-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HEEq8fp2uzjc0eNIMDyiATFs4aqCPgSgvRxn/iF9kJ6rCo8X6g54xDMybjuSq81A BkvmvGcysNK+hHBMt1aAlw== 0000909654-08-001624.txt : 20080912 0000909654-08-001624.hdr.sgml : 20080912 20080912160027 ACCESSION NUMBER: 0000909654-08-001624 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20080911 ITEM INFORMATION: Material Impairments ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080912 DATE AS OF CHANGE: 20080912 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL BANCORP INC /MA/ CENTRAL INDEX KEY: 0001076394 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 043447594 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-25251 FILM NUMBER: 081069527 BUSINESS ADDRESS: STREET 1: 399 HIGHLAND AVENUE CITY: SOMERVILLE STATE: MA ZIP: 02144 BUSINESS PHONE: 6176284000 MAIL ADDRESS: STREET 1: 399 HIGHLAND AVENUE CITY: SOMERVILLE STATE: MA ZIP: 02144 8-K 1 central8ksept11-08.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): September 11, 2008 CENTRAL BANCORP, INC. --------------------- (Exact Name Of Registrant As Specified In Charter) MASSACHUSETTS 0-25251 04-3447594 - -------------------------------- ------------------- ------------- (State Or Other Jurisdiction (Commission (IRS Employer Of Incorporation) File Number) Identification No.) 399 HIGHLAND AVENUE, SOMERVILLE, MASSACHUSETTS 02144 - -------------------------------------------------------------------------------- (Address Of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (617) 628-4000 -------------- NOT APPLICABLE ------------------------------------------------------------- (Former Name Or Former Address, If Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.06 MATERIAL IMPAIRMENTS. -------------------- Central Bancorp, Inc. (NASDAQ Global MarketSM: CEBK) (the "Company"), 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: o Dividends on Fannie Mae and Freddie Mac common and preferred stock were eliminated; o Fannie Mae and Freddie Mac will be required to reduce their mortgage portfolios over time; o 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 o 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, 2008 ---------------------------------------------------------------------------------- REGULATORY REGULATORY THRESHOLD THRESHOLD FOR WELL FOR ADEQUATELY ACTUAL PRO FORMA CAPITALIZED 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%
A copy of the Company's related press release, dated September 12, 2008, is included as Exhibit 99.1 hereto and is furnished herewith. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. --------------------------------- (d) Exhibits Number Description ------ ----------- 99.1 Press Release dated September 12, 2008 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CENTRAL BANCORP, INC. Date: September 12, 2008 By: /s/ John D. Doherty ----------------------------------------------- John D. Doherty Chairman, President and Chief Executive Officer EX-99.1 2 central8ksept11-08ex99.txt NEWS RELEASE FOR IMMEDIATE RELEASE Contact: Paul S. Feeley Senior Vice President, Treasurer and Chief Financial Officer (617) 628-4000 CENTRAL BANCORP, INC. ANNOUNCES IMPAIRMENT OF FANNIE MAE AND FREDDIE MAC PREFERRED STOCK Somerville, Massachusetts -- September 12, 2008 -- Central Bancorp, Inc. (NASDAQ Global MarketSM: CEBK) (the "Company"), 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: o Dividends on Fannie Mae and Freddie Mac common and preferred stock were eliminated; o Fannie Mae and Freddie Mac will be required to reduce their mortgage portfolios over time; o 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 o 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, 2008 ---------------------------------------------------------------------------------- REGULATORY REGULATORY THRESHOLD THRESHOLD FOR WELL FOR ADEQUATELY ACTUAL PRO FORMA CAPITALIZED 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. -----END PRIVACY-ENHANCED MESSAGE-----