NEWS RELEASE


Contact:  Paul S. Feeley                                For Release: Immediately
          SENIOR VICE PRESIDENT, TREASURER &
             CHIEF FINANCIAL OFFICER
             (617) 628-4000


                         CENTRAL BANCORP, INC. INCREASES
                         QUARTERLY CASH DIVIDEND BY 50%
                              TO 18 CENTS PER SHARE

         SOMERVILLE, MASSACHUSETTS, July 21, 2005 - Central Bancorp, Inc.
(NASDAQ:CEBK) announced today that its Board of Directors increased its regular
quarterly cash dividend by 50% to eighteen ($0.18) cents per share, payable on
August 19, 2005, to stockholders of record as of August 5, 2005.

         The dividend reflects an increase of six ($0.06) cents over the
previous quarterly cash dividend of twelve ($.12) cents per share and represents
the Company's 36th CONSECUTIVE distribution since implementing its cash dividend
policy in October 1996. Based on the closing price on July 20 of $26.50, the
annualized dividend yield is 2.72%.

         Central Bancorp's Chairman, President & Chief Executive Officer, John
D. Doherty, speaking on behalf of the Board of Directors, said, "I'm very
pleased the Board has expressed its confidence in our Company's prospects for
future growth by declaring a substantial increase in the quarterly dividend."

         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, a limited service high school
branch in suburban Boston and a stand alone 24-hour automated teller machine in
Somerville.