U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the quarter ended June 30, 2000 ------------- Commission File Number: 0-25251 ------- CENTRAL BANCORP, INC. --------------------- (Exact Name of Registrant as Specified in Charter) MASSACHUSETTS ------------- (State or Other Jurisdiction of Incorporation or Organization) I.R.S. Employer Identification No. 04-3447594 ---------- 399 HIGHLAND AVENUE, SOMERVILLE, MA. 02144 ------------------------------------------ (Address of Principal Executive Offices) Registrant's Telephone Number (617) 628-4000 -------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Class Outstanding at August 10, 2000 - ----------------------------- ------------------------------ Common Stock, $1.00 par value 1,759,467 CENTRAL BANCORP, INC. AND SUBSIDIARY Table of Contents PART I. FINANCIAL INFORMATION --------------------- Item 1. Financial Statements Consolidated Statements of Financial Condition at March 31, 2000 and June 30, 2000 (unaudited) Consolidated Statements of Income for the three month periods ended June 30, 2000 and 1999 (unaudited) Consolidated Statements of Cash Flows for the three month periods ended June 30, 2000 and 1999 (unaudited) Consolidated Statements of Changes in Stockholders' Equity for the three month periods ended June 30, 2000 and 1999 (unaudited) Notes to Consolidated Financial Statements (unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for the three month periods ended June 30, 2000 and 1999 Item 3. Quantitative and Qualitative Disclosures about Market Risk (Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2000) PART II. OTHER INFORMATION ----------------- Item 1. Legal Proceedings Item 2. Changes in Securities and Use of Proceeds Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES Item 1-Financial Statements: CENTRAL BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Financial Condition June 30, March 31, (Dollars in Thousands) 2000 2000 - --------------------------------------------------------------------------------------------------------- ASSETS (Unaudited) Cash and due from banks $ 5,665 $ 6,588 -------------------------------- Short-term investments 2,460 14,802 Investments available for sale: Investment securities 33,438 32,135 Mortgage-backed securities 22,160 23,308 Stock in Federal Home Loan Bank of Boston, at cost 5,800 5,800 The Co-operative Central Bank Reserve Fund 1,576 1,576 -------------------------------- Total investments 65,434 77,621 -------------------------------- Loans: Mortgage loans 336,403 314,966 Other loans 6,443 5,047 -------------------------------- 342,846 320,013 Less allowance for loan losses (3,030) (2,993) -------------------------------- Net loans 339,816 317,020 -------------------------------- Accrued interest receivable 2,170 2,036 Office properties and equipment, net 2,145 2,218 Deferred tax asset, net 1,082 1,071 Goodwill, net 2,736 2,808 Other assets 171 195 -------------------------------- Total assets $ 419,219 $ 409,557 ================================ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $ 268,096 $ 258,339 Advances from Federal Home Loan Bank of Boston 110,250 111,000 Advance payments by borrowers for taxes and insurance 1,133 1,053 Accrued interest payable 484 542 Accrued income taxes 406 -- Accrued expenses and other liabilities 1,487 1,226 -------------------------------- Total liabilities 381,856 372,160 -------------------------------- Commitments and Contingencies (Note 2) Stockholders' equity: 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; Issued 1,970,000 shares (outstanding 1,771,867 and 1,810,450) at June 30, 2000 and March 31, 2000 respectively 1,970 1,970 Additional paid-in capital 11,190 11,190 Retained income 29,123 28,538 Treasury stock (198,133 shares and 159,550 shares at June 30, 2000, and March 31, 2000, respectively), at cost (3,676) (3,043) Accumulated other comprehensive income (loss) (note 4) (843) (825) Unearned compensation - ESOP (401) (433) -------------------------------- Total stockholders' equity 37,363 37,397 -------------------------------- Total liabilities and stockholders' equity $ 419,219 $ 409,557 ================================ See accompanying notes to unaudited consolidated financial statements. CENTRAL BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Income (In Thousands, Except Per Share Data) (Unaudited) Three Months Ended June 30, 2000 1999 ---------------------------- Interest and dividend income: Mortgage loans $6,013 $ 5,075 Other loans 126 137 Short-term investments 85 207 Investment securities 610 385 Mortgage-backed securities 375 400 The Co-operative Central Bank Reserve Fund 21 23 ---------------------------- Total interest and dividend income 7,230 6,227 ---------------------------- Interest expense: Deposits 2,343 2,327 Advances from Federal Home Loan Bank of Boston 1,450 770 ---------------------------- Total interest expense 3,793 3,097 ---------------------------- Net interest and dividend income 3,437 3,130 Provision for loan losses -- -- ---------------------------- Net interest and dividend income after provision for loan losses 3,437 3,130 ---------------------------- Non-interest income: Deposit service charges 103 108 Net gains from sales of investment securities 184 118 Other income 51 52 ---------------------------- Total non-interest income 338 278 ---------------------------- Operating expenses: Salaries and employee benefits 1,317 1,191 Occupancy and equipment 279 296 Data processing service fees 128 137 Professional fees 268 214 Goodwill amortization 72 72 Advertising 226 43 Other expense 286 280 ---------------------------- Total operating expenses 2,576 2,233 ---------------------------- Income before income taxes 1,199 1,175 Income tax expense 434 462 ---------------------------- Net Income before cumulative effect of change in accounting principle 765 713 Cumulative effect of change in accounting principle -- (234) ---------------------------- Net income $ 765 $ 479 ============================ Earnings per common share before cumulative effect of change in accounting principle $ 0.43 $ 0.37 ============================ Earnings per common share before cumulative effect of change in accounting principle, diluted $ 0.43 $ 0.37 ============================ Earnings per common share after cumulative effect of change in accounting principle $ 0.43 $ 0.25 ============================ Earnings per common share after cumulative effect of change in accounting principle, diluted $ 0.43 $ 0.25 ============================ Weighted average common shares outstanding 1,788 1,933 Weighted average common shares outstanding, diluted 1,788 1,938 See accompanying notes to unaudited consolidated financial statements. CENTRAL BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows (Unaudited) Three Months Ended June 30, (In Thousands) 2000 1999 - -------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 765 $ 479 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 112 120 Amortization of premiums, fees and discounts 23 24 Amortization of goodwill 72 72 Net gains from sales of investment securities (184) (118) Increase in deferred tax asset (11) (31) Increase in accrued interest receivable (134) (304) Decrease in other assets 24 280 Increase (decrease) in advance payments by borrowers for taxes and insurance 80 (231) (Decrease) increase in accrued interest payable (58) 10 Increase in accrued income taxes 406 174 Increase in accrued expenses and other liabilities 261 156 -------------------------------- Net cash provided by operating activities 1,356 631 -------------------------------- Cash flows from investing activities: Principal collected on loans 14,341 21,153 Loan originations (37,137) (30,743) Principal payments on mortgage-backed securities available for sale 1,044 3,433 Purchase of investment securities available for sale (2,223) (10,974) Maturities of investment securities available for sale -- 2,000 Proceeds from sales of investment securities available for sale 1,167 1,986 Net decrease in short-term investments 12,342 11,240 Purchase of office properties and equipment (39) (39) -------------------------------- Net cash (used in) provided by investing activities (10,505) (1,944) -------------------------------- Cash flows from financing activities: Net increase in deposits 9,757 783 Proceeds from advances from FHLB of Boston 53,000 1,060 Payments on advances from FHLB of Boston (53,750) (1,060) Purchase of Treasury stock (633) (178) Payments of dividends on common stock (180) (157) Amortization of unearned compensation - ESOP 32 33 -------------------------------- Net cash provided by (used in) financing activities 8,226 481 -------------------------------- Net increase (decrease) in cash and due from banks (923) (832) Cash and due from banks at beginning of period 6,588 4,964 -------------------------------- Cash and due from banks at end of period $ 5,665 $ 4,132 ================================ Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 3,851 $ 3,087 Income taxes 28 280 Schedule of noncash investing activities: Transfer of mortgage loans to real estate acquired by foreclosure -- -- See accompanying notes to unaudited consolidated financial statements. CENTRAL BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Changes in Stockholders' Equity (Unaudited) Additional Common Paid-In Retained Treasury (In Thousands) Stock Capital Income Stock - ---------------------------------------------------------------------------------------------------------------------- Three Months Ended June 30, 1999 -------------------------------- Balance at March 31, 1999 $ 1,967 $ 11,171 $ 25,894 $ -- -------- --------- --------- --------- Net Income -- -- 479 -- Other Comprehensive Income (loss), net of tax Unrealized (losses) on securities , net of reclassification adjustment (note 4) -- -- -- -- -------- --------- --------- --------- Comprehensive income (loss) -- -- 479 -- -------- --------- --------- --------- Purchase of treasury stock -- -- -- (178) Dividends Paid -- -- (157) -- Amortization of unearned compensation - ESOP -- -- -- -- -------- --------- --------- --------- Balance at June 30, 1999 $ 1,967 $ 11,171 $ 26,216 $ (178) ======== ========= ========= ========= Three Months Ended June 30, 2000 -------------------------------- Balance at March 31, 2000 $ 1,970 $ 11,190 $ 28,538 $ (3,043) -------- --------- --------- --------- Net Income -- -- 765 -- Other Comprehensive Income (loss), net of tax Unrealized (losses) on securities , net of reclassification adjustment (note 4) -- -- -- -- -------- --------- --------- --------- Comprehensive income (loss) -- -- 765 -- -------- --------- --------- --------- Purchase of treasury stock -- -- -- (633) Dividends Paid -- -- (180) -- Amortization of unearned compensation - ESOP -- -- -- -- -------- --------- --------- --------- Balance at June 30, 2000 $ 1,970 $ 11,190 $ 29,123 $ (3,676) ======== ========= ========= ========= Accumulated Other Unearned Total Comprehensive Compensation Stockholders' (In Thousands) Income (Loss) ESOP Equity - ----------------------------------------------------------------------------------------------------- Three Months Ended June 30, 1999 -------------------------------- Balance at March 31, 1999 $ 327 $ (617) $ 38,742 --------- -------- -------- Net Income -- -- 479 Other Comprehensive Income (loss), net of tax Unrealized (losses) on securities , net of reclassification adjustment (note 4) (11) -- (11) --------- -------- -------- Comprehensive income (loss) (11) -- 468 --------- -------- -------- Purchase of treasury stock -- -- (178) Dividends Paid -- -- (157) Amortization of unearned compensation - ESOP -- 33 33 --------- -------- -------- Balance at June 30, 1999 $ 316 $ (584) $ 38,908 ========= ======== ======== Three Months Ended June 30, 2000 -------------------------------- Balance at March 31, 2000 $ (825) $ (433) $ 37,397 --------- -------- -------- Net Income -- -- 765 Other Comprehensive Income (loss), net of tax Unrealized (losses) on securities , net of reclassification adjustment (note 4) (18) -- (18) --------- -------- -------- Comprehensive income (loss) (18) -- 747 --------- -------- -------- Purchase of treasury stock -- -- (633) Dividends Paid -- -- (180) Amortization of unearned compensation - ESOP -- 32 32 --------- -------- -------- Balance at June 30, 2000 $ (843) $ (401) $ 37,363 ========= ======== ======== See accompanying notes to unaudited consolidated financial statements. CENTRAL BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements June 30, 2000 (Unaudited) (1) BASIS OF PRESENTATION --------------------- The consolidated financial statements of the Registrant for June 30, 2000 and 1999 presented herein should be read in conjunction with the financial statements of the Company as of and for the year ended March 31, 2000, included in the Company's Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to fairly present the results for the interim periods presented. Interim results are not necessarily indicative of results to be expected for the entire year. (2) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK ------------------------------------------------- Commitments to originate loans, unused lines of credit and unadvanced portions of construction loans are agreements to lend to a customer, provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the borrower. Commitments at June 30, 2000 follow: (In Thousands) Unused lines of credit......................... $ 10,426 Unadvanced portions of construction loans ..... 6,307 Unadvanced portions of commercial loans ....... 5,172 Commitments to originate commercial loans ..... 14,875 Commitments to originate residential mortgage loans: Fixed rate .............................. 360 Adjustable rate ......................... 3,472 CENTRAL BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements, Continued June 30, 2000 (Unaudited) (3) INCOME TAXES ------------ The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are established for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. (4) REPORTING COMPREHENSIVE INCOME ------------------------------ The Company has established standards for reporting and displaying comprehensive income, which is defined as all changes to equity except investments by, and distributions to, shareholders. Net income is a component of comprehensive income, with all other components referred to in the aggregate as other comprehensive income. The Company's other comprehensive income (loss) and related tax effect is as follows: For the Three Months Ended (In Thousands) June 30, 2000 - --------------------------------------------------------------------------------------------------------- Before- Tax Tax (Benefit) After-Tax Amount Expense Amount -------- --------- -------- Unrealized gains (losses) on securities Unrealized holding gains arising during period $ 155 $ 56 $ 99 Less: reclassification adjustment for gains realized in net income 184 67 117 -------------------------------------------- Other comprehensive loss $ (29) $ (11) $ (18) ============================================ For the Three Months Ended June 30, 1999 -------------------------------------------------- Before- Tax Tax (Benefit) After-Tax Amount Expense Amount -------- --------- -------- Unrealized gains (losses) on securities Unrealized holding gains arising during period $ 100 $ 39 $ 61 Less: reclassification adjustment for gains realized in net income 118 46 72 -------------------------------------------- Other comprehensive loss $ (18) $ (7) $ (11) ============================================ CENTRAL BANCORP, INC. AND SUBSIDIARY Management's Discussion and Analysis of Financial Condition and Results of Operations GENERAL: - ------- On January 8, 1999, the Registrant, Central Bancorp, Inc. became the holding company of Central Co-operative Bank when the Bank completed its holding company reorganization. Because substantially all of the business of the Registrant is the business of the Bank, the discussion below focuses on the business of the Bank. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Holding Company" included in the Company's Annual Report on Form 10-K as of and for the year ended March 31, 2000. Net income amounted to $765,000, or $0.43 per diluted share for the three months ended June 30, 2000 as compared to net income of $479,000, or $0.25 per diluted share in the corresponding quarter ended June 30, 1999. Net income for the current quarter was higher than net income for the same period in 1999 primarily due to a $307,000 increase in net interest and dividend income. During the June 30, 1999 quarter, the Company incurred a non re-curring charge of $234,000, net of taxes, for costs associated with establishing Central Bancorp, Inc., as the holding company for Central Bank. This charge represented the balance of unamortized organization costs outstanding as of April 1, 1999, that were required to be written off in accordance with a new accounting rule regarding reporting costs of organization activities. In addition , The Company's operating expenses increased by $343,000 during the June 30, 2000 quarter over the June 30, 1999 quarter principally due to higher marketing and advertising expenses to promote deposit and other products. FINANCIAL CONDITION: - ------------------- The following is a discussion of the major changes and trends in financial condition from the end of the preceding fiscal year, March 31, 2000, to June 30, 2000. Total assets increased from $409.5 million at March 31, 2000 to $419.2 million at June 30, 2000 primarily as a result of an increase in deposits which were invested in the Company's loan portfolio, offset by a decrease in investments. The Company's loan balance grew by $22.8 million or 7.1% as a result of loan originations amounting to $37.1 million, of which $19.8 were in residential real estate loans. Loan amortization and pay-offs amounted to $14.3 million. The Company's investment portfolio decreased by $12.1 million, primarily as a result of pay-downs of mortgage-backed securities and a decline in short term investments, offset by purchases of investment securities. Funds from the decline in the Company's investment portfolio were primarily used to partially fund the increase in the loan portfolio. Deposits increased during the three month period by $9.7 million primarily due to an increase of $9.1 million in term deposit certificates. As previously announced, the Company's Board of Directors during the quarter ended June 2000, approved a third stock repurchase program, authorizing the Company to repurchase an additional 88,903 shares of the Company's common stock over the next twelve months. This represents about 5% of the Company's outstanding shares. As of June 30, 2000 under all three buyback programs, the Company has repurchased 198,133 shares, at an average cost of $18.56 per share, representing 10.06% of common stock at the time of the adoption of the program. At June 30, 2000, there were remaining 82,703 shares authorized under the third stock repurchase program. Completion of the new program will depend on market conditions and there is no guaranty of the exact number of shares the Company will repurchase. NON-PERFORMING ASSETS: - --------------------- The Company had no non-accruing loans at June 30, 2000, a decrease of $235 thousand or 100.0% from March 31, 2000. There was no interest income not recognized on non-accruing loans for the first three months of fiscal 2001. The following table sets forth information with respect to the Company's non-performing assets for the dates indicated: June 30, March 31, June 30, 2000 2000 1999 ------ -------- -------- (Dollars in thousands) Loans accounted for on a non-accrual basis, (non-accruing loans) $ 0 $ 235 $ 416 Impaired loans, accruing 0 0 0 Non-accruing loans as a percentage of total loans 0.00% 0.07% 0.14% Non-accruing loans as a percentage of total assets 0.00% 0.06% 0.11% RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2000, AND 1999: - --------------------- Net income for the three months ended June 30, 2000, and 1999, amounted to $765,000 or $0.43 per diluted share and $479,000 or $0.25 per diluted share, respectively. Interest income from the Company's loan portfolio increased $927,000 in the first quarter of fiscal 2001. This increase was primarily the result of a $43.7 million increase in the average loan balance in addition to a 14 basis point increase in average rates earned on these loans. Incomefrom the Company's investment portfolio (which includes income on short term investments, investment securities, mortgage-backed securities, FHLB stock and The Co-operative Central Bank Reserve Fund) increased by $76,000 during the first quarter of fiscal 2001 when compared to the same fiscal 2000 period. The yield on these assets increased by 88 basis points while the average balance decreased by $7.0 million during the fiscal 2001 quarter. Average earning assets increased by $36.8 million while the rate earned on these assets increased 37 basis points to 7.24% during the first quarter of fiscal 2001 when compared to the first quarter of fiscal 2000. The Company's cost of deposits increased by $16,000 during the first quarter of fiscal 2001 when compared to the same fiscal 2000 quarter. The rate paid on deposits increased 8 basis points from 3.45% during the quarter ended June 30, 1999 to 3.53% during the quarter ended June 30, 2000. The average balance of these deposits decreased $4.2 million to $265.4 million during the first quarter of fiscal 2001 from $269.6 million during the fiscal 2000 first quarter. The average balance of borrowed funds increased by $41.5 million to $98.5 million in the fiscal 2001 first quarter compared to $57.0 million in the same fiscal 2000 quarter. These advances were used to fund loan growth. The rate paid on borrowings increased by 49 basis points in the fiscal 2001 quarter to 5.89% from 5.40% in the fiscal 2000 quarter. The combined effect of these changes resulted in an increase of $680,000 in interest expense on borrowings to $1.4 million in the first quarter of fiscal 2001 compared to $770,000 in fiscal 2000's first quarter. The average balance of interest-bearing liabilities increased $37.4 million while the rates paid on these liabilities increased by 38 basis points during the quarter ended June 30, 2000 when compared to the same period one year ago. These developments resulted in a $1.0 million increase in interest and dividend income and an increase of $696,000 in interest expense. The combination resulted in a $307,000 increase in net interest and dividend income from the fiscal 2000 quarter to the fiscal 2001 quarter. The provision for loan losses is made to maintain the allowance for loan losses at a level which management considers adequate to provide for probable losses based on an evaluation of known and inherent risks in the loan portfolio. Consistent with the current evaluation of the loan portfolio, the Company did not make any provision for the first quarter of fiscal 2001 or fiscal 2000. Non-interest income increased by $60,000 to $338,000 in the first quarter of fiscal 2001 from $278,000 in the first fiscal 2000 quarter. The Company recorded $184,000 and $118,000 in net gains from sales of investment securities during the first quarter of fiscal 2001 and fiscal 2000, respectively. This $66,000 increase in net gains from the sale of investment securities is the primary reason for the increase in non-interest income between the two quarters. Operating expenses increased $343,000 in the first quarter of fiscal 2001 compared to the same quarter of fiscal 2000. This increase is primarily attributable to an increase of $126,000 in salaries and employee benefits and an increase of $183,000 in advertising due to a marketing effort to promote deposit and other products. The provision for Federal and state income taxes amounted to $434,000 and $462,000 during the first quarter of fiscal 2001 and fiscal 2000, respectively. The decreased expense relates primarily to the increased level of pre-tax income offset by a decrease in the effective tax rate due to the implementation of a tax planning strategy during the second quarter of fiscal 2000. LIQUIDITY AND CAPITAL RESOURCES: - ------------------------------- The Company's principal sources of liquidity are loan amortization, loan prepayments, increases in deposits and advances from The Federal Home Loan Bank (FHLB) of Boston. The Company is a voluntary member of the FHLB of Boston and as such is generally entitled to borrow. Cash from these liquidity sources is used to fund loan originations, security investments, deposit maturities and repayment of FHLB of Boston advances. The Company's capital to assets ratio was 8.91% on June 30, 2000, which exceeded regulatory requirements. NEW ACCOUNTING PRONOUNCEMENT: - ---------------------------- During 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Position ("SOP") 98-5, Accounting for Costs of a Start-Up Entity. SOP 98-5 requires organizational costs, which were being amortized, to be expensed and accounted for as a cumulative effect of a change in accounting principle. On April 1, 1999, the Bank expensed unamortized organizational costs resulting in a charge to earnings, net of taxes, of $234 thousand. In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 133 established accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. SFAS 133 also provides for matching the timing of gain or loss recognition on the hedged asset or liability that is attributable to the hedged risk or the earnings effect of the hedged forecasted transaction. In June 1999, the FASB issued SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133, which defers the effective date of SFAS No. 133. SFAS No. 133 will be effective for all fiscal quarters of fiscal years beginning after June 15, 2000. The adoption of this Statement is not expected to have a material impact on the Company's financial position. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - ---------------------------------------------------------- The Company has experienced no material changes in market risk since the discussion of this in the annual report as of March 31, 2000. FORWARD-LOOKING STATEMENTS - -------------------------- This report includes forward-looking statements that involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include the economic environment, competition, products and pricing in geographic and business areas in which the Company operates, prevailing interest rates, changes in government regulations and policies affecting financial services companies, and credit quality and credit risk management. Central Bancorp, Inc. undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this report. Part II. Other Information Item 1. Legal Proceedings None Item 2. Changes in Securities and Use of Proceeds Not Applicable Item 3. Defaults upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of Stockholders of Central Bancorp, Inc. held on July 27, 2000, stockholders voted affirmatively on the following proposal: To elect three directors to serve until the 2003 Annual meeting of Stockholders. VOTE VOTE ELECTED AT MEETING TERM FOR WITHHELD - ------------------ ---- --- -------- Joseph R. Doherty 3 Years 94% 6% Terence D. Kenney 3 Years 94% 6% Nancy D. Neri 3 Years 94% 6% Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27, FDS, Financial Data Schedule (b) Reports on Form 8-K During the quarter ended June 30, 2000, the Registrant filed one Current Report on Form 8-K, announcing the adoption of its third stock repurchase program on May 22, 2000. CENTRAL BANCORP, INC. AND SUBSIDIARY 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. AND SUBSIDIARY ------------------------------------ 8/11/00 /s/ John D. Doherty ------ ------------------- Date John D. Doherty President and Chief Executive Officer 8/11/00 /s/ Paul S. Feeley - -------- ------------------ Date Paul S. Feeley Senior Vice President, Treasurer and Chief Financial Officer