Pulaski Financial 10K 2008 Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2008

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ____________

Commission File No.:0-24571

PULASKI FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Missouri

43-1816913

(State or other jurisdiction

of incorporation or organization)

(IRS Employer Identification No.)

12300 Olive Boulevard, St. Louis, Missouri 63141

(Address of principal executive offices)

Registrant’s telephone number, including area code:(314) 878-2210

Securities registered pursuant to Section 12(b) of the Act:


Common Stock, par value $0.01 per share		The Nasdaq Stock Market LLC
(Title of Each Class)		(Name of Each Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x.

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 of 1934 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 disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):


Large Accelerated Filer ¨		Accelerated Filer x

Non-accelerated Filer ¨		Smaller Reporting Company ¨

(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ¨ No x.

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter was $91.5 million.

There were issued and outstanding 10,217,459 shares of the registrant’s common stock as of December 10, 2008.

Documents Incorporated by Reference

Portions of 2008 Annual Report to Stockholders (Part II).

Portions of the Definitive Proxy Statement for the 2009 Annual Meeting of Stockholders (Part III).

INDEX


		Page No.
PART I

Item 1. Business		3
Item 1A. Risk Factors		33
Item 1B. Unresolved Staff Comments		40
Item 2. Properties		41
Item 3. Legal Proceedings		42
Item 4. Submission of Matters to a Vote of Security Holders		42

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		43
Item 6. Selected Financial Data		44
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		44
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		44
Item 8. Financial Statements and Supplementary Data		45
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		45
Item 9A. Controls and Procedures		45
Item 9B. Other Information		45

PART III

Item 10. Directors, Executive Officers and Corporate Governance		46
Item 11. Executive Compensation		46
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		46
Item 13. Certain Relationships, Related Transactions and Director Independence		47
Item 14. Principal Accountant Fees and Services		47

PART IV

Item 15. Exhibits and Financial Statement Schedules		48

SIGNATURES		50

This report contains certain “forward-looking statements” within the meaning of the federal securities laws, which are made in good faith pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts, rather statements based on Pulaski Financial Corp’s current expectations regarding its business strategies, intended results and future performance. Forward-looking statements are generally preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions.

Management’s ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors which could cause actual results to differ for anticipated results include interest rate trends, the general economic climate in the market area in which Pulaski Financial Corp. operates, as well as nationwide, Pulaski Financial Corp.’s ability to control costs and expenses, competitive products and pricing, loan delinquency rates and changes in federal and state legislation and regulation and accounting principles. These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. Subject to applicable law and regulation, Pulaski Financial Corp. assumes no obligation to update any forward-looking statements.

Unless the context indicates otherwise, all references in this annual report on Form 10-K to the “Company,” “we,” “us” and “our” refer to Pulaski Financial Corp. and its subsidiaries.

PART I

Item 1. Business

General

Pulaski Financial Corp. (the “Company”) is the holding company for Pulaski Bank (the “Bank”). The Company’s primary asset is its investment in the Bank, but it also maintains investment and mortgage-backed securities portfolios for liquidity. It has subordinated debt in connection with the issuance of trust preferred securities, the proceeds from which have been injected into the Bank as capital. Accordingly, the information set forth in this annual report on Form 10-K, including the consolidated financial statements and related financial data, relates primarily to the Bank.

Pulaski Bank provides an array of financial products and services for businesses and retail customers primarily through its twelve full-service offices in the St. Louis metropolitan area and three loan production offices in the Kansas City metropolitan area and the Illinois portion of the St. Louis metropolitan area. Pulaski Bank is primarily engaged in attracting deposits from individuals and businesses and using these deposits, together with borrowed funds, to originate one-to four-family residential mortgage loans, residential construction loans, home equity lines of credit, multifamily and commercial real estate and commercial and industrial loans principally within its lending market.

Available Information

We maintain an Internet website athttp://www.pulaskibankstl.com. We make available our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended, and other information related to us, free of charge, on this site as soon as reasonably practicable after we electronically file those documents with, or otherwise furnish them to, the Securities and Exchange Commission. Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this annual report on Form 10-K.

Market Area

We currently conduct our business in the St. Louis metropolitan area and, to a lesser extent, in the Kansas City metropolitan area. In the St. Louis metropolitan area, we conduct operations out of our main office, eleven full-service branch offices and one loan production office. In the Kansas City metropolitan area, we operate out of two mortgage lending offices in Lee’s Summit, Missouri and Overland Park, Kansas.

Competition

We face intense competition attracting savings deposits (our primary source of lendable funds) and originating loans. Our most direct competition for savings deposits has historically come from commercial banks, other thrift institutions and credit unions located in our market area. We have faced additional significant competition for investors’ funds from short-term money market securities and other corporate and government securities.

At June 30, 2008, which is the most recent date for which data is available from the Federal Deposit Insurance Corporation (the “FDIC”), we held approximately 1.5% of the deposits in the St. Louis, Missouri-Illinois Metropolitan Statistical Area, which was the thirteenth largest market share out of 139 financial institutions with offices in this metropolitan statistical area. Banks owned by large bank holding companies, such as US Bancorp, Bank of America Corporation and Regions Financial Corp., operate in our market area. These institutions are significantly larger than us and, therefore, have significantly greater resources that could allow them to offer a wider variety of products and services.

Our competition for loans comes principally from other financial institutions, mortgage banking companies and mortgage brokers. We expect competition to increase in the future as a result of legislative, regulatory and technological changes. Technological advances, for example, have lowered barriers to market entry, allowed banks to expand their geographic reach by providing services over the Internet and made it possible for non-depository institutions to offer products and services that traditionally have been provided by banks. The Gramm-Leach-Bliley Act, which permits affiliation among banks, securities firms and insurance companies, also has changed the competitive environment as several non-traditional banking companies have begun collecting deposits in the St. Louis metropolitan area.

Lending Activities

Residential Mortgage Lending. The majority of our mortgage production is sold on a best efforts, flow basis, servicing-released, to a number of regional and national secondary market investors. This strategy enables us to have a much larger lending capacity, provide a much more comprehensive product offering and reduce the interest rate, prepayment and credit risks associated with residential lending. This strategy also allows us to offer more competitive interest rates. Loans originated for sale are closed in our name and held in “warehouse” until they are sold to the investors, typically within 30 days. The loans held in warehouse provide an attractive asset yield during the short time we hold them, pending their sale, because we are able to fund these longer-term assets (typically 30 year mortgages) with low-cost, short-term funds. Loan sale activity is our largest source of non-interest income.

We are a direct endorsement lender with the Federal Housing Administration (“FHA”). Consequently, our FHA-approved, direct endorsement underwriters are authorized to approve or reject FHA-insured loans up to maximum amounts established by FHA. We are also an automatic lender with the Veterans’ Administration (“VA”), which enables our designated qualified personnel to approve or reject loans on behalf of the VA.

We offer a variety of adjustable-rate mortgage (“ARM”) loans. These ARM loans may be sold in the secondary market or originated for portfolio investment. The loan fees charged, interest rates and other provisions of our ARM loans are determined by us on the basis of our own pricing criteria, the composition and interest rate risk of our current loan portfolio and market conditions. Interest rates and payments on our ARM loans generally are adjusted periodically to a rate typically equal to 2.00% to 3.75% above the one-year constant maturity U.S. Treasury index. The periodic interest rate cap (the maximum amount by which the interest rate may be increased or decreased in a given period) on our ARM loans is generally 2% per adjustment period and the lifetime interest rate cap is generally 6% over the initial interest rate of the loan. We qualify the borrower based on the borrower’s ability to repay the ARM loan based on the maximum interest rate at the first adjustment in the case of one-year ARM loans, and based on the initial interest rate in the case of ARM loans that adjust after two or more years. We do not originate negative amortization loans for portfolio investment. We believe that the periodic adjustment feature of our ARM loans provides us the flexibility to offer initial interest rates that are competitive while limiting our long-term exposure to interest-rate risk.

Borrower demand for ARM loans versus fixed-rate mortgage loans is a function of current and expected market interest rates and the difference between the initial interest rates and fees charged for each type of loan. The relative amount of fixed-rate mortgage loans and ARM loans that can be originated at any time is largely determined by the demand for each.

We require title insurance insuring the status of our lien on all of our residential mortgage loans and also require that fire and extended coverage casualty insurance (and, if appropriate, flood insurance) be maintained in an amount equal to the greater of the outstanding loan balance or the full replacement cost of the dwelling.

Our lending policies generally limit the maximum loan-to-value ratio on first mortgage loans secured by owner-occupied properties to 80% of the lesser of the appraised value or the purchase price. We will make loans in excess of that limit provided the borrower obtains mortgage insurance or the customer demonstrates sufficient credit history and ability to service the debt. Prior to 2008, the Company offered second mortgage loans that exceed 80% combined loan-to-value ratios, which were priced with enhanced yields. The Company still offers second mortgage loans up to 85% of the current loan values on an exception basis to extremely credit-worthy borrowers. However, the current underwriting guidelines are more stringent due to the current adverse economic environment. At September 30, 2008 the Company had $86.3 million of second mortgage loans.

We generally obtain appraisals on our real estate loans from our in-house staff of licensed appraisers and independent appraisers. During the year ended September 30, 2008, the Company performed approximately 60% of its appraisals through the in-house staff. By using in-house staff to perform the appraisal services, management has improved the quality of the appraisal process as loan officers no longer have the ability to control the assignment of the appraisal services.

Construction and Development Loans. We originate real estate construction and development loans that consist primarily of 1-4 family residential construction loans made to retail mortgage customers and builders. Loan disbursements are closely monitored by management to ensure that funds are being used strictly for the purposes agreed upon in the loan covenants. We employ both internal staff and external title company experts to ensure that loan disbursements are substantiated by regular inspections and review. Construction and development loans are similar to all residential loans in that loans are underwritten according to the adequacy of the borrower’s repayment sources at the time of approval. Unlike conventional residential lending, signs of deterioration in the customer’s ability to repay the loan is measured throughout the life of the loan and not just at origination or when the loan becomes past due. In most instances, loan amounts are limited to 85% of the “as completed” appraised value of the construction project. Personal

guarantees are generally obtained from commercial borrowers. At September 30, 2008, the Company had $6.7 million of land development loans to residential developers and none of these loans were greater than 90 days past due.

Commercial Real Estate Loans. We engage in commercial real estate lending, typically through direct originations. We have expanded our commercial real estate portfolio to provide diversification and to generate assets that are sensitive to fluctuations in interest rates. Commercial real estate loans are generally prime-based, floating-rate loans, or short-term (one to five year), fixed-rate loans. Personal guarantees are generally obtained. Our commercial loan policy limits our lending amount to 15% of our unimpaired Bank capital plus reserves, which was $114.8 million at September 30, 2008. Current market conditions are particularly adverse for residential land development loans and the Company has recently de-emphasized this type of lending.

Commercial and Industrial Loans. We originate commercial and industrial loans that are secured by property such as inventory, equipment and finished goods. All commercial borrowers are evaluated for the adequacy of repayment sources at the time of approval and are regularly reviewed for any possible deterioration in their ability to repay the loan. In most instances, collateral is required to provide an additional source of repayment in the event of default by the borrower. The structure of the collateral varies from loan to loan depending on the financial strength of the borrower, the amount and terms of the loan, and the collateral available to be pledged. Personal guarantees are generally obtained.

Home Equity Lines of Credit.Home equity lines of credit are secured with a deed of trust and are issued in an amount up to 85% of the appraised or assessed value of the property securing the line of credit, less the outstanding balance on the first mortgage. The Bank’s credit underwriting standards for home equity loans have generally followed conforming loan guidelines. This type of loans is generally originated in conjunction with the process of originating first mortgage loans eligible for sale in the secondary market. In prior periods, the Company originated certain home equity loans with available lines up to 100% of the appraised value of the home when combined with the balance of the first mortgage loans. At September 30, 2008, the balance of equity loans with combined loan-to-value ratios equal to 100% totaled approximately $5 million. Interest rates on home equity lines of credit are adjustable and are tied to the prime interest rate. This rate is obtained from the Wall Street Journal and adjusts on a monthly basis. Our introductory rate on equity lines loans is also the floor rate on all new originations. Interest rates are based upon the loan-to-value ratio of the property, with better rates given to borrowers with more equity. Home equity lines of credit, because they adjust monthly with fluctuations in the prime interest rate, present less interest rate risk to us. Lending up to 100% of the value of the property presents greater credit risk to us. Consequently, we limit this product to customers with a favorable credit history.

Consumer and Other Loans. We originate consumer loans to residents of the metropolitan areas of St. Louis and Kansas City. These loans are generally offered to our customers as a convenience and include automobile loans, unsecured loans, and other secured consumer goods loans. Automobile loans currently in the portfolio consist of fixed-rate loans secured by both new and used cars and light trucks. New cars are financed for a period of up to 72 months while used cars are financed for 60 months or less depending on the year and model. Collision and comprehensive insurance coverage is required on all automobile loans. Consumer and other loans totaled $6.9 million at September 30, 2008.

Loan Marketing and Processing. Loan applicants come through direct marketing efforts by our loan officers, as well as through referrals by realtors, financial planners, previous and present customers and, to a far lesser extent, through television, radio, internet and print advertising promotions. All types of loans may be originated in any of our offices, but are closed primarily at title companies to accommodate our customers. Loans we retain in our portfolio are serviced from our main office. Loans sold into the secondary mortgage market are generally sold on a “servicing released” basis and are serviced by the purchaser while

loans sold on a participation basis are serviced by us. Mortgage loan officers are compensated for their loan production based upon the dollar volume closed, as well as the gain on the sale produced.

Upon receipt of a loan application from a prospective borrower, a credit report and other data are obtained to verify specific information relating to the loan applicant’s employment, income and credit standing. An appraisal of the real estate offered as collateral is performed by an appraiser approved by us and licensed or certified by the State of Missouri.

The board of directors has granted loan approval authority to certain officers up to prescribed limits, depending on their experience and tenure. The CEO may approve secured loans up to $1.0 million and unsecured up to $250,000. An internal loan committee, consisting of five senior officers and two non-management directors approves secured loans up to $8.0 million and unsecured loans up to $2.0 million, while all loans above these levels are approved by the full board of directors.

Loan applicants are promptly notified of our decision. Interest rates are subject to change if the approved loan is not closed within the time of the commitment, which usually is 60 to 90 days.

Loan Underwriting Risks.

Adjustable-Rate Loans. The retention of ARM loans in our loan portfolio helps reduce our exposure to changes in interest rates. There are, however, credit risks resulting from the potential of increased costs to be paid by the customer due to changing interest rates. During periods of rising interest rates, the risk of default on ARM loans increases as a result of repricing and the increased costs to the borrower. Furthermore, because the ARM loans we originate generally provide initial rates of interest below the fully-indexed rates, these loans are subject to increased risks of default, delinquency, or prepayment as the rates adjust upward to the fully-indexed rates.

Second Mortgage Loans and Home Equity Lines of Credit. Second mortgage loans and home equity lines of credit generally involve greater credit risk than first mortgage loans because they are secured by mortgage loans that are subordinate to the first mortgage loan on the property. This means that if the borrower is forced into foreclosure, we will receive no proceeds from the sale of the property until the first mortgage has been completely repaid. Second mortgage loans and home equity lines of credit often have high loan-to-value ratios when combined with the first mortgage on the property. Loans with high combined loan-to-value ratios will be more sensitive to declining property values than would those with lower combined loan-to-value ratios and, therefore, may experience a higher incidence of default and severity of losses.

Construction and Development Loans. Construction and development loans involve greater credit risks than residential or commercial real estate lending. Our risk of loss on these types of loans is dependent largely upon the accuracy of the initial estimate of the property’s value at completion of construction or development and the estimated cost (including interest) of the construction. If the estimate of construction costs is inaccurate, we may be required to advance additional funds to complete the development. If, upon completion of the project, the estimate of the marketability of the property is inaccurate, the borrower may be unable to sell the completed project in a timely manner or obtain adequate proceeds to repay the loan. Delays in completing the project may arise from labor problems, material shortages and other unpredictable contingencies. Construction lending also typically involves higher loan principal amounts and is often concentrated with a small number of builders. In addition, during the term of a construction loan, no payment from the borrower is required since the accumulated interest is added to the principal of the loan through an interest reserve. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest. Furthermore, if our estimate of value of a completed project is inaccurate, then

we may be confronted with, at or prior to the maturity of the loan, a project with a value that is insufficient to assure full repayment and we may incur a loss. We generally obtain personal guarantees from builders and commercial borrowers.

Commercial Real Estate Loans. Loans secured by commercial real estate generally have larger loan balances and involve greater risks than one- to four-family residential mortgage loans because the properties securing these loans often have unpredictable cash flows and are more difficult to evaluate and monitor. Payments on loans secured by such properties are often dependent on successful management and operation of the properties. Repayment of such loans may be affected, to a greater extent, by adverse conditions in the real estate market or the economy. If the cash flow from the property is reduced (for example, if leases are not obtained or renewed) the borrower’s ability to repay the loan and the value of the property securing the loan may be impaired. We seek to minimize these risks in a variety of ways, including limiting the size of such loans, reviewing the financial condition of the borrower, verifying the quality of the collateral and scrutinizing the management of the property securing the loan. We also generally obtain loan guarantees from financially capable parties. Our lending personnel or one of our agents inspects all of the properties securing our commercial real estate loans before the loan is made.

Commercial and Industrial Loans. Unlike residential mortgage loans, which generally are made on the basis of a borrower’s ability to make repayment from his or her employment or other income, and which are secured by real property whose value tends to be more easily ascertainable, commercial and industrial loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business, including, in the case of loans secured by accounts receivable, the ability of the borrower to collect amounts due from its customers. There is little additional credit support provided by the borrower for most of these loans and the secondary source of repayment is based almost solely on the liquidation of the pledged collateral and the ability to collect on personal guarantees, if any. As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself, which may be subject to adverse conditions in the economy. Further, any collateral securing such loans may depreciate over time, be difficult to appraise, fluctuate in value and provide an insufficient source of repayment.

Consumer Loans. Consumer loans entail greater risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by rapidly depreciating assets such as automobiles. In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation. The remaining deficiency often does not warrant further collection efforts against the borrower beyond obtaining a deficiency judgment. In addition, consumer loan repayments are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely affected by loss of employment, divorce, illness or personal bankruptcy. Furthermore, the application of various Federal and state laws, including Federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

TABLE 1: Loans Receivable


	At September 30,
	2008					2007					2006					2005					2004
	Amount			Percent of Total		Amount			Percent of Total		Amount			Percent of Total		Amount			Percent of Total		Amount			Percent of Total
	(Dollars in thousands)
Real estate mortgage:
Residential first mortgage	$	253,132		22.97	%	$	232,064		24.05	%	$	230,585		28.89	%	$	219,192		33.98	%	$	214,652		41.31	%
Residential second mortgage		86,349		7.83	%		100,142		10.37	%		84,161		10.54	%		36,537		5.67	%		28,007		5.39	%
Commercial and multi-family		293,713		26.64	%		230,425		23.86	%		164,157		20.56	%		118,695		18.40	%		63,592		12.24	%
Real estate construction		99,382		9.01	%		98,921		10.24	%		57,195		7.16	%		45,022		6.98	%		34,441		6.63	%
Commercial and industrial		137,688		12.49	%		77,642		8.04	%		48,785		6.11	%		26,306		4.08	%		16,787		3.23	%
Home equity		225,357		20.44	%		219,539		22.73	%		207,153		25.95	%		195,647		30.34	%		158,462		30.50	%
Consumer and other:
Automobile		2,334		0.21	%		2,647		0.27	%		2,123		0.27	%		1,838		0.28	%		1,801		0.35	%
Other		4,562		0.41	%		4,271		0.44	%		4,154		0.52	%		1,676		0.27	%		1,884		0.35	%

Total loans		1,102,517		100.00	%		965,651		100.00	%		798,313		100.00	%		644,913		100.00	%		519,626		100.00	%

Add (less):
Unamortized loan origination costs, net of loan fees		5,205					5,163					4,879					3,931					3,152
Loans in process		(6,223	)				(10,567	)				(10,176	)				(8,843	)				(6,615	)
Allowance for loan losses		(12,762	)				(10,421	)				(7,817	)				(6,806	)				(5,579	)

Total loans receivable, net	$	1,088,737				$	949,826				$	785,199				$	633,195				$	510,584

TABLE 2: Loan Maturities and Re-pricing (1)


	At September 30, 2008
	Due Or Re-pricing Within One Year		Due Or Re-pricing After One Year Through Five Years		Due Or Re-pricing Beyond Five Years		Total
	(In thousands)
Real estate mortgage:
Residential	$	93,573	$	101,116	$	144,792	$	339,481
Commercial and multi-family		169,160		107,739		16,814		293,713
Real estate construction		82,014		15,831		1,537		99,382
Commercial and industrial		95,187		18,689		23,812		137,688
Home equity		197,152		28,141		64		225,357
Consumer and other		1,891		4,790		215		6,896

Total loans	$	638,977	$	276,306	$	187,234	$	1,102,517

(1)	Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less. Mortgage loans that have adjustable rates are shown as maturing at their next re-pricing date.

TABLE 3: Fixed and Adjustable Rate Loans


	Loans due or re-pricing after September 30, 2009
	Fixed Rate		Adjustable Rate
	(In thousands)
Real estate mortgage:
Residential	$	135,724	$	110,184
Commercial and multi-family		124,216		337
Real estate construction		17,368		—
Commercial and industrial		42,501		—
Home equity		—		28,205
Consumer and other		5,005		—

Total	$	324,814	$	138,726

Scheduled contractual principal repayments of loans generally do not reflect the actual life of such assets. The average life of loans is substantially less than their contractual terms because of prepayments. In addition, due-on-sale clauses on loans generally give us the right to declare loans immediately due and payable if, among other things, the borrower sells the property subject to the mortgage and the loan is not repaid. The average life of mortgage loans tends to increase, however, when current mortgage loan market rates are substantially higher than rates on existing mortgage loans and, conversely, decreases when rates on existing mortgage loans are substantially higher than current mortgage loan market rates.

Loan Originations, Sales and Purchases.To manage our interest rate risk position, we generally sell the fixed-rate residential mortgage loans that we originate. The sale of such loans in the secondary mortgage market reduces our risk that the interest rates paid on deposits will increase while we hold long-term, fixed-rate loans in our portfolio. It also allows us to continue to fund loans when deposit flows decline or funds are not otherwise available. Residential mortgage loans are generally sold with servicing released. Gains, net of origination expense, from the sale of such loans are recorded at the time of sale. Generally a loan is committed to be sold and a price for the loan is determined at the same time the interest rate on the

loan is locked with the customer, which may be at the time the applicant applies for the loan or any time up to the date of closing. This eliminates the risk to us that a rise in market interest rates will reduce the value of a mortgage before it can be sold.

Additionally, we generally negotiate a best efforts delivery, which minimizes any exposure from loans that do not close. Our issuance of interest rate commitments is considered a derivative investment and changes in market value are reported in our consolidated balance sheet and statement of income and comprehensive income.

TABLE 4: Loan Activity


	Years Ended September 30,
	2008			2007			2006
	(In thousands)
Total gross loans, including loans held for sale, at beginning of period	$	1,024,584		$	859,472		$	710,064
Loans originated:
Residential real estate		1,454,363			1,483,847			1,299,247
Commercial and multi-family real estate		119,259			123,862			110,818
Real estate construction and development		66,825			104,946			65,612
Commercial and industrial		302,280			172,946			78,008
Home equity		147,640			179,997			178,650
Consumer and other		3,057			3,101			3,059

Total loans originated		2,093,424			2,068,699			1,735,394

Loans acquired in business combination		—			—			12,249
Loans purchased:
Residential real estate		1,475			513			18,753
Commercial real state		27,627			16,020			1,790
Loans sold		(1,327,263	)		(1,331,839	)		(1,146,312	)
Loan principal repayments		(646,190	)		(588,281	)		(472,466	)

Net loan activity		149,073			165,112			149,408

Total gross loans, including loans held for sale, at end of period	$	1,173,657		$	1,024,584		$	859,472

Nonperforming Assets and Delinquencies

All commercial loans are evaluated for the adequacy of repayment sources at the time of approval and are regularly reviewed for any possible deterioration in the ability of the borrower to repay the loan. Residential mortgage loan borrowers are typically only downgraded after origination when they have failed to make a required payment. The Bank follows the following collection procedures for all types of loans, excluding consumer loans, although larger customers are typically contacted sooner. The first notice is mailed to the borrower 8 days after the payment due date. Attempts to contact the borrower by telephone generally begin approximately 17 days after the payment due date. On the 30^th day after the due date, a 30 day past due letter is sent. If a satisfactory response is not obtained, continuous follow-up contacts are attempted until the loan has been brought current. On the 45^th day after the due date, a 45 day past due notice is sent. Before the 60^th day of delinquency, attempts to interview the borrower, preferably in person, are made to establish: (1) the cause of the delinquency; (2) whether the cause is temporary; (3) the attitude of the borrower toward the debt; and (4) a mutually satisfactory arrangement for curing the default. Also, in the case of second mortgage loans, after the 60^th day of delinquency: (1) the status and unpaid principal balance of each superior lien is determined; (2) whether any mortgage constituting a superior lien has been sold to any investor; and (3) whether the borrower is also delinquent under a superior lien and what the affected lien holder intends to do to resolve the delinquency.

If the borrower cannot be reached and does not respond to collection efforts, a personal collection visit or property inspection is made and a photograph of the exterior of the property is taken. The physical condition and occupancy status of the property is determined before recommending further action. Such inspection normally takes place on or about the 45^th day of delinquency. Generally, after 45 days into the delinquency procedure, the Bank notifies the borrower that home ownership counseling is available for eligible homeowners. If by the 91^st day of delinquency, or sooner if the borrower is chronically delinquent and all reasonable means of obtaining payment on time have been exhausted, foreclosure, according to the terms of the security instrument and applicable law, is initiated.

When a consumer loan borrower fails to make a required payment, the Bank institutes collection procedures. The first notice is mailed to the borrower 8 days following the payment due date. The Bank receives a computer-generated collection report daily. The customer is contacted by telephone to ascertain the nature of the delinquency. If by the 45^th day following the payment due date, no progress has been made, a written notice is mailed informing the borrowers of their right to cure the delinquency within 20 days and of the Bank’s intent to begin legal action if the delinquency is not corrected. Depending on the type of property held as collateral, the Bank either obtains a judgment in small claims court or takes action to repossess the collateral or may collect under the existing note, whatever is most economically efficient.

Loans are placed on non-accrual status when, in the opinion of management, there is reasonable doubt as to the collectability of interest or principal. Non-accrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collectability of interest or principal.

The Bank’s Board of Directors is informed, on a quarterly basis, as to the status of all loans that are delinquent 90 days or more, the status on all loans currently in foreclosure, and the status of all foreclosed and repossessed property owned by the Bank.

TABLE 5: Non-performing Assets


	At September 30,
	2008			2007			2006			2005			2004
	(Dollars in thousands)
Loans accounted for on a non-accrual basis:
Residential real estate first mortgage.	$	5,904		$	1,780		$	736		$	142		$	370
Residential real estate second mortgage		752			302			58			—			—
Commercial and multi-family real estate		1,125			3,708			—			—			—
Real estate-construction and development		133			—			—			—			—
Commercial and industrial		341			—			—			—			—
Home equity		1,695			554			119			—			66
Consumer and other		160			105			27			24			93

Total		10,110			6,449			940			166			529

Accruing loans which are contractually past due 90 days or more:
Residential real estate first mortgage.		2,543			2,212			3,614			4,742			3,495
Residential real estate second mortgage		—			352			370			—			—
Commercial and multi-family real estate		231			44			125			—			—
Real estate-construction and development		—			—			—			440			—
Commercial and industrial		—			—			—			—			—
Home equity		1,468			1,064			1,456			618			215
Consumer and other		7			150			21			17			32

Total		4,249			3,822			5,586			5,817			3,742

Troubled debt restructurings:
Residential real estate first mortgage .		4,985			209			220			13			—
Residential real estate second mortgage		670			—			—			—			—
Commercial and industrial		537			—			—			—			—
Home equity		112			—			—			—			—

Total		6,304			209			220			13			—

Non-performing loans (1)		20,663			10,480			6,746			5,996			4,271
Real estate owned (net)		3,519			3,090			2,764			754			1,068
Other non-performing assets		237			43			43			—			7

Total non-performing assets	$	24,419		$	13,613		$	9,553		$	6,750		$	5,346

Total non-performing loans as a percentage of net loans		1.88	%		1.09	%		0.85	%		0.94	%		0.83	%
Total non-performing loans as a percentage of total assets		1.58	%		0.93	%		0.70	%		0.76	%		0.67	%
Total non-performing assets as a percentage of total assets		1.87	%		1.20	%		0.99	%		0.86	%		0.84	%

(1)	Includes $221,000, $696,000, $667,000, $663,000, and $848,000 of FHA/VA loans at September 30, 2008, 2007, 2006, 2005 and 2004, respectively, the principal and interest payments on which are fully insured.

Interest income recognized on non-accrual loans was approximately $369,000, $347,000 and $69,000 for the years ended September 30, 2008, 2007 and 2006, respectively. The gross interest income that would have been recorded in such period if the loans had been current in accordance with their terms and had been outstanding throughout the period was $445,000, $633,000 and $110,000 for the years ended September 30,

2008, 2007 and 2006, respectively. Impaired loans continuing to accrue interest are loans that are more than 90 days past due; however, the loans are well secured and remain in process of collection.

Real Estate Acquired in Settlement of Loans. Real estate acquired by the Bank as a result of foreclosure or by deed-in-lieu of foreclosure is initially recorded at the lower of its cost, which is the unpaid principal balance of the related loan plus foreclosure costs, or fair market value less estimated selling costs. Upon receipt of a new appraisal and market analysis, the carrying value is written down through a charge to income, if appropriate. The balance of real estate acquired in settlement of loans increased $429,000 from $3.1 million at September 30, 2007 to $3.5 million at September 30, 2008. The balance at September 30, 2008 consists of thirty-seven residential properties, five residential construction properties and two building lots acquired in settlement of debts outstanding.

Asset Classification. The Bank has adopted the Uniform Credit Classification Policy issued by the Federal Financial Institutions Examination Council, which was subsequently adopted by the Office of Thrift Supervision (“OTS”). The regulations require that each insured institution regularly review and classify its assets based on asset quality. In addition, OTS examiners have authority to identify problem assets in connection with examinations of insured institutions and, if appropriate, require them to be classified. There are three classifications for problem assets: substandard, doubtful and loss. Substandard assets must have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, questionable resulting in a high possibility of loss. An asset classified as loss is considered uncollectible and of such little value that continuance as an asset of the institution without establishment of a specific reserve is not warranted. If an asset or portion thereof is classified as loss, the insured institution establishes specific allowances for loan losses for the full amount of the portion of the asset classified as loss. A portion of general loan loss allowances established to cover probable losses related to classified assets may be included in determining an institution’s regulatory capital, while specific valuation allowances for loan losses generally do not qualify as regulatory capital. OTS regulations also require that assets that do not currently expose an institution to a sufficient degree of risk to warrant classification as substandard, doubtful or loss but do possess credit deficiencies or potential weakness deserving management’s close attention shall be designated “special mention” by either the institution or its examiners.

The Bank’s Risk Management Committee, which includes the Bank’s Chief Financial Officer, other senior officers and collection department personnel meet quarterly to review all classified assets, to approve action plans to resolve the problems associated with the assets and to review recommendations for new classifications, any changes in classifications and recommendations for reserves.

TABLE 6: Classified Loans


	At September 30, 2008
	Loss			Doubtful			Substandard			Special Mention
	Number	Amount		Number	Amount		Number	Amount		Number	Amount
				(Dollars in thousands)
Residential real estate first mortgage	—	$	—	11	$	635	68	$	8,918	—	$	—
Residential real estate second mortgage	—		—	4		67	32		840	—		—
Commercial and multi-family real estate	—		—	3		18	15		11,691	—		—
Real estate construction and development	—		—	—		—	4		8,187	—		—
Commercial and industrial	—		—	2		124	31		7,342	2		1,097
Home equity	—		—	4		94	59		2,470	2		30
Consumer and other	1		2	15		149	1		3	—		—

Total	1	$	2	39	$	1,087	210	$	39,451	4	$	1,127

Allowance for Loan Losses. In originating loans, the Bank recognizes that losses will be experienced and that the risk of loss will vary with, among other things, the type of loan being made, the creditworthiness of the borrower over the term of the loan, general economic conditions and, in the case of a secured loan, the quality of the security for the loan. All charged-off loans are charged to the allowance for loan losses and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses charged to the Bank’s income. The allowance for loan losses is based on management’s periodic evaluation of the Bank’s past loan loss experience, known and inherent risks in the portfolio, the composition of the loan portfolio, adverse situations which may affect the borrower’s ability to repay, the estimated value of any underlying collateral and current economic conditions. The Bank periodically recognizes losses on loans, which have active collection efforts through the use of specific valuation allowances in order to reduce loan balances to the estimated value of the collateral.

The following assessments are performed quarterly in accordance with the Bank’s allowance for loan losses methodology:

Homogeneous residential mortgage loans are given one of five standard risk ratings at the time of origination. The risk ratings are assigned through the use of a credit-scoring model, which assesses credit risk determinants from the borrower’s credit history, the loan-to-value ratio, affordability ratios and other personal history. Historical loss rates and industry data for each credit rating are used to determine the appropriate allocation percentage for each loan grade. Commercial real estate loans are individually reviewed and assigned a credit risk rating at least annually by the internal loan committee. Consumer and home equity loans are assigned standard risk weightings that determine the allocation percentage.

When commercial real estate loans are over 30 days delinquent or residential, consumer and home equity loans are over 90 days past due, they are evaluated individually for impairment. Additionally, loans that demonstrate credit weaknesses that may impact the borrower’s ability to repay or the value of the collateral are also reviewed individually for impairment. We consider a loan to be impaired when management believes it will be unable to collect all principal and interest due according to the contractual terms of the loan. If a loan is impaired, we record a loss valuation equal to the excess of the loan’s carrying value over the present value of estimated future cash flows or the fair value of collateral if the loan is collateral dependent.

Our methodology includes factors that allow us to adjust our estimates of losses based on the most recent information available. Historic loss rates used to determine the allowance are adjusted to reflect the

impact of current conditions, including actual collection and charge-off experience. Any material increase in non-performing loans will adversely affect our financial condition and results of operations.

Management believes that the amount maintained in the allowance will be adequate to absorb probable losses inherent in the portfolio. Although management believes that it uses the best information available to make such determinations, future adjustments to the allowance for loan losses may be necessary and results of operations could be significantly and adversely affected if circumstances differ substantially from the assumptions used in making the determinations. While we believe we have established our allowance for loan losses in accordance with U.S. generally accepted accounting principles, there can be no assurance that the Bank’s regulators, in reviewing the Bank’s loan portfolio, will not request the Bank to increase significantly its allowance for loan losses. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that a substantial increase will not be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Any material increase in the allowance for loan losses will adversely affect our financial condition and results of operations.

TABLE 7: Allowance for Loan Losses


	Year Ended September 30,
	2008			2007			2006			2005			2004
	(Dollars in thousands)
Allowance at beginning of period	$	10,421		$	7,817		$	6,806		$	5,579		$	3,866
Allowance of acquired institution		—			—			282			—			—
Provision charged to expense		7,735			3,855			1,501			1,634			1,934
Charge-offs:
Residential real estate first mortgage		940			193			497			209			73
Residential real estate second mortgage		1,600			521			—			—			—
Commercial and multi-family real estate		374			—			—			—			—
Real estate construction and development		455			119			—			—			—
Commercial and industrial		355			—			7			—			—
Home equity		1,674			296			88			10			15
Consumer and other		233			164			190			197			146

Total charge-offs		5,631			1,293			782			416			234

Recoveries
Residential real estate first mortgage		2			—			3			5			1
Residential real estate second mortgage		1			—			—			—			—
Real estate construction and development		—			—			—			—			5
Home equity		224			17			3			—			—
Consumer and other		10			25			4			4			7

Total recoveries		237			42			10			9			13

Net charge-offs		5,394			1,251			772			407			221

Allowance at end of period	$	12,762		$	10,421		$	7,817		$	6,806		$	5,579

Ratio of allowance to total loans outstanding at the end of the period		1.16	%		1.09	%		0.99	%		1.06	%		1.08	%
Ratio of net charge-offs to average loans outstanding during the period		0.52	%		0.14	%		0.10	%		0.06	%		0.06	%
Allowance for loan losses to non-performing loans		61.76	%		99.44	%		115.89	%		113.51	%		130.63	%

TABLE 8: Allocation of Allowance for Loan Losses


	At September 30,
	2008				2007				2006				2005				2004
	Amount		Percent of Loans in Each Category to Total Loans		Amount		Percent of Loans in Each Category to Total Loans		Amount		Percent of Loans in Each Category to Total Loans		Amount		Percent of Loans in Each Category to Total Loans		Amount		Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
Residential real estate first and second mortgage	$	4,034	30.79	%	$	3,561	34.42	%	$	3,462	39.43	%	$	2,584	39.65	%	$	2,248	49.44	%
Home equity		1,753	20.44			1,396	22.73			1,428	25.95			2,107	30.34			1,976	30.50
Commercial and multi-family real estate		3,824	26.64			3,045	23.86			1,611	20.56			1,063	18.40			335	8.53
Real estate construction and development		1,067	9.01			1,028	10.24			521	7.16			517	6.98			448	6.58
Commercial and industrial		1,827	12.49			1,054	8.04			533	6.11			273	4.08			219	4.24
Consumer and other		257	.63			337	.71			262	.79			262	.55			353	.71

Total allowance for loan losses	$	12,762	100.00	%	$	10,421	100.00	%	$	7,817	100.00	%	$	6,806	100.00	%	$	5,579	100.00	%

Investment Activities

The Bank is permitted, under applicable law, to invest in various types of liquid assets, including U.S. Treasury obligations, securities of various federal agencies and state and municipal governments, deposits at the Federal Home Loan Bank (“FHLB”) of Des Moines, certificates of deposit of federally insured institutions, certain bankers’ acceptances and federal funds. Subject to various restrictions, savings institutions may also invest a portion of their assets in commercial paper, corporate debt securities, equity securities and mutual funds. Savings institutions like the Bank are also required to maintain an investment in FHLB stock and a minimum level of liquid assets.

We maintain a portfolio of primarily investment grade mortgage-backed securities in the form of Ginnie Mae, Freddie Mac and Fannie Mae participation certificates and collateralized mortgage obligations. Ginnie Mae certificates are guaranteed as to principal and interest by the full faith and credit of the United States, while Freddie Mac and Fannie Mae certificates are guaranteed by the respective agencies. Mortgage-backed securities generally entitle us to receive a pro rata portion of the cash flows from an identified pool of mortgages. Collateralized mortgage obligations are types of debt securities issued by a special purpose entity that aggregates pools of mortgages and mortgage-backed securities and creates different classes of securities with varying maturities and amortization schedules, as well as a residual interest, with each class possessing different risk characteristics. The cash flows from the underlying collateral are generally dividend into “tranches” or classes that have descending priorities with respect to the distribution of principal and interest cash flows.

The Investment Committee, which includes our Chief Executive Officer and our Chief Financial Officer, determines appropriate investments in accordance with the board of directors’ approved investment policies and procedures. Investments are made following certain considerations, which include our liquidity position and anticipated cash needs and sources (which in turn include outstanding commitments, upcoming maturities, estimated deposits and anticipated loan amortization and repayments). Further, the effect that the proposed investment would have on our credit and interest rate risk, and risk-based capital is considered. The interest rate, yield, settlement date and maturity are also reviewed.

All of our debt securities and mortgage-backed securities carry market risk insofar as increases in market interest rates would generally cause a decline in their market value. They also carry prepayment risk insofar as they may be called or repaid before their stated maturity during times of low market interest rates, so that we may have to reinvest the funds at a lower interest rate.

Our investment securities portfolio at September 30, 2008 did not contain securities of any issuer with an aggregate book value and aggregate market value in excess of 10% of stockholders’ equity, excluding those issued by the government or its agencies.

TABLE 9: Investment and Mortgage-Backed Securities


	Years Ended September 30,
	2008		2007		2006
	(In thousands)
Held to maturity at amortized cost:
Investment securities -
U.S. Treasury and Agency Obligations	$	—	$	5,980	$	12,932

Mortgage-backed securities:
FHLMC	$	4	$	12	$	27
GNMA		283		327		364
FNMA		15,434		—		—

Total	$	15,721		339		391

Collateralized mortgage obligations - FHLMC	$	23	$	32	$	50

Available for sale, at fair value:
Investment securities -
U.S. Treasury and agency obligations	$	—	$	7,043	$	—

Mortgage-backed securities:
GNMA	$	280	$	322	$	401
FNMA		1,943		2,333		2,789

Total	$	2,223	$	2,655	$	3,190

Collateralized mortgage obligations - GNMA	$	7,958	$	—	$	—

Equity securities	$	1,537	$	3,965	$	4,517

TABLE 10: Maturities and Yields


	At September 30, 2008
	Due in Less Than One Year				Due in One to Five Years				Due in Five to Ten Years				Due in Over Ten Years				Total
	Amount		Weighted Average Yield		Amount		Weighted Average Yield		Amount		Weighted Average Yield		Amount		Weighted Average Yield		Amount		Weighted Average Yield
	(Dollars in thousands)
Held to maturity:
Mortgage-backed securities	$	—	—		$	2	12.03	%	$	283	9.18	%	$	15,436	4.83	%	$	15,721	4.91	%
CMOs		—	—			—	—			—	—			23	3.40	%		23	3.40	%

Total mortgage-backed and related securities	$	—	—		$	2	12.03	%	$	283	9.18	%	$	15,459	4.83	%	$	15,744	4.91	%

Available for sale:
Mortgage-backed securities	$	2	6.00	%	$	1,941	3.82	%	$	—	—		$	280	7.41	%	$	2,223	4.24	%
CMOs		—	—			—	—			—	—			7,958	4.15	%		7,958	4.15	%

Total mortgage-backed and related securities	$	2	6.00	%	$	1,941	3.82	%	$	—	—		$	8,238	4.24	%	$	10,181	4.16	%

The above table is presented based upon contractual maturities. Expected maturities of mortgage-backed securities and CMOs will differ from contractual maturities due to scheduled repayments and because borrowers may have the right to call or prepay obligations with or without prepayment penalties. At September 30, 2008, the Company’s portfolio did not include any callable securities. This table does not take into consideration the effects of scheduled repayments or the effects of possible prepayments.

Sources of Funds

General. Deposits, loan repayments, loan sales, FHLB borrowings and borrowings from the Federal Reserve Bank are the major sources of our funds for lending and other investment purposes. Scheduled loan repayments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are influenced significantly by the level of market interest rates. Borrowings from the FHLB of Des Moines and borrowings from the Federal Reserve Bank may be used to compensate for reductions in the availability of funds from these other sources.

Deposit Accounts.Our depositors reside predominately in the St. Louis metropolitan area. Deposits are attracted from within our market area through the offering of a broad selection of commercial and retail deposit instruments, including checking accounts, negotiable order of withdrawal (“NOW”) accounts, money market deposit accounts, regular savings accounts, certificates of deposit, retirement savings plans and treasury management services. Deposit account terms vary according to the minimum balance required, the time periods the funds must remain on deposit, and the interest rate, among other factors. In determining the terms of our deposit accounts, we consider current market interest rates, the pricing of competitors, our profitability, the Company’s overall interest-rate-risk profile, the Company’s liquidity needs and our customer preferences and concerns. Our Asset Liability Committee regularly reviews our deposit mix and pricing. We supplement our retail deposits through brokered certificates of deposit and municipal deposits.

TABLE 11: Deposits


	At September 30,
	2008				2007				2006
	Amount		Percent of Total		Amount		Percent of Total		Amount		Percent of Total
	(Dollars in thousands)
Demand deposits:
Non-interest-bearing checking	$	76,404	8.35	%	$	57,005	6.82	%	$	38,830	5.92	%
Interest-bearing checking		178,698	19.52			57,816	6.92			53,448	8.15
Passbook savings accounts		25,829	2.82			28,909	3.46			31,896	4.86
Money market		149,141	16.29			173,950	20.82			134,383	20.50

Total demand deposits		430,072	46.98			317,680	38.02			258,557	39.43

Certificates of deposit which mature:
Within 1 year		420,766	45.98			360,188	43.11			276,316	42.15
After 1 year, but within 3 years		53,176	5.81			108,324	12.97			46,786	7.14
Thereafter		11,297	1.23			49,297	5.90			73,918	11.28

Total certificates of deposit		485,239	53.02			517,809	61.98			397,020	60.57

Total deposits	$	915,311	100.00	%	$	835,489	100.00	%	$	655,577	100.00	%

Included in certificates of deposit at September 30, 2008, were brokered time deposits totaling $110.5 million, $10.1 million and $8.4 million that were scheduled to mature during the years ended September 30, 2009, 2010 and 2011, respectively.

At September 30, 2008, 2007 and 2006, certificates of deposit with a minimum principal amount of $100,000 totaled $221.2 million, $278.6 million, and $189.6 million, respectively. At September 30, 2008, such deposits were scheduled to mature as follows:

TABLE 12: Certificates of Deposit with Minimum Balances of $100,000


Maturity Period	Amount as of September 30, 2008
	(In thousands)
Three months or less	$	88,031
Over 3 through 6 months		46,069
Over 6 through 12 months		49,571
Over 12 months		37,513

Total	$	221,184

TABLE 13: Time Deposits by Rates


	At September 30,
	2008		2007		2006
	(In thousands)
0.00 – 1.99%	$	21,468	$	2,536	$	4,177
2.00 – 2.99%		183,702		3,805		17,565
3.00 – 3.99%		196,728		39,393		33,718
4.00 – 4.99%		17,265		31,677		91,632
5.00 – 5.99%		65,627		439,991		249,558
10.00 – 10.99%		449		407		370

Total	$	485,239	$	517,809	$	397,020

TABLE 14: Time Deposits by Maturities


	Amount Due as of September 30, 2008
	Within One Year		After 1 Year But Within Two Years		After 2 Years But Within Three Years		After 3 Years But Within Four Years		Thereafter		Total
	(In thousands)
0.00 – 1.99%	$	21,468	$	—	$	—	$	—	$	—	$	21,468
2.00 – 2.99%		167,023		16,058		192		182		247		183,702
3.00 – 3.99%		175,188		9,761		10,055		1,200		524		196,728
4.00 – 4.99%		10,088		3,545		2,901		138		593		17,265
5.00 – 5.99%		46,999		10,122		93		8,413		—		65,627
10.00 – 10.99%		—		449		—		—		—		449

Total	$	420,766	$	39,935	$	13,241	$	9,933	$	1,364	$	485,239

TABLE 15: Deposit Activity


	Years Ended September 30,
	2008		2007		2006
	(In thousands)
Beginning balance	$	835,489	$	655,577	$	496,171
Deposits acquired in business combination		—		—		41,370
Net increase excluding interest credited		60,998		160,598		107,226
Interest credited		18,824		19,314		10,810

Net increase in deposits		79,822		179,912		159,406

Ending balance	$	915,311	$	835,489	$	655,577

TABLE 16: Average Balances and Rates Paid on Deposits


	Years Ended September 30,
	2008				2007				2006
	Average Balance		Average Rate Paid		Average Balance		Average Rate Paid		Average Balance		Average Rate Paid
	(Dollars in thousands)
Non-interest-bearing checking	$	63,325	—	%	$	47,982	—	%	$	31,365	—	%
Interest-bearing checking		106,009	1.97			60,996	1.85			48,266	1.44
Passbook savings		27,727	0.33			30,170	0.35			32,430	0.36
Money market		183,957	2.88			155,261	4.24			98,804	3.16
Certificates of deposit		466,094	4.28			466,248	5.05			373,125	4.21

Total	$	847,112	3.24	%	$	760,657	4.12	%	$	583,990	3.36	%

Borrowings. We use advances from the FHLB of Des Moines and borrowings from the Federal Reserve Bank to supplement our supply of lendable funds and to meet deposit withdrawal requirements. The FHLB of Des Moines functions as a central reserve bank providing credit for savings associations and certain other member financial institutions. As a member, we are required to own capital stock in the FHLB of Des Moines and we are authorized to apply for advances on the security of such stock and certain of our mortgage loans and other assets (principally securities which are obligations of, or guaranteed by, the U.S. Government) provided certain creditworthiness standards have been met. Advances are made pursuant to several different credit programs. Each credit program has its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based on the financial condition of the member institution and the adequacy of collateral pledged to secure the credit. The line of credit is subject to available collateral of one- to four-family residential loans, home equity loans and loans held for sale. Periodically, the FHLB performs collateral audits in order to review the quality of the collateral, which could result in reduced borrowing capacity.

TABLE 17: FHLB Advances


	Years Ended September 30,
	2008			2007			2006
	(Dollars in thousands)
Maximum balance at any month end during the period	$	265,500		$	203,500		$	200,000
Average balance during the period		224,460			168,476			168,067
Period-end balance		210,600			158,400			172,800
Weighted-average interest rate:
At end of period		2.67	%		4.81	%		5.08	%
During the period		3.54	%		5.20	%		4.63	%

We have the ability to borrow funds from the Federal Reserve under an agreement which assigns certain qualifying loans as collateral to secure the amounts borrowed. These borrowings represent short-term borrowings from the Federal Reserve Bank of St. Louis’ discount window and are typically extended for periods of 28 days or less. At September 30, 2008, $224.2 million of commercial loans were assigned under this arrangement. The assets underlying these borrowings are under the Bank’s physical control.

TABLE 18: Federal Reserve Borrowings


	Years Ended September 30,
	2008			2007			2006
	(Dollars in thousands)
Maximum balance at any month end during the period	$	112,000		$	—		—
Average balance during the period		34,093			1		—
Period-end balance		40,000			—		—
Weighted-average interest rate:
At end of period		2.25	%		—		—
During the period		2.28	%		6.25	%	—

We issued subordinated debentures from two separate special purpose trusts that are wholly-owned subsidiaries of the Company. At September 30, 2008, we had outstanding subordinated debentures totaling $19.6 million. Payments of the principal and interest on the subordinated debentures of these special purpose trusts are unconditionally guaranteed by the Company. Further, the accompanying junior subordinated debentures we issued to the special purpose trusts are senior to our shares of common stock.

Non-Banking Operations

We have a title insurance business, which is a division of the Bank. The division provides traditional title insurance services and products, including owner’s policies of insurance, lender’s policies of insurance and miscellaneous title information products (e.g., letter reports). The policies are issued primarily on residential transactions; however, the division also issues policies on certain commercial transactions.Customers of the title division consist primarily of residential mortgage customers that have been referred to the title division.

We also operate a fixed-income securities sales division consisting of five management and sales personnel. The business consists primarily of buying and selling bonds for community bank investment portfolio managers in Missouri, Illinois and surrounding states. The business does not include maintaining a trading portfolio for the Company.

The Bank’s subsidiary, Pulaski Service Corporation, sells insurance products and annuities. Federal savings associations generally may invest up to 3% of their assets in service corporations, provided that any amount in excess of 2% is used primarily for community, inner city and community development projects. At September 30, 2008, the Bank’s equity investment in its subsidiary was $384,237 or 0.03% of the Bank’s assets.

Personnel

As of September 30, 2008, we had 427 full-time equivalent employees. The employees are not represented by a collective bargaining unit, and we believe our relationship with our employees is good.

Executive Officers of the Registrant

The following table sets forth certain information regarding the executive officers of the Company and the Bank.


Name	Age (1)	Position
Gary W. Douglass	57	President and Chief Executive Officer of Pulaski Financial Corp. and Chief Executive Officer of the Bank
W. Thomas Reeves	54	President of Pulaski Bank
Ramsey K. Hamadi	39	Chief Financial Officer of Pulaski Financial Corp. and Pulaski Bank
Matthew A. Locke	39	President of Mortgage Lending Division of Pulaski Bank
Brian Bjorkman	37	President of Commercial Lending Division of Pulaski Bank
Cheri Bliefernich	40	Executive Vice President of Banking Operations of Pulaski Bank

(1)	As of September 30, 2008.

Biographical Information

Set forth below is certain information regarding the executive officers of the Company and the Bank. There are no family relationships among the executive officers.

Gary W. Douglasswas named President and Chief Executive Office of the Company and Chief Executive Officer of the Bank on May 1, 2008. Before joining Pulaski, Mr. Douglass was Executive Vice President, Finance and Chief Financial Officer of CPI Corp. (NYSE: CPI), a leading portrait studio operator in North America, headquartered in St. Louis. Mr. Douglass previously held the position of Executive Vice President and Chief Financial Officer of Roosevelt Financial Group, Inc., parent of Roosevelt Bank, before its merger with Mercantile Bancorporation, Inc. in 1997. Mr. Douglass is a certified public accountant and a former partner with Deloitte, where he headed that firm’s accounting and auditing practice and its financial institutions practice in St. Louis.

W. Thomas Reeves has served as President of the Bank since March 2006. Prior to joining Pulaski, Mr. Reeves served as Executive Director of Downtown Now!, a not-for-profit organization dedicated to generating investment in, and development of, the downtown St. Louis Area from October 1999 to March 2006. Mr. Reeves also served as Senior Vice President and Chief Lending Officer of Mercantile Bank of St. Louis, where he oversaw all middle market and real estate lending activity in five states. He was Senior Vice President and Chief Lending officer and served in various executive and board positions with Mark Twain Bancshares Inc. and its affiliates. He also served as a bank regulator with the Missouri Division of Finance.

Ramsey K. Hamadijoined the Bank in June 2000 as Controller before being named Chief Financial Officer in July 2001. Prior to joining the Bank, Mr. Hamadi was a Safety and Soundness Examiner at the Federal Reserve Bank of St. Louis.

Matthew A. Lockejoined the Bank in 1997 and currently serves as the President of the Mortgage Division. Prior to assuming his current position, he served the Bank as Senior Vice President and Kansas City Lending Manager. Mr. Locke holds a BBA from Pittsburg State University and a MBA from Webster University in St. Louis.

Brian Bjorkmanjoined the Bank in 2003 and currently serves as the President of the Commercial Division. Prior to joining the Bank, Mr. Bjorkman was President of Commercial Lending at Founders Bank in Chesterfield, Missouri prior to its acquisition by Bank Midwest. Mr. Bjorkman is a graduate of Drake University.

Cheri Bliefernichjoined the Bank in 2004 and has served as Executive Vice President of Banking Operations since October 2008. Prior to assuming the current position, Mrs. Bliefernich served as Senior Vice President, Banking since January 2007 and Vice President, Commercial Retail since November 2004. She has also served as Senior Vice President of Retail Banking at Royal Banks and Vice President of Retail Banking at Founders Bank. Mrs. Bliefernich has been in the banking industry for over 16 years.

REGULATION

General

Pulaski Bank is subject to extensive regulation, examination and supervision by the OTS, as its chartering agency, and the FDIC, as the deposit insurer. The Bank is a member of the FHLB System and its deposit accounts are insured up to applicable limits by the Deposit Insurance Fund managed by the FDIC. The Bank must file reports with the OTS and the FDIC concerning its activities and financial condition in addition to obtaining regulatory approvals prior to entering into certain transactions such as mergers with, or acquisitions of, other financial institutions. There are periodic examinations by the OTS and the FDIC to test the Bank’s safety and soundness and compliance with various laws and regulatory requirements. This regulation and supervision establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. Any change in such regulatory requirements and policies, whether by the OTS, the FDIC or through legislation, could have a material adverse impact on our operations. The Company, as a savings and loan holding company, is required to file certain reports with, and otherwise comply with the rules and regulations of the OTS under federal laws.

Certain of the regulatory requirements applicable to the Bank and to the Company are referred to below or elsewhere herein.

The description of statutory provisions and regulations set forth in this document does not purport to be a complete description of such statutes and regulations and their effects on the Company and the Bank and is qualified in its entirety by reference to the actual statutes and regulations.

Federal Savings Institution Regulation

Business Activities. The activities of federal savings institutions are governed by federal laws and regulations. These laws and regulations delineate the nature and extent of the activities in which federal associations may engage. In particular, many types of lending authority for federal associations, e.g., commercial, non-residential real property and consumer loans, are limited to a specified percentage of the institution’s capital or assets.

Loans to One Borrower. Federal laws provide that savings institutions are generally subject to the national bank limits on loans to one borrower. A savings institution may generally not make a loan or extend credit to a single or related group of borrowers in excess of 15% of the Bank’s unimpaired capital and surplus. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if secured by readily-marketable collateral.

QTL Test. Federal law requires savings institutions to meet a qualified thrift lender (“QTL”) test. Under the test, a savings bank is required to either be a “domestic building and loan association” within the definition of the Internal Revenue Code of 1986, as amended (the “Code”), or maintain at least 65% of its “portfolio assets” (total assets less (i) specified liquid assets up to 20% of total assets, (ii) intangibles, including goodwill, and (iii) the value of property used to conduct business) in certain “qualified thrift investments” (primarily residential mortgages and related investments, including certain mortgage-backed securities) on a monthly basis in 9 out of every 12 months.

A savings institution that fails the QTL test is subject to certain operating restrictions and may be required to convert to a bank charter. As of September 30, 2008, the Bank met the QTL test. Recent legislation has expanded the extent to which education loans, credit card loans and small business loans may be considered “qualified thrift investments.”

Limitation on Capital Distributions. OTS regulations impose limitations upon all capital distributions by a savings institution, such as cash dividends, payments to repurchase its shares and payments to shareholders of another institution in a cash-out merger. Under the regulations, an application to and the prior approval of the OTS is required prior to any capital distribution if the institution does not meet the criteria for “expedited treatment” of applications under OTS regulations (i.e., generally examination ratings in the top two categories), the total capital distributions for the calendar year exceed net income for that year plus the amount of retained net income for the preceding two years, the institution would be undercapitalized following the distribution or the distribution would otherwise be contrary to a statute, regulation or agreement with OTS. If an application is not required, the institution must still provide prior notice to OTS of the capital distribution since it is a subsidiary of the holding company. If the Bank’s capital fell below its regulatory requirements or the OTS notified it that it was in need of more than normal supervision, the Bank’s ability to make capital distributions could be restricted. In addition, the OTS could prohibit a proposed capital distribution by any institution, which would otherwise be permitted by the regulation, if the OTS determines that such distribution would constitute an unsafe or unsound practice.

Assessments. Savings institutions are required to pay assessments to the OTS to fund the agency’s operations. The general assessment, paid on a semi-annual basis, is based on the savings institution’s total assets, including consolidated subsidiaries, as reported in the latest quarterly thrift financial report.

Branching. The OTS regulations authorize federally chartered savings associations to branch nationwide to the extent allowed by federal statute. This permits federal savings associations with interstate networks to more easily diversify their loan portfolios and lines of business geographically. OTS regulations preempt any state law purporting to regulate branching by federal savings institutions.

Community Reinvestment Act. Under the Community Reinvestment Act (“CRA”), as implemented by OTS regulations, a savings institution has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA requires the OTS, in connection with its examination of a savings institution, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution. The CRA also requires all institutions to make public disclosure of their CRA ratings. The Bank received a “Satisfactory” CRA rating in its most recent examination.

Transactions with Related Parties. The Bank’s authority to engage in certain transactions with “affiliates” (i.e., any company that controls or is under common control with an institution, including the Company and any non-savings institution subsidiaries) is limited by federal law. The aggregate amount of covered transactions with any individual affiliate is limited to 10% of the capital and surplus of the savings institution. The aggregate amount of covered transactions with all affiliates is limited to 20% of the savings institution’s capital and surplus. Certain transactions with affiliates are required to be secured by collateral in an amount and of a type described in federal law. The purchase of low quality assets from affiliates is generally prohibited. Transactions with affiliates must be on terms and under circumstances that are at least as favorable as those prevailing at the time for comparable transactions with non-affiliated companies. In addition, savings institutions are prohibited from lending to any affiliate that is engaged in activities that are not permissible for bank holding companies and no savings institution may purchase the securities of any affiliate other than a subsidiary.

The Bank’s authority to extend credit to executive officers, directors and 10% shareholders (“insiders”), as well as entities controlled by such persons, is also governed by federal law. Such loans are required to be made on terms substantially the same as those offered to unaffiliated individuals and may not involve more than the normal risk of repayment. An exception exists for loans made pursuant to a benefit or compensation program that is widely available to all employees of the institution and does not give preference to insiders over other employees. The law limits both the individual and aggregate amount of loans the Bank may make to insiders based, in part, on the Bank’s capital position and requires certain board approval procedures to be followed. There are additional restrictions on extensions of credit to executive officers.

Enforcement. The OTS has primary enforcement responsibility over savings institutions and has the authority to bring actions against the institution and all institution-affiliated parties, including stockholders, and any attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an insured institution. Formal enforcement action may include the issuance of a capital directive or cease and desist order, removal of officers and/or directors, institution of receivership, conservatorship, or termination of deposit insurance. Civil penalties cover a wide range of violations and can amount to $25,000 per day, or even $1 million per day in especially egregious cases. The FDIC has the authority to recommend to the Director of the OTS that enforcement action to be taken with

respect to a particular savings institution. If action is not taken by the Director, the FDIC has the authority to take such action under certain circumstances. Federal law also establishes criminal penalties for certain violations.

Standards for Safety and Soundness. The federal banking agencies have adopted Interagency Guidelines Prescribing Standards for Safety and Soundness. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the OTS determines that an institution fails to meet any standard prescribed by the guidelines, the OTS may require the institution to submit an acceptable plan to achieve compliance with the standard.

Capital Requirements. The OTS capital regulations require savings institutions to meet three minimum capital standards: a 1.5% tangible capital ratio, a 4% leverage ratio (3% for institutions receiving the highest rating on the CAMELS financial institution rating system), and an 8% risk-based capital ratio. In addition, the prompt corrective action standards discussed below also establish, in effect, a minimum 2% tangible capital standard, a 4% leverage capital ratio (3% for institutions receiving the highest rating in the CAMELS financial institution rating system) and, together with the risk-based capital standard itself, a 4% Tier I risk-based capital standard. The OTS regulations also require that, in meeting the tangible, leverage and risk-based capital standards, institutions must generally deduct investments in and loans to subsidiaries engaged in activities as principal that are not permissible for a national bank.

The risk-based capital standard for savings institutions requires the maintenance of Tier 1 (core) and total capital (which is defined as core capital and supplementary capital) to risk weighted assets of 4% and 8%, respectively. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, recourse obligations and direct credit substitutes are multiplied by a risk-weight of 0% to 100%, as assigned by the OTS capital regulation based on the risks OTS believes are inherent in the type of asset. Core capital is defined as common stockholders’ equity (including retained earnings), certain non-cumulative perpetual preferred stock and related surplus, and minority interests in equity accounts of consolidated subsidiaries less intangibles other than certain mortgage servicing rights and credit card relationships. The components of supplementary capital include capital instruments such as cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated debt and intermediate preferred stock. The allowance for loan and lease losses is includable in supplementary capital up to 1.25% of risk-weighted assets. Up to 45% of unrealized gains in available-for-sale securities with readily determinable fair values is also includable as supplementary capital. Overall, the amount of supplementary capital included as part of total capital cannot exceed 100% of core capital.

The OTS also has authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institution’s capital level is or may become inadequate in light of the particular circumstances.

Prompt Corrective Regulatory Action. The OTS is required to take certain supervisory actions against undercapitalized institutions, the severity of which depends upon the institution’s degree of under-capitalization. Generally, a savings institution that has a ratio of total capital to risk-weighted assets of less than 8%, a ratio of Tier I (core) capital to risk-weighted assets of less than 4% or a ratio of core capital to total assets of less than 4% (3% or less for institutions with the highest examination rating) is considered to be “under-capitalized.” A savings institution that has a total risk-based capital ratio less than 6%, a Tier 1 capital ratio of less than 3% or a leverage ratio that is less than 3% is considered to be “significantly undercapitalized” and a savings institution that has a tangible capital to assets ratio equal to or less than 2% is deemed to be “critically undercapitalized.” Subject to a narrow exception, the OTS is required to appoint a receiver or conservator for an institution that is “critically undercapitalized.” The regulation also provides

that a capital restoration plan must be filed with the OTS within 45 days of the date a savings institution receives notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Compliance with the plan must be guaranteed by any parent holding company in an amount of up to the lesser of 5% of the savings association’s total assets when its was deemed to be undercapitalized, or the amount necessary to achieve compliance with applicable capital requirements. In addition, numerous mandatory supervisory actions become immediately applicable to an undercapitalized institution, including, but not limited to, increased monitoring by regulators and restrictions on growth, capital distributions and expansion. The OTS could also take any one of a number of discretionary supervisory actions, including the issuance of a capital directive and the replacement of senior executive officers and directors. Significantly and critically undercapitalized institutions are subject to additional mandatory and discretionary measures.

Insurance of Deposit Accounts.The Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation. The Deposit Insurance Fund is the successor to the Bank Insurance Fund and the Savings Association Insurance Fund, which were merged in 2006. Under the Federal Deposit Insurance Corporation’s risk-based assessment system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors, with less risky institutions paying lower assessments. An institution’s assessment rate depends upon the category to which it is assigned. For 2008, assessments ranged from five to forty-three basis points of assessable deposits. Due to losses incurred by the Deposit Insurance Fund in 2008 as a result of failed institutions, the Federal Deposit Insurance Corporation has proposed to adopt an across the board seven basis point increase in the assessment range for the first quarter of 2009. The Federal Deposit Insurance Corporation has proposed further refinements to its risk-based assessment that would be effective April 1, 2009 and would make the range eight to 771/2 basis points. The Federal Deposit Insurance Corporation may adjust rates uniformly from one quarter to the next, except that no single adjustment can exceed three basis points. No institution may pay a dividend if in default of the FDIC assessment.

In addition to the assessment for deposit insurance, institutions are required to make payments on bonds issued in the late 1980s by the financing corporation to recapitalize a predecessor deposit insurance funds. That payment is established quarterly and for the year ended December 31, 2008, averaged 1.2 basis points of assessable deposits.

The Federal Deposit Insurance Corporation has authority to increase insurance assessments. A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Bank. Management cannot predict what insurance assessment rates will be in the future.

Insurance of deposits may be terminated by the Federal Deposit Insurance Corporation upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the Federal Deposit Insurance Corporation or the Office of Thrift Supervision. We do not know of any practice, condition or violation that might lead to termination of deposit insurance.

In addition to the assessment for deposit insurance, institutions are required to make payments on bonds issued in the late 1980s by the Financing Corporation to recapitalize a predecessor deposit insurance fund.

Federal Home Loan Bank System.The Bank is a member of the FHLB System, which consists of 12 regional FHLBs. The FHLB provides a central credit facility primarily for member institutions. The Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in that FHLB.

The FHLBs are required to provide funds for the resolution of insolvent thrifts and to contribute funds for affordable housing programs. These requirements could reduce the amount of dividends that the FHLBs pay to their members and could also result in the FHLBs imposing a higher rate of interest on advances to their members. If dividends were reduced or interest on future FHLB advances increased, the Bank’s net interest income would likely also be reduced.

Federal Reserve System.The FRB regulations require savings institutions to maintain non-interest-earning reserves against their transaction accounts (primarily NOW and regular checking accounts). The regulations generally require that for 2008, reserves be maintained against aggregate transaction accounts as follows: a 3% reserve ratio is assessed on net transaction accounts over up to and including $45.8 million; a 10% reserve ratio is applied over $45.8 million. The first $8.5 million of otherwise reservable balances (subject to adjustments by the FRB) were exempted from the reserve requirements. The Bank has complied with the foregoing requirements.

Holding Company Regulation

The Company is a non-diversified unitary savings and loan holding company within the meaning of federal law. The Gramm-Leach-Bliley Act of 1999 provides that no company may acquire control of a savings association after May 4, 1999 unless it engages only in the financial activities permitted for financial holding companies under the law or for multiple savings and loan holding companies as described below. Further, the Gramm-Leach-Bliley Act specifies that, subject to a grandfather provision, existing savings and loan holding companies may only engage in such activities. The Company qualifies for the grandfathering and is therefore not restricted in terms of its activities. Upon any non-supervisory acquisition by the Company of another savings association as a separate subsidiary, the Company would become a multiple savings and loan holding company and would be limited to activities permitted multiple holding companies by OTS regulation, such as lending and real estate investments. OTS has issued an interpretation concluding that multiple savings holding companies may also engage in activities permitted for financial holding companies, including insurance activities and underwriting, and investment banking.

A savings and loan holding company is prohibited from, directly or indirectly, acquiring more than 5% of the voting stock of another savings institution or savings and loan holding company without prior written approval of the OTS, and from acquiring or retaining control of a depository institution that is not insured by the FDIC. In evaluating applications by holding companies to acquire savings institutions, the OTS considers among other things, the financial and managerial resources and future prospects of the company and institution involved, the effect of the acquisition on the risk to the Deposit Insurance Fund, the convenience and needs of the community and competitive factors.

The OTS may not approve any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions; (i) the approval of interstate supervisory acquisitions by savings and loan holding companies and (ii) the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisitions. The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.

Although savings and loan holding companies are not currently subject to specific capital requirements or specific restrictions on the payment of dividends or other capital distributions, federal regulations do prescribe such restrictions on subsidiary savings institutions, as described previously. The Bank must notify the OTS 30 days before declaring any dividend to the Company. In addition, the financial impact of a holding company on its subsidiary institution is a matter that is evaluated by the OTS and the

agency has authority to order cessation of activities or divestiture of subsidiaries deemed to pose a threat to the safety and soundness of the institution.

Acquisition of the Company.Under the Federal Change in Bank Control Act (“CIBCA”), a notice must be submitted to the OTS if any person (including a company), or a group acting in concert, seeks to acquire 10% or more of the Company’s outstanding voting stock, unless the OTS has found that the acquisition will not result in a change in control of the Company. Under the CIBCA, the OTS generally has 60 days from the filing of a complete notice to act, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the anti-trust effect of the acquisition. Any company that so acquires control would then be subject to regulation as a savings and loan holding company.

Item 1A. Risk Factors

An investment in shares of our common stock involves various risks. Before deciding to invest in our common stock, you should carefully consider the risks described below in conjunction with the other information in this annual report on Form 10-K and information incorporated by reference into this annual report on Form 10-K, including our consolidated financial statements and related notes. Our business, financial condition and results of operations could be harmed by any of the following risks or by other risks that have not been identified or that we may believe are immaterial or unlikely. The value or market price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements.

High loan-to-value ratios on a significant portion of our residential mortgage and home equity line of credit portfolios expose us to greater risk of loss.

Many of our residential mortgage loans are secured by liens on mortgage properties in which the borrowers have little or no equity because we originated a first mortgage with an 80% loan-to-value ratio at the time of purchase and a concurrent second mortgage with a combined loan-to-value ratio of up to 100%. At September 30, 2008, approximately $62.5 million of second mortgage loans, or 18.4% of our $339.5 million residential mortgage loan portfolio, had original combined loan-to-value ratios in excess of 90%. In addition, our home equity lines of credit may have, when added to existing senior lien balances, a combined loan-to-value ratio at the date of origination based upon the fully-disbursed amount, of up to 100% of the value of the home securing the loan. At September 30, 2008, we held $13.6 million of uninsured home equity lines of credit with a combined loan-to-value ratio in excess of 90%. Our average loan-to-value ratio in our home equity line of credit portfolio is below 80%. These loan-to-value ratios are based on values at the time of origination. Subsequent declines in real estate values could result in an increase in such ratios. Residential loans with high combined loan-to-value ratios will be more sensitive to declining property values than would those with lower combined loan-to-value ratios and, therefore, may experience a higher incidence of default and severity of losses. In addition, if the borrowers sell their homes, such borrowers may be unable to repay their loans in full from the sale.

The unseasoned nature of many loans in our commercial loan portfolio may result in errors in judging their collectability, which may lead to additional provisions or charge-offs, which would reduce our profits.

Our commercial loan portfolio, which includes loans secured by commercial, multi-family and residential real estate as well as business assets, has increased $123.8 million, or 30.4%, to $530.8 million at September 30, 2008 from $407.0 million at September 30, 2007, and increased $416.0 million, or 362.3%, from $114.8 million at September 30, 2004. A large portion of our commercial loan portfolio is unseasoned and does not provide us with a significant payment history pattern from which to judge future collectability. These loans have also not been subjected to a sustained period of unfavorable economic conditions. As a result, it is difficult to predict the future performance of this part of our loan portfolio. These loans may have delinquency or charge-off levels above our historical experience, which could adversely affect our future performance. Further, commercial loans generally have larger balances and involve a greater risk than one- to four-family residential mortgage loans. Accordingly, if we make any errors in judgment in the collectability of our commercial loans, any resulting charge-offs may be larger on a per loan basis than those incurred with our residential mortgage loan portfolio.

Our allowance for loan losses may prove to be insufficient to absorb losses in our loan portfolio.

Our non-performing assets increased significantly in fiscal 2008 from $13.6 million, or 1.20% of total assets at September 30, 2007 to $24.4 million, or 1.87% of total assets. The increase was primarily due to the weakened economy and the softening real estate market. If the economy and/or the real estate market continues to weaken these assets may not perform according to their terms and the value of the collateral may be insufficient to pay any remaining loan balance. If this occurs, we may experience losses, which could have a negative effect on our results of operations. Like all financial institutions, we maintain an allowance for loan losses to provide for loans in our portfolio that may not be repaid in their entirety. We believe that our allowance for loan losses is maintained at a level adequate to absorb probable losses inherent in our loan portfolio as of the corresponding balance sheet date. However, our allowance for loan losses may not be sufficient to cover actual loan losses, and future provisions for loan losses could materially adversely affect our operating results.

In evaluating the adequacy of our allowance for loan losses, we consider numerous quantitative factors, including our historical charge-off experience, growth of our loan portfolio, changes in the composition of our loan portfolio and the volume of delinquent and classified loans. In addition, we use information about specific borrower situations, including their financial position and estimated collateral values, to estimate the risk and amount of loss for those borrowers. Finally, we also consider many qualitative factors, including general and economic business conditions, duration of the current business cycle, current general market collateral valuations, trends apparent in any of the factors we take into account and other matters, which are, by nature, more subjective and fluid. Our estimates of the risk of loss and amount of loss on any loan are complicated by the significant uncertainties surrounding our borrowers’ abilities to successfully execute their business models through changing economic environments, competitive challenges and other factors. Because of the degree of uncertainty and susceptibility of these factors to change, our actual losses may vary from our current estimates.

Federal regulators, as an integral part of their examination process, periodically review our allowance for loan losses and may require us to increase our allowance for loan losses by recognizing additional provisions for loan losses charged to expense, or to decrease our allowance for loan losses by recognizing loan charge-offs. Any such additional provisions for loan losses or charge-offs, as required by these regulatory agencies, could have a material adverse effect on our financial condition and results of operations.

If the value of real estate in the St. Louis and Kansas City metropolitan areas were to decline materially, a significant portion of our loan portfolio could become under-collateralized, which could have a material adverse effect on us.

With most of our loans concentrated in the St. Louis and Kansas City metropolitan areas, a decline in local economic conditions could adversely affect the value of the real estate collateral securing our loans. A decline in property values would diminish our ability to recover on defaulted loans by selling the real estate collateral, making it more likely that we would suffer losses on defaulted loans. Additionally, a decrease in asset quality could require additions to our allowance for loan losses through increased provisions for loan losses, which would reduce our profits. Also, a decline in local economic conditions may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are more geographically diverse. Real estate values are affected by various factors in addition to local economic conditions, including, among other things, changes in general or regional economic conditions, governmental rules or policies and natural disasters.

Our business is subject to the success of the local economy in which we operate.

Because the majority of our borrowers and depositors are individuals and businesses located and doing business in the St. Louis metropolitan area, our success depends, to a significant extent, upon economic conditions in the St. Louis metropolitan area. Adverse economic conditions in our market area could reduce our growth rate, affect the ability of our customers to repay their loans and generally affect our financial condition and results of operations. Conditions such as inflation, recession, unemployment, high interest rates, short money supply, scarce natural resources, international disorders, terrorism and other factors beyond our control may adversely affect our profitability. We are less able than a larger institution to spread the risks of unfavorable local economic conditions across a large number of diversified economies. Any sustained period of increased loan delinquencies, foreclosures or losses caused by adverse market or economic conditions in the State of Missouri could adversely affect the value of our assets, revenues, results of operations and financial condition. Moreover, we cannot give any assurance we will benefit from any market growth or favorable economic conditions in our primary market areas if they do occur.

Recent negative developments in the financial industry and the domestic and international credit markets may adversely affect our operations and our stock price.

Negative developments in the latter half of calendar 2007 and 2008 in the subprime mortgage market and the securitization markets for such loans have resulted in uncertainty in the financial markets in general with the expectation of the general economic downturn continuing into 2009. As a result of this “credit crunch,” commercial as well as consumer loan portfolio performances have deteriorated at many institutions and the competition for deposits and quality loans has increased significantly. In addition, the values of real estate collateral supporting many commercial loans and home mortgages have declined and may continue to decline. Bank and bank holding company stock prices have been negatively affected, as has the ability of banks and bank holding companies to raise capital or borrow in the debt markets has become more difficult compared to recent years. As a result, there is a potential for new federal or state laws and regulations regarding lending and funding practices and liquidity standards, and bank regulatory agencies are expected to be very aggressive in responding to concerns and trends identified in examinations, including the expected issuance of many formal enforcement orders. Negative developments in the financial industry and the domestic and international credit markets, and the impact of new legislation in response to those developments, may negatively impact our operations by restricting our business operations, including our ability to originate or sell loans, and adversely impact our financial performance or our stock price.

An increase in interest rates may reduce our mortgage revenues, which would negatively impact our non-interest income.

Our mortgage banking operations provide a significant portion of our non-interest income. We generate mortgage revenues primarily from gains on the sale of loans to investors on a servicing released basis. In a rising or higher interest rate environment, our originations of mortgage loans may decrease, resulting in fewer loans that are available to be sold to investors. This would result in a decrease in mortgage revenues and a corresponding decrease in non-interest income. In addition, our results of operations are affected by the amount of non-interest expenses associated with mortgage banking activities, such as salaries and employee benefits, occupancy, equipment and data processing expense and other operating costs. During periods of reduced loan demand, our results of operations may be adversely affected to the extent that we are unable to reduce expenses commensurate with the decline in loan originations.

Fluctuations in interest rates could reduce our profitability and affect the value of our assets.

Like other financial institutions, we are subject to interest-rate risk. Our primary source of income is net interest income, which is the difference between interest earned on loans and investments and the interest paid on deposits and borrowings. We expect that we will periodically experience imbalances in the interest rate sensitivities of our assets and liabilities and the relationships of various interest rates to each other. Over any defined period of time, our interest-earning assets may be more sensitive to changes in market interest rates than our interest-bearing liabilities, or vice versa. In addition, the individual market interest rates underlying our loan and deposit products (e.g., the prime rate) may not change to the same degree over a given time period. In any event, if market interest rates should move contrary to our position, our earnings may be negatively affected. In addition, loan volume and quality and deposit volume and mix can be affected by market interest rates. Changes in levels of market interest rates could materially adversely affect our net interest spread, asset quality, origination volume and overall profitability.

We principally manage interest-rate risk by managing our volume and mix of our earning assets and funding liabilities. In a changing interest rate environment, we may not be able to manage this risk effectively. If we are unable to manage interest-rate risk effectively, our business, financial condition and results of operations could be materially harmed.

Changes in the level of interest rates also may negatively affect our ability to originate real estate loans, the value of our assets and our ability to realize gains from the sale of our assets, all of which ultimately affect our earnings.

If The Goodwill That We Recorded in Connection with a Business Acquisition Becomes Impaired, It Could Have a Negative Impact on Our Profitability.

Goodwill represents the amount of acquisition cost over the fair value of net assets we acquired in the purchase of another financial institution. We review goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate the carrying value of the asset might be impaired. We determine impairment by comparing the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Any such adjustments are reflected in our results of operations in the periods in which they become known. At September 30, 2008, our goodwill totaled $3.9 million. While we have recorded no such impairment charges since we initially recorded the goodwill, there can be no assurance that our future evaluations of goodwill will not result in findings of impairment and related write-downs, which may have a material adverse effect on our financial condition and results of operations.

Our business strategy includes the continuation of significant growth plans, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively.

Our assets have increased $666.3 million, or 104.4%, from $637.9 million at September 30, 2004 to $1.30 billion at September 30, 2008, primarily due to increases in commercial, residential and home equity loans. We expect to continue to experience growth in the amount of our assets, the level of our deposits and the scale of our operations. Achieving our growth targets requires us to attract customers that currently bank at other financial institutions in our market, thereby increasing our share of the market. Our ability to successfully grow will depend on a variety of factors, including our ability to attract and retain experienced

bankers, the continued availability of desirable business opportunities, the competitive responses from other financial institutions in our market areas and our ability to manage our growth. While we believe we have the management resources and internal systems in place to successfully manage our future growth, there can be no assurance growth opportunities will be available or that we will successfully manage our growth. If we do not manage our growth effectively, we may not be able to achieve our business plan, and our business and prospects could be harmed.

Our continued pace of growth may require us to raise additional capital in the future, but that capital may not be available when it is needed.

We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations. We anticipate that we have sufficient capital resources to satisfy our capital requirements for the foreseeable future. Subsequent to September 30, 2008, we applied for $32.5 million in preferred stock in the U.S. Treasury Department’s Tarp Capital Purchase Program. We may at some point, however, need to raise additional capital to support our continued growth. If we raise capital through the issuance of additional shares of our common stock or other securities, it would dilute the ownership interests of existing shareholders and may dilute the per share book value of our common stock. New investors may also have rights, preferences and privileges senior to our current shareholders which may adversely impact our current shareholders.

Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside of our control, and on our financial performance. Accordingly, we cannot assure you of our ability to raise additional capital, if needed, on terms acceptable to us. If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth and acquisitions could be materially impaired.

Our wholesale funding sources may prove insufficient to replace deposits at maturity and support our future growth.

We must maintain sufficient funds to respond to the needs of depositors and borrowers. As a part of our liquidity management, we use a number of funding sources in addition to deposit growth and repayments and maturities of loans and investments. As we continue to grow, we are likely to become more dependent on these sources, which include FHLB advances, borrowings from the Federal Reserve Bank, proceeds from the sale of loans, and brokered certificates of deposit. At September 30, 2008, we had $210.6 million of FHLB advances outstanding with an additional $76.4 million available borrowing capacity, $40.0 million of borrowings from the Federal Reserve Bank outstanding with an additional $128.1 million available borrowing capacity and $128.9 million in brokered certificates of deposit. If we were to become less than “well capitalized,” as defined by applicable OTS regulations, it would materially restrict our ability to acquire and retain brokered certificates of deposit and could reduce the maximum borrowing limits we currently have available through the FHLB and the Federal Reserve Bank. Additionally, adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources. Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates. Finally, if we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs. In this case, our operating margins and profitability would be adversely affected.

The building of market share through our branching strategy could cause our expenses to increase faster than revenues.

We may continue to build market share in the St. Louis metropolitan area through our branching strategy. We opened three new branches during calendar year 2007. There are considerable costs involved in opening branches and new branches generally require a period of time to generate sufficient revenues to offset their costs, especially in areas in which we do not have an established presence. Accordingly, any new branch can be expected to negatively impact our earnings for some period of time until the branch reaches certain economies of scale. We have no assurance our new branches will be successful even after they have been established.

We are dependent upon the services of our management team.

Our future success and profitability is substantially dependent upon the management and banking abilities of our senior executives. We believe that our future results will also depend, in part, upon our attracting and retaining highly skilled and qualified management. We are especially dependent on a limited number of key management personnel, none of whom has an employment agreement with us, except for our chief executive officer. The loss of the chief executive officer and other senior executive officers could have a material adverse impact on our operations because other officers may not have the experience and expertise to readily replace these individuals. Competition for such personnel is intense, and we cannot assure you that we will be successful in attracting or retaining such personnel. Changes in key personnel and their responsibilities may be disruptive to our business and could have a material adverse effect on our business, financial condition and results of operations.

Our failure to continue to recruit and retain qualified loan originators could adversely affect our ability to compete successfully and affect our profitability.

Our continued success and future growth depend heavily on our ability to attract and retain highly skilled and motivated loan originators and other banking professionals. We compete against many institutions with greater financial resources both within our industry and in other industries to attract these qualified individuals. Our failure to recruit and retain adequate talent could reduce our ability to compete successfully and adversely affect our business and profitability.

We operate in a highly regulated environment and we may be adversely affected by changes in laws and regulations.

Pulaski Bank is subject to extensive regulation, supervision and examination by the OTS, its chartering authority, and by the FDIC, as insurer of its deposits. The Company is subject to regulation and supervision by the OTS. Such regulation and supervision govern the activities in which an institution and its holding company may engage, and are intended primarily for the protection of the FDIC insurance fund and for the depositors and borrowers of Pulaski Bank. The regulation and supervision by the OTS and the FDIC are not intended to protect the interests of investors in our common stock. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the adverse classification of our assets and determination of the level of our allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations. In addition, the Sarbanes-Oxley Act of 2002, and the related rules and regulations promulgated by the Securities and Exchange Commission and Nasdaq that are applicable to us, have, in recent years, increased the scope, complexity and

cost of corporate governance, reporting and disclosure practices, including the costs of completing our audit and maintaining our internal controls.

We are subject to security and operational risks relating to our use of technology that could damage our reputation and our business.

Security breaches in our internet banking activities could expose us to possible liability and damage our reputation. Any compromise of our security also could deter customers from using our internet banking services that involve the transmission of confidential information. We rely on standard internet security systems to provide the security and authentication necessary to effect secure transmission of data. These precautions may not protect our systems from compromises or breaches of our security measures that could result in damage to our reputation and our business. Additionally, we outsource our data processing to a third party. If our third party provider encounters difficulties or if we have difficulty in communicating with such third party, it will significantly affect our ability to adequately process and account for customer transactions, which would significantly affect our business operations.

Competition from financial institutions and other financial service providers may adversely affect our growth and profitability.

The banking business is highly competitive and we experience competition from many other financial institutions. We compete with commercial banks, credit unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, and other mutual funds, as well as other super-regional, national and international financial institutions that operate offices in our primary market areas.

We compete with these institutions both in attracting deposits and in making loans. This competition has made it more difficult for us to make new loans and has occasionally forced us to offer higher deposit rates. Price competition for loans and deposits might result in us earning less on our loans and paying more on our deposits, which reduces net interest income. Many of our competitors are larger financial institutions. While we believe we can and do successfully compete with these other financial institutions in our primary markets, we may face a competitive disadvantage as a result of our smaller size, smaller resources and smaller lending limits, lack of geographic diversification and inability to spread our marketing costs across a broader market. In recent years, several new financial institutions have formed in the St. Louis area. These de novo banks may price their loans and deposits aggressively in order to attract customers. Although we compete by concentrating our marketing efforts in our primary markets with local advertisements, personal contacts and greater flexibility and responsiveness in working with local customers, we can give no assurance this strategy will be successful.

We may have fewer resources than many of our competitors to invest in technological improvements.

The financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers.

Our ability to service our debt, pay dividends and otherwise pay our obligations as they come due is substantially dependent on capital distributions from Pulaski Bank, and these distributions are subject to regulatory limits and other restrictions.

A substantial source of our income from which we service our debt, pay our obligations and from which we can pay dividends is the receipt of dividends from Pulaski Bank. The availability of dividends from Pulaski Bank is limited by various statutes and regulations. It is possible, depending upon the financial condition of Pulaski Bank, and other factors, that the applicable regulatory authorities could assert that payment of dividends or other payments is an unsafe or unsound practice. In the event that Pulaski Bank is unable to pay dividends to us, we may not be able to service our debt, pay our obligations or pay dividends on our common stock. The inability to receive dividends from Pulaski Bank would adversely affect our business, financial condition, results of operations and prospects.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Bank conducts its business through twelve full-service banking offices. The following table sets forth information on those offices as of September 30, 2008.


Location	Year Opened	Net Book Value (1)		Owned/ Leased		Approximate Square Footage
		(Dollars in thousands)
Main Office:
12300 Olive Boulevard Creve Coeur, Missouri 63141	1978	$	3,204	Owned		32,300

Full-Service Bank Offices:
199 Jamestown Mall Florissant, Missouri 63034	1998		57	Leased	(2)	2,500

3760 South Grand Avenue St. Louis, Missouri 63118	1967		567	Owned		3,500

4226 Bayless Road St. Louis, Missouri 63123	2001		751	Owned		3,200

1928 Zumbehl Road St. Charles, Missouri 63303	2000		840	Owned		2,800

1700 O’Fallon Road
St. Charles, Missouri 63304	2003		1,201	Owned		4,000

17701 Edison Road, Suite 100 Chesterfield, Missouri 63005	2005		1,609	Owned		3,800

415 DeBaliviere St. Louis, Missouri 63112	2006		1,500	Owned	(3)	25,000

10 Maryland Plaza St. Louis, Missouri 63108	2006		25	Leased	(4)	1,700

6510 Clayton Road Richmond Heights, Missouri 63117	2007		2,892	Owned		2,700

900 Olive Street St. Louis, Missouri 63101	2007		957	Leased	(5)	3,700

175 Carondelet Plaza Clayton, Missouri 63105	2007		937	Leased	(6)	4,100

Other Offices:
12152 Olive Boulevard St. Louis, Missouri 63141	2002		—	Leased	(7)	5,000

6600 College Boulevard Overland Park, Kansas 66211	2002		176	Leased	(8)	10,000

702 East Highway 50 O’Fallon, Illinois 62269	2006		58	Leased	(9)	10,400

2724A Grovelin Street Godfrey, Illinois 62035	2006		9	Leased	(10)	1,400


Location	Year Opened	Net Book Value (1)	Owned/ Leased		Approximate Square Footage
8413 Clint Drive Belton, Missouri 64012	2007	53	Leased	(11)	900

821 NE Columbus, Suite 100 Lee’s Summit, Missouri 64063	2008	8	Leased	(12)	1,900

One Pulaski Center Drive St. Louis, Missouri 63141	2003	4,094	Owned	(13)	27,000

Future offices (14)		915

(1)	Represents the net book value of land, buildings, furniture, fixtures and equipment owned by the Bank.

(2)	Includes the period the office was located at 6955 Parker Road at Highway 367 in Florissant. The office was moved to its current site in October 1998. Lease expires on August 31, 2011.

(3)	The Bank acquired this location as a result of the acquisition of Central West End Bank in March 2006. Approximately 7,974 square feet is leased to eight tenants with varying lease expiration dates.

(4)	The Bank acquired this lease as a result of the acquisition of Central West End Bank in March 2006. The lease expires on April 30, 2009.

(5)	Lease expires on August 31, 2017.

(6)	Lease expires on September 30, 2017.

(7)	Serves as a record storage site. Lease is on a month-to-month term.

(8)	Houses loan production office. Lease expires on October 31, 2013.

(9)	Houses loan production office. Lease expires on February 28, 2009. Office was closed October 31, 2008.

(10)	Houses loan production office. Lease expires on December 14, 2009.

(11)	Houses loan production office. Lease expires on April 30, 2010.

(12)	Houses loan production office and opened effective October 14, 2008. Lease expires on October 15, 2011.

(13)	Houses the mortgage lending, appraisal and title divisions.

(14)	Consists of land purchased at New Halls Ferry, leasehold improvements and furniture, fixtures and equipment related to Lee’s Summit office opened effective October 2008.

Item 3. Legal Proceedings

The Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business which, in the aggregate, involve amounts which are believed by management to be immaterial to the financial condition and results of operations of the Company.

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

None.

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The market for the registrant’s common equity and related stockholders matters required by this item is incorporated herein by reference to the section captioned “Common Stock Information” in the Annual Report to Stockholders.

For a description of restrictions on Pulaski Bank’s ability to pay cash dividends to Pulaski Financial Corp., see “Regulation – Federal Savings Institution Regulation – Limitations on Capital Distributions” in this annual report on Form 10-K.

The following graph compares the cumulative total stockholder return on the Company’s common stock with the cumulative total return on the Nasdaq Index (U.S. Companies) and with the SNL Midwest Thrift Index. The total return assumes reinvestment of all dividends. The graph assumes $100 was invested at the close of business on September 30, 2003.


	At September 30,
Index	2003		2004		2005		2006		2007		2008
Pulaski Financial Corp.	$	100.00	$	136.22	$	187.59	$	178.56	$	142.45	$	100.12
NASDAQ Composite		100.00		106.15		120.41		126.39		151.18		117.06
SNL Midwest Thrift Index		100.00		113.21		117.98		129.14		128.62		111.71

Source: SNL Financial LC, Charlottesville, VA

ISSUER PURCHASES OF EQUITY SECURITIES


Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1)	(d) Maximum Number (or approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July 1, 2008 through July 31, 2008	63	$9.50	63	386,140
August 1, 2008 through August 31, 2008	—	—	—	386,140
September 1, 2008 through September 30, 2008	2,074	8.70	2,074	384,066
Total	2,137	$8.72	2,137

(1)	In February 2007, the Company announced a repurchase program under which it could repurchase up to 497,000 shares of the Company’s common stock. The repurchase program will continue until it is completed or terminated by the Board of Directors.

Item 6. Selected Financial Data

The information required by this item is incorporated herein by reference to the section captioned “Selected Consolidated Financial Information” in the Annual Report to Stockholders.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information required by this item is incorporated herein by reference to the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report to Stockholders.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

The financial statements required by this item are incorporated herein by reference to the audited consolidated financial statements and notes thereto included in the Annual Report to Stockholders.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. In addition, based on that evaluation, no change in the Company’s internal control over financial reporting occurred during the quarter ended September 30, 2008 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s report on internal control over financial reporting is incorporated by reference to page 32 in the Annual Report to Stockholders.

KPMG LLP’s attestation report on the Company’s internal control over financial reporting is incorporated by reference to page 33 in the Annual Report to Stockholders.

Item 9B. Other Information

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

Directors

For information concerning the Board of Directors of the Company, the information contained under the section captioned “Proposal 1—Election of Directors” in the Proxy Statement is incorporated herein by reference.

Compliance with Section 16(a) of the Exchange Act

Reference is made to the cover page of this Form 10-K and to the section captioned “Compliance with Section 16(a) of the Exchange Act” in the Proxy Statement for information regarding compliance with Section 16(a) of the Exchange Act.

Code of Ethics

We have adopted a written code of ethics, which applies to our senior financial officers. We intend to disclose any changes or waivers from our Code of Ethics applicable to any senior financial officers on our website at http://www.pulaskibankstl.com or in a report on Form 8-K. A copy of the Code of Ethics is available, without charge, upon written request to Christine A. Munro, Corporate Secretary, Pulaski Financial Corp., 12300 Olive Blvd, St. Louis, MO 63141.

Corporate Governance

For information regarding the audit committee and its composition and the audit committee expert, the section captioned “Corporate Governance – Meetings and Committees of the Board of Directors” in the Proxy Statement is incorporated herein by reference.

Item 11. Executive Compensation

The information contained under the sections captioned “Executive Compensation” and “Corporate Governance – Directors’ Compensation” in the Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

(a)

Security Ownership of Certain Beneficial Owners

Information required by this item is incorporated herein by reference to the section captioned “Stock Ownership” in the Proxy Statement.

(b)

Security Ownership of Management

The information required by this item is incorporated herein by reference to the sections captioned “Stock Ownership” in the Proxy Statement.

(c)

Changes in Control

The Company is not aware of any arrangements, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

(d)

Equity Compensation Plan Information

Information required by this item is incorporated herein by reference to the section captioned “Item 2 – Approval of the Amendment to the Pulaski Financial Corp. 2006 Long-Term Incentive Plan – Equity Compensation Plan Information” in the Proxy Statement.

Item 13. Certain Relationships, and Director Independence Related Transactions

The information set forth under the sections captioned “Corporate Governance – Independent Directors,” “– Policy and Procedures Governing Related Party Transactions,” and “Transactions with Management” in the Proxy Statement is incorporated by reference.

Item 14. Principal Accountant Fees and Services

The information set forth under the section captioned “Proposal 3 – Ratification of Independent Registered Public Accounting Firm” in the Proxy Statement is incorporated by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules

The following documents are filed as part of this report:

Financial Statements


Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at September 30, 2008 and 2007

Consolidated Statements of Income and Comprehensive Income for the Years Ended September 30, 2008, 2007 and 2006

Consolidated Statements of Stockholders’ Equity for the Years Ended September 30, 2008, 2007 and 2006

Consolidated Statements of Cash Flows for the Years Ended September 30, 2008, 2007 and 2006

Notes to Consolidated Financial Statements for the Years ended September 30, 2008, 2007 and 2006

Such financial statements are incorporated herein by reference to the Consolidated Financial Statements and Notes thereto included in the Annual Report to Stockholders

Financial Statement Schedules

None.

Exhibits

The exhibits listed below are filed as part of this report or are incorporated by reference herein.



3.1		Articles of Incorporation of Pulaski Financial Corp.¹

3.2		Certificate of Amendment to Articles of Incorporation of Pulaski Financial Corp.²

3.3		Bylaws of Pulaski Financial Corp.³

4.1		Form of Certificate for Common Stock⁴

4.2		No long-term debt instrument issued by the Registrant exceeds 10% of consolidated assets or is registered. In accordance with paragraph 4(iii) of Item 601(b) of Regulation S-K, the Registrant will furnish the Securities and Exchange Commission copies of long-term debt instruments and related agreements upon request.

10.1		Employment Agreement by and among Pulaski Bank, Pulaski Financial Corp. and Gary W. Douglass⁵

10.2		Pulaski Financial Corp. 2002 Stock Option Plan.¹

10.3		Pulaski Financial Corp. 2000 Stock-Based Incentive Plan⁶

10.4		Amendment to Pulaski Financial Corp. 2002 Stock Option Plan⁷

10.5		Pulaski Financial Corp. Deferred Compensation Plan (“Equity Trust Plan”)⁸

10.6		Separation and Release Agreement between Pulaski Financial Corp. and William A. Donius⁵

10.7		Form of Stock Option Agreement⁹

10.8		Pulaski Financial Corp. Cash-Based Deferred Compensation Plan¹¹

10.9		Pulaski Financial Corp. Stock-Based Preferred Compensation Plan¹¹



10.10		Form of Pulaski Financial Corp. Stock-Based Deferred Compensation Plan Election Form¹¹

10.11		Form of Pulaski Financial Corp. Stock-Based Deferred Compensation Plan Election Form¹¹

10.12		Pulaski Financial Corp. 2006 Long-Term Incentive Plan¹¹

10.13		Form of Non-Solicitation and Confidentiality Agreement between Pulaski Financial Corp. and each of Ramsey K. Hamadi, W. Thomas Reeves, Matthew A. Locke and Brian J. Bjorkman

13.1		Annual Report to Stockholders

21.1		Subsidiaries of Pulaski Financial Corp.

23.1		Consent of KPMG LLP

31.1		Rule 13a-14(a) 15d-14(a) Certification of Chief Executive Officer

31.2		Rule 13a-14(a) 15d-14(a) Certification of Chief Financial Officer

32.1		Chief Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Chief Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Incorporated herein by reference to Pulaski Financial Corp.’s Definitive Proxy Statement for the 2003 Annual Meeting of Stockholders.

Incorporated herein by reference to Pulaski Financial Corp.’s Form 10-Q for the quarterly period ended December 31, 2003, as filed on February 17, 2004.

Incorporated herein by reference to Pulaski Financial Corp.’s Form 10-Q for the quarterly period ended June 30, 2005, as filed on August 9, 2005.

⁴

Incorporated herein by reference from the Form S-1 (Registration No. 333-56465), as amended, as filed on June 9, 1998.

⁵

Incorporated herein by reference to Pulaski Financial Corp.’s Form 10-Q for the quarterly period ended March 31, 2008, as filed on May 12, 2008.

⁶

Incorporated herein by reference to Pulaski Financial Corp.’s Definitive Proxy Statement for the 2000 Annual Meeting of Stockholders.

⁷

Incorporated herein by reference to Pulaski Financial Corp.’s Form 10-Q for the quarterly period ended March 31, 2004, as filed on May 14, 2004.

⁸

Incorporated herein by reference to Pulaski Financial Corp.’s Form 10-K for the year ended September 30, 2003, as filed on December 27, 2003.

⁹

Incorporated herein by reference to Pulaski Financial Corp.’s Form 10-Q for the year period ended March 31, 2005, as filed on May 10, 2005.

¹⁰

Incorporated herein by reference to Pulaski Financial Corp.’s Form 10-k for the year ended September 30, 2005, as filed on December 13, 2005.

¹¹

Incorporated herein by reference to Pulaski Financial Corp.’s Definitive Proxy Statement for the 2006 Annual Meeting of Stockholders.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

PULASKI FINANCIAL CORP.

(Registrant)

/s/ Gary W. Douglass

Gary W. Douglass

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


NAME	TITLE	DATE

/s/ Gary W. Douglass Gary W. Douglass	President and Chief Executive Officer (principal executive officer)	December 12, 2008

/s/ Ramsey K. Hamadi Ramsey K. Hamadi	Chief Financial Officer (principal accounting and financial officer)	December 12, 2008

/s/ Stanley J. Bradshaw Stanley J. Bradshaw	Chairman of the Board	December 12, 2008

/s/ Lee S. Wielansky Lee S. Wielansky	Vice-Chairman of the Board	December 12, 2008

/s/ William M. Corrigan, Jr. William M. Corrigan, Jr.	Director	December 12, 2008

/s/ William A. Donius William A. Donius	Director	December 12, 2008

/s/ Leon A. Felman Leon A. Felman	Director	December 12, 2008

/s/ Michael R. Hogan Michael R. Hogan	Director	December 12, 2008

/s/ Timothy K. Reeves Timothy K. Reeves	Director	December 12, 2008

/s/ Steven C. Roberts Steven C. Roberts	Director	December 12, 2008

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Pulaski Financial (PULB) Inactive 10-K2008 FY Annual report

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