UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-26681
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PULASKI BANCORP, INC.
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(Exact name of Small Business issuer as specified in its charter)
FEDERALLY-CHARTERED 22-3652847
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
130 Mountain Avenue, Springfield, New Jersey 07081
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 973-564-9000
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
As of November 2, 2000, 1,946,845 common shares, $.01 par value, were
outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X
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<PAGE>
PULASKI BANCORP, INC. AND SUBSIDIARY
INDEX
Page
Number
------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
September 30, 2000 and December 31, 1999 (Unaudited) 1
Consolidated Statements of Income for the Nine and
Three Months Ended September 30, 2000 and 1999 (Unaudited) 2
Consolidated Statements of Comprehensive Income for the
Nine and Three Months Ended September 30, 2000 and 1999 3
(Unaudited)
Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 2000 and 1999 (Unaudited) 4 - 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
<PAGE>
<TABLE>
<CAPTION>
PULASKI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
(Unaudited)
September 30, December 31,
Assets 2000 1999
------ ------------- -------------
<S> <C> <C>
Cash and amounts due from depository institutions $ 4,050,203 $ 3,966,072
Interest-bearing deposits 2,314,435 454,547
Federal funds sold 1,600,000 2,350,000
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Total cash and cash equivalents 7,964,638 6,770,619
Term deposits 99,000 197,000
Trading account securities 1,794,000 2,790,500
Securities available for sale 6,190,647 5,906,451
Investment securities held to maturity 6,947,445 6,947,017
Mortgage-backed securities held to maturity 62,915,602 71,399,443
Loans receivable 152,159,250 134,522,001
Real estate owned 29,076 49,822
Premises and equipment 3,950,509 4,037,888
Federal Home Loan Bank of New York stock, at cost 2,350,000 2,100,000
Interest receivable 1,413,083 1,218,056
Other assets 841,814 611,493
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Total assets $ 246,655,064 $ 236,550,290
============= =============
Liabilities and stockholders' equity
Liabilities
Deposits $ 188,749,246 $ 169,007,650
Advances from Federal Home Loan Bank of New York 32,000,000 42,000,000
Advance payments by borrowers for taxes 940,405 919,231
Other liabilities 870,829 840,521
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Total liabilities 222,560,480 212,767,402
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Stockholders' equity
Preferred stock; $.01 par value; authorized 2,000,000 shares; issued and
outstanding-none --
Common stock; par value $.01; authorized 13,000,000 shares;
2,108,088 shares issued 2000 and 1999; 1,946,845 shares (2000)
and 2,080,488 shares (1999) outstanding 21,081 21,081
Paid-in-capital 9,806,957 9,833,349
Retained earnings - substantially restricted 16,151,766 14,912,410
Unearned Incentive Plan Award shares (314,437) (428,702)
Unearned Employee Stock Ownership Plan shares (146,576) (278,439)
Accumulated other comprehensive income - Unrealized (loss) on
securities available for sale, net (82,000) (52,480)
Treasury stock, at cost; 161,243 shares (2000) and 27,600 shares (1999) (1,342,207) (224,331)
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Total stockholders' equity 24,094,584 23,782,888
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Total liabilities and stockholders' equity $ 246,655,064 $ 236,550,290
============= =============
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
PULASKI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
----------------------------- -----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest income:
Loans $ 8,828,413 $ 6,592,823 $ 3,139,342 $ 2,345,111
Mortgage-backed securities held to maturity 3,375,162 2,702,156 1,140,174 996,242
Investment securities held to maturity 335,467 296,085 113,264 108,540
Securities available for sale 284,196 227,296 102,277 78,064
Other interest-earning assets 355,060 540,624 144,410 157,352
------------ ------------ ------------ ------------
Total interest income 13,178,298 10,358,984 4,639,467 3,685,309
------------ ------------ ------------ ------------
Interest expense:
Deposits 5,820,921 5,656,842 2,167,322 1,848,717
Advances and other borrowed money 1,864,458 298,491 617,115 280,543
------------ ------------ ------------ ------------
Total interest expense 7,685,379 5,955,333 2,784,437 2,129,260
------------ ------------ ------------ ------------
Net interest income 5,492,919 4,403,651 1,855,030 1,556,049
Provision for loan losses 66,000 86,000 16,000 25,000
------------ ------------ ------------ ------------
Net interest income after provision for loan losses 5,426,919 4,317,651 1,839,030 1,531,049
------------ ------------ ------------ ------------
Non-interest income:
Fees and service charges 169,176 130,297 60,282 58,062
Trading account income (loss) 357,784 (30,935) 33,763 (34,483)
Gain on real estate owned -- 599 -- (581)
Gain on sale of deposits -- 422,554 -- 422,554
Miscellaneous 15,835 14,224 5,083 4,886
------------ ------------ ------------ ------------
Total non-interest income 542,795 536,739 99,128 450,438
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Non-interest expenses:
Salaries and employee benefits 2,204,755 1,957,066 735,495 680,338
Net occupancy expense of premises 417,365 310,595 127,847 116,188
Equipment 312,265 279,570 100,801 93,002
Advertising 68,255 62,228 21,834 5,243
Loss on foreclosed real estate 5,904 -- 3,015 --
Federal insurance premium 26,729 75,810 8,988 25,101
Miscellaneous 653,634 696,833 202,730 228,005
------------ ------------ ------------ ------------
Total non-interest expenses 3,688,907 3,382,102 1,200,710 1,147,877
------------ ------------ ------------ ------------
Income before income taxes 2,280,807 1,472,288 737,448 833,610
Income taxes 845,947 573,371 270,295 306,078
------------ ------------ ------------ ------------
Net income $ 1,434,860 $ 898,917 $ 467,153 $ 527,532
============ ============ ============ ============
Net income per common shares:
Basic/diluted $ 0.74 $ 0.44 $ 0.24 $ 0.26
============ ============ ============ ============
Dividends declared per common share $ 0.24 $ 0.24 $ 0.08 $ 0.08
============ ============ ============ ============
Weighted average number of shares outstanding:
Basic/diluted 1,934,647 2,040,343 1,920,372 2,020,952
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
PULASKI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
---------------------------- ---------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income $ 1,434,860 $ 898,917 $ 467,153 $ 527,532
Other comprehensive income-unrealized
holding (loss) gain on securities available
for sale, net of income taxes (29,520) (25,600) 12,000 (14,720)
----------- ----------- ----------- -----------
Comprehensive income $ 1,405,340 $ 873,317 $ 479,153 $ 512,812
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
PULASKI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
Nine Months Ended
September 30,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,434,860 $ 898,917
Adjustments to reconcile net income to
cash provided by (used in) operating activities:
Depreciation and amortization of premises and equipment 192,158 195,902
Accretion of discounts and amortization of premium, net (38,098) 26,378
Accretion of deferred loan fees and discounts (314,476) (185,634)
Provision for loan losses 66,000 86,000
Purchase of trading account securities (2,854,120) (7,074,557)
Proceeds from sales of trading account securities 4,278,787 4,289,672
Realized gains on sales of trading account securities (132,811) (41,011)
Unrealized (gain) loss on trading account securities (224,973) 71,946
(Gain) on sales of real estate owned (906) (3,226)
(Gain) on sale of deposits -- (422,554)
(Increase) in interest receivable (195,027) (257,179)
(Increase) in other assets (259,841) (82,996)
Increase (decrease) in interest payable on deposits 664,362 (143,160)
Increase (decrease) in other liabilities 30,308 (267,052)
ESOP shares committed to be released 112,653 153,867
Amortization of cost of stock contributed to Incentive Plan 114,265 114,264
------------ ------------
Net cash provided by (used in) operating activities 2,873,141 (2,640,423)
------------ ------------
Cash flows from investing activities:
Proceeds from maturities of term deposits 98,000 --
Purchase of securities available for sale (284,196) (227,296)
Proceeds from maturities of investment securities held to maturity -- 1,000,000
Proceeds from calls of investment securities held to maturity -- 2,000,000
Purchases of investment securities held to maturity -- (3,000,000)
Purchases of mortgage-backed securities held to maturity -- (37,148,664)
Principal repayments on mortgage backed securities held to maturity 8,451,128 18,235,405
Purchases of loans (5,704,091) (7,725,227)
Net change in loans receivable (11,706,287) (18,566,451)
Capitalized cost on real estate owned (7,471) (10,003)
Proceeds from sales of real estate owned 50,728 133,852
Additions to premises and equipment (104,779) (392,769)
Purchase of Federal Home Loan Bank of New York stock (250,000) (453,800)
------------ ------------
Net cash (used in) investing activities (9,456,968) (46,154,953)
------------ ------------
Cash flow from financing activities:
Net increase in deposits 19,077,234 718,330
Cash paid for sale of deposits -- (5,245,867)
Net (decrease) increase in advances from Federal Home Loan Bank
of New York (10,000,000) 38,000,000
Net (decrease) in other borrowed money -- (454,805)
Net increase in advance payments by borrowers for taxes 21,174 76,157
Cash dividends paid (202,686) (230,392)
Purchase of treasury stock (1,117,876) --
------------ ------------
Net cash provided by financing activities 7,777,846 32,863,423
------------ ------------
Net increase (decrease) in cash and cash equivalents 1,194,019 (15,931,953)
Cash and cash equivalents - beginning 6,770,619 23,364,562
------------ ------------
Cash and cash equivalents - ending $ 7,964,638 $ 7,432,609
============ ============
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
PULASKI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
Nine Months Ended
September 30,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Supplemental information:
Transfer of loans receivable to real estate owned $ 21,605 $ 39,819
Cash paid during the period for:
Income taxes 1,031,697 512,588
Interest on deposits and borrowings 6,840,044 6,086,309
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
PULASKI BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. BASIS OF PRESENTATION
-------------------------
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-QSB and Regulation S-X and do not
include information or footnotes necessary for a complete presentation of
financial condition, results of operations, and cash flows in conformity with
generally accepted accounting principles. However, in the opinion of management,
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of the consolidated financial statements have been included.
The results of operations for the nine and three months ended September 30,
2000, are not necessarily indicative of the results which may be expected for
the entire fiscal year.
2. NET INCOME PER COMMON SHARE
--------------------------------
Basic net income per common share is based on the weighted average number of
common shares actually outstanding, adjusted for unearned shares of the ESOP and
the Incentive Plan. Diluted net income per share is calculated by adjusting the
weighted average number of shares of common stock outstanding to include the
effect of potential common shares. Potential common shares related to unearned
incentive plan awards, unearned ESOP shares and stock options were not dilutive
during the nine and three months ended September 30, 2000 and 1999.
3. FORMATION OF STOCK HOLDING COMPANY
---------------------------------------
On July 12, 1999, Pulaski Savings Bank (the "Bank") reorganized into a two-tier
mutual holding company structure pursuant to an Agreement and Plan of
Reorganization which was unanimously adopted by the Board of Directors of the
Bank on January 28, 1999 ("Plan of Reorganization") and approved by the
stockholders of the Bank on April 23, 1999. Under the Plan of Reorganization
(the "Reorganization"), the Bank became a wholly owned subsidiary of Pulaski
Bancorp, Inc. (the "Company"), a federally-chartered stock holding company, a
majority of the Common Stock of which is now owned by the Pulaski Bancorp,
M.H.C. (the "Mutual Holding Company"), the Bank's parent mutual holding company.
In the Reorganization, each outstanding share of Bank common stock was converted
into one share of Company common stock and the holders of Bank common stock
became the holders of all of the outstanding shares of Company common stock.
Accordingly, as a result of the Reorganization, the Bank's minority
stockholders, became minority stockholders of the Company and the Bank's
majority stockholder, the Mutual Holding Company, became the majority
stockholder of the Company.
After the Reorganization, the Bank has continued its business and operations as
a wholly owned subsidiary of the Company and the consolidated capitalization,
assets, liabilities, income and financial statements, and management of the
Company immediately following the Reorganization is substantially the same as
those of the Bank immediately prior to consummation of the Reorganization. The
Charter and Bylaws of the Bank continue in effect, and have not been affected in
any manner by the Reorganization. The name "Pulaski Savings Bank" continues to
be utilized by the Bank. The corporate existence of the Bank has continued
unaffected and unimpaired by the Reorganization except that all of its
outstanding stock is now owned by the Company.
6
<PAGE>
PULASKI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
Discussion of Forward-Looking Statements
When used or incorporated by reference in disclosure documents, the words
"anticipate", "estimate", "expect", "project", "target", "goal" and similar
expressions are intended to identify forward-looking statements. Such
forward-looking statements are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, expected or projected. These
forward-looking statements speak only as of the date of the document. The Bank
expressly disclaims any obligation or undertaking to publicly release any
updates or revisions to any forward-looking statement contained herein to
reflect any change in the Bank's expectation with regard thereto or any change
in events, conditions or circumstances on which any such statement is based.
Comparison of Financial Condition at September 30, 2000 and December 31, 1999
The Company's assets at September 30, 2000 totalled $246.7 million, which
represents an increase of $10.1 million or 4.3% as compared with $236.6 million
at December 31, 1999.
Cash and cash equivalents increased $1.2 million or 17.7% to $8.0 million at
September 30, 2000 from $6.8 million at December 31, 1999, primarily reflecting
a $1.9 million increase in interest-bearing deposits, which was sufficient to
offset a decrease in federal funds sold of $750,000.
Term deposits at September 30, 2000 decreased $98,000 or 49.7% to $99,000 from
$197,000 at December 31, 1999, reflecting maturity of a term deposit. Trading
account securities at September 30, 2000 decreased $997,000 or 35.7% to $1.8
million when compared with $2.8 million at December 31, 1999. The decrease
during the nine months ended September 30, 2000 resulted from sales of trading
account securities of $4.1 million offset by purchases of $2.9 million along
with an unrealized gain of $225,000. Securities available for sale at September
30, 2000 increased $285,000 or 4.8% to $6.2 million when compared with $5.9
million at December 31, 1999, which resulted primarily from purchases of
securities available for sale. Investment securities held to maturity remained
unchanged at September 30, 2000 at $6.9 million when compared with December 31,
1999.
Mortgage-backed securities held to maturity decreased $8.5 million or 11.9% to
$62.9 million at September 30, 2000 when compared to $71.4 million at December
31, 1999. The decrease during the nine months ended September 30, 2000 resulted
primarily from repayments on mortgage-backed securities of $8.5 million.
Net loans increased $17.7 million or 13.2% to $152.2 million at September 30,
2000 as compared to $134.5 million at December 31, 1999. The increase during the
nine months ended September 30, 2000, resulted primarily from loan originations
and purchases exceeding loan principal repayments.
Deposits at September 30, 2000 increased $19.7 million or 11.7% to $188.7
million when compared with $169.0 million at December 31, 1999.
7
<PAGE>
PULASKI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
Comparison of Financial Condition at September 30, 2000 and December 31, 1999
(Cont'd.)
Advances from the Federal Home Loan Bank of New York ("FHLB") totalled $32.0
million and $42.0 million at September 30, 2000 and December 31, 1999,
respectively, representing a decrease of $10.0 million or 23.8%, resulting from
repayments of advances.
Stockholders' equity amounted to $24.1 million and $23.8 million at September
30, 2000 and December 31, 1999, respectively. During the nine months ended
September 30, 2000 and 1999, net income of $1.4 million and $899,000,
respectively, was recorded and cash dividends of $203,000 and $230,000,
respectively, were paid on the common stock. During the nine months ended
September 30, 2000, the Company repurchased 133,643 shares of its common stock,
at prices ranging from $7.94 to $9.75 per share, for $1.1 million under a stock
repurchase program.
Comparison of Operating Results for the Three Months Ended September 30, 2000
and 1999
Net income decreased $61,000 or 11.6% to $467,000 for the three months ended
September 30, 2000 compared with $528,000 for the same 1999 period. The decrease
in net income during the 2000 period resulted from an increase in total interest
expense combined with an increase in non-interest expenses and a decrease in
non-interest income which were partially offset by an increase in total interest
income along with decreases in provision for loan losses and income taxes.
Interest income on loans increased by $794,000 or 33.9% to $3.1 million during
the three months ended September 30, 2000 when compared with $2.3 million during
the same 1999 period. The increase during the 2000 period resulted from an
increase of 67 basis points in the yield earned on the loan portfolio along with
an increase of $28.1 million or 23.1% in the average balance of loans
outstanding. Interest on mortgage-backed securities increased $144,000 or 14.5%
to $1.1 million during the three months ended September 30, 2000 when compared
with $996,000 for the same 1999 period. The increase during the 2000 period
resulted from an increase of 148 basis points in the yield earned sufficient to
offset a decrease in the average balance of mortgage-backed securities
outstanding of $6.7 million or 9.4%. Interest earned on investment securities,
including available for sale and held to maturity issues, increased $29,000 or
15.5% to $216,000 during the three months ended September 30, 2000 when compared
with $187,000 for the same 1999 period. The increase during the 2000 period
resulted from a 74 basis point increase in the yield earned on such securities,
accompanied by an increase of $330,000 or 2.6% in the average balance of
investment securities outstanding. Interest earned on other interest-earning
assets decreased by $13,000 or 8.3% to $144,000 during the three months ended
September 30, 2000 when compared with $157,000 for the same 1999 period. The
decrease during the 2000 period resulted from a decrease of 117 basis points in
the yield earned, sufficient to offset an increase of $779,000 or 9.1% in the
average balance of other interest-earning assets outstanding.
Interest expense on deposits increased $319,000 or 17.3% to $2.2 million during
the three months ended September 30, 2000 when compared to $1.8 million during
the same 1999 period. Such increase during the 2000 period was attributable to
an increase of $6.6 million or 3.9% in the average balance of interest-bearing
deposits outstanding, along with an increase of 56 basis points in the cost of
interest-bearing deposits. Interest on borrowed money amounted to $617,000 and
$281,000 during the three months ended September 30, 2000 and 1999,
respectively. The increase during the 2000 period resulted primarily from an
increase of $15.6 million or 74.9% in the average balance of borrowed money,
which was used to fund increased loan demand and securities purchases.
8
<PAGE>
PULASKI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
Comparison of Operating Results for the Three Months Ended September 30, 2000
and 1999 (Cont'd.)
Net interest income increased $299,000 or 19.2% to $1.9 million during the three
months ended September 30, 2000 when compared with $1.6 million during the same
1999 period. Such increase was due to an increase in total interest income of
$954,000, which was sufficient to offset an increase in total interest expense
of $655,000. The net interest rate spread increased to 2.65% in 2000 from 2.45%
in 1999. The increase in the interest rate spread in 2000 resulted from an
increase of 96 basis points in the yield earned on interest-earning assets,
which was more than sufficient to offset a 76 basis point increase in the cost
of interest-bearing liabilities.
During the three months ended September 30, 2000 and 1999, the Bank provided
$16,000 and $25,000, respectively, for loan losses. The allowance for loan
losses is based on management's evaluation of the risks inherent in the loan
portfolio and gives due consideration to changes in general market conditions
and in the nature and volume of the Bank's loan activity. The Bank intends to
continue to provide for loan losses based on its periodic review of the loan
portfolio and general market conditions. Management believes that, based on
information currently available, the allowance for loan losses is sufficient to
cover losses inherent in its loan portfolio at this time. However, no assurance
can be given that the level of the allowance for loan losses will be sufficient
to cover future possible loan losses incurred by the Bank or that future
adjustments to the allowance for loan losses will not be necessary if economic
and other conditions differ substantially from the economic and other conditions
used by management to determine the current level of the allowance for loan
losses. Management may in the future increase the level of the allowance for
loan losses as a percentage of total loans and non-performing loans in the event
it increases the level of commercial real estate, multifamily, or consumer
lending as a percentage of its total loan portfolio. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the allowance for loan losses. Such agencies may require the
Bank to provide additions to the allowance based upon judgments different from
management. At September 30, 2000 and 1999, the Bank's non-performing loans,
which were delinquent ninety days or more, totalled $487,000 or .20% of total
assets and $632,000 or .27% of total assets, respectively. At September 30, 2000
and 1999, all non-performing loans were on non-accrual status.
Non-interest income decreased by $351,000 to $99,000 during the three months
ended September 30, 2000 when compared to $450,000 during the same 1999 period.
During the three months ended September 30, 1999, the Bank sold its deposits of
$5.7 million held at its Harrison, New Jersey branch office at a gain of
$423,000. During the 2000 period this decrease was partially offset by increases
in fees and service charges of $2,000 and trading account income of $68,000.
During the three months ended September 30, 2000, the Bank sold $648,000 in
trading securities, resulting in realized gains of $33,000, and recorded
unrealized gains on trading securities of $1,000. During the three months ended
September 30, 1999, the Bank purchased $551,000 and did not sell any trading
account securities, however, an unrealized loss of $34,000 was recorded.
Non-interest expenses increased by $53,000, or 4.6%, to $1.2 million during the
three months ended September 30, 2000 when compared with $1.1 million during the
same 1999 period. During the 2000 period, increases in salaries and employee
benefits, occupancy, equipment, advertising and loss on foreclosed real estate
of $55,000, $12,000, $8,000, $17,000 and $3,000, respectively, were partially
offset by decreases in federal insurance premiums and miscellaneous expenses of
$16,000 and $25,000, respectively, when compared with the same 1999 period.
Income taxes totalled $270,000 and $306,000 during the three months ended
September 30, 2000 and 1999, respectively. The decrease during the 2000 period
resulted primarily from a decrease in pre-tax income.
9
<PAGE>
PULASKI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
Comparison of Operating Results for the Nine Months Ended September 30, 2000
and 1999
Net income increased $536,000 or 59.6% to $1.4 million for the nine months ended
September 30, 2000 compared with $899,000 for the same 1999 period. The increase
in net income during the 2000 period resulted from increases in total interest
income and non-interest income and a decrease in provision for loan losses which
were partially offset by increases in total interest expense, non-interest
expenses and income taxes.
Interest income on loans increased by $2.2 million or 33.9% to $8.8 million
during the nine months ended September 30, 2000 when compared with $6.6 million
during the same 1999 period. The increase during the 2000 period resulted from
an increase of 37 basis points in the yield earned on the loan portfolio along
with an increase of $31.2 million or 27.9% in the average balance of loans
outstanding. Interest on mortgage-backed securities increased $673,000 or 24.9%
to $3.4 million during the nine months ended September 30, 2000 when compared
with $2.7 million for the same 1999 period. The increase during the 2000 period
resulted from an increase in the average balance of mortgage-backed securities
outstanding of $3.7 million or 5.8%, along with an increase of 103 basis points
in the yield earned thereon. Interest earned on investment securities, including
available for sale and held to maturity issues, increased $97,000 or 18.5% to
$620,000 during the nine months ended September 30, 2000 when compared with
$523,000 for the same 1999 period. The increase during the 2000 period resulted
from a 60 basis point increase in the yield earned on such securities,
accompanied by an increase of $897,000 or 7.4% in the average balance of
investment securities outstanding. Interest earned on other interest-earning
assets decreased by $186,000 to $355,000 during the nine months ended September
30, 2000 when compared with $541,000 for the same 1999 period. The decrease
during the 2000 period resulted from a decrease of $4.8 million or 36.4% in the
average balance of other interest-earning assets outstanding, sufficient to
offset an increase of 17 basis points in the yield earned thereon.
Interest expense on deposits increased $164,000 or 2.9% to $5.8 million during
the nine months ended September 30, 2000 when compared to $5.7 million during
the same 1999 period. Such increase during the 2000 period was attributable to
an increase of $462,000 in the average balance of interest-bearing deposits
outstanding, along with an increase of 12 basis points in the cost of
interest-bearing deposits. Interest on borrowed money amounted to $1.9 million
and $298,000 during the nine months ended September 30, 2000 and 1999,
respectively. The increase during the 2000 period resulted primarily from an
increase of $31.7 million in the average balance of borrowed money, which was
used to fund increased loan demand and securities purchases.
Net interest income increased $1.1 million or 24.7% to $5.5 million during the
nine months ended September 30, 2000 when compared with $4.4 million during the
same 1999 period. Such increase was due to an increase in total interest income
of $2.8 million, which was sufficient to offset an increase in total interest
expense of $1.7 million. The net interest rate spread increased to 2.72% in 2000
from 2.44% in 1999. The increase in the interest rate spread in 2000 resulted
from an increase of 70 basis points in the yield earned on interest-earning
assets, which was more than sufficient to offset a 42 basis point increase in
the cost of interest-bearing liabilities.
During the nine months ended September 30, 2000 and 1999, the Bank provided
$66,000 and $86,000, respectively, for loan losses.
10
<PAGE>
PULASKI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
Comparison of Operating Results for the Nine Months Ended September 30, 2000 and
1999 (Cont'd.)
Non-interest income increased by $6,000 to $543,000 during the nine months ended
September 30, 2000 when compared to $537,000 during the same 1999 period. The
increase during the 2000 period resulted primarily from increases in fees and
service charges of $39,000, trading account income of $389,000 and miscellaneous
income of $2,000 sufficient to offset decreases in gain on sale of deposits of
$423,000 and gain on foreclosed real estate of $1,000. During the nine months
ended September 30, 2000, the Bank purchased $2.9 million and sold $4.3 million
in trading securities, resulting in realized gains of $133,000, and recorded
unrealized gains on trading account securities of $225,000. During the nine
months ended September 30, 1999, the Bank purchased $7.1 million and sold $4.3
in trading account securities resulting in realized gains of $41,000 offset by
recorded unrealized losses of $72,000. During the nine months ended September
30, 1999, the Bank sold its deposits of $5.7 million held at its Harrison, New
Jersey branch office at a gain of $423,000.
Non-interest expenses increased by $307,000, or 9.1%, to $3.7 million during the
nine months ended September 30, 2000 when compared with $3.4 million during the
same 1999 period. During the 2000 period, increases in salaries and employee
benefits, occupancy, equipment, advertising and loss on real estate owned of
$248,000, $106,000, $32,000, $6,000 and $6,000, respectively, were partially
offset by decreases in federal insurance premiums and miscellaneous expenses of
$49,000 and $43,000, respectively, when compared with the same 1999 period.
Income taxes totalled $846,000 and $573,000 during the nine months ended
September 30, 2000 and 1999, respectively. The increase during the 2000 period
resulted primarily from an increase in pre-tax income.
Liquidity and Capital Resources
The Bank is required to maintain minimum levels of liquid assets as defined by
the Office of Thrift Supervision (the "OTS") regulations. The requirement, which
the OTS may vary from time to time, depending upon economic conditions and
deposit flows, is based upon a percentage of deposits and short-term borrowings.
The required ratio currently is 4.0%. The Bank's liquidity was 23.33% at
September 30, 2000. The Bank adjusts its liquidity levels in order to meet
funding needs for deposit outflows, payment of real estate taxes from escrow
accounts on mortgage loans, repayment of borrowings, when applicable, and loan
funding commitments. The Bank also adjusts its liquidity level as appropriate to
meet its asset/liability objectives.
The Bank's primary sources of funds are deposits, amortization and prepayments
of loans and mortgage-backed securities principal, maturities of investment
securities and funds provided by operations. While scheduled loan and
mortgage-backed securities amortization and maturing term deposits and
investment securities are relatively predictable sources of funds, deposit flows
and loan and mortgage-backed securities prepayments are greatly influenced by
market interest rates, economic conditions and competition. The levels of these
assets are dependent on the operating, financing, lending and investing
activities during any given period. At September 30, 2000, interest-bearing
deposits, term deposits, federal funds sold and securities available for sale
totalled $10.2 million. The Bank has other sources of liquidity if a need for
additional funds arises, including advances from the FHLB. At September 30,
2000, advances from the FHLB amounted to $32.0 million.
11
<PAGE>
PULASKI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
Liquidity and Capital Resources (Cont'd.)
During the nine months ended September 30, 2000 and 1999, cash dividends paid on
common stock amounted to $203,000 and $230,000, respectively. The mutual holding
company waived its right to receive dividends. If the mutual holding company had
not waived its right to receive dividends, the amount of such dividends, during
the three and nine months ended September 30, 2000, would have been increased by
$89,000 and $268,000, respectively.
The Bank anticipates that it will have sufficient funds available to meet its
current loan commitments. At September 30, 2000, the Bank had outstanding
commitments to originate and purchase loans of $11.9 million and commitments to
fund unused credit lines and construction loans in process of $25.1 million.
Certificates of deposit scheduled to mature in one year or less at September 30,
2000, totalled $120.0 million. Management believes that, based upon its
experience and the Bank's deposit flow history, a significant portion of such
deposits will remain with the Bank.
Under OTS regulations, three separate measurements of capital adequacy (the
"Capital Rule") are required. The Capital Rule requires each savings institution
to maintain tangible capital equal to at least 1.5% and core capital equal to at
least 4.0% of its adjusted total assets. The Capital Rule further requires each
savings institution to maintain total capital equal to at least 8.0% of its
risk-weighted assets. The following table sets forth the Bank's capital position
at September 30, 2000 as compared to the minimum regulatory capital
requirements:
<TABLE>
<CAPTION>
Minimum Capital Prompt Corrective
Actual Requirements Actions Provisions
---------------------- -------------------- ----------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Total Capital
(to risk-weighted assets) $ 24,886 19.26% $ 10,335 8.00% $ 12,919 10.00%
Tier 1 Capital
(to risk-weighted assets) 23,743 18.38% - - 7,751 6.00%
Core (Tier 1) Capital
(to adjusted total assets) 23,743 9.61% 9,883 4.00% 12,354 5.00%
Tangible Capital
(to adjusted total assets) 23,743 9.61% 3,706 1.50% - -
</TABLE>
12
<PAGE>
PULASKI BANCORP, INC. AND SUBSIDIARY
PART II . OTHER INFORMATION
ITEM 1. Legal Proceedings
-----------------
None.
ITEM 2. Changes in Securities and Use of Proceeds
-----------------------------------------
None.
ITEM 3. Defaults Upon Senior Securities
-------------------------------
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
ITEM 5. Other Information
-----------------
None
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
3.1 Stock Charter of Pulaski Bancorp, Inc. *
3.2 Bylaws of Pulaski Bancorp, Inc. *
4.0 Form of Common Stock Certificate *
11.0 Computation of earnings per share
27.0 Financial Data Schedule
* Incorporated herein by reference into this document from the Exhibits
to the Current Report on Form 8-K, filed July 12, 1999.
(b) Reports on form 8-K:
None.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the issuer has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
PULASKI BANCORP, INC.
Date: November 13, 2000 By /S/ Thomas Bentkowski
----------------- ---------------------
Thomas Bentkowski
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 13, 2000 By: /S/ Lee Wagstaff
------------------ ---------------------
Lee Wagstaff
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
14
