Central Bancorp Receives $10.0 Million of Capital From Small Business Lending Fund, Redeems Preferred Stock Issued Under the U.S. Treasury's Capital Purchase Program

Central Bancorp, Inc. CEBK today announced that the U.S. Department of Treasury has invested $10.0 million in the Company's preferred stock under the Small Business Lending Fund (the "SBLF"). The SBLF is a voluntary program intended to encourage small business lending by providing capital to qualified community banks at favorable rates. The initial interest rate on the SBLF funds will be 5% and may be decreased to as low as 1% if the Company experiences specific growth rates in its small business lending portfolio. With the proceeds from this investment, the Company has redeemed all $10.0 million of the preferred stock that it sold to the Treasury under the TARP Capital Purchase Program on December 5, 2008. In conjunction with the Company's participation in the TARP Capital Purchase Program, the Treasury also received a warrant to purchase up to 234,742 shares of the Company's common stock at an exercise price of $6.39 per share. The Company is currently evaluating whether to seek agreement with the Treasury to repurchase the warrant at its fair market value. However, there can be no assurance that the Company will reach an agreement with the Treasury as to a fair market value of the warrant, or that the Company will repurchase the warrant.