Pulaski Financial Reports 30% Increase in First Quarter EPS

Pulaski Financial Corp. (Nasdaq Global Select: PULB, the “Company”) reported net income available to common shareholders for the quarter ended December 31, 2014 of $3.1 million, or $0.26 per diluted common share, compared with $3.3 million, or $0.27 per diluted common share, for the linked quarter ended September 30, 2014 and $2.2 million, or $0.20 per diluted common share, for the same quarter last year.

The Company saw its fifth consecutive quarter of growth in portfolio loans. The total balance of portfolio loans at December 31, 2014 increased $19.8 million, or 2%, from September 30, 2014, due to increases in commercial loans and residential first mortgage loans. The commercial loan portfolio increased $14.5 million, or 2%, with meaningful growth in commercial and industrial loans and real estate construction loans. However, this growth was partially offset by shrinkage in non-owner occupied commercial real estate loans and land acquisition and development loans. In addition, the Company continued to be successful in marketing two “niche” adjustable-rate loan products, resulting in a $10.0 million, or 4%, increase in residential first mortgage loans during the quarter.

Net interest income for the quarter decreased 2% compared with the September 2014 quarter, but increased 7% compared with the same quarter last year. The net interest margin decreased to 3.43% for the December 2014 quarter compared with 3.56% for the September 2014 quarter and 3.53% in the December 2013 quarter primarily as the result of market-driven declines in the average yield on portfolio loans. The combined average balances of portfolio loans and loans held for sale grew 13% in the December 2014 quarter compared with the same quarter last year, which more than offset the negative impact of the decline in the net interest margin on net interest income. However, when compared with the September 2014 quarter, the combined average balance of portfolio loans and loans held for sale grew only 1%, which was not sufficient to offset the negative impact of the decline in the net interest margin. The Company’s total cost of funds remained almost constant among the quarters.

Noninterest income for the quarter increased 42% compared with the September 2014 quarter and 50% compared with the December 2013 quarter as the result of increases in mortgage revenues and revenues realized on SBA loan sales. In addition, the Company received $688,000 from its insurance carrier during the December 2014 quarter, representing a partial recovery of a loss incurred in a prior fiscal year as the result of a fraud perpetrated against the Bank by one of its commercial loan customers.

Mortgage revenues increased $341,000, or 30%, compared with the September 2014 quarter primarily as the result of an increase in the net profit margin on loans sold. The net profit margin on loans sold increased to 0.64% in the December 2014 quarter compared with 0.48% in the September 2014 quarter due to higher sales prices realized from the Company’s mortgage loan investors combined with a proportionately lower level of origination costs. Loan sales decreased 3% to $229.6 million. The level of mortgage loans originated for sale during the quarter increased 11% compared with the September 2014 quarter primarily as the result of an increase in loan refinancing activity. A decrease in market interest rates created an increase in consumer demand for mortgage loan refinancings during the last half of the quarter. As a result, loans originated to refinance existing mortgages increased 151% to $94.7 million. Loans originated to finance home purchases saw a seasonal decrease of 15% to $167.5 million. Mortgage revenues increased $441,000, or 43%, compared with the December 2013 quarter as the result of an increase in volume of loans sold combined with an increase in the net profit margin.

Gary Douglass, President and Chief Executive Officer, commented, “We were pleased to see that the performance expectations I shared with you in last quarter’s release and conference call were achieved in the current quarter. As expected, we saw continued loan portfolio growth, with solid growth in commercial loans, additional fee income from the operation of our new SBA lending platform, continued growth of mortgage-related revenues and controlled credit costs during the quarter. We were also pleased to see that our focused effort to raise core deposits resulted in 8% deposit growth during the quarter with minimal impact on the total cost of deposits.”

Douglass continued, “Looking forward to the balance of fiscal 2015, we continue to remain optimistic about our prospects for meaningful earnings growth. We expect our second fiscal quarter to produce core earnings that are reasonably similar to the just completed first quarter. The increased demand for mortgage loan refinancings during the second half of the just completed quarter resulted in significant growth in our loans held for sale at a time when the decreased seasonal demand for purchase money mortgages would have historically had a negative impact on the balance. In addition, we saw a significant increase in quarter-end interest-rate lock commitments extended to our residential loan customers compared with September 30, 2014. This activity is expected to position us for another quarter of solid mortgage revenues in our March 2015 quarter, which has traditionally represented the seasonal low point in our mortgage operation. Finally, we expect a stronger second half of our fiscal year driven by increased home purchase activity and an expanded staff of mortgage loan originators. We also expect continued modest commercial portfolio growth, bolstered by our renewed focus on new business development.”

Conference Call Tomorrow

Pulaski Financial’s management will discuss first quarter results and other developments tomorrow, January 28, 2015, during a conference call beginning at 11 a.m. EST (10 a.m. CST). The call will also be simultaneously webcast and archived for three months at: http://www.pulaskibank.com/our-story/shareholder-relations/. Participants in the conference call may dial 877-473-3757, conference ID 67756655, a few minutes before the start time. The call will also be available for replay through February 28, 2015 at 855-859-2056 or 404-537-3406, conference ID 67756655.

About Pulaski Financial

Pulaski Financial Corp., operating in its 93rd 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, Kansas City, Chicago and Denver 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, 2014 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
December 31,September 30,December 31,
201420142013
Interest income $ 12,223 $ 12,397 $ 11,498
Interest expense 1,373 1,314 1,323
Net interest income 10,850 11,083 10,175
Provision for loan losses 500 310 200

Net interest income after provision for loan losses

10,350 10,773 9,975
Mortgage revenues 1,474 1,134 1,033
Retail banking fees 1,055 1,119 1,046
SBA loan sale revenues 179 72 -
Other 1,008 295 393
Total non-interest income 3,716 2,620 2,472
Salaries and employee benefits 4,970 4,297 4,191
Occupancy, equipment and data processing expense 2,794 2,694 2,627
Advertising 172 164 179
Professional services 497 436 822
FDIC deposit insurance premium expense 259 289 261
Real estate foreclosure (recoveries) losses and expenses, net 77 (28 ) 127
Other 557 586 493
Total non-interest expense 9,326 8,438 8,700
Income before income taxes 4,740 4,955 3,747
Income tax expense 1,605 1,532 1,244
Net income after tax 3,135 3,423 2,503
Preferred stock dividends and premium paid on repurchases - (127 ) (295 )
Earnings available to common shares $ 3,135 $ 3,296 $ 2,208
Annualized Performance Ratios
Return on average assets 0.93 % 1.03 % 0.81 %
Return on average common equity 10.91 % 11.68 % 8.83 %
Interest rate spread 3.32 % 3.46 % 3.42 %
Net interest margin 3.43 % 3.56 % 3.53 %
SHARE DATA
Weighted average common shares outstanding - basic 11,715,120 11,671,891 10,948,781
Weighted average common shares outstanding - diluted 12,063,777 12,095,294 11,220,002
Basic earnings per common share $0.27 $0.28 $0.20
Diluted earnings per common share $0.26 $0.27 $0.20
Dividends per common share $0.095 $0.095 $0.095
PULASKI FINANCIAL CORP.
SELECTED BALANCE SHEET DATA
(Unaudited)
(Dollars in thousands)
December 31,September 30,
20142014
Total assets $ 1,426,456 $ 1,380,096
Loans receivable, net 1,130,638 1,110,861
Allowance for loan losses 15,926 15,978
Mortgage loans held for sale, net 87,076 58,139
Investment securities 46,172 41,431
Capital stock of Federal Home Loan Bank 7,012 8,268
Cash and cash equivalents 72,953 81,549
Deposits 1,098,333 1,021,653
Borrowed money 181,313 210,940
Subordinated debentures 19,589 19,589
Stockholders' equity - common 114,512 112,116
Total book value per common share $9.50 $9.31
Tangible book value per common share $9.17 $8.99

Regulatory capital ratios - Pulaski Bank only: (1)

Tier 1 leverage capital (to average assets) 9.51 % 9.70 %
Total risk-based capital (to risk-weighted assets) 13.25 % 13.46 %

(1) December 31, 2014 regulatory capital ratios are estimated.

December 31,September 30,
20142014
LOANS RECEIVABLE
Single-family residential:
First mortgage $ 283,365 $ 273,370
Second mortgage 39,434 39,555
Home equity lines of credit 87,143 90,179
Total single-family residential real estate 409,942 403,104
Commercial:
Commercial and multi-family real estate:
Owner occupied 136,901 134,609
Non-owner occupied 252,732 261,948
Land acquisition and development 30,457 37,052
Real estate construction and development 52,747 46,777
Commercial and industrial 257,315 235,297
Total commercial 730,152 715,683
Consumer and installment 3,618 4,024
1,143,712 1,122,811
Add (less):
Deferred loan costs 4,627 4,669
Loans in process (1,775 ) (641 )
Allowance for loan losses (15,926 ) (15,978 )
Total $ 1,130,638 $ 1,110,861
Weighted average rate at end of period 4.04 % 4.11 %
December 31, 2014September 30, 2014
WeightedWeighted
AverageAverage
InterestInterest
DEPOSITSBalanceRateBalanceRate
Demand deposits:

(Dollars in thousands)

Non-interest-bearing checking $ 194,758 0.00% $ 189,642 0.00%
Interest-bearing checking 229,847 0.12% 222,156 0.10%
Savings accounts 42,029 0.13% 43,640 0.13%
Money market 223,778 0.29% 203,974 0.29%
Total demand deposits 690,412 0.14% 659,412 0.13%
Certificates of Deposit:
Traditional 299,863 0.72% 273,349 0.66%
CDARS 63,962 0.40% 44,794 0.31%
Brokered 44,096 0.40% 44,098 0.39%
Total certificates of deposit 407,921 0.64% 362,241 0.59%
Total deposits $ 1,098,333 0.32% $ 1,021,653 0.29%
PULASKI FINANCIAL CORP.
RESIDENTIAL MORTGAGE LOAN ACTIVITY
(Unaudited)
RESIDENTIAL MORTGAGE LOANS ORIGINATED FOR SALE
Three Months EndedThree Months Ended
December 31, 2014December 31, 2013
MortgageHomeMortgageHome
RefinancingsPurchasesTotalRefinancingsPurchasesTotal
(In thousands)
First quarter $ 94,694 $ 167,472 $ 262,166 $ 29,996 $ 136,423 $ 166,419
RESIDENTIAL MORTGAGE LOANS SOLD TO INVESTORS
Three Months EndedThree Months Ended
December 31, 2014December 31, 2013
NetNet
LoansMortgageProfitLoansMortgageProfit
SoldRevenuesMarginSoldRevenuesMargin
(Dollars in thousands)
First quarter $ 229,565 $ 1,474 0.64% $ 179,919 $ 1,033 0.57%
PULASKI FINANCIAL CORP.
NONPERFORMING ASSETS
(Unaudited)
(In thousands)
December 31,September 30,
NON-PERFORMING ASSETS20142014
Non-accrual loans:
Single-family residential real estate:
First mortgage $ 3,417 $ 4,026
Second mortgage 607 354
Home equity lines of credit 1,410 1,479
5,434 5,859
Commercial:
Commercial and multi-family real estate - 457
Land acquisition and development - 3,734
Commercial and industrial 310 348
Total commercial 310 4,539
Total non-accrual loans 5,744 10,398

Non-Accrual Troubled debt restructurings: (1)

Current under the restructured terms:
Single-family residential real estate:
First mortgage 5,163 4,668
Second mortgage 1,065 1,126
Home equity lines of credit 867 741
Total single-family residential real estate 7,095 6,535
Commercial:
Commercial and multi-family real estate 3,442 3,335
Real estate construction and development 14 -
Commercial and industrial 1,069 1,102
Total commercial 4,525 4,437
Consumer and installment 9 13
Total current troubled debt restructurings 11,629 10,985
Past due under restructured terms:
Single-family residential real estate:
First mortgage 2,914 3,477
Second mortgage 548 483
Home equity lines of credit 224 395
Total single-family residential real estate 3,686 4,355
Commercial:
Commercial and multi-family real estate 443 669
Land acquisition and development 39 38
Real estate construction and development - 39
Commercial and industrial - 488
Total commercial 482 1,234
Total past due troubled debt restructurings 4,168 5,589
Total non-accrual troubled debt restructurings 15,797 16,574
Total non-performing loans 21,541 26,972
Real estate acquired in settlement of loans:
Residential real estate 1,590 2,631
Commercial real estate 6,130 3,171
Total real estate acquired in settlement of loans 7,720 5,802
Total non-performing assets $ 29,261 $ 32,774

(1)

Troubled debt restructured includes non-accrual loans totaling $15.8 million and $16.6 million at December 31, 2014 September 30, 2014, 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 LOSSES20142013
Allowance for loan losses, beginning of period $ 15,978 $ 18,306
Provision charged to expense 500 200
Charge-offs:
Single-family residential real estate:
First mortgage 169 717
Second mortgage 152 196
Home equity 284 354
Total single-family residential real estate 605 1,267
Commercial:
Land acquisition and development - 465
Commercial and industrial 29 -
Total commercial 29 465
Consumer and installment 63 21
Total charge-offs 697 1,753
Recoveries:
Single-family residential real estate:
First mortgage 3 59
Second mortgage 13 47
Home equity 95 159
Total single-family residential real estate 111 265
Commercial:
Commercial and multi-family real estate 9 186
Land acquisition and development 8 -
Real estate construction and development 3 -
Commercial and industrial 7 458
Total commercial 27 644
Consumer and installment 7 8
Total recoveries 145 917
Net charge-offs 552 836
Balance, end of period $ 15,926 $ 17,670
December 31,September 30,
ASSET QUALITY RATIOS20142014
Non-performing loans as a percent of total loans 1.88 % 2.40 %

Non-performing loans excluding current troubled debt restructurings as a percent of total loans

0.87 % 1.42 %
Non-performing assets as a percent of total assets 2.05 % 2.37 %

Non-performing assets excluding current troubled debt restructurings as a percent of total assets

1.24 % 1.58 %
Allowance for loan losses as a percent of total loans 1.39 % 1.42 %

Allowance for loan losses as a percent of non-performing loans

73.94 % 59.24 %

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

154.67 % 97.06 %
PULASKI FINANCIAL CORP.
AVERAGE BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
Three Months Ended
December 31, 2014December 31, 2013
InterestAverageInterestAverage
AverageandYield/AverageandYield/
Interest-earning assets: BalanceDividendsCostBalanceDividendsCost
Loans receivable $ 1,129,910 $ 11,406 4.04% $ 1,008,591 $ 10,836 4.30%
Mortgage loans held for sale 67,903 703 4.14% 54,239 567 4.18%
Other interest-earning assets 68,981 115 0.67% 90,618 95 0.42%
Total interest-earning assets 1,266,794 12,224 3.86% 1,153,448 11,498 3.99%
Non-interest-earning assets 83,337 79,097
Total assets $ 1,350,131 $ 1,232,545
Interest-bearing liabilities:
Deposits $ 845,853 $ 894 0.42% $ 838,101 $ 958 0.46%
Borrowed money 176,507 480 1.09% 88,562 365 1.64%
Total interest-bearing liabilities 1,022,360 1,374 0.54% 926,663 1,323 0.57%
Non-interest-bearing deposits 198,843 175,062
Non-interest-bearing liabilities 14,024 13,462
Stockholders' equity 114,904 117,358
Total liabilities and stockholders' equity $ 1,350,131 $ 1,232,545
Net interest income $ 10,850 $ 10,175
Interest rate spread 3.32% 3.42%
Net interest margin 3.43% 3.53%

Contacts:

Pulaski Financial Corp.
Paul Milano, 314-878-2210
Chief Financial Officer

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