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EXHIBIT 99.1
NEWS RELEASE
Contact: Paul S. Feeley For Release: Immediately
SENIOR VICE PRESIDENT, TREASURER &
CHIEF FINANCIAL OFFICER
(617) 628-4000
CENTRAL BANCORP REPORTS
IMPROVED FISCAL YEAR EARNINGS
SOMERVILLE, MASSACHUSETTS, May 10, 2006 - Central Bancorp,
Inc. (the "Company") (NASDAQ:CEBK) today reported that its net income for the
year ended March 31, 2006 increased to $2.6 million, or $1.84 per diluted
share, as compared to earnings of $2.5 million, or $1.65 per diluted share, for
the fiscal year ended March 31, 2005, an increase of more than 7%. For the
quarter ended March 31, 2006, net income was $518,000, or $.36 per diluted
share, as compared to $817,000, or $.57 per diluted share, for the correspond-
ing quarter in the prior fiscal year.
The earnings improvement for the year ended March 31, 2006 included
increases of $586,000 in net interest and dividend income and $342,000 in total
non-interest income. While the net interest spread and margins declined from
2.85% and 3.20% to 2.72% and 3.11%, respectively, year to year, the growth in
interest-earning assets outpaced the increase in interest-bearing liabilities,
resulting in the net increase. The increase in total non-interest income con-
tinued to be driven by increases in deposit-related fees, offset partially by
lower levels of gains on sales of loans and investments. Non-interest expenses
increased $665,000 which included the previously reported charge of $283,000
taken in the September 2005 quarter associated with a restructuring that
involved voluntary employment termination packages offered to selected
employees.
Central Bancorp's Chairman, President & Chief Executive Officer,
John D. Doherty, commented, "We are pleased the Company's earnings for the most
recent fiscal year showed improvement, especially in light of the flat yield
curve throughout most of the fiscal year. In the months ahead, we anticipate
our earnings and margins will continue to be under pressure because of the
yield curve and the competitive environment that has contributed to higher
rates on
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CENTRAL BANCORP, INC.
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customers' deposit accounts without proportional increases in lending rates. We
have been able to compete successfully for deposits through the use of targeted
CD specials, which contributed to record deposits of $393 million at March 31,
2006, up more than $33 million during the quarter alone and $60 million from the
March 31, 2005 level."
The decrease in net income for the quarter ended March 31, 2006
compared to the same quarter a year earlier was primarily the result of a
decrease in net interest and dividend income and an increase in non-interest
expense, partially offset by an increase in non-interest income and decreases in
the provision for income taxes and the provision for loan losses. Net interest
and dividend income for the quarter ended March 31, 2006 totaled $3.9 million
compared to $4.1 million in the prior year period. Decreases occurred in the net
interest spread and the net interest margin from 2.95 % and 3.28%, respectively,
for the quarter ended March 31, 2005 to 2.48% and 2.88%, respectively, for the
quarter ended March 31, 2006. The decrease in the spread and margin was due
primarily to increases in the rate of interest-bearing liabilities. The increase
in the cost of funds was greater than the increase in the yield on
interest-earning assets primarily due to interest-bearing liabilities repricing
upward faster than interest-earning assets, resulting mainly from the increase
in short-term interest rates and the flat yield curve, as well as the Company's
ongoing promotional certificate of deposit programs at attractive rates.
Non-interest income increased $119,000 for the quarter ended March 31,
2006 compared to the 2005 period, primarily as a result of a $93,000 increase in
net gains on the sales of securities and a $50,000 increase in other
non-interest income due to increased fees on transaction accounts, partially
offset by a $24,000 decrease in the gain on sale of loans.
Non-interest expense was $3.6 million in the March 2006 quarter
compared to $3.3 million for the prior year quarter, primarily due to increased
staffing and normal salary increases. Income tax expense for the March 2006
quarter decreased $68,000 from the 2005 quarter due to the decrease in pre-tax
income.
The provision for loan losses was zero for the quarter ended March 31,
2006 compared to $50,000 for the prior year period. Management considered the
allowance for loan losses to be adequate during both periods.
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CENTRAL BANCORP, INC.
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Total assets were $547.3 million at March 31, 2006, compared to $521.1
million at March 31, 2005.
During the year ended March 31, 2006, deposits increased to $393.4
million primarily as a result of an increase in certificates of deposit due to
the promotional interest rates offered for these accounts. Total loans increased
$26.8 million primarily due to an increase in the origination of commercial real
estate loans, which increased mainly due to the Company's continuing focus on
originating these loans. Total liabilities increased by $25.3 million, primarily
reflecting an increase in deposits of $60.2 million and a decrease in borrowings
of $35.2 million. Borrowings decreased as the Company was able to fund loan
growth through lower cost deposits.
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.
(SEE ACCOMPANYING TABLES.)
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THIS PRESS RELEASE MAY CONTAIN CERTAIN FORWARD-LOOKING STATEMENTS, WHICH ARE
BASED ON MANAGEMENT'S CURRENT BELIEFS AND EXPECTATIONS, AS WELL AS THE
ASSUMPTIONS MADE USING INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT. SINCE
THESE STATEMENTS REFLECT THE VIEWS OF MANAGEMENT CONCERNING FUTURE EVENTS, THESE
STATEMENTS INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS. THESE RISKS AND
UNCERTAINTIES INCLUDE AMONG OTHERS: 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. ADDITIONALLY, OTHER RISKS AND UNCERTAINTIES MAY BE DESCRIBED IN THE
COMPANY'S QUARTERLY REPORTS ON FORM 10-Q AND ITS ANNUAL REPORTS ON FORM 10-K,
EACH FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WHICH ARE AVAILABLE AT
THE SECURITIES AND EXCHANGE COMMISSION'S INTERNET WEBSITE (WWW.SEC.GOV) AND TO
WHICH REFERENCE IS HEREBY MADE. THEREFORE, ACTUAL FUTURE RESULTS MAY DIFFER
SIGNIFICANTLY FROM RESULTS DISCUSSED IN THESE FORWARD-LOOKING STATEMENTS AND
UNDUE RELIANCE SHOULD NOT BE PLACED ON SUCH STATEMENTS. THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS.
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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 Year Ended
March 31, March 31,
-------------------------------------------
2006 2005 2006 2005
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(Unaudited)
Interest and divident income $7,700 $7,104 $30,341 $27,616
Interest expense 3,834 3,000 14,024 11,885
------ ------- ------- -------
Net interest and dividend income 3,866 4,104 16,317 15,731
Provision for loan losses 0 50 100 100
Net gain on sales and write-downs
of investment securities 113 20 419 453
Gain on sale of loans 25 49 208 252
Other non-interest income 312 262 1,370 950
Non-interest expenses 3,562 3,264 14,183 13,518
------ ------- ------- -------
Income before taxes 754 1,121 4,031 3,768
Provision for income taxes 236 304 1,388 1,305
------ ------- ------- -------
Net income $ 518 $ 817 $ 2,643 $ 2,463
====== ====== ======= =======
Earnings per share:
Basic $ .36 $ .58 $ 1.85 $ 1.66
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Diluted $ .36 $ .57 $ 1.84 $ 1.65
====== ====== ======= =======
Weighted average number of
shares outstanding:
Basic 1,435 1,417 1,429 1,482
====== ====== ======= =======
Diluted 1,444 1,421 1,438 1,493
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Selected Consolidated Balance Sheet Data
(In Thousands)
March 31, March 31,
2006 2005
-------------------------------
Total assets $ 547,275 $521,071
Cash and cash equivalents 15,263 6,383
Investment securities available
for sale 97,195 108,616
Total loans (1) 415,364 388,603
Allowance for loan losses 3,788 3,681
Deposits 393,413 333,215
Borrowings 106,032 141,197
Subordinated debenture 5,258 5,258
Stockholders' equity 39,189 38,239
(1) Includes loans held for sale of $45 and $2,221 at March 31, 2006 and March
31, 2005, respectively.
Selected Financial Ratios
(In Thousands, Except Per Share Data)
Quarter Ended Year Ended
March 31, March 31,
-----------------------------------------------
2006 2005 2006 2005
-----------------------------------------------
(Unaudited)
Return on average assets 0.38 % 0.64 % 0.49 % 0.49 %
Return on average equity 5.29 8.50 6.78 6.12
Interest rate spread 2.48 2.95 2.72 2.85
Net interest margin 2.88 3.28 3.11 3.20
Equity to assets 7.16 7.34
Non-performing assets to total 0.22 0.04
assets
Book value per share $24.64 $24.07