1
Paul S. Feeley Immediately
SENIOR VICE PRESIDENT, TREASURER &
CHIEF FINANCIAL OFFICER
(617) 628-4000
CENTRAL BANCORP REPORTS SECOND QUARTER EARNINGS
SOMERVILLE, MASSACHUSETTS, November 3, 2004-- Central Bancorp, Inc.
(NASDAQ: CEBK) today reported that its net income decreased to $506,000, or
$0.33 per diluted share, for the three months ended September 30, 2004, from
$830,000, or $0.53 per diluted share, for the corresponding quarter in the prior
fiscal year.
The current quarter's results included costs of $178,700, net of taxes,
consisting primarily of legal and other professional fees incurred in connection
with the previously announced buyback of 154,268 shares of Company stock from PL
Capital LLC and affiliates by the Company and its ESOP Trust. During the quarter
ended September 30, 2003, the Company recognized an insurance recovery of
$214,000, net of related legal fees and taxes, attributable to shareholder
litigation, which was settled in that quarter. Exclusive of the foregoing
significant items, pro forma earnings increased to $685,000 for the second
quarter of this year from $616,000 for the comparable period last year.
Earnings during the quarter ended September 30, 2004 included an
increase in net interest and dividend income. Although net interest margin
declined from 3.39% in the second quarter of the last fiscal year to 3.20%
during this quarter, this level is an improvement over the 3.10% net interest
margin reported for the first quarter of this fiscal year. This improvement was
primarily attributable to shifts in the Company's asset mix, with increases in
commercial loans and investment securities and declines in low-yielding short
term investments.
For the six months ended September 30, 2004, net income decreased to
$960,000, or $0.61 per diluted share, from $2,118,000, or $1.36 per diluted
share, in the year earlier period. Exclusive of the after-tax impact of $374,000
resulting from the Company's June 2003 settlement of its REIT-related tax
liability with the Massachusetts Department of Revenue and a net insurance
recovery of $276,000 for the six-month fiscal 2003 period attributable to the
aforementioned net insurance recovery, and the costs associated with the stock
buyback noted above, net income declined $329,000 compared to the year earlier
period. This reduction was largely the result of a $397,000 decrease in net
interest income in the first half of the current year, as compared to the prior
year period.
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Central Bancorp, Inc.
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John D. Doherty, Chairman, President & Chief Executive Officer, stated,
"We are pleased to see an increase in net interest and dividend income for the
quarter as compared to last year and especially as compared to the first quarter
of this fiscal year. The last several years have been extremely challenging
because of the interest rate environment. Although we have continued our balance
sheet shift, which has included an increase in commercial real-estate lending,
asset quality remains outstanding with no loans delinquent in excess of 90 days
at September 30."
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 PRESS RELEASE CONTAINS FINANCIAL INFORMATION DETERMINED BY METHODS OTHER
THAN IN ACCORDANCE WITH ACCOUNTING METHODS GENERALLY ACCEPTED IN THE UNITED
STATES OF AMERICA ("GAAP"). THE COMPANY'S MANAGEMENT USES THESE NON-GAAP
MEASURES IN ITS ANALYSIS OF THE COMPANY'S PERFORMANCE. THESE MEASURES TYPICALLY
ADJUST GAAP PERFORMANCE MEASURES TO EXCLUDE THE EFFECTS OF SIGNIFICANT GAINS OR
LOSSES THAT ARE UNUSUAL IN NATURE. BECAUSE THESE ITEMS AND THEIR IMPACT ON THE
COMPANY'S PERFORMANCE ARE DIFFICULT TO PREDICT, MANAGEMENT BELIEVES THAT
PRESENTATIONS OF FINANCIAL MEASURES EXCLUDING THE IMPACT OF THESE ITEMS PROVIDE
USEFUL SUPPLEMENTAL INFORMATION THAT IS ESSENTIAL TO A PROPER UNDERSTANDING OF
THE OPERATING RESULTS OF THE COMPANY'S BUSINESS. THESE DISCLOSURES SHOULD NOT BE
VIEWED AS A SUBSTITUTE FOR OPERATING RESULTS DETERMINED IN ACCORDANCE WITH GAAP,
NOR ARE THEY NECESSARILY COMPARABLE TO NON-GAAP PERFORMANCE WHICH MAY BE
PRESENTED BY OTHER COMPANIES.
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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Central Bancorp, Inc.
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CENTRAL BANCORP, INC.
CONSOLIDATED OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Quarter Ended Six Months Ended
September 30, September 30,
------------------------------------------------------
2004 2003 2004 2003
------------------------------------------------------
(Unaudited) (Unaudited)
Net interest and dividend income $ 3,946 $ 3,941 $ 7,653 $ 8,050
Provision for loan losses -- 50 50 100
Net gain (loss) on sales of investment securities 214 (130) 348 (135)
Gain on sale of loans 56 68 119 209
Other non-interest income 230 230 480 503
Non-interest expenses 3,612 2,761 7,005 5,759
------- ------- ------- -------
Income before taxes 834 1,298 1,545 2,768
Provision for income taxes 328 468 585 650
------- ------- ------- -------
Net income $ 506 $ 830 $ 960 $ 2,118
======= ======= ======= =======
Earnings per share:
Basic $ 0.33 $ 0.54 $ 0.62 $ 1.37
======= ======= ======= =======
Diluted $ 0.33 $ 0.53 $ 0.61 $ 1.36
======= ======= ======= =======
Weighted average number of shares outstanding:
Basic 1,538 1,549 1,549 1,547
======= ======= ======= =======
Diluted 1,550 1,563 1,562 1,561
======= ======= ======= =======
Outstanding shares, end of period 1,589 1,663 1,589 1,663
======= ======= ======= =======
RECONCILIATION OF GAAP EARNINGS
TO PRO FORMA EARNINGS:
Net income per GAAP $ 506 $ 830 $ 960 $ 2,118
Impact of REIT legislation, net of taxes -- -- -- (374)
Impact of litigation and legal fees,
net of insurance and taxes -- (214) -- (276)
Costs associated with stock buyback,
net of taxes 179 -- 179 --
------- ------- ------- -------
Pro forma earnings $ 685 $ 616 $ 1,139 $ 1,468
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CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SEPTEMBER 30, March 31,
2004 2004
-------------------------------
(Unaudited)
Total assets $504,999 $490,897
Investment securities available for sale 107,604 83,771
Total loans (1) 358,306 357,424
Allowance for loan losses 3,606 3,537
Deposits 316,310 295,920
Borrowings 147,125 145,256
Stockholders' equity 38,335 43,454
Book value per share $ 24.14 $ 26.10
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(1) INCLUDES LOANS HELD FOR SALE OF $1,182 AND $799 AT SEPTEMBER 30, 2004
AND MARCH 31, 2004, RESPECTIVELY.