SOURCE: Pulaski Financial Corp.

October 21, 2008 18:06 ET

Pulaski Financial Reports $0.28 Diluted EPS for Year Despite Loss on Sale of Fannie Mae Preferred Stock and Separation Payment to Former CEO

ST. LOUIS, MO--(Marketwire - October 21, 2008) - Pulaski Financial Corp. (NASDAQ: PULB)

--  Net interest income up 14% for quarter and 22% for year on strong
    growth in average loans and core deposits
    
--  Loans receivable increase 3% during quarter and 15% during year on
    growth in commercial real estate and commercial and industrial loans
    
--  Core deposits increase 5% during quarter and 35% during year on growth
    in retail checking account balances; Retail banking fees up 9% for quarter
    and 16% for year
    
--  Mortgage revenues up 105% for quarter and 24% for year on widened
    gross sales margins
    
--  Provision for loan losses totals $2.8 million for quarter versus net
    charge-offs of $2.0 million resulting in reserve build of $800,000 and
    ratio of allowance to total loans of 1.16%
    
--  Bank maintains "well-capitalized" regulatory status including 7.93%
    Tier 1 leverage capital ratio and 10.59% total risk-based capital ratio at
    September 30, 2008
    

Pulaski Financial Corp. (NASDAQ: PULB) today announced net income for the fiscal year ended September 30, 2008 of $2.9 million, or $0.28 per diluted share, compared with net income of $9.0 million, or $0.88 per diluted share, for the year ended September 30, 2007. The Company reported a net loss for the quarter ended September 30, 2008 of $4.1 million, or $0.39 per diluted share, compared with net earnings of $2.3 million, or $0.23 per diluted share, for the same quarter a year ago. Results for the quarter ended September 30, 2008 were negatively impacted by investment securities losses totaling $5.2 million after tax, or $0.50 per diluted share, which primarily included the previously announced losses realized on the sale of the Company's entire portfolio of Fannie Mae preferred stock. Results for the twelve-month period ended September 30, 2008 also included a $989,000 after-tax charge, or $0.10 per diluted share, for a separation payment and other expenses related to the resignation of the Company's former chief executive officer on May 1, 2008.

Gary Douglass, President and Chief Executive Officer, commented, "Despite the loss we realized on the sale of the Fannie Mae preferred stock, which was an unfortunate issue impacting a large number of financial institutions across the country, and the expenses related to the resignation of our former CEO, our core operating results for the year were solid, especially considering the unprecedented environment in which we operated. We saw strong growth in revenues, driven by expansion in our net interest income, mortgage revenues and retail banking fees. We continued to gain market share with significant growth in loans and core deposits. We saw a significant increase in loan charge-offs for the year, but at a level that was still well below those experienced by the industry on a national level. We increased our provision for loan losses to cover these charge-offs and to build our loan loss reserves. We continued to be classified as 'well capitalized' under federal regulations, with a 7.93% Tier I leverage capital ratio and a 10.59% total risk-based capital ratio at September 30, 2008."

Douglass continued, "Despite dramatic challenges in our industry and our economy, Pulaski remains a true community bank serving St. Louis. We continue to make quality loans to our business and mortgage customers while providing a safe home for our customers' deposits. A number of banks in our community have been forced to severely curtail their availability to their loan customers because of capital limitations and weaknesses in their lending practices. I am pleased to say that, in the past quarter, we originated $437 million of new residential and commercial loans in our community. Loan originations for the year totaled $2.1 billion. These loans were made to creditworthy borrowers under our tightened credit standards. Pulaski Bank remains a source of strength within the St. Louis community, evidenced by our successful growth in core deposits -- over 35% for the year. As local depositors have become increasingly concerned over the safety of their deposits, Pulaski Bank's quality reputation is a growing safe harbor for the community."

Net Interest Income Increases on Strong Core Deposit and Commercial Loan Growth

Net interest income rose $1.1 million, or 14%, to $9.0 million for the fourth quarter of fiscal 2008 compared with $7.9 million for the same period a year ago. For the year, net interest income increased $6.5 million, or 22%, to $35.6 million. Results for the quarter and the year were driven by strong growth in the average balance of loans receivable, which increased $140.4 million, or 15%, to $1.09 billion compared with the same period a year ago. For the twelve-month period, the average balance of loans receivable increased $166.2 million to $1.04 billion. Commercial real estate and commercial and industrial loans accounted for substantially all of this growth, while the Company saw a decline in the balance of construction land loans.

The net interest margin was 3.04% for the three months ended September 30, 2008 compared with 3.23% for the quarter ended June 30, 2008 and 3.03% for the comparable quarter a year ago. For the year, the net interest margin rose to 3.08% in 2008 compared with 2.97% in 2007. The decline from the quarter ended June 30, 2008 was due to a decline in the yield on average interest earning assets caused primarily by a rise in non-accruing loans during the three months ended September 30, 2008 and a loss of dividend income resulting from the sale of the Fannie Mae preferred stock. The Company's cost of funds remained stable at 2.99% during each of the two quarters ended September 30, 2008 and June 30, 2008, which compared favorably with 4.72% for the quarter ended September 30, 2007.

Growth in core deposits, which have traditionally been the Company's lowest-cost funding source, continues to be one of the Company's primary strategic objectives. This strategy has yielded continued success as core deposits, which include checking, money market and passbook accounts, rose 5%, or $19.0 million, from June 30, 2008 and 35%, or $112.4 million, from September 30, 2007 to $430.1 million at September 30, 2008. The Company's newest banking locations in Richmond Heights, Clayton, and downtown St. Louis, which opened in 2007, had combined deposits totaling nearly $71.3 million at September 30, 2008. This growth was well ahead of management's projections. Also contributing to the Company's deposit growth was an increase in CDARS time deposits, which offer the bank's customers the ability to receive FDIC insurance on deposits up to $50 million. CDARS deposits increased $39.3 million from June 30, 2008 and $32.5 million from September 30, 2007 to $123.9 million at September 30, 2008.

Douglass noted, "Fierce competition for deposits in our market area, as well as nationally, resulted in the pursuit of irrational pricing strategies by many banks. We generally resisted the temptation to 'chase deposits' and offer unusually high deposit rates. Instead, we were able to grow our core deposits by offering convenient products at reasonable rates, and by capitalizing on our strong reputation and high level of customer service."

The Company's net interest margin was also impacted by changes in the mix of wholesale funding, which include brokered deposits and borrowings from the Federal Home Loan Bank and the Federal Reserve Bank. Management actively chooses among these wholesale funding sources based on their relative costs and availability. During the year ended September 30, 2008, management reduced the balance of brokered deposits, which have traditionally been the Company's most expensive funding source, by 32% to $128.9 million at September 30, 2008. These deposits were replaced with less-expensive borrowings from the Federal Home Loan Bank and retail core deposits. At September 30, 2008, the Company had the ability to borrow an additional $204.5 million from the Federal Home Loan Bank and the Federal Reserve Bank.

Continued Growth in Mortgage Revenues Bolsters Non-Interest Income

Primarily as the result of the sale of the Company's investment in Fannie Mae preferred stock during the quarter ended September 30, 2008, losses on investment securities totaled $8.2 million and $7.9 million during the three and twelve months ended September 30, 2008, respectively. Excluding these losses, non-interest income rose 28% for the quarter and 17% for the year compared with the same 2007 periods due primarily to strong growth in mortgage revenues and also to increased retail banking fees and investment brokerage revenues.

Douglass commented, "Our conservative mortgage business model is resulting in continued growth in non-interest income at a time when most mortgage companies are experiencing significant losses. We are focusing on profitability and efficiency. While our loan sales during the September 2008 quarter actually declined $47 million compared with the September 2007 quarter, our mortgage revenues doubled between the same periods due to lower direct origination costs and improved sales margins."

Mortgage revenues increased 105% to $1.5 million for the quarter ended September 30, 2008 on loan sales of $293 million compared with revenues of $727,000 on loan sales of $340 million in the same 2007 period. For the year, mortgage revenues increased 24% to $6.1 million on loan sales of $1.32 billion in 2008 compared with revenues of $4.9 million on loan sales of $1.34 billion for the same period last year. The Company experienced a 14% reduction in loan sales activity in the September 2008 quarter as the result of weakened loan demand caused by an overall shrinkage in the number of qualified credit-worthy borrowers in the market. However, the Company realized higher gross revenue margins during the 2008 periods due to reduced market competition and a shift in product mix to more profitable FHA loans.

Retail banking fees increased 9% to $1.0 million for the September 2008 quarter compared with the same period a year ago and 16% for the year to $4.0 million, driven primarily by growth in retail checking accounts. Investment brokerage revenues were up 46% to $188,000 for the September 2008 quarter compared with the same period a year ago and 55% for the year to $1.0 million as the result of successful sales efforts to new customers combined with an improved bond sales environment caused by the steepened yield curve.

Non-interest Expense

Total non-interest expense increased $1.6 million, or 27%, to $7.7 million for the quarter ended September 30, 2008 compared with $6.1 million for the same period a year ago and increased $6.4 million, or 28%, to $29.2 million for the year ended September 30, 2008 compared with $22.8 million for the year ended September 30, 2007. Non-interest expense for the year ended September 30, 2008 included a $1.6 million charge for the separation-related expenses resulting from the resignation of the Company's former chief executive officer on May 1, 2008. Other factors contributing to the increases were the strategic growth in the number of banking locations in late 2007, additional personnel costs associated with increased commercial loan activity and increased foreclosure activity.

Asset Quality

"Maintaining manageable asset quality in the midst of the current environment continues to be one of our top priorities," said Douglass. "We continued to aggressively charge-off losses when they occurred and to strengthen our reserves. Non-performing loans rose this quarter, due primarily to an increase in past due residential first mortgage loans. We are closely monitoring our troubled assets and continue to work with residential borrowers in an effort to keep them in their homes. We did not engage in the risky types of lending such as sub-prime or option-ARM loans that have contributed to the national credit crisis, so we feel we are well positioned to work through this environment."

Douglass continued, "We experienced a $4.6 million increase in non-performing loans during the quarter ended September 30, 2008 compared with June 30, 2008 due primarily to a rise in non-performing residential first mortgage loans, which represented 65% of the Company's total non-performing loans at September 30, 2008. Residential first mortgage loans typically carry a lower level of inherent risk than other types of loans we originate. Charge-offs on this product type were only 0.41% of average residential first mortgage loans during 2008 compared with 0.52% on the entire portfolio. At September 30, 2008, our residential first mortgage loan portfolio totaled $239.6 million and had a 70% average loan-to-value at origination. We believe we can work with these borrowers to preserve the value they have invested in their homes."

The provision for loan losses for the three months ended September 30, 2008 was $2.8 million compared with $689,000 for the same quarter a year ago and was $7.7 million for the year ended September 30, 2008 compared with $3.9 million in the same period last year. The provision for loan losses in the current-year periods related primarily to charge-offs, an increase in the level of non-performing loans and growth in performing commercial loans, which carry a higher level of inherent risk than residential loans. The ratio of the allowance for loan losses to total loans at September 30, 2008 was 1.16% compared with 1.11% at June 30, 2008 and 1.09% at September 30, 2007.

Net charge-offs for the quarter ended September 30, 2008 totaled $2.0 million, or 0.73% of average loans on an annualized basis, compared with $1.3 million, or 0.51% of average loans on an annualized basis, for the quarter ended June 30, 2008 and $267,000, or 0.11% of average loans on an annualized basis, for the September 2007 quarter. Net charge-offs in the September 2008 quarter included $539,000 of losses related to two loans involving fraudulent borrower activity. Excluding these losses, the level of charge-offs during the quarter ended September 30, 2008 closely approximated the level experienced in the prior linked quarter. For the twelve-month periods, net charge-offs totaled $5.4 million, or 0.52% of average loans, in 2008 compared with $1.3 million, or 0.14% of average loans, in 2007.

Non-performing loans increased to $20.7 million, or 1.88% of total loans, at September 30, 2008 from $16.1 million, or 1.50% of total loans, at June 30, 2008 and $10.5 million, or 1.09% of total loans, at September 30, 2007. The increase during the quarter ended September 30, 2008 was primarily due to a $3.4 million increase in non-accruing residential first mortgage loans, a $747,000 increase in non-accruing home equity loans and a $498,000 increase in non-accruing residential second mortgage loans. The ratio of the allowance for loan losses to non-performing loans was 61.76% at September 30, 2008 compared with 74.00% at June 30, 2008 and 99.44% at September 30, 2007. The decline in the ratio of the allowance to non-performing loans at September 30, 2008 was due to a change in the mix of non-performing loans during the September 2008 quarter, specifically increased residential first mortgage loans. These loans carry a lower level of inherent risk than other types of loans in the Company's portfolio, especially compared to second mortgage loans and home equity lines of credit where the Company often does not own or service the first mortgage loan.

Troubled debt restructurings increased to $6.3 million at September 30, 2008 compared with $5.1 million at June 30, 2008 and $209,000 at September 30, 2007. Troubled debt restructurings at September 30, 2008 consisted of 39 residential mortgage loans totaling $5.8 million and one commercial loan totaling $537,000. The restructured terms of the loans generally included a reduction of the interest rates and the addition of past due interest to the principal balance of the loans. At September 30, 2008, restructured loans totaling $1.3 million were past due 30 days or more under the restructured loan terms. Management believes the loans are adequately collateralized and properly valued at September 30, 2008.

Real estate acquired in settlement of loans totaled $3.5 million at September 30, 2008 compared with $4.8 million at June 30, 2008 and $3.1 million at September 30, 2007. The balance at September 30, 2008 consisted of 36 residential real estate properties and 8 commercial real estate properties in the Company's two primary market areas of St. Louis and Kansas City. The Company's largest foreclosed property at June 30, 2008, a $2.3 million commercial office building in St. Louis County, was sold during the quarter ended September 30, 2008.

Real estate foreclosure losses and expense include realized losses on the final disposition of foreclosed properties, additional write-downs for declines in the fair market values of properties subsequent to foreclosure and expenses incurred in connection with maintaining the properties until they are sold. Real estate foreclosure losses and expense increased $736,000 to $870,000 for the quarter ended September 30, 2008 compared with $134,000 for the same quarter last year and increased $1.3 million to $1.9 million for the year ended September 30, 2008 compared with $597,000 for the same period last year. The increases were generally due to the overall increased foreclosure activity and continuing declines in property values resulting in additional write-downs subsequent to foreclosure and realized losses on sale.

Outlook

"Despite a 100% increase in our provision for loan losses during fiscal 2008, which was roughly equal to $0.24 per diluted share after tax, our core earnings (excluding primarily losses on sales of securities and the expense related to the resignation of the Company's former chief executive) grew a modest 2% for the year. Like most other financial institutions in the nation, we felt the pressure of the national credit crisis, and we responded by aggressively identifying and charging off problem loans and by prudently building our loan loss reserves. Despite this very difficult environment, we saw healthy growth in our core business lines which we believe was bolstered by our strength and solid reputation, resulting in us benefiting from a 'flight to quality' by many existing and new customers. During the year, our core deposits grew 35%, our commercial loan portfolio grew 43%, and we originated $1.5 billion of mortgage loans. Our loan growth was accomplished under our tightened credit standards, and our core deposit growth was achieved without paying the inflated deposit rates being offered by many banks in our market to bolster their liquidity. We also maintained our 'well capitalized' regulatory status," Douglass commented.

Douglass continued, "Absent the losses on the sale of the Fannie Mae preferred stock and the separation payments made to our former CEO that we incurred in 2008, fiscal 2009 results should be appreciably better than what we reported in 2008. However, we believe 2009 will likely be another challenging year full of uncertainties as each of us looks for the 'bottom' of the national credit crisis. The merits of the government's bail-out plan are yet to be proven. We are diligently watching to see how the plan will curtail the length and depth of the current economic recession as well as the national residential mortgage crisis. As we are all acutely aware, the details of how the plan will cure the current oversupply of housing and the resulting declining property values have yet to be revealed. We also believe the current environment will continue to put pressure on the industry's net interest margins as variable rate assets reprice downward in response to the reduction in the prime rate while rates paid on deposits locally and nationally remain at inflated levels caused by irrational pricing strategies in highly competitive deposit markets. We will continue to resist the pressure to adopt these irrational pricing strategies, as we did in 2008."

Douglass concluded, "Because of the uncertainties in this economic environment, we do not feel it is prudent to issue specific earnings guidance at this time. We are confident that our experienced, talented and dedicated employees and our growing base of loyal customers will enable us to effectively manage through these challenging times and allow us to emerge even stronger than we are today. Our focus for fiscal 2009 is on managing asset quality to control the level of our credit costs, improving our net interest margin, implementing a cost-management culture and continued disciplined capital allocation. In addition, we are currently conducting a careful and thoughtful evaluation of the merits surrounding participation in the Treasury Department's preferred equity program."

Conference Call Tomorrow

Pulaski Financial management will discuss fourth quarter results and other developments tomorrow, October 22, during a conference call beginning at 11 a.m. EDT (10 a.m. CDT). The call also will be simultaneously webcast and archived for three months at: http://www.viavid.net/detailpage.aspx?sid=000057DB. Participants in the conference call may dial 877-407-9039 a few minutes before start time. The call also will be available for replay until November 5, 2008 at 877-660-6853, account number 3055 and conference I.D. 300799.

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 St. Louis metropolitan area. 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
                                (Unaudited)


SELECTED BALANCE SHEET DATA
(Dollars in thousands except per    September 30,   June 30,  September 30,
 share data)                            2008          2008        2007
                                     -----------  -----------  -----------
Total assets                         $ 1,304,150  $ 1,290,589  $ 1,131,465
Loans receivable, net                  1,088,737    1,060,131      949,826
Allowance for loan losses                 12,762       11,909       10,421
Loans held for sale, net                  71,966       78,370       58,536
Investment securities (includes
 equity securities)                        1,537       13,089       16,988
FHLB stock                                10,896       11,761        8,306
Mortgage-backed & related securities      25,925       18,992        3,027
Cash and cash equivalents                 29,078       33,591       23,774
Deposits                                 915,311      833,363      835,489
Federal Reserve borrowings                40,000       95,000            -
FHLB advances                            210,600      223,000      158,400
Subordinated debentures                   19,589       19,589       19,589
Stockholders' equity                      82,361       86,340       80,804
Book value per share                 $      8.06  $      8.47  $      8.13

Asset Quality Ratios
Nonperforming loans as a percent of
 total loans                                1.88%        1.50%        1.09%
Nonperforming assets as a percent of
 total assets                               1.87%        1.62%        1.20%
Allowance for loan losses as a
 percent of total loans                     1.16%        1.11%        1.09%
Allowance for loan losses as a
 percent of nonperforming loans            61.76%       74.00%       99.44%







                                 Three Months           Twelve Months
SELECTED OPERATING DATA       Ended September 30,     Ended September 30,
                            ----------------------  ----------------------
(Dollars in thousands)         2008        2007        2008        2007
                            ----------  ----------  ----------  ----------
Interest income             $   17,230  $   19,321  $   73,266  $   70,925
Interest expense                 8,191      11,383      37,653      41,834
                            ----------  ----------  ----------  ----------
   Net interest income           9,039       7,938      35,613      29,091
Provision for loan losses        2,833         689       7,735       3,855
                            ----------  ----------  ----------  ----------
   Net interest income
    after provision for
    loan losses                  6,206       7,249      27,878      25,236
                            ----------  ----------  ----------  ----------
Retail banking fees              1,042         959       3,963       3,415
Mortgage revenues                1,493         727       6,111       4,942
Revenue from investment
 division operations               188         128       1,024         663
Gain (loss) on sale of
 securities                     (8,195)        129      (7,870)        273
Other                              311         433       1,687       1,728
                            ----------  ----------  ----------  ----------
   Total non-interest
    income                      (5,161)      2,376       4,915      11,021
                            ----------  ----------  ----------  ----------
Compensation expense             3,325       2,915      14,056      11,178
Occupancy, equipment and
 data processing                 1,998       1,625       7,219       5,760
Advertising                        330         411       1,257       1,424
Professional services              353         374       1,496       1,353
Real estate foreclosure
 losses and expenses, net          870         134       1,931         597
Gain on derivative
 financial instruments             (65)       (142)       (396)       (586)
Other                              935         807       3,657       3,047
                            ----------  ----------  ----------  ----------
   Total non-interest
    expense                      7,746       6,124      29,220      22,773
                            ----------  ----------  ----------  ----------
Income (loss) before income
 taxes                          (6,701)      3,501       3,573      13,484
Income tax expense
 (benefit)                      (2,650)      1,193         684       4,501
                            ----------  ----------  ----------  ----------
   Net income (loss)        $   (4,051) $    2,308  $    2,889  $    8,983
                            ==========  ==========  ==========  ==========

Performance Ratios
Return on average assets         (1.28%)      0.82%       0.23%       0.85%
Return on average equity        (18.52%)     11.20%       3.34%      11.26%
Interest rate spread              2.80%       2.65%       2.81%       2.62%
Net interest margin               3.04%       3.03%       3.08%       2.97%

SHARE DATA
Weighted average shares
 outstanding-basic          10,039,042   9,778,411   9,914,220   9,814,396
Weighted average shares
 outstanding-diluted        10,289,791  10,222,156  10,239,301  10,255,702
EPS-basic                   $    (0.40) $     0.24  $     0.29  $     0.92
EPS-diluted                 $    (0.39) $     0.23  $     0.28  $     0.88
Dividends                   $    0.095  $    0.090  $    0.370  $    0.350







                          PULASKI FINANCIAL CORP.
          UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS, Continued
                                (Unaudited)


LOANS RECEIVABLE                    September 30,   June 30,  September 30,
(Dollars in thousands)                   2008        2008         2007
                                     -----------  -----------  -----------

Real estate mortgage:
   One to four family residential    $   339,481  $   323,093  $   332,206
   Multi-family residential               32,547       32,848       30,219
   Commercial real estate                261,166      255,410      200,206
                                     -----------  -----------  -----------
      Total real estate mortgage         633,194      611,351      562,631
                                     -----------  -----------  -----------

Real estate construction and
 development:
   One to four family residential         34,511       42,959       45,428
   Multi-family residential                9,607       15,409       13,899
   Commercial real estate                 55,264       44,626       39,594
                                     -----------  -----------  -----------
      Total real estate construction
       and development                    99,382      102,994       98,921
                                     -----------  -----------  -----------
Commercial & Industrial loans            137,688      130,815       77,642
Equity line of credit                    225,357      224,221      219,539
Consumer and installment                   6,896        6,965        6,918
                                     -----------  -----------  -----------
                                       1,102,517    1,076,346      965,651
                                     -----------  -----------  -----------
Add (less):
   Deferred loan costs                     5,205        5,193        5,163
   Loans in process                       (6,223)      (9,499)     (10,567)
   Allowance for loan losses             (12,762)     (11,909)     (10,421)
                                     -----------  -----------  -----------
                                         (13,780)     (16,215)     (15,825)
                                     -----------  -----------  -----------
      Total                          $ 1,088,737  $ 1,060,131  $   949,826
                                     ===========  ===========  ===========
Weighted average rate at end of
 period                                     6.02%        6.11%        7.44%
                                     ===========  ===========  ===========







                        September 30,                       September 30,
                            2008          June 30, 2008         2007
                      ----------------- ----------------- -----------------
DEPOSITS                       Weighted          Weighted          Weighted
(Dollars in                    Average           Average           Average
 thousands)                    Interest          Interest          Interest
                      Balance    Rate   Balance    Rate   Balance    Rate
                      -------- -------- -------- -------- -------- --------
Demand Deposit Accounts:
  Noninterest-bearing
   checking           $ 76,404    0.00% $ 69,603    0.00% $ 57,005    0.00%
  Interest-bearing
   checking            178,698    2.51%  139,865    2.14%   57,815    1.79%
  Money market         149,141    2.12%  174,412    2.21%  173,950    4.05%
  Passbook savings
   accounts             25,829    0.32%   27,241    0.30%   28,909    0.29%
                      --------          --------          --------
    Total demand
     deposit accounts  430,072    1.80%  411,121    1.69%  317,679    2.57%
                      --------          --------          --------

Certificates of
 Deposit: (1)
  $100,000 or less     264,245    3.32%  221,285    3.39%  239,401    5.45%
  Greater than
   $100,000            220,994    3.52%  200,957    3.75%  278,409    4.73%
                      --------          --------          --------
    Total certificates
     of deposit        485,239    3.41%  422,242    3.56%  517,810    5.06%
                      --------          --------          --------
    Total deposits    $915,311    2.65% $833,363    2.64% $835,489    4.11%
                      ========          ========          ========

(1) Includes brokered
 deposits             $128,937    3.85% $108,407    4.04% $190,445    5.36%
                      ========          ========          ========






                          PULASKI FINANCIAL CORP.
            NONPERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES
                                (Unaudited)


NONPERFORMING ASSETS                   September 30, June 30, September 30,
(In thousands)                             2008        2008        2007
                                        ----------- ----------- -----------
Non-accrual loans:
    Residential real estate first
     mortgages                          $     5,904 $     2,471 $     1,780
    Residential real estate second
     mortgages                                  752         255         302
    Commercial and multi-family               1,125       1,133       3,708
    Real estate-construction and
     development                                133         218           -
    Commercial and industrial                   341         240           -
    Home equity                               1,695         948         554
    Other                                       160          92         105
                                        ----------- ----------- -----------
        Total non-accrual loans              10,110       5,357       6,449
                                        ----------- ----------- -----------

Accruing loans past due 90 days or more:
    Residential real estate first
     mortgages                                2,543       2,710       2,212
    Residential real estate second
     mortgages                                    -          99         352
    Commercial and multi-family                 231         553          44
    Real estate-construction and
     development                                  -         953           -
    Home equity                               1,468       1,301       1,064
    Other                                         7          46         150
                                        ----------- ----------- -----------
        Total accruing loans past due 90
         days or more                         4,249       5,662       3,822
                                        ----------- ----------- -----------

Restructured loans:
    Residential real estate first
     mortgages                                4,985       1,374         209
    Residential real estate second
     mortgages                                  670         135           -
    Commercial and multi-family                   -       3,467           -
    Commercial and industrial                   537           -           -
    Home equity                                 112         100           -
                                        ----------- ----------- -----------
        Total restructured loans              6,304       5,076         209
                                        ----------- ----------- -----------
        Total non-performing loans           20,663      16,095      10,480
                                        ----------- ----------- -----------
Real estate acquired in settlement of
 loans:
    Residential real estate                   3,124       2,460       3,022
    Commercial and multi-family                 395       2,319          68
                                        ----------- ----------- -----------
        Total real estate acquired in
         settlement of loans                  3,519       4,779       3,090
                                        ----------- ----------- -----------
Other nonperforming assets                      237          43          43
                                        ----------- ----------- -----------
        Total non-performing assets     $    24,419 $    20,917 $    13,613
                                        =========== =========== ===========






                                       Three Months       Twelve Months
ALLOWANCE FOR LOAN LOSSES           Ended September 30, Ended September 30,
                                    ------------------  ------------------
(In thousands)                        2008      2007      2008      2007
                                    --------  --------  --------  --------
Allowance for loan losses,
 beginning of period                $ 11,909  $  9,999  $ 10,421  $  7,817
Provision charged to expense           2,833       689     7,735     3,855
Loans charged off, net:
    Residential real estate first
     mortgages                          (443)      (23)     (938)     (193)
    Residential real estate second
     mortgages                          (291)      (37)   (1,600)     (521)
    Commercial and multi-family            -         -      (374)        -
    Real estate-construction and
     development                        (305)     (119)     (455)     (119)
    Commercial and industrial           (355)        -      (355)        -
    Home equity                         (542)      (44)   (1,450)     (279)
    Other                                (44)      (44)     (222)     (139)
                                    --------  --------  --------  --------
       Total loans charged off, net   (1,980)     (267)   (5,394)   (1,251)
                                    --------  --------  --------  --------
       Allowance for loan losses,
        end of period               $ 12,762  $ 10,421  $ 12,762  $ 10,421
                                    ========  ========  ========  ========







                          PULASKI FINANCIAL CORP.
                          AVERAGE BALANCE SHEETS
                                (Unaudited)


                                        Three Months Ended
                        --------------------------------------------------
                           September 30, 2008        September 30, 2007
                        -------------------------  -----------------------
                                           Aver-                     Aver-
                                  Interest  age             Interest  age
(Dollars in thousands)   Average     and   Yield/   Average   and    Yield/
                         Balance  Dividends Cost   Balance  Dividends Cost
                        ---------- ------- -----  ---------- ------- -----
Interest-earning assets:
  Loans receivable      $1,088,140 $15,964  5.87% $  947,757 $17,837  7.53%
  Loans available for
   sale                     57,005     868  6.09%     68,399   1,092  6.39%
  Other interest-earning
   assets                   44,446     398  3.58%     33,161     392  4.73%
                        ---------- -------        ---------- -------
    Total
     interest-earning
     assets              1,189,591  17,230  5.79%  1,049,317  19,321  7.37%
                                   -------                   -------
Noninterest-earning
 assets                     79,525                    73,688
                        ----------                ----------
    Total assets        $1,269,116                $1,123,005
                        ==========                ==========

Interest-bearing
 liabilities:
  Deposits              $  806,150 $ 5,909  2.93% $  771,689 $ 8,725  4.52%
  Borrowed money           289,662   2,282  3.15%    192,975   2,658  5.51%
                        ---------- -------        ---------- -------
    Total
     interest-bearing
     liabilities         1,095,812   8,191  2.99%    964,664  11,383  4.72%
                                   -------                   -------
Noninterest-bearing
 deposits                   68,075                    53,575
Noninterest-bearing
 liabilities                17,749                    22,289
Stockholders' equity        87,480                    82,477
                        ----------                ----------
    Total liabilities
     and stockholders'
     equity             $1,269,116                $1,123,005
                        ==========                ==========
Net interest income                $ 9,039                   $ 7,938
                                   =======                   =======
Interest rate spread                        2.80%                     2.65%
Net interest margin                         3.04%                     3.03%




                                        Twelve Months Ended
                        --------------------------------------------------
                           September 30, 2008        September 30, 2007
                        -------------------------  -----------------------
                                           Aver-                     Aver-
                                  Interest  age             Interest  age
(Dollars in thousands)   Average     and   Yield/   Average   and    Yield/
                         Balance  Dividends Cost   Balance  Dividends Cost
                        ---------- ------- -----  ---------- ------- -----
Interest-earning assets:
  Loans receivable      $1,044,217 $67,608  6.47% $  878,057 $65,220  7.43%
  Loans available for
   sale                     64,446   3,562  5.53%     64,415   3,992  6.20%
  Other interest-earning
   assets                   46,522   2,096  4.51%     35,771   1,713  4.79%
                        ---------- -------        ---------- -------
    Total
     interest-earning
     assets              1,155,185  73,266  6.34%    978,243  70,925  7.25%
                                   -------                   -------
Noninterest-earning
 assets                     80,535                    73,655
                        ----------                ----------
    Total assets        $1,235,720                $1,051,898
                        ==========                ==========

Interest-bearing
 liabilities:
  Deposits              $  783,787 $27,441  3.50% $  712,674 $31,337  4.40%
  Borrowed money           283,010  10,212  3.61%    191,257  10,497  5.49%
                        ---------- -------        ---------- -------
    Total
     interest-bearing
     liabilities         1,066,797  37,653  3.53%    903,931  41,834  4.63%
                                   -------                   -------
Noninterest-bearing
 deposits                   63,325                    47,982
Noninterest-bearing
 liabilities                19,176                    20,197
Stockholders' equity        86,422                    79,788
                        ----------                ----------
    Total liabilities
     and stockholders'
     equity             $1,235,720                $1,051,898
                        ==========                ==========
Net interest income                $35,613                   $29,091
                                   =======                   =======
Interest rate spread                        2.81%                     2.62%
Net interest margin                         3.08%                     2.97%

Contact Information

  • For Additional Information Contact:

    Ramsey Hamadi
    Chief Financial Officer
    Pulaski Financial Corp.
    (314) 878-2210 Ext. 3825

    Dave Garino or Dan Callahan
    Fleishman-Hillard, Inc.
    (314) 982-0551