[PULASKI FINANCIAL CORP. LOGO APPEARS HERE]
FOR APPROVAL ONLY
PULASKI FINANCIAL REPORTS FOURTH QUARTER
NET INCOME UP 34% TO $2.1 MILLION
o NON-INTEREST INCOME RISES 42% OVER PRIOR YEAR QUARTER TO $3.3 MILLION
AND 22% TO $10.9 MILLION OVER PRIOR YEAR
o DILUTED EARNINGS PER SHARE INCREASES 33% OVER PRIOR YEAR QUARTER TO
$0.24 AND 34% TO $0.90 OVER PRIOR YEAR
o RETAINED LOAN PORTFOLIO GROWS 5% IN THE QUARTER AND 24% YTD
o NET INTEREST INCOME EXPANDS 18% TO $5.7 MILLION OVER PRIOR YEAR QUARTER
AND 35% TO $21.6 MILLION OVER PRIOR YEAR
ST. LOUIS, OCTOBER 25, 2005--Pulaski Financial Corp. (Nasdaq: PULB) today
reported that net earnings for the fourth quarter ended September 30, 2005
increased 34% to $2.1 million, or $0.24 per diluted share, from net earnings of
$1.6 million, or $0.18 per diluted share, in the same quarter a year ago. Net
earnings for the year ended September 30, 2005 increased 36% to $8.0 million, or
$0.90 per diluted share, compared to earnings of $5.9 million, or $0.67 per
diluted share, for the fiscal year ended September 30, 2004. Results and share
figures have been adjusted to account for a three-for-two stock split that
occurred in July 2005.
COMMERCIAL LOAN DEMAND REMAINS STRONG
"Commercial loan growth remained strong in both the fourth quarter and the
year." William A. Donius, Chairman and Chief Executive Officer commented. "Our
retained loan portfolio continues to expand; increasing 5% during the fourth
quarter and 24% for the year. Retained loans stood at $633.2 million at
September 30, 2005, compared with $510.6 million at September 30, 2004. Our
commercial loan portfolio grew by more than 14% to $179.3 million during the
quarter due primarily to growth in commercial real estate loans, while home
equity loan balances increased $4.4 million to $195.6 million and residential
loans increased $3.9 million to $266.5 million during the quarter ended
September 30, 2005," Donius added.
"Net interest income grew 18% to $5.7 million in the fourth quarter compared
with the same period in 2004 and 34.5% for the year to $21.6 million. Interest
rate risk remains low as assets and liabilities remain well matched," Donius
commented. "Our net interest margin declined 17 basis points to 3.08% in the
fourth quarter from its level in the prior quarter. The decline stems primarily
from the continued narrowing spread on loans held for sale combined with a
$68,000 loss of accrued interest on the sale of a non-performing commercial loan
and a $57,000 reduction in dividends from the Federal Home Loan Bank of Des
Moines. The Company's net interest margin was negatively impacted 14 basis
points by the continuing narrowing spread on loans held for sale over their
funding source, one-week FHLB advances. As a percentage of the Company's net
interest bearing assets, loans held for sale increased from 7.7% of the
portfolio at June 30, 2005 to 10.1% of the portfolio at September 30, 2005. At
the same time, the net interest spread on the portfolio declined from 2.8% to
1.7% due to the flattened yield curve.
"We recognize volatility of spread on the warehouse portfolio is a part of our
business and don't intend to manage it any differently. We have previously seen
spreads on this portfolio over 4%. Our expectation is that the yield curve will
change. When it does, we expect to benefit from the change," Donius said. The
Company's assets and liabilities remain well matched with 67% of liabilities and
65% of assets set to reprice during the next year.
Deposits increased $19.5 million during the quarter and $113.1 million for the
year to $519.9 million as of September 30, 2005, including $25.4 million
currently held for sale. Demand deposit accounts, including money market and
passbooks increased $15.4 million during the year. The Company's non-interest
bearing checking account balances have increased 85% to $30.0 million due
primarily to the growth in commercial relationships. On October 11, 2005, the
Company announced that Pulaski Bank and UMB Bank, NA had entered into a purchase
agreement under which Pulaski Bank will sell its Kansas City, Missouri branch
office to UMB Bank. This bank branch had $25.4 million in deposits and $1.0
million in assets held for sale at September 30, 2005.
Commercial transaction accounts increased $15.9 million during the year to $35.4
million. "The commercial division has done a great job developing full banking
relationships, including delivering on commercial deposit accounts," Donius
said.
Total assets rose $149.8 million to $787.7 million for the year. Net loans at
year-end totaled $697.5 million at September 30, 2005 compared with $559.7
million at September 30, 2004. Stockholders' equity rose to $48.7 million from
$41.0 million at the end of the previous year due primarily to earnings.
"We anticipate less pressure on our net interest margin in coming months as we
have increased our intermediate fixed rate liability position. Our long term
success in maintaining a strong net interest margin should be supported by our
continued emphasis on sales of core deposits," Donius noted.
EXPANDED MORTGAGE BANKING DELIVERS STRONG NON-INTEREST INCOME GROWTH
Non-interest income rose 42% to $3.3 million for the three months ended
September 30, 2005, up from $2.3 million for the same period a year ago. "In the
last six months, the mortgage division, with operations in St. Louis and Kansas
City, has expanded the commissioned residential lending staff by 25%, making it
more efficient and profitable." William A. Donius, chairman, president and chief
executive officer, commented.
Mortgage revenue expanded 50% to $1.8 million for the quarter and 20% for the
year to $5.7 million. The Company sold $373.6 million in loans during the fourth
quarter compared with $224.9 million in the fourth quarter a year ago. For
fiscal 2005, the Company originated $1.2 billion in mortgage loans while selling
$1.1 billion.
"For the third year in a row, the mortgage division has originated more than $1
billion in loans, which places us as one of the top lenders in both Kansas City
and St. Louis, according to RMS Information Systems, which monitors recorded
deeds of trusts in metropolitan communities. We are especially encouraged by
growth in the additional lines of business stemming from our lending activities
such as the title company and our new mortgage joint venture, 1st KC Home
Lending. The title division contributed, after-tax, $70,000 for the fourth
quarter and $187,000 for the year; the joint venture contributed $34,000
after-tax in its first full quarter of operations," Donius said.
Retail banking revenue was relatively unchanged from the prior year, but
remained a strong source of non-interest income. The Company reported $650,000
of retail banking revenue for the fourth quarter and $2.5 million for the year.
"Retail banking has always been a cornerstone of our organization. We are
continuing our efforts to attract additional retail business and expand our
relationships with existing customers. We believe there is an opportunity to
continue to grow our retail banking revenue as we expand our bank locations.
Retail deposits are also a significant source of funds with we can employ to
fuel continued growth and we have in place programs to attract them," Donius
noted.
OTHER OPERATING RESULTS
Non-performing assets were unchanged at $6.8 million at June 30, 2005 and
September 30, 2005 despite the sale of the $1.7 million commercial credit
downgraded to non-performing during the quarter ended June 30, 2005. The loan
was sold at an amount approximating carrying value. Offsetting the sale of that
loan, the Company experienced an increase of $1.1 million in residential
non-performing loans, which totaled $4.9 million at September 30, 2005 and an
increase in non-performing home equity loans. The increase in non-performing
loans residential loans was due primarily to the growth in residential lending
activity over the last couple of years. The Company believes the residential
loans are well collateralized.
The provision for loan losses for the fourth quarter totaled $639,000 compared
with $704,000 in the same period a year ago. The decrease in the provision for
loan loss was due to slower growth in the loan portfolio, compared with the same
quarter in 2004, offset by the increase in nonperforming loans. The additional
provision brought the allowance for loan losses to $6.8 million at September 30,
2005. Nonperforming loans at year-end as a percent of total loans was 0.85%
compared with 0.76% at the same point a year earlier.
Compensation expense increased $562,000 over the prior year to $2.5 million for
the fourth quarter due to the addition of 21 new employees as well as higher
benefits and salaries expense for the existing staff. The added staff consisted
primarily of additions to the investment, title, commercial and residential
mortgage divisions, which experienced significant growth. Accounting and audit
staff additions relating to compliance with the Sarbanes Oxley Act ("SOX") also
resulted in higher compensation expense. The Company experienced SOX-related
expense in excess of $500,000 during fiscal 2005.
OUTLOOK
"Due to the strong growth trends, we see no reason to change our double digit
earnings growth forecast as we enter fiscal 2006," said Donius. "The health of
the region's economy is reflected in the growth we are experiencing in St. Louis
and Kansas City, our primary markets. We are making every effort to capitalize
on the opportunity this growth offers by adding to staff and where appropriate,
adding new locations. However, we will continue to be prudent in our pursuit of
growth and avoid assuming unreasonable risk. We will, for the foreseeable future
remain focused on our goal of becoming a full-fledged community bank with retail
banking and residential mortgage lending and commercial banking as our core
businesses, but we will also continue to bolster our other units.
"Our confidence is further supported by the knowledge that we have in place
staff that is dedicated to achieving our goals. It has been an integral part of
our strategy to attract and retain talented persons and to provide them with the
means to achieve their individual objectives and in doing so achieve the goals
we have set for Pulaski. The competitive environment we are facing is changing
rapidly but we are up to the challenge.
"The recently announced sale of our Kansas City retail banking location, has
allowed us to focus on growing our operations in the St. Louis market. We are
confident that redeploying assets in St. Louis will allow us to further enhance
our position as a leading community bank in St. Louis. With a strong financial
foundation and a dedicated staff, I believe we can become the community bank of
choice in the St. Louis market and reach the $1 billion assets level while
remaining one of the top performing small banks in the nation," Donius said.
CONFERENCE CALL TODAY
Pulaski Financial management will discuss fiscal 2005 and fourth quarter results
and other developments today during a conference call beginning at 10 a.m.
Central Standard Time. The call also will be simultaneously webcast and archived
for three months at: http://www.viavid.net/detailpage.aspx?sid=00002A25.
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Participants in the conference call may dial 877-407-4018 a few minutes before
start time. The call also will be available for replay through November 8, 2005
at 877-660-6853, account number 3055 and conference I.D. 174201.
Pulaski Financial Corp., operating in its 83rd year through its subsidiary,
Pulaski Bank, serves customers throughout the St. Louis and Kansas City
metropolitan areas. The bank offers a full line of quality retail-banking
products through eight full-service branch offices. The company's website can be
accessed at www.pulaskibankstl.com. Visit the shareholder information page for
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useful and comparative data.
STATEMENTS CONTAINED IN THIS NEWS RELEASE CONTAIN FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
THESE STATEMENTS ARE BASED ON THE BELIEFS AND EXPECTATIONS OF MANAGEMENT AS WELL
AS THE ASSUMPTIONS MADE USING INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT.
SINCE THESE STATEMENTS REFLECT THE VIEWS OF MANAGEMENT CONCERNING FUTURE EVENTS,
THESE STATEMENTS INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS. THESE RISKS AND
UNCERTAINTIES INCLUDE AMONG OTHERS, CHANGES IN MARKET INTEREST RATES AND GENERAL
AND REGIONAL ECONOMIC CONDITIONS, CHANGES IN GOVERNMENT REGULATIONS, CHANGES IN
ACCOUNTING PRINCIPLES AND THE QUALITY OR COMPOSITION OF THE LOAN AND INVESTMENT
PORTFOLIOS AND OTHER FACTORS THAT MAY BE DESCRIBED IN THE COMPANY'S QUARTERLY
REPORTS ON FORM 10-Q FOR THE QUARTERS ENDED DECEMBER 31, MARCH 31 AND JUNE 30
AND IN ITS ANNUAL REPORT ON FORM 10-K, EACH FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WHICH ARE AVAILABLE AT THE SECURITIES AND EXCHANGE
COMMISSION'S INTERNET WEBSITE (WWW.SEC.GOV) AND TO WHICH REFERENCE IS HEREBY
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MADE. THEREFORE, ACTUAL FUTURE RESULTS MAY DIFFER SIGNIFICANTLY FROM RESULTS
DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
PULASKI FINANCIAL CORP.
UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS
SELECTED BALANCE SHEET DATA: AT SEPT 30, AT SEPT 30,
(IN THOUSANDS EXCEPT PER SHARE DATA) 2005 2004
-------------- --------------
Total assets $ 787,729 $ 637,886
Loans receivable, net 633,195 510,584
Allowance for loan losses 6,806 5,579
Loans held for sale, net 64,335 49,152
Investment securities 10,228 12,986
FHLB stock 8,462 7,538
Mortgage-backed & related securities 4,833 6,574
Cash and cash equivalents 25,688 20,296
Deposits 494,484 406,799
Liabilities related to assets held for sale 25,375 -
FHLB advances 171,000 154,600
Subordinated debentures 19,589 9,279
Stockholder's equity 48,732 40,974
Book value per share 5.77 4.98
ASSET QUALITY RATIOS:
Nonperforming loans as a percent of total loans 0.85% 0.76%
Nonperforming assets as a percent of total assets 0.86% 0.84%
Allowance for loan losses as a percent of total loans 0.97% 0.99%
Allowance for loan losses as a percent of nonperforming loans 113.51% 130.63%
THREE MONTHS TWELVE MONTHS
SELECTED OPERATING DATA: ENDED SEPT 30, ENDED SEPT 30,
(IN THOUSANDS EXCEPT SHARE DATA) 2005 2004 2005 2004
-------- -------- -------- --------
Interest income $ 11,045 $ 7,254 $ 37,792 $ 23,832
Interest expense 5,393 2,464 16,239 7,806
---------- ---------- ---------- ----------
Net interest income 5,652 4,790 21,553 16,026
Provision for loan losses 639 704 1,635 1,934
---------- ---------- ---------- ----------
Net interest income after provision for loan losses 5,013 4,086 19,918 14,092
Retail banking fees 650 674 2,467 2,389
Mortgage revenues 1,828 1,210 5,670 4,589
Revenue from title company operations 259 120 795 134
Revenue from investment division operations 160 - 668 -
Insurance commissions 41 84 207 334
Gain on sale of securities - - - 736
Other 332 211 1,137 778
---------- ---------- ---------- ----------
Total non-interest income 3,270 2,299 10,944 8,960
Compensation expense 2,455 1,892 9,239 6,475
Other 2,520 1,983 8,955 7,239
---------- ---------- ---------- ----------
Total non-interest expense 4,975 3,875 18,194 13,714
Income before income taxes 3,308 2,510 12,668 9,338
Income taxes 1,214 947 4,704 3,486
---------- ---------- ---------- ----------
Net income $ 2,094 $ 1,563 $ 7,964 $ 5,852
========== ========== ========== ==========
SHARE DATA
Weighted average shares outstanding-basic 8,414,359 8,158,980 8,329,307 8,096,034
Weighted average shares outstanding-diluted 8,888,655 8,691,923 8,828,224 8,695,004
EPS-basic $ 0.25 $ 0.19 $ 0.96 $ 0.72
EPS-diluted $ 0.24 $ 0.18 $ 0.90 $ 0.67
Dividends $ 0.08 $ 0.06 $ 0.28 $ 0.20
PERFORMANCE RATIOS:
Return on average assets 1.07% 1.05% 1.12% 1.18%
Return on average equity 17.07% 16.44% 17.43% 15.31%
Interest rate spread 2.90% 3.36% 3.12% 3.37%
Net interest margin 3.08% 3.44% 3.26% 3.47%