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CENTRAL BANCORP, INC.
(Name of Registrant as Specified in Its Charter)
FINANCIAL EDGE FUND, LP
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
/x/ No fee required.
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PL CAPITAL, LLC
20 East Jefferson Avenue 466 Southern Blvd.
Suite 22 Adams Building
Naperville, Illinois 60540 Chatham, New Jersey 07928
Tel: (630) 848-1340 Tel: (973) 360-1666
Fax: (630) 848-1342 Fax: (973) 360-1697
YOUR VOTE IS IMPORTANT!
September 12, 2002
Dear Fellow Central Bancorp, Inc. Stockholder:
The PL Capital Group needs your help to elect our two highly qualified,
independent candidates to the board of Central Bancorp, Inc. As owners of over
9% of Central's stock, our goal is simple: to maximize the earnings and book
value of Central and the value of Central's stock. The best way we know to do
that is to have you, and other stockholders, help us elect our two highly
qualified, independent candidates to the board of Central.
In every other annual election of directors, Central's board picked the
candidates, and you as a stockholder, had no competing candidates to choose
from. In this election you have a real choice.
Our candidates, Mr. Garrett Goodbody and Mr. Richard Fates, were selected by us
because they are independent and highly qualified former banking industry senior
executives who will aggressively advocate the best interests of you and other
stockholders. I urge you to review their respective biographies (see attached).
Please ask yourself, why is Central spending tens of thousands of dollars (of
what is effectively Central stockholders' money) to keep two highly experienced
nominees off the board?
Please also review Central's financial and stock price performance for the past
five years before voting, being careful not to get swayed by Central's recent
letter (dated September 6) in which management appears to selectively highlight
their performance. It is a fact that Central's stock price is lower today than
it was in 1998. Central's management stated in its recent letter that Central
has produced a "15% per annum growth rate in core earnings per share since
1999." While that is mathematically accurate when choosing 1999 as a base
period, here are the complete results for the past 6 years:
Fiscal years ending March 31:
- --------------- ------------- --------------- -------------- --------------- -------------- --------------
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
EPS $1.46 $1.56 $1.38 $1.77 $1.81 $1.72
ROE 8.67% 8.64% 7.12% 8.86% 8.11% 7.62%
"Core" EPS $1.48 $1.21 $1.15 $1.54 $1.55 $1.78
"Core" ROE 8.81% 6.71% 5.94% 7.74% 6.96% 7.89%
- --------------- ------------- --------------- -------------- --------------- -------------- --------------
Source: Central Bancorp Annual Reports and SNL Financial Quarterly Thrift Digest
Note: "Core" figures exclude non-recurring amounts, such as gain/loss on sale of
securities, as defined by SNL Financial, a leading provider of banking industry
statistics
Central's stated and "core" earnings per share (EPS) increased at a compounded
annual rate of only 3% since 1997. On both a stated and "core" return on equity
(ROE) basis, 2002's results are lower than 1997. Where is the performance that
Central highlighted in its recent letter?
Before voting, we urge you to review the financial performance of Central and
compare the qualifications of our candidates, Mr. Goodbody and Mr. Fates, to the
candidates nominated by the existing board of Central, in order to decide for
yourself which candidates will best represent your, and other stockholders'
interests. You do have a choice.
If you have not done so already, or if you have already sent in the white proxy
card, we urge you to sign, date and mail the enclosed GREEN proxy card today in
the enclosed postage prepaid envelope. If any of your shares are held in the
name of a bank, brokerage firm or other nominee, please contact the party
responsible for your account and direct them to vote your shares for our
candidates on the GREEN proxy card. We urge you to DISCARD THE WHITE PROXY CARD.
If you have any questions, you can contact our proxy firm, D.F. King & Co. at
212-269-5550 (fax #212-952-0137), or us directly at the addresses and phone
numbers noted above in the letterhead. Our email addresses are Bankfund@aol.com
and Palmersail@aol.com.
Thank you for your consideration.
On behalf of the PL Capital Group,
/s/ Richard Lashley /s/ John Palmer
Richard Lashley John Palmer
Principal Principal
PL CAPITAL GROUP'S CANDIDATES FOR THE BOARD OF
CENTRAL BANCORP, INC.
MR. GARRETT GOODBODY
Garrett Goodbody, age 57, is currently Managing Partner of Goodbody Partners LP,
a firm engaged in portfolio management and international financial services
consulting. He is also a managing member and founder of Goodbody/PL LLC, the
general partner of Goodbody/PL LP, an investment partnership specializing in the
banking industry.
He is currently a member of the Board of Directors of Equitable Bank (symbol:
EQSB), a publicly traded $475 million in assets thrift based in Wheaton,
Maryland. Mr. Goodbody was elected to Equitable's Board in January 2002. Mr.
Goodbody was formerly a member of the Board of Directors of Haven Bancorp, Inc.,
a $3 billion in assets thrift based in Westbury, NY. Haven was sold to New York
Community Bancorp (symbol: NYCB) at the end of 2000.
Mr. Goodbody has extensive domestic and international experience in the
management of banks, thrifts and other financial institutions. A graduate of
Yale College and Harvard Business School, Mr. Goodbody started his career at
Citibank NA, where he held increasingly senior positions in Mexico, Brazil,
Canada and the United States involving at various times Corporate Lending, Risk
Asset Review, Operations and lastly, head of Cash Management Services. In 1985,
Mr. Goodbody joined Marine Midland Bank (now HSBC USA) where he was ultimately
the Senior Executive Vice President for Corporate Lending. Previously, he had
been the regional President for Credit Cards statewide for Marine Midland and
for all Community Banking activities in the Hudson Valley for Marine Midland. In
1991, Mr. Goodbody became the President and CEO of New Milford Savings Bank, a
troubled savings bank. Over a period of two years, Mr. Goodbody was instrumental
in restructuring New Milford Savings. Starting in 1993, Mr. Goodbody became an
advisor in a series of international consulting engagements in Slovakia, Hungary
and Mexico. Several engagements involved sizeable financial institutions that
were troubled, underperforming and required substantial restructuring. Based on
his banking experiences, Mr. Goodbody has developed substantial expertise as a
senior executive in the major business lines utilized by banks such as Central
Bancorp, as well as a strong appreciation of the steps necessary to improve the
profitability of an institution such as Central. Mr. Goodbody resides in Sharon,
Connecticut.
MR. RICHARD FATES
Mr. Richard Fates, age 57, is a former senior executive with 25 years of
experience at the Bank of Boston, a $73 billion in assets commercial bank
formerly based in Boston. He is currently a financial planner with Bay State
Financial Services in Boston, MA. He is also the principal and owner of Fates
Financial Advisors, a financial consulting and planning firm based in South
Hamilton, MA.
Mr. Fates began his business career at Bank of Boston in 1975 after graduating
from Yale University in 1967 and serving as a Navy pilot from 1967-74. He gained
significant experience and responsibilities during his career at Bank of Boston,
including (1) VP, Specialized Lending (1975-1983); (2) Managing Director, Bank
of Boston UK (1983-88), which included responsibility for running that group's
syndicated lending, mezzanine and equity investment operations; (3)
Director-Syndications (1988-1992), with responsibility for the syndication of
all term lending throughout Bank of Boston's U.S. franchise; (4) Integration
Coordinator (1992-95), with responsibility for overseeing multiple mergers and
acquisitions and restructuring of numerous lines of business, and finally (5)
Regional President, Central Region of Massachusetts (1996-2000), with direct
responsibility for running 42 branches with $2 billion in deposits and 500
employees. In that final role, Mr. Fates was effectively the CEO of an
independent mid-sized bank operating in central Massachusetts, skills that are
directly applicable to serving on Central Bancorp's Board of Directors, in our
opinion. Mr. Fates retired from FleetBoston (after Fleet acquired BankBoston) in
2000, at which time he formed Fates Financial Advisors.
Mr. Fates is active in his community, having previously served as: (1) Chair of
the Town Finance Committee in South Hamilton, Massachusetts; (2) Chair of the
United Way of Central Massachusetts Fund Raising Campaign; (3) Chair of the
Worcester Area Chamber of Commerce; (4) Member of the University of
Massachusetts Memorial Health Care Foundation Board of Trustees; (5) Member of
the Worcester Club Executive Committee; and (6) Member of the Board of the
Worcester Club.
He is currently: (1) the Chairman of the Board of Trustees of the Pomfret
School, a private prep school based in Pomfret, Connecticut; and (2)
Coordinator, North Shore United Way Campaign for the Hamilton-Wenham Area.