Pulaski Financial Reports First Fiscal Quarter Results

ST. LOUIS--(BUSINESS WIRE)--Pulaski Financial Corp. (Nasdaq Global Select: PULB)(the “Company”) reported net income available to common shareholders for the quarter ended December 31, 2015 of $3.2 million, or $0.26 per diluted common share, compared with $3.1 million, or $0.26 per diluted common share, for the same quarter last year and $3.6 million, or $0.29 per diluted common share, for the linked quarter ended September 30, 2015.

Earnings for the quarter benefited from significant increases in net interest income and mortgage revenues combined with significantly lower credit costs compared with the same quarter last year. Also impacting the comparability of earnings with last year’s quarter were $666,000 of merger-related professional fees incurred in the December 2015 quarter, which reduced diluted earnings per share by $0.03, and the receipt of a $688,000 payment from the Company’s 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, which increased diluted earnings per share by $0.04.

Net interest income for the quarter was up 8% from the same quarter last year as the Company benefited from growth in portfolio loans and residential mortgage loans held for sale. This growth more than offset a decline in the net interest margin that resulted primarily from market driven declines in loan interest rates. The total balance of portfolio loans at December 31, 2015 increased $33.9 million, or 3%, from September 30, 2015, due to increases in commercial loans and residential first mortgage loans. The commercial loan portfolio increased $24.1 million, or 3%, with growth in all loan categories except non-owner occupied commercial real estate loans. In addition, the Company continued to be successful in marketing “niche” adjustable-rate loan products, resulting in an $8.7 million, or 3%, increase in residential first mortgage loans during the quarter.

Mortgage revenues increased 48% over the same quarter last year, as the demand for loans to finance home purchases remained strong. The Company saw a 39% increase in loans to finance home purchases compared with last year’s quarter. In addition, low market interest rates continued to fuel strong customer demand for loans to refinance existing mortgages, resulting in a 92% increase in refinancing volume.

The Company recorded an $800,000 credit to the provision for loan losses for the December 2015 quarter as the result of significant recoveries collected during the quarter combined with continued improvement in asset quality. Recoveries totaled $1.4 million in the current-year quarter compared with $145,000 in the same period last year. Following extended collection efforts, approximately $1.1 million was recovered from two commercial borrowers during the quarter related to loans that were charged off in previous periods. The balance of non-performing assets decreased 12% from September 30, 2015, dropping the quarter-end ratio of non-performing assets to total assets to 1.22%. The ratio of the allowance for loan losses to total loans was 1.28% at December 31, 2015 compared with 1.31% at September 30, 2015.

Gary Douglass, President and Chief Executive Officer, commented, “We are very pleased with our quarterly results driven by meaningful loan portfolio growth, significant growth in mortgage-related revenues and continued improvement in net credit costs. In addition, the strong residential loan demand during the quarter resulted in a 68% increase in the quarter-end balance of loans held for sale. This will give us strong momentum going into our second fiscal quarter, which has historically been negatively impacted by a seasonal slowdown in residential mortgage demand.”

Pending Merger

On December 3, 2015, the Company and First Busey Corporation, Champaign, Illinois (“First Busey”) announced that they entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which First Busey will acquire the Company and the Bank. Under the terms of the Merger Agreement, each share of Company common stock will be converted into the right to receive 0.79 of a share of First Busey common stock. Consummation of the transaction remains subject to customary closing conditions, including receipt of requisite shareholder approval and all required regulatory approvals.

First Busey has filed a registration statement on Form S-4 with the SEC in connection with the proposed transaction. The registration statement includes a proxy statement of First Busey and the Company that also constitutes a prospectus of First Busey, which will be sent to the stockholders of each of the Company and First Busey. Stockholders are advised to read the proxy statement/prospectus when it becomes available because it will contain important information about First Busey, the Company and the proposed transaction. This document and other documents relating to the merger filed by First Busey and the Company can be obtained free of charge from the SEC’s website at www.sec.gov. These documents also can be obtained free of charge by accessing First Busey’s website at www.busey.com under the tab “Investor Relations” and then under “SEC Filings” or by accessing the Company’s website at www.pulaskibank.com under the tab “Our Story” and then under “Shareholder Relations” and “SEC Filings”. Alternatively, these documents, when available, can be obtained free of charge from First Busey upon written request to First Busey Corporation, Corporate Secretary, 100 W. University Avenue, Champaign, Illinois 61820 or by calling (217) 365-4544, or from the Company, upon written request to Pulaski Financial Corp., Corporate Secretary, 12300 Olive Boulevard, St. Louis, Missouri 63141 or by calling 314-878-2210.

First Busey, the Company and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from stockholders in connection with the proposed transaction under the rules of the SEC. Information about these participants may be found in the definitive proxy statement of First Busey relating to its 2015 Annual Meeting of Stockholders filed with the SEC by First Busey on April 17, 2015 and the definitive proxy statement of Pulaski relating to its 2016 Annual Meeting of Stockholders filed with the SEC on December 23, 2015. These definitive proxy statements can be obtained free of charge from the sources indicated above. Additional information regarding the interests of these participants will also be included in the proxy statement/prospectus regarding the proposed transaction when it becomes available.

About Pulaski Financial

Pulaski Financial Corp., operating in its 94th 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 Omaha-Council Bluffs metropolitan areas, mid-Missouri, southwestern Missouri, eastern Kansas, and Lincoln, Nebraska. 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, 2015 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.