[CENTRAL BANCORP LETTERHEAD]





Contact:  William P. Morrissey                         For Release:  Immediately
          Senior Vice President
          (617) 628-4000


                         CENTRAL BANCORP, INC. INCREASES
                              CASH DIVIDEND BY 20%

     SOMERVILLE,  MASSACHUSETTS,  October  10,  2002 -- Central  Bancorp,  Inc.,
(NASDAQ:CEBK) announced today that its Board of Directors has declared a regular
quarterly  cash  dividend of twelve cents ($.12) per share,  payable on November
15, 2002, to stockholders of record as of November 1, 2002.

     Central  Bancorp's  President & Chief Executive  Officer,  John D. Doherty,
stated,  "I'm very  pleased that the  Company's  strong  financial  position has
allowed your Board of Directors to increase the  quarterly  cash dividend by 20%
to 12 cents a share from 10 cents. This increase reflects our continued optimism
about Central  Bancorp's  future within the communities we serve and our ongoing
commitment to improve stockholder value over the long-term."

     This  represents  the  Company's  25th   consecutive   distribution   since
implementing the cash dividend policy in October 1996.

     Central Bancorp, Inc., is the holding company for Central Bank, whose legal
name is Central Co-operative Bank, a  Massachusetts-chartered  co-operative bank
operating eight full-service banking offices in suburban Boston.