CENTRAL BANCORP, INC.
                                  NEWS RELEASE


Contact:                                         For Release:
                  John D. Doherty                                Immediately
                  President
                  (617) 628-4000


                              CENTRAL BANCORP, INC.
                       ADOPTS NEW SHAREHOLDER RIGHTS PLAN

     SOMERVILLE,  MASSACHUSETTS, October 11, 2001--Central Bancorp, Inc. (NASDAQ
National Market: CEBK), parent company of Central Co-Operative Bank, has adopted
a new Shareholder Rights Plan which will become effective upon the expiration of
its current  Rights Plan at the close of business on October 24,  2001.  The new
Rights Plan is similar to the Rights Plan  currently in effect.  The Rights Plan
is designed  to protect  shareholders'  interests  in the event of an unfair and
coercive takeover attempt.

     In the event any person or group of  persons  exceeds  the stock  ownership
limitations  in the Rights Plan,  the Rights Plan  entitles each other holder of
Central Bancorp, Inc. common stock to purchase the Company's stock at a discount
price.

     According to John D. Doherty,  President and Chief Executive Officer,  "The
new  Rights  Plan is  intended  to assure  that all of Central  Bancorp,  Inc.'s
shareholders  continue to receive  fair and equal  treatment in the event of any
proposed  takeover of the Company.  The Rights Plan will not prevent a takeover,
but should encourage anyone seeking to acquire the Company to negotiate with the
Board of Directors prior to attempting a takeover."

     "Our  principal  objective,"  Mr.  Doherty  said,  "is to continue to build
long-term value for our shareholders."



Central Bancorp, Inc.
Page 2 of 2

     The Rights  Plan  applies to shares  held on the record date of October 24,
2001. However,  rights issued under the Plan will not be exerciseable initially.
The Rights will trade with the Company's  common stock and no certificates  will
be issued until certain  triggering  events occur, as set forth under the Rights
Plan and related Rights Agreement.

                                      # # #