BCSB Bancorp 8-K Results of Operations and Financial Condition

PRESS RELEASE

FOR RELEASE JANUARY 30, 2012 AT 4:00 P.M.

For More Information Contact

Joseph J. Bouffard

(410) 248-9130

BCSB Bancorp, Inc.

Baltimore County Savings Bank

BCSB BANCORP, INC. REPORTS RESULTS FOR THE QUARTER ENDED

DECEMBER 31, 2011

BCSB Bancorp, Inc. (the “Company”) (NASDAQ: BCSB), the holding company for Baltimore County Savings Bank (the “Bank”) reported net income of $462,000 for the three month period ended December 31, 2011, which represents the first quarter of its 2012 fiscal year, as compared to net income of $45,000 for the three months ended December 31, 2010. For comparison purposes, 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 $462,000 or $0.15 per basic and diluted share for the three months ended December 31, 2011, compared to a net loss available to common stockholders of $111,000 or ($0.04) per basic and diluted common share for the three months ended December 31, 2010. The Company repaid TARP on January 26, 2011 without raising additional capital, which would have been dilutive to shareholders.

During the three months ended December 31, 2011, earnings were favorably impacted by lower loan loss provisions and, to a lesser extent, increased net interest income as compared to the corresponding period during the prior fiscal year.

The drop in loan loss provisions during the three months ended December 31, 2011 as compared to the prior year was directly related to a decline in nonperforming assets and loan charge-offs during the period. Foreclosed real estate decreased by $1.7 million, or 57%, from $3.0 million at September 30, 2011 to $1.3 million at December 31, 2011 as the Company was able to dispose of a certain commercial and residential properties. Nonperforming loans also declined during the period from $18.3 million at September 30, 2011 to $17.2 million at December 31, 2011. Total nonperforming assets were $18.5 million at December 31, 2011 versus $21.3 million at September 30, 2011.

The increase in net interest income during the three months ended December 31, 2011 as compared to the three months ended December 31, 2010 was primarily due to higher average balances related to the mortgage-backed securities portfolio combined with a declining cost of funds rate on the deposit portfolio. These increases in net interest income were partially offset by lower interest income from the Company’s loan portfolio, which declined by $9.5 million during the three months ended December 31, 2011.

President and Chief Executive Officer Joseph J. Bouffard commented “We continue to make progress in our efforts to resolve asset quality issues, including disposition of foreclosed real estate. Nonperforming assets are down, as are loan charge-offs. Earnings have shown improvement and our interest rate spread has expanded. These are positive trends that we continually work hard to strengthen.”

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, 2011.  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)

	December 31,		September 30,
	2011		2011
	(Dollars in thousands)
ASSETS
Cash equivalents and time deposits	$	74,336	$	60,108
Investment Securities, available for sale		4,816		6,919
Loans Receivable, net		355,341		364,843
Mortgage-backed Securities, available for sale		166,805		150,879
Foreclosed Real Estate		1,275		2,999
Premises and Equipment, net		10,336		9,932
Bank Owned Life Insurance		16,334		16,228
Other Assets		14,394		12,948
Total Assets	$	643,637	$	624,856
LIABILITIES
Deposits	$	560,446	$	550,014
Junior Subordinated Debentures		17,011		17,011
Accounts Payable Trade Date Securities		7,966		--
Other Liabilities		6,060		5,872
Total Liabilities		591,483		572,897
Total Stockholders’ Equity		52,154		51,959
Total Liabilities & Stockholders’ Equity	$	643,637	$	624,856

Consolidated Statements of Operations

(Unaudited)

	Three Months ended December 31,
	2011		2010
	(Dollars in thousands except per share data)
Interest income	$	6,701	$	6,805
Interest expense		1,931		2,346
Net interest income		4,770		4,459
Provision for loan losses		300		800
Net interest income after provision for loan losses		4,470		3,659
Total non-interest income		544		784
Total non-interest expenses		4,315		4,455
Income (Loss) before tax expense		699		(12	)
Income tax expense (benefit)		237		(57	)
Net income		462		45
Preferred stock dividends and discount accretion		--		(156	)
Net income (loss) available to common shareholders	$	462	$	(111	)
Basic and diluted earnings (loss) per common share	$	.15	$	(.04	)

Summary of Financial Highlights

(Unaudited)

	Three Months ended December 31,
	2011			2010
Return on average assets (Annualized)		.29	%		.03	%
Return on average equity (Annualized)		3.55	%		.29	%
Interest rate spread		3.24	%		2.99	%
Net interest margin		3.26	%		3.06	%
Efficiency ratio		81.20	%		84.87	%
Ratio of average interest earning assets/interest bearing liabilities		101.96	%		104.21	%

Allowance for Loan Losses

(Unaudited)

	Three Months ended December 31,
	2011			2010
	(Dollars in thousands)
Allowance at beginning of period	$	4,768		$	6,634
Provision for loan losses		300			800
Recoveries		12			22
Charge-offs		(16	)		(286	)
Allowance at end of period	$	5,064		$	7,170
Allowance for loan losses as a percentage of gross loans		1.40	%		1.82	%
Allowance for loan losses to nonperforming loans		29.46	%		52.50	%

Non-Performing Assets

(Unaudited)

	At December 31, 2011			At September 30,  2011		At December 31, 2010
	(Dollars in thousands)
Nonaccrual Loans:
Commercial	$	9,070	$		9,895	$	10,985
Residential Real Estate (1)		6,968			7,715		2,003
Consumer		20			20		--
Total Nonaccrual Loans (2)		16,058			17,630		12,988
Accruing Troubled Debt Restructurings		1,133			656		670
Total Nonperforming Loans		17,191			18,286		13,658
Foreclosed Real Estate		1,275			2,999		186
Total Nonperforming Assets	$	18,466	$		21,285	$	13,844
Nonperforming Loans to Loans Receivable		4.84%			5.01%		3.55%
Nonperforming Assets to Total Assets		2.87%			3.41%		2.22%

  (1) Includes residential owner occupied properties and residential rental investor properties.

  (2) Nonaccrual status denotes loans on which, in the opinion of management, the collection of additional interest is questionable.  Also included in this category at December 31, 2011 are $7.5 million in Troubled Debt Restructurings, all but $20,000 of which were not delinquent.  Reporting guidance requires disclosure of these loans as nonaccrual until the loans have performed according to the modified terms for a sustained period.