[PULASKI FINANCIAL CORP. LETTERHEAD]
PULASKI FINANCIAL REPORTS FIRST QUARTER 2008
DILUTED EARNINGS PER SHARE UP 13% TO $0.27 PER SHARE
o FOCUS ON COMMUNITY BANKING DRIVES IMPROVED RESULTS
o NET INTEREST INCOME EXPANDS 19% OVER PRIOR YEAR TO $8.2 MILLION
o STRONG COMMERCIAL LOAN DEMAND FUELS $76 MILLION IN LOAN GROWTH; LOANS
RECEIVABLE EXCEED $1 BILLION
o CORE DEPOSITS INCREASE 17%, AIDED BY GROWTH FROM NEW BANK LOCATIONS
o NON-INTEREST INCOME INCREASES 18% TO $3.1 MILLION ON GROWTH IN MORTGAGE
REVENUES AND RETAIL BANKING FEES
o WHILE NON-PERFORMING ASSETS INCREASE SLIGHTLY, HAVING NEVER ENGAGED IN
SUBPRIME LENDING ACTIVITIES AIDS EFFORTS TO ENSURE OVERALL ASSET
QUALITY
ST. LOUIS, JANUARY 22, 2008--Pulaski Financial Corp. (Nasdaq Global Select:
PULB) today announced net income for the first fiscal quarter ended December 31,
2007 of $2.7 million, or $0.27 per diluted share, compared with earnings of $2.5
million, or $0.24 per diluted share, during the same quarter a year ago. The
increased earnings were fueled by strong growth in net interest income, mortgage
revenues and retail banking fees.
Chief Executive Officer William Donius commented, "We are pleased with the
strong start to fiscal 2008 in each of our principal lines of business: retail,
mortgage and commercial. Each of these areas made a significant contribution to
our first quarter success."
NET INTEREST INCOME INCREASES ON STRONG LOAN AND CORE DEPOSIT GROWTH
Net interest income rose 19% to $8.2 million for the first fiscal quarter of
2008 compared with $6.9 million for the same 2007 period as the result of strong
growth in loans and core deposits.
Loans receivable grew 8%, or $75.8 million, during the quarter to $1.03 billion
at December 31, 2007. Commercial real estate and commercial and industrial loans
accounted for more than 80% of this growth. The Company also saw strong growth
in loans held for sale, which increased 50%, or $29.0 million, during the
quarter.
"We experienced strong growth in our commercial loan portfolio, which continues
to perform at a very high level. Our commercial lending group continues to
demonstrate their ability to generate quality assets in the midst of a tough
loan market. Ensuring continued credit quality remains our foremost concern, as
we approved only about 60% of the commercial loan applications we reviewed
during the quarter," Donius said.
Also contributing to the increase in net interest income was growth in total
deposits, including core deposits, which are generally the Company's lowest-cost
funding source. Core deposit growth continues to be one of the Company's primary
strategic objectives. This strategy has yielded immediate success as core
deposits, which include checking, money market and passbook accounts, rose 17%,
or $54.4 million, during the quarter to $372.1 million at December 31, 2007.
Total deposits increased $33.5 million to $869.0 million at December 31, 2007.
"Growth in core deposits from commercial banking relationships is essential for
the Company's continued growth in the St. Louis market. Since 2005, the Company
has opened or acquired six new full-service locations in the central corridor of
St. Louis. With the city's business districts predominately in this area, these
new locations are perfectly located to enhance the Company's ability to provide
convenient service to commercial customers," said Donius. "We are pleased to
report that our three newest bank locations, which were opened in calendar year
2007, are exceeding our expectations."
The Company's Clayton, downtown St. Louis and Richmond Heights locations, which
have been open 12 months or less, have combined deposits totaling nearly $40
million, including $20 million of growth during the December 2007 quarter.
"Several years ago, we committed to becoming St. Louis' leading community bank.
We believe these results are proof of our progress," Donius said. "By every
measure, our growth can be traced to a philosophy of serving retail and
commercial customers whose banking needs are not being met by either national
affiliates or de novo start-ups."
The Company's net interest margin remained relatively unchanged at 3.02% for the
December 2007 quarter compared with 3.03% and 3.06% for the quarters ended
September 30, 2007 and December 31, 2006, respectively. Although the Company's
interest-bearing liabilities are slightly more sensitive to a declining
interest-rate environment than its interest-bearing assets, the Company remains
well-positioned to absorb changes in market interest rates, with approximately
two-thirds of its assets and liabilities scheduled to mature or reprice within
one year.
NON-INTEREST INCOME INCREASES ON STRONG MORTGAGE AND RETAIL BANKING RESULTS
Mortgage revenues rose 24% to $1.3 million for the three months ending December
31, 2007 compared with the same period last year. Loan sales totaled
approximately $285 million in each of the two quarters ended December 31, 2007
and 2006. However, the Company realized higher gross revenue margins during the
December 2007 quarter due to reduced market competition, which resulted in
increased revenues. Also contributing to the increase in mortgage revenues were
lower overhead costs within the mortgage division, primarily lower compensation
costs resulting from reduced staffing levels.
Donius commented, "Even though much of the national mortgage sector is
distressed, our mortgage division experienced a strong quarter due to both
higher gross margins and greater efficiency. Reduced staffing levels within our
mortgage division allowed us to optimize staffing size and reduce overhead."
Retail banking fees rose 32%, or $246,000, to $1.0 million for the quarter ended
December 31, 2007 compared with $782,000 for last year's quarter, primarily due
to a change in the Company's policy on account overdraft fees.
ASSET QUALITY
The balance of non-performing assets was $16.1 million, or 1.29% of total
assets, at December 31, 2007 compared with $13.6 million, or 1.20% of total
assets, at September 30, 2007. The Company's largest non-performing asset at
December 31, 2007 was a $2.6 million loan secured by commercial real estate. The
property securing the loan was acquired through foreclosure in January 2008.
Management is optimistic it will work out of this non-performing asset in the
near future and believes the loan was adequately collateralized at December 31,
2007.
Net charge-offs for the quarter ended December 31, 2007 were $302,000, or 0.12%
of average loans on an annualized basis, compared with $149,000, or 0.07% of
average loans on an annualized basis, for the December 2006 quarter and
$267,000, or 0.11% of average loans on an annualized basis, for the quarter
ended September 30, 2007. Net charge-offs for the current quarter primarily
included $257,000 in charge-offs on single-family residential mortgage loans and
$46,000 in charge-offs on consumer loans.
Donius observed, "Property values in some Midwest residential real estate
markets began to decline during 2007, but because property values in the Midwest
have generally moved up slowly over the years, we are not expecting a
substantial decline in values overall. We recognized this trend in mid-2007 and
we were proactive in adapting to this environment by tightening our underwriting
practices. Also, we modified policies, scrutinized collateral values on problem
loans and made changes to eliminate or enhance certain loan products in light of
weakening market conditions."
Donius added, "We are committed to maintaining our high standard of credit
quality. We have never engaged in sub-prime lending activities."
The provision for loan losses increased $351,000 to $1.0 million for the quarter
ended December 31, 2007 compared with $682,000 for the same quarter the year
before. The provision for loan losses in the current-year quarter related
primarily to growth in the Company's performing loan portfolio, including
substantial growth in commercial loans, which carry a higher level of inherent
risk than residential loans, and also to charge-offs and the increase in the
level of non-performing assets. The ratios of the allowance for loan losses to
total loans and to non-performing loans were 0.99% and 89.66%, respectively, at
December 31, 2007 compared with 1.02% and 99.44%, respectively, at September 30,
2007.
NON-INTEREST EXPENSE
Total non-interest expense increased 27% to $6.4 million for the quarter ended
December 31, 2007 compared with $5.1 million for the comparable 2006 quarter
primarily as the result of increases in salaries and employee benefits expense
and occupancy expense. Salaries and employee benefits expense and occupancy
expense related to the three new bank locations totaled $166,000 and $147,000,
respectively for the December 2007 quarter compared with $8,000 and $0,
respectively for the December 2006 quarter. The Company also saw a $213,000
increase in FDIC insurance premium expense during the December 2007 quarter
following the utilization of the one-time assessment credit provided to eligible
insured depository institutions under the Federal Deposit Insurance Reform Act
of 2005. Management expects future quarterly FDIC insurance premium expense to
be approximately $150,000.
The provision for income taxes decreased from $1.3 million for the quarter ended
December 31, 2006 to $1.1 million for the December 2007 quarter. The effective
tax rate was 29.4% for the quarter ended December 31, 2007 compared with 34.6%
in the prior-year quarter. The lower effective tax rate was primarily the result
of a $150,000 benefit in the December 2007 quarter related to a change in the
estimated amount of the Company's tax liability.
OUTLOOK
"We expect to see continued growth in loans receivable and core deposits which
will generate additional net interest income and strengthen 2008 earnings. We
are optimistic that the changes we made in our underwriting policies and
practices in 2007 will have lasting benefits resulting in sound asset quality.
Our new bank locations have already attracted valuable core deposits. We are
confident that, while modestly dilutive to earnings in 2008, this investment in
our future will produce strong returns as early as fiscal 2009 and will add
significant value to our franchise," Donius stated.
"Given these trends, we remain very optimistic about our outlook for fiscal year
2008: high single-digit to low double-digit percentage growth in our 2008
diluted earnings per share compared with fiscal 2007. However, the entire
banking industry continues to operate in a challenging environment caused by
uncertainties in the national housing and mortgage sectors, volatile interest
rates and ongoing national credit concerns. We cannot fully predict the impact
these external market factors will have on our 2008 results," Donius continued.
CONFERENCE CALL TOMORROW
Pulaski Financial management will discuss first quarter results and other
developments tomorrow, January 23, 2008, during a conference call beginning at
11 a.m. EST (10 a.m. CST). The call also will be simultaneously webcast and
archived for three months at:
http://www.viavid.net/detailpage.aspx?sid=00004A6C. Participants in the
conference call may dial 877-407-9039 a few minutes before start time. The call
also will be available for replay for three months at 877-660-6853, account
number 3055 and conference I.D. 270781.
ABOUT PULASKI FINANCIAL
Pulaski Financial Corp., operating in its 86th year through its subsidiary,
Pulaski Bank, serves customers throughout the St. Louis metropolitan area. The
bank offers a full line of quality retail and commercial banking products
through 12 full-service branch offices in St. Louis and three loan production
offices in Kansas City and the Illinois portion of the St. Louis metroplex. The
Company's website can be accessed at www.pulaskibankstl.com.
This news release may contain forward-looking statements about Pulaski Financial
Corp., which the Company intends to be covered under the safe harbor provisions
contained in the Private Securities Litigation Reform Act of 1995. Statements
that are not historical or current facts, including statements about beliefs and
expectations, are forward-looking statements. These forward-looking statements
cover, among other things, anticipated future revenue and expenses and the
future plans and prospects of the Company. These statements often include the
words "may," "could," "would," "should," "believes," "expects," "anticipates,"
"estimates," "intends," "plans," "targets," "potentially," "probably,"
"projects," "outlook" or similar expressions. You are cautioned that
forward-looking statements involve uncertainties, and important factors could
cause actual results to differ materially from those anticipated, including
changes in general business and economic conditions, changes in interest rates,
legal and regulatory developments, increased competition from both banks and
non-banks, changes in customer behavior and preferences, and effects of critical
accounting policies and judgments. For discussion of these and other risks that
may cause actual results to differ from expectations, refer to our Annual Report
on Form 10-K for the year ended September 30, 2007 on file with the SEC,
including the sections entitled "Risk Factors." These risks and uncertainties
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements. Forward-looking statements speak only
as of the date they are made, and the Company undertakes no obligation to update
them in light of new information or future events.
PULASKI FINANCIAL CORP.
UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS
SELECTED BALANCE SHEET DATA December 31, September 30,
(Dollars in thousands except per share data) 2007 2007
============ ============
Total assets $ 1,250,907 $ 1,131,465
Loans receivable, net 1,025,623 949,826
Allowance for loan losses 11,151 10,421
Loans held for sale, net 87,582 58,536
Investment securities (includes equity
securities) 27,679 16,988
FHLB stock 12,489 8,306
Mortgage-backed & related securities 2,937 3,027
Cash and cash equivalents 23,334 23,675
Deposits 868,966 835,489
FHLB advances 252,300 158,400
Subordinated debentures 19,589 19,589
Stockholders' equity 83,572 80,804
Book value per share $ 8.36 $ 8.13
Asset Quality Ratios
Non-performing loans as a percent of total
loans 1.11% 1.03%
Non-performing assets as a percent of total
assets 1.29% 1.20%
Allowance for loan losses as a percent of total
loans 0.99% 1.02%
Allowance for loan losses as a percent of
nonperforming loans 89.66% 99.44%
Three Months
Ended December 31,
SELECTED OPERATING DATA ==========================
(Dollars in thousands) 2007 2006
============ ============
Interest income $ 19,370 $ 16,375
Interest expense 11,169 9,469
------------ ------------
Net interest income 8,201 6,906
Provision for loan losses 1,032 681
------------ ------------
Net interest income after provision for
loan losses 7,169 6,225
------------ ------------
Retail banking fees 1,028 782
Mortgage revenues 1,318 1,061
Revenue from investment division operations 215 242
Gain on sale of securities 54 144
Other 526 431
------------ ------------
Total non-interest income 3,141 2,660
------------ ------------
Compensation expense 3,021 2,432
Occupancy, equipment and data processing 1,597 1,251
Advertising 340 247
Professional services 283 262
Real estate foreclosure expense and losses, net 229 147
Gain on derivative financial instruments (122) (172)
Charitable donations 39 49
Other 1,056 869
------------ ------------
Total non-interest expense 6,443 5,085
------------ ------------
Income before income taxes 3,867 3,800
Income taxes 1,135 1,314
------------ ------------
Net income $ 2,732 $ 2,486
============ ============
Performance Ratios
Return on average assets 0.94% 1.02%
Return on average equity 12.88% 12.59%
Interest rate spread 2.65% 2.71%
Net interest margin 3.02% 3.06%
SHARE DATA
Weighted average shares outstanding-basic 9,780,132 9,823,850
Weighted average shares outstanding-diluted 10,186,789 10,269,066
EPS-basic $ 0.28 $ 0.25
EPS-diluted $ 0.27 $ 0.24
Dividends $ 0.090 $ 0.085
PULASKI FINANCIAL CORP.
UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS, Continued
LOANS RECEIVABLE December 31, September 30,
(Dollars in thousands) 2007 2007
=========== ===========
Real estate mortgage:
One to four family residential $ 333,047 $ 332,206
Multi-family residential 33,713 30,219
Commercial real estate 230,655 200,206
----------- -----------
Total real estate mortgage 597,415 562,631
----------- -----------
Real estate construction and development:
One to four family residential 47,079 45,428
Multi-family residential 13,014 13,899
Commercial real estate 45,985 39,594
----------- -----------
Total real estate construction
and development 106,078 98,921
----------- -----------
Commercial & industrial loans 110,033 77,642
Equity line of credit 223,270 219,539
Consumer and installment 7,000 6,918
----------- -----------
1,043,796 965,651
----------- -----------
Add (less):
Deferred loan costs 5,327 5,163
Loans in process (12,349) (10,567)
Allowance for loan losses (11,151) (10,421)
----------- -----------
(18,173) (15,825)
----------- -----------
Total $ 1,025,623 $ 949,826
=========== ===========
Weighted average rate at end of
period 7.29% 7.44%
=========== ===========
December 31, 2007 September 30, 2007
=====================================
Weighted Weighted
DEPOSITS Average Average
(Dollars in thousands) Interest Interest
Balance Rate Balance Rate
=========== ===========
Demand Deposit Accounts:
Noninterest-bearing checking $ 63,341 0.00% $ 57,005 0.00%
Interest-bearing checking 82,952 1.96% 57,815 1.79%
Money market 196,357 3.76% 173,950 4.05%
Passbook savings accounts 29,450 0.29% 28,909 0.29%
----------- -----------
Total demand deposit accounts 372,100 2.44% 317,679 2.57%
----------- -----------
Certificates of Deposit: (1)
$100,000 or less 231,077 4.99% 239,401 5.45%
Greater than $100,000 265,789 4.73% 278,409 4.73%
----------- -----------
Total certificates of deposit 496,866 4.85% 517,810 5.06%
----------- -----------
Total deposits $ 868,966 3.82% $ 835,489 4.11%
=========== ===========
(1) Includes brokered deposits $ 173,343 $ 190,445
=========== ===========
PULASKI FINANCIAL CORP.
NONPERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES
(Unaudited)
NONPERFORMING ASSETS December 31, September 30,
(In thousands) 2007 2007
============= =============
Non-accrual loans:
Residential real estate $ 1,846 $ 2,082
Commercial 3,786 3,708
Real estate construction and development 221 -
Home equity 669 554
Other 289 105
------------- -------------
Total non-accrual loans 6,811 6,449
------------- -------------
Accruing loans past due 90 days or more:
Residential real estate 3,116 2,564
Commercial 383 44
Real estate construction and development 227 -
Home equity 1,106 1,063
Other 207 150
------------- -------------
Total accruing loans past due 90
days or more 5,039 3,821
------------- -------------
Restructured loans 587 210
------------- -------------
Total non-performing loans 12,437 10,480
Real estate acquired in settlement of loans 3,645 3,090
Other nonperforming assets 44 43
------------- -------------
Total non-performing assets $ 16,126 $ 13,613
============= =============
Three Months Ended December 31,
ALLOWANCE FOR LOAN LOSSES ==============================
(In thousands) 2007 2006
============= =============
Allowance for loan losses, beginning of
period $ 10,421 $ 7,817
Provision charged to expense 1,032 682
Loans charged-off (410) (159)
Recoveries of loans previously charged-off 108 10
------------- -------------
Allowance for loan losses, end of period $ 11,151 $ 8,350
============= =============
PULASKI FINANCIAL CORP.
AVERAGE BALANCE SHEETS
(Unaudited)
Three Months Ended
====================================================
December 31, 2007 December 31, 2006
========================== ========================
(Dollars in thousands) Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Cost Balance Dividends Cost
----------- -------- ----- --------- -------- -----
Interest-earning
assets:
Loans receivable $ 994,423 $ 18,215 7.33% $ 814,417 $ 15,187 7.46%
Loans available for
sale 51,511 727 5.64% 51,249 763 5.96%
Other interest-earning
assets 39,313 428 4.35% 36,850 425 4.61%
----------- -------- --------- --------
Total
interest-earning
assets 1,085,247 19,370 7.14% 902,516 16,375 7.26%
-------- --------
Noninterest-earning
assets 76,327 70,763
----------- ---------
Total assets $ 1,161,574 $ 973,279
=========== =========
Interest-bearing
liabilities:
Deposits $ 762,448 $ 8,202 4.30% $ 633,124 $ 6,736 4.26%
Borrowed money 233,572 2,967 5.08% 199,126 2,733 5.49%
----------- -------- --------- --------
Total
interest-bearing
liabilities 996,020 11,169 4.49% 832,250 9,469 4.55%
-------- --------
Noninterest-bearing
deposits 59,688 43,982
Noninterest-bearing
liabilities 21,018 18,034
Stockholders' equity 84,848 79,013
----------- ---------
Total liabilities
and stockholders'
equity $ 1,161,574 $ 973,279
=========== =========
Net interest income $ 8,201 $ 6,906
======== ========
Interest rate spread 2.65% 2.71%
Net interest margin 3.02% 3.06%
CONTACT:
For Additional Information Contact:
William A. Donius
CEO
Pulaski Financial Corp.
(314) 878-2210 Ext. 3610
John Hastings
Dan Callahan
Fleishman-Hillard, Inc.
(314) 982-1700