PRESS RELEASE
PULASKI FINANCIAL REPORTS SECOND QUARTER
NET INCOME OF $0.30 PER DILUTED SHARE
o NET INCOME INCREASES 83% PRIMARILY DUE TO GAIN ON SALE OF A BANK
BRANCH
o CHECKING ACCOUNT BALANCES INCREASE 49% OR $31 MILLION ON
COMMERCIAL AND PUBLIC DEPOSIT GROWTH
o RETAINED LOAN PORTFOLIO GROWS 6% OR $49 MILLION IN Q2, 11% OR
$83 MILLION YEAR-TO-DATE
o RETAIL BANKING FEES INCREASE 21%
o GROWTH IN CORE DEPOSITS DURING THE QUARTER ARE EXPECTED TO HAVE
POSITIVE IMPACT ON NET INTEREST MARGIN
o COMPLETED SECONDARY COMMON EQUITY OFFERING RAISING $16.6 MILLION
ST. LOUIS, APRIL 25, 2006--Pulaski Financial Corp. (Nasdaq: PULB) today
announced earnings for the quarter ended March 31, 2006 of $2.9 million, or
$0.30 per diluted share, compared with earnings of $1.6 million, or $0.18 per
diluted share, for the same quarter last year. For the six months ended March
31, 2006, earnings were $4.7 million, or $0.52 per diluted share, compared with
$3.5 million, or $0.40 per diluted share for the same period a year ago. Total
assets at quarter-end increased to $907.4 million, from $789.9 million at
September 30, 2005. Notable items during the quarter included a $2.5 million
gain on the sale of the Kansas City branch, a charitable contribution to a
community-based organization of $250,000, and a loss on the sale of
nonperforming loans of $128,000.
ACQUISITION SUCCESSFULLY COMPLETED
"We completed our acquisition of Central West End Bank on March 31, 2006, which
added two strategic bank locations to our franchise as well as $41 million of
deposits and $12 million of loans," stated Pulaski's Chairman and CEO, William
A. Donius. "We are optimistic that these two strategically advantageous
locations will successfully augment our other effective strategies to continue
to grow deposits in the years to come," he added. The assets of Central West End
are reflected in the balance sheet as of March 31. However, because the
transaction closed at the end of the quarter, the Company's results of
operations do not reflect the operations of Central West End for the current
quarter or periods prior to March 31.
STRONG DEPOSIT GROWTH REPORTED
The Bank's checking account balances grew 49%, or $31 million, including $14
million acquired from Central West End. "Our efforts to expand on our commercial
and municipal relationships have been effective, resulting in increased deposits
and a lower cost of funds for the Bank," Donius commented. Total deposits
increased $115.6 million in the quarter to $629.8 million. Year to date,
checking accounts, money markets and passbook savings accounts have grown 26% to
$227.9 million.
MORTGAGE RESULTS
Successes in the commercial and retail areas of the company were tempered by a
decline in mortgage revenue to $636,000 from $1.3 million in the same quarter a
year earlier. "We experienced a rise in fixed origination costs during the past
year and a decline in the gross revenue margin due to increased competition and
rising interest rates. The combination of these two events resulted in
inefficiency that drove down our mortgage income. While the reduction in
mortgage revenues was due, in large part, to competitive market conditions, our
proactive management team moved quickly to adjust the factors within our
control. We completed a thorough analysis of our fixed-cost structure, our loan
fees and our mortgage division incentive plans, and, by quarter-end, made
certain changes in each of these areas that we believe will improve both the
mortgage division's and the Company's results going forward," Donius commented.
Also contributing to the decline in mortgage revenue during the quarter was a
loss of $128,000 from the sale of $6 million of nonperforming loans.
RESIDENTIAL LENDING OUTLOOK
"While the competitive mortgage market had an impact on the December and March
quarters, our current mortgage pipeline is more than double its size early in
the year. The expanded pipeline, the changes already implemented and
improvements we are already seeing from seasonal trends should result in
improved financial performance over the second half of our fiscal year," said
Donius. Mortgage lending volume from November through February was
uncharacteristically low. However, the market improved significantly in the
latter part of the second quarter, as $155 million of mortgage loans were closed
in March, representing nearly 77% of the volume of loans that had closed in the
first two months of the most recent quarter.
LOAN GROWTH REMAINS STRONG
"Despite the soft market, we experienced strong loan growth during the quarter,"
Donius said. "Our retained loan portfolio continues to expand due to a high
quality pipeline of commercial and residential loans," he added. The retained
loan portfolio increased $82.6 million, or 13%, to $715.8 million at March 31,
2006 compared to $633.2 million at September 30, 2005. The growth in loans was
very balanced, with approximately half the growth stemming from commercial and
half from retail relationships.
NEW TALENT BOLSTERS TEAM
"The addition of Tom Reeves as President will help us as we expand into new
markets and broaden our relationships, particularly our commercial
relationships, in St. Louis," Donius continued. "Tom is extremely well connected
in the St. Louis community, having served as the Chief Lending Officer at two of
the largest banks in town prior to a five-year stint at running an organization
charged with stimulating growth in Downtown St. Louis."
Commenting on other recent additions, Donius said, "New board members Steve
Roberts, Mike Hogan and Stan Bradshaw are all top notch business advisors. We
are confident they'll help us reach our ambitious goal of growing to $1.5
billion in assets within the next five years."
The Bank also added six residential loan officers in conjunction with the
recently announced joint venture with Prudential Select Properties.
"These recent additions, at all levels of our Bank, reinforce our proven
expertise at identifying, recruiting and managing talent to accomplish our
organic growth targets," Donius said.
INTEREST INCOME EXPANDS
Net interest income grew 8.5% to $5.6 million in the quarter compared with the
same period in 2005. The net interest margin declined on a linked quarter basis
primarily due to the timing of selling low-cost deposits in the Kansas City Bank
location and replacing them with higher-cost, short-term brokered deposits. The
Bank's assets and liabilities remain well matched, with approximately two-thirds
of assets and liabilities set to reprice during the next year. "We are pleased
at the performance of our balance sheet through what has been a challenging
interest rate environment. Long term, our focus of growing core deposits is
essential to expanding our margins as lending competition continues to be
fierce," Donius said.
RETAIL BANKING INCOME EXPANDS
Retail banking income increased 21% to $685,000 for the quarter. "We saw a sharp
rise in retail banking revenue primarily through our efforts to better assist
our customers," Donius stated. "Retail banking has always been a cornerstone of
our organization. We will continue our efforts to attract additional retail
business and expand our relationships with existing customers. We believe we
have an opportunity to further grow our retail banking revenue as we continue to
expand the number of our bank locations. Retail deposits are, and will remain, a
significant source of funds we can deploy to fuel growth. We are confident we
have programs in place to attract them," Donius added.
OTHER EXPENSE
Other expense for the quarter ended March 31, 2006 included a charitable
contribution of $250,000 to a St. Louis community-based organization. "As a
community bank, supported by our community for over 84 years, we believe
donations like this are an important part of our corporate values," Donius said.
Also adding to other expense for the current quarter was a $73,000 loss on
derivatives. The documentation concerns that forced the loss of hedge accounting
in prior periods, resulting in losses of $407,000 during the first quarter of
2006 and $470,000 in the first half of 2005, were corrected during the current
quarter, enabling the Company to apply hedge accounting. "Our hedge
documentation and our hedge effectiveness testing have proven to be effective
for these financial instruments," said Ramsey K. Hamadi, Chief Financial
Officer. "We believe the small loss we experienced this quarter will be typical
of small gains and losses the Company will experience until the derivative
instrument matures or is called. We believe that eventually all the losses will
be recovered as the derivatives mature," Hamadi concluded.
ASSET QUALITY REMAINS STRONG
Nonperforming assets increased $2.9 million, to $9.7 million at March 31, 2006
compared to $6.8 million at September 30, 2005 and $7.5 million at December 31,
2005. The increase in nonperforming assets stems primarily from the downgrade of
a $1.6 million commercial real estate relationship. The Company is working with
the customer to sell the property and believes that the loan is properly
reserved.
The provision for loan losses for the quarter totaled $453,000 compared with
$117,000 in the same period a year ago. The increase in the provision for loan
losses was due primarily to an increase in nonperforming loans during the
current period. The allowance for loan losses at March 31, 2006 was $7.4
million, or 76.0% of nonperforming loans and 0.95% of total loans.
Non-performing loans were 1.11% of total loans at March 31, 2006 compared with
0.85% at September 30, 2005. Charge-offs, excluding the impact from the sales of
nonperforming loans, were $102,000 and $173,000, for the current quarter and
year to date, respectively compared to $68,000 and $151,000 for the three and
six-month periods ended March 31, 2005, respectively.
OUTLOOK
"We are pleased with the continued growth of the franchise. Our outlook for the
remaining two quarters remains optimistic. We believe we can deliver the double
digit income increase that we anticipated at the beginning of the fiscal year,"
Donius concluded.
CONFERENCE CALL TODAY
Pulaski Financial management will discuss second quarter results and other
developments today during a conference call beginning at 10 a.m. Central
Daylight Time. The call also will be simultaneously webcast and archived for
three months at: http://www.viavid.net/detailpage.aspx?sid=0000301E.
--------------------------------------------------
Participants in the conference call may dial 877-407-9039 a few minutes before
start time. The call also will be available for replay through May 9, 2006 at
877-660-6853, account number 3055 and conference I.D. 200968.
Pulaski Financial Corp., operating in its 84th 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 nine full-service branch offices. The company's website can be
accessed at www.pulaskibankstl.com. Visit the shareholder information page for
----------------------
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
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 MAR. 31, AT SEPT. 30,
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 2006 2005
------------ -------------
Total assets $ 907,360 $ 789,861
Loans receivable, net 715,776 633,195
Allowance for loan losses 7,396 6,806
Loans held for sale, net 53,639 64,335
Investment securities (includes equity securities) 22,137 10,228
FHLB stock 7,775 8,462
Mortgage-backed & related securities 4,944 4,833
Cash and cash equivalents 41,151 25,688
Deposits 629,848 496,171
Deposit liabilities held for sale - 25,375
FHLB advances 153,500 171,000
Subordinated debentures 19,589 19,589
Stockholders' equity 72,087 48,246
Total book value per share $ 7.30 $ 5.72
Tangible book value per share $ 6.84 $ 5.66
ASSET QUALITY RATIOS
Nonperforming loans as a percent of total loans 1.11% 0.85%
Nonperforming assets as a percent of total assets 1.07% 0.85%
Allowance for loan losses as a percent of total loans 0.95% 0.97%
Allowance for loan losses as a percent of nonperforming loans 75.98% 113.51%
THREE MONTHS SIX MONTHS
SELECTED OPERATING DATA ENDED MARCH 31, ENDED MARCH 31,
------------------------------ -----------------------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 2006 2005 2006 2005
----------- ----------- ----------- -----------
Interest income $ 12,141 $ 8,761 $ 23,931 $ 16,972
Interest expense 6,500 3,564 12,434 6,748
----------- ----------- ----------- -----------
Net interest income 5,641 5,197 11,497 10,224
Provision for loan losses 453 117 859 467
----------- ----------- ----------- -----------
Net interest income after provision for loan losses 5,188 5,080 10,638 9,757
----------- ----------- ----------- -----------
Retail banking fees 685 566 1,432 1,185
Mortgage revenues 636 1,263 1,410 2,380
Revenue from title company operations 174 200 372 359
Revenue from investment division operations 150 259 267 398
Gain on sale of branch 2,474 - 2,474 -
Other 534 291 938 599
----------- ----------- ----------- -----------
Total non-interest income 4,653 2,579 6,893 4,921
----------- ----------- ----------- -----------
Compensation expense 2,464 2,481 4,511 4,549
Occupancy, equipment and data processing 1,227 1,021 2,335 1,957
Loss on derivative financial instruments 73 638 480 470
Charitable contributions 289 12 309 53
Other 1,321 1,009 2,598 2,076
----------- ----------- ----------- -----------
Total non-interest expense 5,374 5,161 10,233 9,105
----------- ----------- ----------- -----------
Income before income taxes 4,467 2,498 7,298 5,573
Income taxes 1,572 915 2,555 2,098
----------- ----------- ----------- -----------
Net income $ 2,895 $ 1,583 $ 4,743 $ 3,475
=========== =========== =========== ===========
PERFORMANCE RATIOS
Return on average assets 1.43% 0.94% 1.19% 1.04%
Return on average equity 18.99% 14.09% 17.21% 15.93%
Interest rate spread 2.78% 3.20% 2.88% 3.17%
Net interest margin 3.00% 3.31% 3.09% 3.29%
SHARE DATA
Weighted average shares outstanding-basic 8,881,437 7,933,545 8,581,976 7,879,247
Weighted average shares outstanding-diluted 9,508,138 8,813,865 9,193,533 8,774,484
EPS-basic $ 0.33 $ 0.20 $ 0.55 $ 0.44
EPS-diluted $ 0.30 $ 0.18 $ 0.52 $ 0.40
Dividends $ 0.08 $ 0.06 $ 0.16 $ 0.12
LOANS RECEIVABLE MARCH DECEMBER SEPTEMBER
(DOLLARS IN THOUSANDS) 2006 2005 2005
---------- ---------- ----------
Commercial & Industrial Loans $ 41,382 $ 34,933 $ 26,306
Real estate mortgage:
One to four family residential 287,323 268,408 255,729
Multi-family residential 15,839 13,971 13,994
Commercial real estate 126,704 112,302 104,701
---------- ---------- ----------
Total real estate mortgage 429,866 394,681 374,424
---------- ---------- ----------
Real estate construction and development:
One to four family residential 29,551 29,989 33,652
Multi-family residential 5,791 4,334 1,790
Commercial real estate 13,671 12,249 9,580
---------- ---------- ----------
Total real estate construction and development 49,013 46,572 45,022
---------- ---------- ----------
Equity line of credit 201,703 197,808 195,647
Consumer and installment 3,800 3,584 3,514
---------- ---------- ----------
725,764 677,578 644,913
---------- ---------- ----------
Add (less):
Deferred loan (costs) fees 4,147 4,266 3,931
Loans in process (6,738) (8,486) (8,843)
Allowance for loan losses (7,397) (6,900) (6,806)
---------- ---------- ----------
(9,988) (11,120) (11,718)
---------- ---------- ----------
Total $ 715,776 $ 666,458 $ 633,195
========== ========== ==========
Weighted average rate at end of period 7.12% 6.85% 6.59%
========== ========== ==========
Weighted Weighted Weighted
DEPOSITS Average Average Average
(DOLLARS IN THOUSANDS) MARCH Interest DECEMBER Interest SEPTEMBER Interest
2006 Rate 2005 Rate 2005 Rate
-------------------------------------------------------------
Demand Deposit Accounts:
Noninterest-bearing checking $ 35,050 0.00% $ 29,817 0.00% $ 30,039 0.00%
Interest-bearing checking 60,296 1.56% 34,133 0.63% 30,962 0.16%
Money market 98,537 2.91% 94,681 2.66% 87,172 2.37%
Passbook savings accounts: 33,998 0.41% 30,769 0.35% 32,364 0.35%
---------- ---------- ---------
Total demand deposit accounts 227,881 1.73% 189,400 1.50% 180,537 1.24%
Certificates of Deposit (*) 401,967 4.02% 324,838 3.64% 341,009 3.35%
---------- ---------- ---------
Subtotal 629,848 3.19% 514,238 2.85% 521,546 2.59%
Less: deposit liabilities held for sale -- (24,466) (25,375)
---------- ---------- ---------
Net deposits $ 629,848 $ 489,772 $496,171
========== ========== =========
(*) Includes brokered deposits $ 134,475 $ 97,598 $118,856
========== ========== =========
CONTACT:
For Additional Information Contact:
William A. Donius
Chairman & CEO
Pulaski Financial Corp.
(314) 878-2210 Ext. 3610
Michael Arneth
The Investor Relations Company
(847) 296-4200