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Paul S. Feeley
Senior Vice President, Treasurer &
Chief Financial Officer
(617) 628-4000CENTRAL BANCORP, INC. REPORTS FINANCIAL RESULTS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2008
SOMERVILLE, MASSACHUSETTS, November 4, 2008 - Central Bancorp, Inc. (NASDAQ GM:CEBK) (the "Company") today reported its financial results for the three and six month periods ended September 30, 2008. These financial results were significantly impacted by the September conservatorship of the Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac") that caused a substantial write down of the value of the Company's investment in the preferred stock of these companies as previously announced. Net loss for the quarter ended September 30, 2008 was $9.5 million, or $6.80 per diluted share, as compared to net income of $465,000, or $0.33 per diluted share, for the comparable prior year quarter. The Company's loss for the six months ended September 30, 2008 was $9.1 million, or $6.53 per diluted share, as compared to net income of $690,000, or $0.49 per diluted share, for the corresponding period in 2007.
The non-cash charges to record the other than temporary impairment of the Fannie Mae and Freddie Mac preferred stocks reduced earnings by $9.4 million or $6.75 and $6.77 per diluted share for the quarter and year-to-date periods ending September 2008 respectively. No tax benefit was recorded during the periods as the losses were considered capital losses and there were no available capital gains to offset such losses. However, in the quarter ending December 31, 2008, the Company will recognize a tax benefit of approximately $3.2 million or $2.34 per share on the Fannie Mae and Freddie Mac impairment charges due to the October 3, 2008 enactment of the Emergency Economic Stabilization Act of 2008, which permits the Company to treat losses incurred on the Fannie Mae and Freddie Mac preferred stock as ordinary losses for federal income tax purposes. In our press release issued on September 12, 2008, we disclosed projections of certain regulatory capital ratios. As of September 30, 2008, the Company and the Bank remained well capitalized in all such measures except total risk based capital which would be considered adequately capitalized at the Bank level. A summary of regulatory capital ratios at September 30, 2008 follows:
Note: above ratios include tax benefits allowed by regulatory authorities.
At September 30, 2008 Actual RegulatoryThresholdfor Well Capitalized RegulatoryThresholdfor Adequately Capitalized Central Bancorp: Tier 1 Leverage 6.44% 5.0% 4.0% Tier 1 Risk-Based Ratio 9.32% 6.0% 4.0% Total Risk-Based Ratio 10.54% 10.0% 8.0% Central Co-operative Bank: Tier 1 Leverage 5.45% 5.0% 4.0% Tier 1 Risk-Based Ratio 7.90% 6.0% 4.0% Total Risk-Based Ratio 9.12% 10.0% 8.0%
For the quarter ended September 30, 2008, when compared to the quarter ended September 30, 2007, net interest and dividend income of $4.2 million represents an increase of $945,000, from $3.3 million. This increase was primarily driven by a decline in net interest expense of $1.1 million. The net interest rate spread and the net interest margin improved from 1.95% and 2.43%, respectively, for the quarter ended September 30, 2007 to 2.82% and 3.14%, respectively, for the 2008 comparable period. These increases were primarily due to a 95 basis point decrease in the cost of funds, mainly due to decreases in the average rates paid on deposits, as a result of aggressive liability management, and Federal Home Loan Bank (FHLB) advances. During the quarter ended September 30, 2008 as compared to the quarter ended September 30, 2007, some high-cost certificates of deposit were replaced with more cost-effective Federal Home Loan Bank (FHLB) borrowings and lower-costing deposits. The average balance of certificates of deposit totaled $171.8 million during the quarter ended September 30, 2008, compared to $187.1 million for the same period in 2007, a decline of $15.3 million. The average balance of FHLB borrowings totaled $146.2 million during the quarter ended September 30, 2008, compared to $135.6 million for the same period in 2007, an increase of $10.6 million. Additionally, the average balance of lower-costing non-maturity deposits increased by $8.9 million to $185.9 million for the quarter ended September 30, 2008, as compared to an average balance of $177.0 million during the same period of 2007. The yield on interest-earning assets declined by 8 basis points.
The provision for loan losses totaled $900,000 for the quarter ended September 30, 2008, compared to a negative provision for loan losses of $300,000 during the same period of 2007. The increase in the provision for the quarter was primarily related to one customer relationship. The Company provides for loan losses in order to maintain the allowance for loan losses at a level that management estimates is adequate to absorb probable losses based on an evaluation of known and inherent risks in the portfolio. In determining the appropriate level of the allowance for loan losses, the Company considers past and anticipated loss experience, evaluations of underlying collateral, prevailing economic conditions, the nature and volume of the loan portfolio and the levels of non-performing and other classified loans. Management evaluates the level of the loan loss reserve on a regular basis and considered the allowance for loan losses to be adequate during both periods.
Net gains (losses) from sales or write downs of investment securities other than Fannie Mae or Freddie Mac write downs declined by $287,000, from a gain of $172,000 during the comparable quarter last year to a loss of $115,000 this year, reflecting impairment of several securities that were deemed to be other than temporary in the current stock market environment. Other income increased by $75,000 primarily as a result of an investment in Bank Owned Life Insurance. Non-interest operating expenses increased $223,000 or 6.6% primarily due to increases in salaries and benefits and marketing expenses.
The effective income tax rate as calculated under SFAS 109 requires certain projections to determine the effective tax rate expected for the year. Those estimates were significantly altered by the actions relating to Fannie Mae and Freddie Mac which in addition to the other than temporary impairment charges for which the tax benefit cannot be recognized until the Company's fiscal third quarter, the cessation of tax advantaged dividends on those securities had the impact of increasing the projected effective tax rate for the year.
In addition to the losses relating to the Fannie Mae and Freddie Mac preferred stock, items primarily affecting the earnings for the six months ended September 30, 2008 when compared to the quarter ended September 30, 2007 were: an increase in net interest income of $1.5 million; an increase in the provision for loan losses of $1.4 million; a net change in sales and write-downs on other securities of $432,000 and an increase in non-interest expenses of $315,000.
The net interest rate spread and the net interest margin improved from 1.97% and 2.44%, respectively, for the six months ended September 30, 2007 to 2.67% and 3.01%, respectively, for the 2008 comparable period.
Total assets were $541.8 million at September 30, 2008 and $571.2 million at March 31, 2008. The decrease in assets for the six months ended September 30, 2008 relates primarily to a decrease in short-term investments of $4.5 million and a decrease of $16.5 million in investment securities (including the reduction in value of investment securities of $9.4 million due to the other than temporary impairment charge for Fannie Mae and Freddie Mac preferred stock). Deposits declined by $7.0 million and FHLB borrowings by $12.0 million during this period. Total loans decreased by $12.2 million. Construction loans declined by $8.8 million as management de-emphasized this type of lending in the current market environment. Commercial and industrial loans also declined by $7.1 million due to pay-offs of such loans, partially offset by an increase in residential loans of $3.7 million. Deposits declined primarily because of continuing strong competition for deposits in our market area. FHLB advances decreased to $144.6 million at September 30, 2008 from $156.7 million at March 31, 2008.
Senior management continued to give high priority to monitoring the Company's asset quality. At September 30, 2008, non-performing loans totaled $10.3 million or 1.91% of total assets as compared to $9.3 million or 1.68% of total assets at the same date in 2007. While bankruptcy filings continue to extend the time required to resolve some non-performing assets, management continues to work with borrowers and bankruptcy trustees to resolve these situations as soon as possible. Management believes that there are adequate reserves and collateral securing non performing loans to cover losses that may result from these loans.
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 nine full-service banking offices, a limited service high school branch in suburban Boston and a standalone 24-hour automated teller machine in Somerville.
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.
Central Bancorp, Inc. Consolidated Operating Data (In Thousands, Except Per-Share Data) Quarter Ended September 30, Six Months Ended September 30, 2008 2007 2008 2007 (Unaudited) (Unaudited) Net interest and dividend income $ 4,198 $ 3,253 $ 8,123 $ 6,593 Provision for loan losses 900 (300) 1,100 (300) Net gain (loss) from sales or write-downs of investment securities other than FNMA or FHLMC (115) 172 (144) 288 Net loss from write-downs of FNMA and FHLMC (9,394) -- (9,394) -- Gain on sale of loans 3 25 15 77 Other non-interest income 412 337 857 694 Non-interest expenses 3,606 3,383 7,214 6,899 Income (loss) before taxes (9,402) 704 (8,857) 1,053 Provision for income taxes 64 239 208 363 Net income (loss) $(9,466) $ 465 $(9,065) $ 690 Earnings per share: Basic $(6.80) $0.33 $(6.53) $0.50 Diluted $(6.80) $0.33 $0.49 $0.49 Weighted average number of shares outstanding: Basic 1,391 1,394 1,388 1,393 Diluted 1,391 1,399 1,388 1,400 Outstanding shares, end of period 1,640 1,640 1,640 1,640
Consolidated Balance Sheet Data (In Thousands, Except Per Share Data) September 30, 2008 March 31, 2008 (Unaudited) (Unaudited) Total assets $541,752 $571,245 Short-term investments 7,429 11,888 Total investments 46,539 63,054 Total loans(1) 463,940 475,137 Allowance for loan losses 4,674 3,613 Deposits 354,061 361,089 Borrowings 144,798 156,832 Subordinated debentures 11,341 11,341 Stockholders' equity 28,588 38,816 Book value per share 17.43 23.67 Book equity to Assets 5.28% 6.79% Non-performing assets to total assets 1.93 1.68 (1) Includes loans held for sale of $1,240 and $195 at September 30, 2008 and March 31, 2008, respectively.
Selected Financial Ratios (In Thousands, Except Per Share Data) Quarter Ended September 30, Six Months Ended September 30, 2008 2007 2008 2007 (Unaudited) (Unaudited) Return on average assets (6.81)% 0.34% (3.23)% 0.25% Return on average equity (99.95) 4.88 (46.57) 3.63 Interest rate spread 2.82 1.95 2.67 1.97 Net interest margin 3.14 2.43 3.01 2.44
Paul S. Feeley
Senior Vice President, Treasurer &
Chief Financial Officer
(617) 628-4000CENTRAL BANCORP, INC. DECLARES ITS REGULAR QUARTERLY CASH DIVIDEND
SOMERVILLE, MASSACHUSETTS, October 16, 2008 - Central Bancorp, Inc. (NASDAQ GM:CEBK) announced that its Board of Directors declared its regular quarterly cash dividend of eighteen ($0.18) cents per share, payable on November 21, 2008, to stockholders of record as of November 7, 2008.
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 nine full-service banking offices, a limited service high school branch in suburban Boston and a standalone 24-hour automated teller machine in Somerville.
Paul S. Feeley
Senior Vice President, Treasurer &
Chief Financial Officer
(617) 628-4000CENTRAL BANCORP, INC. ANNOUNCES IMPAIRMENT OF FANNIE MAE AND FREDDIE MAC PREFERRED STOCK
Somerville, Massachusetts - September 12, 2008 - Central Bancorp, Inc. NASDAQ Global MarketSM:CEBK), parent company of Central Co-Operative Bank (the "Bank"), announced today that the U.S. government's actions with respect to the Federal Home Loan Mortgage Corporation ("Freddie Mac") and Federal National Mortgage Association ("Fannie Mae") will adversely impact the value of the Company's perpetual preferred stock investments in Fannie Mae and Freddie Mac.
On September 7, 2008, the U.S. Treasury, the Federal Reserve, and the Federal Housing Finance Agency ("FHFA") announced that the FHFA was putting Fannie Mae and Freddie Mac under conservatorship and giving management control to their regulator, the FHFA. Key provisions of the U.S. Government's plan announced to date are as follows:
- Dividends on Fannie Mae and Freddie Mac common and preferred stock were eliminated;
- Fannie Mae and Freddie Mac will be required to reduce their mortgage portfolios over time;
- The U.S. Government agreed to provide equity capital to cover mortgage defaults in return for $1.0 billion of senior preferred stock in Fannie Mae and Freddie Mac and warrants for the purchase of 79.9% of the common stock of Fannie Mae and Freddie Mac; and
- The U.S. Government also announced that the U.S. Treasury would provide secured loans to Fannie Mae and Freddie Mac as needed until the end of 2009 and that the U.S. Treasury plans to purchase mortgage backed securities from Fannie Mae and Freddie Mac in the open market.
At June 30, 2008, the Company had five securities totaling $10.1 million of perpetual preferred stock of Fannie Mae and Freddie Mac which had an unrealized loss of $799,000. The impact of the above actions and concerns in the marketplace about the future value of the perpetual preferred stock of Fannie Mae and Freddie Mac have caused the values of these investments to decrease materially and it is unclear when or if the value of the investments will improve in the future. Given the above developments, on September 11, 2008, the Company concluded that it will record a non-cash other than temporary impairment on these investments for the quarter ending September 30, 2008, the amount of which is expected to equal the difference between the net book value of the securities at September 30, 2008 and the market value of the securities at September 30, 2008. As of the closing price on September 11, 2008, the market value of these securities was approximately $890,600. If the investments were valued at zero and if the Company was not able to record a tax benefit for the loss, the resulting capital ratios would render the Bank adequately capitalized because the Bank's total risk-based capital ratio would fall below 10%. The impact on the Company's and Bank's capital ratios would be as follows:
[Unaudited]
At
June 30, 2008Actual Pro Forma RegulatoryThresholdfor Well Capitalized RegulatoryThresholdfor Adequately Capitalized Central Bancorp: Tier 1 Leverage 8.36% 6.66% 5.0% 4.0% Tier 1 Risk-Based Ratio 11.38% 9.28% 6.0% 4.0% Total Risk-Based Ratio 12.30% 10.22% 10.0% 8.0% Central Co-operative Bank: Tier 1 Leverage 7.01% 5.30% 5.0% 4.0% Tier 1 Risk-Based Ratio 9.55% 7.40% 6.0% 4.0% Total Risk-Based Ratio 10.47% 8.34% 10.0% 8.0%
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 nine full-service banking offices, a limited service high school branch in suburban Boston and a standalone 24-hour automated teller machine in Somerville.
This news release may contain forward-looking statements about Central Bancorp, Inc., which the Company intends to be covered under the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of the Company. These statements often include the words "may," "could," "would," "should," "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "potentially," "probably," "projects," "outlook" or similar expressions. You are cautioned that forward-looking statements involve uncertainties, and important factors could cause actual results to differ materially from those anticipated, including changes in general business and economic conditions, changes in interest rates, legal and regulatory developments, increased competition from both banks and non-banks, changes in customer behavior and preferences, and effects of critical accounting policies and judgments. For discussion of these and other risks that may cause actual results to differ from expectations, refer to our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q on file with the SEC, including the sections entitled "Risk Factors." These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events.
William P. Morrissey
Executive Vice President/
Chief Operating Officer
(617) 628-4000CENTRAL BANCORP, INC. HOLDS 2008 ANNUAL STOCKHOLDERS MEETING
SOMERVILLE, MASSACHUSETTS, July 24, 2008 - Central Bancorp, Inc. (NASDAQ Global MarketSM:CEBK) announced that its 2008 Annual Stockholders Meeting was held today. At the meeting, John J. Morrissey, Paul E. Bulman and James F. Linnehan were each elected as directors, each to serve for a three-year term.
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 nine full-service banking offices, a limited service high school branch in suburban Boston and a stand alone 24-hour automated teller machine in Somerville.
Paul S. Feeley
Senior Vice President, Treasurer &
Chief Financial Officer
(617) 628-4000CENTRAL BANCORP REPORTS IMPROVED EARNINGS FOR THE QUARTER ENDED JUNE 30, 2008
SOMERVILLE, MASSACHUSETTS, July 22, 2008 - Central Bancorp, Inc. (NASDAQ Global MarketSM:CEBK) (the "Company") today reported that its net income for the quarter ended June 30, 2008 increased to $401,000, or $0.29 per diluted share, from net income of $225,000, or $0.16 per diluted share, for the comparable prior year quarter.
Contributing to the earnings improvement was a $585,000 increase in net interest and dividend income, which was partially offset by a $200,000 increase in the provision for loan losses relating to one property, a $97,000 decrease in non-interest income due primarily to the $121,000 write-down of one equity security determined to be other than temporarily impaired, and by a $92,000 increase in operating expenses.
The net interest rate spread and the net interest margin increased from 1.99% and 2.45%, respectively, for the quarter ended June 30, 2007, to 2.51% and 2.88%, respectively, for the 2008 comparable period. These increases were primarily the result of a decrease in the cost of funds, which declined by 66 basis points, mostly due to decreases in the average rates paid on deposits, as a result of aggressive liability management, and Federal Home Loan Bank ("FHLB") advances. During the quarter ended June 30, 2008, interest rates were reduced on many deposit products, and therefore, many certificates of deposit that matured during the quarter were renewed at lower rates. Additionally, lower-costing core deposits increased by $6.3 million during the quarter ended June 30, 2008 as compared to the quarter ended June 30, 2007. The yield on interest-earning assets declined by 14 basis points, from 5.90% during the quarter ended June 30, 2007 to 5.76% during the same period in 2008, primarily due to a decrease in the average yield on mortgage loans, partially offset by an increase in the average yield on investment securities. The yield on mortgage loans declined primarily due to foregone interest income of $160,000 related to non-accrual loans during the quarter ended June 30, 2008 compared to $66,000 in the corresponding 2007 quarter. Compared to the prior year, the average yield on investment securities for the quarter ended June 30, 2008 increased due to the purchase of higher-yielding preferred stocks during fiscal 2008.
During the three months ended June 30, 2008, operating expenses totaled $3.6 million compared to $3.5 million during the three months ended June 30, 2007. This increase is primarily attributable to increases in salaries and benefits and marketing expenses, partially offset by decreases in data processing expenses and professional services. Salaries and benefits increased by $119,000 during the quarter ended June 30, 2008 compared to the same period of 2007, primarily due to open positions being filled and salary increases granted for the first time since April, 2006. Marketing expenses increased by $26,000 during the quarter ended June 30, 2008 compared to the same period of 2007, as the Bank strategically decided to increase marketing expenses on a limited basis. Data processing expenses decreased by $22,000 during the quarter ended June 30, 2008 compared to the same period of 2007, as the Bank incurred fewer costs for items such as license fees and due to a contract renegotiated at a lower cost. Professional expenses decreased by $24,000 during the quarter ended June 30, 2008 compared to the same period of 2007, primarily due to the reduction of contract labor services after certain open positions were filled.
Total assets were $564.3 million at June 30, 2008, compared with $571.2 million at March 31, 2008. During the quarter ended June 30, 2008, short-term investments decreased by $5.8 million, total investments decreased by $3.0 million, and deposits increased by $852,000. The proceeds from the short-term investments, investment securities, and the increase in deposits were used to fund loan growth of $1.2 million and FHLB maturities of $7.0 million. Deposits increased to $361.9 million at June 30, 2008 from $361.1 million at March 31, 2008, while FHLB advances decreased to $149.7 million at June 30, 2008 from $156.8 million at March 31, 2008. Total loans, excluding loans held for sale, increased by $1.2 million from March 31, 2008, primarily due to increases in residential loans of $3.0 million, commercial real estate loans of $7.9 million, and home equity loans of $254,000, partially offset by decreases in construction loans of $7.0 million, and commercial and industrial loans of $3.0 million.
Senior management continued to give high priority to monitoring and managing the Company's asset quality. At June 30, 2008, non-performing loans totaled $10.1 million, or 1.79% of total assets and 2.12% of total loans as of June 30, 2008 compared to $9.6 million at March 31, 2008. The eight loans constituting this category are all secured by real estate collateral located almost exclusively in the Greater Boston area. Seven of these loans have an active plan for resolution in place from either the sale of the real estate directly by the borrower or through foreclosure. The other non-performing loan is expected to enter into a bankruptcy court approved resolution program with the ongoing net cash flow generated from apartment rents from the property collateral being paid to the Bank. While bankruptcy filings have extended the time to resolve some non-performing assets, management continues to work with borrowers and bankruptcy trustees to resolve these situations as soon as possible.
The Company provides for loan losses in order to maintain the allowance for loan losses at a level that management believes is adequate to absorb probable losses based on an evaluation of known and inherent risks in the portfolio. In determining the appropriate level of the allowance for loan losses, the Company considers past and anticipated loss experience, evaluations of underlying collateral, prevailing economic conditions, the nature and volume of the loan portfolio and the levels of non-performing and other classified loans. Management evaluates the level of the loan loss reserve on a regular basis. During the first quarter of fiscal 2009, the Company recorded a provision of $200,000, compared to a provision of $0 during the same quarter of fiscal 2008. Management believes there are adequate reserves and collateral securing these loans to cover losses that may result from non-performing loans.
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 nine full-service banking offices, a limited service high school branch in suburban Boston and a standalone 24-hour automated teller machine in Somerville.
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.
Central Bancorp, Inc. Consolidated Operating Data (In Thousands, Except Per-Share Data) Quarter Ended June 30, 2008 2007 (Unaudited) Net interest and dividend income $ 3,925 $ 3,340 Provision for loan losses 200 0 Net gain (loss) from sales or write-downs of investment securities (29) 116 Gain on sale of loans 13 52 Other non-interest income 444 357 Non-interest expenses 3,608 3,516 Income before taxes 545 349 Provision for income taxes 144 124 Net income $ 401 $ 225 Earnings per share: Basic $ 0.29 $ 0.16 Diluted $ 0.29 $ 0.16 Weighted average number of shares outstanding: Basic 1,386 1,392 Diluted 1,386 1,401 Outstanding shares, end of period 1,640 1,640
Consolidated Balance Sheet Data
(In Thousands, Except Per Share Data)June 30, 2008 March 31, 2008 (Unaudited) Total assets $564,279 $571,245 Short term investments 6,125 11,888 Total investments 60,016 63,054 Total loans(1) 476,123 475,137 Allowance for loan losses 3,809 3,613 Deposits 361,941 361,089 Borrowings 149,665 156,832 Subordinated debenture 11,341 11,341 Stockholders' equity 38,130 38,816 Book value per share 23.25 23.67 Book equity to assets 6.76 % 6.79 % Non-performing assets to total assets 1.79 1.68 (1) Includes loans held for sale of $0 and $195 at June 30, 2008 and March 31, 2008, respectively.
Selected Financial Ratios (In Thousands, Except Per Share Data) Quarter Ended June 30, 2008 2007 (Unaudited) Return on average assets 0.28 % 0.16 % Return on average equity 4.14 2.39 Interest rate spread 2.51 1.99 Net interest margin 2.88 2.45
Paul S. Feeley
Senior Vice President, Treasurer &
Chief Financial Officer
(617) 628-4000CENTRAL BANCORP, INC. DECLARES ITS REGULAR QUARTERLY CASH DIVIDEND
SOMERVILLE, MASSACHUSETTS, July 18, 2008 - Central Bancorp, Inc. (NASDAQ Global MarketSM:CEBK) announced that its Board of Directors declared its regular quarterly cash dividend of eighteen ($0.18) cents per share, payable on August 15, 2008, to stockholders of record as of August 1, 2008.
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 nine full-service banking offices, a limited service high school branch in suburban Boston and a standalone 24-hour automated teller machine in Somerville.
Paul S. Feeley
Senior Vice President, Treasurer &
Chief Financial Officer
(617) 628-4000CENTRAL BANCORP REPORTS IMPROVED EARNINGS FOR THE FISCAL YEAR AND QUARTER ENDED MARCH 31, 2008
SOMERVILLE, MASSACHUSETTS, May 15, 2008 - Central Bancorp, Inc. (NASDAQ Global Market SM:CEBK) (the "Company") today reported that its net income for the fiscal year ended March 31, 2008 increased to $1.4 million, or $1.07 per diluted share, from net income of $1.0 million, or $0.70 per diluted share, for the year ended March 31, 2007. Earnings for the quarter ended March 31, 2008 improved to $101,000, or $0.07 per diluted share, from $42,000, or $0.03 per diluted share, for the corresponding quarter in 2007.
A major contributor to the earnings improvement in fiscal 2008 was a decrease of $997,000 in non-interest expenses, primarily due to decreases in salaries and benefits of $314,000 and marketing expenses of $423,000 that resulted from management's efforts to reduce operating expenses. Salaries and benefits decreased due to staff cuts and positions not being filled and marketing expenses decreased due to a decision to discontinue most advertising and marketing activities. Additionally, non-interest income increased by $238,000 due to increases in gains on the sale of securities and loans, brokerage income, and other miscellaneous income. The foregoing fiscal 2008 developments included an $853,000 decrease in net interest and dividend income, reflecting strong competition for deposits and loans and the effect of non-accrual loans experienced during the March 31, 2008 fiscal year.
Net interest rate spread and net interest margin declined from 2.21% and 2.68%, respectively, for the March 31, 2007 fiscal year to 2.06% and 2.51%, respectively, for the 2008 fiscal year. The decrease in spread and margin were the result of an increase in cost of funds, which increased by 9 basis points due to an increase in the cost of deposits, partially offset by lower costs of FHLB borrowings and other borrowings. The cost of deposits increased primarily due to an increase in the rates paid on money market deposit accounts. The Company continued to utilize more cost-effective FHLB advances during the year rather than promote certificates of deposit at premium rates. Although the Federal Reserve cut short-term interest rates substantially during the year, deposit rates did not decline in step with those cuts until late in the fiscal year. The yield on interest-earning assets declined by 6 basis points due to a decrease in the average yield on loans, partially offset by an increase in the average yield on investments. The average yield on loans declined primarily due to foregone interest income of $522,000 related to non-accrual loans during fiscal 2008 as compared to $10,000 during fiscal 2007. The average yield on investment securities increased from 4.85% during fiscal 2007 to 5.12% during fiscal 2008, primarily due to the purchase of higher-yielding tax advantaged preferred stocks, which totaled $11.4 million at March 31, 2008 compared to none at March 31, 2007.
The increase in net income for the March 31, 2008 quarter primarily resulted from a $176,000 increase in net interest and dividend income and a $293,000 decrease in payroll, marketing and other operating expenses. Partially offsetting these favorable items were a $224,000 decrease in net gains on securities transactions resulting primarily from the March 2008 write-downs of two equity securities totaling $185,000, and a $230,000 provision for loan losses during the March 31, 2008 quarter, compared to a $30,000 provision during the prior year's quarter. The increased provision was primarily the result of management's re-evaluation of the fair market value of one non-accrual loan.
The net interest rate spread and the net interest margin increased from 1.97% and 2.44%, respectively, for the quarter ended March 31, 2007, to 2.20% and 2.60%, respectively, for the 2008 comparable period. These increases were primarily the result of a decrease in the cost of funds, which decreased by 26 basis points primarily due to decreases in the average rates paid on deposits and FHLB advances. During the quarter ended March 31, 2008, some high-cost certificates of deposit were replaced with more cost-effective FHLB borrowings and other deposits. The yield on interest-earning assets declined by 3 basis points from 5.93% during the quarter ended March, 2007 to 5.90% during the same period of 2008, primarily due to a decrease in the average yield on mortgage loans, partially offset by an increase in the average yield on investment securities. The yield on mortgage loans declined primarily due to foregone interest income of $153,000 related to non-accrual loans during the quarter ended March 2008 as compared to $10,000 in the 2007 quarter. As compared to the prior quarter, the average yield on investment securities for the quarter ended March 31, 2008 increased due to the purchase of higher-yielding preferred stocks during fiscal 2008.
The income tax benefit for the three months ended March 31, 2008 totaled $18,000 as compared to a $28,000 benefit for the same 2007 quarter. The tax provision for the three months ended March 31, 2008 reflected higher pre-tax income for the quarter ended March 31, 2008 compared to March 31, 2007, and the impact of tax-favored investments purchased late in the year.
Total assets were $571.2 million at March 31, 2008, up from $566.1 million at March 31, 2007. During the fiscal year ended March 31, 2008, short-term investments decreased by $2.6 million, and investment securities available for sale decreased by $12.8 million as a result of the redeployment of the proceeds from the sales or maturities of these assets to offset the impact of a deposit decline of $27.5 million and to fund loan growth, which totaled $14.4 million during the year. Deposits decreased from $388.6 million at March 31, 2007 to $361.1 million at March 31, 2008, primarily because of continued strong competition for deposits in our market area, particularly with respect to certificates of deposit. The decrease in certificates of deposit is primarily the result of the Bank's strategy to discontinue offering premium rates on certificates of deposit, resulting in a savings in interest and marketing expense, and to instead utilize more cost-effective FHLB advances as a funding source. FHLB advances increased to $156.7 million at March 31, 2008 from $125.0 million at March 31, 2007. Total loans, excluding loans held for sale, increased by $14.4 million, primarily due to increases in residential loans of $3.5 million, commercial real estate loans of $9.0 million, and commercial and industrial loans of $6.6 million, partially offset by decreases in construction loans of $4.1 million and home equity loans of $342,000.
Senior management continued to give high priority to monitoring the Company's asset quality during the three and twelve months ended March 31, 2008, at which time non performing loans totaled $9.6 million compared to $330,000 at the same date in 2007. While the Company has seen increases in its non-performing loans such increases are primarily related to five borrowers. The non-accrual loans represent residential construction loans to one borrower to construct two homes, one loan secured by a multifamily property, two commercial real estate loans and one residential loan. While bankruptcy filings have extended the time to resolve some non-performing assets, management continues to work with borrowers and bankruptcy trustees to resolve these situations as soon as possible. The Company provides for loan losses in order to maintain the allowance for loan losses at a level that management believes is adequate to absorb probable losses based on an evaluation of known and inherent risks in the portfolio. In determining the appropriate level of the allowance for loan losses, the Company considers past and anticipated loss experience, evaluations of underlying collateral, prevailing economic conditions, the nature and volume of the loan portfolio and the levels of non-performing and other classified loans. Management evaluates the level of the loan loss reserve on a regular basis. During the second quarter of fiscal 2008, the Company recorded a negative provision of $300,000, which was partially offset by a provision of $230,000 in the March 2008 quarter. Management believes there are adequate reserves and collateral securing these loans to cover losses that may result from non-performing loans.
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 nine full-service banking offices, a limited service high school branch in suburban Boston and a standalone 24-hour automated teller machine in Somerville.
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.
Central Bancorp, Inc. Consolidated Operating Data (In Thousands, Except Per-Share Data) Quarter Ended March 31, Year Ended March 31, 2008 2007 2008 2007 (Unaudited) (Unaudited) Net interest and dividend income $ 3,546 $ 3,370 $ 13,596 $ 14,449 Provision for loan losses 230 30 (70) 80 Net gain (loss) from sales or write-downs of investment securities (2) 222 645 581 Gain on sales of loans 40 40 158 99 Other non-interest income 349 325 1,429 1,314 Non-interest expenses 3,620 3,913 13,859 14,856 Income before taxes 83 14 2,039 1,507 Provision (benefit) for income taxes (18) (28) 592 487 Net income $101 $ 42 $1,447 $1,020 Earnings per share: Basic $0.07 $0.03 $1.07 $0.72 Diluted $0.07 $0.03 $1.07 $0.70 Weighted average number of shares outstanding: Basic 1,357 1,391 1,350 1,419 Diluted 1,359 1,404 1,355 1,452 Outstanding shares, end of period 1,640 1,640 1,640 1,640
Central Bancorp, Inc. Consolidated Balance Sheet Data (In Thousands, Except Per Share Data) March 31, 2008 March 31, 2007 (Unaudited) (Unaudited) Total assets $571,245 $566,140 Short-term investments 11,888 14,470 Total investments 63,054 74,705 Total loans(1) 475,137 461,117 Allowance for loan losses 3,613 3,881 Deposits 361,089 388,573 Borrowings 156,832 125,712 Subordinated debenture 11,341 11,341 Stockholders' equity 38,816 37,702 Book value per share 23.67 22.99 Book equity to assets 6.79 % 6.66 % Non-performing assets to total assets 1.68 0.06 (1) Includes loans held for sale of $195 and $575 at March 31, 2008 and March 31, 2007, respectively.
Selected Financial Ratios (In Thousands, Except Per Share Data) Quarter Ended March 31, Year Ended March 31, 2008 2007 2008 2007 (Unaudited) (Unaudited) Return on average assets 0.07% 0.03% 0.26% 0.18% Return on average equity 1.03 0.43 3.76 2.59 Interest rate spread 2.20 1.97 2.06 2.21 Net interest margin 2.60 2.44 2.51 2.68
Bryan Greenbaum
Senior Vice President, Retail Banking
(617) 628-4000CENTRAL BANK AWARDS SCHOLARSHIP TO WOBURN HIGH SCHOOL BANKING STUDENT
Miguel Santiago (center) accepts Central Bank's Student Banker Scholarship at Woburn Memorial High School.
Also pictured are School Branch Supervisor, Carol McCarthy and Banking teacher, Stephen Sullivan.
WOBURN, MASSACHUSETTS, May 8, 2008 - John D. Doherty, President and Chief Executive Officer of Central Bank announced today that Miguel Santiago has been awarded Central Bank's Student Banker Scholarship for the 2007-2008 school year.
Santiago, a senior in the Banking II course at Woburn High School, plans on entering Bentley College in the fall with a major in economics, finance or accounting. He was selected for this honor based on his academic performance in the banking course and participation in Central Bank's educational branch located in the school.
Said Doherty, "Central Bank's branch at Woburn Memorial High School allows us to work with outstanding young people like Miguel. The enthusiasm and dedication of each of these young men and women is commendable. Miguel's success exemplifies these qualities."
In addition to working in the high school branch as part of his banking class, Miguel works at the bank's Main Street office after school. He was recently named Youth of the Year by the Woburn Boy's and Girl's Club.
Central Bank collaborated with Woburn High School to develop a student-banking program to help students learn about financial services and develop personal finance and job skills. The student-banking program includes course work taught by Stephen Sullivan of the high school faculty and hands-on participation of students who staff teller windows in the fully-functional on-site banking facility.
Six students in the high school's banking course were hired as tellers to operate the branch under the direction of Central Bank's High School Branch Supervisor, Carol McCarthy. The branch, which has been operating at the High School since 2002, is a full-service facility that is open on school days to meet the banking needs of students, faculty and staff.
Established in 1915, Central Bank, the bank subsidiary of Central Bancorp, Inc. (NASDAQ: CEBK), is a Massachusetts chartered co-operative bank operating nine full service branches and a limited access educational branch in Somerville, Arlington, Burlington, Chestnut Hill, Malden, Medford, Melrose and Woburn.
Central Bank is a member of FDIC, Member of SIF and is an Equal Housing Lender.
Paul S. Feeley
Senior Vice President, Treasurer &
Chief Financial Officer
(617) 628-4000CENTRAL BANCORP, INC. DECLARES ITS REGULAR QUARTERLY CASH DIVIDEND
SOMERVILLE, MASSACHUSETTS, April 17, 2008 - Central Bancorp, Inc. (NASDAQ Global Market SM:CEBK) announced today that its Board of Directors declared its regular quarterly cash dividend of eighteen ($0.18) cents per share, payable on May 16, 2008, to stockholders of record as of May 2, 2008.
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 nine full-service banking offices, a limited service high school branch in suburban Boston and a standalone 24-hour automated teller machine in Somerville.
Paul S. Feeley
Senior Vice President, Treasurer &
Chief Financial Officer
(617) 628-4000CENTRAL BANCORP REPORTS EARNINGS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2007
SOMERVILLE, MASSACHUSETTS, February 6, 2008 - Central Bancorp, Inc. (NASDAQ Global Market SM:CEBK) (the "Company") today reported that its net income for the quarter ended December 31, 2007 increased to $656,000, or $0.48 per diluted share, from net income of $514,000, or $0.35 per diluted share, for the comparable prior year quarter. The Company's earnings for the nine months ended December 31, 2007 improved to $1.3 million, or $0.99 per diluted share, from $978,000, or $.67 per diluted share, for the corresponding period in 2006.
The increase in net income for the December 2007 quarter primarily resulted from a $228,000 increase in net gains from the sales of investment securities, which was offset partially by a $163,000 decline in net interest and dividend income. The lower net interest and dividend income continued to reflect the strong local competition for deposits and loans in the Company's market area and the effect of non-accrual loans.
The net interest rate spread and the net interest margin declined from 2.16% and 2.66%, respectively, for the quarter ended December 31, 2006 to 2.11% and 2.58%, respectively, for the 2007 comparable period. The cost of funds decreased by 8 basis points as some high-cost certificates of deposit were replaced with more cost-effective Federal Home Loan Bank (FHLB) borrowings and lower-costing deposits. The average balance of certificates of deposit totaled $181.1 million during the quarter ended December 31, 2007, compared to $222.1 million for the same period in 2006, a decline of $41.0 million. The average balance of FHLB borrowings totaled $138.7 million during the quarter ended December 31, 2007, compared to $123.8 million for the same period in 2006, an increase of $14.9 million. Additionally, the average balance of lower-costing non-maturity deposits increased by $17.3 million to $139.6 million for the quarter ended December 31, 2007, as compared to an average balance of $122.3 million during the same period of 2006. The yield on interest-earning assets declined by 12 basis points primarily due to foregone interest income on non-accrual loans, which totaled $131,000.
There were no provisions for loan losses for the quarters ended December 31, 2007 and 2006. The Company provides for loan losses in order to maintain the allowance for loan losses at a level that management estimates is adequate to absorb probable losses based on an evaluation of known and inherent risks in the portfolio. In determining the appropriate level of the allowance for loan losses, the Company considers past and anticipated loss experience, evaluations of underlying collateral, prevailing economic conditions, the nature and volume of the loan portfolio and the levels of non-performing and other classified loans. Management evaluates the level of the loan loss reserve on a regular basis and considered the allowance for loan losses to be adequate during both periods.
Pre-tax income of $903,000 for the quarter ended December 31, 2007 was $118,000 higher than pre-tax income of $785,000 for the same period in 2006. However, the effective tax rate was reduced because of tax-advantaged transactions during the quarter which resulted in a $24,000 reduction in the provision for income taxes. This expense amounted to $247,000 for the quarter ended December 31, 2007 compared to $271,000 for the same period of 2006.
The improved net income for the nine months ended December 31, 2007 primarily resulted from a $705,000 decrease in non-interest expenses, mostly attributable to a $624,000 decrease in employee costs and marketing; a $350,000 decrease in the provision for loan losses, mainly attributable to the $300,000 negative provision recorded in the September 2007 quarter that reflected our loan-loss experience and trends in the various categories of the Company's loans; a $288,000 increase in net gains on sales of investment securities; and a $59,000 increase in gains on sales of loans. These improvements were partially offset by a $1.0 million decline in net interest and dividend income primarily as a result of the increased cost of funds and the impact of non-accrual loans.
The net interest rate spread and the net interest margin declined from 2.29% and 2.74%, respectively, for the nine months ended December 31, 2006 to 2.01% and 2.48%, respectively, for the 2007 comparable period. The cost of funds increased by 21 basis points primarily due to increases in the average rates paid on money market deposit accounts and certificates of deposit, which were 3.79% and 4.40%, respectively, for the nine months ended December 31, 2007, compared to 2.01% and 4.29%, respectively, for the same period in 2006. The yield on interest-earning assets declined by 7 basis points primarily due to foregone interest income on non-accrual loans, which totaled $369,000 for the nine months ended December 31, 2007.
The provision for income taxes for the nine months ended December 31, 2007 rose to $610,000, compared to the $515,000 provision for the nine months ended December 31, 2006, reflecting the higher pre-tax income reported in the 2007 period, partially offset by the lower effective tax rate that resulted from tax-advantaged transactions that occurred during the quarter ended December 31, 2007.
Total assets were $554.7 million at December 31, 2007 and $566.1 million at March 31, 2007. During the nine months ended December 31, 2007, short-term investments decreased by $12.6 million and investment securities decreased by $10.8 million as a result of the redeployment of these funds to offset the impact of a deposit decline of $33.7 million during this period. Deposits decreased from $388.6 million at March 31, 2007 to $354.9 million at December 31, 2007. Deposits declined primarily because of continuing strong competition for deposits in our market area, particularly with respect to certificates of deposit, which declined $38.8 million from $217.9 million at March 31, 2007 to $179.1 million at December 31, 2007. The decrease in certificates of deposit is primarily the result of the Bank's strategy to discontinue advertising premium rates on certificates of deposit, realizing a savings in marketing expense, and to instead utilize more cost-effective FHLB advances as a funding source. FHLB advances increased to $145.8 million at December 31, 2007 from $125.0 million at March 31, 2007. Total loans increased by $6.7 million, including increases in commercial real estate loans of $9.4 million and commercial and industrial loans of $7.2 million, which were partially offset by decreases in construction loans of $5.9 million and residential loans of $3.7 million.
Senior management continued to give high priority to monitoring the Company's asset quality during the three and nine months ended December 31, 2007. At December 31, 2007, non-performing loans totaled $9.3 million as compared to $300,000 at the same date in 2006. While bankruptcy filings have extended the time to resolve some non-performing assets, management continues to work with borrowers and bankruptcy trustees to resolve these situations as soon as possible. The level of non-performing assets, which represented 1.67% of total assets at December 31, 2007, is virtually unchanged from September 30, 2007. Management believes that there are adequate reserves and collateral securing these loans to cover losses that may result from non-performing loans.
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 nine full-service banking offices, a limited service high school branch in suburban Boston and a standalone 24-hour automated teller machine in Somerville.
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.
Central Bancorp, Inc. Consolidated Operating Data (In Thousands, Except Per-Share Data) Quarter Ended December 31, Nine Months Ended December 31, 2007 2006 2007 2006 (Unaudited) (Unaudited) Net interest and dividend income $ 3,457 $ 3,620 $ 10,050 $ 11,080 Provision for loan losses 0 0 (300) 50 Net gain from sales of investment securities 359 131 647 359 Gains on sales of loans 41 0 118 59 Other non-interest income 386 344 1,080 989 Non-interest expenses 3,340 3,310 10,239 10,944 Income before taxes 903 785 1,956 1,493 Provision for income taxes 247 271 610 515 Net income $ 656 $ 514 $1,346 $ 978 Earnings per share: Basic $0.48 $0.36 $1.00 $0.68 Diluted $0.48 $0.35 $0.99 $0.67 Weighted average number of shares outstanding: Basic 1,354 1,448 1,347 1,445 Diluted 1,358 1,463 1,354 1,459 Outstanding shares, end of period 1,640 1,640 1,640 1,640
Consolidated Balance Sheet Data (In Thousands, Except Per Share Data) December 31, 2007 March 31, 2007 (Unaudited) Total assets $554,671 $566,140 Short-term investments 1,893 14,470 Total investments 63,882 74,705 Total loans(1) 467,820 461,117 Allowance for loan losses 3,379 3,881 Deposits 354,867 388,573 Borrowings 146,243 125,712 Subordinated Debenture 11,341 11,341 Stockholders' equity 39,177 37,702 Book value per share $ 23.89 $ 22.99 Equity to assets 7.06 % 6.66 % Non-performing assets to total assets 1.67 0.06 (1) Includes loans held for sale of $0 and $575 at December 31, 2007 and March 31, 2007, respectively.
Selected Financial Ratios (In Thousands, Except Per Share Data) Quarter Ended December 31, Nine Months Ended December 31, 2007 2006 2007 2006 (Unaudited) (Unaudited) Return on average assets 0.48% 0.37% 0.32% 0.24% Return on average equity 6.76 5.09 4.67 3.26 Interest rate spread 2.11 2.16 2.01 2.29 Net interest margin 2.58 2.66 2.48 2.74
Paul S. Feeley
Senior Vice President, Treasurer &
Chief Financial Officer
(617) 628-4000CENTRAL BANCORP, INC. DECLARES ITS REGULAR QUARTERLY CASH DIVIDEND
SOMERVILLE, MASSACHUSETTS, January 17, 2008 - Central Bancorp, Inc. (NASDAQ Global Market SM:CEBK) announced today that its Board of Directors declared its regular quarterly cash dividend of eighteen ($0.18) cents per share, payable on February 15, 2008, to stockholders of record as of February 1, 2008.
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 nine full-service banking offices, a limited service high school branch in suburban Boston and a standalone 24-hour automated teller machine in Somerville.
Central Bank is a SUMSM Program member. Click the SUM logo for participating SUM ATM locations that are available to cardholders of SUM members surcharge-free.
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