##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2006

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

0-24571

Commission File Number



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Pulaski Financial Corp.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Missouri                                                       |  | 43-1816913                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



|                                          |  |           
|----------------------------------------- |  | ----------
|12300 Olive Boulevard St. Louis, Missouri |  | 63141-6434
|(Address of principal executive office)   |  | (Zip Code)

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

Not Applicable

(Former name,
address and former fiscal year, if changed since last report)



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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 a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer
and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer ̈Accelerated filer  x    Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act)     Yes ̈No  x

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



|                                       |  |                              
|-------------------------------------- |  | -----------------------------
|Class                                  |  | Outstanding at August 8, 2006
|Common Stock, par value $.01 per share |  | 9,896,444 shares             



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##### Table of Contents

PULASKI FINANCIAL CORP. AND SUBSIDIARIES

FORM 10-Q

JUNE 30, 2006

TABLE OF CONTENTS



|         |  |                                                                                                                                   |  |     
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                                                  
|         |  |                                                                                                                                   |  | Page
|PART I   |  | FINANCIAL INFORMATION                                                                                                             |  |     
|         |  |                                                                                                                                  
|Item 1.  |  | Financial Statements                                                                                                              |  |     
|         |  |                                                                                                                                  
|         |  | Consolidated Balance Sheets at June 30, 2006 (Unaudited) and September 30, 2005                                                   |  | 1   
|         |  |                                                                                                                                  
|         |  | Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended June 30, 2006 and 2005 (Unaudited) |  | 2   
|         |  |                                                                                                                                  
|         |  | Consolidated Statement of Stockholders Equity for the Nine Months Ended June 30, 2006 (Unaudited)                                |  | 3   
|         |  |                                                                                                                                  
|         |  | Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2006 and 2005 (Unaudited)                                |  | 4   
|         |  |                                                                                                                                  
|         |  | Notes to Unaudited Consolidated Financial Statements (Unaudited)                                                                  |  | 6   
|         |  |                                                                                                                                  
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                             |  | 13  
|         |  |                                                                                                                                  
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                                                                        |  | 26  
|         |  |                                                                                                                                  
|Item 4.  |  | Controls and Procedures                                                                                                           |  | 27  
|         |  |                                                                                                                                  
|PART II  |  | OTHER INFORMATION                                                                                                                 |  |     
|         |  |                                                                                                                                  
|Item 1.  |  | Legal Proceedings                                                                                                                 |  | 29  
|         |  |                                                                                                                                  
|Item 1A. |  | Risk Factors                                                                                                                      |  | 29  
|         |  |                                                                                                                                  
|Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                       |  | 29  
|         |  |                                                                                                                                  
|Item 3.  |  | Defaults Upon Senior Securities                                                                                                   |  | 30  
|         |  |                                                                                                                                  
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                                               |  | 30  
|         |  |                                                                                                                                  
|Item 5.  |  | Other Information                                                                                                                 |  | 30  
|         |  |                                                                                                                                  
|Item 6.  |  | Exhibits                                                                                                                          |  | 30  
|         |  |                                                                                                                                  
|         |  | Signatures                                                                                                                        |  |     



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##### Table of Contents

PART I - FINANCIAL INFORMATION

PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2006 (UNAUDITED) AND SEPTEMBER 30, 2005



|                                                                                                                                                                     |  |               |             |   |                   |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                                                                     |  | June 30, 2006 |             |   | September 30,2005 |  
|ASSETS                                                                                                                                                               |  |               |             |   |                   |   |             |  
|Cash and amounts due from depository institutions                                                                                                                    |  | $             | 19,072,081  |   |                   | $ | 16,558,213  |  
|Federal funds sold and overnight deposit                                                                                                                             |  |               | 1,549,249   |   |                   |   | 9,130,273   |  
|                                                                                                                                                                     |  |               |             |   |                   |   |             |  
|Total cash and cash equivalents                                                                                                                                      |  |               | 20,621,330  |   |                   |   | 25,688,486  |  
|Interest-bearing time deposits in other banks                                                                                                                        |  |               | 1,881,000   |   |                   |   |            |  
|Equity securities available for sale, at fair value                                                                                                                  |  |               | 4,521,971   |   |                   |   | 4,251,844   |  
|Debt securities held to maturity, at amortized cost (fair value, $9,339,991 and $5,992,136 at June 30, 2006 and September 30, 2005,
respectively)                    |  |               | 9,435,015   |   |                   |   | 5,976,550   |  
|Mortgage-backed and related securities held to maturity, at amortized cost (fair value, $496,474 and $699,453 at June 30, 2006 and
September 30, 2005, respectively) |  |               | 468,993     |   |                   |   | 650,321     |  
|Mortgage-backed securities available for sale, at fair value                                                                                                         |  |               | 3,373,817   |   |                   |   | 4,182,371   |  
|Capital stock of Federal Home Loan Bank - at cost                                                                                                                    |  |               | 9,426,000   |   |                   |   | 8,462,400   |  
|Loans receivable held for sale, at lower of cost or market                                                                                                           |  |               | 76,334,887  |   |                   |   | 64,334,775  |  
|Loans receivable, net of allowance for loan losses of $7,634,966 and $6,805,958 at June 30, 2006 and September 30, 2005,
respectively                                |  |               | 749,733,595 |   |                   |   | 633,195,325 |  
|Real estate acquired in settlement of loans, net of allowance for losses of $44,272 and $64,833 at June 30, 2006 and September 30,
2005, respectively                |  |               | 3,081,575   |   |                   |   | 754,196     |  
|Premises and equipment - net                                                                                                                                         |  |               | 17,576,442  |   |                   |   | 13,659,637  |  
|Bank owned life insurance                                                                                                                                            |  |               | 23,196,348  |   |                   |   | 15,646,949  |  
|Assets held for sale                                                                                                                                                 |  |               |            |   |                   |   | 1,017,347   |  
|Accrued interest receivable                                                                                                                                          |  |               | 5,139,948   |   |                   |   | 4,272,078   |  
|Goodwill                                                                                                                                                             |  |               | 3,938,524   |   |                   |   |            |  
|Core deposit intangible                                                                                                                                              |  |               | 683,101     |   |                   |   |            |  
|Other assets                                                                                                                                                         |  |               | 9,475,227   |   |                   |   | 7,768,959   |  
|                                                                                                                                                                     |  |               |             |   |                   |   |             |  
|TOTAL ASSETS                                                                                                                                                         |  | $             | 938,887,773 |   |                   | $ | 789,861,238 |  
|                                                                                                                                                                     |  |               |             |   |                   |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                 |  |               |             |   |                   |   |             |  
|LIABILITIES:                                                                                                                                                         |  |               |             |   |                   |   |             |  
|Deposits                                                                                                                                                             |  | $             | 623,784,983 |   |                   | $ | 496,171,066 |  
|Deposit liabilities held for sale                                                                                                                                    |  |               |            |   |                   |   | 25,375,086  |  
|Advances from Federal Home Loan Bank                                                                                                                                 |  |               | 188,500,000 |   |                   |   | 171,000,000 |  
|Note payable                                                                                                                                                         |  |               | 3,405,000   |   |                   |   | 3,575,000   |  
|Subordinated debentures                                                                                                                                              |  |               | 19,589,000  |   |                   |   | 19,589,000  |  
|Advance payments by borrowers for taxes and insurance                                                                                                                |  |               | 2,329,985   |   |                   |   | 2,739,693   |  
|Accrued interest payable                                                                                                                                             |  |               | 1,383,969   |   |                   |   | 1,028,021   |  
|Dividends payable                                                                                                                                                    |  |               | 840,241     |   |                   |   | 675,133     |  
|Due to other banks                                                                                                                                                   |  |               | 15,533,228  |   |                   |   | 13,635,612  |  
|Other liabilities                                                                                                                                                    |  |               | 9,786,594   |   |                   |   | 7,826,163   |  
|                                                                                                                                                                     |  |               |             |   |                   |   |             |  
|Total liabilities                                                                                                                                                    |  |               | 865,153,000 |   |                   |   | 741,614,774 |  
|                                                                                                                                                                     |  |               |             |   |                   |   |             |  
|STOCKHOLDERS EQUITY:                                                                                                                                                |  |               |             |   |                   |   |             |  
|Preferred stock - $.01 par value per share, authorized 1,000,000 shares; none issued or outstanding                                                                  |  |               |            |   |                   |   |            |  
|Common stock - $.01 par value per share, authorized 18,000,000 shares; 13,287,141 and 11,918,619 shares issued at June 30, 2006 and
September 30, 2005, respectively |  |               | 132,848     |   |                   |   | 119,187     |  
|Treasury stock - at cost (3,407,220 and 3,479,455 shares at June 30, 2006 and September 30, 2005, respectively)                                                      |  |               | (16,228,009 | ) |                   |   | (17,229,150 | )
|Treasury stock - equity trust - at cost (255,053 and 429,321 shares at June 30, 2006 and September 30, 2005,
respectively)                                           |  |               | (1,775,221  | ) |                   |   | (3,896,503  | )
|Additional paid-in capital                                                                                                                                           |  |               | 48,667,146  |   |                   |   | 31,287,248  |  
|Unearned restricted shares                                                                                                                                           |  |               |            |   |                   |   | (81,350     | )
|Accumulated other comprehensive loss                                                                                                                                 |  |               | (45,369     | ) |                   |   | (23,129     | )
|Retained earnings                                                                                                                                                    |  |               | 42,983,378  |   |                   |   | 38,070,161  |  
|                                                                                                                                                                     |  |               |             |   |                   |   |             |  
|Total stockholders equity                                                                                                                                           |  |               | 73,734,773  |   |                   |   | 48,246,464  |  
|                                                                                                                                                                     |  |               |             |   |                   |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                           |  | $             | 938,887,773 |   |                   | $ | 789,861,238 |  
|                                                                                                                                                                     |  |               |             |   |                   |   |             |  

See accompanying notes to the unaudited consolidated financial statements.



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##### Table of Contents

PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

THREE AND NINE MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)



|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|--------------------------------------------------- |  | --------------------------- | ---------- | - | -------------------------- | - | --------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                    |  | Three Months Ended June 30, |            |   | Nine Months Ended June 30, |  
|                                                    |  | 2006                        |            |   | 2005                       |   |           | 2006 |  |   | 2005       |  
|                                                    |  |                             |            |   | (Restated)                 |   |           |      |  |   | (Restated) |  
|INTEREST INCOME:                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Loans receivable                                    |  | $                           | 13,943,895 |   |                            | $ | 9,532,175 |      |  | $ | 37,282,855 |   |  | $ | 26,075,234 |  
|Debt and equity securities                          |  |                             | 116,141    |   |                            |   | 43,356    |      |  |   | 353,230    |   |  |   | 142,965    |  
|Mortgage-backed securities                          |  |                             | 48,179     |   |                            |   | 65,948    |      |  |   | 157,378    |   |  |   | 213,540    |  
|Capital stock of the Federal Home Loan Bank         |  |                             | 88,229     |   |                            |   | 84,877    |      |  |   | 220,751    |   |  |   | 206,631    |  
|Other                                               |  |                             | 62,378     |   |                            |   | 48,412    |      |  |   | 175,439    |   |  |   | 107,946    |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Total interest income                               |  |                             | 14,258,822 |   |                            |   | 9,774,768 |      |  |   | 38,189,653 |   |  |   | 26,746,316 |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|INTEREST EXPENSE:                                   |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Deposits                                            |  |                             | 5,174,345  |   |                            |   | 2,768,272 |      |  |   | 13,452,550 |   |  |   | 6,825,478  |  
|Advances from Federal Home Loan Bank                |  |                             | 2,016,338  |   |                            |   | 1,446,884 |      |  |   | 5,410,961  |   |  |   | 3,689,723  |  
|Subordinated debentures                             |  |                             | 358,557    |   |                            |   | 264,558   |      |  |   | 1,007,715  |   |  |   | 631,807    |  
|Note payable                                        |  |                             | 62,188     |   |                            |   | 45,719    |      |  |   | 174,139    |   |  |   | 126,208    |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Total interest expense                              |  |                             | 7,611,428  |   |                            |   | 4,525,433 |      |  |   | 20,045,365 |   |  |   | 11,273,216 |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|NET INTEREST INCOME                                 |  |                             | 6,647,394  |   |                            |   | 5,249,335 |      |  |   | 18,144,288 |   |  |   | 15,473,100 |  
|                                                    |  |                             |            |  
|PROVISION FOR LOAN LOSSES                           |  |                             | 291,664    |   |                            |   | 529,398   |      |  |   | 1,151,035  |   |  |   | 996,125    |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                             | 6,355,730  |   |                            |   | 4,719,937 |      |  |   | 16,993,253 |   |  |   | 14,476,975 |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|NON-INTEREST INCOME:                                |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Retail banking fees                                 |  |                             | 785,599    |   |                            |   | 631,831   |      |  |   | 2,217,958  |   |  |   | 1,817,236  |  
|Mortgage revenues                                   |  |                             | 1,230,631  |   |                            |   | 1,594,568 |      |  |   | 2,610,539  |   |  |   | 3,974,797  |  
|Title policy revenues                               |  |                             | 186,221    |   |                            |   | 179,816   |      |  |   | 558,644    |   |  |   | 495,310    |  
|Investment brokerage revenues                       |  |                             | 151,952    |   |                            |   | 109,730   |      |  |   | 419,153    |   |  |   | 507,874    |  
|Gain on sale of securities                          |  |                             |           |   |                            |   |          |      |  |   | 56,163     |   |  |   |           |  
|Gain on sale of branch, net                         |  |                             |           |   |                            |   |          |      |  |   | 2,473,853  |   |  |   |           |  
|Other                                               |  |                             | 465,030    |   |                            |   | 302,285   |      |  |   | 1,376,061  |   |  |   | 900,381    |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Total non-interest income                           |  |                             | 2,819,433  |   |                            |   | 2,818,230 |      |  |   | 9,712,371  |   |  |   | 7,695,598  |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|NON-INTEREST EXPENSE:                               |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Salaries and employee benefits                      |  |                             | 2,689,513  |   |                            |   | 2,270,094 |      |  |   | 7,200,885  |   |  |   | 6,819,463  |  
|Occupancy, equipment and data processing expense    |  |                             | 1,427,427  |   |                            |   | 1,083,808 |      |  |   | 3,762,478  |   |  |   | 3,040,945  |  
|Advertising                                         |  |                             | 277,818    |   |                            |   | 249,872   |      |  |   | 743,111    |   |  |   | 609,560    |  
|Professional services                               |  |                             | 278,663    |   |                            |   | 241,293   |      |  |   | 942,525    |   |  |   | 688,669    |  
|Loss (gain) on derivative financial instruments     |  |                             | (146,073   | ) |                            |   | (874,244  | )    |  |   | 334,173    |   |  |   | (403,995   | )
|Charitable donations                                |  |                             | 16,625     |   |                            |   | 30,168    |      |  |   | 325,165    |   |  |   | 83,024     |  
|Other                                               |  |                             | 752,169    |   |                            |   | 742,114   |      |  |   | 2,220,690  |   |  |   | 1,967,123  |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Total non-interest expense                          |  |                             | 5,296,142  |   |                            |   | 3,743,105 |      |  |   | 15,529,027 |   |  |   | 12,804,789 |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|INCOME BEFORE INCOME TAXES                          |  |                             | 3,879,021  |   |                            |   | 3,795,062 |      |  |   | 11,176,597 |   |  |   | 9,367,784  |  
|INCOME TAXES                                        |  |                             | 1,401,140  |   |                            |   | 1,394,770 |      |  |   | 3,956,251  |   |  |   | 3,492,655  |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|NET INCOME                                          |  | $                           | 2,477,881  |   |                            | $ | 2,400,292 |      |  | $ | 7,220,346  |   |  | $ | 5,875,129  |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|OTHER COMPREHENSIVE (LOSS) INCOME                   |  |                             | (45,369    | ) |                            |   | 25,231    |      |  |   | (22,240    | ) |  |   | 6,423      |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|COMPREHENSIVE INCOME                                |  | $                           | 2,432,512  |   |                            | $ | 2,425,523 |      |  | $ | 7,198,106  |   |  | $ | 5,881,552  |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Per share amounts:                                  |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Basic earnings per share                            |  | $                           | 0.26       |   |                            | $ | 0.30      |      |  | $ | 0.81       |   |  | $ | 0.74       |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Basic weighted average common shares outstanding    |  |                             | 9,620,525  |   |                            |   | 7,959,648 |      |  |   | 8,928,159  |   |  |   | 7,926,081  |  
|Diluted earnings per share                          |  | $                           | 0.24       |   |                            | $ | 0.27      |      |  | $ | 0.76       |   |  | $ | 0.67       |  
|                                                    |  |                             |            |   |                            |   |           |      |  |   |            |   |  |   |            |  
|Diluted weighted average common shares outstanding  |  |                             | 10,245,190 |   |                            |   | 8,874,609 |      |  |   | 9,544,085  |   |  |   | 8,828,224  |  

See accompanying notes to the unaudited consolidated financial statements.



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##### Table of Contents

PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY

NINE MONTHS ENDED JUNE 30, 2006 (UNAUDITED)



|                                                                        |  |             |         |                |   |             |                          |  |   |                 |   |  |                                   |         |   |                  |   |         |       |  |   |            |   |  |   |            |  
|----------------------------------------------------------------------- |  | ----------- | ------- | -------------- | - | ----------- | ------------------------ |  | - | --------------- | - |  | --------------------------------- | ------- | - | ---------------- | - | ------- | ----- |  | - | ---------- | - |  | - | ---------- | -
|                                                                        |  | CommonStock |         | Treasury Stock |   |             | AdditionalPaid-InCapital |  |   | RestrictedStock |   |  | AccumulatedOtherComprehensiveLoss |         |   | RetainedEarnings |   |         | Total | 
|Balance September 30, 2005                                              |  | $           | 119,187 |                | $ | (21,125,653 | )                        |  | $ | 31,287,248      |   |  | $                                 | (81,350 | ) |                  | $ | (23,129 | )     |  | $ | 38,070,161 |   |  | $ | 48,246,464 |  
|Comprehensive income:                                                   |  |             |         |                |   |             |                          |  |   |                 |   |  |                                   |         |   |                  |   |         |       |  |   |            |   |  |   |            |  
|Net income                                                              |  |             |        |                |   |            |                          |  |   |                |   |  |                                   |        |   |                  |   |        |       |  |   | 7,220,346  |   |  |   | 7,220,346  |  
|Unrealized loss on investment securities, net of tax                    |  |             |        |                |   |            |                          |  |   |                |   |  |                                   |        |   |                  |   | (22,240 | )     |  |   |           |   |  |   | (22,240    | )
|Common stock offering (1,150,000 shares)                                |  |             | 11,500  |                |   |            |                          |  |   | 16,127,730      |   |  |                                   |        |   |                  |   |        |       |  |   |           |   |  |   | 16,139,230 |  
|Dividends ($0.085 per share)                                            |  |             |        |                |   |            |                          |  |   |                |   |  |                                   |        |   |                  |   |        |       |  |   | (2,307,129 | ) |  |   | (2,307,129 | )
|Stock options exercised                                                 |  |             |        |                |   | 287,388     |                          |  |   | 147,025         |   |  |                                   |        |   |                  |   |        |       |  |   |           |   |  |   | 434,413    |  
|Non-cash compensation expense for stock option grants                   |  |             |        |                |   |            |                          |  |   | 199,127         |   |  |                                   |        |   |                  |   |        |       |  |   |           |   |  |   | 199,127    |  
|Stock issued under dividend reinvestment plan                           |  |             | 54      |                |   | 28,691      |                          |  |   | 95,738          |   |  |                                   |        |   |                  |   |        |       |  |   |           |   |  |   | 124,483    |  
|Stock issued for acquisition (210,732 shares)                           |  |             | 2,107   |                |   | 776,126     |                          |  |   | 2,913,792       |   |  |                                   |        |   |                  |   |        |       |  |   |           |   |  |   | 3,692,025  |  
|Stock repurchases                                                       |  |             |        |                |   | (88,301     | )                        |  |   |                |   |  |                                   |         |   |                  |   |        |       |  |   |           |   |  |   | (88,301    | )
|Equity trust shares purchased                                           |  |             |        |                |   | (602,817    | )                        |  |   | 602,817         |   |  |                                   |        |   |                  |   |        |       |  |   |           |   |  |   |           |  
|Release of equity trust shares                                          |  |             |        |                |   | 2,724,098   |                          |  |   | (2,724,098      | ) |  |                                   |        |   |                  |   |        |       |  |   |           |   |  |   |           |  
|Tax benefit for non-qualified stock options and restricted share awards |  |             |        |                |   |            |                          |  |   | 71,259          |   |  |                                   |        |   |                  |   |        |       |  |   |           |   |  |   | 71,259     |  
|Amortization of restricted shares                                       |  |             |        |                |   |            |                          |  |   | 25,096          |   |  |                                   |        |   |                  |   |        |       |  |   |           |   |  |   | 25,096     |  
|Forfeiture of Management Recognition and                                |  |             |         |                |   |             |                          |  |   |                 |   |  |                                   |         |   |                  |   |         |       |  |   |            |   |  |   |            |  
|Development Plan shares                                                 |  |             |        |                |   | (2,762      | )                        |  |   | 2,762           |   |  |                                   |        |   |                  |   |        |       |  |   |            |   |  |   |           |  
|Reclassification of unearned restricted share awards under SFAS No 123R |  |             |        |                |   |            |                          |  |   | (81,350         | ) |  |                                   | 81,350  |   |                  |   |        |       |  |   |            |   |  |   |           |  
|                                                                        |  |             |         |                |   |             |                          |  |   |                 |   |  |                                   |         |   |                  |   |         |       |  |   |            |   |  |   |            |  
|Balance June 30, 2006                                                   |  | $           | 132,848 |                | $ | (18,003,230 | )                        |  | $ | 48,667,146      |   |  | $                                 |        |   |                  | $ | (45,369 | )     |  | $ | 42,983,378 |   |  | $ | 73,734,773 |  
|                                                                        |  |             |         |                |   |             |                          |  |   |                 |   |  |                                   |         |   |                  |   |         |       |  |   |            |   |  |   |            |  

See accompanying notes to the unaudited consolidated financial statements.



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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR NINE MONTHS

ENDED JUNE 30, 2006 (UNAUDITED) AND JUNE 30, 2005 (UNAUDITED)



|                                                                              |  |      |              |   |            |   |              |  
|----------------------------------------------------------------------------- |  | ---- | ------------ | - | ---------- | - | ------------ | -
|                                                                              |  | 2006 |              |   | 2005       |  
|                                                                              |  |      |              |   | (Restated) |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                         |  |      |              |   |            |   |              |  
|Net income                                                                    |  | $    | 7,220,346    |   |            | $ | 5,875,129    |  
|Adjustments to reconcile net income to net cash from operating activities:    |  |      |              |   |            |   |              |  
|Depreciation, amortization and accretion:                                     |  |      |              |   |            |   |              |  
|Premises and equipment                                                        |  |      | 986,046      |   |            |   | 918,949      |  
|Net deferred fees                                                             |  |      | 1,873,313    |   |            |   | 1,780,992    |  
|Amortization of debt issuance costs on swaps                                  |  |      | 418,004      |   |            |   | 89,754       |  
|Restricted stock awards                                                       |  |      | 25,096       |   |            |   | 76,528       |  
|Noncash compensation expense for stock option grants                          |  |      | 199,127      |   |            |   | 928          |  
|ESOP shares committed to be released                                          |  |      |             |   |            |   | 670,349      |  
|Provision for loan losses                                                     |  |      | 1,151,035    |   |            |   | 996,125      |  
|Provision for losses on real estate acquired in settlement of loans           |  |      | 102,884      |   |            |   | 73,513       |  
|Losses on sale of real estate acquired in settlement of loans                 |  |      | 77,533       |   |            |   | 32,053       |  
|Originations of loans receivable for sale to correspondent lenders            |  |      | (831,792,113 | ) |            |   | (704,943,921 | )
|Proceeds from sales of loans to correspondent lenders                         |  |      | 821,876,666  |   |            |   | 673,782,065  |  
|Gain on sales of loans-held for sale                                          |  |      | (2,084,666   | ) |            |   | (3,040,471   | )
|Gain on sales of retained loans                                               |  |      |             |   |            |   | (223,892     | )
|Gain on sales of securities                                                   |  |      | (56,163      | ) |            |   |             |  
|Gain on sale of branch, net of expenses                                       |  |      | (2,473,853   | ) |            |   |             |  
|Increase in cash value of bank-owned life insurance                           |  |      | (597,755     | ) |            |   | (431,451     | )
|Loss (gain) on derivative instruments                                         |  |      | 334,173      |   |            |   | (403,995     | )
|Increase (decrease) in accrued expenses                                       |  |      | (715,333     | ) |            |   | 87,237       |  
|Changes in other assets and liabilities                                       |  |      | 1,615,905    |   |            |   | (826,666     | )
|                                                                              |  |      |              |   |            |   |              |  
|Net adjustments                                                               |  |      | (9,060,101   | ) |            |   | (31,361,903  | )
|                                                                              |  |      |              |   |            |   |              |  
|Net cash used in operating activities                                         |  |      | (1,839,755   | ) |            |   | (25,486,774  | )
|                                                                              |  |      |              |   |            |   |              |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                         |  |      |              |   |            |   |              |  
|Proceeds from sale of debt securities-AFS                                     |  |      | 8,066,476    |   |            |   |             |  
|Proceeds from maturities of time deposits                                     |  |      | 198,000      |   |            |   |             |  
|Proceeds from maturities of debt securities-AFS                               |  |      | 450,000      |   |            |   | 9,250,000    |  
|Proceeds from maturities of debt securities-HTM                               |  |      | 28,500,000   |   |            |   |             |  
|Proceeds from redemption of FHLB stock                                        |  |      | 10,550,400   |   |            |   | 4,917,800    |  
|Purchase of bank-owned life insurance                                         |  |      | (6,500,000   | ) |            |   | (3,500,000   | )
|Purchases of Federal Home Loan Bank stock                                     |  |      | (11,400,600  | ) |            |   | (6,315,400   | )
|Purchases of debt securities-AFS                                              |  |      | (567,489     | ) |            |   | (467,833     | )
|Purchases of debt securities-HTM                                              |  |      | (31,736,851  | ) |            |   | (5,989,277   | )
|Principal payments received on mortgage-backed securities                     |  |      | 907,798      |   |            |   | 1,213,671    |  
|Proceeds from sales of retained loans                                         |  |      |             |   |            |   | 9,351,359    |  
|Net increase in loans                                                         |  |      | (111,872,392 | ) |            |   | (102,707,164 | )
|Proceeds from sales of real estate acquired in settlement of loans receivable |  |      | 1,548,715    |   |            |   | 1,364,100    |  
|Proceeds from disposal of equipment                                           |  |      | 10,731       |   |            |   | 95,148       |  
|Purchases of premises and equipment                                           |  |      | (3,278,778   | ) |            |   | (3,151,522   | )
|Cash received from acquired entity, net of cash & cash equivalents paid       |  |      | 15,733,735   |   |            |   |             |  
|Net cash paid on sale of branch                                               |  |      | (19,448,123  | ) |            |   |             |  
|                                                                              |  |      |              |   |            |   |              |  
|Net cash used in investing activities                                         |  |      | (118,838,378 | ) |            |   | (95,939,118  | )
|                                                                              |  |      |              |   |            |   |              |  

See accompanying notes to the unaudited consolidated financial statements.



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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR NINE MONTHS

ENDED JUNE 30, 2006 (UNAUDITED) AND JUNE 30, 2005
(UNAUDITED)



|                                                                                |  |            |             |   |      |   |             |  
|------------------------------------------------------------------------------- |  | ---------- | ----------- | - | ---- | - | ----------- | -
|                                                                                |  | 2006       |             |   | 2005 |  
|                                                                                |  | (Restated) |            
|CASH FLOWS FROM FINANCING ACTIVITIES:                                           |  |            |             |   |      |   |             |  
|Increase in deposits less cash received from acquired entity, net               |  |            | 83,864,291  |   |      |   | 93,802,118  |  
|Proceeds from Federal Home Loan Bank advances, net                              |  |            | 17,500,000  |   |      |   | 19,500,000  |  
|Repayment on note payable                                                       |  |            | (170,000    | ) |      |   | (255,000    | )
|Proceeds from issuance of subordinated debentures                               |  |            |            |   |      |   | 10,310,000  |  
|Net increase in due to other banks                                              |  |            | 1,897,616   |   |      |   | 3,440,181   |  
|Cash paid to trustees for purchase of equity trust shares                       |  |            | (1,254,911  | ) |      |   |            |  
|Net decrease in advance payments by borrowers for taxes and insurance           |  |            | (599,974    | ) |      |   | (526,146    | )
|Proceeds from common stock offering                                             |  |            | 16,139,230  |   |      |   |            |  
|Proceeds from stock issued under dividend reinvestment plan                     |  |            | 124,483     |   |      |   |            |  
|Proceeds from stock options exercised                                           |  |            | 434,413     |   |      |   | 949,905     |  
|Excess tax benefit from non-qualified stock options and restricted share awards |  |            | 71,259      |   |      |   |            |  
|Dividends paid on common stock                                                  |  |            | (2,307,129  | ) |      |   | (1,664,704  | )
|Stock repurchases                                                               |  |            | (88,301     | ) |      |   | (184,365    | )
|                                                                                |  |            |             |   |      |   |             |  
|Net cash provided by financing activities                                       |  |            | 115,610,977 |   |      |   | 125,371,989 |  
|                                                                                |  |            |             |   |      |   |             |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                            |  | $          | (5,067,156  | ) |      | $ | 3,946,097   |  
|                                                                                |  |           
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                |  |            | 25,688,486  |   |      |   | 20,296,111  |  
|                                                                                |  |            |             |   |      |   |             |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      |  | $          | 20,621,330  |   |      | $ | 24,242,208  |  
|                                                                                |  |            |             |   |      |   |             |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                              |  |            |             |   |      |   |             |  
|Cash paid during the period for:                                                |  |            |             |   |      |   |             |  
|Interest on deposits                                                            |  | $          | 13,096,602  |   |      | $ | 6,835,949   |  
|Interest on advances from FHLB                                                  |  |            | 5,410,961   |   |      |   | 3,689,723   |  
|Interest on subordinated debentures                                             |  |            | 1,007,715   |   |      |   | 631,807     |  
|Interest on notes payable                                                       |  |            | 174,139     |   |      |   | 126,208     |  
|                                                                                |  |            |             |   |      |   |             |  
|Cash paid during year for interest                                              |  | $          | 19,689,417  |   |      | $ | 11,283,687  |  
|                                                                                |  |            |             |   |      |   |             |  
|Income taxes, net                                                               |  |            | 5,230,000   |   |      |   | 3,763,135   |  
|                                                                                |  |           
|NONCASH INVESTING ACTIVITIES:                                                   |  |            |             |   |      |   |             |  
|Real estate acquired in settlement of loans receivable                          |  |            | 4,056,510   |   |      |   | 787,040     |  

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)



|1. | BASIS OF PRESENTATION
|-- | ---------------------

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 debentures. 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 June 30, 2006 and September 30, 2005 and its results of operations for the three- and
nine-month periods ended June 30, 2006 and 2005. The results of operations for the three- and nine-month periods ended June 30, 2006, 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, 2005 contained in the Companys 2005 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, 2005.

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.



|2 | RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|- | ----------------------------------------------------------------------------

In November 2004, the Company entered into certain interest rate swap agreements to hedge the interest rate risk inherent in certain of its brokered certificates of deposit. These hedging relationships did not meet
the criteria for the short-cut method of fair value hedge accounting in Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities(SFAS No. 133).

Because the Company did not qualify for the short-cut method of hedge accounting on these swap agreements, the amounts
previously recorded as an adjustment to the carrying value of hedged items, brokered certificates of deposits, were recognized as losses on derivative financial instruments in the consolidated statements of income and comprehensive income for the
year ended September 30, 2005.

In addition, the net cash settlements under the interest rate swaps that were originally reported in
interest expense have been reclassified to loss on derivative instruments. Finally, the broker placement fees on the certificates of deposit have been recorded as an asset and are being amortized on a straight-line basis to the maturity of the
certificates of deposit. This restatement had no effect on net cash used in operating activities for the three and nine months ended June 30, 2005.

The Company has restated its consolidated financial statements to reflect these changes for the quarters ended December 31, 2004, March 31, 2005, and June 30, 2005.



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The Company has also restated basic earnings per share for three and nine months ended June 30, 2005
to reflect unvested equity trust shares in treasury stock as not outstanding for the calculation of basic earnings per share.

The Condensed
Consolidated Financial Statements included in this Form 10-Q include the effect of the adjustments required to correct these errors, as summarized below.



|                                                    |  |                                  |            |        |   |          |             |  |   |            |  
|--------------------------------------------------- |  | -------------------------------- | ---------- | ------ | - | -------- | ----------- |  | - | ---------- | -
|                                                    |  | Three Months Ended June 30, 2005 |           
|                                                    |  | As PreviouslyReported            |            | Change |   |          | As Restated | 
|Interest expense on deposits                        |  | $                                | 2,582,443  |        | $ | 185,829  |             |  | $ | 2,768,272  |  
|Total interest expense                              |  |                                  | 4,339,604  |        |   | 185,829  |             |  |   | 4,525,433  |  
|Net interest income                                 |  |                                  | 5,428,926  |        |   | (179,591 | )           |  |   | 5,249,335  |  
|Net interest income after provision for loan losses |  |                                  | 4,899,528  |        |   | (179,591 | )           |  |   | 4,719,937  |  
|Gain on derivative instruments                      |  |                                  |           |        |   | (874,244 | )           |  |   | (874,244   | )
|Total non-interest expense                          |  |                                  | 4,635,887  |        |   | (892,782 | )           |  |   | 3,743,105  |  
|Income before income taxes                          |  |                                  | 3,085,031  |        |   | 710,031  |             |  |   | 3,795,062  |  
|Income taxes                                        |  |                                  | 1,131,704  |        |   | 263,066  |             |  |   | 1,394,770  |  
|Net income                                          |  | $                                | 1,953,327  |        | $ | 446,965  |             |  | $ | 2,400,292  |  
|Earnings per share-basic                            |  | $                                | 0.23       |        | $ | 0.07     |             |  | $ | 0.30       |  
|Earnings per share-diluted                          |  | $                                | 0.22       |        | $ | 0.05     |             |  | $ | 0.27       |  
|Weighted average shares oustanding-basic            |  |                                  | 8,370,198  |        |   | (410,550 | )           |  |   | 7,959,648  |  
|                                                    | 
|                                                    |  | Nine Months Ended June 30, 2005  |           
|                                                    |  | As PreviouslyReported            |            | Change |   |          | As Restated | 
|Interest expense on deposits                        |  | $                                | 6,398,350  |        | $ | 427,128  |             |  | $ | 6,825,478  |  
|Total interest expense                              |  |                                  | 10,846,088 |        |   | 427,128  |             |  |   | 11,273,216 |  
|Net interest income                                 |  |                                  | 15,883,663 |        |   | (410,563 | )           |  |   | 15,473,100 |  
|Net interest income after provision for loan losses |  |                                  | 14,887,538 |        |   | (410,563 | )           |  |   | 14,476,975 |  
|Gain on derivative instruments                      |  |                                  |           |        |   | (403,995 | )           |  |   | (403,995   | )
|Total non-interest expense                          |  |                                  | 13,279,662 |        |   | (474,873 | )           |  |   | 12,804,789 |  
|Income before income taxes                          |  |                                  | 9,360,090  |        |   | 7,694    |             |  |   | 9,367,784  |  
|Income taxes                                        |  |                                  | 3,489,804  |        |   | 2,851    |             |  |   | 3,492,655  |  
|Net income                                          |  | $                                | 5,870,286  |        | $ | 4,843    |             |  | $ | 5,875,129  |  
|Earnings per share-basic                            |  | $                                | 0.71       |        | $ | 0.03     |             |  | $ | 0.74       |  
|Earnings per share-diluted                          |  | $                                | 0.67       |        |   |         |             |  | $ | 0.67       |  
|Weighted average shares oustanding-basic            |  |                                  | 8,300,644  |        |   | (374,563 | )           |  |   | 7,926,081  |  



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|3. | EARNINGS PER SHARE
|-- | ------------------

Basic earnings per share is
computed using the weighted average number of common shares outstanding. The dilutive effect of potential common shares outstanding is included in diluted earnings per share. The computations of basic and diluted earnings per share are presented in
the following table.



|                                              |  |                             |            |                            |   |           |  |      |           |  |   |          
|--------------------------------------------- |  | --------------------------- | ---------- | -------------------------- | - | --------- |  | ---- | --------- |  | - | ---------
|                                              |  | Three Months Ended June 30, |            | Nine Months Ended June 30,
|                                              |  | 2006                        |            | 2005                       |   | 2006      |  | 2005
|Weighted average shares outstanding - basic   |  |                             | 9,620,525  |                            |   | 7,959,648 |  |      | 8,928,159 |  |   | 7,926,081
|Treasury stock-equity trust                   |  |                             | 255,053    |                            |   | 410,550   |  |      | 214,023   |  |   | 394,928  
|Employee stock options and awards             |  |                             | 369,612    |                            |   | 504,411   |  |      | 401,903   |  |   | 507,215  
|                                              |  |                             |            |                            |   |           |  |      |           |  |   |          
|Weighted average shares outstanding - diluted |  |                             | 10,245,190 |                            |   | 8,874,609 |  |      | 9,544,085 |  |   | 8,828,224
|                                              |  |                             |            |                            |   |           |  |      |           |  |   |          
|Net income per share-basic                    |  | $                           | 0.26       |                            | $ | 0.30      |  | $    | 0.81      |  | $ | 0.74     
|Net income per share-diluted                  |  | $                           | 0.24       |                            | $ | 0.27      |  | $    | 0.76      |  | $ | 0.67     

Under the treasury stock method, outstanding stock options are dilutive when the average market
price of the Companys common stock, when combined with the effect of any unamortized compensation expense, 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.

The following
options to purchase shares during the three and nine-month periods ended June 30, 2006 and 2005 were not included in the respective computations of diluted earnings per share because the exercise price of the options, when combined with the
effect of the unamortized compensation expense, was greater than the average market price of the common shares and were considered anti-dilutive. These options expire in various periods through 2015 and 2014, respectively.



|                                |  |                            |  |                           |  |        |  |       
|------------------------------- |  | -------------------------- |  | ------------------------- |  | ------ |  | ------
|                                |  | Three Months EndedJune 30, |  | Nine Months EndedJune 30,
|                                |  | 2006                       |  | 2005                      |  | 2006   |  | 2005  
|Number of option shares         |  | 75,596                     |  |                          |  | 37,523 |  | 5,863 
|Equivalent anti-dilutive shares |  | 95,258                     |  |                          |  | 46,353 |  | 12,196



|4. | STOCK-BASED COMPENSATION
|-- | ------------------------

The Companys
shareholder-approved, stock-based incentive plans permit the grant of awards in the form of options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code, options that do not so qualify (non-statutory
stock options,) and grants of restricted shares of common stock. All employees, non-employee directors and consultants of the Company and its affiliates are eligible to receive awards under the plans. At June 30, 2006, all stock option awards
were granted with an exercise price equal to the market value of the Companys shares at the date of grant and generally vest, and become exercisable, over a period of three to five years. The exercise period for all of these stock options may
not exceed 10 years from the date of grant. Generally, option and share awards



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provide for accelerated vesting if there is a change in control (as defined in the plans.). Subsequent to
June 30, 2006, the Company granted stock option awards totaling 10,500 shares of its common stock to nonemployee directors with exercise prices at a premium of 10% over the market value of the Companys shares at the date of grant. These
stock option awards were immediately vested on the date of grant and are exercisable for a period of five years from the date of grant.

Prior to fiscal 2006, the Company applied the intrinsic value-based method, as outlined in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, (APB No. 25) and related
interpretations, in accounting for stock options granted under these programs. Under the intrinsic value-based method, no compensation expense was recognized if the exercise price of the Companys employee stock options equaled the market price
of the underlying stock on the date of the grant. Accordingly, prior to fiscal year 2006, no compensation cost was recognized in the accompanying consolidated statements of income on stock options granted to employees, since all options granted
under the Companys share incentive programs had an exercise price equal to the market value of the underlying common stock on the date of the grant.

Effective October 1, 2005, the Company adopted Statement of Financial Accounting Standards No. 123R, Share-based Payment (SFAS No. 123R). This statement replaces SFAS No. 123,
Accounting for Stock-Based Compensation, and supersedes APB No. 25. SFAS No. 123R requires that all stock-based compensation be recognized as an expense in the financial statements and that such cost be measured at the fair
value of the award. This statement was adopted using the modified prospective method of application, which requires the Company to recognize compensation expense on a prospective basis. Therefore, prior period financial statements have not been
restated. Under this method, in addition to reflecting compensation expense for new share-based awards, expense is also recognized to reflect the remaining service period of awards that had been included in pro forma disclosures in prior periods.
SFAS No. 123R also requires that excess tax benefits related to stock option exercises be reflected as financing cash inflows instead of operating cash inflows.

The following table illustrates the effect on net income and earnings per share as if SFAS 123R had been applied to all outstanding awards for the three and nine months ended June 30, 2005:



|                                                                                                                              |  |                                       |           |   |                                |   |           |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------- | --------- | - | ------------------------------ | - | --------- | -
|                                                                                                                              |  | Three Months EndedJune 30, 2005       |           |   | Nine Months EndedJune 30, 2005 |  
|                                                                                                                              |  | (In thousands, except per share data) |          
|Net income:                                                                                                                   |  |                                       |           |   |                                |   |           |  
|As reported                                                                                                                   |  | $                                     | 2,400,292 |   |                                | $ | 5,875,129 |  
|Add: total employee stock-based compensation expense included in reported net income, net of tax effect                       |  |                                       | 119,435   |   |                                |   | 472,773   |  
|Deduct: Total stock-based employee compensation expense, determined under fair value method for all awards, net of tax effect |  |                                       | (191,426  | ) |                                |   | (676,034  | )
|                                                                                                                              |  |                                       |           |   |                                |   |           |  
|Pro forma net income                                                                                                          |  | $                                     | 2,328,301 |   |                                | $ | 5,671,868 |  
|                                                                                                                              |  |                                       |           |   |                                |   |           |  
|Basic earnings per share:                                                                                                     |  |                                       |           |   |                                |   |           |  
|As reported                                                                                                                   |  | $                                     | 0.30      |   |                                | $ | 0.74      |  
|Pro forma                                                                                                                     |  |                                       | 0.29      |   |                                |   | 0.72      |  
|Diluted earnings per share:                                                                                                   |  |                                       |           |   |                                |   |           |  
|As reported                                                                                                                   |  |                                       | 0.27      |   |                                |   | 0.67      |  
|Pro forma                                                                                                                     |  |                                       | 0.26      |   |                                |   | 0.64      |  



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A summary of the Companys stock option programs as of June 30, 2006 and changes during the
nine-month period then ended, is presented below:



|                               |  |                  |   |  |                              |       |                                       |   |                                            |  |          
|------------------------------ |  | ---------------- | - |  | ---------------------------- | ----- | ------------------------------------- | - | ------------------------------------------ |  | ---------
|                               |  | Number Of Shares |   |  | WeightedAverageExercisePrice |       | AggregateIntrinsicValue (in millions) |   | Weighted- AverageRemainingContractual Life
|Outstanding at October 1, 2005 |  | 862,217          |   |  | $                            | 6.87  |                                       |   |                                            |  |          
|Granted                        |  | 97,500           |   |  |                              | 16.41 |                                       |   |                                            |  |          
|Exercised                      |  | (78,031          | ) |  |                              | 5.57  |                                       |   |                                            |  |          
|Expired                        |  |                 |   |  |                              |      |                                       |   |                                            |  |          
|Forfeited                      |  | (11,325          | ) |  |                              | 12.70 |                                       |   |                                            |  |          
|                               |  |                  |   |  |                              |       |                                       |   |                                            |  |          
|Outstanding at June 30, 2006   |  | 870,361          |   |  |                              | 7.98  |                                       | $ | 7.6                                        |  | 6.3 years
|                               |  |                  |   |  |                              |       |                                       |   |                                            |  |          
|Exercisable at June 30, 2006   |  | 558,231          |   |  |                              | 5.32  |                                       | $ | 6.3                                        |  | 5.2 years
|                               |  |                  |   |  |                              |       |                                       |   |                                            |  |          

The total intrinsic value of stock options exercised during the nine months ended June 30,
2006 and 2005 was $905,000 and $2.0 million, respectively. The weighted average grant-date fair value of options granted during the nine months ended June 30, 2006 was $ 4.72. As of June 30, 2006, the total unrecognized compensation
expense related to non-vested stock awards was $947,000 and the related weighted average period over which it is expected to be recognized is 1.8 years. Excess tax benefits associated with share based payments totaled $71,000 for the nine months
ended June 30, 2006.

The fair value of stock options granted in the nine-month periods ended June 30, 2006 and 2005 is estimated
on the date of grant using the Black-Scholes option pricing model with the following average assumptions:



|                        |  |                            |   |  |       |  
|----------------------- |  | -------------------------- | - |  | ----- | -
|                        |  | Nine Months Ended June 30, |  
|                        |  | 2006                       |   |  | 2005  |  
|Risk free interest rate |  | 4.40                       | % |  | 3.65  | %
|Expected volatility     |  | 27.93                      | % |  | 25.61 | %
|Expected life in years  |  | 6.0                        |   |  | 5.0   |  
|Dividend yield          |  | 1.82                       | % |  | 1.91  | %



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|5. | LOANS RECEIVABLE
|-- | ----------------

Loans receivable at June 30,
2006 and September 30, 2005 are summarized as follows:



|                                          |  |               |             |   |                   |   |             |  
|----------------------------------------- |  | ------------- | ----------- | - | ----------------- | - | ----------- | -
|                                          |  | June 30, 2006 |             |   | September 30,2005 |  
|Real estate mortgage:                     |  |               |             |   |                   |   |             |  
|One to four family residential            |  | $             | 297,907,570 |   |                   | $ | 255,729,099 |  
|Multi-family residential                  |  |               | 12,499,108  |   |                   |   | 13,994,329  |  
|Commercial real estate                    |  |               | 136,783,554 |   |                   |   | 104,700,624 |  
|                                          |  |              
|Real estate construction and development: |  |               |             |   |                   |   |             |  
|Residential                               |  |               | 31,023,179  |   |                   |   | 33,651,527  |  
|Multi-family                              |  |               | 6,185,663   |   |                   |   | 1,789,997   |  
|Commercial                                |  |               | 19,713,867  |   |                   |   | 9,580,258   |  
|                                          |  |              
|Commercial and industrial                 |  |               | 45,507,521  |   |                   |   | 26,305,952  |  
|Equity lines                              |  |               | 208,050,704 |   |                   |   | 195,646,918 |  
|Consumer and installment                  |  |               | 6,042,285   |   |                   |   | 3,514,166   |  
|                                          |  |               |             |   |                   |   |             |  
|                                          |  |               | 763,713,451 |   |                   |   | 644,912,870 |  
|                                          |  |              
|Add (less):                               |  |               |             |   |                   |   |             |  
|Deferred loan costs                       |  |               | 4,672,415   |   |                   |   | 3,931,366   |  
|Loans-in-process                          |  |               | (11,017,305 | ) |                   |   | (8,842,953  | )
|Allowance for loan losses                 |  |               | (7,634,966  | ) |                   |   | (6,805,958  | )
|Total                                     |  | $             | 749,733,595 |   |                   | $ | 633,195,325 |  
|                                          |  |               |             |   |                   |   |             |  
|Weighted average rate at end of period    |  |               | 7.40        | % |                   |   | 6.59        | %
|                                          |  |               |             |   |                   |   |             |  



|6. | DEPOSITS
|-- | --------

Deposits at June 30, 2006 and
September 30, 2005 are summarized as follows:



|                              |  |               |             |                             |                    |   |        |   |                             |  |      |  
|----------------------------- |  | ------------- | ----------- | --------------------------- | ------------------ | - | ------ | - | --------------------------- |  | ---- | -
|                              |  | June 30, 2006 |             |                             | September 30, 2005 |  
|                              |  | Amount        |             | WeightedAverageInterestRate |                    |   | Amount |   | WeightedAverageInterestRate | 
|Transaction accounts:         |  |               |             |                             |                    |   |        |   |                             |  |      |  
|Non-interest-bearing checking |  | $             | 36,974,846  |                             |                   |   |        | $ | 29,192,436                  |  |     |  
|Interest-bearing checking     |  |               | 58,867,768  |                             | 1.57               | % |        |   | 28,993,549                  |  | 0.16 | %
|Passbook savings accounts     |  |               | 33,736,859  |                             | 0.36               | % |        |   | 30,230,199                  |  | 0.35 | %
|Money market                  |  |               | 94,507,775  |                             | 3.29               | % |        |   | 82,638,233                  |  | 2.34 | %
|                              |  |               |             |                             |                    |   |        |   |                             |  |      |  
|Total transaction accounts    |  |               | 224,087,248 |                             | 1.85               | % |        |   | 171,054,417                 |  | 1.22 | %
|                              |  |               |             |                             |                    |   |        |   |                             |  |      |  
|Certificates of deposit:      |  |               |             |                             |                    |   |        |   |                             |  |      |  
|Less than $100,000            |  |               | 197,918,381 |                             | 4.58               | % |        |   | 162,797,896                 |  | 3.11 | %
|$100,000 and greater          |  |               | 201,779,355 |                             | 4.21               | % |        |   | 162,318,753                 |  | 3.53 | %
|                              |  |               |             |                             |                    |   |        |   |                             |  |      |  
|Total certificates of deposit |  |               | 399,697,736 |                             | 4.39               | % |        |   | 325,116,649                 |  | 3.32 | %
|                              |  |               |             |                             |                    |   |        |   |                             |  |      |  
|Total                         |  | $             | 623,784,984 |                             | 3.48               | % |        | $ | 496,171,066                 |  | 2.60 | %
|                              |  |               |             |                             |                    |   |        |   |                             |  |      |  



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|7. | RECLASSIFICATIONS
|-- | -----------------

Certain reclassifications have
been made to 2005 amounts to conform to the 2006 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, including those in Item 1.A. Risk Factors in this Form 10-Q and
Item 1.A. Risk Factors in the Companys Form 10-K for the year ended September 30, 2005.

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.

RECENT ANNOUNCEMENTS

On May 19, 2006, the Company announced two one-time contributions of $250,000 each to the St. Louis Art Museum and the Arts & Education Council of St.
Louis. Of these amounts, $250,000 was paid in February 2006 and was reflected as a charge to earnings during the quarter ended March 31, 2006. While the Company fully intends to honor the remaining pledge if able, it remains a pledge only at
this point and its payment will be dependent upon, among other things, the Companys ability to pay it in subsequent years. Accordingly, the remaining $250,000 has not been recorded as a liability in the Companys consolidated financial
statements at June 30, 2006.

On June 23, 2006, the Company announced an increase of 6.25% in its regular quarterly dividend to 8.5 cents per
share of common stock from 8 cents. The new annualized rate is 34 cents per share, up 2 cents per share from the previous annual rate of 32 cents per share. The dividend was payable July 17, 2006 to stockholders of record on July 6, 2006.

OVERVIEW

Pulaski Financial
Corp., with total assets of $938.9 million at June 30, 2006, is the holding company for Pulaski Bank, a growth-oriented financial institution. The Banks 84-year history as a thrift institution serving retail and commercial customers has
created years of customer loyalty that the current generation of management is leveraging in its mission to become the bank of choice in the metropolitan St. Louis community. The Companys business strategy is to focus on the growth and
efficiency of five core banking products, which include two deposit products  checking and money market accounts and three loan products  residential, home equity and commercial loans. These five
products provide the primary source of the Companys operating income and are the focus of the Companys balance sheet growth. Driving these relationships are more than 60 seasoned residential and commercial lenders in the Companys
two market locations, St. Louis and Kansas City, which include nine branch locations and two loan production offices. The successful results of this business strategy are reflected in the Companys asset growth and net income. Total assets
grew approximately 19% to $938.9 million at June 30, 2006 from $789.9 million at September 30, 2005, including 18% growth in the retained loan portfolio funded in large part by a 26% increase in deposits. Since September 30,
2001, the Companys total assets grew $650.7 million from $288.8 million, representing a five-year compound annual growth rate of 27%.



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Net Income

Net
income for the three months ended June 30, 2006 rose 3% to $2.48 million compared to $2.40 million for the three months ended June 30, 2005. Diluted earnings per share for the third quarter of 2006 were reduced by an increase of
707,000 average diluted shares outstanding resulting from common stock issued in a secondary public offering during February 2006. Driven by growth in loans and deposits, net interest income grew 27% to $6.6 million in the third quarter compared to
$5.2 million in the 2005 quarter. Included in third quarter net income were gains on derivative financial instruments totaling $146,000 and $874,000 in 2006 and 2005, respectively, or $91,000 and $542,000, respectively, after tax.

Net income for the nine months ended June 30, 2006 increased 23% to $7.2 million, or $0.76 per diluted share, compared to $5.9 million, or $0.67 per diluted share,
for the nine months ended June 30, 2005. For nine-month period, net interest income increased $2.7 million, or 17%, on a $133.1 million increase in interest-earning assets. Net income for the nine months ended June 30, 2006 included a $2.5
million pre-tax gain on the sale of a branch in Kansas City, Missouri.

The Companys operating results have been negatively impacted during the year
by a 21% increase in non-interest expense related primarily to the Companys successful expansion under its business strategy. The increase was primarily due to the expansion of the commercial division, which doubled the number of loan officers
and staff, and three additional bank locations. The Company also incurred additional expenses related to the implementation of procedures required under the Sarbanes Oxley Act. The efficiency ratio was 58% for the three months ended June 30,
2006 compared to 56% for the 2005 period.

Annualized return on average assets was 1.09% for the 2006 quarter compared to 1.34% for the three months ended
June 30, 2005. Return on average equity declined to 13.03% for the quarter ended June 30, 2006 from 20.51% for the same period a year ago due to the increase in stockholders equity resulting from the Companys secondary stock
offering. In February 2006, the Company raised $16.1 million in additional equity through the issuance of 1.15 million shares of its common. The additional capital was necessary to support the Companys future growth plans and,
accordingly, has not yet been fully leveraged, resulting in the decline in return on average equity during the third quarter.

Business Combination

A significant highlight for the year included the completion of the acquisition of CWE Bancorp, Inc. and its wholly-owned subsidiary, Central West End
Bank (CWE), as of the close of business on March 31, 2006. The acquisition added two strategic branch locations in a desirable area between Clayton and downtown St. Louis, approximately 4,000 customers, over $41 million of deposits
and approximately $12 million in loans. A full integration of CWEs data processing systems was completed in May 2006, which enabled the Bank to offer these new customers its complete range of loan and deposit products. The acquisition was
accretive to third quarter earnings, despite incurring a $125,000 pre-tax expense during the quarter ended June 30, 2006 for the conversion of CWEs customer data onto the Banks data processing system.

Core Product Growth

Core deposits increased significantly during the
nine-month period due primarily to continued commercial and municipal deposit growth and the acquisition of CWE. During the nine months ended June 30, 2006, checking account balances increased $37.7 million to $95.8 million, money market
accounts increased $11.9 million to $94.5 million, and passbook savings accounts increased $3.5 million to $33.7 million, bringing total core transaction accounts to $224.1 million at June 30, 2006 from $171.1 million at September 30,
2005. The acquisition of CWE added $14.2 million of checking accounts, $7.1 million of money market accounts and $4.4 million of passbook savings accounts.

The retained loan portfolio expanded 18%, or $116.5 million, from $633.2 million at September 30, 2005 to $749.7 million at June 30, 2006. The growth in the loan portfolio was driven by balanced retained loan growth,
including a 56%, or $66.9 million, increase in loan balances in the commercial division, a 31% increase in loan balances in the residential division, a 13% increase in loan balances in the consumer and home equity division and $12 million
in loans acquired from CWE.



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Net Interest Income

The Companys primary source of revenue is net interest income, which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. Net interest income for the quarter ended
June 30, 2006 increased 26% to $6.6 million compared to $5.2 million for the comparable quarter last year. The increase was due primarily to growth in the loan portfolio funded by growth in low-cost deposits. The Banks net interest margin
increased from 3.13% for the quarter ended June 30, 2005 to 3.22% for the quarter ended June 30, 2006. The increase in the margin was due primarily to the addition of approximately $41 million of deposits from the CWE acquisition, that
were used to retire higher cost borrowings from the Federal Home Loan Bank. The yields on interest-earning assets and the cost of interest-bearing liabilities increased as the result of actions taken by the Federal Reserves Open Market
Committee (FOMC), which raised the Federal funds rate 25 basis points at 45-day intervals following its last 15 meetings. For the nine months ended June 30, 2006, net interest income rose 17% to $18.1 million compared to $15.5
million for the same 2005 period. The increase for the year was also driven by the growth in average interest earning assets, which increased $133.1 million to $771.1 million during the nine months ended June 30, 2006. The Banks
balance sheet is very sensitive to changes in interest rates, with approximately two-thirds of its assets and liabilities repricing within one year. This interest-rate risk profile is expected to protect the Bank from long-term changes in interest
rates. However, the overall timing of the Banks assets repricing within the one-year timeframe generally lag the timing of liability repricing, resulting in temporary compressions of the net interest margin in times of rapidly rising interest
rates.

Total interest income during the quarter ended June 30, 2006 increased $4.5 million, or 46%, to $14.3 million compared to $9.8 million for the
quarter ended June 30, 2005. For the nine months ended June 30, 2006, interest income rose 42.8% to $38.2 million from $26.7 million for the nine months ended June 30, 2005. The rise in interest income for the three- and nine- month
periods was due to robust growth in the average balance of the loan portfolio and increased yields resulting from loans repricing in the rising interest rate environment combined with the addition of higher-yielding commercial loans. The average
balance of retained loans rose $140.9 million to $733.8 million for the quarter ended June 30, 2006 from $592.9 million for the quarter ended June 30, 2005. The average yield on the retained loan portfolio rose 117 basis points to
7.09% from 5.92% in the comparable quarter last year. For the nine months ended June 30, 2006, the average balance of retained loans rose $126.3 million to $694.1 million and the average yield increased 106 basis points to 6.77%. The growth in
loan balances consists primarily of growth in commercial and residential real estate loans (see Managements Discussion of Core Business Strategy).

Partially offsetting growth in interest income was a rise in interest expense. Total interest expense increased $3.1 million, or 68%, to $7.6 million for the third quarter of 2006 compared to $4.5 million for the same period a year
ago. For the nine months ended June 30, 2006, interest expense rose 78% to $20.0 million from $11.3 million in last years period. The rise in interest expense for the three- and nine-month periods was due primarily to market-driven
changes in the cost of funds, which increased 110 basis points from 2.86% for the quarter ended June 30, 2005 to 3.96% for the quarter ended June 30, 2006, and increased 122 basis points from 2.48% for the nine months ended June 30,
2005 to 3.70% for the nine months ended June 30, 2006.

Nonperforming Assets

Nonperforming assets increased to $10.0 million at the end of the third quarter, compared with $9.7 million at second quarter-end and $6.8 million at the end of the prior fiscal year. Nonperforming loan balances
increased from $6.0 million at September 30, 2005 to $6.8 million at June 30, 2006, but declined $1.8 million from March 31, 2006, as the Company took several properties in settlement of debts including a $1.1 million commercial
building. Real estate acquired in settlement of loans increased from $754,000 at September 30, 2005 to $3.1 million at June 30, 2006. Such real estate is carried at the lower of cost or fair market value and as such the Company anticipates
the ability to sell the properties without any significant additional loss.

MANAGEMENTS
DISCUSSION OF CORE BUSINESS STRATEGY

Loan yields relative to prime rates
are declining in the St. Louis market due to strong competitive forces from de novo and large national banks striving to gain market share. Consequently, Bank management has expanded its deposit sales focus in an effort to attract lower-costing core
deposits, thereby bolstering the Banks net interest margins. The result has been sustained organic growth for the nine-month period ending June 30, 2006.



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Total liabilities increased $123.6 million to $865.2 million at June 30, 2006 compared to $741.6 million at
September 30, 2005. Total deposits increased $127.6 million during 2006, including $41.4 million of deposits acquired from CWE. The Banks strategic focus on growing core liability products centers on checking account and money
market deposit growth.For the nine months ended June 30, 2006, checking and money market accounts increased $49.5 million to $190.4 million.

Checking account balances increased 65%, or $37.6 million, to $95.8 million at June 30, 2006 from $58.2 million at September 30, 2005. Checking accounts are the Banks lowest-cost deposits and are also the
primary source of retail banking revenue. The increases were due to organic growth in retail deposits and the recent addition of the CWE locations. Retail banking revenue increased 24% for the three-month period and 22% for the nine-month period
ended June 30, 2006 to $786,000 and $2.2 million, respectively, compared to $632,000 and $1.8 million, respectively, for the same periods a year ago.

Money market account balances increased $11.9 million, to $94.5 million at June 30, 2006 from $82.6 million at September 30, 2005. The Bank is in its fifth year of pursuing money market accounts as a core deposit
product and its third year of successfully marketing the Big Bertha Money Market Account. The money market product carries similar interest rate characteristics to the Banks home equity and prime-adjusting commercial loans and
results in an ideal source of funds for the growth of these portfolios. Money market accounts are generally less interest-rate sensitive and more stable than CD balances. The Bank has remained disciplined in its pricing, resulting in slow, but
stable, growth in this product.

In addition to core deposits, other sources of funds include time deposits, FHLB advances and subordinated debt. At
June 30, 2006, the Company had $399.7 million of time deposits, including $142.0 million of brokered deposits compared to $118.9 million in brokered deposits at September 30, 2005. The Bank also experienced strong growth in time deposits
offered under the Certificate of Deposit Account Registry Service®(CDARS),
which provides a means to attract and federally insure time deposits in excess of $100,000. CDARS deposit balances, which are included in total time deposits, increased from $34.1 million at September 30, 2005, with a weighted average rate of
3.42%, to $72.5 million at June 30, 2006, with a weighted average rate of 4.75%. Approximately half of the growth in CDARS balances stemmed from successful sales efforts to local union districts. The Company also had $188.5 million of FHLB
advances and $19.6 million of subordinated debt at June 30, 2006, compared to $171.0 million in FHLB advances and $19.6 million of subordinated debt at September 30, 2005.

The Banks retained loan portfolio, net of allowance for loan lossesincreased $116.5 million, or 18.4%, to $749.7 million at June 30, 2006 from $633.2 million at September 30, 2005,
including $12 million in loans acquired in the purchase of CWE. The Banks strong commitment to its three core lending products, commercial, home equity lines of credit and residential mortgage loanscontinues to drive the growth
in the Banks interest earning assets.

Commercial loans,consisting of $136.8 million of commercial real estate loans, $45.5 million of
commercial and industrial loans (C&I), $18.7 million multi-family permanent and development loans and $19.7 million of construction and development loans, increased $64.3 million to $220.7 million at June 30, 2006 compared
to $156.4 million at September 30, 2005. Fueled by the commercial loan relationships, commercial checking and money market deposits rose $32.5 million during the nine months ended June 30, 2006 and totaled $67.5 million by quarter
end. The Bank had no non-performing commercial loans, $1.1 million in other commercial real estate acquired in settlement of loans, and an allowance for loan losses of $2.4 million, or 1% of the commercial loan portfolio. The Company has not
experienced any charge-offs in its commercial loan portfolio. However, most of these commercial loans are seasoned less than three years.

Permanent and
construction residential loan balances increased $29.5 million to $328.9 million at June 30, 2006 compared to $289.4 million at September 30, 2005, including $12 million of loans acquired in the CWE purchase. As a
large-volume mortgage lender, the Bank has the opportunity to carefully select loans to retain in its 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. Due, in part, to the historically strong collateral of the residential loan portfolio, the Bank has experienced a low level of losses with this product. Net charge-offs during the nine months
ended June 30, 2006 were $604,000 compared to $287,000 for the nine months ended June 30, 2005. Current year charge-offs included $378,000 of loss recognized in an effort to work out two pools of non-performing residential loans through
the sale, at discounts, to investors specializing in troubled asset workouts.



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##### Table of Contents

Residential mortgage loans originated and sold to investors on a servicing-released basis are one of the Companys
largest sources of non-interest income and the gains on the sales of loans are the primary component of mortgage revenues. Mortgage revenue for the quarter ended June 30, 2006 declined 23% to $1.2 million on $321.0 million of sales, from
$1.6 million on $264.1 million of sales for the quarter ended June 30, 2005. The Companys third quarter operating results, when compared to the 2005 quarter, have been negatively impacted by a highly competitive mortgage-lending
environment, resulting in narrower gross margins on loan sales and higher per-unit production costs due to poor efficiency. However, mortgage revenues increased $646,000, or 110%, over the quarter ended March 31, 2006. Management took several
actions late in the second quarter of 2006 to increase efficiency, including adjusting loan officers incentives, increasing underwriting fees charged to originate a loan and reducing certain fixed overhead costs. These changes, combined with
seasonal trends, resulted in increased revenues over the second quarter.

Home equity lines of credithave historically been the Banks
most consistently growing portion of the loan portfolio. However, higher interest rates and a flattened yield curve have prompted many borrowers to opt for fixed-rate second mortgages and to pay down high-cost borrowings when possible. Consequently,
growth rates for the equity lines of credit have slowed dramatically. The equity line balances increased $12.4 million to $208.0 million at June 30, 2006 compared to $195.6 million at September 30, 2005. Home equity loans are typically
approved for qualified borrowers in conjunction with their 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, and provide stability to the Companys net interest margin. In recent quarters, the Company has seen a rise in both balances and charge-offs of
non-performing home equity lines. The charge-offs have come almost exclusively from high loan-to-value lines of credit with 90% to 100% loan to values. The home equity line portfolio contains $5.6 million of loans in the 90% to 100% loan-to-value
category. At June 30, 2006, the Bank had $1.4 million of non-performing home equity loans. Home equity net charge-offs totaled $85,000 for the nine months ended June 30, 2006.

AVERAGE BALANCE SHEETS

The following tables set 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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##### Table of Contents

|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|-------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | -------------------- | - | ---------- |  | ---- | -------------- |  | - | -------------------- | - | ---------- | - | ----- |  | ---- | -
|                                                                                 |  | Three Months Ended     |        
|                                                                                 |  | June 30, 2006          |         |   | June 30, 2005        |  
|                                                                                 |  | AverageBalance         |         |   | InterestandDividends |   | Yield/Cost |  |      | AverageBalance |  |   | InterestandDividends |   | Yield/Cost |  
|                                                                                 |  | (Dollars in thousands) |        
|Interest-earning assets:                                                         |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Loans receivable:(1)                                                             |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Real estate and commercial                                                       |  | $                      | 524,976 |   |                      | $ | 8,949      |  | 6.82 | %              |  | $ | 403,055              |   |            | $ | 5,927 |  | 5.88 | %
|Consumer                                                                         |  |                        | 3,712   |   |                      |   | 55         |  | 5.93 | %              |  |   | 3,039                |   |            |   | 48    |  | 6.32 | %
|Home equity                                                                      |  |                        | 205,131 |   |                      |   | 4,007      |  | 7.81 | %              |  |   | 186,819              |   |            |   | 2,798 |  | 5.99 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total loans retained                                                             |  |                        | 733,819 |   |                      |   | 13,011     |  | 7.09 | %              |  |   | 592,913              |   |            |   | 8,773 |  | 5.92 | %
|                                                                                 |  |                        |         |   |                      |  
|Loans available for sale                                                         |  |                        | 57,416  |   |                      |   | 933        |  | 6.50 | %              |  |   | 51,243               |   |            |   | 759   |  | 5.92 | %
|                                                                                 |  |                        |         |   |                      |  
|Debt securities                                                                  |  |                        | 12,704  |   |                      |   | 116        |  | 3.65 | %              |  |   | 4,646                |   |            |   | 43    |  | 3.70 | %
|FHLB stock                                                                       |  |                        | 8,976   |   |                      |   | 88         |  | 3.92 | %              |  |   | 8,647                |   |            |   | 85    |  | 3.93 | %
|Mortgage-backed securities                                                       |  |                        | 4,217   |   |                      |   | 48         |  | 4.55 | %              |  |   | 5,490                |   |            |   | 66    |  | 4.81 | %
|Other                                                                            |  |                        | 9,332   |   |                      |   | 62         |  | 2.66 | %              |  |   | 7,651                |   |            |   | 49    |  | 2.56 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total interest-earning assets                                                    |  |                        | 826,464 |   |                      |   | 14,258     |  | 6.90 | %              |  |   | 670,590              |   |            |   | 9,775 |  | 5.83 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|                                                                                 |  |                        |         |   |                      |  
|Non-interest-earning assets                                                      |  |                        | 80,701  |   |                      |   |            |  |      |                |  |   | 46,792               |   |            |   |       |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total assets                                                                     |  | $                      | 907,165 |   |                      |   |            |  |      |                |  | $ | 717,382              |   |            |   |       |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Interest-bearing liabilities:                                                    |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Demand deposit                                                                   |  | $                      | 62,824  |   |                      | $ | 241        |  | 1.53 | %              |  | $ | 37,749               |   |            |   | 32    |  | 0.34 | %
|Savings                                                                          |  |                        | 35,818  |   |                      |   | 32         |  | 0.36 | %              |  |   | 33,382               |   |            |   | 29    |  | 0.35 | %
|Money market                                                                     |  |                        | 97,150  |   |                      |   | 759        |  | 3.13 | %              |  |   | 91,301               |   |            |   | 467   |  | 2.05 | %
|Time deposits                                                                    |  |                        | 380,808 |   |                      |   | 4,142      |  | 4.35 | %              |  |   | 280,334              |   |            |   | 2,240 |  | 3.20 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total interest-bearing deposits                                                  |  |                        | 576,600 |   |                      |   | 5,174      |  | 3.59 | %              |  |   | 442,766              |   |            |   | 2,768 |  | 2.50 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|FHLB advances                                                                    |  |                        | 168,269 |   |                      |   | 2,016      |  | 4.79 | %              |  |   | 166,523              |   |            |   | 1,447 |  | 3.48 | %
|Note payable                                                                     |  |                        | 3,489   |   |                      |   | 62         |  | 7.11 | %              |  |   | 3,659                |   |            |   | 46    |  | 5.03 | %
|Subordinated debentures                                                          |  |                        | 19,589  |   |                      |   | 359        |  | 7.33 | %              |  |   | 19,589               |   |            |   | 265   |  | 5.41 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total interest-bearing liabilities                                               |  |                        | 767,947 |   |                      |   | 7,611      |  | 3.96 | %              |  |   | 632,537              |   |            |   | 4,526 |  | 2.86 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Non-interest bearing liabilities:                                                |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Non-interest bearing deposits                                                    |  |                        | 33,169  |   |                      |   |            |  |      |                |  |   | 22,058               |   |            |   |       |  |      |  
|Other non-interest bearing liabilities                                           |  |                        | 29,968  |   |                      |   |            |  |      |                |  |   | 15,973               |   |            |   |       |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total non-interest-bearing liabilities                                           |  |                        | 63,137  |   |                      |   |            |  |      |                |  |   | 38,031               |   |            |   |       |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Stockholders equity                                                             |  |                        | 76,081  |   |                      |   |            |  |      |                |  |   | 46,814               |   |            |   |       |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Total liabilities and stockholders equity                                       |  | $                      | 907,165 |   |                      |   |            |  |      |                |  | $ | 717,382              |   |            |   |       |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Net interest income                                                              |  |                        |         |   |                      | $ | 6,647      |  |      |                |  |   |                      |   |            | $ | 5,249 |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  
|Interest rate spread(2)                                                          |  |                        |         |   |                      |   |            |  | 2.94 | %              |  |   |                      |   |            |   |       |  | 2.97 | %
|Net interest margin(3)                                                           |  |                        |         |   |                      |   |            |  | 3.22 | %              |  |   |                      |   |            |   |       |  | 3.13 | %
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                        | 107.62  | % |                      |   |            |  |      |                |  |   | 106.02               | % |            |   |       |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |       |  |      |  

---

|(1) | Includes non-accrual loans with an average balance of $1.5 million and $1.0 million for the
three months ended June 30, 2006 and 2005, respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Yield on interest-earning assets less cost of interest-bearing liabilities.
|--- | ---------------------------------------------------------------------------

|(3) | Net interest income divided by average interest-earning assets.
|--- | ---------------------------------------------------------------



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##### Table of Contents

|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|-------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | -------------------- | - | ---------- |  | ---- | -------------- |  | - | -------------------- | - | ---------- | - | ------ |  | ---- | -
|                                                                                 |  | Nine Months Ended      |        
|                                                                                 |  | June 30, 2006          |         |   | June 30, 2005        |  
|                                                                                 |  | AverageBalance         |         |   | InterestandDividends |   | Yield/Cost |  |      | AverageBalance |  |   | InterestandDividends |   | Yield/Cost |  
|                                                                                 |  | (Dollars in thousands) |        
|Interest-earning assets:                                                         |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Loans receivable:(1)                                                             |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Real estate and commercial                                                       |  | $                      | 489,917 |   |                      | $ | 23,904     |  | 6.51 | %              |  | $ | 388,152              |   |            | $ | 16,721 |  | 5.74 | %
|Consumer                                                                         |  |                        | 3,510   |   |                      |   | 160        |  | 6.08 | %              |  |   | 3,184                |   |            |   | 141    |  | 5.90 | %
|Home Equity                                                                      |  |                        | 200,715 |   |                      |   | 11,188     |  | 7.43 | %              |  |   | 176,492              |   |            |   | 7,441  |  | 5.62 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Total loans retained                                                             |  |                        | 694,142 |   |                      |   | 35,252     |  | 6.77 | %              |  |   | 567,828              |   |            |   | 24,303 |  | 5.71 | %
|                                                                                 |  |                        |         |   |                      |  
|Loans available for sale                                                         |  |                        | 45,315  |   |                      |   | 2,031      |  | 5.98 | %              |  |   | 42,929               |   |            |   | 1,772  |  | 5.50 | %
|                                                                                 |  |                        |         |   |                      |  
|Debt securities                                                                  |  |                        | 12,034  |   |                      |   | 353        |  | 3.91 | %              |  |   | 7,465                |   |            |   | 143    |  | 2.55 | %
|FHLB stock                                                                       |  |                        | 8,552   |   |                      |   | 221        |  | 3.45 | %              |  |   | 8,019                |   |            |   | 207    |  | 3.44 | %
|Mortgage-backed securities                                                       |  |                        | 4,415   |   |                      |   | 157        |  | 4.74 | %              |  |   | 5,913                |   |            |   | 213    |  | 4.80 | %
|Other                                                                            |  |                        | 6,649   |   |                      |   | 175        |  | 3.51 | %              |  |   | 5,839                |   |            |   | 108    |  | 2.47 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Total interest-earning assets                                                    |  |                        | 771,107 |   |                      |   | 38,189     |  | 6.60 | %              |  |   | 637,993              |   |            |   | 26,746 |  | 5.59 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|                                                                                 |  |                        |         |   |                      |  
|Non-interest-earning assets                                                      |  |                        | 63,049  |   |                      |   |            |  |      |                |  |   | 45,282               |   |            |   |        |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Total assets                                                                     |  | $                      | 834,156 |   |                      |   |            |  |      |                |  | $ | 683,275              |   |            |   |        |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Interest-bearing liabilities:                                                    |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Demand deposit                                                                   |  | $                      | 45,913  |   |                      |   | 447        |  | 1.30 | %              |  | $ | 36,670               |   |            |   | 88     |  | 0.32 | %
|Savings                                                                          |  |                        | 32,592  |   |                      |   | 86         |  | 0.35 | %              |  |   | 33,333               |   |            |   | 87     |  | 0.35 | %
|Money market                                                                     |  |                        | 94,438  |   |                      |   | 2,038      |  | 2.88 | %              |  |   | 87,259               |   |            |   | 1,152  |  | 1.76 | %
|Time deposits                                                                    |  |                        | 362,941 |   |                      |   | 10,882     |  | 4.00 | %              |  |   | 271,543              |   |            |   | 5,498  |  | 2.70 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Total interest-bearing deposits                                                  |  |                        | 535,884 |   |                      |   | 13,453     |  | 3.35 | %              |  |   | 428,805              |   |            |   | 6,825  |  | 2.12 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|FHLB advances                                                                    |  |                        | 163,222 |   |                      |   | 5,410      |  | 4.42 | %              |  |   | 156,679              |   |            |   | 3,690  |  | 3.14 | %
|Note payable                                                                     |  |                        | 3,546   |   |                      |   | 174        |  | 6.54 | %              |  |   | 3,744                |   |            |   | 126    |  | 4.49 | %
|Subordinated debentures                                                          |  |                        | 19,589  |   |                      |   | 1,008      |  | 6.86 | %              |  |   | 16,757               |   |            |   | 632    |  | 5.03 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Total interest-bearing liabilities                                               |  |                        | 722,241 |   |                      |   | 20,045     |  | 3.70 | %              |  |   | 605,985              |   |            |   | 11,273 |  | 2.48 | %
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Non-interest bearing liabilities:                                                |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Non-interest bearing deposits                                                    |  |                        | 29,467  |   |                      |   |            |  |      |                |  |   | 19,573               |   |            |   |        |  |      |  
|Other non-interest bearing liabilities                                           |  |                        | 20,340  |   |                      |   |            |  |      |                |  |   | 13,174               |   |            |   |        |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Total non-interest-bearing liabilities                                           |  |                        | 49,807  |   |                      |   |            |  |      |                |  |   | 32,747               |   |            |   |        |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Stockholders equity                                                             |  |                        | 62,108  |   |                      |   |            |  |      |                |  |   | 44,543               |   |            |   |        |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Total liabilities and stockholders equity                                       |  | $                      | 834,156 |   |                      |   |            |  |      |                |  | $ | 683,275              |   |            |   |        |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Net interest income                                                              |  |                        |         |   |                      | $ | 18,144     |  |      |                |  |   |                      |   |            | $ | 15,473 |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  
|Interest rate spread(2)                                                          |  |                        |         |   |                      |   |            |  | 2.90 | %              |  |   |                      |   |            |   |        |  | 3.11 | %
|Net interest margin(3)                                                           |  |                        |         |   |                      |   |            |  | 3.14 | %              |  |   |                      |   |            |   |        |  | 3.23 | %
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                        | 106.77  | % |                      |   |            |  |      |                |  |   | 105.28               | % |            |   |        |  |      |  
|                                                                                 |  |                        |         |   |                      |   |            |  |      |                |  |   |                      |   |            |   |        |  |      |  

---

|(1) | Includes non-accrual loans with an average balance of $2.1 million and $862,000 for the nine
months ended June 30, 2006 and 2005, respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Yield on interest-earning assets less cost of interest-bearing liabilities.
|--- | ---------------------------------------------------------------------------

|(3) | Net interest income divided by average interest-earning assets.
|--- | ---------------------------------------------------------------



- 19 -



---

##### Table of Contents

Rate Volume Analysis

The following table sets forth the effects of changing rates and volumes on net interest income for the periods indicated. The total change for each category of interest-earning asset and interest-bearing liability is segmented into the
change attributable to variations in volume (change in volume multiplied by prior period rate) and the change attributable to variations in interest rates (changes in rates multiplied by prior period volume). Changes in interest income and expense
attributed to both changes in volume and changes in rate are allocated proportionately to rate and volume.



|                                                      |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  
|----------------------------------------------------- |  | - | ----- | - |  | - | ----- | - |  | - | ----- | - |  | - | ----- | - |  | - | ----- | - |  | - | ------ | -
|Interest-earning assets:                              |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |  
|Loans receivable                                      |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  
|Real estate and commercial                            |  | $ | 1,977 |   |  | $ | 1,045 |   |  | $ | 3,022 |   |  | $ | 4,752 |   |  | $ | 2,431 |   |  | $ | 7,183  |  
|Consumer                                              |  |   | 24    |   |  |   | (17   | ) |  |   | 7     |   |  |   | 14    |   |  |   | 5     |   |  |   | 19     |  
|Home Equity                                           |  |   | 295   |   |  |   | 914   |   |  |   | 1,209 |   |  |   | 1,119 |   |  |   | 2,628 |   |  |   | 3,747  |  
|                                                      |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  
|Total loans retained                                  |  |   | 2,296 |   |  |   | 1,942 |   |  |   | 4,238 |   |  |   | 5,885 |   |  |   | 5,064 |   |  |   | 10,949 |  
|Loans available for sale                              |  |   | 96    |   |  |   | 78    |   |  |   | 174   |   |  |   | 101   |   |  |   | 158   |   |  |   | 259    |  
|                                                      |  |   |       |   |  |  
|Debt securities                                       |  |   | 76    |   |  |   | (3    | ) |  |   | 73    |   |  |   | 112   |   |  |   | 98    |   |  |   | 210    |  
|FHLB stock                                            |  |   | 5     |   |  |   | (2    | ) |  |   | 3     |   |  |   | 13    |   |  |   | 1     |   |  |   | 14     |  
|Mortgage-backed securities                            |  |   | (15   | ) |  |   | (3    | ) |  |   | (18   | ) |  |   | (53   | ) |  |   | (3    | ) |  |   | (56    | )
|Other                                                 |  |   | 10    |   |  |   | 3     |   |  |   | 13    |   |  |   | 17    |   |  |   | 50    |   |  |   | 67     |  
|                                                      |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  
|Net change in income on interest earning assets       |  |   | 2,468 |   |  |   | 2,015 |   |  |   | 4,483 |   |  |   | 6,075 |   |  |   | 5,368 |   |  |   | 11,443 |  
|                                                      |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  
|Interest-bearing liabilities:                         |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  
|Demand deposits                                       |  |   | 44    |   |  |   | 165   |   |  |   | 209   |   |  |   | 28    |   |  |   | 331   |   |  |   | 359    |  
|Savings                                               |  |   | (7    | ) |  |   | 10    |   |  |   | 3     |   |  |   | (1    | ) |  |   |      |   |  |   | (1     | )
|Money market                                          |  |   | 32    |   |  |   | 260   |   |  |   | 292   |   |  |   | 101   |   |  |   | 785   |   |  |   | 886    |  
|Time deposits                                         |  |   | 950   |   |  |   | 952   |   |  |   | 1,902 |   |  |   | 2,215 |   |  |   | 3,169 |   |  |   | 5,384  |  
|                                                      |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  
|Total interest-bearing deposits                       |  |   | 1,019 |   |  |   | 1,387 |   |  |   | 2,406 |   |  |   | 2,343 |   |  |   | 4,285 |   |  |   | 6,628  |  
|FHLB advances                                         |  |   | 15    |   |  |   | 554   |   |  |   | 569   |   |  |   | 160   |   |  |   | 1,560 |   |  |   | 1,720  |  
|Note payable                                          |  |   | (14   | ) |  |   | 30    |   |  |   | 16    |   |  |   | (11   | ) |  |   | 59    |   |  |   | 48     |  
|Subordinated debentures                               |  |   |      |   |  |   | 94    |   |  |   | 94    |   |  |   | 119   |   |  |   | 257   |   |  |   | 376    |  
|                                                      |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  
|Net change in expense on interest bearing liabilities |  |   | 1,020 |   |  |   | 2,065 |   |  |   | 3,085 |   |  |   | 2,611 |   |  |   | 6,161 |   |  |   | 8,772  |  
|                                                      |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  
|Change in net interest income                         |  | $ | 1,448 |   |  | $ | (50   | ) |  | $ | 1,398 |   |  | $ | 3,464 |   |  | $ | (793  | ) |  | $ | 2,671  |  
|                                                      |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  

Additional Discussion of Financial Condition

Cash and cash equivalents decreased $5.1 million from $25.7 million at September 30, 2005 to $20.6 million at June 30, 2006. The balance of cash
includes vault cash reserves and other liquid deposit balances with correspondent, Federal Reserve and Federal Home Loan banks.

Debt securities held
to maturity increased $3.4 million from $6.0 million at September 30, 2005 to $9.4 million at June 30, 2006. The Bank purchased debt securities to pledge against certain large deposits.

Premises and equipment increased $3.9 million to $17.6 million at June 30, 2006 from $13.7 million at September 30, 2005. The acquisition of CWE
added $1.6 million of premises and equipment. In addition, the Bank is in the process of constructing a new branch facility in Richmond Heights, Missouri, which added $1.6 million during the period. Also, the Company invested $514,000 in building
improvements and $558,000 in equipment and furniture during the period.



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Bank-owned life insurance (BOLI) increased $7.5 million to $23.2 million at June 30, 2006
from $15.6 million at September 30, 2005. During the March quarter, the Company purchased an additional policy for $6.5 million and added $452,000 from the acquisition of CWE. The tax-adjusted yield on the BOLI portfolio was 6.81% at
June 30, 2006.

Total stockholders equity increased $25.5 million to $73.7 million at June 30, 2006 from $48.2 million at
September 30, 2005. Changes in equity during the nine month period included a $16.1 million increase following the completion of a secondary common stock offering of 1,150,000 shares and a $3.7 million increase due to common stock issued in
conjunction with the acquisition of CWE. Retained earnings increased $4.9 million for the nine-month period due to net income of $7.2 million reduced by dividends paid to shareholders of $2.3 million.

NON-PERFORMING ASSETS AND DELINQUENCIES

Nonperforming assets increased to $10.0 million at the end of the third quarter, compared with $9.7 million at second quarter-end and $6.8 million at the end of the prior
fiscal year. Nonperforming loan balances increased from $6.0 million at September 30, 2005 to $6.8 million at June 30, 2006, but declined $1.8 million from the prior quarter as the Company took several properties in settlement of debts,
including a $1.1 million commercial building. Real estate acquired in settlement of debt increased from $754,000 at September 30, 2005 to $3.1 million at June 30, 2006. The provision for loan losses for the quarter totaled $292,000
compared with $529,000 in the same period a year ago. The lower provision was the result of improved overall loan quality as the level of nonperforming loans improved to 0.82% of total loans at June 30, 2006 compared to 1.11% at March 31,
2006 and 0.85% at September 30, 2005. The allowance for loan losses was $7.6 million at June 30, 2006, or 111.74% of nonperforming loans, 0.92% of total loans and 1.02% of total loans retained for the portfolio, which compared to 113.51%
of nonperforming loans, 0.97% of total loans and 1.07% of loans retained for the portfolio at September 30, 2005.

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, and can also be affected by the following factors: changes in lending policies and procedures, including underwriting
standards and collections, charge-off and recovery history, 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 average historical net charge-off experience has been low, totaling only $342,000. While the charge-offs 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 was due to the growth in loan balances, the risk inherent in the loan portfolio and loan product diversification. The Company was
historically a lender of only one-to-four 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 estate, losses occur more frequently when property values are declining and borrowers are losing equity in the underlying collateral. At present, the property values in the Companys lending areas have been
stable.



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The following table represents activity in the allowance for loan losses for the nine months ended June 30, 2006 and
2005.



|                                                    |  |                            |        |   |      |   |       |  
|--------------------------------------------------- |  | -------------------------- | ------ | - | ---- | - | ----- | -
|                                                    |  | Nine Months Ended June 30, |       
|                                                    |  | 2006                       |        |   | 2005 |  
|                                                    |  | (Dollars in thousands)     |       
|Balance, beginning of period                        |  | $                          | 6,806  |   |      | $ | 5,579 |  
|Provision charged to expense                        |  |                            | 1,151  |   |      |   | 996   |  
|Allowance on loans acquired in business combination |  |                            | 282    |   |      |   |      |  
|Charge-offs                                         |  |                            | (612   | ) |      |   | (281  | )
|Recoveries                                          |  |                            | 8      |   |      |   | 4     |  
|                                                    |  |                            |        |   |      |   |       |  
|Balance, end of period                              |  | $                          | 7,635  |   |      | $ | 6,298 |  
|                                                    |  |                            |        |   |      |   |       |  
|Ratio of allowance to total loans outstanding       |  |                            | 0.92   | % |      |   | 0.91  | %
|Ratio of allowance to nonperforming loans           |  |                            | 111.74 | % |      |   | 98.90 | %

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 loans are individually reviewed and assigned a credit risk rating on an annual basis by the internal loan committee.
Consumer and home equity loans are assigned standard risk weightings that determine the allocation percentage.

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 the allowance are adjusted to reflect the impact of current conditions, including actual collection and charge-off experience. Any material increase in non-performing loans will adversely affect our financial
condition and results of operation.

DISCUSSION OF OTHER INCOME AND
EXPENSE FROM OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2006

Title insurance policy sales generated $186,000 in gross revenues for the quarter ended June 30, 2006 and $559,000 for the nine
months ended June 30, 2006 compared to $180,000 and $495,000 for the three- and nine-month periods a year ago.

Investment brokeragesales generated $152,000 in gross revenues for the quarter ended June 30, 2006 and $419,000 for the nine months ended June 30, 2006 compared to $110,000 and $508,000, respectively, for the three- and nine-month periods a year
ago.Investment brokerage revenues have been negatively impacted by the current interest-rate environment and the resulting lack of demand for bond investments.

Other noninterest income consists primarily of changes in the cash surrender value of BOLI, insurance commissions, fee income from a correspondent bank and lease income from tenants. Other noninterest
income totaled $465,000 for the three-month period ending



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June 30, 2006 compared to $302,000 for the three-month period ending June 30, 2005. For the nine-month period
ending June 30, 2006 other income was $1.4 million compared to $900,000 for the nine months ended June 30, 2005. The increases during the quarter and nine months ended June 30, 2006 were due primarily to an increase in income from
BOLI resulting from the purchase of a $6.5 million policy during the March 2006 quarter.

Salaries and employee benefits expense increased
$419,000 to $2.7 million for the three months ended June 30, 2006 from $2.3 million for the same period in 2005. The increase in compensation was due to growth in the commercial division as well as the expanded branch locations and other
staff additions. Salaries expense was higher than the same period a year ago, but was partially offset by declines in compensation expense associated with the employee stock ownership plan (ESOP) and employee bonuses. The shares in the
Companys ESOP were fully allocated at September 30, 2005 and no additional expense has been incurred since that date. In addition, the Company scaled back its employee bonus program in 2006 compared to 2005.

Occupancy, equipment and data processing expense increased 32% to $1.4 million for the three months ended June 30, 2006 from $1.1 million for the
three months ended June 30, 2005. The increased expense was due to depreciation and operating expenses associated with the additional branch location in Chesterfield, Missouri, and the two branches acquired from CWE, combined with added
depreciation expense from improvements to existing properties and higher data processing costs resulting from growth in customer account activity.

Loss/Gain on derivative financial instrumentswas a $146,000 gain for the three months ended June 30, 2006 compared to an $874,000 gain for the three months ended June 30, 2005. For the nine-month period ended
June 30, 2006, the losses were $334,000 compared to gains of $404,000 for the nine months ended June 30, 2005. The documentation concerns that forced the loss of hedge accounting in prior periods, resulting in the recognition of the
losses, were corrected during the March 2006 quarter, enabling the Company to apply hedge accounting. The small gains and losses incurred in the June and March 2006 quarters are expected to be typical of small gains and losses the Company will
experience until the derivative instruments mature or are called. All the losses are expected to be recovered in future periods as the derivative instruments mature.

Charitable donations increased $242,000 to $325,000 for the nine months ended June 30, 2006 compared to 2005. The increase was due primarily to a contribution of $250,000 to a St. Louis
community-based organization during the second quarter of 2006.

Professional servicesincreased $37,000 to $279,000, and $254,000 to
$943,000, during the three- and nine-month periods ended June 30, 2006, respectively, compared to the same periods in 2005. The increases were the result of increased expenses associated with the development, implementation and testing of
procedures to comply with the requirements of the Sarbanes-Oxley Act and legal and professional fees incurred in connection with the resolution of the issues surrounding the accounting for derivative financial instruments.

INCOME TAXES

The provision for
income taxes was $1.4 million for each of the three months ended June 30, 2006 and June 30, 2005. For the nine-month periods, the provision for income taxes was $4.0 million during 2006 compared to $3.5 million during 2005. The
effective tax rates for the three-month periods ended June 30, 2006 and 2005 were 36.1% and 36.7%, respectively, and were 35.4% and 37.3%, respectively for the nine-month periods ended June 30, 2006 and 2005. The lower effective tax rates
in 2006 were the result of an increase in BOLI income, which is non-taxable, and a decrease in compensation expense associated with the ESOP, which was non-deductible.

LIQUIDITY AND CAPITAL RESOURCES

At June 30,
2006, the Bank had outstanding commitments to originate loans of $111.1 million, commitments to sell loans on a best-efforts basis of $163.1 million and commitments to sell mortgage-backed securities of $27.0 million. At the same date, certificates
of deposit that were scheduled to mature in one year or less totaled $269.2 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 require funds beyond their ability to generate them internally, the Bank has the ability to borrow funds from 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 lower 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 35% of the Banks assets. At June 30, 2006, the Bank had approximately $27.8 million in
additional available borrowing authority under the above-mentioned arrangement, and $188.5 million of outstanding FHLB advances. The Company also maintains a line of credit with the Federal Reserve Bank of St. Louis and a $16.0 million line of
credit with a correspondent bank.



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SOURCES AND USES OF CASH

The Company is a large originator of residential mortgage loans, with more than 87% of the loans being sold to the secondary residential mortgage
investment community. Consequently, the primary source and use of cash in operations is to originate loans for sale, which used $831.8 million in cash during the nine months ended June 30, 2006 and provided proceeds of cash of $821.9
million from loan sales. The Company realized $2.l million of gains on sale of loans. Also, the Company realized a $2.5 million gain on sale of a branch location.

The primary use of cash from investing activities is the origination of loans that are held in portfolio. During the nine months ended June 30, 2006, the Company had a $111.9 million net increase in loan
originations, which increased from $102.7 million for the nine months ended June 30, 2005. The Company also had $15.7 million of cash acquired from CWE and had a cash outflow of $19.4 million on the sale of a branch location. In addition, the
Company sold $8.1 million of debt securities acquired from CWE.

Supporting the growth in the loan portfolio, the Companys primary source of funds
from financing activities came from deposits, which increased $83.9 million compared to a $93.8 million increase for the nine months ended June 30, 2005. The Company also had a secondary common stock offering that resulted in a $16.1
million increase in cash. FHLB advances increased $17.5 million compared to a $19.5 million increase for the nine months ended June 30, 2005.

The following table presents the maturity structure of time deposits and other maturing liabilities at June 30, 2006:



|                                      |  |                        |         |                |   |             |  |                    |       |                        |   |        |  |   |       
|------------------------------------- |  | ---------------------- | ------- | -------------- | - | ----------- |  | ------------------ | ----- | ---------------------- | - | ------ |  | - | ------
|                                      |  | June 30, 2006         
|                                      |  | (In thousands)        
|                                      |  | Certificatesof deposit |         | FHLBBorrowings |   | NotePayable |  | Due to Other Banks |       | SubordinatedDebentures
|Three months or less                  |  | $                      | 119,202 |                | $ | 113,500     |  | $                  |      |                        | $ | 15,533 |  | $ |      
|Over three months through six months  |  |                        | 74,690  |                |   |            |  |                    |      |                        |   |       |  |   |      
|Over six months through twelve months |  |                        | 75,325  |                |   | 11,000      |  |                    | 3,405 |                        |   |       |  |   |      
|Over twelve months                    |  |                        | 130,481 |                |   | 64,000      |  |                    |      |                        |   |       |  |   | 19,589
|                                      |  |                        |         |                |   |             |  |                    |       |                        |   |        |  |   |       
|Total                                 |  | $                      | 399,698 |                | $ | 188,500     |  | $                  | 3,405 |                        | $ | 15,533 |  | $ | 19,589
|                                      |  |                        |         |                |   |             |  |                    |       |                        |   |        |  |   |       

CONTRACTUAL OBLIGATIONS

In addition to owned banking facilities, the Company has entered into long-term operating lease arrangements to support ongoing activities. The required payments under
such commitments and other obligations at June 30, 2006 are as follows:



|                                  |  |   |        
|--------------------------------- |  | - | -------
|Less than one year                |  | $ | 334,345
|Over 1 year but less than 5 years |  |   | 363,177
|Over 5 years                      |  |   |       
|                                  |  |   |        
|Total                             |  | $ | 697,522
|                                  |  |   |        

REGULATORY CAPITAL

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate
certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Companys financial statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.



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The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

Quantitative measures that have been established by regulation to ensure capital adequacy require the Bank
to maintain minimum capital amounts and ratios (set forth in the table below). The Banks primary regulatory agency, the Office of Thrift Supervision (the OTS), requires that the Bank maintain minimum ratios of tangible capital (as
defined in the regulations) of 1.5%, core capital (as defined) of 3% and total risk-based capital (as defined) of 8%. The Bank is also subject to prompt corrective action capital requirement regulations set forth by the OTS. The OTS requires the
Bank to maintain minimum of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital to average assets (as defined). Management believes, as of June 30, 2006, that the Bank meets all
capital adequacy requirements to which it is subject.

As of June 30, 2006 and September 30, 2005, the most recent notification from the OTS
categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier I risk-based, Tier I leverage
ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Banks category.

The following table illustrates the Banks regulatory capital levels compared to its regulatory capital requirements at June 30, 2006:



|                                                            |  |                        |        |       |                               |   |        |                                                                                  |        |  |      |        |  |       |        |  |       |  
|----------------------------------------------------------- |  | ---------------------- | ------ | ----- | ----------------------------- | - | ------ | -------------------------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                                                            |  |                        |        |       |                               |   |        |                                                                                  |        |  |      |        | 
|                                                            |  |                        |        |       |                               |   |        |                                                                                  |        |  |     
|                                                            |  | Actual                 |        |       | For Capital Adequacy Purposes |   |        | To be Categorized as Well Capitalized Under
Prompt Corrective ActionProvisions |       
|                                                            |  | Amount                 |        | Ratio |                               |   | Amount |                                                                                  | Ratio  |  |      | Amount |  | Ratio |       
|                                                            |  | (Dollars in Thousands) |       
|As of June 30, 2006 Tangible capital (to total assets)      |  | $                      | 90,041 |       | 9.66                          | % |        | $                                                                                | 13,983 |  | 1.50 | %      |  |       | N/A    |  | N/A   |  
|Total risk-based capital (to risk-weighted assets)          |  |                        | 97,352 |       | 12.37                         | % |        |                                                                                  | 62,968 |  | 8.00 | %      |  | $     | 78,710 |  | 10.00 | %
|Tier I risk-based capital (to risk-weighted assets)         |  |                        | 90,041 |       | 11.44                         | % |        |                                                                                  | 39,355 |  | 5.00 | %      |  |       | 47,226 |  | 6.00  | %
|Tier I total capital (to total assets)                      |  |                        | 90,041 |       | 9.66                          | % |        |                                                                                  | 37,287 |  | 4.00 | %      |  |       | 46,609 |  | 5.00  | %
|                                                            |  |                        |        |       |                               |  
|As of September 30, 2005 Tangible capital (to total assets) |  | $                      | 67,663 |       | 8.60                          | % |        | $                                                                                | 11,796 |  | 1.50 | %      |  |       | N/A    |  | N/A   |  
|Total risk-based capital (to risk-weighted assets)          |  |                        | 74,280 |       | 10.85                         | % |        |                                                                                  | 54,751 |  | 8.00 | %      |  | $     | 68,439 |  | 10.00 | %
|Tier I risk-based capital (to risk-weighted assets)         |  |                        | 67,663 |       | 9.89                          | % |        |                                                                                  | 34,219 |  | 5.00 | %      |  |       | 41,063 |  | 6.00  | %
|Tier I total capital (to total assets)                      |  |                        | 67,663 |       | 8.60                          | % |        |                                                                                  | 31,455 |  | 4.00 | %      |  |       | 39,319 |  | 5.00  | %

EFFECTS OF INFLATION

Changes in interest rates can have a significant impact on a banks performance because virtually all assets and liabilities of banks are monetary in nature.
Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services. Inflation does have an impact on the growth of total assets in the banking industry, often resulting in a need to increase
equity capital at higher than normal rates to maintain an appropriate equity-to-asset ratio. The Companys operations are not currently impacted by inflation.



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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Companys quantitative or qualitative aspects of market risk during the quarter ended June 30, 2006 from that
disclosed in the Companys Annual Report on Form 10-K for the year ended September 30, 2005.

The Company employs derivative financial
instruments to assist in its management of interest-rate sensitivity by modifying the repricing, maturity and option characteristics of certain assets and liabilities.

The Company utilizes derivative financial instruments to assist in its management of interest rate sensitivity of certain mortgage assets. Derivative financial instruments issued by the Company consist of interest
rate lock commitments to originate residential loans. Commitments to originate loans consist primarily of residential real estate loans. At June 30, 2006, the Company had issued $112.4 million of unexpired interest rate lock commitments to
mortgage loan customers compared to $147.1 million of unexpired commitments at September 30, 2005.

The Company typically hedges these derivative
commitments through one of two means  either by obtaining a corresponding best-efforts lock commitment with an investor to sell the loan at an agreed upon price, or by forward selling mortgage-backed securities. The forward sale of
mortgage-backed securities is a means of matching a corresponding derivative asset with similar characteristics as the bank-issued commitment, but changes directly opposite in fair value from market movements. Loans hedged through forward sales of
mortgaged backed securities are sold individually or in pools on a mandatory delivery basis to investors, whereas the best efforts sales are locked on a loan-by-loan basis shortly after issuing the rate lock commitments to customers. The Company had
outstanding forward sales commitments of mortgage-backed securities of $27.0 million in notional value at June 30, 2006 and $15.0 million at September 30, 2005. At June 30, 2006, this hedge was matched against $26.8 million of
interest rate lock commitments that were to be sold through the mandatory delivery of loan pool sales compared to $11.5 million of interest rate lock commitments at September 30, 2005.

The carrying value of the interest rate lock commitment liabilities included in the consolidated balance sheets was $154,285 and $83,800 at June 30, 2006 and
September 30, 2005, respectively. The carrying value of the forward sales commitment assets included in the consolidated balance sheets was $162,248 and $104,250 at June 30, 2006 and September 30, 2005, respectively.

The Company entered into interest rate swap agreements to hedge a number of its brokered certificates of deposit in order to convert the fixed rates on the brokered CDs
into variable LIBOR rates. The effect of a swap agreement is that the counterparty pays the fixed rate to the Company while the Company pays the LIBOR rate to the counterparty. The maturity date, notional amounts, interest rates paid and received
and fair value of the Companys interest rate swap agreements as of June 30, 2006 were as follows:



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|              |  |                 |            |                    |      |   |                        |      |   |                      |   |            |  
|------------- |  | --------------- | ---------- | ------------------ | ---- | - | ---------------------- | ---- | - | -------------------- | - | ---------- | -
|Maturity Date |  | Notional Amount |            | Interest Rate Paid |      |   | Interest Rate Received |      |   | Estimated Fair Value |  
|10/20/2008    |  | $               | 10,000,000 |                    | 5.04 | % |                        | 4.30 | % |                      | $ | (265,153   | )
|11/19/2009    |  |                 | 10,000,000 |                    | 5.06 | % |                        | 3.50 | % |                      |   | (323,572   | )
|11/23/2009    |  |                 | 10,000,000 |                    | 5.04 | % |                        | 3.75 | % |                      |   | (326,408   | )
|11/26/2010    |  |                 | 10,000,000 |                    | 5.06 | % |                        | 4.13 | % |                      |   | (569,064   | )
|11/26/2010    |  |                 | 5,000,000  |                    | 5.05 | % |                        | 4.13 | % |                      |   | (282,697   | )
|11/26/2010    |  |                 | 5,000,000  |                    | 5.04 | % |                        | 4.13 | % |                      |   | (280,861   | )
|1/24/2010     |  |                 | 10,000,000 |                    | 5.02 | % |                        | 3.70 | % |                      |   | (519,085   | )
|1/28/2011     |  |                 | 10,000,000 |                    | 5.05 | % |                        | 4.30 | % |                      |   | (286,109   | )
|2/25/2011     |  |                 | 5,000,000  |                    | 5.04 | % |                        | 4.80 | % |                      |   | (177,062   | )
|9/14/2012     |  |                 | 5,000,000  |                    | 5.04 | % |                        | 4.25 | % |                      |   | (172,217   | )
|              |  |                 |            |                    |      |   |                        |      |   |                      |   |            |  
|Total         |  | $               | 80,000,000 |                    |      |   |                        |      |   |                      | $ | (3,202,228 | )
|              |  |                 |            |                    |      |   |                        |      |   |                      |   |            |  

CONTROLS AND PROCEDURES

Pulaski Financial maintains disclosure
controls and procedures as such term is defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act), that are designed to ensure that the information required to be
disclosed in the reports that Pulaski Financial files or submits under the Exchange Act with the Securities and Exchange Commission (the SEC) (1) is recorded, processed, summarized and reported within the time periods specified in
the SECs rules and forms, and (2) is accumulated and communicated to Pulaski Financials management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required
disclosure.

During the quarter ended December 31, 2005, Pulaski Financialss management, including Pulaski Financials principal executive
officer and principal financial officer, evaluated the effectiveness of Pulaski Financials disclosure controls and procedures as of September 30, 2005, and concluded that, because of the existence of a material weakness in Pulaski
Financials internal control over financial reporting as of such date (as discussed in managements report on internal control over financial reporting in its annual report on Form 10-K,) Pulaski Financials disclosure controls and
procedures were not effective as of such date. To remedy the internal control deficiencies over financial reporting relating to the accounting for certain derivative instruments, Pulaski Financial established procedures subsequent to
December 31, 2005 to provide sufficient testing and verification that any existing or new hedging instruments meet the criteria for hedge accounting. As of March 31, 2006, such procedures were finalized, and as such, a material weakness in
internal controls over financial reporting no longer existed at June 30, 2006.

IMPACT OF
RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2005, the Financial
Accounting Standards Board (FASB) issued Statement No. 154, Accounting Changes and Error Corrections (SFAS No. 154), a replacement of APB Opinion No. 20, Accounting Changes, and FASB
Statement No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 requires retrospective application for voluntary changes in accounting principles unless it is impracticable to do so. SFAS
No. 154 is effective for accounting changes and corrections of errors in fiscal years beginning after December 15, 2005. Early application is permitted for accounting changes and corrections of errors during fiscal years beginning
after June 1, 2005. We have evaluated the requirements of SFAS No.154 and do not expect it to have a material effect on our financial condition or results of operations.

In February 2006, the FASB issued Statement No. 155, Accounting for Certain Hybrid Financial Instruments (SFAS No. 155), which amends FASB Statements No. 133 and 140. This
Statement permits fair value remeasurement for any hybrid financial instrument containing an embedded derivative that would otherwise require bifurcation, and broadens a Qualified



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Special Purpose Entitys (QSPE) permitted holdings to include passive derivative financial instruments
that pertain to other derivative financial instruments. This statement is effective for all financial instruments acquired, issued or subject to a remeasurement event occurring after the beginning of an entitys first fiscal year beginning
after September 15, 2006. We have evaluated the requirements of SFAS No. 155 and do not expect it to have a material effect on our financial condition or results of operations.

In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156 (SFAS No. 156), Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, which requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable and permits
the entities to elect either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement 140 for subsequent measurement. The subsequent measurement of separately recognized
servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the
characterization of declines in fair value as impairments or direct write-downs. Statement No. 156 is effective as of the beginning of an entitys first fiscal year that begins after September 15, 2006. Earlier adoption is permitted
as of the beginning of an entitys fiscal year, provided the entity has not yet issued financial statements, including interim financial statements for any period of that fiscal year. We have evaluated the requirements of SFAS No. 156 and
do not expect it to have a material effect on our financial condition or results of operations.

In June 2006, the FASB issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, an interpretation of SFAS No. 109, Accounting for Income Taxes (Interpretation No. 48). Interpretation No. 48 clarifies the accounting for uncertainty in
income taxes in financial statements and prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken. It also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods, disclosure and transition. Interpretation No. 48 is effective for fiscal years beginning after December15, 2005. The Company is currently evaluating the requirements of
Interpretation No. 48 to determine the impact on its financial condition and results of operations.



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##### Table of Contents

PART II  OTHER INFORMATION

Item 1. Legal Proceedings:

Periodically, there have been various claims and lawsuits involving the Bank,
such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Banks business. Neither the
Bank nor the Company is a party to any pending legal proceedings that it believes would have a material adverse effect on the financial condition or operations of the Company.

Item 1A. Risk Factors:

In addition to the other information set forth in this report, the reader should
consider the factors discussed in Part I, Item 1A. Risk Factors in the Companys annual Report on Form 10-K for the year ended September 30, 2005, which could materially affect the Companys business, financial condition
or future results. The risks described in the Companys Annual Report on Form 10-K are not the only risks the Company faces. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also
could materially adversely affect the Companys business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds:

The following table provides
information regarding the Companys purchases of its equity securities during the three months ended June 30, 2006.

ISSUER
PURCHASES OF EQUITY SECURITIES



|                                     |  |                                                 |  |                                            |       |                                                                                               |       |                                                                                                                                |       
|------------------------------------ |  | ----------------------------------------------- |  | ------------------------------------------ | ----- | --------------------------------------------------------------------------------------------- | ----- | ------------------------------------------------------------------------------------------------------------------------------ | ------
|                                     |  |                                                 |  |                                           
|                                     |  |                                                 |  |                                            |       |                                                                                               |       |                                                                                                                               
|Period                               |  | (a) Total Number of Shares (or Units) Purchased |  | (b) Average Price Paid per Share (or Unit) |       | (c)Total Number of Shares (or Units) Purchasedas Part of
Publicly Announced Plans or Programs |       | (d) Maximum Number (or Approximate Dollar Value) of Shares(or Units) that May Yet Be Purchased Under the Plans or Programs
(1)
|April 1, 2006 through April 30, 2006 |  |                                                |  |                                            |      |                                                                                               |      |                                                                                                                                | 25,493
|May 1, 2006 through May 31, 2006     |  |                                                |  |                                            |      |                                                                                               |      |                                                                                                                                | 25,493
|June 1, 2006 through June 30, 2006   |  | 5,000                                           |  | $                                          | 16.60 |                                                                                               | 5,000 |                                                                                                                                | 20,493
|Total                                |  | 5,000                                           |  | $                                          | 16.60 |                                                                                               | 5,000 |                                                                                                                                |       

---

|(1) | In February 2003, Pulaski Financial Corp. announced a repurchase program under which it would repurchase up to 140,000 shares of the Companys common stock. On
July 21, 2003, the Company declared a two-for-one split of its common stock, increasing the shares authorized under this program to 280,000. On July 18, 2005, the Company declared a three-for-two stock split, increasing the shares
authorized under this program to 420,000. The Company expects to acquire the remaining 20,493 shares authorized for repurchase; however, the timing of the repurchases and the number of shares repurchased, if any, will depend upon market conditions
and other factors.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Item 3. Defaults Upon Senior Securities: Not applicable

Item 4. Submission of Matters to a Vote of Security Holders: None

Item 5. Other Information: Not applicable

Item 6. Exhibits



|     |  |                                                                                    
|---- |  | -----------------------------------------------------------------------------------
|     | 
|3.1  |  | Articles of Incorporation of Pulaski Financial Corp.(1)                            
|     | 
|3.2  |  | Certificate of Amendment to Articles of Incorporation of Pulaski Financial Corp.(2)
|     | 
|3.3  |  | Bylaws of Pulaski Financial Corp.(3)                                               
|     | 
|4.0  |  | Form of Certificate for Common Stock(4)                                            
|     | 
|31.1 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer                  
|     | 
|31.2 |  | Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer              
|     | 
|32.1 |  | Section 1350 Certification of Chief Executive Officer                              
|     | 
|32.2 |  | Section 1350 Certification of Chief Financial Officer                              

---

|(1) | Incorporated by reference into this document from the Exhibits to the 2003 proxy statement as filed with the Securities and Exchange Commission on December 27,
2002.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference into this document from the Form 10-Q, as filed with the Securities and Exchange Commission on February 17, 2004.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated herein by reference from the Form 10-Q, as filed with the Securities and Exchange Commission on August 9, 2005.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference from the Form S-1 (Registration No. 333-56465), as amended, as filed with the Securities and Exchange Commission on June 9, 1998.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.



|                     |  |                                                
|-------------------- |  | -----------------------------------------------
|                     |  | PULASKI FINANCIAL CORP.                        
|                     | 
|Date: August 8, 2006 |  | /s/William A. Donius                           
|                     |  | William A. Donius                              
|                     |  | Chairman, President and Chief Executive Officer
|                     | 
|Date: August 8, 2006 |  | /s/Ramsey K. Hamadi                            
|                     |  | Ramsey K. Hamadi                               
|                     |  | Chief Financial Officer