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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended December 31, 2004

OR

For the transition period from              to             

0-24571

Commission File Number

Pulaski Financial Corp.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (314) 878-2210

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

Indicate the number of shares outstanding of the registrant’s classes of common stock, as of the latest practicable date.

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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

FORM 10-Q

DECEMBER 31, 2004

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PART I - FINANCIAL INFORMATION

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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2004 (UNAUDITED) AND SEPTEMBER 30, 2004

See accompanying notes to the unaudited consolidated financial statements.

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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003 (UNAUDITED)

See accompanying notes to the unaudited consolidated financial statements.

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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED DECEMBER 31, 2004 (UNAUDITED)

See accompanying notes to the unaudited consolidated financial statements.

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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THREE MONTHS

ENDED DECEMBER 31, 2004 (UNAUDITED) AND DECEMBER 31, 2003 (UNAUDITED)

(Continued)

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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THREE MONTHS ENDED

ENDED DECEMBER 31, 2004 (UNAUDITED) AND DECEMBER 31, 2003 (UNAUDITED)

See accompanying notes to the unaudited consolidated financial statements.

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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The unaudited consolidated financial statements include the accounts of Pulaski Financial Corp. (the “Company”) and its wholly owned subsidiary, Pulaski Bank (the “Bank”), and its wholly owned subsidiary, Pulaski Service Corporation. All significant intercompany accounts and transactions have been eliminated. The assets of the Company consist primarily of the investment in the outstanding shares of the Bank and its liabilities consist principally of subordinated debt. Accordingly, the information set forth in this report, including the consolidated financial statements and related financial data, relates primarily to the Bank. The Company, through the Bank, operates as a single business segment, providing traditional community banking services through its full service branch network.

In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial condition of the Company as of December 31, 2004 and September 30, 2004 and its results of operations for the three-month period ended December 31, 2004 and 2003. The results of operations for the period ended December 31, 2004, are not necessarily indicative of the operating results that may be expected for the entire fiscal year. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended September 30, 2004 contained in the Company’s 2004 Annual Report to Stockholders, which was filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended September 30, 2004.

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements that affect the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The allowance for loan losses and fair values of financial instruments are significant estimates reported within the consolidated financial statements.

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Under the treasury stock method, outstanding stock options are dilutive when the average market price of the Company’s common stock exceeds the option price during a period. In addition, proceeds from the assumed exercise of dilutive options along with the related tax benefit are assumed to be used to repurchase common shares at the average market price of such stock during the period. Anti-dilutive shares are those option shares with exercise prices in excess of the current market value.

In December 2002, the Financial Accounting Standards Board “FASB” issued Statement of Financial Accounting Standards “SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure SFAS 148”, which provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 requires disclosures in the interim as well as annual financial statements about the method of accounting used for stock-based employee compensation and the effect of the method on net income. The Company has elected to continue to account for stock-based employee compensation under APB Opinion No. 25 until the expected implementation date of “SFAS No.123 (Revised 2004), Share-Based Payment”, which is effective for public companies for interim and annual periods beginning after June 15, 2005. Accordingly, no stock-based employee compensation cost related to options granted is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. The financial statements for three months ending September 30, 2005 are expected to reflect stock-based employee compensation costs of option grants in the consolidated statement of income and comprehensive income.

The following table shows pro forma compensation expense, net income and earnings per share as if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation.

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On December 15, 2004, Pulaski Financial Statutory Trust II, a Delaware statutory trust, issued $10.0 million adjustable-rate preferred securities. The proceeds from this issuance, along with the Company’s $310,000 capital contribution for the Trust’s common securities, were used to acquire $10.3 million of the Company’s floating rate junior subordinated deferrable interest debentures due 2034 (the “Debentures”), which constitute the sole asset of the Trust. The interest rate on the Debentures and the capital securities is variable and adjustable quarterly at 1.86% over the three-month LIBOR, with an initial rate of 4.31%. The current rate is 4.31%.

The stated maturity of the Debentures is December 15, 2034. In addition, the Debentures are subject to redemption at par at the option of the Company, subject to prior regulatory approval, in whole or in part on any interest payment date on or after December 15, 2009.

Certain reclassifications have been made to 2003 amounts to conform to the 2004 presentation.

* * * * * *

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts, rather they are statements based on the Company’s current expectations regarding its business strategies, intended results and future performance. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions.

Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause the Company’s actual results, performance and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, general economic conditions, including changes in market interest rates and changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; changes in accounting principles and guidelines; competition, demand for loan products; deposit flows; and other factors disclosed periodically in the Company’s filings with the Securities and Exchange Commission.

Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue reliance on them, whether included in this report or made elsewhere from time to time by the Company or on its behalf. Except as required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.

OVERVIEW

Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements and accompanying notes thereto.

The profitability of the Company is largely dependent on the net interest income generated by its subsidiary bank. The Company’s business strategy is focused on maximizing net interest income of the Bank through growth and improved efficiency of five core products, which includes two deposit products, checking and money market accounts, and three loan products, commercial, home equity and residential loans. These five products provide the primary source of the Bank’s operating income and are the focus of the Company’s growth in the consolidated balance sheet. Driving these relationships are more than 47 seasoned residential and commercial lenders in the Company’s two market locations, St. Louis and Kansas City, which include seven branch locations and two loan production offices. During the three months ended December 31, 2004, each of these products made important contributions resulting in record earnings for the quarter of $1.9 million, or $0.33 per diluted share, compared to $1.4 million, or $0.24 per diluted share, for the quarter ended December 31, 2003. During the quarter ended December 31, 2004, the Company had annualized returns on equity and assets of 18.04% and 1.16%, respectively, compared to annualized returns on equity and assets for the quarter ended December 31, 2003 of 15.08% and 1.36%, respectively. Total assets of the Company grew 8.5% to $692.0 million at December 31, 2004 compared to $637.9 million at September 30, 2004.

Total assets increased due to growth in the retained loan portfolio, which increased $43.2 million during the three months ended December 31, 2004. Commercial and home equity loans grew $23.3 million and $13.7 million, respectively. At December 31, 2004, the $553.8 million loan portfolio, net of allowance for loan

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losses, consisted of $237.5 million of residential loans, $171.9 million of home equity loans and $131.1 million of commercial loan balances. Of the commercial balances, $26.9 million were commercial and industrial loans.

Due to the growth in the portfolio, net interest income increased 46.9% to $5.1 million for the quarter ended December 31, 2004 compared to $3.5 million for the same period a year ago. The net interest margin declined from 3.44% for the quarter ended September 30, 2004 to 3.31% for the quarter ended December 31, 2004 due to asset growth outpacing core deposit growth, resulting in higher wholesale funding dependence. With approximately two-thirds of the Company’s assets and liabilities set to reprice within one year, the Company’s interest rate risk profile is low.

The increase in net income also reflected the contribution of two new divisions, Pulaski Title Company (Title Company) and Pulaski Investment Division (Investment Division). The companies reported $159,000 and $139,000 in revenue, respectively. After expenses, the Title Division contributed $52,000 in pre-tax income while the Investment Division broke even. The Title Company completed its seventh month of operations and the Investment Division it’s second as of December 31, 2004. Both divisions are expected to make increasing contributions through the remaining fiscal year.

RECENT EVENTS

On January 27, 2005, at the annual shareholder meeting of the Company, the shareholders elected the following board members to three year terms ending in 2008: William A. Donius, 46, the Company’s President, Chief Executive and Chairman since 1997, Robert A. Ebel, 73, Chairman of the Board of Universal Printing Co., a commercial printer in St. Louis, Mo. and director of the Company since 1979, and Leon A. Felman, 69, managing partner of Felman Family Partnership, LP, director of Dynex Capital, Inc. and director of the Company since 2004. At the same meeting, the shareholders elected Lee S. Wielansky, 53, Chairman and Chief Executive Officer of Midland Development Group, Inc. and director of Acadia Realty, to a one year term ending in 2006.

MANAGEMENT’S DISCUSSION ON CORE BUSINESS STRATEGY

The Company’s retained loan portfolio, net of allowance for loan losses increased $43.2 million, or 8.5% to $553.8 million at December 31, 2004 from $510.6 million at September 30, 2004. The Company’s strong commitment to its three core lending products, commercial, home equity lines of credit and residential mortgage loans, resulted in a growth in the average balance of loans of $228.3 million to $585.6 million for the three months ended December 31, 2004 compared to three months ended December 31, 2003.

Due to the significant growth in retained loans, net interest income increased 46.9% to $5.1 million for the quarter ended December 31, 2004 compared to $3.5 million for the same period a year ago. The net interest margin declined from 3.44% for the quarter ended September 30, 2004 to 3.31% for the three months ended December 31, 2004 and declined from a net interest margin of 3.67% for the quarter ended December 31, 2003. With approximately two-thirds of the Company’s assets and liabilities set to reprice within one year, the Company’s interest rate risk profile is low. The decline in the net interest margin was due to several factors, including most notably the rapid growth in the loan portfolio that has significantly outpaced the company’s growth of low cost core deposits, resulting in increased wholesale funding reliance. At December 31, 2004, the Company had $132.6 million of brokered deposits, $165.8 million of FHLB advances and $19.6 million of subordinated debt, compared to $26.1 million in brokered deposits, $84.5 million in FHLB advances and $0 of subordinated debt at December 31, 2003. In addition, the Company has been impacted by changes in the yield curve as longer term rates such as the 30 year, 15 year and 5 year mortgage rates have been largely unchanged during the year, yet short term borrowing costs have increased by 125 basis points

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and are expected to continue rising. Finally, the Company’s growing home equity portfolio, which totaled $171.9 million at December 31, 2004, has typically repriced three weeks or more behind the Company’s cost of funds. The Company’s cost of funds reprice daily instead of monthly like the HELOC portfolio and are more susceptible to market speculations of rising rates than the home equity portfolio, which floats on the national prime rates published on the first of each month in the Wall Street Journal.

Commercial real estate and commercial and industrial (“C&I”) loans increased $25.8 million to $131.1 million at December 31, 2004 compared to $105.3 million at September 30, 2004. The commercial portfolio consists of $67.6 million of commercial real estate, $26.9 million of commercial and industrial, $20.7 million of residential (multi-family and development) and $15.1 million in construction and development. The commercial loan growth over the next three years has been targeted to be about 70% commercial real estate and 30% C&I. At December 31, 2004, the Company had $21.5 million in commercial demand deposit accounts. The Company has one substandard residential construction loan to a commercial borrower in the amount of $429,000 and had an allowance for loan losses of $1.3 million allocated to the commercial portfolio. The Company has no charge-off history with its commercial loan portfolio.

Home equity lines of credit remain the most consistent growing interest-earning assets within the Company. The equity line balances increased $13.7 million to $171.9 million at December 31, 2004 compared to $158.3 million at September 30, 2004. Home equity loans are approved for qualified borrowers in conjunction with the first mortgage loan applications. The large volume of mortgage loans originated in recent years has provided many opportunities to cross-sell this product to customers. As a prime-based asset, home equity lines carry low interest rate risk characteristics and attractive yields, lending stability to the Company’s net interest margin. At December 31, 2004, the Bank had $278,000 of non-performing home equity loans or 0.16% of the home equity portfolio and had zero charge-offs during the three months ended December 31, 2004.

Permanent and construction residential loan balances increased $4.0 million to $237.5 million at December 31, 2004 compared to $233.5 million at September 30, 2004. As a large volume mortgage lender, the Bank has the opportunity to carefully select loans to retain for portfolio. Typically, loans originated for portfolio mature or reprice within three years and carry higher credit risk and interest rate yields than residential loans that are originated for sale. At December 31, 2004, the balance of residential non-performing assets was $5.1 million, including $1.1 million of real estate owned by the Bank. The real estate owned by the Bank consists primarily of two residential properties that are currently under contract and are expected to be sold without any significant losses. The Company has government guarantees on $1.0 million of the $4.0 million of non-performing residential loans. In part due to the historically strong collateral of the residential loan portfolio, the Company has absorbed few losses with this product, including just $16,000 during the three months ended December 31, 2004 and $73,000 for the fiscal year ended September 30, 2004. In the Midwest region of the United States, residential properties have not experienced any significant price declines over the last 10 years. In an economic environment that resulted in declining residential values, the Company would be at increased risk of credit losses from non-performing loans.

Residential mortgage loans originated and sold to investors on a servicing released basis are the Company’s largest source of non-interest income and are the primary component of mortgage revenue. Mortgage revenue for the quarter ended December 31, 2004 declined $34,000 to $1.1 million from $1.2 million for the quarter ended December 31, 2003 on $209.9 million and $195.7 million of sales, respectively. Offsetting growth in the retained portfolio, the average balance of mortgage loans held for sale declined $15.2 million to $43.7 million for the quarter ended December 31, 2004 compared to the same period a year ago. The flattening of the yield curve has impacted the Company most notably on the net spread income the Company realizes on loans held for sale, where the Company has experienced a 117 basis point decline on the average balance of loans held for sale. The Company funds loans held for sale with overnight and short term advances because the loans are typically sold within 30 days of origination. The average balance of loans held for sale totaled

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$43.7 million for the quarter ended December 31, 2004 and had a spread of 3.00% over the average FHLB of Des Moines overnight rates compared to an average balance of $58.6 and a spread of 4.17% over the FHLB of Des Moines overnight rates for the quarter ended December 31, 2003.

Total liabilities increased $51.9 million to $648.8 million at December 31, 2004 compared to $596.9 million at September 30, 2004. The Company’s strategic focus on growing core liability products centers on checking account and money market deposit growth. For the three months ended December 31, 2004, demand deposit accounts have increased just $3.0 million to a balance of $168.2 million. Due to aggressive pricing by national and community banks in the St. Louis market, deposit growth has slowed significantly as the Company has continued to follow internal pricing disciplines, leaving the Company to rely on increased wholesale funding sources such as FHLB advances and brokered CDs.

The balance of checking accounts increased $465,000 to $51.9 million at December 31, 2004 from $51.5 million at September 30, 2004. Checking accounts are the lowest cost deposits for the Company and are also the primary source of retail banking revenue. Retail banking revenue increased $89,000 to $619,000 for the quarter ended December 31, 2004 compared to $530,000 for the same period ended December 31, 2003. Retail banking revenue increased 16.8% despite an increase of just 5.7% in the number of checking accounts, which went from 13,800 at December 31, 2003 to 14,600 accounts at December 31, 2004. The revenue during the quarter increased primarily because of an increase in frequency of checking overdrafts from existing customers. For three months ended December 31, 2004, the Company honored $19.3 million of overdraft checks compared to $15.4 million for three months ended December 31, 2003.

The balance of money market accounts increased $3.2 million to $83.2 million at December 31, 2004 from $80.0 million at September 30, 2004. The Company is in its fifth year of pursuing money market accounts as a core product and its third year of successfully marketing the “Big Bertha Money Market Account”. The product carries similar interest rate characteristics as the Company’s home equity loans and results in an ideal source of funds for the growth of this line of credit portfolio. Money market accounts are generally less interest rate sensitive and more stable than CD balances. The market became very competitive in money market accounts during the quarter, as one of the bank’s competitors made aggressive marketing efforts to capture this market, offering six- month special rates more than 75 basis points over fed funds rates. The Company has stayed disciplined in its pricing and has seen slower growth, but has not experienced significant runoff. Many bank managers have become very aggressive in pricing short-term deposits as they anticipate increases in the rate environment.

AVERAGE BALANCE SHEET

The following table sets forth information regarding average daily balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin, and ratio of average interest-earning assets to average interest-bearing liabilities for the periods indicated.

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ADDITIONAL DISCUSSION ON FINANCIAL CONDITION

Cash and cash equivalents decreased $102,000 from $20.3 million at September 30, 2004 to $20.2 million at December 31, 2004. Cash balance change daily based upon funds distributed on loan closings, cash receipts from investors on sale of loans and changes in deposits from customers. Typically excess cash inflows are used to retire daily borrowings from the Federal Home Loan Bank.

The balance of Federal Home Loan Bank advances increased $11.2 million during the quarter ended December 31, 2004 and totaled $165.8 million. The increase in advances was used to fund loan growth.

Subordinated debt balances increased $10.3 million during quarter ended December 31, 2004. On December 15, 2004, Pulaski Financial Statutory Trust II, a Delaware statutory trust, issued $10.0 million adjustable-rate preferred securities. The proceeds from this issuance, along with the Company’s $310,000 capital contribution for the Trust’s common securities, were used to acquire $10.3 million of the Company’s floating rate junior subordinated deferrable interest debentures due 2034 (the “Debentures”), which constitute the sole asset of the Trust. The interest rate on the Debentures and the capital securities is variable and adjustable quarterly at 1.86% over the three-month LIBOR, with an initial rate of 4.31%. The current rate is 4.31%.

Balances due to other banks decreased $9.1 million to $5.4 million at December 31, 2004 compared to $14.5 million at September 30, 2004. Due to other banks is the balance of checks drawn on a correspondent Bank’s checking account. On a daily basis, the Company settles with the correspondent bank. The balances primarily represent the checks issued to fund loans on the final business day of the month.

Total stockholders’ equity at December 31, 2004 was $43.2 million, an increase of $2.2 million from $41.0 million at September 30, 2004. The increase was primarily attributable to net income for the three months of $1.9 million. Also contributing to growth in equity during the quarter was $373,000 from stock option exercises, $341,000 from release of shares from the ESOP and $44,000 from amortization of management recognition and development shares. Offsetting the increase in stockholders’ equity was the payment of dividends of $494,000.

NON-PERFORMING ASSETS AND DELINQUENCIES

Total non-performing assets increased $617,000 from $5.3 million at September 30, 2004 to $6.0 million at December 31, 2004. The balance of non-accrual loans increased from $529,000 to $1.1 million as several large residential loans were placed on non-accrual, offset by accruing loans greater than 90 days past due decreasing $122,000 to $3.6 million during the quarter ended December 31, 2004. The allowance for loan losses was $5.8 million at December 31, 2004, or 0.95% of total loans and 119.63% of non-performing loans (non-accrual, accruing past due 90 days or more and troubled debt restructured loans), compared to $5.6 million at September 30, 2004, or 0.99% of total loans and 130.63% of non-performing loans.

PROVISION FOR LOAN LOSSES

The provision for loan losses was $349,000 for the three-month period ended December 31, 2004 compared to $264,000 for the three-month period ended December 31, 2003. The increase in the provision for loan losses during the quarter was due primarily to the addition of a higher balance of commercial, home equity and lower credit quality residential loans, which carry a higher level of risk than the portfolio that existed at December 31, 2003.

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The provision for loan losses is determined by management as the amount to bring the allowance for loan losses to a level that is considered adequate to absorb losses inherent in the loan portfolio. The allowance for loan losses is a critical accounting estimate reported within the consolidated financial statements. The allowance is based upon quarterly management estimates of expected losses inherent in the loan portfolio. Management estimates are determined by quantifying certain risks in the portfolio that are affected primarily by changes in the nature and volume of the portfolio combined with an analysis of past-due and classified loans, but can also be affected by the following factors: changes in lending policies and procedures, including underwriting standards and collections, charge-off and recovery practices, changes in national and local economic conditions and developments, and changes in the experience, ability, and depth of lending management staff.

Because management adheres to specific loan underwriting guidelines focusing primarily on residential and commercial real estate and home equity loans secured by one-to four-family and commercial properties, the Bank’s five-year historical loan loss experience has been low at $185,000. While the losses have increased slightly over the last five years, the balance of the allowance has increased dramatically, almost doubling in the last two fiscal years. The growth in allowance for loan losses is due to growth in the loan portfolio as well as loan product diversification. The Company was historically a lender of only 1-4 family conforming residential loans. Today the Company has expanded its loan portfolio to include higher risk home equity, commercial and construction loans. Because the Company’s loan portfolio is typically collateralized by real properties, losses occur more frequently when property values are declining and borrowers are losing equity in the Company’s collateral. At present, the property values in the Company’s lending areas have been stable and appreciating.

The following table is a summary of our loan loss experience for the periods indicated:

The following assessments are performed quarterly in accordance with the Company’s allowance for loan losses methodology:

Homogeneous residential mortgage loans are given one of five standard risk ratings at the time of origination. The risk ratings are assigned through the use of a credit scoring model, which assesses credit risk determinants from the borrower’s credit history, the loan-to-value ratio, the affordability ratios or other personal history. Five-year historical loss rates and industry data for each credit rating are used to determine the appropriate allocation percentage for each loan grade. Commercial real estate, consumer and home equity loans are assigned standard risk weightings that determine the allocation percentage.

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When commercial real estate loans are over 30 days delinquent or residential, consumer and home equity loans are over 90 days past due, they are evaluated individually for impairment. Additionally, loans that demonstrate credit weaknesses that may impact the borrower’s ability to repay or the value of the collateral are also reviewed individually for impairment. The Company considers a loan to be impaired when management believes it will be unable to collect all principal and interest due according to the contractual terms of the loan. If a loan is impaired, the Company records a loss valuation equal to the excess of the loan’s carrying value over the present value of estimated future cash flows or the fair value of collateral if the loan is collateral dependent.

The Company’s methodology includes factors that allow the Company to adjust its estimates of losses based on the most recent information available. Historic loss rates used to determine allowance provisions are adjusted to reflect the impact of current conditions, including actual collection and charge-off experience.

DISCUSSION OF OTHER INCOME AND EXPENSE FROM OPERATIONS FOR THREE MONTHS ENDED DECEMBER 31, 2004

Title policy revenues totaled $159,000 for the three months ended December 31, 2004. The Title Company, which operates as a division of Pulaski Bank, has completed its seventh month of operation as of December 31, 2004, and contributed $52,000 in pre-tax income. The Title Company’s operations consist primarily of selling title policies to the Bank’s residential and commercial customers in connection with the origination of their real estate loans.

Investment division revenues totaled $139,000 for the three months ended December 31, 2004. After expenses, the Investment Division generated a net loss of ($1,000) after beginning operations in November of 2004. The Investment Division operations consist principally of brokering bonds from wholesale brokerage houses to bank, municipal and individual investors. Revenues are generated on trading spreads.

Profit on sale of securities was $0 during the quarter ended December 31, 2004 compared to $280,000 during the quarter ended December 31, 2003. The gain for the quarter ended December 31, 2003 was the result of the sale of thrift equity securities held by the Company. Proceeds of the sale were reinvested in other bank equity securities.

Other income increased $37,000 to $244,000 for the three-month period ending December 31, 2004 compared to the three-month period ending December 31, 2003. Other income consists primarily of changes in value from the Bank Owned Life Insurance, fee income from a correspondent bank and lease income from tenants.

Salaries and employee benefits expense increased $608,000 to $2.1 million for the three-month period ended December 31, 2004 from $1.5 million for the three-month period ended December 31, 2003. Salaries increased due to higher ordinary salary expense and increased expense associated with the ESOP. In the 12 months following December 31, 2003, the Company has added 22 people due to growth in the commercial department, the establishment of the Investment and Title Company divisions and growth of back office personnel. In addition, the Company had $341,000 of ESOP expense for the quarter ended December 31, 2004 compared to none during the quarter ended December 31, 2003. The Company elected not to release any unallocated ESOP shares during the quarter ended December 31, 2003 because the Company had made significant prepayments in the ESOP debt earlier in the year. For the quarter ended December 31, 2004, the Company released an additional 10,000 shares on top of the 7,758 shares required to be released under the plan. The shares were released at a cost to the Company of $19.20 per share.

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Occupancy and equipment related expenses increased $38,000 to $936,000 during the three-month period ended December 31, 2004 compared to the three-month period ended December 31, 2003.

Other expenses increased $179,000 to $655,000 during the three-month period ended December 31, 2004 compared to the three-month period ended December 31, 2003. Other expense increased due to higher charitable contributions, underwriting expense, utilities, servicing claims and loss provisions on other real estate owned.

INCOME TAXES

The provision for income taxes was $1.2 million for the three-month period ended December 31, 2004 compared to $837,000 for the three-month period ended December 31, 2003. The effective tax rates for the three-month periods were 38.5% and 37.3%, respectively. The tax rate increased for the three month period ending December 31, 2004 because of the Company’s added expense for the release of shares from the ESOP. The Company realizes expense at the average fair market price of the shares of stock during the quarter, but the Company tax benefits for the ESOP expense is based on the Company’s historic basis in the shares. The fair market price of the shares during the quarter was $19.20 per share, but the Company’s historic basis in the stock was $5.00 per share.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2004, the Bank had outstanding commitments to originate loans of $118.4 million and commitments to sell loans on a best efforts basis of $109.7 million. At the same date, certificates of deposit that are scheduled to mature in one year or less totaled $206.4 million. Based on past experience, management believes the majority of maturing certificates of deposit will remain with the Bank.

If the Bank or the Company requires funds beyond its ability to generate them internally, the Bank has the ability to borrow funds for the FHLB under a blanket agreement which assigns all investments in FHLB stock, qualifying first residential mortgage loans, residential loans held for sale and home equity loans with a 90% or greater LTV as collateral to secure the amounts borrowed. Total borrowings from the Federal Home Loan Bank are subject to limitations based upon a risk assessment of the Bank, which currently allows for a line of credit equal to 40% of the Bank’s assets. At December 31, 2004, the Bank had approximately $275.4 million in available borrowing authority under the above-mentioned arrangement, $165.8 million of which had been borrowed in advances from the FHLB. The Company also maintains a $12 million line of credit with a correspondent bank.

SOURCES AND USES OF CASH