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PRESS RELEASE
FOR RELEASE OCTOBER 22, 2008 AT 4:00 P.M.
For More Information Contact
Joseph J. Bouffard, President and CEO
(410) 248-9130
BCSB Bancorp, Inc.
BCSB BANCORP, INC. REPORTS RESULTS FOR THE YEAR ENDED
SEPTEMBER 30, 2008
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.
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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
o Raised nearly $20 million by completing conversion from Mutual Holding
Company structure to a fully publicly owned corporation.
o Net interest income for the year increased by more than $1.2 million or
8.9% compared to 2007.
o Paid off more than $16 million in debt, including $6 million in Trust
Preferred Securities.
o Interest rate spread for 2008 improved to 2.60% from 2.04% in 2007, a
27% increase over the prior year.
o Allowance for loan losses to nonperforming loans increased to 320% in 2008
from 116% in 2007.
o 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.
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<Table>
<Caption>
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 994 3,970
sale
Loans Receivable, net 400,469 416,302
Mortgage-backed Securities, available 89,956 104,999
for sale
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
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Total Liabilities 517,327 607,789
Total Stockholders' Equity 49,755 34,592
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Total Liabilities & Stockholders' Equity $ 567,082 $ 642,381
============= =============
</Table>
<Table>
<Caption>
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 3,733 3,620 14,448 13,478
Provision for Loan Losses
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 713 (528) 1,229 (4,666)
(Benefit)
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)
======== ======== ======= =======
</Table>
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<Table>
<Caption>
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%
</Table>
<Table>
<Caption>
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%
</Table>
<Table>
<Caption>
Non-Performing Assets
(Unaudtied)
At At
September 30, At June 30, September 30,
2008 2008 2007
--------------- ------------ -------------
(Dollars in thousands)
Nonperforming Loans:
Commercial $ 671 $ 1,649 $ 2,266
Real Estate 162 -- --
Consumer 2 13 24
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Total Nonperforming Loans 835 1,662 2,290
Foreclosed Real Estate 1,230 -- --
Other NonPerforming Assets 14 20 --
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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%
</Table>