BCSB Bancorp, Inc. Reports Results for the Year Ended September 30, 2010

BALTIMORE, Oct. 29 /PRNewswire-FirstCall/ -- BCSB Bancorp, Inc. (the "Company") (Nasdaq: BCSB), the holding company for Baltimore County Savings Bank, FSB, reported net income of $1,207,000 for the year ended September 30, 2010, as compared to a net loss of $1,955,000 for the year ended September 30, 2009.  When consideration is given to dividends and discount accretion on preferred shares issued under the U.S. Treasury's TARP Capital Purchase Program, the Company reported net income available to common stockholders of $582,000 or $0.20 per basic share and $0.19 per diluted share for the year ended September 30, 2010, compared to a net loss available to common stockholders of $2,432,000 or ($0.84) per basic and diluted common share for the year ended September 30, 2009.

Net income for the three months ended September 30, 2010 was $569,000, as compared to a net loss of $1,879,000 for the three months ended September 30, 2009. When consideration is given to dividends and discount accretion on preferred shares issued under the U.S. Treasury's TARP Capital Purchase Program, net income available to common stockholders was $413,000 or $0.14 per basic share and $0.13 per diluted share for the three months ended September 30, 2010, compared to a net loss available to common stockholders of $2,035,000 or ($0.70) per basic and diluted share for the three months ended September 30, 2009.

Earnings during the three and twelve months ended September 30, 2010 improved in comparison to the same periods of the prior fiscal year primarily due to a $2.3 million goodwill impairment charge recorded during the three months ended September 30, 2009. The impairment charge was necessary to write off all goodwill recorded in connection with the Company's acquisition in 2002 of WHG Bancshares Corporation. In addition, the Company benefited from improved net interest income during the three and twelve months ended September 30, 2010.  During the twelve months ended September 30, 2010, the Company also experienced increased non-interest income, reduced FDIC special assessment premiums and lower impairment losses for mortgage-backed investment securities deemed by management to be "other than temporarily impaired" (OTTI). These improvements to earnings were partially offset by significant increases in loan loss provisions during the twelve months ended September 30, 2010.

Additional loan loss provisions were necessary during the twelve months ended September 30, 2010 to address the continued decline in overall economic conditions and increases in troubled assets, particularly in relation to the commercial loan portfolio. Nonperforming assets were $12.8 million at September 30, 2010 versus $8.3 million at September 30, 2009, the Company's prior fiscal year end. Most of the nonperforming assets consisted of commercial loans, which increased to $12.1 million at September 30, 2010 from $6.3 million at September 30, 2009.

President and Chief Executive Officer Joseph J. Bouffard commented "We are pleased to report a profit for the fiscal year despite major challenges within the banking industry. Although loss provisions and troubled loans have risen, asset quality issues remain manageable and we have been proactive in establishing what are believed to be appropriate reserve levels. During the fourth quarter, we made the decision to sell a collateralized mortgage obligation security ("CMO") for which we previously recognized $600,000 in cumulative OTTI charges. The loss on sale was offset by gains on sales of other securities within our portfolio.  We remain very well capitalized and believe the Company is favorably positioned moving forward".

As noted above, OTTI charges have been recorded in relation to the Company's CMO securities portfolio. As of September 30, 2010, the market value of these CMO securities totaled $14.3 million, which reflects $2.6 million in gross unrealized losses.  If in the future it is determined that further declines in market values or credit losses with respect to these or any other securities are other than temporary, the Company would be required to recognize additional losses in its consolidated statements of operations.

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, local and national economic factors and the matters described in "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended September 30, 2009.  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.

(1) Nonperforming status denotes loans on which, in the opinion of management, the collection of additional interest is questionable.  Also included in this category at September 30, 2010 are $3.3 million in Troubled Debt Restructurings that are not delinquent.  Reporting guidance requires disclosure of these loans as nonperforming even though they are current in terms of principal and interest payments.

SOURCE BCSB Bankcorp, Inc.

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