increase in  commercial  real estate
loans and a $2.0 million  increase in commercial  loans,  partially  offset by a
$8.1 million decrease in residential mortgage loans and a $11.6 million decrease
in construction  loans.  During the current quarter,  prepayments of residential
mortgage loans were significant amounting to $20.8 million. Management regularly
assesses the  desirability  of holding  newly  originated  long-term  fixed-rate
residential  mortgage  loans in portfolio or selling such loans in the secondary
market.  A number of factors are  evaluated to determine  whether or not to hold
such loans in portfolio including,  current and projected liquidity, current and
projected interest rates, projected growth in other interest-earning  assets and
the current and projected interest rate risk profile. Based on its consideration
of  these  factors,  management  determined  that  most  fixed-rate  residential
mortgage  loans  originated  during the  current  quarter  should be sold in the
secondary market.

         The Company  experienced  growth of $10.1  million in core deposits and
$10.3  million in term  deposits  resulting in an increase in total  deposits of
$20.4  million.  The  growth in core  deposits  was  principally  related to the
increase  of $7.4  million  in money  market  deposit  accounts.  Because of the
continuation  of the low  interest  rates for  deposits in recent  years and the
tiered  pricing  used with this type of  account,  money  market  accounts  have
attracted large average balances.  The growth in core deposits was also aided by
growth in most other  types of  accounts.  The Company  began a major  marketing
initiative  in March 2004 to promote a new free checking  account  product which
contributed to this growth.

         The decrease in  Stockholders'  equity of $5.1 million to $38.3 million
at September 30, 2004 was primarily  attributable  to the  previously  announced
purchase of 77,134  shares of common stock by the Company and an equal number of
shares purchased by the Central  Cooperative Bank Employee Stock Ownership Trust
(the "ESOP") for a total of $5.1 million. The Company and the ESOP purchased the
shares  pursuant to the terms of the Stock Purchase  Agreement,  dated September
13,  2004,  by and  among  the  Registrant  and the  ESOP and PL  Capital,  LLC,
Financial Edge Fund, L.P.,  Financial  Edge-Strategic  Fund,  L.P.,  Goodbody/PL
Capital,  L.P.,  Goodbody/PL Capital,  LLC, Richard Lashley,  John W. Palmer and
Richard J. Fates.  At the same tine, the Company  received the proceeds from the
issuance of $5.1  million of trust  preferred  securities  which are included in
capital for regulatory purposes and shown separately in the liability section of
the balance sheet.


                                       9

<PAGE> 12


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

         Net income  decreased by $324 thousand to $506 thousand for the quarter
ended  September 30, 2004,  compared to the same quarter in the prior year.  The
current quarter's results included costs of $178,700,  net of taxes,  consisting
primarily of legal and other  professional  fees incurred in connection with the
previously  announced buyback of 154,268 shares of Company stock from PL Capital
LLC and affiliates by the Company and its ESOP Trust.  Included in net income in
the prior year  quarter,  was an  insurance  recovery  of  $214,000,  net of the
related  legal  fees  and  taxes,  attributable  to  the  dispute  with  certain
shareholders,  which was settled during the quarter.  Exclusive of the foregoing
significant  items,  pro forma earnings  increased $69 thousand  compared to the
corresponding   quarter  in  the  prior  year.   This   increase  was  primarily
attributable  to an  increase  in net  interest  income  and  gains  on sales of
investments,   partly  offset  by  increases  in  salaries  and  benefits,  data
processing and advertising and marketing expenses.

         The Company's net interest margin  decreased 19 basis points from 3.39%
in the prior year quarter to 3.20% in the current quarter. The unfavorable trend
in the net  interest  margin is  primarily  reflective  of the  limitations  the
Company has in reducing its overall cost of funds. This limitation is due to two
factors.  First,  the Company's  utilization of long-term  FHLB advances,  which
represented 33% of average interest-bearing  liabilities in the current quarter,
has provided for limited repricing  opportunities during the period of declining
rates.  These advances  cannot be prepaid without a substantial  penalty,  which
management has elected not to pay.  Second,  the ability to reduce deposit rates
continues to be limited after the past several years of rate  reductions as well
as competitive market factors.

         The reduction in the net interest margin is also partially attributable
to the shift in the mix of  interest-earning  assets  from  loans to  short-term
investments  and  investment  securities.  During  the  current  quarter,  loans
represented 80% of the average balance of total interest-earning assets compared
to 87% in the prior year quarter.  This shift to  shorter-term,  lower  yielding
assets  results from the Company's  decision to sell most  long-term  fixed-rate
residential  mortgages  loans  originated  during  the past two years due to the
historically low rates which existed during much of this period.

INTEREST  INCOME.  Interest  income for the quarter ended September 30, 2004 was
$6.9 million  compared to $6.8 million in the prior year  quarter.  Although the
yield on  interest-earning  assets  decreased  from 5.89% in the  quarter  ended
September 30, 2003 to 5.61% in the current  quarter,  average  interest  earning
assets increased by $31.1 million.

INTEREST  EXPENSE.  Interest  expense for the quarter  ended  September 30, 2004
increased  by $105  thousand  to $3.0  million  compared  to the  quarter  ended
September 30, 2003. A decrease of 8 basis points in the cost of funds from 2.87%
in the quarter ended  September 30, 2003 to 2.79% in the quarter ended September
30, 2004 was offset by an increase in average  interest-bearing  liabilities  of
$27.4 million in the current year period.


                                       10


<PAGE> 13

            The following table presents average balances and average rates
earned/paid by the Company for the quarter ended September 30, 2004 compared to
the quarter ended September 30, 2003:
<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED SEPTEMBER 30,
                                                      ----------------------------------------------------------------------
                                                                  2004                                     2003
                                                      --------------------------------       -------------------------------
                                                      AVERAGE                  AVERAGE       AVERAGE                 AVERAGE
                                                      BALANCE    INTEREST       RATE         BALANCE     INTEREST     RATE
                                                      -------    --------     --------       -------     --------   --------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                                 <C>          <C>            <C>         <C>           <C>          <C>
Interest-earning assets:
Mortgage loans                                      $ 354,393    $ 5,457        6.16%       $ 364,104     $ 5,793      6.36%
Other loans                                             5,812         92        6.33            5,864         104      7.09
Investment securities                                 114,955      1,321        4.60           64,307         844      5.25
Short-term investments                                 18,694         56        1.20           28,519          75      1.05
                                                    ---------    -------                    ---------     -------
    Total interest-earning assets                     493,854      6,926        5.61          462,794       6,816      5.89
                                                    ---------    -------                    ---------     -------

Allowance for loan losses                              (3,618)                                 (3,370)
Noninterest-earning assets                             16,063                                  20,214
                                                    ---------                               ---------
Total assets                                        $ 506,299                               $ 479,638
                                                    =========                               =========
Interest-bearing liabilities:
Deposits                                            $ 285,017      1,216        1.71        $ 255,550       1,100      1.72
Advances from FHLB of Boston                          138,780      1,713        4.94          144,484       1,775      4.91
Other borrowings                                        3,636         51        5.61                0           0      0.00
                                                    ---------    -------                    ---------     -------
Total interest-bearing liabilities                    427,433      2,980        2.79          400,034       2,875      2.87
                                                    ---------    -------                    ---------     -------

Noninterest-bearing liabilities                        38,398                                  37,455
                                                    ---------                               ---------
Total liabilities                                     465,831                                 437,489

Stockholders' equity                                   40,468                                  42,149
                                                    ---------                               ---------
    Total liabilities and stockholders' equity      $ 506,299                               $ 479,638
                                                    =========                               =========

Net interest and dividend income                                 $ 3,946                                  $ 3,941
                                                                 =======                                  =======
Net interest spread                                                             2.82%                                  3.02%
Net interest margin                                                             3.20%                                  3.39%
</TABLE>

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

         During the  quarter  ended  September  30,  2004 and 2003,  the Company
provided $0 and $50 thousand for loan losses.  The Company's  asset quality,  as
measured principally by delinquency rates, charge-offs and loan classifications,
continues to be outstanding.

NON-INTEREST INCOME. Total non-interest income was $499 thousand for the quarter
ended  September  30, 2004 compared to $163 thousand in the same period of 2003.
The primary  reason for the $336  thousand  increase in the current year was the
gain on sales of securities  which  amounted to $214 thousand.  This  additional
non-interest  income was partially offset by a decline in loan sale gains of $12
thousand in the current quarter. Overall,  residential loan origination activity
has  declined in the current  quarter  compared to the same  quarter  last year,
especially fixed rate loan originations, resulting in fewer loans being sold.


                                       11

<PAGE> 14


NON-INTEREST  EXPENSES.  Non-interest  expenses increased $855 thousand, or 31%,
during the quarter  ended  September 30, 2004 as compared to the same quarter in
2003 due principally to increases in professional fees ($458 thousand), salaries
and employee  benefits  ($237  thousand) and other  non-interest  expenses ($160
thousand).

         The  increase in salaries and employee  benefits of $237  thousand,  or
14%,  during the quarter  ended  September 30, 2004,  was due to overall  salary
increases,  increases  in  staffing,  as well as increases in pension and health
care costs.

         Professional  fees increased $458 thousand  during the current  quarter
due to the costs  associated  with the previously  discussed  buyback of 154,268
shares  by  the  Company  and  the  ESOP  and  the   recognition  of  a  partial
reimbursement of legal defense costs from the Company's insurance carrier in the
prior year quarter.  The legal  defense  costs were incurred in connection  with
shareholder litigation, which was settled in August 2003.

         Advertising and marketing  expenses increased $139 thousand as a result
of the kick-off of a fall deposit promotion during the current quarter.

         INCOME TAXES.  The effective tax rates for the quarters ended September
30, 2004 and 2003 were 40% and 36%, respectively.

COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2004
AND 2003

         For the six months ended  September 30, 2004, net income  decreased 55%
to $960 thousand,  or $.61 per diluted  share,  compared to $2,118  million,  or
$1.36 per diluted share, in the year earlier period.  Exclusive of the favorable
impact of $374,000, after-taxes,  resulting from the settlement of the Company's
REIT-related tax liability with the Massachusetts  Department of Revenue and the
favorable impact of a net insurance recovery associated with certain shareholder
litigation,  which  increased  net income by  $276,000  in the first half of the
previous year, and the costs  associated with the stock buyback noted above, net
income declined  $329,000  compared to the year earlier period.  This change was
largely the result of a $397,000 decrease in net interest income between periods
attributable to the factors previously disclosed herein.

INTEREST INCOME. Interest income for the six months ended September 30, 2004 was
$13.5  million,  or $299 thousand less than the amount earned in the same period
in the prior year due to a decrease in the yield on interest-earning assets from
5.99% in the first six months of the prior  year to 5.59% in the same  period of
the current year. Average interest-earning assets increased by $22.5 million, or
5%, to $484.8  million  during the six months ended  September  30,  2004,  from
$462.3 million for the six months ended September 30, 2003.

INTEREST  EXPENSE.  Interest expense for the six months ended September 30, 2004
was $5.9 million compared to $5.8 million for the six months ended September 30,
2003,  an increase of $98,000 or 1.7%.  This  decrease  resulted from a 10 basis
points  decrease  in the  cost of  funds  from  2.89%  in the six  months  ended
September 30, 2003 to 2.79% in the six months ended September 30, 2004.  Average
interest-bearing liabilities increased $22 million to $421.7 million from $400.1
million primarily from the promotion of a 15-month CD product.

         The  decrease in the cost of funds during the first half of the current
year was entirely  due to a reduction in the cost of deposits  from 1.77% during
the prior year period to 1.70% during the six months ended  September  30, 2004.
The  cost  of  FHLB  advances,  the  Company's  other  primary  interest-bearing
liability,  increased  during the first half of the  current  year to 4.89% from
4.88% in the comparable  prior year period.  As FHLB advances can not be prepaid
without a substantial  penalty,  these longer term,  fixed-rate  borrowings have
been a  significant  factor in the  compression  of the  Company's  net interest
margin during the most recent period of declining rates.



                                       12


<PAGE> 15

            The following table presents average balances and average rates
earned/paid by the Company for the six months ended September 30, 2004 compared
to the six months ended September 30, 2003:
<TABLE>
<CAPTION>
                                                                             SIX MONTHS ENDED SEPTEMBER 30,
                                                      ----------------------------------------------------------------------
                                                                  2004                                     2003
                                                      --------------------------------       -------------------------------
                                                      AVERAGE                  AVERAGE       AVERAGE                 AVERAGE
                                                      BALANCE    INTEREST       RATE         BALANCE     INTEREST     RATE
                                                      -------    --------     --------       -------     --------   --------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                                 <C>          <C>             <C>        <C>          <C>            <C>
Interest-earning assets:
Mortgage loans                                      $  353,660   $ 10,839        6.13%      $ 372,936    $ 11,814       6.34%
Other loans                                              5,417        171        6.31           6,311         248       7.86
Investment securities                                  102,900      2,410        4.68          66,495       1,684       5.07
Short-term investments                                  22,526        120        1.07          16,607          93       1.12
                                                    ----------   --------                   ---------    --------
    Total interest-earning assets                      484,803     13,540        5.59         462,349      13,839       5.99
                                                    ----------   --------                   ---------    --------

Allowance for loan losses                               (3,618)                                (3,370)
Noninterest-earning assets                              18,508                                 18,405
                                                    ----------                              ---------
Total assets                                        $  499,693                              $ 477,444
                                                    ==========                              =========
Interest-bearing liabilities:
Deposits                                            $  277,950      2,366        1.70       $ 255,389       2,257       1.77
Advances from FHLB of Boston                           140,294      3,431        4.89         144,685       3,531       4.88
Other borrowings                                         3,469         90        5.19              --           1         --
                                                    ----------   --------                   ---------    --------
Total interest-bearing liabilities                     421,713      5,887        2.79         400,074       5,789       2.89
                                                    ----------   --------                   ---------    --------

Noninterest-bearing liabilities                         36,517                                 36,123
                                                    ----------                              ---------
Total liabilities                                      458,230                                436,197

Stockholders' equity                                    41,463                                 41,247
                                                    ----------                              ---------
    Total liabilities and stockholders' equity      $  499,693                              $ 477,444
                                                    ==========                              =========

Net interest and dividend income                                 $  7,653                                $  8,050
                                                                 ========                                ========
Net interest spread                                                              2.80%                                  3.10%
Net interest margin                                                              3.16%                                  3.48%
</TABLE>

PROVISION  FOR LOAN  LOSSES.  During the first  half of the  current  year,  the
Company provided $50,000 for loan losses.  While the Company's asset quality, as
measured principally by delinquency rates, charge-offs and loan classifications,
continues to be outstanding,  the shifting of the mix of the loan portfolio to a
greater  portion of  commercial  real  estate  loans  indicated  the need for an
increase  in the  reserve for loan  losses in the first  quarter.  $100,000  was
recorded in the corresponding period of the prior year.

NON-INTEREST  INCOME.  Non-interest  income increased to $947,000 during the six
months  ended  September  30, 2004 from  $577,000 in the prior year  period.  An
increase in gains on sales of  investment  securities  of $483,000 was partially
offset by a decline in gains on the sale of loans of $90,000  caused by the slow
down in refinance activity this year.

         Net gains from sales and  write-downs  of  investment  securities  were
$348,000 for the six months ended  September  30, 2004 compared to net losses of
$135,000  in the  comparable  prior year  period.  During  the six months  ended
September  30,  2004 and 2003,  the  Company  recorded  write-downs  of $-0- and
$130,000,  respectively,  in certain equity  securities  which had experienced a
decline in fair value judged to be other than temporary.

NON-INTEREST EXPENSES. Non-interest expenses increased $1,246,000 during the six
months ended September 30, 2004, as compared to the corresponding  period in the
prior year.  Exclusive of the impact of  litigation  and legal fees,  net of the
related  insurance  recovery  in  fiscal  2003  and  costs  associated  with the
repurchase of common stock during the current fiscal year, non-interest expenses
increased  $624,000,  due  principally  to  increases  in salaries  and employee
benefits of $340,000 and increased advertising costs of $156,000.

                                       13

<PAGE> 16


         The  increase in salaries and  employee  benefits of $340,000,  or 10%,
during  the six months  ended  September  30,  2004,  was due to overall  salary
increases,  increases  in  staffing to support a larger  asset base,  as well as
increases in health insurance and pension expense.

INCOME TAXES.  The  effective  tax rates for the six months ended  September 30,
2004 and 2003 were 38% and 23.5%, respectively. As previously noted, the Company
recovered  $374,000  in taxes  during  the first half of the  current  year as a
result  of the  settlement  of the  REIT  tax  dispute  with  the  Massachusetts
Department  of Revenue.  Exclusive of this item,  the effective tax rate for the
six months ended September 30, 2003 was 37.0%. This increase from the prior year
is  entirely  due to the  change  in state  tax law  eliminating  the use of the
dividends  received  deduction  on  dividends  received  by a bank from its REIT
subsidiary.

LIQUIDITY AND CAPITAL RESOURCES

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

         At September 30, 2004, the Company had commitments to originate  loans,
unused  outstanding  lines of credit and undisbursed  proceeds of loans totaling
$67.2  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 September 30, 2004 were
as follows:
<TABLE>
<CAPTION>
                                                                                 Company     Bank
                                                                                 -------     ----
                  <S>                                                            <C>         <C>
                  Tier 1 Capital (to average assets) ........................     7.88%       7.15%
                  Tier 1 Capital (to risk-weighted assets) ..................    11.54       10.48
                  Total Capital (to risk-weighted assets) ...................    12.58       11.54
</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.

         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.



                                       14


<PAGE> 17



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

         The following table indicates the estimated  exposure,  as a percentage
of estimated net interest income, for the twelve-month period following the date
indicated  assuming  an  immediate  shift in  interest  rates as set forth below
(dollars in thousands):

<TABLE>
<CAPTION>

                                                                   September 30,                  March 31,
                                                                        2004                         2004
                                                              -------------------------      --------------------
                                                              Amount           % Change      Amount      % Change
                                                              ------           --------      ------      --------
                  <S>                                         <C>               <C>          <C>            <C>
                  300 basis point increase in rates ......... $(1,631)          (10.2)%      $ (1,236)      (8.1)%

                  75 basis point decrease in rates...........    --               --             (315)      (2.1)

                  100 basis point decrease in rates..........     133             0.8%            --         --
</TABLE>

ITEM 4.     CONTROLS AND PROCEDURES

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

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

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

                  Not Applicable



                                       15


<PAGE> 18



Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

         The following table sets forth information regarding the Company's
repurchases of its Common Stock during the quarter ended September 30, 2004.
<TABLE>
<CAPTION>
                                                                              TOTAL NUMBER
                                                                                OF SHARES
                                                                                PURCHASED         MAXIMUM
                                                                               AS PART OF    NUMBER OF SHARES
                                                 TOTAL                          PUBLICLY      THAT MAY YET BE
                                               NUMBER OF       AVERAGE          ANNOUNCED     PURCHASED UNDER
                                                SHARES       PRICE PAID         PLANS OR       THE PLANS OR
                   PERIOD                      PURCHASED      PER SHARE         PROGRAMS         PROGRAMS
                   ------                      ---------      ---------         --------         --------

              <S>                              <C>             <C>                <C>               <C>
              July 2004
              Beginning date: July 1              --           $    --             --               --
              Ending date: July 31

              August 2004
              Beginning date: August 1            --                --             --               --
              Ending date: August 31

              September 2004
              Beginning date: September 1      77,134(1)         33.25             --               --
              Ending date: September  30
</TABLE>
              --------------------
              (1) All shares were purchased at a price of $33.25 per share in a
                  negotiated transaction pursuant to a Stock Purchase Agreement
                  with PL Capital LLC, Financial Edge Fund, L.P., Financial
                  Edge-Strategic Fund, L.P., Goodbody/PL Capital, L.P.,
                  Goodbody/PL Capital, LLC, Richard Lashley, John W. Palmer and
                  Richard J. Fates.

Item 3.  Defaults upon Senior Securities

                  Not Applicable

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

         On September 20, 2004,  the  Registrant  convened its Annual Meeting of
Stockholders. The only item submitted to a vote of stockholders was the election
of three  directors.  Gregory W. Boulos,  John D. Doherty and Albert J. Mercuri,
Jr. were elected  directors and the terms of office of the  following  directors
continued  after the  meeting:  Joseph R.  Doherty,  Paul E.  Bulman,  Edward F.
Sweeney, Jr., John J. Morrissey and James F. Linnehan. The following is a record
of the voting in the election of directors:

              ELECTION OF DIRECTORS                FOR                WITHHELD

                Gregory W. Boulos               1,257,947             339,454
                John D. Doherty                 1,257,283             340,118
                Albert J. Mercuri, Jr.          1,257,947             339,454

         There were no abstentions or broker non-votes.

Item 5.  Other Information

                  None


                                       16

<PAGE> 19

<TABLE>
<CAPTION>

Item 6.  Exhibits and Reports on Form 8-K

        (a)      Exhibits

                 <S>    <C>
                 4.1    Indenture, dated September 16, 2004, between Central Bancorp, Inc. and JP Morgan Chase Bank

                 4.2    Form of Junior Subordinated Debt Security Due 2034 (filed as Exhibit A to Exhibit 4.1 filed herewith)

                 10.1   Guarantee  Agreement,  dated  September  16,  2004,  by Central  Bancorp,  Inc.  for the
                        benefit of JP Morgan Chase Bank, as trustee

                 31.1   Rule 13a-14(a) Certification of Chief Executive Officer

                 31.2   Rule 13a-14(a) Certification of Chief Financial Officer

                 32     Section 1350 Certification
</TABLE>




                                       17
<PAGE> 20




                                   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




November 15, 2004                /s/ John D. Doherty
   Date                          -----------------------------------------------
                                 John D. Doherty
                                 Chairman, President and Chief Executive Officer




November 15, 2004                /s/ Paul S. Feeley
   Date                          -----------------------------------------------
                                 Paul S. Feeley
                                 Senior Vice President, Treasurer
                                   and Chief Financial Officer