Michael K. Devlin Immediately
Senior Vice President
(617) 628-4000
CENTRAL BANCORP REPORTS SETTLEMENT OF
REIT-RELATED STATE TAX LIABILITY
SOMERVILLE, MASSACHUSETTS, June 24, 2003-- Central Bancorp, Inc. (NASDAQ:
CEBK), the holding company for Central Co-operative Bank (the "Central Bank"),
today reported that Central Bank is one of a group of banks that has entered
into an agreement with the Massachusetts Department of Revenue (the "DOR") to
settle the issue related to state income taxes owed on dividends received from
the Bank's real estate investment trust (REIT) subsidiary for the fiscal periods
2000 to 2003. Under the agreement, Central Bank paid $430,547, representing 50%
of the amount assessed for the fiscal 2000 to 2002 tax years, including
interest. Central Bank had previously paid, as part of its estimated tax
payments, the estimated 50% settlement amount of $167,830 for fiscal 2003. These
payments are deductible for federal tax purposes.
During the fourth quarter of fiscal 2003, the Company accrued approximately
$850,000, representing an estimate of the cost of state legislation passed on
March 5, 2003, which retroactively eliminated the 95% dividends received
deduction applicable to dividends paid to Central Bank by its REIT subsidiary.
Based on the settlement reached with DOR, the Company has reversed $374,000 of
the taxes previously accrued for this matter, which will be included as a
reduction of income tax expense in the Company's financial results for the
quarter ending June 30, 2003.
Central Bank, a Massachusetts-chartered co-operative bank, operates eight
full-service banking offices and one limited-service high school branch in
suburban Boston.
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This press release 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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