Pulaski Financial Reports First Fiscal Quarter Results

Highlights for the Quarter

  • Diluted EPS $0.20 in 2014 versus $0.25 in 2013
  • Credit costs decreased 90% to $327,000 in 2014 versus $3.3 million in 2013
  • Mortgage revenues down 65% on sharp drop in loan refinancing activity
  • Commercial loan portfolio increased $15.3 million, or 2%
  • Net interest income declined 14%; commercial loan growth only partially offsets impact of market-driven yield declines and expected legacy residential mortgage portfolio runoff
  • Internal adversely classified assets represented only 35% of regulatory capital plus the allowance for loan losses

ST. LOUIS--()--Pulaski Financial Corp. (Nasdaq Global Select: PULB, the “Company”) reported net income available to common shareholders for the quarter ended December 31, 2013 of $2.2 million, or $0.20 per diluted common share compared with $2.7 million, or $0.25 per diluted common share, for the same quarter last year.

Earnings for the quarter benefited from a sharp decline in credit costs as asset quality remained stable. Total credit costs, consisting of the provision for loan losses and foreclosed property losses and expense, fell to $327,000 for the December 2013 quarter compared with $3.3 million in the same quarter last year. Net charge-offs decreased to $836,000 compared with $1.2 million in last year’s quarter. The quarter-end level of non-performing assets increased $2.9 million from September 30, 2013 primarily as the result of the classification as non-accrual of a $3.9 million loan secured by commercial real estate in the St. Louis metropolitan area that had been on the Company’s list of adversely classified loans for several quarters. However, the combined level of adversely classified and watch list loans declined 4% during the quarter.

Noninterest income for the quarter decreased $2.2 million compared with the same quarter last year primarily as the result of a 65% decrease in mortgage revenues. The Company saw a 56% decrease in the amount of mortgage loans originated for sale during the quarter compared with last year’s quarter. Dampened by the higher level of market interest rates, and directionally consistent with industry-wide trends, the level of mortgage loan refinancings decreased 87%. However, the volume of loans to finance home purchases decreased only 9%.

Net interest income for the quarter was down $1.6 million compared with the same quarter last year primarily as the result of lower levels of interest income on loans. Interest income on mortgage loans held for sale decreased $1.0 million primarily due to the lower average balance resulting from the decreased mortgage origination activity. Interest income on portfolio loans decreased $1.1 million primarily as the result of a decrease in the average yield.

Gary Douglass, President and Chief Executive Officer, commented, “Although down from the comparable quarter last year, our first fiscal quarter earnings in 2014 remained at a respectable level in light of the difficult operating environment we faced. The dramatic industry-wide decrease in consumer demand for mortgage refinancings had a significant negative impact on mortgage revenues and the amount of interest earned on loans held for sale. In addition, the continued strong competition for commercial loans held down the interest rates we were able to charge on new and renewing loans. Fortunately, a significant portion of our revenue decline was offset by significantly lower overall credit costs as we continue to reap the benefits of our hard work in problem asset management over the past several years.”

Douglass continued, “Looking forward to the balance of fiscal 2014, we continue to remain optimistic about our prospects for meaningful earnings growth. We expect our second fiscal quarter to produce reasonably similar results to the just completed first quarter as the seasonal nature of purchase mortgage demand and minimal refinance activity continue to depress mortgage-related revenues. However, we expect a much 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 commercial portfolio growth, bolstered by our renewed focus on new business and expanded production capacity. Earnings for the balance of the fiscal year should also benefit from the repurchase of additional preferred stock funded by lower-cost, tax-deductible bank borrowings. Finally, we will opportunistically review and evaluate shareholder-beneficial, in-market acquisition opportunities and possible niche loan production activities as drivers of potential future revenue growth.”

Other News – Company Completes Repurchase of $10 Million of Preferred Stock

The Company also today announced that it recently completed another repurchase of its preferred stock from a private investor. During January 2014, the Company repurchased $10 million in par value, or approximately 58% of the outstanding shares, of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, using proceeds from a loan obtained from a commercial bank. Following the repurchase, $7.3 million in par value, or 23% of the original amount issued, remains outstanding.

Conference Call Tomorrow

Pulaski Financial’s management will discuss first fiscal quarter results and other developments tomorrow, January 29, 2014, 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 44426431, a few minutes before the start time. The call will also be available for replay through March 1, 2014 at 855-859-2056 or 404-537-3406, conference ID 44426431.

About Pulaski Financial

Pulaski Financial Corp., operating in its 92nd 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, 2013 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,
2013 2013 2012
Interest income $ 11,498 $ 12,117 $ 13,613
Interest expense   1,323     1,406     1,806  
 
Net interest income 10,175 10,711 11,807
Provision for loan losses   200     6,850     2,065  
 
Net interest income after provision for loan losses   9,975     3,861     9,742  
 
Mortgage revenues 1,033 2,752 2,988
Retail banking fees 1,046 1,050 1,153
Investment brokerage revenues 99 231 293
Other   294     471     282  
Total non-interest income   2,472     4,504     4,716  
 
Salaries and employee benefits 4,191 4,354 4,566
Occupancy, equipment and data processing expense 2,627 2,543 2,360
Advertising 179 157 119
Professional services 822 600 554
FDIC deposit insurance premium expense 261 276 434
Real estate foreclosure losses and expense, net 127 644 1,214
Other   493     908     611  
Total non-interest expense   8,700     9,482     9,858  
 
Income (loss) before income taxes 3,747 (1,117 ) 4,600
Income tax expense (benefit)   1,244     (537 )   1,472  
Net income (loss) after tax 2,503 (580 ) 3,128
Benefit from repurchase of preferred stock, net - (20 ) -
Preferred stock dividends   (295 )   (342 )   (406 )
Earnings (loss) available to common shares $ 2,208   $ (942 ) $ 2,722  
 
Annualized Performance Ratios
Return on average assets 0.81 % (0.18 %) 0.96 %
Return on average common equity 8.83 % (3.71 %) 11.40 %
Interest rate spread 3.42 % 3.54 % 3.73 %
Net interest margin 3.53 % 3.65 % 3.87 %
 
SHARE DATA
Weighted average common shares outstanding - basic 10,948,781 10,922,253 10,815,633
Weighted average common shares outstanding - diluted 11,220,002 11,181,889 11,066,355
Basic earnings (loss) per common share $0.20 ($0.09 ) $0.25
Diluted earnings (loss) per common share $0.20 ($0.08 ) $0.25
Dividends per common share $0.095 $0.095 $0.095
           
PULASKI FINANCIAL CORP.
BALANCE SHEET DATA
(Unaudited)
   
(Dollars in thousands)
 
December 31, September 30,
2013 2013
Total assets $ 1,293,704 $ 1,275,944
Loans receivable, net 1,003,726 988,668
Allowance for loan losses 17,670 18,306
Mortgage loans held for sale, net 56,031 70,473
Investment securities 42,380 43,211
Capital stock of Federal Home Loan Bank 4,617 4,777
Cash and cash equivalents 105,057 86,309
Deposits 1,030,128 1,010,812
Borrowed money 114,543 113,483
Subordinated debentures 19,589 19,589
Stockholders' equity - preferred 17,388 17,310
Stockholders' equity - common 99,551 98,748
Total book value per common share $8.76 $8.65
Tangible book value per common share $8.41 $8.30
Regulatory capital ratios - Pulaski Bank only: (1)
Tier 1 leverage capital (to average assets) 10.00 % 10.05 %
Total risk-based capital (to risk-weighted assets) 14.03 % 14.03 %
 
(1) September 30, 2013 regulatory capital ratios are estimated.
 
December 31, September 30,
2013 2013
LOANS RECEIVABLE
Single-family residential:
First mortgage $ 214,918 $ 212,357
Second mortgage 43,420 43,208
Home equity lines of credit   107,228     110,906  
Total single-family residential real estate   365,566     366,471  
Commercial:
Commercial and multi-family real estate 366,954 348,003
Land acquisition and development 37,941 40,430
Real estate construction and development 35,964 20,548
Commercial and industrial   210,298     226,829  
Total commercial   651,157     635,810  
Consumer and installment   2,742     2,761  
1,019,465 1,005,042
Add (less):
Deferred loan costs 2,902 3,188
Loans in process (971 ) (1,256 )
Allowance for loan losses   (17,670 )   (18,306 )
Total $ 1,003,726   $ 988,668  
 
Weighted average rate at end of period   4.38 %   4.45 %
 
 

December 31, 2013

September 30, 2013

Weighted Weighted
Average Average
Interest Interest
DEPOSITS Balance     Rate     Balance     Rate
Demand deposits: (Dollars in thousands)
Non-interest-bearing checking $ 177,825 0.00 % $ 168,033 0.00 %
Interest-bearing checking 254,882 0.10 % 237,362 0.10 %
Savings accounts 39,693 0.13 % 39,845 0.13 %
Money market   208,559   0.27 %   206,927   0.26 %
Total demand deposits   680,959   0.13 %   652,167   0.13 %
 
Certificates of Deposit:
Traditional 299,573 0.77 % 313,217 0.84 %
CDARS   49,596   0.26 %   45,428   0.28 %
Total certificates of deposit   349,169   0.70 %   358,645   0.77 %
Total deposits $ 1,030,128   0.32 % $ 1,010,812   0.35 %
                         
PULASKI FINANCIAL CORP.
RESIDENTIAL MORTGAGE LOAN ACTIVITY
(Unaudited)
 
RESIDENTIAL MORTGAGE LOANS ORIGINATED FOR SALE
 
2014 2013
Mortgage Home Mortgage Home
Refinancings Purchases Total Refinancings Purchases Total
(In thousands)
First quarter $ 29,996 $ 136,423 $ 166,419 $ 230,399 $ 149,241 $ 379,640
 
RESIDENTIAL MORTGAGE LOANS SOLD TO INVESTORS
 
2014 2013
Net Net
Loans Mortgage Profit Loans Mortgage Profit
Sold Revenues Margin Sold Revenues Margin
(Dollars in thousands)
First quarter $ 179,919 $ 1,033 0.57 % $ 367,388 $ 2,988 0.81 %
 
PULASKI FINANCIAL CORP.
NONPERFORMING ASSETS
(Unaudited)
       
(In thousands)
 
December 31, September 30,
NON-PERFORMING ASSETS 2013 2013
Non-accrual loans:
Single-family residential real estate:
First mortgage $ 5,145 $ 5,335
Second mortgage 585 442
Home equity lines of credit   1,866   2,124
Total single-family residential real estate   7,596   7,901
Commercial:
Commercial and multi-family real estate 1,492 1,774
Land acquisition and development 3,429 -
Commercial and industrial   357   -
Total commercial   5,278   1,774
Consumer & installment   62   78
Total non-accrual loans   12,936   9,753
 
Non-Accrual Troubled debt restructurings: (1)
Current under the restructured terms:
Single-family residential real estate:
First mortgage 6,938 5,169
Second mortgage 1,289 904
Home equity lines of credit   427   498
Total single-family residential real estate   8,654   6,571
Commercial:
Commercial and multi-family real estate 1,647 2,585
Land acquisition and development - 43
Real estate construction and development - 23
Commercial and industrial   1,970   2,055
Total commercial   3,617   4,706
Consumer and installment   23   28
Total current troubled debt restructurings   12,294   11,305
Past due under restructured terms:
Single-family residential real estate:
First mortgage 2,141 3,974
Second mortgage 234 155
Home equity lines of credit   234   178
Total single-family residential real estate   2,609   4,307
Commercial:
Commercial and multi-family real estate 2,780 1,652
Land acquisition and development 42 19
Real estate construction and development 42 -
Commercial and industrial   451   572
Total commercial   3,315   2,243
Total past due troubled debt restructurings   5,924   6,550
Total non-accrual troubled debt restructurings   18,218   17,855
Total non-performing loans   31,154   27,608
Real estate acquired in settlement of loans:
Residential real estate 2,403 3,019
Commercial real estate   3,347   3,376
Total real estate acquired in settlement of loans   5,750   6,395
Total non-performing assets $ 36,904 $ 34,003
 

(1)

Troubled debt restructured includes non-accrual loans totaling $18.2 million and $17.9 million at December 31, 2013 and September 30, 2013, 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 2013 2012
Allowance for loan losses, beginning of period $ 18,306 $ 17,117
Provision charged to expense 200 2,065
Charge-offs:
Single-family residential real estate:
First mortgage 717 1,236
Second mortgage 196 351
Home equity   354     713  
Total single-family residential real estate   1,267     2,300  
Commercial:
Commercial and multi-family real estate - 523
Land acquisition and development 465 23
Real estate construction and development - 260
Commercial and industrial   -     484  
Total commercial   465     1,290  
Consumer and installment   21     34  
Total charge-offs   1,753     3,624  
Recoveries:
Single-family residential real estate:
First mortgage 59 25
Second mortgage 47 34
Home equity   159     86  
Total single-family residential real estate   265     145  
Commercial:
Commercial and multi-family real estate 186 1,042
Land acquisition and development - 17
Real estate construction and development - 1,169
Commercial and industrial   458     15  
Total commercial   644     2,243  
Consumer and installment   8     11  
Total recoveries   917     2,399  
Net charge-offs   836     1,225  
Balance, end of period $ 17,670   $ 17,957  
 
 
December 31, September 30,
ASSET QUALITY RATIOS   2013     2013  
Non-performing loans as a percent of total loans 3.06 % 2.75 %

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

1.85 % 1.62 %
Non-performing assets as a percent of total assets 2.85 % 2.66 %

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

1.90 % 1.78 %
Allowance for loan losses as a percent of total loans 1.73 % 1.82 %

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

56.72 % 66.31 %

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

90.27 % 106.56 %
 
PULASKI FINANCIAL CORP.
AVERAGE BALANCE SHEETS
(Unaudited)
                       
(Dollars in thousands)
 
Three Months Ended
December 31, 2013 December 31, 2012
Interest Average Interest Average
Average and Yield/ Average and Yield/
Interest-earning assets: Balance     Dividends     Cost Balance     Dividends     Cost
Loans receivable $ 1,008,591 $ 10,836 4.30 % $ 987,147 $ 11,939 4.84 %
Mortgage loans held for sale 54,239 567 4.18 % 183,801 1,569 3.41 %
Other interest-earning assets   90,618       95 0.42 %   50,761       105 0.83 %
Total interest-earning assets 1,153,448   11,498 3.99 % 1,221,709   13,613 4.46 %
Non-interest-earning assets   79,097   86,550
Total assets $ 1,232,545 $ 1,308,259
 
Interest-bearing liabilities:
Deposits $ 838,101 $ 958 0.46 % $ 911,539 $ 1,435 0.63 %
Borrowed money   88,562       365 1.64 %   76,874       371 1.92 %
Total interest-bearing liabilities 926,663   1,323 0.57 % 988,413   1,806 0.73 %
Non-interest-bearing deposits 175,062 182,531
Non-interest-bearing liabilities 13,462 16,773
Stockholders' equity   117,358   120,542
Total liabilities and stockholders' equity $ 1,232,545 $ 1,308,259
Net interest income $ 10,175 $ 11,807
Interest rate spread 3.42 % 3.73 %
Net interest margin 3.53 % 3.87 %

Contacts

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

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Contacts

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