UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

(Mark One)


  /X/    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

         For the quarterly period ended June 30, 2004

         OR

 / /     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

         For the transition period from ______ to ______

                         Commission File Number: 0-24589

                               BCSB BANKCORP, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

          UNITED STATES                                 52-2108333
----------------------------------                ---------------------
(State or Other Jurisdiction of                      (I.R.S. Employer
 Incorporation or Organization)                     Identification No.)

            4111 E. JOPPA ROAD, SUITE 300, BALTIMORE, MARYLAND 21236
            --------------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (410) 256-5000
                           ---------------------------
                 Issuer's Telephone Number, Including Area Code)

                                       N/A
              -----------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                         if Changed Since Last Report)

Indicate  by check mark  whether  the  registrant:  (1) has filed all reports
required  to be filed by  Section  13 or 15(d) of the  Securities  Exchange  Act
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X  No
                                      ---   ---

Indicate by check mark  whether the  registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes    No X
                                               ---   ---

     As of August 11,  2004,  the issuer had  5,899,173  shares of Common  Stock
issued and outstanding.

<PAGE>

                                    CONTENTS
<TABLE>
<CAPTION>

                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                             <C>
PART I.  FINANCIAL INFORMATION
         ---------------------

Item 1.  Financial Statements

         Consolidated Statements of Financial Condition as of
                  June 30, 2004 (unaudited) and September 30, 2003................................................2

         Consolidated Statements of Operations for the Nine Months and Three Months Ended
                  June 30, 2004 and 2003  (unaudited).............................................................3

         Consolidated Statements of Comprehensive Income for the Nine Months and Three Months Ended
                  June 30, 2004 and 2003 (unaudited)............................................................. 4

         Consolidated Statements of Cash Flows for the Nine Months Ended
                  June 30, 2004 and 2003 (unaudited)............................................................. 5

     Notes to Consolidated Financial Statements...................................................................8

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations...................11

Item 3.  Quantitative and Qualitative Disclosures About Market Risk..............................................25

Item 4.  Controls and Procedures.................................................................................25


PART II.  OTHER INFORMATION
          -----------------

Item 1.  Legal Proceedings.......................................................................................26

Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities........................26

Item 3.  Defaults Upon Senior Securities.........................................................................26

Item 4.  Submission of Matters to a Vote of Security Holders.....................................................26

Item 5.  Other Information.......................................................................................26

Item 6.  Exhibits and Reports on Form 8-K........................................................................26


SIGNATURES.......................................................................................................27

CERTIFICATIONS...................................................................................................28

</TABLE>

                                       1
<PAGE>

                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               Baltimore, Maryland

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 ----------------------------------------------
<TABLE>
<CAPTION>

                                                                                              JUNE 30,      SEPTEMBER 30,
                                                                                                2004             2003
                                                                                           -------------    -------------
                                                                                            (Unaudited)
<S>                                                                                             <C>               <C>
                                      Assets
                                      ------
Cash                                                                                       $  13,870,244    $  11,032,415
Interest bearing deposits in other banks                                                       2,545,144       11,288,223
Federal funds sold                                                                               192,640          987,636
Investment securities, held to maturity                                                        2,497,510        2,500,000
Investment securities, available for sale                                                    162,373,479      121,289,555
Loans receivable, net                                                                        366,546,933      365,054,645
Loans held for sale                                                                                   --          247,600
Mortgage backed securities, held to maturity                                                  21,111,695       18,394,439
Mortgage backed securities, available for sale                                               142,937,352      116,204,401
Premises and equipment, net                                                                    8,900,515        9,226,887
Federal Home Loan Bank of Atlanta stock                                                        4,905,000        3,304,900
Accrued interest receivable                                                                    2,468,468        2,114,609
Prepaid and deferred income taxes                                                              4,610,003        1,752,582
Bank Owned Life Insurance                                                                     11,784,083               --
Goodwill                                                                                       2,294,327        2,294,327
Core deposit intangible                                                                          379,000          421,000
Other assets                                                                                   2,540,255        2,084,630
                                                                                           -------------    -------------
Total assets                                                                               $ 749,956,648    $ 668,197,849
                                                                                           =============    =============
                Liabilities and Stockholders' Equity
                ------------------------------------
Liabilities
-----------
  Deposits                                                                                 $ 582,002,199    $ 551,928,619
  Advances from the Federal Home Loan Bank of Atlanta                                         98,817,477       32,267,861
  Trust Preferred Securities                                                                          --       22,500,000
  Junior Subordinated Debentures                                                              23,197,000               --
  Advance payments by borrowers for taxes and insurance                                        2,662,941          854,694
  Income taxes payable                                                                           164,686          193,051
  Payables to disbursing agents                                                                  566,996          136,352
  Accounts payable Trade Date Securities                                                              --       13,998,307
  Dividends payable                                                                              267,954          266,329
  Other liabilities                                                                            1,950,197        1,284,720
                                                                                           -------------    -------------
Total liabilities                                                                            709,629,450      623,429,933
Commitments and contingencies
Stockholders' Equity
--------------------
  Common stock (Par value $.01 - 13,500,000 authorized, 5,899,093 and 5,885,593
   shares issued and outstanding
   at June 30, 2004 and September 30, 2003)                                                       58,991           58,856
  Additional paid-in capital                                                                  20,875,268       20,652,137
  Obligation under Rabbi Trust                                                                 1,258,752        1,243,469
  Retained earnings (substantially restricted)                                                25,400,915       25,556,888
  Accumulated Other Comperhensive Income/(Loss)  (net of taxes)                               (5,431,364)        (770,874)
  Employee Stock Ownership Plan                                                                 (638,864)        (776,060)
  Stock held by Rabbi Trust                                                                   (1,196,500)      (1,196,500)
                                                                                           -------------    -------------
  Total Stockholders' Equity                                                                  40,327,198       44,767,916
                                                                                           -------------    -------------
Total liabilities and Stockholders' Equity                                                 $ 749,956,648    $ 668,197,849
                                                                                           =============    =============
</TABLE>

The accompanying notes to the consolidated  financial statements are an integral
part of these statements.

                                       2
<PAGE>

                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               Baltimore, Maryland

                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                -------------------------------------------------
<TABLE>
<CAPTION>
                                                        FOR NINE MONTHS ENDED         FOR THREE MONTHS ENDED
                                                               JUNE 30,                       JUNE 30,
                                                     --------------------------      -----------------------
                                                       2004              2003         2004             2003
                                                     --------          --------      ------           ------
<S>                                                     <C>               <C>          <C>             <C>
Interest Income
---------------
  Interest and fees on loans                         $16,529,243     $20,157,718    $ 5,464,975    $  6,240,920
  Interest on mortgage backed securities               3,972,045       3,061,049      1,501,174         995,680
  Interest and dividends on investment securities      3,161,591       2,043,325      1,290,170         865,696
  Other interest income                                   82,588         267,263         18,935          90,654
                                                     -----------     -----------    -----------    ------------
Total interest income                                 23,745,467      25,529,355      8,275,254       8,192,950

Interest Expense
----------------
  Interest on deposits                                10,098,875      10,770,764      3,399,515       3,530,442
  Interest on borrowings - short term                    291,563         162,643        218,810          51,989
  Interest on borrowings-long term                       816,184         791,249        261,750         251,632
  Other Interest Expense                                 794,407         501,285        265,084         160,851
                                                     -----------     -----------    -----------    ------------
Total interest expense                                12,001,029      12,225,941      4,145,159       3,994,914
                                                     -----------     -----------    -----------    ------------

  Net interest income                                 11,744,438      13,303,414      4,130,095       4,198,036
  Provision for losses on loans                          356,046       1,198,713         88,579         786,348
                                                     -----------     -----------    -----------    ------------
  Net interest income after provision
  for losses on loans                                 11,388,392      12,104,701      4,041,516       3,411,688

Other Income
------------
  Loss on sale of  repossessed assets                    (44,425)             --       (123,865)             --
  Gain on Sale of Loans                                   41,800         340,109             --          68,751
  Fees and charges on loans                              174,594         165,547         54,073          53,219
  Fees on transaction accounts                           568,325         379,349        172,438         133,142
  Rental income                                           88,867          93,321         28,123          32,999
  Gain from sale of investments                           11,409          40,652          3,609          15,652
  Gain on sale of Mortgage Backed Securities               7,548         232,900             --          79,290
  Income from Bank Owned Life Insurance                  359,083              --        116,553              --
  Miscellaneous income                                    34,496          92,423         17,123           9,438
                                                     -----------     -----------    -----------    ------------
  Net other income                                     1,241,697       1,344,301        268,054         392,491
Non-Interest Expenses
---------------------
Salaries and related expense                           6,583,619       6,268,066      2,287,745       2,171,688
Occupancy expense                                      1,385,013       1,204,969        417,683         419,859
Deposit insurance premiums                               163,095         151,811         55,159          50,996
Data processing expense                                1,145,357       1,140,083        388,601         335,594
Equipment expense                                        888,747         973,579        288,499         340,901
Professional fees                                        167,749         186,127         48,800          49,081
Advertising                                              688,895         598,271        208,281         176,888
Telephone, postage and office supplies                   443,627         488,030        143,173         163,262
Other expenses                                           405,962         415,319        177,481          63,065
                                                     -----------     -----------    -----------    ------------
Total non-interest expenses                           11,872,064      11,426,255      4,015,422       3,771,334
                                                     -----------     -----------    -----------    ------------

Income before tax provision                              758,025       2,022,747        294,148          32,845
Income tax provision                                     137,513         769,810         61,110          11,000
                                                     -----------     -----------    -----------    ------------
Net income                                           $   620,512     $ 1,252,937    $   233,038    $     21,845
                                                     ===========     ===========    ===========    ============

Basic earnings per share                             $       .11     $       .22    $       .04    $         --
                                                     ===========     ===========    ===========    ============
Diluted earnings per share                           $       .11     $       .22    $       .04    $         --
                                                     ===========     ===========    ===========    ============
Dividends per share                                  $       .25     $       .25    $      .125    $       .125
                                                     ===========     ===========    ===========    ============
</TABLE>

The accompanying notes to the consolidated  financial statements are an integral
part of these statements


                                       3

<PAGE>

                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               Baltimore, Maryland

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
             ------------------------------------------------------
                                   (UNAUDITED)
                                   -----------
<TABLE>
<CAPTION>

                                                                                      FOR NINE MONTHS ENDED
                                                                                            JUNE 30,
                                                                                   --------------------------
                                                                                       2004           2003
                                                                                   -----------    -----------
<S>                                                                                      <C>           <C>
Net Income                                                                         $   620,512    $ 1,252,937
Other comprehensive (loss) income, net of tax:
 Unrealized net holding (losses) gains on
  available-for-sale portfolios, net of tax $(2,921,512) and 129,621                (4,648,854)       203,410
Reclassification adjustment for gains
  included in net income, net of tax $ (7,321) and (105,646)                           (11,636)      (167,906)
                                                                                   -----------    -----------

Comprehensive (loss) income                                                        $(4,039,978)   $ 1,288,441
                                                                                   ===========    ===========

</TABLE>
<TABLE>
<CAPTION>

                                                                                       FOR THREE MONTHS ENDED
                                                                                               JUNE 30,
                                                                                     --------------------------
                                                                                         2004           2003
                                                                                     -----------    -----------
<S>                                                                                      <C>            <C>

Net Income                                                                           $   233,038       $ 21,845
Other comprehensive (loss) income, net of tax:
 Unrealized net holding (losses) gains on
  available-for-sale portfolios, net of tax $(3,489,452) and 229,657                  (5,548,801)       364,859
Reclassification adjustment for gains
  included in net income, net of tax $(1,394) and (36,667)                                (2,215)       (58,275)
                                                                                     -----------       --------

Comprehensive (loss) income                                                          $(5,317,978)      $328,429
                                                                                     ===========       ========
</TABLE>

The accompanying notes to the consolidated financial statements are an integral
part of these statements.


                                       4
<PAGE>

                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               Baltimore, Maryland

                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                -------------------------------------------------

<TABLE>
<CAPTION>

                                                                                FOR NINE MONTHS ENDED
                                                                                       JUNE 30,
                                                                                2004            2003
                                                                           ------------    ------------
<S>                                                                              <C>            <C>
Operating Activities
--------------------
  Net Income                                                               $    620,512    $  1,252,937
  Adjustments to Reconcile Net Income to Net
  Cash Used by Operating Activities
  ---------------------------------
    Accretion of discount on investments                                        (52,963)        (57,900)
    Dividends on Investment Securities                                         (826,435)       (723,316)
    Gain on sale of investments                                                 (11,409)        (40,652)
    Loans originated for sale                                                (3,201,800)    (10,526,862)
    Loans sold                                                                3,491,200      10,294,052
    Gain on sale of loans                                                       (41,800)       (340,109)
    Loan fees and costs deferred, net                                           (38,625)        274,798
    Amortization of deferred loan fees and cost, net                           (132,198)       (506,871)
    Provision for losses on loans                                               356,046       1,198,713
    Non-cash compensation under Stock-Based Benefit Plan                        247,400         187,718
    Amortization of premium on mortgage backed securities                       326,723         398,032
    Amortization of purchase premiums and discounts, net                        (27,675)       (452,083)
    Gain on sale of mortgaged backed securities                                  (7,548)       (232,900)
    Provision for depreciation                                                  707,388         737,259
    Loss on sale of repossessed assets                                           44,425              --
    Income from bank owned life insurance                                      (359,083)             --
    (Increase) decrease in accrued interest receivable                         (353,859)        307,628
    Decrease in prepaid income taxes                                             71,412         198,092
    Decrease in other assets                                                    241,375         155,682
    Decrease in accrued interest payable on deposits                            (18,166)        (29,331)
    (Decrease) increase in income taxes payable                                 (28,365)         85,225
    Increase in other liabilities and payables to
          disbursing agents                                                   1,096,121       5,028,478
    Increase in obligation under Rabbi-Trust                                     15,283          29,350
                                                                           ------------    ------------
        Net cash provided by operating activities                             2,117,959       7,237,940
</TABLE>

                                       5
<PAGE>
                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               Baltimore, Maryland

                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                -------------------------------------------------

<TABLE>
<CAPTION>


                                                                                         FOR NINE MONTHS ENDED
                                                                                                JUNE 30,
                                                                                    ------------------------------
                                                                                         2004             2003
                                                                                    -------------    -------------
<S>                                                                                     <C>                 <C>
Cash Flows from Investing Activities
------------------------------------
    Purchase of Bank Owned Life Insurance                                           $ (11,425,000)   $          --
    Purchases of investment securities - available for sale                           (75,286,086)    (133,076,372)
    Proceeds from maturities of investment securities - available for sale             21,130,000       56,185,019
    Proceeds from sale of investment securities- available for sale                    10,481,524        5,040,652
    Purchases of investment securities - held to maturity                              (2,497,875)        (500,000)
    Proceeds from maturities of investment securities - held to maturity                2,500,000        2,500,000
    Longer term loans originated                                                      (47,502,530)     (52,531,646)
    Principal collected on longer term loans                                           45,347,616       82,462,075
    Net increase (decrease) in short-term loans                                           (25,556)      (7,937,955)
    Principal collected on mortgage backed securities - available for sale             19,655,365       19,211,814
    Purchase of mortgage backed securities - available for sale                       (52,250,758)     (57,820,305)
    Proceeds from sale of mortgaged backed securities- available for sale               1,447,365       18,038,332
    Purchase of mortgage backed securities- held to maturity                           (7,062,150)      (1,038,404)
    Principal collected on mortgage backed securities - held to maturity                4,313,049       14,384,179
    Proceeds from sale of repossessed assets                                              171,418               --
    Investment in premises and equipment                                                 (381,016)        (720,844)
    (Purchase)/Redemption of Federal Home Loan Bank of Atlanta stock                   (1,600,100)         634,800
     Decrease in accounts payable Trade Date Securities                               (13,998,307)              --
                                                                                    -------------    -------------
     Net cash used by investing activities                                           (106,983,041)     (55,168,655)

Cash Flows from Financing Activities
------------------------------------
Decrease in checks written in excess of bank balance                                           --         (390,799)
Net increase in demand deposits, money market, passbook
      accounts and advances by borrowers for taxes and
      insurance                                                                        16,726,338       18,679,105
    Net increase in certificates of deposit                                            15,400,296       32,634,162
    Advances from Federal Home Loan Bank of Atlanta                                   152,877,000               --
    Repayment of Federal Home Loan Bank of Atlanta advances                           (86,177,000)      (3,000,000)
    Exercised Stock Options                                                               113,062            8,000
    Dividends paid on stock                                                              (774,860)        (772,569)
                                                                                    -------------    -------------
        Net cash provided by financing activities                                      98,164,836       47,157,899
                                                                                    -------------    -------------

Decrease in cash and cash equivalents                                                  (6,700,246)        (772,816)
Cash and cash equivalents at beginning of period                                       23,208,274       25,703,327
                                                                                    -------------    -------------
Cash and cash equivalents at end of period                                          $  16,508,028    $  24,930,511
                                                                                    =============    =============
</TABLE>

                                       6
<PAGE>


                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               Baltimore, Maryland

                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                -------------------------------------------------
<TABLE>
<CAPTION>
                                                                                         JUNE 30,
                                                                                -------------------------
                                                                                    2004          2003
                                                                                -----------   -----------
<S>                                                                                   <C>          <C>
The following is a summary of cash and cash equivalents:
    Cash                                                                        $13,870,244   $10,642,180
    Interest bearing deposits in other banks                                      2,545,144     9,380,636
    Federal funds sold                                                              192,640     5,007,695
                                                                                -----------   -----------
    Balance of cash items reflected on Statement of
      Financial Condition                                                        16,608,028    25,030,511
        Less - certificate of deposit with an original maturity of
          more than ninety days                                                     100,000       100,000
                                                                                -----------   -----------
Cash and cash equivalents reflected on the
    Statement of Cash Flows                                                     $16,508,028   $24,930,511
                                                                                ===========   ===========
Supplemental Disclosures of Cash Flows Information:
    Cash paid during the period for:

    Interest                                                                    $11,867,401   $12,286,181
                                                                                ===========   ===========

    Income taxes                                                                $   182,500   $   826,700
                                                                                ===========   ===========
</TABLE>


The accompanying notes to the consolidated financial statements are an integral
part of these statements.

                                       7
<PAGE>


                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               Baltimore, Maryland

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
             ------------------------------------------------------


Note 1 - Principles of Consolidation
         ---------------------------

          BCSB Bankcorp,  Inc. (the  "Company")  owns 100% of Balltimore  County
          Savings Bank,  F.S.B. and subsidiaries (the "Bank") , and also invests
          in federal  funds sold,  interest-bearing  deposits in other banks and
          U.S.  Agency  bonds.  The Bank owns 100% of Baltimore  County  Service
          Corporation  and Ebenezer  Road,  Inc. The  accompanying  consolidated
          financial  statements  include the accounts and  transactions of these
          companies on a consolidated basis. All intercompany  transactions have
          been eliminated in the  consolidated  financial  statements.  Ebenezer
          Road, Inc. sells insurance products.  It's operations are not material
          to the consolidated financial statements.

          The  "Company"  owns 100% of the common stock of BCSB Capital  Trust I
          and BCSB Capital  Trust II and in accordance  with FASB  Interpertaion
          Number  46  these   entities  have  not  been   consolidated   in  the
          accompanying consolidated financial statements.

Note 2 - Basis for Financial Statement Presentation
         ------------------------------------------

          The accompanying  consolidated financial statements have been prepared
          in accordance with  accounting  principles  generally  accepted in the
          United  States  of  America  and  the   instructions   to  Form  10-Q.
          Accordingly,  they do not include all of the  disclosures  required by
          accounting  principles  generally  accepted  in the  United  States of
          America  for  complete  financial   statements.   In  the  opinion  of
          management,  all  adjustments  (none of which were  other than  normal
          recurring accruals) necessary for a fair presentation of the financial
          position and results of operations for the periods presented have been
          included.  The financial  statements of the Company are presented on a
          consolidated  basis with those of the Bank.  The results for the three
          and nine months ended June 30, 2004 are not necessarily  indicative of
          the results of  operations  that may be  expected  for the year ending
          September 30, 2004. The consolidated  financial  statements  should be
          read in conjunction  with the  consolidated  financial  statements and
          related  notes which are  incorporated  by reference in the  Company's
          Annual Report on Form 10-K for the year ended September 30, 2003.

Note 3 - Cash Flow Presentation
         ----------------------

          For  purposes  of  the  statements  of  cash  flows,   cash  and  cash
          equivalents include cash and amounts due from depository institutions,
          investments  in  federal  funds,  and  certificates  of  deposit  with
          original maturities of 90 days or less.







                                       8

<PAGE>
                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               BALTIMORE, MARYLAND


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
             ------------------------------------------------------


Note 4 - Earnings Per Share
         ------------------

          Basic per share  amounts are based on the weighted  average  shares of
          common  stock  outstanding.  Diluted  earnings  per share  assume  the
          conversion,  exercise  or  issuance  of  all  potential  common  stock
          instruments such as options,  unless the effect is to reduce a loss or
          increase  earnings per share.  No adjustments  were made to net income
          (numerator) for all periods presented.  The basic and diluted weighted
          average  shares  outstanding  for the nine and three months ended June
          30, 2004 and 2003 is as follows:
<TABLE>
<CAPTION>

                                                                     For the Nine Months Ended June 30,
                                        ----------------------------------------------------------------------------------------
                                                           2004                                      2003
                                        ----------------------------------------------------------------------------------------
                                           Income         Shares      Per Share       Income          Shares        Per Share
         <S>                                 <C>           <C>          <C>             <C>            <C>            <C>
         Basic EPS
         ---------
                                        $  620,512       5,785,943   $     0.11     $1,252,937       5,723,135   $          0.22
         Effect of dilutive shares              --          57,488           --             --          45,683                --
                                        ----------   -------------   ----------     ----------   -------------   ---------------

         Diluted EPS
         -----------
                                        $  620,512       5,843,431   $     0.11     $1,252,937       5,768,818   $          0.22
                                        ==========   =============   ==========     ==========   =============   ===============


</TABLE>
<TABLE>
<CAPTION>

                                                                 For the Three Months Ended June 30,
                                        ----------------------------------------------------------------------------------------
                                                            2004                                   2003
                                        --------------------------------------------------------------------------------------
             <S>                         <C>               <C>          <C>             <C>       <C>             <C>
                                           Income         Shares      Per Share      Income         Shares         Per Share
         Basic EPS
         ---------
                                        $  233,038       5,791,312   $     0.04     $   21,845       5,723,085   $          0.00
         Effect of dilutive shares              --          50,204           --             --          59,739                --
                                        ----------   -------------   ----------     ----------   -------------   ---------------

         Diluted EPS
         -----------
                                        $  233,038       5,841,516   $     0.04     $   21,845       5,782,824   $          0.00
                                        ==========   =============   ==========     ==========   =============   ===============
</TABLE>

                                       9
<PAGE>


                      BCSB BANKCORP, INC. AND SUBSIDIARIES
                      ------------------------------------
                               Baltimore, Maryland


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
             ------------------------------------------------------

Note 5 - Regulatory Capital
         ------------------

The following table sets forth the Bank's capital position at June 30, 2004.
<TABLE>
<CAPTION>

                                                                                              To Be Well
                                                                                           Capitalized Under
                                                                     For Capital            Prompt Corrective
                                            Actual                Adequacy Purposes         Action Provisions
                                    -----------------------   ------------------------  ------------------------
                                    Actual           % of     Required          % of    Required          % of
                                    Amount           Assets    Amount            Assets  Amount            Assets
                                    ------           ------   --------          ------  --------          ------
<S>                                   <C>              <C>       <C>            <C>        <C>              <C>
                                                                    (unaudited)

Tangible (1)                     $ 53,089,474          7.21%  $11,044,110         1.50%     N/A            N/A
Tier 1 capital (2)                 53,089,474         14.71           N/A          N/A   21,655,484        6.00%
Core (1)                           53,089,474          7.21    29,450,959         4.00   36,813,699        5.00
Total  (2)                         54,987,510         15.24    29,873,978         8.00   36,092,473       10.00
</TABLE>

------------
(1) To adjusted total assets.
(2) To risk-weighted assets.

Note 6- Stock Option Plan
        -----------------

               Stock-Based Employee  Compensation- At June 30, 2004 and 2003 the
          company has four stock-based  employee  compensation  plans, which are
          described more fully in the 2003 Annual Report.  The company  accounts
          for those plans under the recognition  and  measurement  principles of
          APB Opinion No. 25,  Accounting  for Stock  Issued to  Employees,  and
          related  Interpretations.  No compensation cost is reflected in income
          for the granted  options as all granted  options had an exercise price
          equal to the market value of the  underlying  common stock on the date
          of grant. The following table illustrates the effect on net income and
          earnings  per  share  if  the  Company  had  applied  the  fair  value
          recognition  provisions  of FASB  Statement  No. 123,  Accounting  for
          Stock-Based Compensation, to stock-based employee compensation.

<TABLE>
<CAPTION>

                                                        For the Nine months ended June 30, For the Three Months Ended June 30,
                                                             2004               2003             2004              2003
                                                             ----               ----             ----              ----
                    <S>                                      <C>                <C>              <C>                <C>
                  Net Income, as reported                $ 620,512        $ 1,252,937      $      233,038      $    21,845
                  Add: Stock-based Compensation
                       Included in the determination
                       of Net income as reported,
                       net of tax                          199,742            172,520              59,534           77,568
                  Deduct: Total stock-based compensation
                          Expense determined under
                           fair value  method for all
                           awards, net of tax             (239,335)          (211,443)            (72,731)         (90,095)
                                                         ---------        -----------      --------------      -----------
                       Pro forma net income              $ 580,919        $ 1,214,014      $      219,841      $     9,318
                                                         =========        ===========      ==============      ===========
                       Earnings per share:

                       Basic-as reported                     $ .11              $ .22                $.04             $.00
                                                               ===                ===                 ===              ===
                       Basic-pro forma                         .10                .21                 .04              .00
                                                               ===                ===                 ===              ===
                       Diluted-as reported                     .11                .22                 .04              .00
                                                               ===                ===                 ===              ===
                       Diluted-proforma                        .10                .21                 .04              .00
                                                               ===                ===                 ===              ===
</TABLE>

                                       10
<PAGE>

Note 7- Recent Accounting Pronouncements
        --------------------------------

     In January  2003,  the  Financial  Accounting  Standards  Board issued FASB
Interpretation  No.  46,   "Consolidation  of  Variable  Interest  Entities,  an
Interpretation  of ARB  No.  51"  which  was  revised  in  December  2003.  This
Interpretation  provides  guidance for the  consolidation  of variable  interest
entities  (VIEs).  BCSB  Bankcorp  Capital  Trust I ("BCSB I"), and BCSB Capital
Trust II ("BCSB II") qualify as variable  interest entities under FIN 46. BCSB I
and BCSB II issued mandatorily  redeemable preferred securities (Trust Preferred
Securities)  to  third-party  investors  and loaned the proceeds to the Company.
BCSB I and BCSB II hold, as there sole assets, subordinated debentures issued by
the Company.  Accordingly the Trust Preferred  Securities have been reclassified
as Junior Subordinated Debentures.

Note 8- Guarantees
        ----------

     The Company  does not issue any  guarantees  that would  require  liability
recognition or  disclosure,  other than its standby  letters of credit.  Standby
letters of credit written are conditional  commitments  issued by the Company to
guarantee the performance of a customer to a third party. Generally, all letters
of credit,  when issued have  expiration  dates within one year. The credit risk
involved in issuing  letters of credit is essentially the same as those that are
involved in extending  loans  facilities  to customers.  The Company,  generally
holds collateral and/or personal  guarantees  supporting these commitments.  The
Company  has  $419,000  of  standby  letters  of  credit  as of June  30,  2004.
Management  believes  that  the  proceeds  obtained  through  a  liquidation  of
collateral and the  enforcement  of guarantees  would be sufficient to cover the
potential amount of future payment required under the corresponding  guarantees.
The current  amount of the  liability as of June 30, 2004 for  guarantees  under
standby letters of credit issued is not material.

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

     The  Company  was formed by the Bank to become the  holding  company of the
Bank following the Bank's  reorganization  to the mutual holding company form of
organization (the "Reorganization").  The Reorganization was consummated on July
8, 1998.

     The Company's net income is dependent primarily on its net interest income,
which is the difference  between interest income earned on its loan,  investment
securities  and  mortgage-backed  securities  portfolio  and  interest  paid  on
interest-bearing  liabilities.  Net  interest  income is  determined  by (i) the
difference  between yields earned on  interest-earning  assets and rates paid on
interest-bearing  liabilities  ("interest  rate  spread")  and (ii) the relative
amounts  of  interest-earning  assets  and  interest-bearing   liabilities.  The
Company's  interest  rate  spread  is  affected  by  regulatory,   economic  and
competitive  factors  that  influence  interest  rates,  loan demand and deposit
flows.  To a lesser  extent,  the  Company's  net income also is affected by the
level of other income,  which primarily consists of fees and charges, and levels
of non-interest expenses such as salaries and related expenses.

     The  operations  of the Company are  significantly  affected by  prevailing
economic  conditions,  competition  and  the  monetary,  fiscal  and  regulatory
policies of  governmental  agencies.  Lending  activities  are influenced by the
demand  for and  supply of  housing,  competition  among  lenders,  the level of
interest rates and the  availability of funds.  Deposit flows and costs of funds
are  influenced by prevailing  market rates of interest,  primarily on competing
investments, account maturities and the levels of personal income and savings in
the Company's market area.

CRITICAL ACCOUNTING POLICIES

     The Company's  significant  accounting  policies are set forth in Note 1 of
the consolidated  financial  statements as of September 30, 2003 which was filed
on Form 10-K. Of these significant  accounting  policies,  the Company considers
its policy  regarding  the  allowance  for loan  losses to be its most  critical
accounting policy,  because it requires management's most subjective and complex
judgments.  In addition,  changes in economic  conditions can have a significant
impact on the  allowance  for loan losses and  therefore  the provision for loan
losses and results of operations. The Company has developed appropriate policies
and  procedures  for  assessing  the adequacy of the  allowance for loan losses,
recognizing  that this process  requires a number of  assumptions  and estimates
with respect to its loan portfolio. The Company's assessments may be impacted in
future  periods by  changes in  economic  conditions,  the impact of  regulatory
examinations, and the discovery of information with respect to borrowers that is
not  known  to  management  at the  time  of the  issuance  of the  consolidated
financial statements. The Company adopted the disclosure only provisions of FASB
Statement  No. 123, see note 6 to the  consolidated  financial  statements.  The
Company does not expect to expense the fair market value of stock  options until
required by  accounting  principles  generally  accepted in the United States of
America.


                                       11
<PAGE>

FORWARD-LOOKING STATEMENTS

     When used in this Form 10-Q,  the words or phrases  "will  likely  result,"
"are expected to," "will continue," "is anticipated,"  "estimate,"  "project" or
similar expressions are intended to identify "forward-looking statements" within
the  meaning of the  Private  Securities  Litigation  Reform  Act of 1995.  Such
statements are subject to certain risks and  uncertainties  including changes in
economic  conditions  in the  Company's  market  area,  changes in  policies  by
regulatory  agencies,  fluctuations in interest  rates,  demand for loans in the
Company's market area, and competition that could cause actual results to differ
materially  from  historical   earnings  and  those  presently   anticipated  or
projected.  The Company wishes to caution readers not to place undue reliance on
any such forward-looking  statements,  which speak only as of the date made. The
Company  wishes to advise readers that the factors listed above could affect the
Company's financial performance and could cause the Company's actual results for
future periods to differ  materially  from any opinions or statements  expressed
with respect to future periods in any current statements.

     The Company does not undertake,  and specifically disclaims any obligation,
to  publicly  release  the  result  of any  revisions  which  may be made to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2004 AND SEPTEMBER 30, 2003

     During the nine months ended June 30, 2004, the Company's  assets increased
by $81.8  million,  or 12.2% from $668.2 million at September 30, 2003 to $750.0
million at June 30, 2004. The Company's interest bearing deposits in other banks
decreased by $8.7 million, or 77.5%, from $11.3 million at September 30, 2003 to
$2.5  million  at  June  30,  2004.  The  Company's  mortgage-backed  securities
available for sale increased by $26.7 million,  or 23.0%, from $116.2 million at
September 30, 2003 to $142.9 million at June 30, 2004. The Company's  investment
portfolio  available  for sale  increased  $41.1  million or 33.9%,  from $121.3
million at September  30, 2003 to $162.4  million at June 30,  2004.  During the
nine  months  ended June 30, 2004 the Company  purchased  $11.5  million of bank
owned life  insurance.  The  preceding was  accomplished  in an effort to reduce
interest rate risk in the balance  sheet.  Management was reluctant to make long
term low rate loans in the low interest rate  environment  that prevailed during
the nine month  period  ended June 30,  2004.  Emphasis has been placed on short
term loans such as automobile loans, home equity loans and short term mortgages.
The Company's deposits increased by $30.1 million,  or 5.5%, from $551.9 million
at  September  30,  2003 to $582.0  million at June 30,  2004.  The  increase in
deposits  was achieved  through  normal  marketing  efforts.  Advances  from the
Federal  Home Loan Bank of Atlanta  increased by $66.5  million,  or 206.2% from
$32.3 million at September 30, 2003 to $98.8 million at June 30, 2004. The funds
were used to purchase  securities  and fund loans.  Accounts  Payable Trade Date
Securities  decreased by $14.0 million or 100.0% from $14.0 million at September
30, 2003 to $0 at June 30, 2004. Trade Date Securities are commitments to settle
security  purchases in the near future.  Stockholders'  equity decreased by $4.5
million,  or 10.0% from $44.8  million at September 30, 2003 to $40.3 million at
June 30, 2004,  which was primarily  attributable to the increase in accumulated
other  comprehensive loss of $4.7 million from, a negative $771,000 at September
30, 2003 to a negative $5.4 million at June 30, 2004.  These  unrealized  losses
are considered  temporary as they reflect market values on June 30, 2004 and are
subject to change daily as interest rates fluctuate. This decrease is due to the
adjustment for the available for sale  securities  recorded at market value in a
rising rate environment and has no impact on the Bank's regulatory capital..

COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED JUNE 30, 2004 AND 2003

     Net Income.  Net income decreased by $632,000,  or 50.4%, from $1.2 million
for the nine months  ended June 30, 2003 to $621,000  for the nine months  ended
June 30,  2004.  The  decrease  in net  income  was  primarily  attributable  to
decreased  net interest  income of $1.6 million.  This was  partially  offset by
decreases in the provision for loan losses and income taxes.

     Net Interest  Income.  Net interest  income was $11.7  million for the nine
months ended June 30, 2004,  compared to $13.3 million for the nine months ended
June 30, 2003,  representing a decrease of $1.6 million,  or 11.7%. The decrease
was primarily due to the decrease in the average rate on interest earning-assets
and an increase in the average balance of interest bearing liabilities. This was
partially  offset by an increase in the average balance of assets and a decrease
in the average rate paid on interest bearing assets.  Due to declining  interest
rates and loans  re-pricing  faster  than  deposits  the  interest  rate  spread
decreased  47 basis points from 2.94% for the nine months ended June 30, 2003 to
2.47% for the nine months ended June 30, 2004.



                                       12
<PAGE>

     Interest Income.  Interest income  decreased by $1.8 million,  or 7.1% from
$25.5  million for the nine months ended June 30, 2003 to $23.7  million for the
nine months  ended June 30, 2004.  Interest and fees on loans  decreased by $3.7
million, or 18.3%, from $20.2 million for the nine months ended June 30, 2003 to
$16.5 million for the nine months ended June 30, 2004. This was primarily due to
a decrease in the average  yield on loans of 78 basis  points from 6.91% at June
30, 2003 to 6.13% at June 30, 2004, and a $29.2 million  decrease in the average
balance of loans  receivable  from  $388.8  million  at June 30,  2003 to $359.6
million at June 30,  2004.  The  decrease  in the  average  balance of loans was
primarily  attributable  to increased  competition  in the  refinancing  market,
current economic  conditions and  management's  reluctance to make long term low
rate  loans in the low  interest  rate  environment  that  prevailed  during the
period.  The  decrease in the average  yield was  attributed  to the  prevailing
market rates in the economy. Interest on mortgage-backed securities increased by
$911,000 or 29.8% from $3.1  million for the nine months  ended June 30, 2003 to
$4.0  million  for the nine  months  ended  June 30,  2004.  This  increase  was
primarily  due to  the  increase  in  the  average  balance  of  mortgage-backed
securities  from $94.0  million at June 30,  2003 to $135.0  million at June 30,
2004.  The  increase in the average  balance  more than offset a decrease in the
average rate from 4.34% at June 30, 2003 to 3.92% at June 30, 2004. Interest and
dividends on investment  securities increased by $1.2 million or 60.0% from $2.0
million  for the nine months  ended June 30,  2003 to $3.2  million for the nine
months ended June 30, 2004. This was primarily due to an increase in the average
balance of  investments  of $59.6  million,  or 78.9% from $75.5 million for the
nine months ended June 30, 2003 to $135.1 million for the nine months ended June
30, 2004. The increase in the average balance more than offset a decrease in the
average yield on investments  from 3.61% for the nine months ended June 30, 2003
to 3.12% for the nine months ended June 30, 2004.

     Interest Expense. Interest expense, which consists of interest on deposits,
interest on  borrowed  money and other  interest  expense  decreased  from $12.2
million  for the nine months  ended June 30, 2003 to $12.0  million for the nine
months  ended June 30, 2004 a change of  $200,000 or 1.6%.  Interest on deposits
decreased  $672,000  due to a decrease  in the  average  yield on deposits of 37
basis points from 2.74% for the nine months ended June 30, 2003 to 2.37% for the
nine months ended June 30, 2004. This was partially offset by an increase in the
average  balance of deposits of $44.2  million,  or 8.4% from $523.6  million at
June 30,  2003 to $567.8  million  at June 30,  2004.  The  Company  was able to
increase its deposits through normal marketing  efforts.  Interest on short-term
borrowings  increased  by  $129,000  for the nine  months  ended June 30,  2004.
Interest on long-term  borrowings increased by $25,000 for the nine months ended
June 30, 2004.  This  increase was primarily due to an increase of $26.0 million
in the average  balances of advances  from the Federal Home Loan Bank of Atlanta
during the nine  months  ended June 30,  2004.  Also  contributing  to  interest
expense was  interest  on the Trust  Preferred  Securities  which  increased  by
$293,000  from  $501,000  for the nine  month  period  ending  June 30,  2003 to
$794,000 for the nine months ended June 30, 2004.  This  increase was due to the
increase in the average balance of Trust Preferred Securities from $12.5 million
during 2003 to $22.5 million during 2004.

                                       13
<PAGE>


     Average Balance Sheet.  The following table sets forth certain  information
relating to the Company's  average  balance sheet and reflects the average yield
on assets and cost of  liabilities  for the  periods  indicated  and the average
yields  earned and rates  paid.  Such  yields and costs are  derived by dividing
income or  expense  by the  average  daily  balance  of  assets or  liabilities,
respectively, for the nine month periods ended June 30, 2004, and June 30, 2003.
Total average assets are computed using month-end balances.

     The table also presents  information for the periods indicated with respect
to the differences between the average yield earned on  interest-earning  assets
and  average  rate  paid on  interest-bearing  liabilities,  or  "interest  rate
spread," which banks have  traditionally  used as an indicator of profitability.
Another  indicator of net interest income is "net interest margin," which is its
net interest income divided by the average balance of interest-earning assets.
<TABLE>
<CAPTION>

                                                                      NINE MONTHS ENDED JUNE 30
                                               ---------------------------------------------------------------------------
                                                            2004                                      2003
                                               ---------------------------------       -----------------------------------
                                               AVERAGE                   AVERAGE       AVERAGE                     AVERAGE
                                               BALANCE      INTEREST      RATE         BALANCE       INTEREST       RATE
                                               -------      --------     -------       -------       --------      -------
                                                                           (Dollars in thousands)
<S>                                             <C>          <C>           <C>           <C>            <C>           <C>
Interest-earning assets:
   Loans....................................   $ 359,648    $  16,529        6.13%     $  388,859    $ 20,158         6.91%
   Mortgage-backed securities...............     135,042        3,972        3.92          93,963       3,061         4.34
   Investment securities....................     135,071        3,162        3.12          75,506       2,043         3.61
   Other Investments........................       8,415           83        1.32          25,456         267         1.40
                                               ---------    ---------                  ----------    --------
       Total interest-earning assets........     638,176       23,746        4.96         583,784      25,529         5.83
Noninterest-earning assets..................      60,548                                   32,219
                                               ---------                               ----------
       Total assets.........................   $ 698,724                               $  616,003
                                               =========                               ==========

Interest-bearing liabilities:
   Deposits.................................   $ 567,842       10,099        2.37         523,584      10,771         2.74
   FHLB Advances............................      50,980        1,108        2.90          25,442         953         4.99
   Jr. Sub. Debt/Trust Preferred Securities.      22,500          794        4.71          12,500         501         5.34
   Other liabilities........................       1,545            0        0.00           1,853           1         0.07
                                               ---------    ---------                  ----------    --------
Total interest-bearing liabilities..........     642,867       12,001        2.49         563,379      12,226         2.89
                                                            ---------    --------                    --------      -------
Noninterest-bearing liabilities.............      12,311                                    7,845
                                               ---------                               ----------
       Total liabilities....................     655,178                                  571,224
Stockholders' equity .......................      43,546                                   44,779
                                               ---------                               ----------
       Total liabilities and stockholders'
            equity..........................   $ 698,724                               $  616,003
                                               =========                               ==========

Net interest income.........................                $  11,745                                $ 13,303
                                                            =========                                ========
Interest rate spread........................                                 2.47%                                    2.94%
                                                                          =======
Net interest margin.........................                                 2.45%                                    3.04%
                                                                          =======                                     ====
Ratio average interest earning assets/
    interest bearing liabilities............                                99.27%                                  103.62%
                                                                            =====                                   ======
</TABLE>

                                       14

<PAGE>

     Rate/Volume  Analysis.  The table  below  sets  forth  certain  information
regarding changes in interest income and interest expense of the Company for the
periods   indicated.   For  each   category   of   interest-earning   asset  and
interest-bearing liability,  information is provided on changes attributable to:
(i) changes in volume (changes in volume  multiplied by old rate);  (ii) changes
in rates  (change  in rate  multiplied  by old  volume);  and (iii)  changes  in
rate/volume (changes in rate multiplied by the changes in volume).

<TABLE>
<CAPTION>

                                                         For Nine Months  Ended June 30,
                                                ---------------------------------------------------
                                                        2004            vs.              2003
                                                ---------------------------------------------------
                                                              Increase (Decrease)
                                                                      Due to
                                                ---------------------------------------------------
                                                                                Rate/
                                                Volume         Rate            Volume        Total
                                                ------         ----            ------        -----
<S>                                               <C>           <C>             <C>           <C>
                                                                   (In thousands)
Interest income:
  Loans receivable..........................   $ (1,543)      $ (2,255)      $    169    $ (3,629)
  Mortgage-backed securities................      1,343           (301)          (131)        911
  Investment securities and
      FHLB Stock............................      1,618           (279)          (220)      1,119
  Other interest-earning assets.............       (179)           (15)            10        (184)
                                               --------       --------       --------    --------
    Total interest-earning assets...........      1,239         (2,850)          (172)     (1,783)

Interest expense:
  Deposits..................................        910         (1,459)          (123)       (672)
  FHLB advances.............................        957           (400)          (402)        155
  Trust Preferred Securities................        401            (60)           (48)        293
  Other liabilities.........................          0             (1)             0          (1)
                                               --------       --------       --------    --------
     Total interest-bearing
       liabilities..........................      2,268         (1,920)          (573)       (225)
                                               --------       --------       --------    --------

Change in net interest income...............   $ (1,029)      $   (930)      $    401    $ (1,558)
                                               ========       ========       ========    ========
</TABLE>


     Provision for Loan Losses.  The Company charges  provisions for loan losses
to  earnings  to  maintain  the  total  allowance  for  loan  losses  at a level
management   considers   adequate  to  provide  for  probable  loan  losses.  In
determining the provision,  management considers prior loss experience,  current
economic  conditions and the probability of these  conditions  affecting  future
loan  performance.  The Company  established  provisions  for losses on loans of
$356,000 for the nine months  ended June 30,  2004,  as compared to $1.2 million
for the nine months  ended June 30, 2003,  representing  a decrease of $843,000.
This decrease was partially  attributable to the decrease in the average balance
of loans of $29.2 million,  or 7.5% from $388.8 million to $359.6 million.  Loan
chargeoffs  for the nine months ended June 30, 2004 were $907,000 as compared to
$1.5  million  for the nine months  ended June 30, 2003 a decrease of  $593,000.
Loan  charge offs  decreased  due to the  absence of a  commercial  loan loss of
$569,000 which was charged off during the nine months ended June 30, 2003.  Loan
recoveries  were  $241,000 for the nine months  ended June 30, 2004  compared to
$267,000 for the nine months ended June 30, 2003. Non  performing  loans at June
30,  2004 were $1.1  million as  compared  to  $348,000  at June 30,  2003.  The
increase in non performing loans was partially due to two delinquent  commercial
real estate loans which are well  collateralized and the Bank does not expect to
incur a loss.  The total loss allowance  allocated to loans is $2.4 million.  In
establishing  such  provisions,  management  considered  an analysis of the risk
inherent in the loan portfolio.

     Other Income. Other income decreased by $103,000, or 7.6% from $1.3 million
for the nine  months  ended June 30,  2003 to $1.2  million  for the nine months
ended June 30, 2004. The decrease in other income for the nine months ended June
30, 2004 was primarily  attributable to a decrease of $225,000 in Gains from the
Sale of Mortgage Backed  Securities from $233,000 for the nine months ended June
30, 2003 to $7,500 for the nine months ended June 30, 2004.  Gains from the sale
of loans also  decreased  $298,000  from $340,000 for the nine months ended June
30, 2003 to $42,000



                                       15
<PAGE>

for the nine months ended June 30, 2004.  These decreases were partially  offset
by  increases  in fees on  transaction  accounts and income from Bank Owned Life
Insurance.  Fees on  transaction  accounts  increased  by $189,000  for the nine
months  ended June 30,  2004,  due to an increase  in the volume of  transaction
accounts.  Income from Bank Owned Life Insurance  increased $359,000 from $0 for
the nine months  ended June 30, 2003 to $359,000  for the nine months ended June
30, 2004.

     Non-interest  Expenses.  Total non-interest expenses increased by $446,000,
or 3.9%,  from $11.4  million for the nine  months  ended June 30, 2003 to $11.9
million for the nine months  ended June 30, 2004.  The increase in  non-interest
expenses was due to increases in salaries and related  expenses of $316,000,  or
5.0%.  Occupancy  expense also increased by $180,000,  from $1.2 million for the
nine months  ended June 30, 2003 to $1.4  million for the nine months ended June
30,  2004.  This was mainly  due to normal  increases  in rent and  electricity.
Advertising  expense also  increased by $91,000 or 15.2%,  from $598,000 for the
nine months  ended June 30, 2003 to $689,000  for the nine months ended June 30,
2004. This increase was due to additional  advertising and increased advertising
cost during the period.  These  increases were partially  offset by decreases in
Equipment expenses and telephone postage and office supplies.  Equipment expense
decreased by $85,000,  or 8.7% from  $974,000 for the nine months ended June 30,
2003 to $889,000  for the nine months  ended June 30,  2004.  This  decrease was
primarily due to decreased equipment repairs and decreased depreciation expense.
Telephone postage and office supplies decreased by $44,000 or 9.1% from $488,000
for the nine months  ended June 30, 2003 to $444,000  for the nine months  ended
June  30,  2004.  This  decrease  was  achieved  through  the  increased  use of
interoffice mail and e-mail.

     Income Taxes.  The  Company's  income tax expense was $137,000 and $770,000
for the nine months ended June 30, 2004 and 2003,  respectively.  The  Company's
effective tax rates were 18.1% and 38.1% for the nine months ended June 30, 2004
and 2003,  respectively.  The decrease in the  effective  tax rate was primarily
attributable  to the Bank's earning non -taxable income from the Bank Owned Life
Insurance.

                                       16
<PAGE>


COMPARISON  OF  OPERATING  RESULTS FOR THE THREE  MONTHS ENDED JUNE 30, 2004 AND
2003

     Net Income. Net income increased by $211,000,  or 966.8%,  from $22,000 for
the three months ended June 30, 2003 to $233,000 for the three months ended June
30, 2004. The increase in net income was primarily attributable to a decrease in
the  provision  for loan losses of  $698,000.  This was  partially  offset by an
increase in non interest expenses and a decrease in non interest income.

     Net Interest  Income.  Net  interest  income was $4.1 million for the three
months ended June 30, 2004,  compared to $4.2 million for the three months ended
June 30, 2003,  representing  a decrease of $68,000,  or 1.6%.  The decrease was
primarily  due to an  increase  in  the  average  balance  of  interest  bearing
liabilities and a decrease in the average rate on interest earning-assets.  This
was offset  somewhat by an increase in the average  balance on interest  earning
assets  and a  decline  in the  weighted  average  rate on  liabilities.  Due to
declining interest rates and loans re-pricing faster than deposits, the interest
rate spread  decreased 34 basis  points  from,  2.72% for the three months ended
June 30, 2004 to 2.38% for the three months ended June 30, 2004.

     Interest Income.  Interest income  increased by $82,000,  or 1.0% from $8.2
million for the three  months  ended June 30, 2003 to $8.3 million for the three
months ended June 30, 2004. Interest and fees on loans decreased by $776,000, or
12.4%,  from $6.2  million  for the three  months  ended  June 30,  2003 to $5.5
million for the three months ended June 30, 2004.  This was  primarily  due to a
decrease  in the  average  yield on loans of 59 basis  points from 6.64% for the
three  months  ended June 30, 2003 to 6.05% for the three  months ended June 30,
2004, and a $14.7 million  decrease in the average  balance of loans  receivable
from $376 .0 million at June 30, 2003 to $361.3  million at June 30,  2004.  The
decrease in the average balance of loans was primarily attributable to increased
competition  in  the  refinancing   market,   current  economic  conditions  and
management's  reluctance  to make long term low rate  loans in the low  interest
rate environment  that prevailed during the period.  The decrease in the average
yield was attributed to the prevailing market rates in the economy.  Interest on
mortgage-backed  securities increased by $505,000 or 50.7% from $1.0 million for
the three  months ended June 30, 2003 to $1.5 million for the three months ended
June 30, 2004.  This  increase was  primarily due to the increase in the average
balance of  mortgage-backed  securities  from $97.5  million at June 30, 2003 to
$162.3 million at June 30, 2004. Interest and dividends on investment securities
increased by $424,000 or 49.0% from $866,000  million for the three months ended
June 30, 2003 to $1.3 million for the three months ended June 30, 2004. This was
primarily  due to an  increase in the average  balance of  investments  of $63.3
million  from,  $101.9  million at June 30,  2003 to $165.2  million at June 30,
2004.

     Interest Expense. Interest expense, which consists of interest on deposits,
interest  on  borrowed  money and other  interest  expense  increased  from $4.0
million for the three  months  ended June 30, 2003 to $4.1 million for the three
months  ended June 30, 2004 a change of  $150,000 or 3.8%.  Interest on deposits
decreased  $130,000  due to a decrease  in the  average  yield on deposits of 27
basis  points  from 2.60% at June 30, 2003 to 2.33% at June 30,  2004.  This was
partially  offset by an  increase  in the  average  volume of  deposits of $38.7
million from $544.0 million at June 30, 2003 to $582.7 million at June 30, 2004.
The Company was able to increase its deposits through normal marketing  efforts.
Interest on  short-term  borrowings  increased  by $167,000 for the three months
ended June 30, 2004, and interest on long-term  borrowings  increased by $10,000
for the three months ended June 30, 2004.  The increase in interest on long-term
borrowings  and short term  borrowings  was due to an  increase  in the  average
balance of advances from the Federal Home Loan Bank of Atlanta of $60.1 million,
or 240.4%.  This was  partially  offset by a decrease of 259 basis points in the
average yield paid on advances from the Federal Home Loan Bank of Atlanta during
the three months ended June 30, 2004. Also  contributing to interest expense was
interest on the Junior Subordinated  Debenture/Trust  Preferred Securities which
was  $265,000  for the three  month  period  ending June 30,  2004,  compared to
$161,000 for the three month period ending June 30, 2003.  This increase was due
to an increase in the average balance of Trust  Preferred  Securities from $12.5
million during to $22.5 million during 2004.

                                       17
<PAGE>


     Average Balance Sheet.  The following table sets forth certain  information
relating to the Company's  average  balance sheet and reflects the average yield
on assets and cost of  liabilities  for the  periods  indicated  and the average
yields  earned and rates  paid.  Such  yields and costs are  derived by dividing
income or  expense  by the  average  daily  balance  of  assets or  liabilities,
respectively,  for the three month periods  ended June 30, 2004 and 2003.  Total
average assets are computed using month-end balances.

     The table also presents  information for the periods indicated with respect
to the differences between the average yield earned on  interest-earning  assets
and  average  rate  paid on  interest-bearing  liabilities,  or  "interest  rate
spread," which banks have  traditionally  used as an indicator of profitability.
Another  indicator of net interest income is "net interest margin," which is its
net interest income divided by the average balance of interest-earning assets.
<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED JUNE 30,
                                               -----------------------------------    ------------------------------------
                                                            2004                                       2003
                                               -----------------------------------    ------------------------------------
                                               AVERAGE                   AVERAGE       AVERAGE                     AVERAGE
                                               BALANCE      INTEREST      RATE         BALANCE       INTEREST       RATE
                                               -------      --------     -------       -------       --------      -------
<S>                                              <C>          <C>          <C>           <C>           <C>           <C>
                                                                           (Dollars in thousands)
Interest-earning assets:
   Loans....................................   $ 361,278    $   5,465        6.05%     $  376,016     $ 6,241         6.64%
   Mortgage-backed securities...............     162,253        1,501        3.70          97,489         996         4.09
   Investment securities....................     165,217        1,290        3.12         101,913         865         3.40
   Other Investments........................       4,286           19        1.77          25,657          91         1.42
                                               ---------    ---------                  ----------    --------
       Total interest-earning assets........     693,034        8,275        4.78         601,075       8,193         5.45
Noninterest-earning assets..................      58,052                                   34,364
                                               ---------                               ----------
       Total assets.........................   $ 751,086                               $  635,439
                                               =========                               ==========

Interest-bearing liabilities:
   Deposits.................................   $ 582,722        3,399        2.33         544,011       3,530         2.60
   FHLB Advances............................      85,083          481        2.26          24,992         303         4.85
   Jr. Sub. Debt/Trust Preferred Securities.      22,500          265        4.71          12,500         161         5.15
   Other liabilities........................       2,238            0        0.00           2,462           1         0.16
                                               ---------    ---------                  ----------    --------
Total interest-bearing liabilities..........     692,543        4,145        2.39         583,965       3,995         2.74
                                                            ---------    --------                    --------      -------
Noninterest-bearing liabilities.............      17,391                                    7,457
                                               ---------                               ----------
       Total liabilities....................     709,934                                  591,422
Stockholders' equity .......................      41,152                                   44,017
                                               ---------                               ----------
       Total liabilities and stockholders'
            equity..........................   $ 751,086                               $  635,439
                                               =========                               ==========

Net interest income.........................                $   4,130                                $  4,198
                                                            =========                                ========
Interest rate spread........................                                 2.38%                                    2.72%
                                                                          =======                                     ====
Net interest margin.........................                                 2.38%                                    2.79%
                                                                          =======                                     ====
Ratio average interest earning assets/
    interest bearing liabilities............                               100.07%                                  102.93%
                                                                           ======                                   ======
</TABLE>


                                       18
<PAGE>

     Rate/Volume  Analysis.  The table  below  sets  forth  certain  information
regarding changes in interest income and interest expense of the Company for the
periods   indicated.   For  each   category   of   interest-earning   asset  and
interest-bearing liability,  information is provided on changes attributable to:
(i) changes in volume (changes in volume  multiplied by old rate);  (ii) changes
in rates  (change  in rate  multiplied  by old  volume);  and (iii)  changes  in
rate/volume (changes in rate multiplied by the changes in volume).

<TABLE>
<CAPTION>

                                                            FOR THREE MONTHS  ENDED JUNE 30,
                                                ---------------------------------------------------
                                                        2004             VS.            2003
                                                ---------------------------------------------------
                                                                INCREASE (DECREASE)
                                                                       DUE TO
                                                ---------------------------------------------------
                                                                                RATE/
                                                VOLUME         RATE            VOLUME        TOTAL
                                                ------         ----            ------        -----
                                                                   (In thousands)
<S>                                                <C>           <C>           <C>           <C>
Interest income:
  Loans receivable..........................   $   (247)      $   (551)      $     22    $   (776)
  Mortgage-backed securities................        651            (88)           (58)        505
  Investment securities and
      FHLB Stock............................        538            (69)           (44)        425
  Other interest-earning assets.............        (76)            23             19         (72)
                                               --------       --------       --------    --------
    Total interest-earning assets...........        866           (685)           (99)         82

Interest expense:
  Deposits..................................        251           (357)           (25)       (131)
  FHLB advances.............................        723           (160)          (385)        178
  Jr. Sub. Debt./ Trust Preferred Securities        129            (14)           (11)        104
  Other liabilities.........................          0             (1)             0          (1)
                                               --------       --------       --------    --------
     Total interest-bearing
       liabilities..........................      1,103           (532)          (421)        150
                                               --------       --------       ---------   --------

Change in net interest income...............   $   (237)      $   (153)      $    322    $    (68)
                                               ========       ========       ========    ========
</TABLE>


     Provision for Loan Losses.  The Company charges  provisions for loan losses
to  earnings  to  maintain  the  total  allowance  for  loan  losses  at a level
management   considers   adequate  to  provide  for  probable  loan  losses.  In
determining  the  provision,  management  considers a number of factors  such as
existing loan levels, prior loss experience, current economic conditions and the
probability of these conditions  affecting future loan performance.  The Company
established provisions for losses on loans of $89,000 for the three months ended
June 30, 2004, as compared to $786,000 for the three months ended June 30, 2003,
representing a decrease of $697,000.The  decrease was partially  attributable to
the absence of a commercial  loan write off of $569,000  during the three months
ended June 30,  2003 and a  decrease  in the  average  balance of loans of $14.7
million or 3.9% from $376.0  million at June 30, 2003 to $361.3  million at June
30, 2003. Loan chargeoffs for the three months ended June 30, 2004 were $225,000
as compared to $886,000  for the three  months ended June 30, 2003 a decrease of
$661,000.  Loan chargeoffs decreased due to improving economic conditions.  Loan
recoveries  were $86,000 for the three  months  ended June 30, 2004  compared to
$110,000 for the three months ended June 30, 2003. Non performing  loans at June
30, 2004 were $1.1 million as compared to $348,000 at June 30,  2003.  The total
loss  allowance  allocated  to  loans  is $2.4  million.  In  establishing  such
provisions,  management  considered an analysis of the risk inherent in the loan
portfolio. For additional information see "Asset Quality" disclosure.

     Other Income.  Other income  decreased by $124,000,  or 31.7% from $392,000
for the three  months ended June 30, 2003 to $268,000 for the three months ended
June 30, 2004.  The decrease in other income for the three months ended June 30,
2004 was partially attributable to an increase in the loss on repossessed assets
of $124,000 from $0 for the three months ended June 30, 2003 to $124,000 for the
three months ended June 30, 2004 and a decrease in the gain on sale of mortgaged
backed  securities  of $79,000  for the three  months  ended June 30,  2004 from
$79,000  for the three  months  ended June 30,  2003 to $0 for the three



                                       19
<PAGE>

months ended June 30, 2004. This was partially offset by an increase in the cash
surrender  value of bank owned life  insurance  of $117,000 for the three months
ended June 30,  2004,  compared to $0 for the three  months ended June 30, 2003.
Fees on transaction  accounts also increased $39,000 from $133,000 for the three
months ended June 30, 2003 to $172,000 for the three months ended June 30, 2004.
Fees on  transaction  accounts  increased  due to the  increase in the volume of
transaction accounts.

     Non-interest  Expenses.  Total non-interest  expenses increased by $244,000
for the three months ended June 30, 2004, from $3.8 million for the three months
ended June 30, 2003 to $4.0  million for the three  months  ended June 30, 2004.
The Company  experienced  increases of $116,000 in salaries and related expenses
for the three months ended June 30, 2004, from $2.2 million for the three months
ended June 30, 2003 to $2.3  million for the three  months  ended June 30, 2004.
Advertising  expense  increased  by $31,000  from  $177,000 for the three months
ended June 40, 2003 to $208,000 for the three  months ended June 30, 2004.  This
was primarily due to the increased cost of advertising.  Data processing expense
also  increased  $53,000 for the three months ended June 30, 2004 from  $336,000
for the three  months ended June 30, 2003 to $389,000 for the three months ended
June 30,  2004.  This  increase was  primarily  due to the  increased  volume of
accounts.  Other  expenses also increased by $114,000 for the three months ended
June 30, 2004, from $63,000 for the three months ended June 30, 2003 to $177,000
for the three months ended June 30, 2004.  These increases were partially offset
by a decrease  equipment expense of $53,000,  from $341,000 for the three months
ended June 30, 2003 to $288,000 for the three  months ended June 30, 2004.  This
decrease was primarily due to a decrease in equipment repairs.

     Income Taxes.  The Company's income tax expense was $61,000 and $11,000 for
the three  months  ended June 30,  2004 and 2003,  respectively.  The  Company's
effective  tax rates  were 20.8% and 33.5% for the three  months  ended June 30,
2004  and  2003,  respectively.  The  decrease  in the  effective  tax  rate was
primarily  attributable to the Bank's earning  non-taxable  income from the Bank
Owned Life Insurance.


                                       20
<PAGE>


COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS

     The Company is a party to financial instruments with off-balance sheet risk
including  commitments  to extend  credit  under  existing  lines of credit  and
commitments  to sell  loans.  These  instruments  involve,  to varying  degrees,
elements of credit and interest rate risk in excess of the amount  recognized in
the consolidated balance sheets.

     Off-balance  sheet financial  instruments  whose contract amounts represent
credit and interest rate risk are summarized as follows:

<TABLE>
<CAPTION>

                                                                       June 30, 2004    September 30, 2003
                                                                       -------------    ------------------
                                                                           (dollars in thousands)
           <S>                                                              <C>                  <C>

         Commitments to originate new loans                           $    24,635            $    10,600
         Unfunded commitments to extend credit under existing
              equity line and commercial lines of credit                   21,431                 20,410
         Commercial letters of credit                                         419                    419

</TABLE>

     Commitments  to originate new loans or to extend  credit are  agreements to
lend to a customer as long as there is no violation of any condition established
in the contract.  Loan  commitments  generally expire within 30 to 45 days. Most
equity line  commitments for the unfunded portion of equity lines are for a term
of 20 years, and commercial lines of credit are generally renewable on an annual
basis.  Commitments  generally have fixed expiration dates or other  termination
clauses  and may require  payment of a fee.  Since many of the  commitments  are
expected to expire without being drawn upon, the total commitment amounts do not
necessarily  represent  future cash  requirements.  The Company  evaluates  each
customer's  creditworthiness  on a case-by-case  basis. The amount of collateral
obtained,  if deemed necessary by the Company upon extension of credit, is based
on management's credit evaluation of the borrower.

CONTRACTUAL OBLIGATIONS

     The following table sets forth the Company's contractual  obligations as of
June 30, 2004.

<TABLE>
<CAPTION>

                                                                   Payments due by period
                                                                   ----------------------
                                                                   (Dollars in thousands)
                                        Less than
                                         1 year               1-3 years         4-5 years        Over 5 years          Total
                                    -----------------         ---------         ---------        ------------          -----
<S>                                         <C>                  <C>              <C>                  <C>              <C>
Time Deposits                           $   197,566            $ 108,989        $  84,248           $     --          $390,803
Long-term borrowings                         79,950                   --            9,000              9,000            97,950
Junior Subordinated Debenture                    --                   --               --             23,197            23,197
Lease obligations                               933                3,086            1,390              6,558            11,967
                                        -----------            ---------        ---------           --------          --------

Total contractual cash
    obligations                         $   278,449            $ 112,075        $  94,638           $ 38,755          $523,917
                                        ===========            =========        =========           ========          ========
</TABLE>

                                       21
<PAGE>



ASSET QUALITY

     At  June  30,  2004,  the  Company  had   approximately   $1.2  million  in
non-performing assets (nonaccrual loans,  repossessed assets and foreclosed real
estate) or .17% of total assets.  At September 30, 2003,  non-performing  assets
were $583,000 or .09% of total assets.  Non accrual loans  increased by $800,000
from  $300,000 for the period ended  September  30, 2003 to $1.1 million for the
period ended June 30,  2004.  This was due to two  commercial  real estate loans
which are delinquent.  These loans are well collateralized and the Bank does not
expect to incur a loss. The Bank's allowance for loan losses was $2.4 million at
June 30, 2004 and $2.7 million at September 30, 2003.


     The following  table  presents an analysis of the Company's  non-performing
assets:
<TABLE>
<CAPTION>
                                                               At                      At
                                                            June 30,              September 30,
                                                              2004                    2003
                                                              ----                    ----
                                                                  (Dollars in Thousands)
<S>                                                             <C>                     <C>
Nonperforming loans:
Nonaccrual loans:
  Single-family residential                                  $    339                 $   300
  Multi-family residential                                         --                      --
  Commercial Real Estate                                          670                      --
  Construction                                                     --                      --
  Commercial Loans                                                 67                      --
  Consumer                                                         27                      --
                                                             --------                 -------
Total Nonaccrual loans                                          1,103                     300
Loans 90 days past due and accruing                                --                      --
Restructured loans                                                 --                      --
                                                             --------                 -------
Total nonperforming loans                                       1,103                     300
Other non-performing assets                                       141                     283
                                                             --------                 -------
Total nonperforming assets                                   $  1,244                 $   583
                                                             ========                 =======
Nonperforming loans to loans receivable, net                     .30%                    .08%
Nonperforming assets as a percentage
 of loans and foreclosed real estate                             .34%                    .15%
Nonperforming assets to total assets                             .17%                    .09%
</TABLE>




                                       22
<PAGE>


The  following  table sets forth an  analysis of the Bank's  allowance  for loan
losses for the periods indicated.
<TABLE>
<CAPTION>

                                     For the Nine Months Ended  For the Three Months Ended
                                              June 30,                   June 30,
                                          2004        2003        2004         2003
                                          ----        ----        ----         ----
         <S>                              <C>         <C>         <C>           <C>

Balance at beginning of period ......   $ 2,698     $ 2,199     $ 2,439     $ 2,153
                                        -------     -------     -------     -------

Loans charged-off:
  Real estate mortgage:
    Single-family residential .......        --          --          --          --
    Multi-family residential ........        --          --          --          --
    Commercial ......................        --          --          --          --
    Construction ....................        --          --          --          --
    Commercial loans ................        --         569          --         569
    Consumer ........................       907         932         225         316
                                        -------     -------     -------     -------
Total charge-offs ...................       907       1,501         225         885

Recoveries:
  Real estate mortgage:
    Single-family residential .......        --          --          --          --
    Multi-family residential ........        --          --          --          --
    Commercial ......................        --          --          --          --
    Construction ....................        --          --          --          --
Commercial loans secured ............        --          --          --          --
  Consumer ..........................       241         267          86         110
                                        -------     -------     -------     -------
Total recoveries ....................       241         267          86         110
Net loans charged off ...............      (666)     (1,234)       (139)        775
Provision for loan  losses ..........       356       1,199          88         786
                                        -------     -------     -------     -------
Balance at end of period ............   $ 2,388     $ 2,164     $ 2,388     $ 2,164
                                        =======     =======     =======     =======

Ratio of net charge-offs to average
  loans outstanding during the
  period ...........................        .18%        .39%        .03%        .24%
                                        =======     =======     =======     =======

</TABLE>

     Regulations  require  that the  Company  classify  its  assets on a regular
basis. There are three classifications for problem assets: substandard, doubtful
and loss.  The Company  regularly  reviews its assets to  determine  whether any
assets  require  classification  or  re-classification.  At June 30,  2004,  the
Company had $1.7 million in  classified  assets,  consisting  of $1.6 million in
substandard  and loss  loans,  and $ 141,000  in other  repossessed  assets.  At
September 30, 2003, the Company had $583,000 in substandard  assets,  consisting
of $300,000 in loans, and $283,000 in other repossessed assets.

     In addition to regulatory  classifications,  the Company also classifies as
"special mention" assets that are currently  performing in accordance with their
contractual  terms but may become  classified  or  non-performing  assets in the
future. At June 30, 2004, the Company has identified  approximately $2.5 million
in assets classified as special mention.






                                       23
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     At June  30,  2004,  the  Bank  exceeded  all  regulatory  minimum  capital
requirements. For information comparing the Bank's tangible, core and risk-based
capital  levels  to  the  regulatory  requirements,  see  Note  5  of  Notes  to
Consolidated Financial Statements.

     The  Company's  primary  sources of funds are deposits  and  proceeds  from
maturing investment securities and mortgage-backed  securities and principal and
interest  payments on loans.  While  maturities  and scheduled  amortization  of
mortgage-backed  securities and loans are a predictable source of funds, deposit
flows and mortgage prepayments are greatly influenced by general interest rates,
economic conditions, competition and other factors.

     The primary  investing  activities  of the Company are the  origination  of
loans and the purchase of investment securities and mortgage-backed  securities.
During the nine  months  ended June 30,  2004 and 2003,  the  Company  had $47.5
million and $52.5 million,  respectively, of loan originations.  During the nine
months ended June 30, 2004 and 2003, the Company purchased investment securities
in  the  amounts  of  $77.8  million  and  $133.6  million,   respectively,  and
mortgage-backed  securities in the amounts of $59.3  million and $58.8  million,
respectively. The primary financing activity of the Company is the attraction of
savings deposits.

     The Company has other  sources of  liquidity  if there is a need for funds.
The Bank has the  ability  to  obtain  advances  from  the FHLB of  Atlanta.  In
addition, the Company maintains a portion of its investments in interest-bearing
deposits at other financial institutions that will be available, if needed.

     The Bank is required to maintain minimum levels of liquid assets as defined
by OTS regulations.  This requirement,  which may be changed at the direction of
the OTS depending upon economic  conditions  and deposit flows,  is based upon a
percentage  of deposits and  short-term  borrowings.  The Bank's  average  daily
liquidity ratio for the month of June was  approximately  49.7%,  which exceeded
the required  level for such period.  Management  seeks to maintain a relatively
high level of liquidity in order to retain  flexibility  in terms of  investment
opportunities  and deposit pricing.  Because liquid assets generally provide for
lower rates of return,  the Bank's  relatively high liquidity will, to a certain
extent, result in lower rates of return on assets.

     The  Company's  most liquid assets are cash,  interest-bearing  deposits in
other  banks and  federal  funds  sold,  which  are  short-term,  highly  liquid
investments with original  maturities of less than three months that are readily
convertible  to known amounts of cash.  The levels of these assets are dependent
on the Company's operating,  financing and investing activities during any given
period.  At June 30, 2004,  cash,  interest-bearing  deposits in other banks and
federal funds sold were $13.8 million, $2.5.million and $193,000, respectively.

     The Company  anticipates  that it will have  sufficient  funds available to
meet its current  commitments.  Certificates  of deposit  which are scheduled to
mature in less than one year at June 30, 2004 totaled $197.5  million.  Based on
past experience, management believes that a significant portion of such deposits
will remain with the Bank.  The Bank is a party to  financial  instruments  with
off-balance-sheet  risk  made in the  normal  course  of  business  to meet  the
financing  needs of its  customers.  These  financial  instruments  are  standby
letters of credit,  lines of credit and  commitments  to fund mortgage loans and
involve  to  varying  degrees  elements  of credit  risk in excess of the amount
recognized in the statement of financial position. The contract amounts of those
instruments  express the extent of involvement  the Company has in this class of
financial  instruments and represents the Company's exposure to credit loss from
nonperformance by the other party.

     The Company  generally  requires  collateral  or other  security to support
financial instruments with off-balance-sheet  credit risk. At June 30, 2004, the
Company had commitments  under standby letters of credit and lines of credit and
commitments  to originate  mortgage  loans of $419,000,  $21.4 million and $24.6
million respectively.






                                       24
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market  risk is the  possible  chance of loss from  unfavorable  changes in
market prices and rates.  These changes may result in a reduction of current and
future period net interest income, which is the favorable spread earned from the
excess of interest income on  interest-earning  assets over interest  expense on
interest-bearing liabilities.

     The Company considers  interest rate risk to be its most significant market
risk, which could  potentially  have the greatest impact on operating  earnings.
The  structure  of the  Company's  loan and  deposit  portfolios  is such that a
significant  change in interest rates may adversely impact net market values and
net interest income.

     The Company  monitors whether material changes in market risk have occurred
since September 30, 2003. The Company does not believe that any material adverse
changes in market risk exposures occurred since September 30, 2003.

ITEM 4. CONTROLS AND PROCEDURES

     As of the end of the  period  covered  by this  report,  management  of the
Company  carried  out  an  evaluation,   under  the  supervision  and  with  the
participation  of  the  Company's  principal  executive  officer  and  principal
financial officer, of the effectiveness of the Company's disclosure controls and
procedures.  Based on this evaluation, the Company's principal executive officer
and principal financial officer concluded that the Company's disclosure controls
and  procedures  are  effective  in  ensuring  that  information  required to be
disclosed  by the  Company  in  reports  that it  files  or  submits  under  the
Securities Exchange Act of 1934, as amended, is recorded, processed,  summarized
and reported,  within the time periods  specified in the Securities and Exchange
Commission's  rules  and  forms.  It  should  be noted  that the  design  of the
Company's  disclosure  controls  and  procedures  is based in part upon  certain
reasonable  assumptions about the likelihood of future events,  and there can be
no reasonable  assurance  that any design of disclosure  controls and procedures
will  succeed  in  achieving  its  stated  goals  under  all  potential   future
conditions,  regardless of how remote, but the Company's principal executive and
financial  officers have  concluded that the Company's  disclosure  controls and
procedures are, in fact, effective at a reasonable assurance level.

     In addition,  there have been no changes in the Company's  internal control
over financial  reporting (to the extent that elements of internal  control over
financial  reporting are subsumed  within  disclosure  controls and  procedures)
identified in connection  with the evaluation  described in the above  paragraph
that occurred  during the Company's  last fiscal  quarter,  that has  materially
affected,  or is reasonably likely to materially  affect, the Company's internal
control over financial reporting.


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<PAGE>


PART II.  OTHER INFORMATION

         ITEM 1.  LEGAL PROCEEDINGS

         None.

         ITEM 2.  CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF
                  EQUITY SECURITIES

         None.

         ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

         None.

         ITEM 5.  OTHER INFORMATION

         None.

         ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      List of Exhibits

        The following exhibits are filed herewith:

        Exhibit                                      Title
        Number                                       -----
        ------

        31.1     Rule 13a-14(a) Certification of Chief Executive Officer

        31.2     Rule 13a-14(a) Certification of Chief Financial Officer

        32       Certification  Pursuant to 18 U.S.C.  Section 1350, as Adopted
                 Pursuant to Section 906 of the  Sarbanes-Oxley  Act of
                 2003.

     The  following  current  reports on Form 8-K were filed  during the quarter
ended June 30, 2004:

        (b)      Form 8-K


                 On May 13, 2004 the Company  filed a Current  Report on Form
                 8-K reporting under Item 5, Item 7 and Item 12.



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<PAGE>
                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                    BCSB BANKCORP, INC.



Date: August 11, 2004               /s/ Gary C. Loraditch
                                    -----------------------------------
                                    Gary C. Loraditch
                                    President
                                    (Principal Executive Officer)


Date: August 11, 2004               /s/ Bonnie M. Klein
                                    -----------------------------------
                                    Bonnie M. Klein
                                    Vice President and Treasurer
                                    (Principal Financial and Accounting Officer)




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