Pulaski Financial Corp. (Nasdaq Global Select: PULB) today reported net income for the quarter ended December 31, 2011 of $3.0 million, or $0.23 per diluted common share, compared with net income of $2.2 million, or $0.15 per diluted common share, for the quarter ended September 30, 2011 and net income of $3.1 million, or $0.24 per diluted common share, for the December 2010 quarter. Reducing income available to common shares were dividends and the related discount accretion on the Company's preferred stock totaling $0.05 per diluted common share in each of the three quarters.

Gary Douglass, President and Chief Executive Officer commented, "We are very pleased with the continued improvements realized in the December 2011 quarter in terms of both operating results and asset quality. The 52% increase in our linked-quarter earnings per share marked the third consecutive quarter of meaningful earnings growth. In an environment where top-line revenue growth was challenging, we were able to deliver meaningful growth in interest income, net interest income and the net interest margin while, at the same time, significantly reducing our overall level of non-interest expense. Equally important, we continued to make good progress on our number one priority, which is asset quality improvement. Not only did we reduce the level of non-performing assets for the fourth consecutive quarter, we also saw improvement in several potential future predictors of asset quality. The levels of internal adversely classified assets and early stage loan delinquencies, which we define as loans that are 31 to 89 days past due, both showed meaningful declines from September 30, 2011."

Net Interest Income Up from the Linked Quarter on Growth in Loans Held for Sale and Lower Deposit Costs

Net interest income increased to $12.1 million for the first quarter of fiscal 2012 compared with $11.3 million for the quarter ended September 30, 2011, but decreased from $13.4 million for the same period a year ago. The increase from the linked quarter was primarily the result of growth in the average balance of mortgage loans held for sale to $138.7 million compared with $61.9 million for the quarter ended September 30, 2011 and, to a lesser extent, a lower cost of deposits. The decrease from the same period a year ago was primarily due to a decline in the average balance of mortgage loans held for sale from a near record high of $305.9 million for the quarter ended December 31, 2010, partially offset by a lower cost of deposits.

The net interest margin reached a record high of 3.97% for the three months ended December 31, 2011 compared with 3.67% for the quarter ended September 30, 2011 and 3.78% for the quarter ended December 31, 2010. The linked-quarter increase was the result of growth in mortgage loans held for sale that was funded by the reduction of lower-yielding assets held in Fed funds, combined with a decrease in the cost of deposits. The increase in the net interest margin from the December 2010 quarter was primarily the result of a decrease in the cost of deposits.

Mortgage Revenues Remained Consistent with the Linked Quarter on Continued Strong Loan Volume

Non-interest income decreased to $3.4 million for the quarter ended December 31, 2011 compared with $3.6 million for each of the quarters ended September 30, 2011 and December 31, 2010. The linked-quarter decrease was primarily due to lower retail banking fees related to fees charged on insufficient checks while the decrease from the prior-year quarter was due to lower mortgage revenues. Mortgage revenues were $1.7 million on loan sales of $329 million for the quarter ended December 31, 2011 compared with $1.7 million on loan sales of $283 million for the quarter ended September 30, 2011 and $1.8 million on loan sales of $612 million in the December 2010 quarter.

Mortgage loans originated for sale totaled $371 million for the quarter ended December 31, 2011 compared with $354 million for the quarter ended September 30, 2011 and $598 million for the December 2010 quarter. As a result of the low level of market interest rates during the quarter, the Company saw an increase in demand for mortgage refinancings compared with the linked quarter, but this level of demand was down significantly from the near historically high levels experienced in the December 2010 quarter. Mortgage refinancings totaled $242 million, or 65% of total loans originated for sale, for the quarter ended December 31, 2011 compared with $177 million, or 50% of total loans originated for sale for the quarter ended September 30, 2011, and $434 million, or 73% of total loans originated for sale, for the December 2010 quarter.

The net profit margin on loans sold was 0.51% for the quarter ended December 31, 2011 compared with 0.59% for the quarter ended September 30, 2011 and 0.30% for the December 2010 quarter. The linked-quarter decrease was primarily the result of a market-driven decrease in selling prices realized from the Company's mortgage loan investors. The net profit margin for the same quarter last year was abnormally low and was due to the backlog of loans held in the Company's mortgage warehouse that was created by the near record high level of loan origination volumes resulting in lower realized selling prices. Mortgage loans held for sale increased $54.2 million, or 54%, to $154.9 million at December 31, 2011 compared with $100.7 million at September 30, 2011.

Douglass noted, "Once again, we were able to capitalize on the increased market demand for mortgage loan refinancings during the quarter that was driven by the historically low level of interest rates. As a result, we realized a linked-quarter increase in mortgage loan originations and sales. However, we experienced a linked-quarter decrease in our net profit margins due to market-driven decreases in the selling prices realized from our investors. Fortunately, a portion of the impact of these decreased selling prices was offset by the significant reduction to our operating cost structure that we implemented in the prior quarter. The strong demand also resulted in growth in our mortgage loans held for sale to $155 million at December 31, 2011, which will give us significant momentum going into our second fiscal quarter of 2012 by generating net interest income while they are held in the warehouse and mortgage revenues when they are delivered to our investors."

Non-interest Expense Down from the Linked Quarter on Lower Operating Costs

Total non-interest expense was $8.1 million for the quarter ended December 31, 2011 compared with $8.9 million for the linked quarter and $8.3 million for the prior-year quarter. The linked-quarter decrease was primarily due to lower occupancy and advertising costs as management continued ongoing efforts to control such costs. The decrease from the same quarter last year was primarily due to lower expense associated with foreclosed properties.

Real estate foreclosure expense and losses totaled $745,000 for the quarter ended December 31, 2011 compared with $796,000 for the linked quarter and $1.1 million for the prior-year quarter. Such expenses were primarily due to write-downs of properties and losses on sales that resulted from declines in their fair values subsequent to foreclosure.

Compensation expense totaled $3.7 million in the December 2011 quarter compared with $3.8 million for the linked quarter and $3.4 million for the prior-year quarter. The increase from the December 2010 quarter was related primarily to the decrease in loan origination activity compared with the prior-year quarter, which resulted in a lower level of absorption of direct, fixed compensation costs and higher compensation expense in the December 2011 quarter.

Asset Quality Continued to Stabilize

Non-performing assets decreased to $69.9 million at December 31, 2011 from $72.1 million at September 30, 2011. The decrease was primarily attributable to a $2.9 million decrease in real estate acquired in settlement of loans resulting from the sale or write down of several properties during the quarter. In addition, two other important potential future predictors of asset quality experienced improvement during the quarter. The level of internal adversely classified assets decreased approximately 9% from September 30, 2011 to December 31, 2011 and total loans that were 31 to 89 days past due decreased approximately 34% during the same period.

The provision for loan losses for the three months ended December 31, 2011 was $3.0 million compared with $3.0 million for the quarter ended September 30, 2011 and $4.3 million for the December 2010 quarter. Net charge-offs for the quarter ended December 31, 2011 totaled $2.9 million, or 1.12% of average loans on an annualized basis, compared with $3.0 million, or 1.15% of average loans on an annualized basis, for the quarter ended September 30, 2011 and $4.0 million, or 1.51% of average loans on an annualized basis, for the December 2010 quarter.

Conclusion / Outlook

Douglass stated, "While we expect to achieve solid earnings performance again in our second fiscal quarter, the level of earnings is not likely to reach the level we saw in the December 2011 quarter. This expectation is principally based on the anticipated impact that the usual seasonal decline in market demand for mortgage loan originations, which we generally see in our second fiscal quarter, will have on mortgage revenues and interest income on mortgage loans held for sale. For the full fiscal year of 2012, we continue to expect meaningful year-over-year earnings improvement compared with fiscal 2011."

Douglass continued, "Our priorities and focus for the balance of fiscal 2012 are continued asset quality improvement and revenue expansion from growth in commercial and industrial and owner-occupied commercial real estate lending and additional residential mortgage loan production gained by capturing additional market share. Finally, we will remain ever vigilant with respect to controlling both funding costs and operating expenses."

Conference Call Tomorrow

Pulaski Financial's management will discuss first quarter results and other developments tomorrow, January 18, 2012, 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://pulaskibankstl.com/corporate-profile.aspx. Participants in the conference call may dial 877-473-3757 a few minutes before start time. The call also will be available for replay through January 31, 2012 at 800-585-8367 or 404-537-3406, conference ID 43044511.

About Pulaski Financial

Pulaski Financial Corp., operating in its 90th year through its subsidiary, Pulaski Bank, serves customers throughout the St. Louis and Kansas City metropolitan areas and Wichita, Kansas. The bank offers a full line of quality retail and commercial banking products through 13 full-service branch offices in the St. Louis metropolitan area and offers mortgage loan products through six loan production offices in the St. Louis and Kansas City metropolitan areas and Wichita, Kansas. 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, 2011 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.

Tables follow...

 
PULASKI FINANCIAL CORP.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
 
    (Dollars in thousands except per share data)
       
Three Months Ended
December 31, September 30, December 31,
2011 2011 2010
Interest income $ 14,624 $ 14,136 $ 17,124
Interest expense   2,509     2,816     3,708  
 
Net interest income 12,115 11,320 13,416
Provision for loan losses   3,000     3,000     4,300  
 
Net interest income after provision for loan losses   9,115     8,320     9,116  
 
Retail banking fees 1,001 1,102 1,026
Mortgage revenues 1,687 1,681 1,847
Investment brokerage revenues 374 395 446
Other   353     407     329  
Total non-interest income   3,415     3,585     3,648  
 
Compensation expense 3,743 3,820 3,402
Occupancy, equipment and data processing expense 2,181 2,402 2,072
Advertising 108 216 100
Professional services 426 401 445
Real estate foreclosure losses and expenses, net 745 796 1,085
FDIC deposit insurance premiums 441 479 623
Other   487     776     574  
Total non-interest expense   8,131     8,890     8,301  
 
Income before income taxes 4,399 3,015 4,463
Income tax expense   1,357     835     1,346  
Net income after tax 3,042 2,180 3,117
Preferred stock dividends   517     517     516  
Earnings available for common shares $ 2,525   $ 1,663   $ 2,601  
 
Annualized Performance Ratios
Return on average assets 0.93 % 0.66 % 0.83 %
Return on average common equity 11.08 % 7.47 % 11.71 %
Interest rate spread 3.80 % 3.52 % 3.61 %
Net interest margin 3.97 % 3.67 % 3.78 %
 
SHARE DATA
Weighted average shares outstanding - basic 10,605,620 10,574,405 10,507,158
Weighted average shares outstanding - diluted 11,004,706 10,962,188 10,925,023
Basic earnings per common share $ 0.24 $ 0.16 $ 0.25
Diluted earnings per common share $ 0.23 $ 0.15 $ 0.24
Dividends per common share $ 0.095 $ 0.095 $ 0.095
 
 
PULASKI FINANCIAL CORP.
BALANCE SHEET DATA
(Unaudited)
 
    (Dollars in thousands)    
       
December 31, September 30,
2011 2011
Total assets $ 1,332,081 $ 1,309,209
Loans receivable, net 1,014,000 1,021,273
Allowance for loan losses 25,790 25,714
Mortgage loans held for sale, net 154,876 100,719
Investment securities 10,950 14,457
FHLB stock 4,519 3,100
Mortgage-backed & related securities 8,364 9,986
Cash and cash equivalents 41,652 57,071
Deposits 1,126,631 1,122,525
FHLB advances 49,000 29,000
Subordinated debentures 19,589 19,589
Stockholders' equity - preferred 31,638 31,527
Stockholders' equity - common 90,585 88,643
Book value per common share $ 8.03 $ 8.07
Tangible book value per share $ 7.68 $ 7.70
 
 
December 31, September 30,
2011 2011
LOANS RECEIVABLE
Single-family residential:
Residential first mortgage $ 235,967 $ 242,091
Residential second mortgage 49,467 51,535
Home equity lines of credit 167,447 176,324
Commercial:
Commercial and multi-family real estate 316,783 316,210
Land acquisition and development 52,531 51,497
Real estate construction and development 23,520 22,331
Commercial and industrial 188,776 180,821
Consumer and installment   2,714     3,118  
  1,037,205     1,043,927  
Add (less):
Deferred loan costs 3,496 3,626
Loans in process (911 ) (566 )
Allowance for loan losses   (25,790 )   (25,714 )
  (23,205 )   (22,654 )
Total $ 1,014,000   $ 1,021,273  
 
Weighted average rate at end of period   5.17 %   5.30 %
 
 
December 31, 2011September 30, 2011
Weighted Weighted
Average Average
Interest Interest
DEPOSITS Balance Rate Balance Rate
Demand Deposit Accounts: (Dollars In thousands)
Non-interest-bearing checking $ 150,028 0.00 % $ 150,431 0.00 %
Interest-bearing checking 341,608 0.25 % 328,275 0.28 %
Passbook savings accounts 36,307 0.14 % 35,714 0.14 %
Money market   185,220   0.33 %   183,873   0.33 %
Total demand deposit accounts   713,163   0.21 %   698,293   0.22 %
 
Certificates of Deposit:
Retail 340,238 1.39 % 344,770 1.61 %
CDARS 73,230 0.36 % 71,026 0.42 %
Brokered   -   -   8,436   5.23 %
Total certificates of deposit   413,468   1.21 %   424,232   1.48 %
Total deposits $ 1,126,631   0.58 % $ 1,122,525   0.70 %
 
 
PULASKI FINANCIAL CORP.
NONPERFORMING ASSETS
(Unaudited)
 
    (In thousands)
   
December 31, September 30,
NONPERFORMING ASSETS 2011 2011
Non-accrual loans:
Residential real estate first mortgages $ 7,599 $ 5,871
Residential real estate second mortgages 1,251 1,177
Home equity 2,774 4,084
Commercial and multi-family 4,990 2,375
Land acquisition and development 475 229
Real estate-construction and development 583 854
Commercial and industrial 609 210
Consumer and other   335     240  
Total non-accrual loans   18,616     15,040  
 
Troubled debt restructured: (1)
Current under the restructured terms:
Residential real estate first mortgages 13,140 14,911
Residential real estate second mortgages 962 1,861
Home equity 434 1,248
Commercial and multi-family 2,565 4,359
Real estate-construction and development 1,226 1,538
Commercial and industrial   443     560  
Total current restructured loans   18,770     24,477  
Past due greater than 30 days under restructured terms:
Residential real estate first mortgages 11,979 9,372
Residential real estate second mortgages 757 452
Home equity 1,195 999
Commercial and multi-family 2,194 2,226
Land acquisition and development 120 121
Real estate-construction and development 51 51
Commercial and industrial 317 417
Consumer and other   -     226  
Total past due restructured loans   16,613     13,864  
Total restructured loans   35,383     38,341  
Total non-performing loans   53,999     53,381  
Real estate acquired in settlement of loans:
Residential real estate 1,526 3,037
Commercial real estate   14,340     15,681  
Total real estate acquired in settlement of loans   15,866     18,718  
Total non-performing assets $ 69,865   $ 72,099  
 

(1) Troubled debt restructured includes non-accrual loans totaling $35.4 million and $38.3 million at December 31, 2011 and September 30, 2011, respectively.

These totals are not included in non-accrual loans above.
 
 
 
PULASKI FINANCIAL CORP.
ALLOWANCE FOR LOAN LOSSES AND ASSET QUALITY RATIOS
(Unaudited)
 
(Dollars in thousands)
 
Three Months
Ended December 31,
ALLOWANCE FOR LOAN LOSSES 2011 2010
Allowance for loan losses, beginning of period $ 25,714 $ 26,976
Provision charged to expense 3,000 4,300
(Charge-offs) recoveries, net:
Residential real estate first mortgages (697 ) (166 )
Residential real estate second mortgages (124 ) (302 )
Home equity (1,300 ) (521 )
Commercial and multi-family (789 ) (721 )
Land acquisition & development 6 (2,117 )
Commercial and industrial 6 (141 )
Consumer and other   (26 )   (33 )
Total loans charged off, net   (2,924 )   (4,001 )
Allowance for loan losses, end of period $ 25,790   $ 27,275  
 
December 31, September 30,
ASSET QUALITY RATIOS 2011 2011
Nonperforming loans as a percent of total loans 5.21 % 5.11 %

Nonperforming loans excluding current troubled debt restructurings as a percent of total loans

3.40 % 2.77 %
Nonperforming assets as a percent of total assets 5.24 % 5.51 %

Nonperforming assets excluding current troubled debt restructurings as a percent of total assets

3.84 % 3.64 %
Allowance for loan losses as a percent of total loans 2.49 % 2.46 %

Allowance for loan losses as a percent of nonperforming loans

47.76 % 48.17 %

Allowance for loan losses as a percent of nonperforming loans excluding current troubled debt restructurings and related allowance for loan losses

72.02 % 84.50 %
 
 
PULASKI FINANCIAL CORP.
AVERAGE BALANCE SHEETS
(Unaudited)
 
    (Dollars in thousands)
                   
Three Months Ended
December 31, 2011 December 31, 2010
Interest Average Interest Average
Average and Yield/ Average and Yield/
Interest-earning assets: Balance Dividends Cost Balance Dividends Cost
Loans receivable $ 1,040,762 $ 13,201 5.07 % $ 1,064,170 $ 13,585 5.11 %
Mortgage loans held for sale 138,698 1,310 3.78 % 305,905 3,229 4.22 %
Other interest-earning assets   42,660   113 1.06 %   49,650   310 2.50 %
Total interest-earning assets 1,222,120   14,624 4.79 % 1,419,725   17,124 4.82 %
Noninterest-earning assets   87,287   85,062
Total assets $ 1,309,407 $ 1,504,787
 
Interest-bearing liabilities:
Deposits $ 961,548 $ 2,145 0.89 % $ 982,640 $ 3,198 1.30 %
Borrowed money   52,410   364 2.78 %   242,287   511 0.84 %
Total interest-bearing liabilities 1,013,958   2,509 0.99 % 1,224,927   3,709 1.21 %
Noninterest-bearing deposits 157,286 141,331
Noninterest-bearing liabilities 15,471 18,533
Stockholders' equity   122,692   119,996
Total liabilities and stockholders' equity $ 1,309,407 $ 1,504,787
Net interest income $ 12,115 $ 13,415
Interest rate spread 3.80 % 3.61 %
Net interest margin 3.97 % 3.78 %

Pulaski Financial Corp.
Paul Milano, 314-317-5046
Chief Financial Officer