BCSB Bancorp, Inc. Reports Results for the Year Ended September 30, 2008

BALTIMORE, Oct. 22  /PRNewswire-FirstCall/ -- BCSB Bancorp, Inc. (NASDAQ:BCSB), the holding company for Baltimore County Savings Bank, F.S.B., headquartered in Baltimore, Maryland, reported net income of $894,000 or $0.30 per basic and diluted share for the year ended September 30, 2008, as compared to a net loss of $2.9 million or ($0.95) per basic and diluted share for the year ended September 30, 2007. For the three months ended September 30, 2008, net income was $461,000 or $0.16 per basic and diluted share as compared to a net loss of $307,000 or ($0.11) per basic and diluted share for the three months ended September 30, 2007.

During the three and twelve months ended September 30, 2008, the Company benefited from increases in net interest income and non-interest income as compared to corresponding periods in the prior fiscal year. These improvements to earnings were partially offset by $360,000 in loan loss provisions during the three months ended September 30, 2008 to address the continued decline in economic conditions, particularly in relation to the local real estate market.

The loss for the year ended September 30, 2007 was primarily associated with the balance sheet restructuring completed by the Company in March of 2007. In conjunction with this restructuring, the Company realized pre-tax losses of $7.1 million from the sale of investments and loans. Also during the year ended September 30, 2007, the Bank received $3.4 million in insurance proceeds as a partial recovery of losses incurred resulting from a check- kiting fraud perpetrated against the Bank in June of 2006.

The $307,000 loss for the quarter ended September 30, 2007 was due to $296,000 of expenses related to the check-kiting scheme previously discussed and additional compensation expenses of approximately $150,000 related to an agreement with a member of the executive management team, who retired after 34 years of service. In addition, professional fees of approximately $150,000 were incurred for special, limited scope consulting and legal projects.

Stockholders' equity increased by $15.2 million during the year ended September 30, 2008. This reflects the Company's increased earnings as well as its successful capital raising efforts.  Stockholders' equity was negatively impacted by accumulated other comprehensive loss (net of taxes) which was ($2.5) million at September 30, 2008 compared to ($1.6) million at the end of the previous quarter. Most of this loss relates to the Company's $25.1 million in collateralized mortgage obligation securities portfolio, for which the gross market value declined by $1.1 million in the most recent quarter and $3.7 million in the last six months. This is reflective of turmoil in the mortgage backed securities market and the price drop in the market value of these securities. The Company has the ability and the intent to hold these securities to maturity and, to date, the securities have performed in accordance with their terms. If in the future it is determined that declines in market values with respect to these or any other securities are other than temporary, the Company would be required to recognize losses in its Consolidated Statement of Operations. The Company has no equity holdings in Federal Home Loan Mortgage Corporation or Federal National Mortgage Association stock and, accordingly, has no loss exposure in this area.

President and CEO Joseph J. Bouffard commented that he was very pleased with progress made over the past fiscal year despite unprecedented challenges within the industry. The Company was successful in achieving its three major initiatives for the year, which were to raise capital, have a regulatory supervisory agreement rescinded and become profitable. During the year, the Company converted to a fully publicly traded company. As a result of the conversion, capital ratios were strengthened and debt was reduced at both the Bank and the holding company. Earlier in the year, in recognition of the Company's improvements, the Bank's principal regulator, the Office of Thrift Supervision, rescinded a Supervisory Agreement that had been in effect since 2005. The Company has also enjoyed four consecutive quarters of profitability. On a cautionary note Bouffard noted that loan charge-offs increased during the three months ended September 30, 2008. And although nonperforming loans have declined recently, future additions to the loan loss reserve may be necessary if economic conditions deteriorate further.

Fiscal Year Ended September 30, 2008 Highlights

-- Raised nearly $20 million by completing conversion from Mutual Holding Company structure to a fully publicly owned corporation.

-- Net interest income for the year increased by more than $1.2 million or 8.9% compared to 2007.

-- Paid off more than $16 million in debt, including $6 million in Trust Preferred Securities.

-- Interest rate spread for 2008 improved to 2.60% from 2.04% in 2007, a 27% increase over the prior year.

-- Allowance for loan losses to nonperforming loans increased to 320% in 2008 from 116% in 2007.

-- Equity to assets ratio at September 30, 2008 improved to 8.8% from 5.4% at September 30, 2007.

This press release contains statements that are forward-looking, as that term is defined by the Private Securities Litigation Reform Act of 1995 or the Securities and Exchange Commission in its rules, regulations and releases. The Company intends that such forward-looking statements be subject to the safe harbors created thereby.  All forward-looking statements are based on current expectations regarding important risk factors, including but not limited to real estate values, market conditions, the impact of interest rates on financing, and local and national economic factors.  Accordingly, actual results may differ from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by the Company or any other person that results expressed herein will be achieved.

                            BCSB Bancorp, Inc.
              Consolidated Statements of Financial Condition
                               (Unaudited)

                                                September 30,  September 30,
                                                    2008            2007
                                                   (Dollars in thousands)
  ASSETS
  Cash equivalents and time deposits               $35,083        $76,116
  Investment Securities, available for sale            994          3,970
  Loans Receivable, net                            400,469        416,302
  Mortgage-backed Securities, available for sale    89,956        104,999
  Foreclosed Real Estate                             1,244             94
  Premises and Equipment, net                        9,762         10,454
  Bank Owned Life Insurance                         14,389         13,847
  Other Assets                                      15,185         16,599
  Total Assets                                    $567,082       $642,381

  LIABILITIES
  Deposits                                        $484,791       $558,457
  Borrowings                                        10,000         20,000
  Junior Subordinated Debentures                    17,011         23,197
  Other Liabilities                                  5,525          6,135
  Total Liabilities                                517,327        607,789
  Total Stockholders' Equity                        49,755         34,592
  Total Liabilities & Stockholders' Equity        $567,082       $642,381



                  Consolidated Statements of Operations
                               (Unaudited)

                            Three Months ended       Twelve Months ended
                                September 30,           September 30,
                              2008        2007        2008         2007
                            (Dollars in thousands   (Dollars in thousands
                            except per share data)  except per share data)

  Interest Income            $8,019      $9,252      $34,137      $39,112
  Interest Expense            3,926       5,632       19,329       25,517
  Net Interest Income         4,093       3,620       14,808       13,595
  Provision for Loan Losses     360           0          360          117
  Net Interest Income After
   Provision for Loan
   Losses                     3,733       3,620       14,448       13,478
  Total Non-Interest Income     613         497        2,047       (5,335)
  Total Non-Interest Expenses 3,633       4,645       15,266       12,809
  Income (Loss) Before Tax
   Expense (Benefit)            713        (528)       1,229       (4,666)
  Income Tax Expense
   (Benefit)                    252        (221)         335       (1,745)
  Net Income (Loss)            $461       $(307)        $894      $(2,921)

  Basic and Diluted
   Earnings (Loss) Per Share  $0.16      $(0.11)       $0.30       $(0.95)



                     Summary of Financial Highlights
                               (Unaudited)

                                 Three Months ended   Twelve Months ended
                                    September 30,        September 30,
                                   2008      2007       2008       2007
  Return (Loss) on Average
   Assets (Annualized)             0.32%     (.19%)     0.15%     (0.41%)
  Return (Loss) on Average
   Equity (Annualized)             3.69%    (3.55%)     2.08%     (8.57%)

  Interest Rate Spread             3.02%     2.49%      2.60%      2.04%
  Net Interest Margin              3.08%     2.44%      2.61%      2.04%

  Efficiency Ratio                77.20%   112.80%     90.56%    155.18%
  Ratio of Average Interest
   Earnings Assets/Interest
   Bearing Liabilities           101.84%    98.81%    100.35%     99.83%



                        Allowance for Loan Losses
                               (Unaudited)

                                 Three Months ended    Twelve Months ended
                                    September 30,         September 30,
                                  2008       2007       2008       2007
                               (Dollars in thousands) (Dollars in thousands)

  Allowance at Beginning of
   Period                        $2,675     $2,706     $2,650     $2,679
  Provision for Loan Loss           360         --        360        117
  Recoveries                         50          6        265        218
  Charge-Offs                      (413)       (62)      (603)      (364)
  Allowance at End of Period     $2,672     $2,650     $2,672     $2,650

  Allowance for Loan Losses
   as a Percentage of Gross
   Loans                           0.65%      0.62%      0.65%      0.62%

  Allowance for Loan Losses
   as a Percentage of
   Nonperforming Loans            320.0%     115.7%     320.0%     115.7%


                          Non-Performing Assets
                               (Unaudited)

                              At September 30,  At June 30, At September 30,
                                     2008           2008          2007
                                             (Dollars in thousands)

  Nonperforming Loans:
    Commercial                       $671          $1,649        $2,266
    Real Estate                       162              --            --
    Consumer                            2              13            24
      Total Nonperforming Loans       835           1,662         2,290
  Foreclosed Real Estate            1,230              --            --
  Other NonPerforming Assets           14              20            --
      Total Nonperforming Assets   $2,079          $1,682        $2,290

  Nonperforming Loans as a
   Percentage of Total Net
   Loans                            0.21%           0.41%         0.55%

  Nonperforming Assets as a
   Percentage of Total Assets       0.37%           0.28%         0.37%


DATASOURCE: BCSB Bancorp, Inc.



CONTACT:  Joseph J. Bouffard, President and CEO of BCSB Bancorp, Inc.,

[phone]



Web site:  http://www.baltcosavings.com/ 

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