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PRESS RELEASE
PULASKI FINANCIAL REPORTS STRONG THIRD QUARTER CORE EARNINGS GROWTH
ON EXPANDED NET INTEREST INCOME
o NET INTEREST INCOME EXPANDS 27% IN CURRENT QUARTER AND 14% YEAR TO
DATE ON STRONG LOAN AND DEPOSIT GROWTH
o NET INTEREST MARGIN CLIMBS TO 3.22%
o YEAR-TO-DATE DILUTED EPS UP 14% ON 23% INCREASE IN EARNINGS
o RETAIL BANKING REVENUES RISE 24% IN CURRENT QUARTER AND 22% YEAR TO
DATE
o MORTGAGE LENDING DIVISION IMPROVES EFFICIENCY AND PROFITS
o ASSET QUALITY REMAINS STRONG
ST. LOUIS, JULY 26, 2006--Pulaski Financial Corp. (Nasdaq: PULB) today announced
net income for the quarter ended June 30, 2006 of $2.5 million, or $0.24 per
diluted share, compared with $2.4 million, or $0.27 per diluted share, in the
same quarter a year ago. Earnings for both periods benefited from changes in
value of derivative financial instruments, totaling $146,000, or $0.01 per
diluted share after-tax, for the quarter ended June 30, 2006 and $874,000, or
$0.06 per diluted share after-tax, for the quarter ended June 30, 2005.
Net income for the nine months ended June 30, 2006 increased 23% to $7.2
million, or $0.76 per diluted share, compared with $5.9 million, or $0.67 per
diluted share, for the nine months ended June 30, 2005. Current period earnings
were negatively impacted by changes in the value of derivative financial
instruments, which resulted in a loss of $334,000, or $0.02 per diluted share
after-tax, for the nine months ended June 30, 2006, compared to a gain of
$404,000, or $0.03 per diluted share after-tax, for the nine months ended June
30, 2005. Diluted earnings per share for the third quarter were also reduced by
a 707,000 increase in the quarter's average diluted shares outstanding resulting
from stock issued in a secondary public offering during February 2006.
Total assets at quarter-end increased to $938.9 million from $789.9 million at
September 30, 2005, due to strong growth in the retained loan portfolio and, to
a lesser extent, the acquisition of Central West End Bank. Loans increased
$116.5 million on the year to $749.7 million, supported by deposit growth of
$127.6 million to $623.8 million at June 30, 2006. Central West End Bank, which
was acquired on March 31, 2006, had total loans of $12.0 million and total
assets of $50.3 million.
NET INTEREST INCOME SEES STRONG GROWTH
Driven by growth in loans and lower-cost transaction deposits, net interest
income grew 27% to $6.6 million in the third quarter compared with $5.2 million
in the same period in 2005, and 17%, to $18.1 million, for the nine months. Loan
growth remained strong during the third quarter, increasing $34.0 million, or
nearly 5%. "We have continued to build a first-rate commercial lending team, and
their portfolio remains the fastest growing segment of our business," William A.
Donius, Chairman and Chief Executive Officer commented. The retained loan
portfolio increased at an annualized rate of 25%.
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Loan growth was funded primarily by an increase in deposits, which totaled
$623.8 million at June 30, 2006 compared with $496.2 million at September 30,
2005. The acquisition of Central West End Bank added $41 million of deposits and
two strategic bank locations. In contrast, deposits declined $6.1 million from
the quarter ended March 31, 2006. Due to changes in market conditions,
management decided to let certain high-cost retail certificates of deposit
runoff in favor of lower-cost wholesale deposits and borrowings.
"Earlier this year, we raised additional capital through a common stock offering
to support the improvement and expansion of our bank facilities, staff and
banking technologies. We added three new bank locations this year and plan to
add three more in the next 24 months. We expanded core transaction account
balances 24%, or nearly $44 million for the year, which is essential for the
long-term growth of our Company," Donius commented.
RETAIL BANKING INCOME EXPANDS
Retail banking income increased 24% to $786,000 for the quarter due to growth in
bank locations and transaction account relationships. "We added approximately
2,300 checking accounts through the first nine months of our fiscal year, a 15%
increase. We believe the planned new locations and resulting additional
relationships will continue to grow our retail banking revenue. Core deposit
growth remains a strategic focus," Donius noted.
MORTGAGE REVENUES UP FOR LINKED QUARTER
Mortgage revenues decreased $363,000, or 23%, to $1.2 million for the quarter
ended June 30, 2006 compared with $1.6 million during the same quarter in 2005,
but increased $646,000, or 110%, over the quarter ended March 31, 2006. "We made
some adjustments that resulted in improved margins and enhanced profits in the
mortgage division during the third quarter. The mortgage environment has been
more competitive than we anticipated at the beginning of the year, but we are
continuing to gain market share and remain focused on improving lending
efficiency," Donius noted.
Loan sales totaled $351.0 million during the third quarter of 2006 compared with
$264.1 million in the third quarter a year ago. For the nine months, loans
originated for sale totaled $831.8 million while loan sales totaled $819.8
million, compared with $704.9 million of originations and $673.8 million of loan
sales for the nine months ended June 30, 2005.
NONINTEREST EXPENSE UP
Noninterest expense increased $1.6 million, or 42%, to $5.3 million for the
quarter ended June 30, 2006 compared with $3.7 million during the comparable
quarter a year ago. Included in noninterest expense is the change in the market
values of derivative financial instruments. A smaller gain on derivative
financial instruments resulted in a $728,000 increase in noninterest expense
during the quarter compared with the same quarter last year. Also contributing
to the increase were higher compensation expense and occupancy expense resulting
from the costs associated with the three new branch locations, additional
personnel on the commercial lending team, and a $125,000 fee paid to convert the
data processing system of Central West End Bank, which was acquired in March
2006.
ASSET QUALITY REMAINS STRONG
Nonperforming assets increased to $10.0 million at the end of the third quarter,
compared with $9.7 million at second quarter-end and $6.8 million at the end of
the prior fiscal year. The provision for loan losses for the quarter totaled
$292,000 compared with $529,000 in the same period a year ago. The lower
provision was the result of improved overall loan quality. The level of
nonperforming loans improved to 0.82% of total loans at June 30 compared with
1.11% at March 31 and 0.85% at September 30, 2005. The allowance for loan losses
at June 30 was $7.6 million, or 111.7% of nonperforming loans and 0.92% of total
loans, compared with $7.4 million, or 76.0% of nonperforming
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loans, and 0.95% of total loans at March 31. Net charge-offs were $53,000 and
$604,000, for the third quarter and year to date, respectively compared to
$52,000 and $277,000 for the three and nine-month periods ended June 30, 2005,
respectively.
OUTLOOK
"The business environment is challenging, with a softer housing market and
intensifying competition. Nevertheless, the combination of our effective
strategic plan and talented staff have allowed us to make solid progress. Our
emphasis on customer service continues to attract new deposits. The expansion of
our commercial lending division continues to help us balance the cyclical
fluctuations we experience in mortgage lending. The majority of our assets and
liabilities are structured to reprice within one year, allowing us to adapt to a
changing interest rate environment. Finally, we are considering expanding our
presence with the addition of two to three new bank locations in key areas of
metropolitan St. Louis over the next two years," Donius concluded.
CONFERENCE CALL TODAY
Pulaski Financial management will discuss third 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=0000336C Participants
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in the conference call may dial 877- 407-9039 a few minutes before start time.
The call also will be available for replay through August 9, 2006 at
877-660-6853, account number 3055 and conference I.D. 209051.
Pulaski Financial Corp., operating in its 84th year through its subsidiary,
Pulaski Bank, serves customers throughout the St. Louis metropolitan area. The
bank offers a full line of quality retail-banking products through nine
full-service branch offices in St. Louis and a loan production office in Kansas
City. The company's website can be accessed at www.pulaskibankstl.com.
----------------------
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995 as amended, and is including this statement for purposes of these
safe harbor provisions. Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies and expectations of Pulaski
Financial Corp., are generally identifiable by use of the words "believe,"
"expect," "intend," "anticipate," "estimate," "project," or similar expressions.
The Company's ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material adverse
affect on the operations and future prospects of the Company include, but are
not limited to, changes in: interest rates; general economic conditions;
legislative/regulatory provisions; monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve
Board; the quality and composition of the loan or investment portfolios; demand
for loan products; deposit flows; competition; demand for financial services in
the Company's market area; and accounting principles, policies, and guidelines.
Additional factors that could materially affect the Company's financial results,
is included in its filings with the Securities and Exchange Commission including
Item 1A-Risk Factors in the Company's Form 10-K. These risks and uncertainties
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements. Statements herein are made only as of
the date of this presentation. Except as required by applicable law or other
regulation, Pulaski Financial Corp. does not undertake, and specifically
disclaims any obligation to release publicly, the result of any revisions, which
may be made to any forward-looking statements to reflect events or circumstances
after the date of this news release or reflect the occurrence of anticipated or
unanticipated events.
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PULASKI FINANCIAL CORP.
UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS
SELECTED BALANCE SHEET DATA AT JUNE 30, AT MAR. 31, AT SEPT. 30,
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 2006 2006 2005
---------- ----------- ------------
Total assets $ 938,888 $ 907,360 $ 789,861
Loans receivable, net 749,734 715,776 633,195
Allowance for loan losses 7,635 7,396 6,806
Loans held for sale, net 76,335 53,639 64,335
Investment securities (includes equity securities) 13,957 22,137 10,228
FHLB stock 9,426 7,775 8,462
Mortgage-backed & related securities 3,843 4,944 4,833
Cash and cash equivalents 20,621 41,151 25,688
Deposits 623,785 629,848 496,171
Deposit liabilities held for sale - - 25,375
FHLB advances 188,500 153,500 171,000
Subordinated debentures 19,589 19,589 19,589
Stockholders' equity 73,735 72,087 48,246
Total book value per share $ 7.46 $ 7.30 $ 5.72
Tangible book value per share $ 7.00 $ 6.84 $ 5.66
ASSET QUALITY RATIOS
Nonperforming loans as a percent of total loans 0.82% 1.11% 0.85%
Nonperforming assets as a percent of total assets 1.07% 1.07% 0.85%
Allowance for loan losses as a percent of total loans 0.92% 0.95% 0.97%
Allowance for loan losses as a percent of retained loans 1.02% 1.03% 1.07%
Allowance for loan losses as a percent of nonperforming loans 111.74% 75.98% 113.51%
THREE MONTHS NINE MONTHS
SELECTED OPERATING DATA ended June 30, ended June 30,
------------------------------ ------------------------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 2006 2005 2006 2005
---------- ----------- ----------- -----------
Interest income $ 14,259 $ 9,775 $ 38,189 $ 26,746
Interest expense 7,611 4,526 20,045 11,273
---------- ----------- ----------- -----------
Net interest income 6,648 5,249 18,144 15,473
Provision for loan losses 292 529 1,151 996
---------- ----------- ----------- -----------
Net interest income after provision for loan losses 6,356 4,720 16,993 14,477
---------- ----------- ----------- -----------
Retail banking fees 786 632 2,218 1,817
Mortgage revenues 1,231 1,596 2,610 3,751
Revenue from title company operations 186 180 559 495
Revenue from investment division operations 152 110 419 508
Gain on sale of branch - - 2,474 -
Other 464 300 1,432 1,125
---------- ----------- ----------- -----------
Total non-interest income 2,819 2,818 9,712 7,696
---------- ----------- ----------- -----------
Compensation expense 2,689 2,270 7,201 6,819
Occupancy, equipment and data processing 1,427 1,084 3,762 3,041
Loss (gain) on derivative financial instruments (146) (874) 334 (404)
Charitable contributions 17 30 325 83
Other 1,309 1,233 3,907 3,266
---------- ----------- ----------- -----------
Total non-interest expense 5,296 3,743 15,529 12,805
---------- ----------- ----------- -----------
Income before income taxes 3,879 3,795 11,176 9,368
Income taxes 1,401 1,395 3,956 3,493
---------- ----------- ----------- -----------
Net income $ 2,478 $ 2,400 $ 7,220 $ 5,875
========== =========== =========== ===========
PERFORMANCE RATIOS
Return on average assets 1.09% 1.34% 1.15% 1.15%
Return on average equity 13.03% 20.51% 15.50% 17.59%
Interest rate spread 2.94% 2.97% 2.92% 3.11%
Net interest margin 3.22% 3.13% 3.15% 3.23%
========== =========== =========== ===========
SHARE DATA
Weighted average shares outstanding-basic 9,620,525 7,959,648 8,928,159 7,926,081
Weighted average shares outstanding-diluted 10,245,190 8,874,609 9,544,085 8,828,224
EPS-basic $0.26 $0.30 $0.81 $0.74
EPS-diluted $0.24 $0.27 $0.76 $0.67
Dividends $0.09 $0.08 $0.25 $0.20
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PULASKI FINANCIAL CORP.
UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS, Continued
(DOLLARS IN THOUSANDS)
LOANS RECEIVABLE JUNE 30, MARCH 31, SEPTEMBER 30,
(DOLLARS IN THOUSANDS) 2006 2006 2005
---------- ----------- -------------
Commercial & Industrial Loans $ 45,508 $ 41,382 $ 26,306
Real estate mortgage:
One to four family residential 297,908 287,323 255,729
Multi-family residential 12,499 15,839 13,994
Commercial real estate 136,783 126,704 104,701
---------- ----------- -----------
Total real estate mortgage 447,190 429,866 374,424
---------- ----------- -----------
Real estate construction and development:
One to four family residential 31,023 29,551 33,652
Multi-family residential 6,186 5,791 1,790
Commercial real estate 19,714 13,671 9,580
---------- ----------- -----------
Total real estate construction and development 56,923 49,013 45,022
---------- ----------- -----------
Equity line of credit 208,051 201,703 195,647
Consumer and installment 6,042 3,800 3,514
---------- ----------- -----------
763,714 725,764 644,913
---------- ----------- -----------
Add (less):
Deferred loan (costs) fees 4,672 4,147 3,931
Loans in process (11,017) (6,738) (8,843)
Allowance for loan losses (7,635) (7,397) (6,806)
---------- ----------- -----------
(13,980) (9,988) (11,718)
---------- ----------- -----------
Total $ 749,734 $ 715,776 $ 633,195
========== =========== ===========
Weighted average rate at end of period 7.40% 7.12% 6.59%
========== =========== ===========
JUNE 30, 2006 MARCH 31, 2006 SEPTEMBER 30, 2005
------------- -------------- ------------------
WEIGHTED WEIGHTED WEIGHTED
DEPOSITS AVERAGE AVERAGE AVERAGE
(DOLLARS IN THOUSANDS) INTEREST INTEREST INTEREST
BALANCE RATE BALANCE RATE BALANCE RATE
-------------------------------------------------------------
Demand Deposit Accounts:
Noninterest-bearing checking $ 36,975 0.00% $ 35,050 0.00% $ 29,192 0.00%
Interest-bearing checking 58,867 1.57% 60,296 1.56% 28,994 0.16%
Money market 94,508 3.29% 98,537 2.91% 82,638 2.34%
Passbook savings accounts: 33,737 0.36% 33,997 0.41% 30,230 0.35%
--------- --------- ---------
Total demand deposit accounts 224,087 1.85% 227,880 1.73% 171,054 1.22%
Certificates of Deposit (*) 399,698 4.39% 401,968 4.05% 325,117 3.32%
--------- --------- ---------
Total deposits $ 623,785 3.48% $ 629,848 3.21% $ 496,171 2.60%
========= ========= =========
(*) Includes brokered deposits $ 141,969 $ 134,475 $ 118,856
========= ========= =========
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PULASKI FINANCIAL CORP.
AVERAGE BALANCE SHEETS
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED
--------------------------------------------------------------------
June 30, 2006 June 30, 2005
------------------------------ ------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Cost Balance Dividends Cost
------------------------------ ------------------------------
Interest-earning assets:
Loans receivable $ 733,819 $13,011 7.09% $ 592,913 $ 8,773 5.92%
Loans available for sale 57,416 933 6.50% 51,243 759 5.92%
Other interest-earning assets 35,229 315 3.58% 26,434 243 3.68%
------------------ ------------------
Total interest-earning assets 826,464 14,259 6.90% 670,590 9,775 5.83%
------- -------
Noninterest-earning assets 80,701 46,792
--------- ---------
Total assets $ 907,165 $ 717,382
========= =========
Interest-bearing liabilities:
Deposits $ 576,600 $ 5,174 3.59% $ 442,766 $ 2,768 2.50%
Borrowed money 191,347 2,437 5.09% 189,772 1,758 3.71%
------------------ ------------------
Total interest-bearing liabilities 767,947 7,611 3.96% 632,538 4,526 2.86%
------- -------
Noninterest-bearing deposits 33,169 22,057
Noninterest-bearing liabilities 29,968 15,973
Stockholders' equity 76,081 46,814
--------- ---------
Total liabilities and stockholders' equity $ 907,165 $ 717,382
========= =========
Net interest income $ 6,648 $ 5,249
======= =======
Interest rate spread 2.94% 2.97%
Net interest margin 3.22% 3.13%
NINE MONTHS ENDED
--------------------------------------------------------------------
June 30, 2006 June 30, 2005
------------------------------ ------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Cost Balance Dividends Cost
------------------------------ ------------------------------
Interest-earning assets:
Loans receivable $ 694,142 $35,252 6.77% $ 567,828 $24,303 5.71%
Loans available for sale 45,315 2,031 5.98% 42,929 1,772 5.50%
Other interest-earning assets 31,650 906 3.82% 27,236 671 3.28%
------------------ ------------------
Total interest-earning assets 771,107 38,189 6.60% 637,993 26,746 5.59%
------- -------
Noninterest-earning assets 63,049 45,282
--------- ---------
Total assets $ 834,156 $ 683,275
========= =========
Interest-bearing liabilities:
Deposits $ 535,884 $13,452 3.35% $ 428,805 $ 6,825 2.12%
Borrowed money 186,357 6,593 4.72% 177,180 4,448 3.35%
------------------ ------------------
Total interest-bearing liabilities 722,241 20,045 3.70% 605,985 11,273 2.48%
------- -------
Noninterest-bearing deposits 29,466 19,573
Noninterest-bearing liabilities 20,340 13,174
Stockholders' equity 62,109 44,543
--------- ---------
Total liabilities and stockholders' equity $ 834,156 $ 683,275
========= =========
Net interest income $18,144 $15,473
======= =======
Interest rate spread 2.90% 3.11%
Net interest margin 3.14% 3.23%
# # #
FOR ADDITIONAL INFORMATION CONTACT:
William A. Donius, Chairman & CEO
Pulaski Financial Corp.
(314) 878-2210 Ext. 3610
Michael Arneth or Tad Gage
The Investor Relations Company
(312) 245-2700