BCSB Bancorp, Inc. (the “Company”) (NASDAQ: BCSB), the holding company for Baltimore County Savings Bank, FSB, (the “Bank”) reported a net loss of $639,000 for the three month period ended March 31, 2010, which represents the second quarter of its 2010 fiscal year, as compared to net income of $102,000 for the three months ended March 31, 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 a net loss available to common stockholders of $795,000 or ($0.27) per basic and diluted share for the three months ended March 31, 2010, compared to a net loss available to common stockholders
of $52,000 or ($0.02) per basic and diluted common share for the three months ended March 31, 2009.
Net income for the six months ended March 31, 2010 was $31,000, as compared to net income of $342,000 for the six months ended March 31, 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 net loss available to common stockholders was $282,000 or $(0.09) per basic and diluted share for the six months ended March 31, 2010, compared to net income available to common stockholders of $177,000 or $0.06 per basic and diluted share for the six months ended March 31, 2009.
During the three and six months ended March 31, 2010, earnings were negatively impacted by significant increases in loan loss provisions. The Company also recognized $100,000 in
credit losses for certain private label collateralized mortgage obligation (CMO) securities deemed by management to be “Other Than Temporarily Impaired” (OTTI). These charges against earnings were partially offset by notable increases in net interest income as compared to corresponding periods during the prior fiscal year.
Additional loan loss provisions were necessary 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 $9.6 million at March 31, 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 $8.7 million at March 31, 2010 from $6.3 million at September 30, 2009 primarily due to the addition to nonperforming assets of one $3.5 million loan relationship. The loan is secured with commercial real estate utilized as an owner occupied manufacturing facility.
President and Chief Executive Officer Joseph J. Bouffard commented “A challenging environment continues to exist within the financial services industry. Although our troubled assets have risen recently, asset quality remains strong overall when considering current economic conditions. Management has been proactive in establishing what are believed to be appropriate reserve levels and we will continue to do so. We remain very well capitalized and our pending sale of four branches is a transaction expected to improve efficiency and earnings.” Completion of the sale is expected in the second calendar quarter, subject to certain conditions, including regulatory approval.
As noted above, $100,000 in OTTI charges were recorded during the three months ended March 31, 2010. These charges relate to the Company’s $20.8 million CMO securities portfolio. The Company also recorded $500,000 in OTTI charges during the quarter ended June 30, 2009 as a result of these same securities. At March 31, 2010, Stockholders’ equity included $5.1 million in gross unrealized losses (net of taxes) related to these CMO securities. The Company does not intend to sell these securities prior to maturity and, to date, the securities have performed in accordance with their terms. 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 Comp any would be required to recognize additional losses in its consolidated statements of operations.
