William P. Morrissey
Senior Vice President Immediately
(617) 628-4000
CENTRAL BANCORP REPORTS THIRD QUARTER EARNINGS
SOMERVILLE, MASSACHUSETTS, January 28, 2003-- Central Bancorp, Inc.
(NASDAQ: CEBK) today reported net income of $910,000, or $0.58 per diluted
share, for the three months ended December 31, 2002, compared to $949,000, or
$0.57 per diluted share, for the corresponding quarter in the prior fiscal year.
For the nine months ended December 31, 2002, net income increased 27.5% to
$2,605,000, or $1.63 per diluted share, from $2,043,000, or $1.22 per diluted
share, in the year earlier period. Exclusive of the impact of gains and losses
on the sales and write-downs of investment securities, core earnings increased
49.5% during the first nine months of the current fiscal year compared to the
same period in the prior year. The elimination of goodwill amortization in the
current fiscal year, as required by a change in generally accepted accounting
principles, contributed $216,000 to the improved results in fiscal 2003.
John D. Doherty, Chairman, President & Chief Executive Officer, stated, "I
am pleased that we were able to sustain our improved financial performance for
this fiscal year, as compared to last year, by being successful in our two
primary business functions, namely, originating loans and gathering deposits.
Loan originations exceeded $50 million during the third quarter, a record level
for the Bank. In addition, core deposits increased at an annualized rate of over
25% during the current quarter."
Mr. Doherty added, "We have implemented our plan to create a mortgage
banking capability to increase our non-interest income and better manage
interest rate risk, which has contributed greatly to our growth in loan
origination activity. While the sales of loans through December 31, 2002 were
not significant, we have committed to sell to secondary mortgage market
investors nearly $20 million of recently originated fixed-rate residential
mortgages. The gains from these sales are expected to make a major contribution
to growth in the core components of non-interest income in the fourth quarter of
this fiscal year."
(continued)
Central Bancorp, Inc.
Page 2 of 3
The results for the quarter ended December 31, 2002, as compared to the
same period in the prior year, were favorably affected by an increase of
$644,000 in net interest and dividend income. Such increase was largely due to a
59 basis point reduction in the overall cost of funds to 3.20%. The Company
experienced an increase in its net interest margin to 3.73% in the most recently
completed quarter from 3.63% in the same quarter of the prior fiscal year. With
the sustained low interest rate environment currently in existence, and the
related record level of loan refinancing activity, the Company believes it is
likely to experience some compression in its net interest margin during the
upcoming year.
Loan quality continued to be outstanding with no loans delinquent in excess
of 90 days at December 31, 2002. In addition, loan delinquencies continued to be
minimal and the Company held no foreclosed assets at end of the current quarter.
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 and one limited-service high school
branch in suburban Boston.
(See accompanying tables.)
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This earnings report may contain certain forward-looking statements, which are
based on management's current expectations regarding economic, legislative and
regulatory issues that may impact the Company's earnings in future periods.
Factors that could cause future results to vary materially from current
management expectations include, but are not limited to, general economic
conditions, changes in interest rates, deposit flows, real estate values and
competition; changes in accounting principles, policies or guidelines; changes
in legislation or regulation; and other economic, competitive, governmental,
regulatory and technological factors affecting the Company's operations,
pricing, products and services.
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Central Bancorp, Inc.
Page 3 of 3
CENTRAL BANCORP, INC.
CONSOLIDATED OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Quarter Ended Nine Months Ended
December 31, December 31,
--------------------------------------------
2002 2001 2002 2001
--------------------------------------------
(Unaudited) (Unaudited)
Net interest and dividend income $ 4,352 $ 3,708 $ 12,748 $ 10,304
Net gain (loss) on sales and write-downs
of investment securities 14 16 (196) 339
Other non-interest income 292 228 783 652
Non-interest expenses 3,200 2,467 9,222 8,086
-------- -------- -------- --------
Income before taxes 1,458 1,485 4,113 3,209
Provision for income taxes 548 536 1,508 1,166
-------- -------- -------- --------
Net income $ 910 $ 949 $ 2,605 $ 2,043
======== ======== ======== ========
Earnings per share:
Basic $ 0.58 $ 0.57 $ 1.64 $ 1.23
======== ======== ======== ========
Diluted $ 0.58 $ 0.57 $ 1.63 $ 1.22
======== ======== ======== ========
Weighted average number of
shares outstanding:
Basic 1,569 1,657 1,584 1,661
======== ======== ======== ========
Diluted 1,580 1,672 1,600 1,676
======== ======== ======== ========
RECONCILIATION OF GAAP
EARNINGS TO CORE EARNINGS:
Net income per GAAP $ 910 $ 949 $ 2,605 $ 2,043
Net (gain) loss on sales and write-downs
of investment securites, net of taxes (9) (11) 121 (220)
-------- -------- -------- --------
Core earnings $ 901 $ 938 $ 2,726 $ 1,823
======== ======== ======== ========
CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS)
DECEMBER 31, March 31,
2002 2002
--------------------------
(UNAUDITED)
Total assets $488,047 $468,219
Total loans (1) 399,988 371,707
Allowance for loan losses 3,276 3,292
Deposits 286,721 261,907
Borrowings 155,857 164,000
Stockholders' equity 41,090 38,954
<FN>
(1) Includes loans held for sale of $19,494 at December 31, 2002.
</FN>