Pulaski Financial Reports 45% Increase in Third Fiscal Quarter EPS

Pulaski Financial Reports 45% Increase in Third Fiscal Quarter EPS

Current Versus Prior Year Quarter Highlights

  • Earnings growth

    • Diluted EPS $0.29 in 2013 versus $0.20 in 2012

    • Annualized return on average assets 1.11% in 2013 versus 0.84% in 2012

    • Annualized return on average common equity 12.97% in 2013 versus 9.46% in 2012

  • 43% increase in mortgage revenues

  • 48% decline in combined provision for loan losses and foreclosure costs


Linked Quarter Highlights

  • 9% increase in mortgage revenues

  • $5 million, or 1%, increase in commercial loans

  • Net interest income declines modestly; commercial loan growth only partially offsets impact of market-driven yield declines and expected legacy residential mortgage portfolio runoff

  • Continued improvement in asset quality

    • Non-performing assets down $1.9 million, or 4%, to 3.2% of total assets

    • Internal adversely classified assets decreased 3% to approximately 40% of regulatory capital plus the allowance for loan losses

    • Percentage of loans that were 31 to 89 days past due on payments remained low and almost constant at approximately 1% of gross loans

ST. LOUIS--(BUSINESS WIRE)-- Pulaski Financial Corp. (Nasdaq Global Select: PULB) reported net income available to common shares for the quarter ended June 30, 2013 of $3.2 million, or $0.29 per diluted common share, compared with $2.2 million, or $0.20 per diluted common share, for the quarter ended June 30, 2012. For the nine-month periods, the Company reported net income available to common shares of $9.2 million, or $0.83 per diluted common share, in 2013 compared with net income of $5.6 million, or $0.51 per diluted common share, in 2012.

Gary Douglass, President and Chief Executive Officer, commented, "We are very pleased with our third fiscal quarter results. We saw a significant increase in mortgage revenues driven by the recovering housing market. Our asset quality continued to improve, showing meaningful declines in non-performing and internally classified assets. And finally, despite a challenging and generally low growth environment, we saw our third consecutive quarter of commercial loan growth."

Net Interest Income Declines Modestly

Net interest income was $11.2 million for the quarter ended June 30, 2013 compared with $11.5 million for the quarter ended March 31, 2013 and $11.6 million for the quarter ended June 30, 2012. The decreases were primarily the result of declines in the net interest margin combined with a change in the mix of interest-earning assets. The net interest margin was 3.65% for the quarter ended June 30, 2013 compared with 3.67% for the March 2013 quarter and 3.84% for the June 2012 quarter.

Douglass commented, "We were encouraged to see another quarter of commercial loan growth. Unfortunately, this growth was not sufficient to offset the expected shrinkage in our legacy residential loan portfolio caused mainly by the decreasing balances in our home equity line of credit portfolio, resulting in slight shrinkage in our total portfolio level. We were also encouraged to see our net interest margin remain almost unchanged on a linked-quarter basis despite the significant industry-wide headwinds we faced during the quarter as we continued to feel the effect of the market-driven yield declines on new and renewing loans."

Mortgage Revenues Showed a Substantial Increase on Improved Profit Margins and Higher Loan Sales Volumes

Primarily as the result of increased mortgage revenues, non-interest income increased to $4.9 million for the quarter ended June 30, 2013 compared with $4.1 million for the quarter ended June 30, 2012. Mortgage revenues were $3.4 million on loan sales of $355 million for the quarter ended June 30, 2013 compared with $2.4 million on loan sales of $342 million for the quarter ended June 30, 2012. The Company also saw a 9% increase in linked-quarter mortgage revenues.

Mortgage loans originated for sale totaled $358 million for the quarter ended June 30, 2013 compared with $350 million for the quarter ended June 30, 2012. The Company continued to experience strong demand for loans to finance the purchase of homes. Mortgage loans originated to finance the purchase of homes totaled $225 million, or 63% of total loans originated for sale, during the quarter ended June 30, 2013 compared with $200 million, or 57% of total loans originated for sale, for the quarter ended June 30, 2012.

The net profit margin on loans sold improved to 0.97% for the quarter ended June 30, 2013 compared with 0.70% for the June 30, 2012 quarter and 0.90% for the March 2013 quarter. The increases were primarily the result of strong selling prices realized from the Company's mortgage loan investors and the continued control of costs to originate such loans. Mortgage loans held for sale increased to $144.6 million at June 30, 2013 compared with $144.0 million at March 31, 2013.

Douglass noted, "We experienced another quarter of strong loan demand that helped us achieve our ninth consecutive quarterly increase in mortgage revenues. The recovering housing market had a dramatic impact on the mix of our origination activity during the quarter. The total dollar volume of loans originated to finance home purchases reached its highest level in 14 quarters."

Asset Quality Continued to Improve

Non-performing assets decreased to $42.9 million, or 3.2% of total assets, at June 30, 2013 from $44.9 million, or 3.3% of total assets, at March 31, 2013. In addition, the balance of internal adversely classified assets decreased approximately 3% from March 31, 2013 to June 30, 2013, resulting in the seventh consecutive quarterly decline in this category.

The provision for loan losses for the three months ended June 30, 2013 was $1.8 million compared with $1.4 million for the three months ended March 31, 2013. The increased provision was primarily the result of a higher level of net charge-offs. Net charge-offs for the quarter ended June 30, 2013 totaled $1.8 million compared with $724,000 for the March 2013 quarter.

Other News - Results of At-The-Market Common Stock Offering

The Company previously announced on May 7, 2013, that it had filed a prospectus supplement under which it planned from time to time sell up to $10,000,000 of its common stock pursuant to an "at-the-market" equity offering program. During the quarter ended June 30, 2013, the Company sold 13,653 shares of its common stock under the program through Sandler O'Neill & Partners, L.P. as sales agent. Sales were made in "at-the-market" offerings directly on The Nasdaq Global Select Market at an average price of $10.60 resulting in net proceeds to the Company totaling $140,000.

Conclusion / Outlook

Douglass stated, "For our fourth fiscal quarter of 2013, we expect to see additional asset quality improvement resulting in the continuing normalization of credit costs. We will remain focused on increasing our residential mortgage market share to capitalize on increasing home purchase activity and help minimize the revenue impact of potentially lower demand for mortgage refinancings caused by a higher interest rate environment. We will also concentrate on a continuation of commercial loan growth. And finally, we expect to continue to implement our capital management strategy by repurchasing additional preferred shares with available cash and excess capital."

Conference Call Tomorrow

Pulaski Financial's management will discuss third fiscal quarter results and other developments tomorrow, July 31, 2013, during a conference call beginning at 11 a.m. EDT (10 a.m. CDT). The call will also be simultaneously webcast and archived for three months at: http://pulaskibank.com/corporate-profile.aspx. Participants in the conference call may dial 877-473-3757, conference ID 42945640, a few minutes before the start time. The call will also be available for replay through August 31, 2013 at 855-859-2056 or 404-537-3406, conference ID 42945640.

About Pulaski Financial

Pulaski Financial Corp., operating in its 91st year through its subsidiary, Pulaski Bank, offers a full line of quality retail and commercial banking products through 13 full-service branch offices in the St. Louis metropolitan area. The Bank also offers mortgage loan products through loan production offices in the St. Louis and Kansas City metropolitan areas, mid-Missouri, southwestern Missouri, eastern Kansas, Omaha, Nebraska, and Council Bluffs, Iowa. The Company's website can be accessed at www.pulaskibank.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, 2012 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.

CONDENSED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands except per share data)

Three Months Ended

June 30,

March 31,

June 30,

2013

2013

2012

Interest income

$

12,707

$

13,176

$

13,663

Interest expense

1,545

1,687

2,016

Net interest income

11,162

11,489

11,647

Provision for loan losses

1,800

1,375

3,000

Net interest income after provision for loan losses

9,362

10,114

8,647

Retail banking fees

998

994

1,002

Mortgage revenues

3,444

3,148

2,410

Investment brokerage revenues

185

264

350

Other

287

230

340

Total non-interest income

4,914

4,636

4,102

Salaries and employee benefits

4,414

4,413

3,773

Occupancy, equipment and data processing expense

2,664

2,545

2,330

Advertising

157

111

168

Professional services

569

801

844

Real estate foreclosure losses and expense, net

112

240

436

FDIC deposit insurance premium expense

265

276

650

Other

617

720

589

Total non-interest expense

8,798

9,106

8,790

Income before income taxes

5,478

5,644

3,959

Income tax expense

1,870

1,992

1,213

Net income after tax

3,608

3,652

2,746

Preferred stock dividends

(373

)

(406

)

(518

)

Earnings available to common shares

$

3,235

$

3,246

$

2,228

Annualized Performance Ratios

Return on average assets

1.11

%

1.09

%

0.84

%

Return on average common equity

12.97

%

13.36

%

9.46

%

Interest rate spread

3.54

%

3.55

%

3.70

%

Net interest margin

3.65

%

3.67

%

3.84

%

SHARE DATA

Weighted average shares outstanding - basic

10,914,913

10,916,522

10,709,072

Weighted average shares outstanding - diluted

11,147,049

11,136,801

11,121,025

Basic earnings per common share

$0.30

$0.30

$0.21

Diluted earnings per common share

$0.29

$0.29

$0.20

Dividends per common share

$0.095

$0.095

$0.095

PULASKI FINANCIAL CORP.

CONDENSED STATEMENTS OF INCOME, Continued

(Unaudited)

(Dollars in thousands except per share data)

Nine Months Ended June 30,

2013

2012

Interest income

$

39,496

$

42,297

Interest expense

5,038

6,714

Net interest income

34,458

35,583

Provision for loan losses

5,240

11,500

Net interest income after provision for loan losses

29,218

24,083

Retail banking fees

3,145

2,982

Mortgage revenues

9,580

5,994

Investment brokerage revenues

742

1,120

Other

798

976

Total non-interest income

14,265

11,072

Salaries and employee benefits

13,393

11,297

Occupancy, equipment and data processing expense

7,569

6,840

Advertising

388

381

Professional services

1,924

1,674

Real estate foreclosure losses and expenses, net

1,566

1,783

FDIC deposit insurance premiums

975

1,318

Other

1,946

1,571

Total non-interest expense

27,761

24,864

Income before income taxes

15,722

10,291

Income tax expense

5,334

3,134

Net income after tax

10,388

7,157

Preferred stock dividends

(1,185

)

(1,553

)

Earnings available to common shares

$

9,203

$

5,604

Annualized Performance Ratios

Return on average assets

1.05

%

0.73

%

Return on average common equity

12.58

%

8.05

%

Interest rate spread

3.60

%

3.74

%

Net interest margin

3.73

%

3.89

%

SHARE DATA

Weighted average shares outstanding - basic

10,881,986

10,657,747

Weighted average shares outstanding - diluted

11,116,479

11,087,851

Basic earnings per common share

$0.85

$0.53

Diluted earnings per common share

$0.83

$0.51

Dividends per common share

$0.285

$0.285

PULASKI FINANCIAL CORP.

BALANCE SHEET DATA

(Unaudited)

(Dollars in thousands)

June 30,

March 31,

September 30,

2013

2013

2012