Exhibit 13.1

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BUSINESS OF THE COMPANY

Pulaski Financial Corp. (the Company) is a diversified, community-based, financial institution holding company headquartered in St.
Louis, Missouri. We conduct operations primarily through Pulaski Bank, a federally chartered savings bank (the Bank). Pulaski Bank provides an array of financial products and services for businesses and consumers primarily through its
twelve full-service offices in the St. Louis metropolitan area and three loan production offices in the Kansas City metropolitan area and the Illinois portion of the St. Louis metropolitan area.

We have grown our assets and deposits internally by building our residential and commercial lending operations, opening de novo branches, and hiring experienced bankers
with existing customer relationships in our market. Although we intend to expand primarily through internal growth, we may also make strategic acquisitions and will explore such opportunities as they become available. We operate twelve full-service
bank locations in the St. Louis metropolitan area. Our goal is to continue to deliver value to our shareholders and to enhance our franchise value and earnings through controlled growth in our banking operations, while maintaining the personal,
community-oriented customer service that has characterized our success to date.



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SELECTED CONSOLIDATED FINANCIAL INFORMATION



|                                                    |  |                                          |           |   |      |   |           |  |      |         |      |   |         |  |   |        
|--------------------------------------------------- |  | ---------------------------------------- | --------- | - | ---- | - | --------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                                                    |  | At or For the Years Ended September 30, 
|                                                    |  | 2008                                     |           |   | 2007 |   | 2006      |  | 2005 |         | 2004
|                                                    |  | (In thousands, except per share amounts)
|FINANCIAL CONDITION DATA                            |  |                                          |           |   |      |   |           |  |      |         |      |   |         |  |   |        
|Total assets                                        |  | $                                        | 1,304,150 |   |      | $ | 1,131,465 |  | $    | 962,467 |      | $ | 789,861 |  | $ | 637,886
|Loans receivable, net                               |  |                                          | 1,088,737 |   |      |   | 949,826   |  |      | 785,199 |      |   | 633,195 |  |   | 510,584
|Loans held for sale                                 |  |                                          | 71,966    |   |      |   | 58,536    |  |      | 60,452  |      |   | 64,335  |  |   | 49,152 
|Debt and equity securities                          |  |                                          | 733       |   |      |   | 16,988    |  |      | 17,449  |      |   | 10,228  |  |   | 12,986 
|Capital stock of Federal Home Loan Bank             |  |                                          | 10,896    |   |      |   | 8,306     |  |      | 9,524   |      |   | 8,462   |  |   | 7,538  
|Mortgage-backed securities                          |  |                                          | 25,925    |   |      |   | 3,027     |  |      | 3,631   |      |   | 4,833   |  |   | 6,574  
|Cash and cash equivalents                           |  |                                          | 29,078    |   |      |   | 23,774    |  |      | 22,123  |      |   | 25,688  |  |   | 20,296 
|Deposits                                            |  |                                          | 915,311   |   |      |   | 835,489   |  |      | 655,577 |      |   | 496,171 |  |   | 406,799
|Deposit liabilities held for sale                   |  |                                          |          |   |      |   |          |  |      |        |      |   | 25,375  |  |   |       
|Advances from the Federal Home Loan Bank            |  |                                          | 210,600   |   |      |   | 158,400   |  |      | 172,800 |      |   | 171,000 |  |   | 154,600
|Borrowings from the Federal Reserve                 |  |                                          | 40,000    |   |      |   |          |  |      |        |      |   |        |  |   |       
|Subordinated debentures                             |  |                                          | 19,589    |   |      |   | 19,589    |  |      | 19,589  |      |   | 19,589  |  |   | 9,279  
|Stockholders equity                                |  |                                          | 82,361    |   |      |   | 80,804    |  |      | 75,827  |      |   | 48,246  |  |   | 40,974 
|                                                    |  |                                          |           |   |     
|OPERATING DATA                                      |  |                                          |           |   |      |   |           |  |      |         |      |   |         |  |   |        
|Interest and dividend income                        |  | $                                        | 73,266    |   |      | $ | 70,925    |  | $    | 53,843  |      | $ | 37,792  |  | $ | 23,832 
|Interest expense                                    |  |                                          | 37,653    |   |      |   | 41,834    |  |      | 29,027  |      |   | 16,732  |  |   | 7,806  
|                                                    |  |                                          |           |   |      |   |           |  |      |         |      |   |         |  |   |        
|Net interest income                                 |  |                                          | 35,613    |   |      |   | 29,091    |  |      | 24,816  |      |   | 21,060  |  |   | 16,026 
|Provision for loan losses                           |  |                                          | 7,735     |   |      |   | 3,855     |  |      | 1,501   |      |   | 1,635   |  |   | 1,934  
|                                                    |  |                                          |           |   |      |   |           |  |      |         |      |   |         |  |   |        
|Net interest income after provision for loan losses |  |                                          | 27,878    |   |      |   | 25,236    |  |      | 23,315  |      |   | 19,425  |  |   | 14,092 
|Securities (losses) gains                           |  |                                          | (7,870    | ) |      |   | 273       |  |      | 123     |      |   |        |  |   | 736    
|Gain on branch sale                                 |  |                                          |          |   |      |   |          |  |      | 2,474   |      |   |        |  |   |       
|Other non-interest income                           |  |                                          | 12,785    |   |      |   | 10,748    |  |      | 9,862   |      |   | 10,048  |  |   | 7,546  
|Total non-interest expense                          |  |                                          | 29,220    |   |      |   | 22,773    |  |      | 20,511  |      |   | 17,576  |  |   | 13,037 
|                                                    |  |                                          |           |   |      |   |           |  |      |         |      |   |         |  |   |        
|Income before income taxes                          |  |                                          | 3,573     |   |      |   | 13,484    |  |      | 15,263  |      |   | 11,897  |  |   | 9,337  
|Income taxes                                        |  |                                          | 684       |   |      |   | 4,501     |  |      | 5,425   |      |   | 4,418   |  |   | 3,485  
|                                                    |  |                                          |           |   |      |   |           |  |      |         |      |   |         |  |   |        
|Net income                                          |  | $                                        | 2,889     |   |      | $ | 8,983     |  | $    | 9,838   |      | $ | 7,479   |  | $ | 5,852  
|                                                    |  |                                          |           |   |      |   |           |  |      |         |      |   |         |  |   |        
|                                                    |  |                                          |           |   |     
|COMMON SHARE DATA(1)                                |  |                                          |           |   |      |   |           |  |      |         |      |   |         |  |   |        
|Basic earnings per share                            |  | $                                        | 0.29      |   |      | $ | 0.92      |  | $    | 1.07    |      | $ | 0.94    |  | $ | 0.75   
|Diluted earnings per share                          |  | $                                        | 0.28      |   |      | $ | 0.88      |  | $    | 1.01    |      | $ | 0.85    |  | $ | 0.67   
|Dividends declared per share                        |  | $                                        | 0.37      |   |      | $ | 0.35      |  | $    | 0.33    |      | $ | 0.28    |  | $ | 0.20   
|Book value per share                                |  | $                                        | 8.06      |   |      | $ | 8.13      |  | $    | 7.62    |      | $ | 5.72    |  | $ | 4.98   
|Weighted average sharesbasic                       |  |                                          | 9,914     |   |      |   | 9,814     |  |      | 9,206   |      |   | 7,926   |  |   | 7,758  
|Weighted average sharesdiluted                     |  |                                          | 10,239    |   |      |   | 10,256    |  |      | 9,718   |      |   | 8,828   |  |   | 8,695  
|Shares outstandingend of period                    |  |                                          | 10,216    |   |      |   | 9,935     |  |      | 9,946   |      |   | 8,439   |  |   | 8,227  



|(1) | Reflects a three-for-two stock split in July 2005.
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|                                                                          |  |                                        |   |  |        |   |  |        |   |  |        |   |  |        |  
|------------------------------------------------------------------------- |  | -------------------------------------- | - |  | ------ | - |  | ------ | - |  | ------ | - |  | ------ | -
|                                                                          |  | At or For the Year Ended September 30, |  
|                                                                          |  | 2008                                   |   |  | 2007   |   |  | 2006   |   |  | 2005   |   |  | 2004   |  
|KEY OPERATING RATIOS                                                      |  |                                        |   |  |        |   |  |        |   |  |        |   |  |        |  
|Return on average assets                                                  |  | 0.23                                   | % |  | 0.85   | % |  | 1.14   | % |  | 1.06   | % |  | 1.18   | %
|Return on average equity                                                  |  | 3.34                                   |   |  | 11.07  |   |  | 14.98  |   |  | 16.37  |   |  | 15.31  |  
|Average equity to average assets                                          |  | 6.99                                   |   |  | 7.70   |   |  | 7.62   |   |  | 6.45   |   |  | 7.68   |  
|Interest rate spread                                                      |  | 2.81                                   |   |  | 2.63   |   |  | 2.87   |   |  | 3.04   |   |  | 3.38   |  
|Net interest margin                                                       |  | 3.08                                   |   |  | 2.97   |   |  | 3.12   |   |  | 3.18   |   |  | 3.48   |  
|Efficiency ratio                                                          |  | 61.19                                  |   |  | 58.63  |   |  | 58.59  |   |  | 56.67  |   |  | 56.56  |  
|Dividend payout ratio                                                     |  | 130.36                                 |   |  | 39.20  |   |  | 32.67  |   |  | 32.94  |   |  | 29.70  |  
|Non-interest expense to average assets                                    |  | 2.40                                   |   |  | 2.22   |   |  | 2.36   |   |  | 2.56   |   |  | 2.76   |  
|Average interest-earning assets to average interest-bearing liabilities   |  | 108.29                                 |   |  | 107.79 |   |  | 106.96 |   |  | 105.59 |   |  | 105.85 |  
|Allowance for loan losses to total loans receivable at end of period      |  | 1.16                                   |   |  | 1.09   |   |  | 0.99   |   |  | 1.06   |   |  | 1.08   |  
|Allowance for loan losses to nonperforming loans                          |  | 61.76                                  |   |  | 99.44  |   |  | 115.89 |   |  | 113.51 |   |  | 130.63 |  
|Net charge-offs to average outstanding loans receivable during the period |  | 0.52                                   |   |  | 0.14   |   |  | 0.10   |   |  | 0.06   |   |  | 0.06   |  
|Nonperforming assets to total assets                                      |  | 1.87                                   |   |  | 1.20   |   |  | 0.99   |   |  | 0.86   |   |  | 0.84   |  
|                                                                          |  |                                        |   |  |       
|OTHER DATA                                                                |  |                                        |   |  |        |   |  |        |   |  |        |   |  |        |  
|Number of:                                                                |  |                                        |   |  |        |   |  |        |   |  |        |   |  |        |  
|Full-time equivalent employees                                            |  | 427                                    |   |  | 421    |   |  | 361    |   |  | 327    |   |  | 258    |  
|Full service offices                                                      |  | 12                                     |   |  | 11     |   |  | 9      |   |  | 8      |   |  | 7      |  
|                                                                          |  |                                        |   |  |       
|CAPITAL RATIOS(1)                                                         |  |                                        |   |  |        |   |  |        |   |  |        |   |  |        |  
|Tangible capital                                                          |  | 7.93                                   | % |  | 8.79   | % |  | 9.30   | % |  | 8.60   | % |  | 8.14   | %
|Core capital                                                              |  | 7.93                                   |   |  | 8.79   |   |  | 9.30   |   |  | 8.60   |   |  | 8.14   |  
|Total risk-based capital                                                  |  | 10.59                                  |   |  | 11.18  |   |  | 11.99  |   |  | 10.85  |   |  | 11.46  |  



|(1) | Capital ratios are for Pulaski Bank.
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MANAGEMENTS DISCUSSION AND
ANALYSIS OF

FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

Managements discussion and analysis of financial condition and results of operations is intended to assist in understanding our financial condition and results of operations. The information contained in this
section should be read in conjunction with the consolidated financial statements and accompanying notes contained elsewhere in this annual report.

This
report may contain certain forward-looking statements within the meaning of the federal securities laws, which are made in good faith pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These statements are not historical facts; rather, they are statements based on managements current expectations regarding our business strategies, intended results and future performance. Forward-looking statements are generally
preceded by terms such as expects, believes, anticipates, intends and similar expressions.

Managements ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors that could affect actual results include interest-rate trends, the general economic climate in the market area in
which we operate, as well as nationwide, our ability to control costs and expenses, products and pricing offered by competitors, loan delinquency rates, demand for loans and deposits, changes in the quality or composition of our loan portfolio,
changes in accounting principles and changes in federal and state legislation and regulation. Additional factors that may affect our results are discussed in the section titled Risk Factors in our annual report on Form 10-K and in other
reports filed with the Securities and Exchange Commission. These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. We assume no obligation to update any
forward-looking statements.

PULASKI IS A TRUE COMMUNITY
BANK

Pulaski Bank is one of St. Louis top residential lenders, originating $1.46 billion of new residential mortgage loans
in the St. Louis metropolitan area during the year ended September 30, 2008. In addition, we originated $483.2 million of commercial loans during the year. Despite a challenging economic environment, we were able to leverage these customer
relationships, which helped us grow our core deposits by 35%, increase our mortgage revenues by 24% and increase our retail banking fees by 16%. Pulaski has an 86-year history of serving many St. Louis neighborhoods. However, for much of that
history, the Bank was too small to effectively meet the needs of the larger metropolitan area. In the last five years, we expanded our operations and have positioned ourselves to be a True Community Bank to metropolitan St. Louis.



|                                               |  |                              |  |         |  |                   |        |                               |       |              |        |  |      |  
|---------------------------------------------- |  | ---------------------------- |  | ------- |  | ----------------- | ------ | ----------------------------- | ----- | ------------ | ------ |  | ---- | -
|St. Louis MSA Banks & Thrifts                  |  | Head-quarters                |  | Charter |  | Number ofBranches |        | June 2008Deposits In Millions |       | Pct of Total |       
|Rank                                           |  | Company Name                 |  |         |  |                   |       
|1                                              |  | U.S. Bank                    |  | MN      |  | Bank              |        | 116                           |       | $            | 10,188 |  | 17.5 | %
|2                                              |  | Bank of America              |  | NC      |  | Bank              |        | 62                            |       |              | 7,869  |  | 13.5 |  
|3                                              |  | Southwest Bank               |  | WI      |  | Bank              |        | 18                            |       |              | 4,547  |  | 7.8  |  
|4                                              |  | Commerce Bank                |  | MO      |  | Bank              |        | 53                            |       |              | 3,967  |  | 6.8  |  
|5                                              |  | Regions Bank                 |  | AL      |  | Bank              |        | 71                            |       |              | 2,726  |  | 4.7  |  
|6                                              |  | National City Bank           |  | PA      |  | Bank              |        | 61                            |       |              | 2,325  |  | 4.0  |  
|7                                              |  | First Banks, Inc.            |  | MO      |  | Bank              |        | 57                            |       |              | 2,190  |  | 3.8  |  
|8                                              |  | Enterprise Bank & Trust      |  | MO      |  | Bank              |        | 4                             |       |              | 1,296  |  | 2.2  |  
|9                                              |  | Central Bancompany, Inc.     |  | MO      |  | Bank              |        | 14                            |       |              | 981    |  | 1.7  |  
|10                                             |  | Banc Ed Corp.                |  | IL      |  | Bank              |        | 20                            |       |              | 930    |  | 1.6  |  
|11                                             |  | Reliance Bank                |  | MO      |  | Bank              |        | 20                            |       |              | 910    |  | 1.6  |  
|12                                             |  | UMB Bank                     |  | MO      |  | Bank              |        | 25                            |       |              | 899    |  | 1.6  |  
|13                                             |  | Pulaski Bank                 |  | MO      |  | Thrift            |        | 12                            |       |              | 851    |  | 1.5  |  
|14                                             |  | First Co Bancorp, Inc.       |  | IL      |  | Bank              |        | 12                            |       |              | 810    |  | 1.4  |  
|15                                             |  | Heartland Bank               |  | MO      |  | Thrift            |        | 12                            |       |              | 665    |  | 1.1  |  
|                                               |  | Institutions Ranked 16 - 139 |  |         |  |                   |        | 405                           |       |              | 16,966 |  | 29.2 |  
|Source: SNL Financial LLC, Charlottesville,
VA |  | Total                        |  | 962     |  | $                 | 58,120 |                               | 100.0 | %           

St. Louis is the eighteenth largest metropolitan area in the United
States, with a population of 2.8 million and an average household income of $48,716, which is 5% higher than the national average. Ranked according to total deposits at June 30, 2008 as reported by SNL Financial LLC, Pulaski Bank is the
thirteenth largest bank in the St. Louis metropolitan area and, with only 1.5% of the areas $58 billion in deposits, has significant growth potential. The St. Louis economy is relatively stable and diverse with educational and health
services employing



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15% of the workforce, and professional and business services employing 14% of the workforce.

Our community banking strategy emphasizes high-quality, responsive, and personalized customer service. The St. Louis market has experienced heavy consolidation in the banking sector during the last twelve years,
with more than $77 billion in deposits acquired by regional and national banks. This consolidation has created larger banks, which are perceived by many customers as impersonal or unresponsive. We believe there is a significant opportunity for a
locally-managed, community-focused bank to provide a full range of financial services to retail customers and small- and middle-market businesses. By offering quicker decision making in the delivery of banking products and services, offering
customized products where needed, and providing our customers access to our senior decision makers, we distinguish ourselves from the larger regional banks operating in our market areas. Conversely, our larger capital base and product mix enable us
to compete effectively against smaller banks with limited services and capabilities.



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|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Locally-based community banks, like Pulaski, have also gained market share by recruiting experienced bankers who have been displaced by mergers with
larger, out-of-area banks. These bankers have generally developed strong relationships with customers who are willing to follow them to another financial institution. We believe that St. Louisans strongly favor doing business with companies
that are locally-managed, creating opportunities for Pulaski.  In addition to
attracting and retaining veteran bankers who are St. Louis natives, the Companys strategic plan is focused on providing convenient bank locations in the St. Louis commercial districts. Since 2005, the Bank has opened or acquired six new
full-service locations, including its newest location in Clayton, Missouri, which was opened in October 2007. All of these locations are convenient to the metropolitan St. Louis commercial and financial centers. |  | LOGO

COMMUNITY BANKING STRATEGY PRODUCED
STRONG GROWTH IN KEY INDICATORS

We saw net income decline 67.8% in
fiscal 2008 compared to 2007 primarily due to a $7.9 million loss on the sale of the Companys entire portfolio of Fannie Mae preferred stock, a 101% increase in the provision for loan losses, and expenses associated with the resignation of the
Companys former chief executive officer. See Comparison of Operating Results for the Years Ended September 30, 2008 and 2007. However, execution of the Companys community banking strategy produced strong, consistent
performance in many of its key indicators, such as growth in net interest income, other revenues, total assets, loans and deposits, thereby positioning the Company for improved earnings in future periods. Specifically, during the five years ended
September 30, 2008, we have:



| |  | Increased our net interest income from $16.0 million to $35.6 million, representing a 17% compound annual growth rate (CAGR).
|- |  | -------------------------------------------------------------------------------------------------------------------------------



| |  | Increased our mortgage revenues from $4.0 million to $6.1 million, representing a 9% CAGR.
|- |  | ------------------------------------------------------------------------------------------



| |  | Increased our retail banking fees from $2.4 million to $4.0 million, representing an 11% CAGR.
|- |  | ----------------------------------------------------------------------------------------------



| |  | Increased our total assets from $401.4 million to $1.30 billion, representing a 27% CAGR.
|- |  | -----------------------------------------------------------------------------------------



| |  | Increased our total loan portfolio from $276.9 million to $1.09 billion, representing a 32% CAGR.
|- |  | -------------------------------------------------------------------------------------------------



| |  | Increased our total deposits from $313.6 million to $915.3 million, representing a 24% CAGR.
|- |  | --------------------------------------------------------------------------------------------



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| |  | Reduced our ratio of non-interest expense to average assets from 2.76% to 2.40%.
|- |  | --------------------------------------------------------------------------------



| |  | Expanded the number of residential and commercial loan officers from 40 to 87.
|- |  | ------------------------------------------------------------------------------



| |  | Expanded our St. Louis bank network from seven to twelve full-service locations.
|- |  | --------------------------------------------------------------------------------



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Over the last several years, the Companys earnings have become progressively less dependent on non-interest income sources as the loan portfolio has expanded, resulting in higher interest
income and, ultimately, higher net interest income. Net interest income increased to $35.6 million for the year ended September 30, 2008 compared to $16.0 million for the year ended September 30, 2004. Driven by growth in our commercial
and residential portfolios, loans receivable increased 293.2% over the last five years, from $276.9 million at September 30, 2003 to $1.09 billion at September 30, 2008. |  |  |  | LOGO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 
|LOGO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  | Our community banking strategy is centered on serving small- and medium-sized businesses. At September 30, 2003, we were principally a residential lender, with 94% of our loan portfolio
consisting of residential and home equity loans. Over the past five years, the commercial lending division has been a significant contributor to our growth, with $123.8 million of net loan growth in fiscal 2008 and $509.3 million since
September 30, 2003. The commercial loan portfolio totaled $530.8 million, or 48% of total loans receivable, at September 30, 2008 compared to $21.4 million, or 8% of total loans receivable, at September 30, 2003.



Our strategy enabled us to increase our
share of the $58 billion St. Louis deposit market from 0.7% at September 30, 2003 to 1.5% at June 30, 2008. Total deposits increased to $915.3 million at September 30, 2008 from $313.6 million at September 30, 2003. We
continue to grow our core deposit accounts, which we define as checking, money market and savings accounts. Core deposit accounts increased to $430.1 million at September 30, 2008 compared to $132.2 million at September 30, 2003. Money
market accounts and interest-bearing checking accounts increased 131.8% and 591.4%, respectively, during the same period to $149.1 million and $178.7 million, respectively, at September 30, 2008. Non-interest-bearing checking accounts increased
713.2% since September 30, 2003 to $76.4 million at September 30, 2008. The increases stem primarily from growth in commercial relationships, expanded products and a marketing campaign focused on increasing customer relationships. Fueled
by this deposit growth, retail banking fees increased 65.9% from $2.4 in fiscal 2004 to $4.0 million in fiscal 2008.

FOCUS
OF OUR COMMUNITY BANKING STRATEGY

Our strategy centers on our continued
development into a full-service, true community bank. Crucial to this strategy is growth in the Banks three primary business lines: commercial banking services, retail mortgage lending and retail banking services. We believe the marketplace is
more competitive than ever and, to achieve successful results, these products must be delivered with superior and efficient customer service.



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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |     
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Commercial Banking Services.Growth in commercial banking relationships is essential for the Companys continued growth in the St. Louis market. Since beginning our commercial
banking operations in 2003, approximately 63% of the growth in the Banks loan portfolio has come from commercial lending. In 2003, the Bank had just two employees dedicated to commercial banking. Over the past several years, the Company has
been successful in hiring some of the top commercial bankers in St. Louis. Today, the commercial division has 29 employees, many of whom have brought us new business from their existing                                                                                                                                                                                                                                                                                                                      |  | LOGO
|customer relationships. In the last year, the commercial loan portfolio increased $123.8 million to $530.8 million at September 30, 2008 compared to $407.0 million at
September 30, 2007. Commercial loan originations totaled $483.2 million during fiscal 2008 compared to $401.9 million during fiscal 2007. At September 30, 2008, the commercial loan portfolio included of $261.2 million of commercial real
estate loans, $137.7 million of commercial and industrial loans, $55.3 million of commercial construction and development loans, $44.1 million of residential construction and development loans, and $32.5 million of multi-family residential loans.
Our commercial loan customers are also among the best sources of core deposit accounts. During the past year, commercial checking account balances increased $55.3 million to $168.8 million at September 30, 2008 compared to $113.5 million at
September 30, 2007.



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|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Retail Mortgage Lending. Pulaski Bank has more than 75 residential lenders who are lending in every community and touching nearly every
neighborhood in St. Louis and Kansas City. During the year ended September 30, 2008, the Bank originated more than 7,000 residential mortgage and home equity loans, totaling $1.01 billion in the St. Louis metropolitan area, and originated
another $515.3 million in the Kansas City metropolitan area.  Pulaski Bank is a
conforming, residential mortgage lender who originates loans directly through commission-based sales staff in the St. Louis and Kansas City metropolitan areas. We do not engage in sub-prime lending. We have become a leading mortgage originator in
these two markets, originating $1.46 billion, $1.48 billion and $1.30 billion in residential loans during the years ended September 30, 2008, 2007, and 2006, respectively. |  | LOGO



|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|LOGO |  | The majority of loans originated in the retail mortgage division are one- to four-family residential loans, which we sell to investors on a servicing-released basis, generating mortgage revenue,
which is our largest source of non-interest income. For the year ended September 30, 2008, we sold $1.32 billion of residential loans to investors, which generated mortgage revenues totaling $6.1 million, compared to $1.34 billion of loans sold
and $4.9 million in revenues for the year ended September 30, 2007. The Company experienced a modest reduction in loan sales activity in the last half of fiscal 2008 as



-7-



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the result of weakened loan demand caused by an overall shrinkage in the number of qualified, credit-worthy borrowers in the market as many potential
borrowers were impacted by the national credit crisis. However, the Company realized higher gross revenue margins during 2008 due to a shift in the mix of the types of loans originated to products with higher sales margins, such as loans guaranteed
by the FHA, and also due to reduced market competition and lower direct origination costs, primarily personnel costs.

Although we generally originate
conforming mortgage loans, which qualify for sale in the secondary market, a certain number of loans have characteristics that make them appealing for the Banks portfolio even though they do not qualify for sale as conforming
agency-eligible loans. These loans are underwritten using an internal credit-scoring model, which assesses credit risk and assigns one of five risk-based ratings to the loan at the time of inception. Such loans are priced on a
risk/reward basis. In the last 18 months, we have repeatedly tightened our internal credit underwriting standards in response to the national economic crisis. However, we have continually maintained the same basic underwriting tenant, which is to
not to originate loans that have a combination of low FICO credit scores and high loan-to-value ratios. These non-conforming loans differ considerably from sub-prime or Alt-A loans in that we do not rely on the value of the
collateral as a primary source of repayment. Instead, we have always relied on the customers ability and willingness to repay their debt as our primary source of repayment. During the year ended September 30, 2008, residential loans
retained in our portfolio increased $7.3 million to $339.5 million from $332.2 million at September 30, 2007.

Home equity lines of credit balances
totaled $225.4 million at September 30, 2008 compared to $219.5 million at September 30, 2007. These loans consist primarily of revolving lines of credit secured by residential real estate. Growth in this portfolio slowed
significantly during 2008 as we tightened credit standards following the downturn in the economy and have generally continued to offer home equity loans only to our most credit-worthy borrowers. These loans are generally approved in conjunction with
high-quality first mortgage loan applications. Because of the large volume of first mortgage loans originated annually, we are able to selectively offer the home equity product to customers with low loan-to-value ratios and high credit scores. The
interest rates on these loans are tied to the prime rate, which results in low interest-rate risk characteristics, attractive yields and added stability to our net interest margin. The weighted average interest rate on home equity lines of credit
was 5.28% at September 30, 2008 compared to 7.76% at September 30, 2007. The decline in the average interest rate was due to the decline in market interest rates during 2008.



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |     
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Retail Banking Services. Growth in core deposits is critical to support profitable asset growth and is our top strategic objective. Our approach to attracting deposits involves three key
components: providing excellence in customer service, offering customers best-in-class products, and providing customers with convenient banking locations. Checking accounts represent the cornerstone product in a customer relationship and are the
Banks most valuable source of low-cost deposits. Checking account balances not only provide one of the lowest-cost funding sources, but also generate valuable fee income through service charges. The balance of checking accounts increased
$140.3 million during the year to $255.1 million at September 30, 2008 from $114.8 million at September 30, 2007. The increase included $120.9 million of growth in interest-bearing checking account balances resulting from a sustained
marketing campaign focused on growing new customer relationships |  | LOGO
|with these products. At September 30, 2008, the weighted-average cost of interest-bearing checking accounts increased to 2.51% compared to 1.79% at September 30, 2007.
Competition for these products remains intense, but the accounts are generally less interest-rate sensitive and more stable than certificates of deposit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



-8-



---

We consider money market deposits to be another one of our core deposit products. However, during 2008, we shifted our
marketing focus away from these products to concentrate on interest-bearing checking accounts. The balance of money market accounts decreased $24.8 million to $149.1 million at September 30, 2008 from $173.9 million at
September 30, 2007. At September 30, 2008, the weighted average cost of money market deposits decreased to 2.12% compared to 4.05% at September 30, 2007 as the result of declining market interest rates during 2008. Money market and
interest-bearing checking accounts carry adjustable interest rates that make them an ideal funding source for our prime-adjusting commercial and home equity loans.



|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|LOGO |  | Retail banking fees increased 16% to $4.0 million for the year ended September 30, 2008 compared to $3.4 million for the year ended September 30, 2007. Our marketing campaign focused
on cross-selling checking accounts to all customers and developing new checking account relationships. We have seen retail banking fees increase primarily through an increase in the volume of checks honored for customers who have overdrawn their
checking accounts. Historic trends indicate the majority of customers will eventually honor the overdraft checks; consequently, annual charge-offs have averaged under 3% of total retail banking fees.

Also contributing to our deposit growth in 2008 were the three new bank locations we opened in calendar year 2007.
The new locations have proven successful in growing deposits from the start, with $71.3 million of combined deposits at September 30, 2008.

CRITICAL ACCOUNTING POLICIES

We have established various accounting policies that
govern the application of U.S generally accepted accounting principles in the preparation of our consolidated financial statements. Our significant accounting policies are described in the footnotes to the consolidated financial statements that
appear in this report. Certain accounting policies involve significant judgments and assumptions by management that have a material impact on the carrying value of certain assets and liabilities. We consider the following to be our critical
accounting policies: accounting for the allowance for loan losses and derivative financial instruments. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under
the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from these judgments and estimates that could have a material impact on the carrying values of assets and liabilities and our
results of operations.

We maintain an allowance for loan losses to absorb probable losses in our loan portfolio. Determining the amount of the allowance
involves a high degree of judgment. The balance in the allowance is based upon managements quarterly estimates of expected losses inherent in the loan portfolio. Managements estimates are determined by quantifying certain risks in the
portfolio that are affected primarily by changes in the composition and volume of the portfolio combined with an analysis of past-due and adversely classified loans. These estimates can also be affected by the following factors: changes in lending
policies and procedures, including underwriting standards and collection; charge-off and recovery practices; changes in national and local economic conditions and developments; assessment of collateral values by obtaining independent appraisals; and
changes in the experience, ability, and depth of lending management staff. Refer to Note 1 of Notes to Consolidated Financial Statements for a detailed description of our risk assessment process.



-9-



---

We employ derivative financial instruments to help us manage interest rate sensitivity by modifying the repricing,
maturity and option characteristics of certain assets and liabilities. The judgments and assumptions that are most critical to the application of this critical accounting policy are those affecting the estimation of fair value. Fair value is based
on quoted market prices. Refer to Note 1 of Notes to Consolidated Financial Statements for a detailed description of our estimation processes and methodology related to the fair value of derivative financial instruments.



-10-



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|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|-------------------------------------------------------------------------------- |  | ------------------------- | --------- | -------------------- | ---- | ------ | ---------- | ---- | ---- | -------------- |  | -------------------- | --------- |  | ---------- | ------ | - | -------------- | ---- | -------------------- |  | - | ---------- |  | - | ------ | - |  | ---- | -
|                                                                                 |  | Years Ended September 30, |          
|                                                                                 |  | 2008                      |           |                      | 2007 |        |            | 2006 |     
|                                                                                 |  | AverageBalance            |           | InterestandDividends |      |        | Yield/Cost |      |      | AverageBalance |  | InterestandDividends |           |  | Yield/Cost |        |   | AverageBalance |      | InterestandDividends |  |   | Yield/Cost | 
|                                                                                 |  | (Dollars in thousands)    |          
|Interest-earning assets:                                                         |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Loans receivable(1)                                                              |  | $                         | 1,044,217 |                      | $    | 67,608 |            |      | 6.47 | %              |  | $                    | 878,057   |  | $          | 65,220 |   |                | 7.43 | %                    |  | $ | 716,046    |  | $ | 49,592 |   |  | 6.93 | %
|Loans held for sale                                                              |  |                           | 64,446    |                      |      | 3,562  |            |      | 5.53 | %              |  |                      | 64,415    |  |            | 3,992  |   |                | 6.20 | %                    |  |   | 48,518     |  |   | 3,000  |   |  | 6.18 | %
|Debt securities                                                                  |  |                           | 11,873    |                      |      | 410    |            |      | 3.45 | %              |  |                      | 14,768    |  |            | 721    |   |                | 4.88 | %                    |  |   | 11,289     |  |   | 447    |   |  | 3.96 | %
|Equity securities                                                                |  |                           | 9,699     |                      |      | 532    |            |      | 5.48 | %              |  |                      | 4,038     |  |            | 159    |   |                | 3.94 | %                    |  |   | 4,429      |  |   | 169    |   |  | 3.81 | %
|Mortgage-backed securities                                                       |  |                           | 10,031    |                      |      | 562    |            |      | 5.60 | %              |  |                      | 3,334     |  |            | 158    |   |                | 4.74 | %                    |  |   | 4,243      |  |   | 202    |   |  | 4.77 | %
|FHLB stock                                                                       |  |                           | 11,958    |                      |      | 498    |            |      | 4.17 | %              |  |                      | 9,109     |  |            | 442    |   |                | 4.85 | %                    |  |   | 8,788      |  |   | 327    |   |  | 3.72 | %
|Other                                                                            |  |                           | 2,961     |                      |      | 94     |            |      | 3.14 | %              |  |                      | 4,522     |  |            | 233    |   |                | 5.15 | %                    |  |   | 6,052      |  |   | 233    |   |  | 3.85 | %
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Total interest-earning assets                                                    |  |                           | 1,155,185 |                      |      | 73,266 |            |      | 6.34 | %              |  |                      | 978,243   |  |            | 70,925 |   |                | 7.25 | %                    |  |   | 799,365    |  |   | 53,970 |   |  | 6.75 | %
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Non-interest-earning assets                                                      |  |                           | 80,535    |                      |      |        |            |      |      |                |  |                      | 75,005    |  |            |        |   |                |      |                      |  |   | 62,671     |  |   |        |   |  |      |  
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Total assets                                                                     |  | $                         | 1,235,720 |                      |      |        |            |      |      |                |  | $                    | 1,053,248 |  |            |        |   |                |      |                      |  | $ | 862,036    |  |   |        |   |  |      |  
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Interest-bearing liabilities:                                                    |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Interest-bearing deposits                                                        |  | $                         | 783,787   |                      | $    | 27,441 |            |      | 3.50 | %              |  | $                    | 712,674   |  | $          | 31,337 |   |                | 4.40 | %                    |  | $ | 552,626    |  | $ | 19,625 |   |  | 3.55 | %
|FHLB advances                                                                    |  |                           | 224,460   |                      |      | 7,956  |            |      | 3.54 | %              |  |                      | 168,476   |  |            | 8,755  |   |                | 5.20 | %                    |  |   | 168,067    |  |   | 7,777  |   |  | 4.63 | %
|Borrowings from the Federal Reserve Bank                                         |  |                           | 34,093    |                      |      | 776    |            |      | 2.28 | %              |  |                      | 1         |  |            |       |   |                | 6.25 | %                    |  |   |           |  |   |       |   |  |     |  
|Note payable                                                                     |  |                           | 4,868     |                      |      | 242    |            |      | 4.97 | %              |  |                      | 3,191     |  |            | 226    |   |                | 7.08 | %                    |  |   | 3,510      |  |   | 236    |   |  | 6.71 | %
|Subordinated debentures                                                          |  |                           | 19,589    |                      |      | 1,238  |            |      | 6.32 | %              |  |                      | 19,589    |  |            | 1,516  |   |                | 7.74 | %                    |  |   | 19,589     |  |   | 1,389  |   |  | 7.09 | %
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Total interest-bearing liabilities                                               |  |                           | 1,066,797 |                      |      | 37,653 |            |      | 3.53 | %              |  |                      | 903,931   |  |            | 41,834 |   |                | 4.63 | %                    |  |   | 743,792    |  |   | 29,027 |   |  | 3.90 | %
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Non-interest-bearing liabilities:                                                |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Non-interest-bearing deposits                                                    |  |                           | 63,325    |                      |      |        |            |      |      |                |  |                      | 47,982    |  |            |        |   |                |      |                      |  |   | 31,365     |  |   |        |   |  |      |  
|Other non-interest-bearing liabilities                                           |  |                           | 19,176    |                      |      |        |            |      |      |                |  |                      | 20,197    |  |            |        |   |                |      |                      |  |   | 21,204     |  |   |        |   |  |      |  
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Total non-interest-bearing liabilities                                           |  |                           | 82,501    |                      |      |        |            |      |      |                |  |                      | 68,179    |  |            |        |   |                |      |                      |  |   | 52,569     |  |   |        |   |  |      |  
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Stockholders equity                                                             |  |                           | 86,422    |                      |      |        |            |      |      |                |  |                      | 81,138    |  |            |        |   |                |      |                      |  |   | 65,675     |  |   |        |   |  |      |  
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Total liabilities and stockholders equity                                       |  | $                         | 1,235,720 |                      |      |        |            |      |      |                |  | $                    | 1,053,248 |  |            |        |   |                |      |                      |  | $ | 862,036    |  |   |        |   |  |      |  
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Net interest income                                                              |  |                           |           |                      | $    | 35,613 |            |      |      |                |  |                      |           |  | $          | 29,091 |   |                |      |                      |  |   |            |  | $ | 24,943 |   |  |      |  
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  
|Interest rate spread(2)                                                          |  |                           |           |                      |      |        |            |      | 2.81 | %              |  |                      |           |  |            |        |   |                | 2.62 | %                    |  |   |            |  |   |        |   |  | 2.85 | %
|Net interest margin(3)                                                           |  |                           |           |                      |      |        |            |      | 3.08 | %              |  |                      |           |  |            |        |   |                | 2.97 | %                    |  |   |            |  |   |        |   |  | 3.12 | %
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                           |           |                      |      | 108.29 | %          |      |      |                |  |                      |           |  |            | 108.22 | % |                |      |                      |  |   |            |  |   | 107.47 | % |  |      |  
|                                                                                 |  |                           |           |                      |      |        |            |      |      |                |  |                      |           |  |            |        |   |                |      |                      |  |   |            |  |   |        |   |  |      |  



|(1) | Includes non-accrual loans with an average balance of $6.3
million, $2.5 million and $1.8 million for the fiscal years ended September 30, 2008, 2007 and 2006, respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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



-11-



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RATE VOLUME ANALYSIS

The following table allocates the period-to-period changes in the Companys various categories of interest income and expense between changes due to changes in
volume (calculated by multiplying the change in average volumes of the related interest-earning asset or interest-bearing liability category by the prior years rate) and changes due to changes in rate (change in rate multiplied by the prior
years volume). Changes due to changes in rate/volume (changes in rate multiplied by changes in volume) have been allocated proportionately between changes in volume and changes in rate.



|                                                            |  |                                                 |        |   |                                                 |   |        |     |  |   |        |   |  |        |        |   |     |   |        |   |  |   |        |  
|----------------------------------------------------------- |  | ----------------------------------------------- | ------ | - | ----------------------------------------------- | - | ------ | --- |  | - | ------ | - |  | ------ | ------ | - | --- | - | ------ | - |  | - | ------ | -
|                                                            |  | 2008 Compared to 2007Increase (Decrease) Due to |        |   | 2007 Compared to 2006Increase (Decrease) Due to |  
|                                                            |  | Rate                                            |        |   | Volume                                          |   |        | Net |  |   | Rate   |   |  | Volume |        |   | Net |  
|                                                            |  | (In thousands)                                  |       
|Interest-earning assets:                                    |  |                                                 |        |   |                                                 |   |        |     |  |   |        |   |  |        |        |   |     |   |        |   |  |   |        |  
|Loans receivable                                            |  | $                                               | (8,713 | ) |                                                 | $ | 11,101 |     |  | $ | 2,388  |   |  | $      | 3,889  |   |     | $ | 11,739 |   |  | $ | 15,628 |  
|Loans held for sale                                         |  |                                                 | (432   | ) |                                                 |   | 2      |     |  |   | (430   | ) |  |        | 10     |   |     |   | 982    |   |  |   | 992    |  
|Debt securities                                             |  |                                                 | (186   | ) |                                                 |   | (125   | )   |  |   | (311   | ) |  |        | 118    |   |     |   | 156    |   |  |   | 274    |  
|Equity securities                                           |  |                                                 | 81     |   |                                                 |   | 292    |     |  |   | 373    |   |  |        | 6      |   |     |   | (16    | ) |  |   | (10    | )
|Mortgage-backed securities                                  |  |                                                 | 34     |   |                                                 |   | 370    |     |  |   | 404    |   |  |        | (1     | ) |     |   | (43    | ) |  |   | (44    | )
|FHLB stock                                                  |  |                                                 | (68    | ) |                                                 |   | 124    |     |  |   | 56     |   |  |        | 103    |   |     |   | 12     |   |  |   | 115    |  
|Other                                                       |  |                                                 | (74    | ) |                                                 |   | (65    | )   |  |   | (139   | ) |  |        | 68     |   |     |   | (68    | ) |  |   |       |  
|                                                            |  |                                                 |        |   |                                                 |   |        |     |  |   |        |   |  |        |        |   |     |   |        |   |  |   |        |  
|                                                            |  |                                                 |        |   |                                                 |  
|Total net change in income on interest-earning assets       |  |                                                 | (9,358 | ) |                                                 |   | 11,699 |     |  |   | 2,341  |   |  |        | 4,193  |   |     |   | 12,762 |   |  |   | 16,955 |  
|                                                            |  |                                                 |        |   |                                                 |   |        |     |  |   |        |   |  |        |        |   |     |   |        |   |  |   |        |  
|                                                            |  |                                                 |        |   |                                                 |  
|Interest-bearing liabilities:                               |  |                                                 |        |   |                                                 |   |        |     |  |   |        |   |  |        |        |   |     |   |        |   |  |   |        |  
|Interest-bearing deposits                                   |  |                                                 | (5,839 | ) |                                                 |   | 1,943  |     |  |   | (3,896 | ) |  |        | 4,995  |   |     |   | 6,717  |   |  |   | 11,712 |  
|FHLB advances                                               |  |                                                 | (3,244 | ) |                                                 |   | 2,445  |     |  |   | (799   | ) |  |        | 959    |   |     |   | 19     |   |  |   | 978    |  
|Borrowings from the Federal Reserve                         |  |                                                 |       |   |                                                 |   | 776    |     |  |   | 776    |   |  |        |       |   |     |   |       |   |  |   |       |  
|Note payable                                                |  |                                                 | (80    | ) |                                                 |   | 96     |     |  |   | 16     |   |  |        | 12     |   |     |   | (22    | ) |  |   | (10    | )
|Subordinated debentures                                     |  |                                                 | (278   | ) |                                                 |   |       |     |  |   | (278   | ) |  |        | 127    |   |     |   |       |   |  |   | 127    |  
|                                                            |  |                                                 |        |   |                                                 |   |        |     |  |   |        |   |  |        |        |   |     |   |        |   |  |   |        |  
|                                                            |  |                                                 |        |   |                                                 |  
|Total net change in expense on interest-bearing liabilities |  |                                                 | (9,441 | ) |                                                 |   | 5,260  |     |  |   | (4,181 | ) |  |        | 6,093  |   |     |   | 6,714  |   |  |   | 12,807 |  
|                                                            |  |                                                 |        |   |                                                 |   |        |     |  |   |        |   |  |        |        |   |     |   |        |   |  |   |        |  
|                                                            |  |                                                 |        |   |                                                 |  
|Net change in net interest income                           |  | $                                               | 83     |   |                                                 | $ | 6,439  |     |  | $ | 6,522  |   |  | $      | (1,900 | ) |     | $ | 6,048  |   |  | $ | 4,148  |  
|                                                            |  |                                                 |        |   |                                                 |   |        |     |  |   |        |   |  |        |        |   |     |   |        |   |  |   |        |  



-12-



---

COMPARISON OF OPERATING RESULTS FOR
THE

YEARS ENDED SEPTEMBER 30, 2008 AND 2007

OVERVIEW

Net income for the
year ended September 30, 2008 declined 67.8% to $2.9 million, or $0.28 per diluted share, compared to $9.0 million, or $0.88 per diluted share, for the year ended September 30, 2007. Fiscal 2008 earnings were negatively impacted by
after-tax losses on investment securities totaling $5.0 million, or $0.48 per diluted share, primarily related to the sale of the Companys entire portfolio of Fannie Mae preferred stock, an after-tax charge totaling $1.0 million, or $0.10 per
diluted share, for a separation payment and other expenses related to the resignation of the Companys former chief executive officer on May 1, 2008, and a $7.7 million provision for loan losses, which was a $3.9 million increase compared
to 2007. Return on average assets and return on average equity were 0.23% and 3.34%, respectively, during 2008 compared to 0.85% and 11.07%, respectively, during 2007.

NET INTEREST INCOME

Net interest income is the difference
between interest and dividend income on interest-earning assets, such as loans and securities, and the interest expense on interest-bearing liabilities used to fund those assets, including deposits, advances from the Federal Home Loan Bank
(FHLB), borrowings from the Federal Reserve Bank of St. Louis (Federal Reserve) and other borrowings. The amount of net interest income is affected by both changes in the level of interest rates and the amount and composition
of interest-earning assets and interest-bearing liabilities.

Net interest income increased $6.5 million to $35.6 million for the year
ended September 30, 2008 compared to $29.1 million for the year ended September 30, 2007 due almost entirely to an increase in net interest-earning assets. The average balance of interest-earning assets increased $176.9 million to
$1.16 billion during fiscal 2008, compared to $978.2 million for fiscal 2007 due primarily to loan growth. The net interest margin increased 11 basis points to 3.08% in fiscal 2008 from 2.97% in fiscal 2007, resulting primarily from an increase in
core deposits, which are typically the Companys lowest cost of funds, combined with lower wholesale funding costs.

Total interest and dividend
income increased $2.3 million to $73.3 million for the year ended September 30, 2008 compared to $70.9 million for the year ended September 30, 2007. The increase was primarily due to a rise in the average balance of loans
receivable, which increased $166.2 million to $1.04 billion for fiscal 2008, partially offset by a decrease in the average yield on loans receivable to 6.47% in fiscal 2008 from 7.43% in fiscal 2007 resulting from lower market interest rates.
Commercial loans, which generally carry higher interest rates than residential mortgage loans, fueled 87.0% of the growth in the average balance of loans receivable during 2008. Interest income was also negatively impacted by a decline in the
average yield on home equity loans from 8.09% in 2007 to 6.27% in 2008, which adjust monthly with market interest rates. See Business Strategy and Products.

Total interest expense decreased $4.2 million to $37.7 million for fiscal 2008 compared to $41.8 million for fiscal 2007 due to a decline in the average cost of funds partially offset by an increase in the average balance of
interest-bearing liabilities. The average cost of funds decreased from 4.63% for 2007 to 3.53% for 2008 while the average balance of interest-bearing liabilities increased from $903.9 million to $1.07 billion during the same periods, respectively.

The increased average balance of interest-bearing liabilities resulted from increases in the average balances of deposits, advances from the FHLB and
borrowings from the Federal Reserve, which were used to fund asset growth during the period. The decreased average cost was the result of lower market interest rates during the period, growth in core deposits and a shift in the mix of wholesale
funding sources. The Company primarily funds its assets with savings deposits from its retail and commercial customers, which are typically its lowest-cost funding source. This funding source is supplemented with wholesale funds consisting primarily
of advances from the FHLB, time deposits from national brokers and short-term borrowings from the Federal Reserve.



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Management actively chooses between these wholesale funding sources depending on their relative costs and the
Companys overall borrowing capacity at the FHLB and the Federal Reserve. As a result of the 255 basis point decline in the Federal Reserve Boards target federal funds rate during the year ended September 30, 2008 combined with
increased national demand for brokered time deposits, the Company had the ability to secure borrowings from the FHLB and the Federal Reserve at rates substantially lower than those available for brokered time deposits. During the year ended
September 30, 2008, management shifted $61.5 million in maturing brokered time deposits into lower-cost FHLB and Federal Reserve borrowings. Brokered deposits decreased to $128.9 million at September 30, 2008 from $190.4 million at
September 30, 2007.

Interest expense on depositsdecreased $3.9 million, or 12.4%, to $27.4 million during the year ended
September 30, 2008 compared to $31.3 million for the year ended September 30, 2007 as the result of a decrease in the average cost partially offset by an increase in the average balance. The average balance of interest-bearing
deposits increased to $783.8 million for the year ended September 30, 2008 from $712.7 million for the year ended September 30, 2007 while the average cost of deposits decreased from 4.40% to 3.50% during the same periods, respectively.
Growth in average total deposits during 2008 was the result of growth in core deposits and CDARS time deposits partially offset by a decline in the balance of brokered time deposits. This change in the mix of deposits combined with lower market
interest rates resulted in a lower average cost during 2008. See Business Strategy and Products.

Interest expense on advances from the
Federal Home Loan Bank decreased $800,000, or 9.1%, to $8.0 million during the year ended September 30, 2008 compared to $8.8 million for the year ended September 30, 2007 as the result of a decrease in the average cost
partially offset by an increase in the average balance. The average balance increased to $224.5 million for the year ended September 30, 2008 from $168.5 million for the year ended September 30, 2007 while the average cost decreased
from 5.20% to 3.54% during the same period, respectively. The increased average balance resulted from additional borrowings, which were used to fund asset growth and replace higher-cost maturing brokered certificates of deposit. The decreased
average cost was the result of lower market interest rates during the 2008 period.

Interest expense on borrowings from the Federal Reserve
Bank increased to $776,000 during the year ended September 30, 2008 compared to $42 for the year ended September 30, 2007 as the result of an increase in the average balance. The average balance increased to $34.1 million for
the year ended September 30, 2008 from $1,000 for the year ended September 30, 2007. The average cost of these borrowings during the year ended September 30, 2008 was 2.28%. During 2008, the Company supplemented its wholesale
borrowing needs with lower-cost, short-term borrowings from the discount window of the Federal Reserve. The proceeds of these borrowings were used to fund asset growth and replace higher-cost maturing brokered certificates of deposit.

PROVISION FOR LOAN LOSSES

The provision for loan losses for the year ended September 30, 2008 was $7.7 million compared to $3.9 million for the same period a year ago. The provision for loan losses in 2008 related
primarily to increased charge-offs, an increase in the level of non-performing loans and substantial growth in performing commercial loans, which carry a higher level of inherent risk than residential loans. See Non-Performing Assets and
Allowance for Loan Losses.

NON-INTEREST INCOME

Total non-interest income decreased $6.1 million to $4.9 million for the year ended September 30, 2008 compared to $11.0 million for the year
ended September 30, 2007 primarily as the result of $7.9 million in pre-tax losses on investment securities in 2008 compared to $273,000 of gains in 2007. Excluding the gains and losses on the sales of investment securities, non-interest income
increased $2.0 million, primarily as the result of increases in mortgage revenues, retail banking fees and investment brokerage revenues.

Gain
(loss) on sales of securities totaled a net loss of $7.9 million for the year ended September 30, 2008 compared to a net gain of $273,000 in 2007. The net loss in 2008 was primarily the result of the $7.9 million loss



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on the sale of the Companys entire portfolio of Fannie Mae preferred stock, consisting of 350,000 shares of 8.25% Series S fixed-rate preferred stock
which was classified as available for sale. The announcement on September 7, 2008 that the Treasury Department was placing Fannie Mae into conservatorship and eliminating dividends on its common and preferred securities caused the market value
of these securities to fall to minimal levels. Management determined these securities no longer met the Companys investment criteria.

Mortgage
revenues increased 23.7% to $6.1 million during the year ended September 30, 2008 on loan sales of $1.32 billion, compared to mortgage revenues of $4.9 million during the year ended September 30, 2007 on loan sales of
$1.34 billion. The Company experienced a modest reduction in loan sales activity in the last half of fiscal 2008 as the result of weakened loan demand caused by an overall shrinkage in the number of qualified, credit-worthy borrowers in the market
as many potential borrowers were impacted by the national credit crisis. However, the Company realized higher gross revenue margins during 2008 due to a shift in the mix of the types of loans originated on products with higher sales margins, such as
loans guaranteed by the FHA, and due to reduced market competition and lower direct origination costs, primarily personnel costs.

Retail banking
fees increased 16.1% to $4.0 million in 2008 compared to $3.4 million for 2007 driven primarily by growth in retail checking accounts. See Business Strategy and Products.

Investment brokerage revenuesincreased 54.6% to $1.0 million for the year September 30, 2008 compared to $663,000 for the same period a year ago. The Company operates an investment brokerage
division whose operations consist principally of brokering bonds from wholesale brokerage houses to bank, municipal and individual investors. Revenues are generated on trading spreads and fluctuate with changes in trading volumes and market interest
rates. The increased revenues in 2008 were the result of successful sales efforts to new customers combined with an improved bond sales environment caused by the steepened interest-rate yield curve.

Other non-interest income decreased $112,000 to $562,000 for the year ended September 30, 2008 from $675,000 for the year ended September 30,
2007 primarily as the result of a lower fees received from a correspondent bank, which offset service fees charged, due to a reduction of the crediting rate for the Banks funds they held pending outstanding check clearings.

NON-INTEREST EXPENSE

Total non-interest expense increased $6.4 million, or 28.3%, to $29.2 million for the year ended September 30, 2008 compared to $22.8 million for the year ended September 30, 2007.
Non-interest expense for 2008 included a $1.6 million charge for the separation payment, related payroll taxes and legal expenses resulting from the resignation of the Companys former chief executive officer on May 1, 2008. In addition,
the strategic growth in the number of banking locations in 2007 significantly increased non-interest expense during the 2008 period.

Salaries and
employee benefits expense increased $2.9 million, or 25.7%, to $14.1 million for the year ended September 30, 2008 from $11.2 million for the year ended September 30, 2007. Expense for 2008 included $1.4 million in separation
payments resulting from the resignation of the Companys former chief executive officer. In addition, the increase resulted from the expenses associated with the additional employees at the new Clayton and downtown St. Louis bank locations
opened during the second half of calendar year 2007 and staff expansion necessary to support increased commercial loan activity.

Occupancy,
equipment and data processing expenseincreased $1.5 million to $7.2 million for the year ended September 30, 2008 from $5.8 million for the year ended September 30, 2007. The increase was primarily due to the new Clayton and
downtown St. Louis bank locations and increased data processing costs related to increased loan and deposit activity.

Advertising expensedecreased $168,000 to $1.3 million for the year ended September 30, 2008 compared to $1.4 million for the year ended September 30, 2007 primarily due to a reduction in the overall level of advertising during 2008.



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Professional fees increased $143,000 to $1.5 million for the year ended September 30, 2008 from $1.4
million for the year ended September 30, 2007. The increase was primarily due to $123,000 in legal expenses incurred in 2008 related to the resignation of the Companys former chief executive officer.

Gain on derivative instrumentsdecreased $190,000 to $396,000 for the year ended September 30, 2008 from $586,000 for the year ended
September 30, 2007. The Company entered into interest-rate swap agreements during November 2004, which were designed to convert the fixed rates paid on certain brokered certificates of deposits into variable, LIBOR-based rates. The Company uses
long-haul, fair-value, hedge accounting. Under this method, any hedge ineffectiveness was deemed not material and the impact was recognized as a charge or credit to earnings during the period in which the change occurred. Because of the declining
interest rate environment during 2008, all of the interest-rate swap agreements outstanding at September 30, 2007 were called by the counterparties during 2008.

Real estate foreclosure losses and expense, netincludes realized losses on the final disposition of foreclosed properties, additional write-downs for declines in the fair market values of properties,
which occur subsequent to foreclosure and expenses incurred in connection with maintaining the properties until they are sold. Real estate foreclosure losses and expense, net increased $1.3 million to $1.9 million for the year ended
September 30, 2008 compared to $597,000 in 2007. The increases were generally due to the overall increased foreclosure activity and the related realized losses on sales, including a $357,000 loss on the sale of a $2.3 million commercial office
building in St. Louis County, Missouri. See Non-Performing Assets and Allowance for Loan Losses.

Data processing termination
expensetotaled $220,000 for the year ended September 30, 2007 due to the write off of capitalized expenses related to the termination of a contract to convert the Companys core data processing system. The Company recovered
$180,000 of this expense during the year ended September 30, 2008.

FDIC deposit insurance premium expenseincreased $665,000 to
$749,000 for year ended September 30, 2008 compared to $84,000 for the year ended September 30, 2007. The increase was primarily the result of the final utilization, during the quarter ended December 31, 2007, of the one-time
assessment credit that was provided to eligible insured depository institutions under the Federal Deposit Insurance Reform Act of 2005. On October 7, 2008, the Board of Directors of the FDIC announced a proposed restoration plan accompanied by
a notice of proposed rulemaking that would increase the rates banks pay for deposit insurance, while at the same time making adjustments to the system that determines what rate a bank pays the FDIC. Management believes that these proposed changes to
the FDIC insurance rates will increase the Companys FDIC deposit premium expense in 2009.

Other non-interest expense increased
$326,000, or 19%, to $2.0 million for the year ended September 30, 2008 compared to $1.7 million for the year ended September 30, 2007. The increase was primarily due to a $95,000 increase in charitable contributions, $69,000 increase in
telephone expense associated with the new locations and increased activity, and $87,000 of expense associated with the amortization of the Companys investment in purchased federal and state tax credits related to affordable and historic rental
housing units for low-income individuals and families.

INCOME TAXES

The provision for income taxes decreased from $4.5 million for the year ended September 30, 2007 to $684,000 for the year ended September 30,
2008. The effective tax rate was 19.2% in 2008 compared to 33.4% in 2007. The lower effective tax rate in 2008 was primarily the result of a reduction in income tax expense related to the loss on the sale of Fannie Mae preferred stock and the impact
of income from bank-owned life insurance, which is non-taxable.



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NON-PERFORMING ASSETS AND ALLOWANCE
FOR LOAN LOSSES

Non-performing assets at September 30, 2008 and 2007 are summarized as follows:



|                                                          |  |                        |        |   |                   |   |        |  
|--------------------------------------------------------- |  | ---------------------- | ------ | - | ----------------- | - | ------ | -
|                                                          |  | September 30.2008      |        |   | September 30,2007 |  
|                                                          |  | (Dollars in thousands) |       
|Non-accrual loans:                                        |  |                        |        |   |                   |   |        |  
|Residential real estate:                                  |  |                        |        |   |                   |   |        |  
|First mortgage                                            |  | $                      | 5,904  |   |                   | $ | 1,780  |  
|Second mortgage                                           |  |                        | 752    |   |                   |   | 302    |  
|Home equity                                               |  |                        | 1,695  |   |                   |   | 554    |  
|Commercial:                                               |  |                        |        |   |                   |   |        |  
|Commercial & multi-family real estate                     |  |                        | 1,125  |   |                   |   | 3,708  |  
|Real estate construction & development                    |  |                        | 133    |   |                   |   |       |  
|Commercial & industrial                                   |  |                        | 341    |   |                   |   |       |  
|Consumer & other                                          |  |                        | 160    |   |                   |   | 105    |  
|                                                          |  |                        |        |   |                   |   |        |  
|Total non-accrual loans                                   |  |                        | 10,110 |   |                   |   | 6,449  |  
|                                                          |  |                        |        |   |                   |   |        |  
|Accruing loans past due 90 days or more:                  |  |                        |        |   |                   |   |        |  
|Residential real estate:                                  |  |                        |        |   |                   |   |        |  
|First mortgage                                            |  |                        | 2,543  |   |                   |   | 2,212  |  
|Second mortgage                                           |  |                        |       |   |                   |   | 352    |  
|Home equity                                               |  |                        | 1,468  |   |                   |   | 1,064  |  
|Commercial & multi-family real estate                     |  |                        | 231    |   |                   |   | 44     |  
|Consumer & other                                          |  |                        | 7      |   |                   |   | 150    |  
|                                                          |  |                        |        |   |                   |   |        |  
|Total accruing loans past due 90 days or more             |  |                        | 4,249  |   |                   |   | 3,822  |  
|                                                          |  |                        |        |   |                   |   |        |  
|Troubled debt restructured:                               |  |                        |        |   |                   |   |        |  
|Residential real estate:                                  |  |                        |        |   |                   |   |        |  
|First mortgage                                            |  |                        | 4,985  |   |                   |   | 209    |  
|Second mortgage                                           |  |                        | 670    |   |                   |   |       |  
|Home equity                                               |  |                        | 112    |   |                   |   |       |  
|Commercial & industrial                                   |  |                        | 537    |   |                   |   |       |  
|                                                          |  |                        |        |   |                   |   |        |  
|Total troubled debt restructured                          |  |                        | 6,304  |   |                   |   | 209    |  
|                                                          |  |                        |        |   |                   |   |        |  
|Total non-performing loans                                |  |                        | 20,663 |   |                   |   | 10,480 |  
|                                                          |  |                        |        |   |                   |   |        |  
|Real estate acquired in settlement of loans:              |  |                        |        |   |                   |   |        |  
|Residential real estate                                   |  |                        | 3,519  |   |                   |   | 3,090  |  
|                                                          |  |                        |        |   |                   |   |        |  
|Total real estate acquired in settlement of loans         |  |                        | 3,519  |   |                   |   | 3,090  |  
|                                                          |  |                        |        |   |                   |   |        |  
|Other non-performing assets                               |  |                        | 237    |   |                   |   | 43     |  
|                                                          |  |                        |        |   |                   |   |        |  
|Total non-performing assets                               |  | $                      | 24,419 |   |                   | $ | 13,613 |  
|                                                          |  |                        |        |   |                   |   |        |  
|Ratio of non-performing loans to total loans receivable   |  |                        | 1.88   | % |                   |   | 1.09   | %
|Ratio of non-performing assets to total assets            |  |                        | 1.87   | % |                   |   | 1.20   | %
|Ratio of allowance for loan losses to nonperforming loans |  |                        | 61.76  | % |                   |   | 99.44  | %

Non-performing loans increased to $20.7 million, or 1.88% of total loans, at September 30, 2008 from
$10.5 million, or 1.09% of total loans, at September 30, 2007. The increase was primarily due to a $4.1 million increase in non-accruing residential first mortgage loans, a $1.1 million increase in non-accruing home equity loans
and a $6.1 million increase in restructured loans, primarily residential first mortgage loans, partially offset by a $2.1 million decrease in non-accrual commercial and multi-family real estate loans. The significant increases were generally due to
the weakened economic environment and softening real estate market. The decrease in



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non-accrual commercial and multi-family real estate loans was due primarily to the foreclosure and subsequent sale during 2008 of a $2.3 million loan secured
by commercial real estate which was classified as non-accrual at September 30, 2007. The ratio of the allowance for loan losses to non-performing loans was 61.76% at September 30, 2008 compared to 99.44% at September 30, 2007. The
decline in the ratio of the allowance to non-performing loans at September 30, 2008 was due to a change in the mix of non-performing loans during 2008, specifically increased residential first mortgage loans, which represented 65% of total
non-performing loans at September 30, 2008 compared to 40% at September 30, 2007. These loans carry a lower level of inherent risk than other types of loans in the Companys portfolio, especially compared to second mortgage loans and
home equity lines of credit where the Company often does not own or service the first mortgage loan.

Accruing loans greater than 90 days past due
increased from $3.8 million at September 30, 2007 to $4.2 million at September 30, 2008, primarily as the result of a $734,000 increase in residential real estate first mortgage and home equity loans. Loans are placed on non-accrual status
when, in the opinion of management, there is reasonable doubt as to the collectability of interest or principal. Management considers many factors before placing a loan on non-accrual, including the overall financial condition of the borrower, the
progress of managements collection efforts and the value of the underlying collateral.

Troubled debt restructurings increased to $6.3 million at
September 30, 2008 compared to $209,000 at September 30, 2007. Troubled debt restructurings at September 30, 2008 consisted of 39 residential mortgage loans totaling $5.8 million and one commercial loan totaling $537,000. The
restructured terms of the loans generally included a reduction of the interest rates and the addition of past due interest to the principal balance of the loans. Management is actively working with cooperative borrowers in an effort to restructure
past due loans so they are affordable and to preserve the equity the borrowers have in their homes. Interest income on restructured loans is accrued at the reduced rate as long as the borrower complies with the revised terms and conditions. At
September 30, 2008, restructured loans totaling $1.3 million were past due 30 days or more under the restructured loan terms.

Real estate acquired in
settlement of loans totaled $3.5 million at September 30, 2008 compared to $3.1 million at September 30, 2007. The balance at September 30, 2008 consisted of 37 residential real estate properties, five residential construction
properties and two building lots in the Companys two primary market areas of St. Louis and Kansas City.

The total balance of impaired loans
at September 30, 2008 and 2007 was $16.7 million and $6.7 million, respectively. See Note 6 of Notes to the Consolidated Financial Statements.

The following table is a summary of the activity in the allowance for loan losses for the years ended September 30, 2008 and 2007:



|                                       |  |      |            |      |   |           
|-------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                       |  | 2008 |            | 2007
|Balance, beginning of year             |  | $    | 10,421,304 |      | $ | 7,817,317 
|Provision charged to expense           |  |      | 7,734,641  |      |   | 3,855,257 
|Charge-offs, net of recoveries:        |  |      |            |      |   |           
|Residential real estate:               |  |      |            |      |   |           
|First mortgage                         |  |      | 938,006    |      |   | 192,874   
|Second mortgage                        |  |      | 1,599,810  |      |   | 521,216   
|Home equity lines of credit            |  |      | 1,450,201  |      |   | 279,430   
|Commercial:                            |  |      |            |      |   |           
|Commercial & multi-family real estate  |  |      | 374,000    |      |   |          
|Real estate construction & development |  |      | 454,688    |      |   | 119,000   
|Commercial & industrial                |  |      | 355,529    |      |   |          
|Consumer & other                       |  |      | 222,179    |      |   | 138,750   
|                                       |  |      |            |      |   |           
|Total charge-offs, net                 |  |      | 5,394,413  |      |   | 1,251,270 
|                                       |  |      |            |      |   |           
|Balance, end of year                   |  | $    | 12,761,532 |      | $ | 10,421,304
|                                       |  |      |            |      |   |           



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The following table contains a breakdown of the principal balance of loans receivable at September 30, 2008 by major
category and the ratio of net charge-offs to the average balance of each major category for the years ended September 30, 2008 and 2007 and the average annual charge-offs for the five years ended September 30, 2008 and 2007.



|                            |  |                                      |                        |                                                      |      |      |                                         |      |      |  |      |      |  |      |  
|--------------------------- |  | ------------------------------------ | ---------------------- | ---------------------------------------------------- | ---- | ---- | --------------------------------------- | ---- | ---- |  | ---- | ---- |  | ---- | -
|                            |  |                                      |                        | Net Charge-Offs as aPercent of Average Loan Category |     
|                            |  | PrincipalBalance AtSeptember 30,2008 |                        | Year EndedSeptember 30,                              |      |      | AnnualizedFive Years EndedSeptember 30, |     
|                            |  |                                      | 2008                   |                                                      |      | 2007 |                                         |      | 2008 |  |      | 2007 | 
|Residential real estate:    |  |                                      | (Dollars in Thousands) |                                                     
|First mortgage              |  | $                                    | 253,132                |                                                      | 0.41 | %    |                                         | 0.13 | %    |  | 0.18 | %    |  | 0.10 | %
|Second mortgage             |  |                                      | 86,349                 |                                                      | 1.72 | %    |                                         | 0.47 | %    |  | 0.60 | %    |  | 0.16 | %
|Home equity lines of credit |  |                                      | 225,357                |                                                      | 0.64 | %    |                                         | 0.13 | %    |  | 0.19 | %    |  | 0.05 | %
|Commercial(1)               |  |                                      | 530,783                |                                                      | 0.24 | %    |                                         | 0.03 | %    |  | 0.10 | %    |  | 0.02 | %
|Consumer and other          |  |                                      | 6,895                  |                                                      | 0.15 | %    |                                         | 0.11 | %    |  | 0.15 | %    |  | 0.17 | %
|Total loans receivable      |  | $                                    | 1,102,517              |                                                      | 0.52 | %    |                                         | 0.14 | %    |  | 0.21 | %    |  | 0.10 | %



|(1) | Commercial includes real estate construction & development, commercial & multi-family real estate, and
commercial and industrial loans.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------

Net charge-offs for the year ended September 30, 2008 increased $4.1 million to $5.4 million, or
0.52% of average total loans receivable, compared to $1.3 million, or 0.14% of average loans receivable, in 2007, and to a five-year historical average of 0.10% for the five years ended September 30, 2007. Home equity lines of credit and
residential real estate second mortgage loans accounted for over half of the 2008 charge-offs. Because the Company generally does not own or service the first mortgage on the properties securing these types of loans, charge-offs are generally higher
than those experienced on first mortgage real estate loans. In addition, 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. Recent declines in residential real estate values in the Companys market areas, as well as nationally, contributed to the increased charge-offs in 2008. The Company has not engaged in sub-prime lending
activities.

Management believes that the amount maintained in the allowance will be adequate to absorb probable losses inherent in the portfolio. Although
management believes that it uses the best information available to make such determinations, future adjustments to the allowance for loan losses may be necessary and results of operations could be significantly and adversely affected if
circumstances differ substantially from the assumptions used in making the determinations. While management believes it has established the allowance for loan losses in accordance with U.S. generally accepted accounting principles, there can be no
assurance that the Banks regulators, in reviewing the Banks loan portfolio, will not request the Bank to significantly increase its allowance for loan losses. In addition, because future events affecting borrowers and collateral cannot
be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that a substantial increase will not be necessary should the quality of any loans deteriorate as a result of the factors discussed
above. Any material increase in the allowance for loan losses will adversely affect the Companys financial condition and results of operations. See Note 1 of Notes to the Consolidated Financial Statementsfor a description of
managements allowance for loan losses methodology.



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FINANCIAL CONDITION

Cash and cash equivalents increased $5.3 million to $29.1 million at September 30, 2008 from $23.8 million at September 30, 2007. Cash balances
included overnight investments in federal funds of $647,000 at September 30, 2008 compared to $3.3 million at September 30, 2007. These funds are generally used to fund the Companys daily liquidity needs. The primary sources of cash
are increases in deposits and borrowings from the FHLB and the Federal Reserve.

Debt securities held to maturity decreased from $6.0 million
at September 30, 2007 to $0 at September 30, 2008 and debt securities available for sale decreased from $7.0 million at September 2007 to $0 at September 30, 2008. Debt securities are generally held to provide sufficient
collateral for certain large deposit relationships. During 2008, the Company liquidated its portfolio of debt securities either through sale of debt securities available for sale or maturity of debt securities held to maturity and replaced them with
higher-yielding mortgage-backed securities.

Mortgage-backed securities available for saleincreased $7.5 million to $10.2 million at
September 30, 2008 from $2.7 million at September 30, 2007 while mortgage-backed securities held to maturity increased to $15.7 million at September 30, 2008 from $371,000 at September 30, 2007. Such securities
are primarily held as collateral to secure large commercial and municipal deposits. The total balance held in these securities is adjusted as individual securities repay to reflect fluctuations in the balances of the deposits they are securing. The
increase in mortgage-backed securities held to maturity resulted primarily from the securitization of $16.3 million of loans receivable held in the Companys loan portfolio into Fannie Mae mortgage-backed securities during April 2008.

Capital Stock of the Federal Home Loan Bank increased $2.6 million to $10.9 million at September 30, 2008 from $8.3 million at
September 30, 2007, in response to the increase in FHLB borrowings. The Bank is generally required to hold stock equal to 5% of its total FHLB borrowings.

Loans held for sale increased $13.4 million to $72.0 million at September 30, 2008 from $58.5 million at September 30, 2007. These balances represent loans closed in the name of the Bank, which are committed in
advance of closing to be sold to investors. Since these loans are pre-sold, primarily at a pre-determined price on a best-efforts basis, they are not subject to changes in market value as a result of changes in market interest rates. The Bank
typically receives proceeds from the sale of these loans to investors within 30 days of loan closing and benefits from interest income while awaiting sales delivery.

Bank-owned life insurance increased $2.5 million to $27.6 million at September 30, 2008 from $25.1 million at September 30, 2007. The increase was attributable to appreciation of the cash
surrender values of existing policies. Increases in cash surrender values are treated as other income and are tax-exempt. If the cash surrender values of the policies are liquidated, the gains would retroactively be taxed.

Deferred tax assetsincreased $3.0 million to $8.1 million at September 30, 2008 from $5.1 million at September 30, 2007, primarily as the result
of a $2.0 million increase related to capital loss carryovers generated by losses on the sales of equity securities during September 2008. Almost all of these capital loss carryovers were related to the sale of the Companys entire portfolio of
Fannie Mae preferred stock. At the time of sale, the losses on the sale of the Fannie Mae preferred stock were classified as capital losses for Federal income tax purposes and, accordingly, could only be deducted on the Companys income tax
return to the extent they could be used to offset capital gains. On October 3, 2008, the Emergency Economic Stabilization Act of 2008 was enacted, which provided ordinary loss treatment (subject to restrictions) for sales by financial
institutions of devalued preferred stock of Fannie Mae and Freddie Mac sold between January 1, 2008 and September 6, 2008, or held as of September 6, 2008. However, under Statement of Accounting Standards No. 109, Accounting
for Income Taxes (FAS 109), these losses must be treated as capital losses for financial accounting purposes at September 30, 2008, but will be treated as ordinary losses during the quarter ended December 31, 2008.

A valuation allowance should be provided on deferred tax assets when it is more likely than not that some portion of the assets will not be realized. The
Company has not established a valuation allowance at September 30, 2008



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or 2007 because management believes that all criteria for recognition have been met, including the existence of a history of taxes paid or qualifying tax
planning strategies that are sufficient to support the realization of deferred tax assets.

Advances from the Federal Home Loan Bank of Des Moinesincreased $52.2 million to $210.6 million at September 30, 2008 from $158.4 million at September 30, 2007 and borrowings from the Federal Reserve Bankincreased to $40.0 million at September 30, 2008 from $0
at September 30, 2007. The Company supplements its primary funding source, retail deposits, with wholesale funding sources consisting of borrowings from the FHLB, brokered certificates of deposit acquired on a national level and short-term
borrowings from the discount window of the Federal Reserve Bank of St. Louis. Management actively chooses between these wholesale funding sources depending on their relative costs. The increased balances were used to fund asset growth and replace
maturing brokered certificates of deposit.

Note payable increased $4.7 million to $7.6 million at September 30, 2008 from $3.0 million
at September 30, 2007. The increase was due to additional borrowings drawn under a line of credit with a correspondent bank. The Company uses this borrowing to provide capital contributions to the Bank.

Due to other banks decreased $3.1 million to $14.4 million at September 30, 2008 from $17.5 million at September 30, 2007. Due to other banks
represents unremitted payments for bank and cashier checks issued by the Bank. The decrease represents a decrease in check activity on the final day of the fiscal year end. In the normal course of business, settlement for amounts due to other banks
is made on the following business day.

Total stockholders equity increased $1.6 million to $82.4 million at September 30, 2008
from $80.8 million at September 30, 2007. The increase was due primarily to growth in retained earnings driven by net income of $2.9 million and proceeds from stock options exercised of $1.2 million, partially offset by regular cash
dividends paid of $3.7 million and the repurchase of 51,898 shares of the Companys common stock at a total cost of $593,000. Substantially all of the 2008 shares repurchases were made during the six months ended March 31, 2008, as the
Company significantly reduced repurchase activity during the last half of fiscal year 2008. At September 30, 2008, the Company had approximately 384,000 remaining shares that it could repurchase under a share repurchase program announced in
February 2007.

COMPARISON OF OPERATING RESULTS FOR THE

YEARS ENDED SEPTEMBER 30, 2007 AND 2006

OVERVIEW

Net income for the year ended
September 30, 2007 declined 8.7% to $9.0 million, or $0.88 per diluted share, compared to $9.8 million, or $1.01 per diluted share, for the year ended September 30, 2006. Results for 2006 included a $2.5 million gain on the sale of the
Companys only full-service bank location in Kansas City, resulting in an after-tax gain of approximately $1.5 million, or $0.16 per diluted share. In addition, fiscal 2007 earnings were negatively impacted by a $3.9 million provision for loan
losses, which was a $2.4 million increase compared to the previous year. Return on average assets and return on average equity were 0.85% and 11.07%, respectively, during 2007 compared to 1.14% and 14.98%, respectively, during 2006.

NET INTEREST INCOME

Net interest income increased $4.3 million to $29.1 million in fiscal 2007 compared to $24.8 million in fiscal 2006 due to an increase in net interest-earning assets partially offset by a decline in the net interest
margin. The average balance of interest-earning assets increased $178.9 million to $978.2 million during fiscal 2007, compared to $799.4 million for fiscal 2006 due primarily to loan growth. The net interest margin declined 15 basis points to
2.97% in fiscal 2007 from 3.12% in fiscal 2006, resulting primarily from the higher cost of time deposits and wholesale borrowings used to fund the growth in the loan portfolio. During the year ended



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September 30, 2007, the average cost of deposits increased 85 basis points to 4.40% compared to a 50 basis point increase in the yield on loans to
7.43%. The net interest margin was also negatively impacted during 2007 by the narrowing spreads on loans held for sale. The average yield on such loans increased 2 basis points during fiscal 2007 to 6.20% while the average rate on borrowings from
the FHLB used to fund these loans increased 57 basis points to 5.20%.

Interest income increased $17.1 million to $70.9 million for fiscal
2007 compared to $53.8 million for fiscal 2006. Interest income increased primarily due to a rise in the average balance of loans receivable, which increased $162.0 million to $878.1 million for fiscal 2007, combined with an increase in the average
yield on loans to 7.43% in fiscal 2007 from 6.93% in fiscal 2006 due to higher market interest rates. Loans receivable grew $164.6 million, or 21.0%, during fiscal 2007 to $949.8 million at September 30, 2007. Commercial loans, which generally
carry higher interest rates than residential mortgage loans, fueled 77.1% of the growth in the retained loan portfolio during the year ended September 30, 2007, with the remaining growth coming from residential, home equity loans and consumer
loans. Interest income was also positively impacted by a $15.9 million increase in the average balance of loans held for sale during fiscal 2007.

Interest expense increased $12.8 million to $41.8 million for fiscal 2007 compared to $29.0 million for fiscal 2006 due to changes in both the cost and average balance of interest-bearing liabilities. The average cost of
interest-bearing liabilities increased from 3.90% for fiscal year 2006 to 4.63% for the fiscal year 2007 as market interest rates increased in response to increased market competition.

Interest expense on deposits increased $11.7 million to $31.3 million for the year ended September 30, 2007 compared to $19.6 million for the year ended September 30, 2006. The average balance
of interest-bearing deposits increased $160.0 million during fiscal 2007 to $712.7 million at September 30, 2007. The average cost of deposits increased to 4.40% in fiscal 2007 from 3.55% in 2006 primarily as the result of rising market
interest rates. The Bank realized strong, well-balanced growth in money market, checking account and certificate of deposit products from both commercial and retail depositors. Brokered deposits increased $71.9 million during the year from $118.5
million at September 30, 2006 to $190.4 million at September 30, 2007. The deposit growth was used primarily to support loan growth.

Interest expense on FHLB borrowings increased $978,000 to $8.8 million for the year ended September 30, 2007 compared to $7.8 million for the year ended September 30, 2006 almost entirely as the result of the
market-driven increase in the average cost to 5.20% during 2007 from 4.63% during 2006. The Company typically relies on wholesale funds for incremental liquidity due to the Banks relatively high loan to deposit ratio of 115.6%.

ALLOWANCE FOR LOAN LOSSES AND PROVISION FOR
LOSSES ON LOANS

The allowance for loan losses was $10.4 million at September 30, 2007, or 1.09%
of total loans and 99.44% of non-performing loans, compared to $7.8 million at September 30, 2006, or 0.99% of total loans and 115.89% of non-performing loans. The increased allowance was generally attributable to growth in the Companys
commercial loan portfolio and an increase in non-performing loans. See Note 1 of Notes to the Consolidated Financial Statements for a description of managements methodology and Note 6 for a summary of activity in the allowance
for loan losses.

The provision for loan losses for the year ended September 30, 2007 was $3.9 million compared to $1.5 million for the same period a
year ago. The significant increase in the provision for loan losses was due to significant growth in the loan portfolio, especially in commercial loans which carry a higher risk of default, and also to increased charge-offs and an increase in the
level of non-performing loans.

Net charge-offs for the year ended September 30, 2007 totaled $1.3 million, or 0.14% of average loans, compared to
$772,000, or 0.10% of average loans, for the same period a year ago. Net charge-offs in 2007 included $193,000 in charge-offs on single-family residential first mortgage loans, $521,000 in charge-offs on single-family residential second mortgage
loans and $279,000 in charge-offs on home equity loans. Management adheres to specific loan underwriting guidelines focusing primarily on residential and commercial real estate and



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home equity loans secured by one-to four-family and commercial properties and, as the result, while charge-offs in 2007 have increased significantly, the
Companys five-year average annual charge-off experience has been low, totaling only $565,000 or 0.10% of average loans. 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. Declines in residential real estate values in the Companys market areas, as well as nationally, contributed to the increased charge-offs during 2007.

NON-INTEREST INCOME

Total non-interest income decreased $1.4 million to $11.0 million for the year ended September 30, 2007 compared to $12.5 million for the year ended September 30, 2006. In February 2006, the Bank sold its Kansas
City banking location, resulting in a $2.5 million gain. Excluding this gain, non-interest income increased $1.0 million, primarily as the result of increases in mortgage revenues and retail banking fees.

Mortgage revenues increased 6.5% to $4.9 million during the year ended September 30, 2007 on loan sales of $1.34 billion, compared to
mortgage revenues of $4.6 million during the year ended September 30, 2006 on loan sales of $1.15 billion. The growth in loan sales was due primarily to the expansion of the residential mortgage sales staff and resulted in higher revenues
during 2007.

Retail banking fees increased 12.6% to $3.4 million in 2007 compared to $3.0 million for 2007 driven primarily by growth in
retail checking accounts.

Investment brokerage revenuestotaled $663,000 for the year ended September 30, 2007 compared
to $598,000 in fiscal 2006. The investment divisions activities consist primarily of brokering bonds to other community banks, municipalities and high net worth individuals. The volatile interest rate market greatly impacted the
divisions ability to sell bonds during 2007.

Insurance commissionsdecreased to $38,000 for the year ended September 30, 2007
compared to $216,000 for the year ended September 30, 2006. Insurance commissions stem primarily from revenue received for brokering annuity sales for insurance companies. Since these products often compete directly with the Companys
deposit products, these activities were significantly scaled back during fiscal 2007.

Bank-owned life insurance incomeincreased $169,000 to
$1.0 million for the year ended September 30, 2007 from $847,000 for the year ended September 30, 2006, primarily as the result of a full year of income earned in 2007 on $6.5 million of additional policies purchased during February
and March of 2006.

Other income increased $25,000 to $675,000 for the year ended September 30, 2007 from $649,000 for the year ended
September 30, 2006. The increase resulted primarily from increased fee income from checks drawn on a correspondent banks checking account, receipt of a litigation settlement totaling $53,000, net of expenses, and increased rental income
collected from tenants in one of the Banks office buildings.

NON-INTEREST EXPENSE

Total non-interest expense increased $2.3 million, or 11%, to $22.8 million for the year ended September 30, 2007 compared
to $20.5 million for the year ended September 30, 2006. The ratio of non-interest expense to average assets decreased to 2.22% for fiscal 2007 compared to 2.36% for fiscal 2006 primarily as the result of cost-effective growth in average assets.

Salaries and employee benefitsexpense increased $1.3 million, or 13.3%, to $11.2 million for the year ended September 30, 2007 from
$9.9 million for the year ended September 30, 2006 as the result of additional employees hired to staff the new bank locations and to support increased loan activity. The number of full-time equivalent employees increased from 361 at
September 30, 2006 to 421 at September 30, 2007.



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Occupancy and equipmentexpense increased $677,000 to $5.8 million for the year ended September 30,
2007 from $5.1 million for the year ended September 30, 2006. The increase in expense was due primarily to the addition of the Richmond Heights location which opened in January 2007.

Advertising expense increased $300,000 to $1.4 million for the year ended September 30, 2007 compared to $1.1 million for the year ended
September 30, 2006. The increase resulted from higher television and newspaper advertising during 2007 as the Bank increased its marketing efforts related to the new bank locations and new products.

Gain on derivative instruments increased $781,000 during the year to $586,000 for the year ended September 30, 2007 compared to a loss of $194,000 for
the year ended September 30, 2006. During the first quarter of fiscal year 2006, changes in the estimated fair values of these derivatives were recognized as charges or credits to earnings, as appropriate, during the periods in which the
changes occurred. Effective January 1, 2006, the Company began using long-haul, fair-value, hedge accounting. The increased gain in 2007 was the result of a shorter duration on the derivative instruments at September 30, 2007 compared to
September 30, 2006.

Data processing termination expensetotaled $220,000 for the year ended September 30, 2007 due to the
write-off of capitalized expenses related to the termination of a contract to convert the Companys core data processing system. There was no such expense in the prior fiscal year.

INCOME TAXES

The provision for income taxes decreased from $5.4
million for the year ended September 30, 2006 to $4.5 million for the year ended September 30, 2007. The effective tax rate was 33.4% in 2007 compared to 35.5% in 2006. The lower effective tax rate in 2007 was primarily the result of an
increase in bank-owned life insurance income, which is non-taxable.

RECENT DEVELOPMENTS

The U. S. and global economies have experienced and are experiencing significant stress and disruptions in the financial sector. Dramatic slowdowns in the housing
industry with falling home prices and increasing foreclosures and unemployment have resulted in major issues for financial institutions, government-sponsored entities and investment banks. These issues have caused many financial institutions to seek
additional capital, to merge with larger and stronger institutions and in some cases, to fail.

In response to the financial crisis affecting the banking
and financial markets, in October 2008, the Emergency Economic Stabilization Act of 2008 (the EESA) was signed into law to stabilize and provide liquidity to the U.S. financial markets.

As part of that legislation, the U.S. Treasury announced that it has been authorized to purchase equity positions in U. S. financial institutions. Under this program,
known as the Troubled Asset Relief Program Capital Purchase Program (the TARP Capital Purchase Program), the U.S. Treasury will make $250 billion of capital available to U.S. financial institutions, which for certain public
institutions like the Company, will be in the form of preferred stock. In conjunction with the purchase of preferred stock, the Treasury will receive warrants to purchase common stock with an aggregate market price equal to 15% of the total amount
of the preferred investment. Participating financial institutions will be required to adopt the Treasurys standards for executive compensation and corporate governance for the period during which the Treasury holds equity issued under the TARP
Capital Purchase Program and will be restricted from increasing dividends to common shareholders or repurchasing common stock for three years without the consent of the Treasury.



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Further, after receiving a recommendation from the boards of the Federal Deposit Insurance Corporation and the Federal
Reserve System, the Treasury signed the systemic risk exception to the FDIC Act, enabling the FDIC to temporarily provide a 100% guarantee of the senior debt of all FDIC-insured institutions and their holding companies, as well as deposits in
non-interest bearing transaction deposit accounts under a Temporary Liquidity Guarantee Program. Coverage under the Temporary Liquidity Guarantee Program is available for 30 days without charge and thereafter at a cost of 75 basis points per annum
for senior unsecured debt and 10 basis points per for non-interest bearing transaction deposits.

The Company has made a decision to participate in the
Temporary Liquidity Guarantee Program and, subsequent to September 30, 2008, applied for $32.5 million in preferred stock in the TARP Capital Purchase Program.

It is not clear at this time what impact the EESA, the TARP Capital Purchase Program, the Temporary Liquidity Guarantee Program, other liquidity and funding initiatives of the Federal Reserve and other agencies that
have been previously announced, and any additional programs that may be initiated in the future, will have on the Company and the U.S. and global financial markets.

MARKET RISK ANALYSIS

Market risk is the risk of loss arising
from adverse changes in the fair values of financial instruments or other assets caused by changes in interest rates, currency exchange rates, or equity prices. Interest rate risk is the Companys primary market risk and results from timing
differences in the repricing of assets and liabilities, changes in relationships between rate indices, and the potential exercise of explicit or embedded options. The Company uses several measurement tools provided by a national asset liability
management consultant to help manage these risks. Management provides key assumptions to the consultants, which are used as inputs into the measurement tools. Following is a summary of two different tools management uses on a quarterly basis to
monitor and manage interest rate risk.

Earnings Simulation Modeling. Net income is affected by changes in the level of interest rates, the shape of
the yield curve and the general market pressures affecting current market interest rates at the time of simulation. Many interest rate indices do not move uniformly, creating certain disunities between them. For example, the spread between a
thirty-day, prime-based asset and a thirty-day, FHLB advance may not be uniform over time. The earnings simulation model projects changes in net interest income caused by the effect of changes in interest rates on interest-earning assets and
interest-bearing liabilities. Simulation results are measured as a percentage change in net interest income compared to the static-rate or base case scenario. The model considers increases and declines in asset and liability volumes
using prepayment assumptions as well as rate changes. Rate changes are modeled gradually over a twelve-month period, referred to as a rate ramp. The model projects only changes in interest income and expense and does not project changes
in non-interest income, non-interest expense, provision for loan losses or the impact of changing tax rates. At September 30, 2008, net interest income simulation showed a positive nine basis point change from the base case in a 200 basis point
ramped rising rate environment and a negative four basis point change from the base case in a 100 basis point ramped declining rate environment. The projected decrease in net interest income is within the Asset Liability Committees guidelines
in a 200 basis point increasing or 100 basis point decreasing interest rate environment. However, management continually monitors signs of elevated risks and takes certain actions to limit these risks.



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The following table summarizes the results of the Companys income simulation model as of September 30, 2008
and August 31, 2007.



|                                |  |                               |  |        |  |        |  |       
|------------------------------- |  | ----------------------------- |  | ------ |  | ------ |  | ------
|                                |  | Change in Net Interest Income
|                                |  | 2008                          |  | 2007  
|Change in Market Interest Rates |  | Year 1                        |  | Year 2 |  | Year 1 |  | Year 2
|                                |  |                               |  |       
|200 basis point ramped increase |  | 0.9%                          |  | 0.9%   |  | (2.0%) |  | (6.2%)
|                                |  |                               |  |       
|Base case - no change           |  |                              |  | (1.7%) |  |       |  | (1.6%)
|                                |  |                               |  |       
|100 basis point ramped
decrease |  | (0.4%)                        |  | (3.7%) |  | 1.8%   |  | 0.9%  

Net Portfolio Value Analysis.Net portfolio value (NPV) represents the market value of
portfolio equity and is equal to the market value of assets minus the market value of liabilities, with adjustments made for off-balance sheet items. This analysis assesses the risk of loss in market-risk sensitive instruments in the event of a
sudden and sustained 100 to 200 basis point increase or decrease in market interest rates with no effect given to any actions management might take to counter the effect of that interest rate movement. The following is a summary of the results of
the report compiled by the Companys outside consultant using data and assumptions management provided as of September 30, 2008 and August 31, 2007.



|                                |  |                         |  |         |  |              |  |        
|------------------------------- |  | ----------------------- |  | ------- |  | ------------ |  | -------
|                                |  | Estimated Change in NPV
|                                |  | 2008                    |  | 2007   
|Change in Market Interest Rates |  | Amount(000s)            |  | Percent |  | Amount(000s) |  | Percent
|                                |  |                         |  |        
|200 basis point
increase        |  | $5,866                  |  | 5.6%    |  | ($6,451)     |  | (6.3%) 
|                                |  |                         |  |        
|100 basis point increase        |  | $3,312                  |  | 3.1%    |  | ($2,325)     |  | (2.3%) 
|                                |  |                         |  |        
|Base case - no change           |  | $0                      |  |        |  | $0           |  |       
|                                |  |                         |  |        
|100 basis point decrease        |  | ($5,178)                |  | (4.9%)  |  | $785         |  | 0.8%   

The preceding table indicates that, at September 30, 2008, in the event of a 200 basis point increase in
prevailing market interest rates, NPV would be expected to increase by $5.9 million, or 5.6% of the base case scenario value of $105.5 million. In the event of a decrease in prevailing market rates of 100 basis points, NPV would be expected to
decline by $5.2 million or 4.9% of the base case scenario value. The projected decrease in NPV is within the Asset Liability Committees guidelines in a 200 basis point increasing or 100 basis point decreasing interest rate environment.
However, management continually monitors signs of elevated risks and takes certain actions to limit these risks.



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The following table presents the Companys financial instruments that are sensitive to changes in interest rates,
categorized by expected maturity, and the instruments estimated fair values and weighted average interest rates at September 30, 2008. Expected maturities use certain assumptions based on historical experience and other data available to
management.



|                                     |  |                        |   |  |                |         |                       |   |                               |  |                             |         |                 |   |                     |  |                     |        |  |   |           |  |   |          
|------------------------------------ |  | ---------------------- | - |  | -------------- | ------- | --------------------- | - | ----------------------------- |  | --------------------------- | ------- | --------------- | - | ------------------- |  | ------------------- | ------ |  | - | --------- |  | - | ---------
|                                     |  | WeightedAverageRate    |   |  | Within OneYear |         | One YeartoThree Years |   | After ThreeYears toFive Years |  | After FiveYears toTen Years |         | BeyondTen Years |   | CarryingValue Total |  | EstimatedFair Value
|                                     |  | (Dollars in Thousands)
|Interest Sensitive Assets            |  |                        |   |  |                |         |                       |   |                               |  |                             |         |                 |   |                     |  |                     |        |  |   |           |  |   |          
|                                     |  |                        |   |  |                |         |                       |  
|Loans receivablenet(1)              |  | 6.02                   | % |  | $              | 625,199 |                       | $ | 150,261                       |  | $                           | 126,043 |                 | $ | 121,354             |  | $                   | 65,880 |  | $ | 1,088,737 |  | $ | 1,102,715
|Loans held for salenet(2)           |  | 6.08                   | % |  |                | 71,966  |                       |   |                              |  |                             |        |                 |   |                    |  |                     |       |  |   | 71,966    |  |   | 73,189   
|Mortgage-backed securitiesHTM       |  | 4.91                   | % |  |                | 6,526   |                       |   | 2                             |  |                             |        |                 |   | 247                 |  |                     | 8,970  |  |   | 15,745    |  |   | 15,608   
|Mortgage-backed securitiesAFS       |  | 4.16                   | % |  |                | 2       |                       |   | 1,941                         |  |                             |        |                 |   |                    |  |                     | 8,238  |  |   | 10,181    |  |   | 10,181   
|FHLB stock                           |  | 4.00                   | % |  |                | 10,896  |                       |   |                              |  |                             |        |                 |   |                    |  |                     |       |  |   | 10,896    |  |   | 10,896   
|Other                                |  | 1.75                   | % |  |                | 548     |                       |   |                              |  |                             |        |                 |   |                    |  |                     |       |  |   | 548       |  |   | 548      
|                                     |  |                        |   |  |                |         |                       |   |                               |  |                             |         |                 |   |                     |  |                     |        |  |   |           |  |   |          
|Total interest sensitive assets      |  |                        |   |  | $              | 715,137 |                       | $ | 152,204                       |  | $                           | 126,043 |                 | $ | 121,601             |  | $                   | 83,088 |  | $ | 1,198,073 |  | $ | 1,213,137
|                                     |  |                        |   |  |                |         |                       |   |                               |  |                             |         |                 |   |                     |  |                     |        |  |   |           |  |   |          
|                                     |  |                        |   |  |                |         |                       |  
|Interest Sensitive Liabilities       |  |                        |   |  |                |         |                       |   |                               |  |                             |         |                 |   |                     |  |                     |        |  |   |           |  |   |          
|                                     |  |                        |   |  |                |         |                       |  
|Passbook savings accounts            |  | 0.32                   | % |  | $              | 25,829  |                       | $ |                              |  | $                           |        |                 | $ |                    |  | $                   |       |  | $ | 25,829    |  | $ | 25,829   
|Checking accounts(3)                 |  | 2.51                   | % |  |                | 178,698 |                       |   |                              |  |                             |        |                 |   |                    |  |                     |       |  |   | 178,698   |  |   | 178,698  
|Money market accounts                |  | 2.12                   | % |  |                | 149,141 |                       |   |                              |  |                             |        |                 |   |                    |  |                     |       |  |   | 149,141   |  |   | 149,141  
|Certificate of deposit accounts      |  | 3.41                   | % |  |                | 420,766 |                       |   | 39,935                        |  |                             | 13,241  |                 |   | 9,933               |  |                     | 1,364  |  |   | 485,239   |  |   | 485,239  
|FHLB advances                        |  | 2.67                   | % |  |                | 149,600 |                       |   | 32,000                        |  |                             |        |                 |   | 25,000              |  |                     | 4,000  |  |   | 210,600   |  |   | 210,269  
|Note payable                         |  | 4.57                   | % |  |                | 7,640   |                       |   |                              |  |                             |        |                 |   |                    |  |                     |       |  |   | 7,640     |  |   | 7,640    
|Other borrowed money                 |  | 2.25                   | % |  |                | 40,000  |                       |   |                              |  |                             |        |                 |   |                    |  |                     |       |  |   | 40,000    |  |   | 40,000   
|Subordinated debentures              |  | 5.06                   | % |  |                |        |                       |   |                              |  |                             |        |                 |   |                    |  |                     | 19,589 |  |   | 19,589    |  |   | 17,051   
|                                     |  |                        |   |  |                |         |                       |   |                               |  |                             |         |                 |   |                     |  |                     |        |  |   |           |  |   |          
|Total interest sensitive liabilities |  |                        |   |  | $              | 971,674 |                       | $ | 71,935                        |  | $                           | 13,241  |                 | $ | 34,933              |  | $                   | 24,953 |  | $ | 1,116,736 |  | $ | 1,113,867
|                                     |  |                        |   |  |                |         |                       |   |                               |  |                             |         |                 |   |                     |  |                     |        |  |   |           |  |   |          
|                                     |  |                        |   |  |                |         |                       |  
|Off-Balance Sheet Items              |  |                        |   |  |                |         |                       |   |                               |  |                             |         |                 |   |                     |  |                     |        |  |   |           |  |   |          
|                                     |  |                        |   |  |                |         |                       |  
|Operating leases                     |  |                        |   |  | $              | 589     |                       | $ | 1,030                         |  | $                           | 965     |                 | $ | 1,484               |  | $                   |       |  | $ | 4,068     |  | $ | 4,068    
|                                     |  |                        |   |  |                |         |                       |   |                               |  |                             |         |                 |   |                     |  |                     |        |  |   |           |  |   |          
|Commitments to extend credit         |  | 6.32                   | % |  |                | 137,430 |                       |   |                              |  |                             |        |                 |   |                    |  |                     |       |  |   |          |  |   |          
|Unused lines of creditresidential   |  |                        |   |  |                | 235,942 |                       |   |                              |  |                             |        |                 |   |                    |  |                     |       |  |   |          |  |   |          
|Unused lines of creditcommercial    |  |                        |   |  |                | 53,818  |                       |   |                              |  |                             |        |                 |   |                    |  |                     |       |  |   |          |  |   |          
|Unused lines of creditconsumer      |  |                        |   |  |                | 234     |                       |   |                               |  |                             |         |                 |   |                     |  |                     |        |  |   |           |  |   |          



|(1) | Includes non-accrual loans.
|--- | ---------------------------

|(2) | Maturity reflects expected committed sales to investors.
|--- | --------------------------------------------------------

|(3) | Excludes non-interest bearing checking accounts of $76.4
million.
|--- | -----------------------------------------------------------------



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LIQUIDITY RISK

Liquidity risk arises from the possibility that the Company might not be able to satisfy current or future financial commitments, or may become unduly reliant on alternative funding sources. The objective of liquidity
risk management is to ensure that the cash flow requirements of the Banks depositors and borrowers, as well as the Companys operating cash needs, are met. The Asset/Liability Management Committee meets regularly to consider the operating
needs of the organization. Projected cash flows are prepared for a rolling 180 day period, with significant shortfalls in core deposit products examined and wholesale funding decisions made. Funds are available from a number of sources, including
retail deposits, Federal Home Loan Bank advances, short-term borrowings from the Federal Reserve, brokered deposits, other borrowings and loan sales.

The
Company maintains adequate levels of liquidity to ensure the availability of funds to satisfy loan commitments and deposit withdrawals. At September 30, 2008, the Company had outstanding firm commitments to originate loans of $137.4 million,
all of which were on a best-efforts basis and to fulfill commitments under unused lines of credit of $290.0 million. At the same time, certificates of deposit scheduled to mature in one year or less totaled $420.8 million, including $110.4 million
of brokered deposits. Based upon historical experience, management believes the majority of maturing retail certificates of deposit will remain with the Bank. Management manages the level of brokered deposits in conjunction with other wholesale
funding strategies.

The Company requires funds beyond its ability to generate them internally. The Bank has the ability to borrow funds from the FHLB
equal to 35% of the Banks total assets, subject to collateral verification. Under a blanket agreement, the Bank assigns all investments in FHLB stock, all qualifying first residential mortgage loans and all loans held for sale as collateral to
secure the amounts borrowed. At September 30, 2008, the Bank had $76.4 million available under the above-mentioned borrowing arrangement in addition to existing advances of $210.6 million. In addition, the Bank has the ability to borrow funds
on a short-term basis (generally maturing overnight to within 28 days) under the Banks primary credit line at the Federal Reserves discount window. The Bank had approximately $128.1 million in additional borrowing authority at
September 30, 2008 under this arrangement in addition to the $40.0 million in borrowings outstanding at that date and had approximately $224.2 million of commercial loans pledged as collateral under this agreement. Also, as long as the
Bank maintains a well capitalized position, the Bank can issue deposits through a nationally brokered market. Brokered deposits offer the advantage of large blocks of liquidity.

The Company is a large originator of residential mortgage loans, with more than 81% of these loans 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 $1.32 billion in cash during the twelve months ended September 30, 2008 and provided proceeds of $1.32 billion from loan
sales.

The primary use of cash from investing activities is the origination of loans receivable that are held in portfolio. During the year
ended September 30, 2008, loan originations decreased $2.4 million from $176.7 million for the year ended September 30, 2007 to $174.3 million for 2008. Other significant uses of cash from investing activities included $53.3 million
for the purchase of debt securities available for sale, $38.9 million for the purchase of debt securities held to maturity, $9.1 million for the purchase of equity securities available for sale, $15.3 million for the purchase of FHLB stock,
$1.2 million for the purchase or improvement of premises and equipment and $1.5 million for the purchase of bank-owned life insurance. Sources of cash from investing activities included proceeds from the sale of debt securities
available for sale totaling $53.6 million, proceeds from the sale of equity securities available for sale totaling $3.8 million, proceeds from maturities of debt securities held to maturity totaling $45.1 million, proceeds from maturities of
debt securities available for sale totaling $7.0 million, proceeds from FHLB stock redemptions of $12.8 million and proceeds from sale of real estate acquired in settlement of loans of $6.6 million.

Supporting the growth in the loan portfolio, the Companys primary sources of funds from financing activities included a $79.9 million increase in
deposits, a $52.2 million increase FHLB advances, a $40.0 million increase in borrowings from



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the Federal Reserve and a $5 million increase in notes payable. Primary uses of cash from financing activities included a net decrease in due
to other banks of $3.1 million and dividends paid on common stock of $3.7 million.

DERIVATIVES, CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET
ARRANGEMENTS

The Company has various financial obligations, including obligations that may require future cash payments. The table below presents,
as of September 30, 2008, significant fixed and determinable contractual obligations to third parties, excluding accrued interest payable, by payment due date. Further discussion of each obligation is included in the notes to the consolidated
financial statements.



|                            |  |                |         |                        |   |                      |  |             |        |                 |   |        |  |   |       
|--------------------------- |  | -------------- | ------- | ---------------------- | - | -------------------- |  | ----------- | ------ | --------------- | - | ------ |  | - | ------
|                            |  |                |         | Payments due by period
|                            |  | Total          |         | Less than1 Year        |   | 1 to LessThan 3Years |  | 3 to 5Years |        | Morethan 5years
|                            |  | (In thousands)
|Time deposits               |  | $              | 485,239 |                        | $ | 420,766              |  | $           | 53,177 |                 | $ | 11,296 |  | $ |      
|Advances from FHLB          |  |                | 210,600 |                        |   | 149,600              |  |             | 32,000 |                 |   |       |  |   | 29,000
|Note payable                |  |                | 7,640   |                        |   | 7,640                |  |             |       |                 |   |       |  |   |      
|Subordinated debentures     |  |                | 19,589  |                        |   |                     |  |             |       |                 |   |       |  |   | 19,589
|Other borrowings            |  |                | 40,000  |                        |   | 40,000               |  |             |       |                 |   |       |  |   |      
|Operating lease obligations |  |                | 4,068   |                        |   | 589                  |  |             | 1,030  |                 |   | 965    |  |   | 1,484 
|                            |  |                |         |                        |   |                      |  |             |        |                 |   |        |  |   |       
|Total                       |  | $              | 767,136 |                        | $ | 618,595              |  | $           | 86,207 |                 | $ | 12,261 |  | $ | 50,073
|                            |  |                |         |                        |   |                      |  |             |        |                 |   |        |  |   |       

In the normal course of operations, the Company engages in a variety of financial transactions that, in accordance
with U.S. generally accepted accounting principles, are not recorded in its financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used for general corporate
purposes or to manage customers requests for funding. Corporate purpose transactions are used to help manage credit, interest rate, and liquidity risk or to optimize capital. Customer transactions are used to manage customers requests
for funding. The Company is party to interest rate swap agreements which are designed to convert the fixed rates paid on certain brokered certificates of deposits into variable, LIBOR-based rates. See Note 20 of Notes to the Consolidated
Financial Statements for further discussion.

CAPITAL RESOURCES

The Company is not subject to any separate capital requirements from those of the Bank. The Bank is required to maintain specific minimum amounts of capital pursuant to
Office of Thrift Supervision regulations. These minimum capital standards generally require the maintenance of regulatory capital sufficient to meet each of three tests, hereinafter described as the tangible capital requirement, the core capital
requirement and risk-based capital requirement. The tangible capital requirement provides for minimum tangible capital (defined as stockholders equity less all intangible assets) equal to 1.5% of adjusted total assets. The core capital
requirement provides for minimum core capital (tangible capital plus certain forms of supervisory goodwill and other qualifying intangible assets) equal to 3.0% of adjusted assets. The risk-based capital requirement provides for the maintenance of
core capital plus a portion of unallocated loss allowances equal to 8.0% of risk-weighted assets. In computing risk-weighted assets, the Bank multiplies the value of each asset on its balance sheet by a risk-weighting factor that is defined by
federal regulations (e.g., one-to four-family conventional residential loans carry a risk-weighted factor of 50%). See Note 16 of Notes to the Consolidated Financial Statementsfor a summary of the Banks regulatory capital amounts and
ratios at September 30, 2008 and 2007. Subsequent to September 30, 2008, the Company applied for $32.5 million in preferred stock in the Treasurys TARP Capital Purchase Program. See Recent Developments.

EFFECT OF INFLATION AND CHANGING PRICES

The consolidated financial statements and related financial data presented herein have been prepared in accordance with U.S. generally accepted accounting principles,
which require the measurement of financial position and operating results



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in terms of historical dollars, without considering the change in the relative purchasing power of money over time due to inflation. The impact of inflation
is reflected in the increased cost of the Companys operations. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more
significant impact on a financial institutions performance than do general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement No. 157, Fair Value Measurements (SFAS
No. 157), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting standards, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. In March 2008, the FASB issued Staff Position No. FAS 157-2 (FSP No. 157-2), which delays the effective date
of SFAS No. 157 for non-financial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years and interim periods beginning after
November 15, 2008. Management has evaluated the requirements of SFAS No. 157 and believes it will not have a material effect on the Companys financial condition or results of operations.

In September 2006, the FASB issued Statement No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans (SFAS
No. 158), which requires balance sheet recognition of the funded status of pension and other postretirement benefits with the offset to accumulated other comprehensive income. Employers will recognize actuarial gains and losses, prior
service cost, and any remaining transition amounts when recognizing a plans funded status. SFAS No. 158 was effective for the Company beginning October 1, 2007. The adoption of SFAS No. 158 did not have a material effect on the
Companys financial condition or results of operations.

In February 2007, the FASB issued Statement No. 159, The Fair Value Option for
Financial Assets and Financial LiabilitiesIncluding an amendment of FASB Statement No. 115 (SFAS No. 159). SFAS No. 159 provides companies with an option to report selected financial assets and liabilities at
estimated fair value. Most of the provisions of SFAS No. 159 are elective; however, the amendment to SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities that own trading and
available-for-sale securities. The fair value option created by SFAS No. 159 permits an entity to measure eligible items at fair value as of specified election dates. The fair value option (a) may generally be applied instrument by
instrument, (b) is irrevocable unless a new election date occurs, and (c) must be applied to the entire instrument and not to only a portion of the instrument. SFAS No. 159 is effective as of the beginning of an entitys first
fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of the fiscal year, has not yet issued financial
statements for any interim period of such year, and also elects to apply the provisions of SFAS No. 157. Management has evaluated the requirements of SFAS No. 159 and believes it will not have a material effect on the Companys
financial condition or results of operations.

In December 2007, the FASB issued Statement No. 141 (revised 2007), Business CombinationsA
Replacement of FASB Statement No. 141 (SFAS 141(R)) and Statement No. 160, Noncontrolling Interests in Consolidated Financial StatementsAn Amendment of ARB No. 51 (SFAS 160). SFAS 141(R)
establishes principles and requirements for how an acquirer recognizes and measures certain items in a business combination, as well as disclosures about the nature and financial effects of a business combination. SFAS 160 establishes accounting and
reporting standards surrounding noncontrolling interests, or minority interests, which are the portions of equity in a subsidiary not attributable, directly or indirectly, to a parent. The pronouncements are effective for fiscal years beginning on
or after December 15, 2008 and apply prospectively to business combinations. Presentation and disclosure requirements related to noncontrolling interests must be retrospectively applied. Management is currently evaluating the impact of SFAS
141(R) on its accounting for future acquisitions and the impact of SFAS 160 on the Companys consolidated financial statements.

In March 2008, the
FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging ActivitiesAn Amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 requires enhanced qualitative disclosures about



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objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Management is currently evaluating
the impact of SFAS 161 on Companys consolidated financial statements.

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), which 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 was effective for the Company beginning October 1, 2007. The adoption of Interpretation No. 48 did not have a material effect on the Companys
financial condition or results of operations.

In September 2006, the Emerging Issues Task Force Issue 06-4, Accounting for Deferred Compensation and
Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements, was ratified. This EITF Issue addresses accounting for separate agreements that split life insurance policy benefits between an employer and employee. The
Issue requires the employer to recognize a liability for future benefits payable to the employee under these agreements. The effects of applying this Issue must be recognized through either a change in accounting principle through an adjustment to
equity or through the retrospective application to all prior periods. The consensus in this Issue is effective for fiscal years beginning after December 15, 2007, with earlier application permitted. Management has evaluated the requirements of
the Issue and believes it will not have a material effect on the Companys financial condition or results of operations.

In November 2007, the
Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 109, Written Loan Commitments Recorded at Fair Value through Earnings (SAB No. 109). SAB No. 109 provides revised guidance on the
valuation of written loan commitments accounted for at fair value through earnings. Former guidance under SAB No. 105, Application of Accounting Principles to Loan Commitments, indicated that the expected net future cash flows
related to the associated servicing of the loan should not be incorporated into the measurement of the fair value of a derivative loan commitment. The new guidance under SAB No. 109 requires these cash flows to be included in the fair value
measurement. The SAB requires this view to be applied on a prospective basis to derivative loan commitments issued or modified in the first quarter of 2008. The Companys application of SAB No. 109 in 2008 did not have a material effect on
its consolidated financial statements.

.



-31-



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Managements Report on

Internal Control Over Financial Reporting

Our management is responsible for establishing and
maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and of the preparation of our
consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

A companys internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting
as of September 30, 2008, using the criteria established in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has
concluded that, as of September 30, 2008, the Companys internal control over financial reporting was effective based on those criteria.

Our
independent registered public accountants, KPMG LLP, have audited and issued a report on our internal control over financial reporting, which appears in this Annual Report.



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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Pulaski Financial Corp.:

We have audited the accompanying consolidated balance sheets of Pulaski Financial Corp. and subsidiaries (the Company) as of September 30, 2008
and 2007, and the related consolidated statements of income and comprehensive income, stockholders equity, and cash flows for each of the years in the three-year period ended September 30, 2008. We also have audited the Companys
internal control over financial reporting as of September 30, 2008, based on criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The
Companys management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying managements report on internal control over financial reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Companys internal control over
financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing
the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.

A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A companys
internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Pulaski Financial Corp. and subsidiaries as of September 30, 2008 and 2007, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 2008,
in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2008, based on criteria established
in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

As discussed in
note 1 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, on October 1, 2005.

/s/KPMG LLP

St. Louis, Missouri

December 12, 2008



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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2008 and 2007



|                                                                                                                                                     |  |      |               |   |      |   |               |  
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------------- | - | ---- | - | ------------- | -
|ASSETS                                                                                                                                               |  | 2008 |               |   | 2007 |  
|Cash and amounts due from depository institutions                                                                                                    |  | $    | 28,430,409    |   |      | $ | 20,438,008    |  
|Federal funds sold and overnight deposits                                                                                                            |  |      | 647,453       |   |      |   | 3,335,735     |  
|                                                                                                                                                     |  |      |               |   |      |   |               |  
|Total cash and cash equivalents                                                                                                                      |  |      | 29,077,862    |   |      |   | 23,773,743    |  
|Equity securities available for sale, at fair value                                                                                                  |  |      | 733,000       |   |      |   | 3,964,629     |  
|Debt securities available for sale, at fair value                                                                                                    |  |      |              |   |      |   | 7,043,172     |  
|Debt securities held to maturity, at amortized cost (fair value of $5,979,231 at September 30, 2007)                                                 |  |      |              |   |      |   | 5,979,878     |  
|Mortgage-backed securities held to maturity, at amortized cost (fair value of $15,607,652 and $399,629 at September 30, 2008 and 2007,
respectively) |  |      | 15,744,497    |   |      |   | 371,480       |  
|Mortgage-backed securities available for sale, at fair value                                                                                         |  |      | 10,180,666    |   |      |   | 2,655,202     |  
|Capital stock of Federal Home Loan Bankat cost                                                                                                      |  |      | 10,896,100    |   |      |   | 8,305,500     |  
|Loans held for sale, at lower of cost or market                                                                                                      |  |      | 71,966,443    |   |      |   | 58,536,280    |  
|Loans receivable (net of allowance for loan losses of $12,761,532 and $10,421,304 at September 30, 2008 and 2007,
respectively)                      |  |      | 1,088,736,516 |   |      |   | 949,826,147   |  
|Real estate acquired in settlement of loans (net of allowance for losses of $417,773 and $74,035 at September 30, 2008 and 2007,
respectively)       |  |      | 3,518,806     |   |      |   | 3,089,656     |  
|Premises and equipment, net                                                                                                                          |  |      | 19,853,426    |   |      |   | 20,389,445    |  
|Goodwill                                                                                                                                             |  |      | 3,938,524     |   |      |   | 3,938,524     |  
|Core deposit intangible                                                                                                                              |  |      | 361,591       |   |      |   | 500,668       |  
|Accrued interest receivable                                                                                                                          |  |      | 5,614,887     |   |      |   | 6,605,153     |  
|Bank-owned life insurance                                                                                                                            |  |      | 27,591,986    |   |      |   | 25,059,509    |  
|Deferred tax asset                                                                                                                                   |  |      | 8,062,641     |   |      |   | 5,050,795     |  
|Other assets                                                                                                                                         |  |      | 7,873,515     |   |      |   | 6,375,126     |  
|                                                                                                                                                     |  |      |               |   |      |   |               |  
|TOTAL ASSETS                                                                                                                                         |  | $    | 1,304,150,460 |   |      | $ | 1,131,464,907 |  
|                                                                                                                                                     |  |      |               |   |      |   |               |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                 |  |      |               |   |      |   |               |  
|LIABILITIES:                                                                                                                                         |  |      |               |   |      |   |               |  
|Deposits                                                                                                                                             |  | $    | 915,311,365   |   |      | $ | 835,488,696   |  
|Advances from the Federal Home Loan Bank                                                                                                             |  |      | 210,600,000   |   |      |   | 158,400,000   |  
|Borrowings from the Federal Reserve Bank                                                                                                             |  |      | 40,000,000    |   |      |   |              |  
|Note payable                                                                                                                                         |  |      | 7,640,000     |   |      |   | 2,980,000     |  
|Subordinated debentures                                                                                                                              |  |      | 19,589,000    |   |      |   | 19,589,000    |  
|Advance payments by borrowers for taxes and insurance                                                                                                |  |      | 3,667,014     |   |      |   | 2,957,793     |  
|Accrued interest payable                                                                                                                             |  |      | 1,505,949     |   |      |   | 2,530,722     |  
|Due to other banks                                                                                                                                   |  |      | 14,377,831    |   |      |   | 17,484,741    |  
|Other liabilities                                                                                                                                    |  |      | 9,098,795     |   |      |   | 11,229,464    |  
|                                                                                                                                                     |  |      |               |   |      |   |               |  
|Total liabilities                                                                                                                                    |  |      | 1,221,789,954 |   |      |   | 1,050,660,416 |  
|                                                                                                                                                     |  |      |               |   |      |   |               |  
|STOCKHOLDERS EQUITY :                                                                                                                               |  |      |               |   |      |   |               |  
|Preferred stock$.01 par value per share, 1,000,000 shares authorized; none issued                                                                   |  |      |              |   |      |   |              |  
|Common stock$.01 par value per share, 18,000,000 shares authorized; 13,068,618 shares issued at September 30, 2008 and 2007,
respectively           |  |      | 130,687       |   |      |   | 130,687       |  
|Treasury stockat cost (2,853,078 and 3,133,228 shares at September 30, 2008 and 2007, respectively)                                                 |  |      | (16,278,615   | ) |      |   | (17,040,449   | )
|Treasury stockEquity Trust (226,992 and 230,225 shares at September 30, 2008 and 2007, respectively)                                                |  |      | (2,771,883    | ) |      |   | (3,030,198    | )
|Additional paid-in capital                                                                                                                           |  |      | 51,987,198    |   |      |   | 50,560,264    |  
|Accumulated other comprehensive loss, net                                                                                                            |  |      | (97,394       | ) |      |   | (66,283       | )
|Retained earnings                                                                                                                                    |  |      | 49,390,513    |   |      |   | 50,250,470    |  
|                                                                                                                                                     |  |      |               |   |      |   |               |  
|Total stockholders equity                                                                                                                           |  |      | 82,360,506    |   |      |   | 80,804,491    |  
|                                                                                                                                                     |  |      |               |   |      |   |               |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                           |  | $    | 1,304,150,460 |   |      | $ | 1,131,464,907 |  
|                                                                                                                                                     |  |      |               |   |      |   |               |  

See accompanying notes to the consolidated financial statements.



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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006



|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                                                                                                                                            |  | 2008 |            |   | 2007 |   |            | 2006 | 
|INTEREST AND DIVIDEND INCOME:                                                                                                                                                                               |  |      |            |   |      |   |            |      |  |   |            |  
|Loans receivable                                                                                                                                                                                            |  | $    | 71,170,220 |   |      | $ | 69,212,344 |      |  | $ | 52,591,369 |  
|Securities                                                                                                                                                                                                  |  |      | 941,827    |   |      |   | 880,129    |      |  |   | 489,020    |  
|Mortgage-backed securities                                                                                                                                                                                  |  |      | 562,106    |   |      |   | 157,947    |      |  |   | 202,196    |  
|FHLB stock                                                                                                                                                                                                  |  |      | 498,385    |   |      |   | 441,599    |      |  |   | 327,261    |  
|Other                                                                                                                                                                                                       |  |      | 93,009     |   |      |   | 232,701    |      |  |   | 233,080    |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|Total interest and dividend income                                                                                                                                                                          |  |      | 73,265,547 |   |      |   | 70,924,720 |      |  |   | 53,842,926 |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|INTEREST EXPENSE:                                                                                                                                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Deposits                                                                                                                                                                                                    |  |      | 27,441,443 |   |      |   | 31,337,497 |      |  |   | 19,624,756 |  
|Advances from Federal Home Loan Bank                                                                                                                                                                        |  |      | 7,955,576  |   |      |   | 8,755,206  |      |  |   | 7,777,403  |  
|Borrowings from the Federal Reserve Bank                                                                                                                                                                    |  |      | 776,048    |   |      |   | 42         |      |  |   |           |  
|Note payable                                                                                                                                                                                                |  |      | 241,786    |   |      |   | 225,922    |      |  |   | 235,483    |  
|Subordinated debentures                                                                                                                                                                                     |  |      | 1,238,106  |   |      |   | 1,515,214  |      |  |   | 1,389,369  |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|Total interest expense                                                                                                                                                                                      |  |      | 37,652,959 |   |      |   | 41,833,881 |      |  |   | 29,027,011 |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|NET INTEREST INCOME                                                                                                                                                                                         |  |      | 35,612,588 |   |      |   | 29,090,839 |      |  |   | 24,815,915 |  
|PROVISION FOR LOAN LOSSES                                                                                                                                                                                   |  |      | 7,734,641  |   |      |   | 3,855,257  |      |  |   | 1,501,375  |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                                                                                                                                         |  |      | 27,877,947 |   |      |   | 25,235,582 |      |  |   | 23,314,540 |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|NON-INTEREST INCOME:                                                                                                                                                                                        |  |      |            |   |      |   |            |      |  |   |            |  
|Retail banking fees                                                                                                                                                                                         |  |      | 3,963,420  |   |      |   | 3,414,779  |      |  |   | 3,033,494  |  
|Mortgage revenues                                                                                                                                                                                           |  |      | 6,111,359  |   |      |   | 4,942,452  |      |  |   | 4,640,820  |  
|Loss on loan pool sales                                                                                                                                                                                     |  |      |           |   |      |   |           |      |  |   | (122,299   | )
|Investment brokerage revenues                                                                                                                                                                               |  |      | 1,024,291  |   |      |   | 662,566    |      |  |   | 597,814    |  
|Insurance commissions                                                                                                                                                                                       |  |      | 91,173     |   |      |   | 37,793     |      |  |   | 216,279    |  
|(Loss) gain on sales of securities available for sale                                                                                                                                                       |  |      | (7,870,267 | ) |      |   | 273,170    |      |  |   | 123,188    |  
|Gain on sale of branch                                                                                                                                                                                      |  |      |           |   |      |   |           |      |  |   | 2,473,853  |  
|Bank-owned life insurance income                                                                                                                                                                            |  |      | 1,032,477  |   |      |   | 1,015,811  |      |  |   | 846,718    |  
|Other                                                                                                                                                                                                       |  |      | 562,157    |   |      |   | 674,572    |      |  |   | 649,366    |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|Total non-interest income                                                                                                                                                                                   |  |      | 4,914,610  |   |      |   | 11,021,143 |      |  |   | 12,459,233 |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|NON-INTEREST EXPENSE:                                                                                                                                                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Salaries and employee benefits                                                                                                                                                                              |  |      | 14,056,359 |   |      |   | 11,178,161 |      |  |   | 9,861,668  |  
|Occupancy, equipment and data processing expense                                                                                                                                                            |  |      | 7,218,894  |   |      |   | 5,760,423  |      |  |   | 5,083,266  |  
|Advertising                                                                                                                                                                                                 |  |      | 1,256,538  |   |      |   | 1,424,076  |      |  |   | 1,124,269  |  
|Professional services                                                                                                                                                                                       |  |      | 1,496,040  |   |      |   | 1,352,862  |      |  |   | 1,236,742  |  
|Postage, document delivery and office supplies expense                                                                                                                                                      |  |      | 1,043,190  |   |      |   | 1,023,901  |      |  |   | 988,831    |  
|(Gain) loss on derivative instruments                                                                                                                                                                       |  |      | (395,885   | ) |      |   | (586,310   | )    |  |   | 194,330    |  
|Real estate foreclosure expense and losses, net                                                                                                                                                             |  |      | 1,930,841  |   |      |   | 597,242    |      |  |   | 227,595    |  
|Data processing termination (recovery) expense                                                                                                                                                              |  |      | (180,000   | ) |      |   | 219,534    |      |  |   |           |  
|FDIC deposit insurance premiums                                                                                                                                                                             |  |      | 748,994    |   |      |   | 84,274     |      |  |   | 72,750     |  
|Other                                                                                                                                                                                                       |  |      | 2,044,397  |   |      |   | 1,718,630  |      |  |   | 1,721,594  |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|Total non-interest expense                                                                                                                                                                                  |  |      | 29,219,368 |   |      |   | 22,772,793 |      |  |   | 20,511,045 |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|INCOME BEFORE INCOME TAXES                                                                                                                                                                                  |  |      | 3,573,189  |   |      |   | 13,483,932 |      |  |   | 15,262,728 |  
|INCOME TAXES                                                                                                                                                                                                |  |      | 684,445    |   |      |   | 4,501,293  |      |  |   | 5,424,675  |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|NET INCOME                                                                                                                                                                                                  |  | $    | 2,888,744  |   |      | $ | 8,982,639  |      |  | $ | 9,838,053  |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|OTHER COMPREHENSIVE INCOMEUnrealized (loss) gain on investment and mortgage-backed securities available-for-sale (net of income taxes in
2008, 2007 and 2006 of $22,409, $29,357 and $6,250, respectively) |  |      | (31,111    | ) |      |   | (53,350    | )    |  |   | 10,196     |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|COMPREHENSIVE INCOME                                                                                                                                                                                        |  | $    | 2,857,633  |   |      | $ | 8,929,289  |      |  | $ | 9,848,249  |  
|                                                                                                                                                                                                            |  |      |            |   |      |   |            |      |  |   |            |  
|Per share amounts:                                                                                                                                                                                          |  |      |            |   |      |   |            |      |  |   |            |  
|Basic earnings per share                                                                                                                                                                                    |  | $    | 0.29       |   |      | $ | 0.92       |      |  | $ | 1.07       |  
|Basic weighted average common shares outstanding                                                                                                                                                            |  |      | 9,914,220  |   |      |   | 9,814,396  |      |  |   | 9,205,525  |  
|Diluted earnings per share                                                                                                                                                                                  |  | $    | 0.28       |   |      | $ | 0.88       |      |  | $ | 1.01       |  
|Diluted weighted average common shares outstanding                                                                                                                                                          |  |      | 10,239,301 |   |      |   | 10,255,702 |      |  |   | 9,717,733  |  

See accompanying notes to the consolidated financial statements.



-35-



---

PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

YEARS ENDED SEPTEMBER 30, 2007 AND 2006



|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |         |   |       |   |            |   |  |   |            |  
|----------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------- | -------------- | - | ----------- | ------------------------ |  | - | ---------------------------------------------- | - |  | ---------------- | ------- | - | ----- | - | ---------- | - |  | - | ---------- | -
|                                                                                                                        |  | CommonStock |         | Treasury Stock |   |             | AdditionalPaid-InCapital |  |   | AccumulatedOtherComprehensiveIncome(Loss), Net |   |  | RetainedEarnings |         |   | Total |  
|BALANCE, SEPTEMBER 30, 2005                                                                                             |  | $           | 119,187 |                | $ | (21,125,653 | )                        |  | $ | 31,205,898                                     |   |  | $                | (23,129 | ) |       | $ | 38,070,161 |   |  | $ | 48,246,464 |  
|Comprehensive income:                                                                                                   |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |         |   |       |   |            |   |  |   |            |  
|Net income                                                                                                              |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  |        |   |       |   | 9,838,053  |   |  |   | 9,838,053  |  
|Change in unrealized loss on investment securities, net of tax                                                          |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  | 89,652  |   |       |   |           |   |  |   | 89,652     |  
|Less: reclassification adjustment for realized gain on sale of investment securities included in net income, net of tax |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  | (79,456 | ) |       |   |           |   |  |   | (79,456    | )
|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |         |   |       |   |            |   |  |   |            |  
|Total comprehensive income                                                                                              |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  | 10,196  |   |       |   | 9,838,053  |   |  |   | 9,848,249  |  
|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |         |   |       |   |            |   |  |   |            |  
|Common stock offering (1,150,000 shares)                                                                                |  |             | 11,500  |                |   |            |                          |  |   | 16,127,730                                     |   |  |                  |        |   |       |   |           |   |  |   | 16,139,230 |  
|Dividends ($0.33 per share)                                                                                             |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  |        |   |       |   | (3,152,569 | ) |  |   | (3,152,569 | )
|Stock issued for acquisition (210,732 shares)                                                                           |  |             |        |                |   | 776,126     |                          |  |   | 2,915,899                                      |   |  |                  |        |   |       |   |           |   |  |   | 3,692,025  |  
|Stock issued for dividend reinvestment plan (17,152 shares)                                                             |  |             |        |                |   | 63,171      |                          |  |   | 213,411                                        |   |  |                  |        |   |       |   |           |   |  |   | 276,582    |  
|Stock options exercised                                                                                                 |  |             |        |                |   | 497,545     |                          |  |   | 299,884                                        |   |  |                  |        |   |       |   |           |   |  |   | 797,429    |  
|Stock option and award expense                                                                                          |  |             |        |                |   |            |                          |  |   | 344,666                                        |   |  |                  |        |   |       |   |           |   |  |   | 344,666    |  
|Stock repurchased (5,296 shares)                                                                                        |  |             |        |                |   | (88,301     | )                        |  |   |                                               |   |  |                  |        |   |       |   |           |   |  |   | (88,301    | )
|Equity trust shares purchased (122,538 shares)                                                                          |  |             |        |                |   | (1,959,000  | )                        |  |   |                                               |   |  |                  |        |   |       |   |           |   |  |   | (1,959,000 | )
|Release of equity trust shares                                                                                          |  |             |        |                |   | 2,724,098   |                          |  |   | (2,724,098                                     | ) |  |                  |        |   |       |   |           |   |  |   |           |  
|Tax benefit for release of equity trust shares                                                                          |  |             |        |                |   |            |                          |  |   | 800,000                                        |   |  |                  |        |   |       |   |           |   |  |   | 800,000    |  
|Amortization of equity trust expense                                                                                    |  |             |        |                |   |            |                          |  |   | 806,098                                        |   |  |                  |        |   |       |   |           |   |  |   | 806,098    |  
|Excess tax benefit from stock based compensation                                                                        |  |             |        |                |   |            |                          |  |   | 75,673                                         |   |  |                  |        |   |       |   |           |   |  |   | 75,673     |  
|Forfeiture of restricted shares                                                                                         |  |             |        |                |   | (1,842      | )                        |  |   | 1,842                                          |   |  |                  |        |   |       |   |           |   |  |   |           |  
|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |         |   |       |   |            |   |  |   |            |  
|                                                                                                                        |  |             |         |                |   |            
|BALANCE, SEPTEMBER 30, 2006                                                                                             |  | $           | 130,687 |                | $ | (19,113,856 | )                        |  | $ | 50,067,003                                     |   |  | $                | (12,933 | ) |       | $ | 44,755,645 |   |  | $ | 75,826,546 |  
|Comprehensive income:                                                                                                   |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |         |   |       |   |            |   |  |   |            |  
|Net income                                                                                                              |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  |        |   |       |   | 8,982,639  |   |  |   | 8,982,639  |  
|Change in unrealized gain on investment securities, net of tax                                                          |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  | (82,707 | ) |       |   |           |   |  |   | (82,707    | )
|Less: reclassification adjustment for realized gain on sale of investment securities included in net income, net of tax |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  | 29,357  |   |       |   |           |   |  |   | 29,357     |  
|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |         |   |       |   |            |   |  |   |            |  
|Total comprehensive income                                                                                              |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  | (53,350 | ) |       |   | 8,982,639  |   |  |   | 8,929,289  |  
|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |         |   |       |   |            |   |  |   |            |  
|Dividends ($0.35 per share)                                                                                             |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  |        |   |       |   | (3,487,814 | ) |  |   | (3,487,814 | )
|Stock issued for dividend reinvestment plan (25,187 shares)                                                             |  |             |        |                |   | 106,838     |                          |  |   | 286,223                                        |   |  |                  |        |   |       |   |           |   |  |   | 393,061    |  
|Stock options exercised                                                                                                 |  |             |        |                |   | 250,710     |                          |  |   | 145,126                                        |   |  |                  |        |   |       |   |           |   |  |   | 395,836    |  
|Stock option and award expense                                                                                          |  |             |        |                |   |            |                          |  |   | 307,128                                        |   |  |                  |        |   |       |   |           |   |  |   | 307,128    |  
|Stock repurchased (97,337 shares)                                                                                       |  |             |        |                |   | (1,415,545  | )                        |  |   |                                               |   |  |                  |        |   |       |   |           |   |  |   | (1,415,545 | )
|Equity trust shares purchased (88,188 shares)                                                                           |  |             |        |                |   | (1,248,787  | )                        |  |   |                                               |   |  |                  |        |   |       |   |           |   |  |   | (1,248,787 | )
|Release of equity trust shares                                                                                          |  |             |        |                |   | 1,349,993   |                          |  |   | (1,349,993                                     | ) |  |                  |        |   |       |   |           |   |  |   |           |  
|Amortization of equity trust expense                                                                                    |  |             |        |                |   |            |                          |  |   | 876,344                                        |   |  |                  |        |   |       |   |           |   |  |   | 876,344    |  
|Tax benefit for release of equity trust shares                                                                          |  |             |        |                |   |            |                          |  |   | 150,824                                        |   |  |                  |        |   |       |   |           |   |  |   | 150,824    |  
|Excess tax benefit from stock based compensation                                                                        |  |             |        |                |   |            |                          |  |   | 77,609                                         |   |  |                  |        |   |       |   |           |   |  |   | 77,609     |  
|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |         |   |       |   |            |   |  |   |            |  
|BALANCE, SEPTEMBER 30, 2007                                                                                             |  | $           | 130,687 |                | $ | (20,070,647 | )                        |  | $ | 50,560,264                                     |   |  | $                | (66,283 | ) |       | $ | 50,250,470 |   |  | $ | 80,804,491 |  
|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |         |   |       |   |            |   |  |   |            |  

See accompanying notes to the consolidated financial statements.



-36-



---

PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

YEAR ENDED SEPTEMBER 30, 2008



|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |            |   |       |   |            |   |  |   |            |  
|----------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------- | -------------- | - | ----------- | ------------------------ |  | - | ---------------------------------------------- | - |  | ---------------- | ---------- | - | ----- | - | ---------- | - |  | - | ---------- | -
|                                                                                                                        |  | CommonStock |         | Treasury Stock |   |             | AdditionalPaid-InCapital |  |   | AccumulatedOtherComprehensiveIncome(Loss), Net |   |  | RetainedEarnings |            |   | Total |  
|BALANCE, SEPTEMBER 30, 2007                                                                                             |  | $           | 130,687 |                | $ | (20,070,647 | )                        |  | $ | 50,560,264                                     |   |  | $                | (66,283    | ) |       | $ | 50,250,470 |   |  | $ | 80,804,491 |  
|Comprehensive Income:                                                                                                   |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |            |   |       |   |            |   |  |   |            |  
|Net income                                                                                                              |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  |           |   |       |   | 2,888,744  |   |  |   | 2,888,744  |  
|Change in unrealized loss on investment securities, net of tax                                                          |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  | (4,910,677 | ) |       |   |           |   |  |   | (4,910,677 | )
|Less: reclassification adjustment for realized loss on sale of investment securities included in net income, net of tax |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  | 4,879,566  |   |       |   |           |   |  |   | 4,879,566  |  
|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |            |   |       |   |            |   |  |   |            |  
|Total comprehensive income                                                                                              |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  | (31,111    | ) |       |   | 2,888,744  |   |  |   | 2,857,633  |  
|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |            |   |       |   |            |   |  |   |            |  
|Dividends ($0.37 per share)                                                                                             |  |             |        |                |   |            |                          |  |   |                                               |   |  |                  |           |   |       |   | (3,748,701 | ) |  |   | (3,748,701 | )
|Stock issued for dividend reinvestment plan (72,695 shares)                                                             |  |             |        |                |   | 296,667     |                          |  |   | 398,722                                        |   |  |                  |           |   |       |   |           |   |  |   | 695,389    |  
|Stock options exercised (245,542 shares)                                                                                |  |             |        |                |   | 1,002,056   |                          |  |   | 151,567                                        |   |  |                  |           |   |       |   |           |   |  |   | 1,153,623  |  
|Stock option and award expense                                                                                          |  |             |        |                |   |            |                          |  |   | 464,754                                        |   |  |                  |           |   |       |   |           |   |  |   | 464,754    |  
|Stock repurchased (51,898 shares)                                                                                       |  |             |        |                |   | (593,253    | )                        |  |   |                                               |   |  |                  |           |   |       |   |           |   |  |   | (593,253   | )
|Treasury stock issued (13,811 shares)                                                                                   |  |             |        |                |   | 56,363      |                          |  |   | 135,472                                        |   |  |                  |           |   |       |   |           |   |  |   | 191,835    |  
|Equity trust shares purchased (11,605 shares)                                                                           |  |             |        |                |   | (120,000    | )                        |  |   |                                               |   |  |                  |           |   |       |   |           |   |  |   | (120,000   | )
|Release of equity trust shares (26,413 shares)                                                                          |  |             |        |                |   | 378,316     |                          |  |   | (378,316                                       | ) |  |                  |           |   |       |   |           |   |  |   |           |  
|Forfeiture of equity trust shares (63,610 shares)                                                                       |  |             |        |                |   |            |                          |  |   | (366,835                                       | ) |  |                  |           |   |       |   |           |   |  |   | (366,835   | )
|Equity trust expense                                                                                                    |  |             |        |                |   |            |                          |  |   | 951,647                                        |   |  |                  |           |   |       |   |           |   |  |   | 951,647    |  
|Excess tax benefit from stock based compensation                                                                        |  |             |        |                |   |            |                          |  |   | 69,923                                         |   |  |                  |           |   |       |   |           |   |  |   | 69,923     |  
|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |            |   |       |   |            |   |  |   |            |  
|BALANCE, SEPTEMBER 30, 2008                                                                                             |  | $           | 130,687 |                | $ | (19,050,498 | )                        |  | $ | 51,987,198                                     |   |  | $                | (97,394    | ) |       | $ | 49,390,513 |   |  | $ | 82,360,506 |  
|                                                                                                                        |  |             |         |                |   |             |                          |  |   |                                                |   |  |                  |            |   |       |   |            |   |  |   |            |  

See accompanying notes to the consolidated financial statements.



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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006



|                                                                          |  |      |                |   |      |   |                |      |  |   |                |  
|------------------------------------------------------------------------- |  | ---- | -------------- | - | ---- | - | -------------- | ---- |  | - | -------------- | -
|                                                                          |  | 2008 |                |   | 2007 |   |                | 2006 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                     |  |      |                |   |      |   |                |      |  |   |                |  
|Net income                                                                |  | $    | 2,888,744      |   |      | $ | 8,982,639      |      |  | $ | 9,838,053      |  
|Adjustment to reconcile net income to net cash from operating activities: |  |      |                |   |      |   |                |      |  |   |                |  
|Depreciation, amortization and accretion:                                 |  |      |                |   |      |   |                |      |  |   |                |  
|Premises and equipment                                                    |  |      | 1,746,134      |   |      |   | 1,503,735      |      |  |   | 1,362,318      |  
|Deferred loan costs, net                                                  |  |      | 2,703,126      |   |      |   | 3,208,157      |      |  |   | 2,967,165      |  
|Debt and equity securities premiums and discounts, net                    |  |      | (283,611       | ) |      |   | (589,462       | )    |  |   | (308,323       | )
|Broker fees financed under interest-rate swap agreements                  |  |      | 522,015        |   |      |   | 196,932        |      |  |   | 196,932        |  
|Equity trust expense                                                      |  |      | 584,812        |   |      |   | 876,344        |      |  |   | 806,098        |  
|Stock option and award expense                                            |  |      | 464,754        |   |      |   | 307,128        |      |  |   | 344,666        |  
|Deferred income taxes                                                     |  |      | (3,011,846     | ) |      |   | (249,519       | )    |  |   | (641,767       | )
|Provision for loan losses                                                 |  |      | 7,734,641      |   |      |   | 3,855,257      |      |  |   | 1,501,375      |  
|Provision for losses on real estate acquired in settlement of loans       |  |      | 755,773        |   |      |   | 115,535        |      |  |   | 102,884        |  
|Losses on sale of real estate acquired in settlement of loans             |  |      | 800,578        |   |      |   | 144,321        |      |  |   | 91,762         |  
|Originations of loans held for sale                                       |  |      | (1,324,428,979 | ) |      |   | (1,329,923,226 | )    |  |   | (1,142,429,279 | )
|Proceeds from sales of loans held for sale                                |  |      | 1,316,528,832  |   |      |   | 1,336,059,282  |      |  |   | 1,150,504,585  |  
|Gain on sale of loans held for sale                                       |  |      | (5,530,016     | ) |      |   | (4,220,282     | )    |  |   | (4,192,585     | )
|Loss on sale of loan pools                                                |  |      |               |   |      |   |               |      |  |   | 122,299        |  
|Loss (gain) on sale of equity securities available for sale               |  |      | 8,127,779      |   |      |   | (273,170       | )    |  |   | (123,188       | )
|Gain on sale of debt securities available for sale                        |  |      | (257,512       | ) |      |   |               |      |  |   |               |  
|Gain on sale of branch, net of expenses                                   |  |      |               |   |      |   |               |      |  |   | (2,473,852     | )
|Gain on sale of investment in joint venture                               |  |      | (30,755        | ) |      |   |               |      |  |   |               |  
|(Gain) loss on derivative financial statements                            |  |      | (395,885       | ) |      |   | (586,310       | )    |  |   | 194,330        |  
|Increase in cash value of bank-owned life insurance                       |  |      | (1,032,477     | ) |      |   | (1,015,811     | )    |  |   | (845,105       | )
|Tax benefit for release of equity trust shares                            |  |      |               |   |      |   | (150,824       | )    |  |   | (800,000       | )
|Excess tax benefit from stock-based compensation                          |  |      | (69,923        | ) |      |   | (77,609        | )    |  |   | (75,673        | )
|Increase (decrease) in accrued expenses                                   |  |      | 710,861        |   |      |   | (141,729       | )    |  |   | (169,761       | )
|Increase (decrease) in current income taxes payable                       |  |      | (2,402,440     | ) |      |   | 1,844,440      |      |  |   | (1,014,714     | )
|Changes in other assets and liabilities                                   |  |      | (1,453,030     | ) |      |   | (828,570       | )    |  |   | 1,894,040      |  
|                                                                          |  |      |                |   |      |   |                |      |  |   |                |  
|Net adjustments                                                           |  |      | 1,782,831      |   |      |   | 10,054,619     |      |  |   | 7,014,207      |  
|                                                                          |  |      |                |   |      |   |                |      |  |   |                |  
|Net cash provided by operating activities                                 |  |      | 4,671,575      |   |      |   | 19,037,258     |      |  |   | 16,852,260     |  
|                                                                          |  |      |                |   |      |   |                |      |  |   |                |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                     |  |      |                |   |      |   |                |      |  |   |                |  
|Cash received from branch acquisition, net                                |  | $    |               |   |      | $ |               |      |  | $ | 15,733,736     |  
|Cash paid on sale of branch                                               |  |      |               |   |      |   |               |      |  |   | (19,448,123    | )
|Proceeds from sales of debt securities available for sale                 |  |      | 56,634,131     |   |      |   | 5,165,950      |      |  |   | 7,390,758      |  
|Proceeds from sales of equity securities available for sale               |  |      | 3,826,876      |   |      |   | 772,648        |      |  |   |               |  
|Proceeds from sales of mortgage-backed securities available for sale      |  |      |               |   |      |   |               |      |  |   | 779,618        |  
|Proceeds from maturities of investments in time deposits                  |  |      |               |   |      |   | 693,000        |      |  |   | 1,287,000      |  
|Proceeds from maturities of debt securities available for sale            |  |      | 7,000,000      |   |      |   |               |      |  |   | 450,000        |  
|Proceeds from maturities of debt securities held to maturity              |  |      | 45,100,000     |   |      |   | 51,000,000     |      |  |   | 34,000,000     |  
|Proceeds from redemption of FHLB stock                                    |  |      | 12,751,600     |   |      |   | 12,858,200     |      |  |   | 12,313,500     |  
|Purchases of bank-owned life insurance policies                           |  |      | (1,500,000     | ) |      |   |               |      |  |   | (7,100,000     | )
|Purchases of debt securities available for sale                           |  |      | (53,280,870    | ) |      |   | (12,072,920    | )    |  |   | (592,070       | )
|Purchases of debt securities held to maturity                             |  |      | (38,861,190    | ) |      |   | (43,465,822    | )    |  |   | (40,643,057    | )
|Purchases of equity securities available for sale                         |  |      | (9,092,573     | ) |      |   | (248,809       | )    |  |   |               |  
|Purchases of mortgage-backed securities available for sale                |  |      | (8,105,406     | ) |      |   |               |      |  |   |               |  
|Purchases of FHLB stock                                                   |  |      | (15,342,200    | ) |      |   | (11,639,400    | )    |  |   | (13,262,000    | )
|Principal payments received on mortgage-backed securities                 |  |      | 1,612,303      |   |      |   | 653,062        |      |  |   | 1,162,551      |  
|Proceeds from sale of loan pools                                          |  |      |               |   |      |   |               |      |  |   | 13,862,739     |  
|Net increase in loans receivable                                          |  |      | (174,296,330   | ) |      |   | (176,734,957   | )    |  |   | (163,119,464   | )
|Proceeds from sales of real estate acquired in settlement of loans        |  |      | 6,593,149      |   |      |   | 4,459,075      |      |  |   | 2,423,215      |  
|Proceeds from disposal of equipment                                       |  |      | 12,973         |   |      |   | 2,528          |      |  |   | 26,641         |  
|Purchases of premises and equipment                                       |  |      | (1,223,088     | ) |      |   | (3,729,868     | )    |  |   | (4,260,358     | )
|Proceeds from sale of investment joint venture                            |  |      | 49,375         |   |      |   |               |      |  |   |               |  
|Cash paid for investment in joint venture                                 |  |      | (233,691       | ) |      |   | (100,000       | )    |  |   | (67,620        | )
|                                                                          |  |      |                |   |      |   |                |      |  |   |                |  
|Net cash used in investing activities                                     |  | $    | (171,354,941   | ) |      | $ | (172,387,313   | )    |  | $ | (159,062,934   | )
|                                                                          |  |      |                |   |      |   |                |      |  |   |                |  



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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006



|                                                                                 |  |      |             |   |      |   |             |      |  |   |             |  
|-------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                                 |  | 2008 |             |   | 2007 |   |             | 2006 | 
|CASH FLOWS FROM FINANCING ACTIVITIES:                                            |  |      |             |   |      |   |             |      |  |   |             |  
|Net increase in deposits                                                         |  | $    | 79,876,358  |   |      | $ | 179,553,909 |      |  | $ | 115,655,886 |  
|Proceeds from Federal Home Loan Bank advances, net                               |  |      | 52,200,000  |   |      |   | (14,400,000 | )    |  |   | 1,800,000   |  
|Proceeds from borrowings from Federal Reserve Bank, net                          |  |      | 40,000,000  |   |      |   |            |      |  |   |            |  
|Proceeds from note payable                                                       |  |      | 5,000,000   |   |      |   |            |      |  |   |            |  
|Payment on note payable                                                          |  |      | (340,000    | ) |      |   | (340,000    | )    |  |   | (255,000    | )
|Net (decrease) increase in due to other banks                                    |  |      | (3,106,910  | ) |      |   | (4,581,633  | )    |  |   | 8,430,762   |  
|Net increase (decrease) in advance payments by borrowers for taxes and insurance |  |      | 709,221     |   |      |   | (96,920     | )    |  |   | 124,754     |  
|Proceeds from common stock offering                                              |  |      |            |   |      |   |            |      |  |   | 16,139,230  |  
|Proceeds from stock options exercised                                            |  |      | 1,153,623   |   |      |   | 395,836     |      |  |   | 797,429     |  
|Purchase of equity trust shares                                                  |  |      | (120,000    | ) |      |   | (1,248,787  | )    |  |   | (1,959,000  | )
|Dividends paid on common stock                                                   |  |      | (3,748,701  | ) |      |   | (3,487,814  | )    |  |   | (3,152,569  | )
|Tax benefit for release of equity trust shares                                   |  |      |            |   |      |   | 150,824     |      |  |   | 800,000     |  
|Excess tax benefit from stock-based compensation                                 |  |      | 69,923      |   |      |   | 77,609      |      |  |   | 75,673      |  
|Treasury stock issued                                                            |  |      | 191,835     |   |      |   |            |      |  |   |            |  
|Proceeds from cash received in dividend reinvestment plan                        |  |      | 695,389     |   |      |   | 393,061     |      |  |   | 276,582     |  
|Common stock repurchased                                                         |  |      | (593,253    | ) |      |   | (1,415,545  | )    |  |   | (88,301     | )
|                                                                                 |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                 |  |      |            
|Net cash provided by financing activities                                        |  |      | 171,987,485 |   |      |   | 155,000,540 |      |  |   | 138,645,446 |  
|                                                                                 |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                 |  |      |            
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             |  |      | 5,304,119   |   |      |   | 1,650,485   |      |  |   | (3,565,228  | )
|                                                                                 |  |      |            
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                   |  |      | 23,773,743  |   |      |   | 22,123,258  |      |  |   | 25,688,486  |  
|                                                                                 |  |      |             |   |      |   |             |      |  |   |             |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                         |  | $    | 29,077,862  |   |      | $ | 23,773,743  |      |  | $ | 22,123,258  |  
|                                                                                 |  |      |             |   |      |   |             |      |  |   |             |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW                                            |  |      |             |   |      |   |             |      |  |   |             |  
|INFORMATION:                                                                     |  |      |             |   |      |   |             |      |  |   |             |  
|Cash paid during the year for:                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Interest on deposits                                                             |  | $    | 28,445,903  |   |      | $ | 30,597,916  |      |  | $ | 18,980,468  |  
|Interest on advances from Federal Home Loan Bank                                 |  |      | 7,990,888   |   |      |   | 8,763,871   |      |  |   | 7,745,363   |  
|Interest on other borrowings                                                     |  |      | 743,993     |   |      |   | 42          |      |  |   |            |  
|Interest on subordinated debentures                                              |  |      | 1,256,135   |   |      |   | 1,516,169   |      |  |   | 1,373,137   |  
|Interest on note payable                                                         |  |      | 240,813     |   |      |   | 225,925     |      |  |   | 222,868     |  
|                                                                                 |  |      |             |   |      |   |             |      |  |   |             |  
|Cash paid during year for interest                                               |  |      | 38,677,732  |   |      |   | 41,103,923  |      |  |   | 28,321,836  |  
|Income taxes, net                                                                |  |      | 5,766,568   |   |      |   | 3,219,825   |      |  |   | 6,707,644   |  
|                                                                                 |  |      |            
|NON-CASH INVESTING ACTIVITIES:                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Real estate acquired in settlement of loans                                      |  |      | 8,581,958   |   |      |   | 5,044,420   |      |  |   | 4,627,832   |  
|Loans securitized into mortgage-backed securities                                |  |      | 16,264,184  |   |      |   |            |      |  |   |            |  

See accompanying notes to the consolidated financial statements.



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PULASKI FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006



|1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

Pulaski Financial Corp. (the Company) is the holding company for Pulaski Bank (the Bank). The Companys primary assets are the outstanding shares of the Bank, cash, and equity investments in other financial
institutions. The Company also maintains two special purpose subsidiaries that issue preferred securities. Management of the Company and the Bank are substantially similar and the Company neither owns nor leases any property, but instead uses the
premises, equipment and furniture of the Bank. Accordingly, the information in the consolidated financial statements relates primarily to the Bank.

The Company, through the Bank, operates in a single business segment, which is a community-oriented financial institution providing traditional financial services through the operation of twelve full-service bank locations in the St. Louis
metropolitan area at September 30, 2008 and three loan production offices in the Kansas City metropolitan area and the Illinois portion of the St. Louis metropolitan area. The Bank is engaged primarily in the business of attracting deposits
from the general public and using these and other funds to originate a variety of residential, commercial and consumer loans within the Banks lending market areas. The Bank is an approved lender/servicer for the Federal Housing Administration
(FHA) and the Veterans Administration (VA), as well as for the Missouri Housing Development Commission (a government agency established to provide home buying opportunities for low income first time home buyers).

The accounting and reporting policies and practices of the Company and its subsidiaries conform to U.S. generally accepted accounting principles and
to prevailing practices within the banking industry. A summary of the Companys significant accounting policies follows:

Principles of ConsolidationThe consolidated financial statements include the accounts of Pulaski Financial Corp. and its wholly owned subsidiary, Pulaski Bank, and its wholly owned subsidiary, Pulaski Service
Corporation. All significant intercompany transactions have been eliminated in consolidation.

Use of EstimatesThe
preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles 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, and that affect the reported amounts of revenues and expenses during the reporting 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.

Cash and
Cash EquivalentsFor purposes of reporting cash flows, cash and cash equivalents include cash and amounts due from depository institutions, cash in transit, cash in the process of collection, federal funds sold, and overnight deposits
at the Federal Home Loan Bank. Generally, federal funds sold mature within one day.

Securities and Mortgage-Backed Securities
Available for SaleSecurities and mortgage-backed securities available for sale are recorded at their current fair values, adjusted for amortization of premiums and accretion of discounts, which are recognized as adjustments to interest
income over the life of the securities using the level-yield method. Unrealized gains or losses on securities and mortgage-backed securities available for sale are included in a separate component of stockholders equity, net of deferred income
taxes. Gains or losses on the disposition of securities and mortgage-backed securities available for sale are recognized using the specific identification method. Estimated fair values of securities and mortgage-backed securities available for sale
are based on quoted market prices when available. If quoted market prices are not available, fair values are estimated using quoted market prices for similar instruments.



-40-



---

To the extent management determines a decline in the value of a security or mortgage-backed security
available for sale to be other than temporary, the Bank will adjust the carrying value and include such expense in the consolidated statements of income and comprehensive income during the period in which such decline occurs.

Securities and Mortgage-Backed Securities Held to MaturitySecurities and mortgage-backed securities held to maturity are stated at
cost, adjusted for amortization of premiums and accretion of discounts, since the Company has both the ability and intent to hold the securities to maturity. Premium amortization and discount accretion are recognized as adjustments to interest
income over the life of the securities using the level-yield method.

To the extent management determines a decline in the value of a
security or mortgage-backed security held to maturity to be other than temporary, the Company will adjust the carrying value and include such expense in the consolidated statements of income and comprehensive income during the period in which such
decline occurs.

Capital Stock of the Federal Home Loan BankCapital stock of the Federal Home Loan Bank of
Des Moines is carried at cost. Dividends received on such stock are reflected as interest and dividend income in the consolidated statements of income and comprehensive income.

Loans Held for SaleLoans held for sale consist of loans that management does not intend to hold until maturity and are reflected at
the lower of cost or market. Such loans are generally committed to be sold to investors on a best-efforts basis with servicing released. Accordingly, market values for such loans are based on commitment prices. Gains or losses on loan sales are
recognized at the time of sale and are determined by the difference between net sales proceeds and the principal balance of the loans sold, adjusted for net deferred loan fees or costs. Loan origination and commitment fees, net of certain direct
loan origination costs, are deferred until the sale of the loan.

Loans ReceivableLoans receivable are stated at the
principal amounts outstanding adjusted for premiums, discounts, deferred loan costs, loans in process and the allowance for loan losses. Loan origination and commitment fees on originated loans, net of certain direct loan origination costs, are
deferred and amortized to interest income using the level-yield method over the estimated lives of the related loans. Interest on loans is accrued based upon the principal amounts outstanding. The Banks policy is to discontinue the accrual of
interest income on any loan when, in the opinion of management, there is reasonable doubt as to the ultimate collectability of interest or principal. When evaluating collectability, management considers, among other factors, the value of the
underlying collateral. Previously accrued but unpaid interest is charged to current income at the time a loan is placed on non-accrual status. Subsequent collections of cash may be applied as reductions to the principal balance, interest in arrears,
or recorded as income depending on managements assessment of the ultimate collectability of the loan. Non-accrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there
is no longer any reasonable doubt as to the timely collectability of interest or principal.

Impaired
LoansA loan is considered to be impaired when, based on current information and events, management determines that the Company will be unable to collect all amounts due according to the loan contract, including scheduled
interest payments. When a loan is identified as impaired, the amount of impairment is measured based on the present value of expected future cash flows, discounted at the loans effective interest rate, except when the sole remaining source of
repayment for the loan is the operation or liquidation of the collateral. In these cases, observable market prices or the current fair value of the collateral, less selling costs when foreclosure is probable, are used instead of discounted cash
flows. If the value of the impaired loan is determined to be less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), an impairment charge is recognized through a
provision for loan losses.

Troubled Debt RestructuringsA loan is classified as a troubled debt
restructuring if the Company, for economic or legal reasons related to the borrowers financial difficulties, grants a concession to the borrower that it would not



-41-



---

otherwise consider. This usually includes a modification of loan terms (such as a reduction of the rate to below market terms, adding past due interest to
the loan balance or extending the maturity date) and possibly a partial forgiveness of debt. A loan classified as a troubled debt restructuring will retain such classification until the borrower demonstrates the ability to pay under the terms of the
restructured note through a sustained period of repayment performance, which is generally one year. Interest income on restructured loans is accrued at the reduced rate once borrower demonstrates the ability to pay under the terms of the
restructured note through a sustained period of repayment performance, which is generally three months for loans that were less than 30 days past due at the time of restructuring and six months for loans that were 30 days or more past due at the
time of restructuring.

Allowance for Loan LossesThe Company maintains an allowance for loan losses to
absorb probable losses in the Companys loan portfolio. Loan losses are charged against and recoveries are credited to the allowance. Provisions for loan losses are charged to income and credited to the allowance in an amount necessary to
maintain an appropriate allowance given risks identified in the portfolio. The allowance is based upon managements quarterly estimates of probable losses inherent in the loan portfolio. Managements estimates are determined through a
method of 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 practices, changes in national and local economic conditions and developments, assessment of collateral values based on independent
appraisals, and changes in the experience, ability, and depth of lending management staff.

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, debt-to-income
ratios or other personal history. The Companys historical loss rates and industry data for each credit rating, adjusted as described below, are used to determine the appropriate allocation percentage for each loan grade. Commercial real
estate, consumer and home equity loans are assigned standard risk weightings that determine the allocation percentage.

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 determined to be impaired, the Company establishes an allowance for loan losses 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. Historical loss rates used to determine allowance provisions are adjusted to reflect the impact of current conditions, including actual collection and charge-off
experience. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require the Company to modify its allowance for loan losses based on their
judgment about information available to them at the time of their examination.

Real Estate Acquired in Settlement of
LoansReal estate acquired as a result of foreclosure or by deed-in-lieu of foreclosure is initially recorded at the lower of its cost, which is the unpaid principal balance of the related loan plus foreclosure costs, or
fair value less estimated selling costs. Fair value is generally determined through a new appraisal or market analysis. Any write down to fair value at the time the property



-42-



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is acquired is recorded as a charge-off to the allowance for loan losses. Any decline in the fair value of the property subsequent to acquisition is recorded
as a charge to non-interest expense.

Derivative Financial InstrumentsThe Company originates and
purchases derivative financial instruments, including interest rate swaps, interest rate lock commitments and forward contracts to sell mortgage-backed securities. These instruments have certain interest rate risk characteristics that change in
value based upon changes in the capital markets.

Interest Rate Swaps: In the normal course of business, the Company uses derivative
financial instruments (primarily interest rate swaps) to assist in its interest rate risk management. In accordance with Statement of Financial Accounting Standards (SFAS) No. 133, all derivatives are measured and reported at fair
value on the Companys consolidated balance sheets as either an asset or a liability. For derivatives that are designated and qualify as a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the
hedged item attributable to the hedged risk, are deferred against the respective asset or liability during the period of the change in the fair values. For all hedging relationships, derivative gains and losses that are not effective in hedging the
changes in fair value of the hedged item are recognized immediately in current earnings during the period of the change. Similarly, the changes in the fair value of derivatives that do not qualify for hedge accounting under SFAS No. 133 are
also reported in non-interest income when they occur.

The net cash settlements on derivatives that qualify for hedge accounting are
recorded in interest income or interest expense, based on the item being hedged. The net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income.

At the inception of the hedge and quarterly thereafter, a formal assessment is performed to determine whether changes in the fair values of the
derivatives have been highly effective in offsetting the changes in the fair values of the hedged item and whether they are expected to be highly effective in the future. The Company formally documents all relationships between hedging instruments
and hedged items, as well as its risk-management objective and strategy for undertaking the hedge. This process includes identification of the hedging instrument, hedged item, risk being hedged and the method for assessing effectiveness and
measuring ineffectiveness. In addition, on a quarterly basis, the Company assesses whether the derivative used in the hedging transaction is highly effective in offsetting changes in fair value of the hedged item, and measures and records any
ineffectiveness as a credit or charge to earnings. The Company discontinues hedge accounting prospectively when it is determined that the derivative is or will no longer be effective in offsetting changes in the fair value of the hedged item, the
derivative expires, is sold or terminated, or management determines that designation of the derivative as a hedging instrument is no longer appropriate.

The estimates of fair values of the Companys derivatives and related liabilities are calculated by an independent third party using proprietary valuation models. The fair values produced by these valuation
models are, in part, theoretical and reflect assumptions which must be made in using the valuation models. Small changes in assumptions could result in significant changes in valuation. The risks inherent in the determination of the fair value of a
derivative may result in income statement volatility.

The Company uses derivatives to modify the repricing characteristics of certain
assets and liabilities so that changes in interest rates do not have a significant adverse effect on net interest income and cash flows and to better match the repricing profile of its interest-bearing assets and liabilities. As a result of interest
rate fluctuations, certain interest-sensitive assets and liabilities will gain or lose market value. In an effective fair value hedging strategy, the effect of this change in value will generally be offset by a corresponding change in value on the
derivatives linked to the hedged assets and liabilities.

Interest Rate Lock Commitments: Commitments to originate loans (interest
rate lock commitments), which primarily consist of commitments to originate fixed-rate residential mortgage loans, are recorded at fair value. Changes in the fair value of interest rate lock commitments are recognized in non-interest income on a
quarterly basis.

Forward Commitments to Sell Mortgage-Backed Securities:Forward commitments to sell mortgage-backed securities are
recorded at fair value. Changes in the fair value of forward contracts to sell mortgage-backed securities are recognized in non-interest income on a quarterly basis.

Premises and EquipmentPremises and equipment are stated at cost, less accumulated depreciation. Depreciation charged to operations is primarily computed utilizing the straight-line method over the
estimated



-43-



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useful lives of the related assets. Estimated lives range from three to forty years for buildings and improvements and five to ten years for furniture and
equipment. Maintenance and repairs are charged to expense when incurred. Major renewals and improvements are capitalized. Gains and losses on dispositions are credited or charged to earnings as incurred.

GoodwillGoodwill represents the amount of acquisition cost over the fair value of net assets acquired in the purchase of another
financial institution. The Company reviews goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate the carrying value of the asset might be impaired. Impairment is determined by comparing the
implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal
to that excess. Any such adjustments are reflected in the results of operations in the periods in which they become known. After a goodwill impairment loss is recognized, the adjusted carrying amount of goodwill becomes its new accounting basis. No
such impairment losses were recognized during any of the three years ended September 30, 2008.

Intangible
AssetsIntangible assets include core deposit premiums related to the purchase of other financial institutions or branch locations. Core deposit premiums are amortized using the level-yield method. The Company reviews intangible assets
for impairment periodically to determine whether there have been any events or circumstances to indicate the recorded amount is not recoverable from projected undiscounted net operating cash flows. If the projected undiscounted net operating cash
flows are less than the carrying amount, an impairment loss is recognized to reduce the carrying amount to fair value, and when appropriate, the amortization period is also reduced. Any such adjustments are reflected in the results of operations in
the periods in which they become known. No such impairment losses were recognized during any of the three years ended September 30, 2008.

Stock-Based CompensationThe Company maintains a number of stock-based incentive programs, which are discussed in more detail in Note 17. Effective October 1, 2005, the Company adopted SFAS
No. 123R, Share-Based Payment. This statement replaced SFAS No. 123, Accounting for Stock-Based Compensation, and superseded Accounting Principles Board Opinion (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. 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.

Income TaxesDeferred income taxes are determined using an asset or liability approach that requires the recognition of deferred tax
assets or liabilities based upon temporary differences in the tax basis of an asset or liability and its related financial statement balance. The deferred tax asset or liability is calculated using the enacted tax rates expected to apply in the
period in which the deferred asset or liability is expected to be settled or realized.

Effective October 1, 2007, the Company adopted
the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (FIN 48), which clarifies the
accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with SFAS No. 109. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN 48
are to be applied to all tax positions upon initial adoption of this standard. Tax positions must meet the more-likely-than-not recognition threshold at the effective date in order for the related tax benefits to be recognized or continue to be
recognized upon adoption of FIN 48.

ReclassificationsCertain amounts included in the 2007 and 2006 consolidated
financial statements have been reclassified to conform to the 2008 presentation. In accordance with SFAS No. 91, Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring



-44-



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Loans and Initial Direct Costs of Leases, the Company reclassified certain direct fees and costs associated with the origination and sale of loans held
for sale during the years ended September 30, 2007 and 2006 into mortgage revenues to conform to the 2008 presentation in the Companys consolidated statements of income and comprehensive income. The net effect of these reclassifications
during the year ended September 30, 2007 decreased appraisal revenues, title policy revenues and salaries and benefits expense $920,000, $684,000 and $1.03 million, respectively and increased mortgage revenues $579,000. The net effect of these
reclassifications during the year ended September 30, 2006 decreased appraisal revenues, title policy revenues and salaries and benefits expense $167,000, $601,000 and $482,000, respectively and increased mortgage revenues $286,000.



|2. | BUSINESS COMBINATION
|-- | --------------------

On March 31, 2006, the
Company acquired 100% of the outstanding common stock of CWE Bancorp, Inc., the holding company of Central West End Bank (CWE), St. Louis, Missouri. The Companys results of operations do not reflect the operations of CWE Bancorp,
Inc. for periods prior to March 31, 2006. The aggregate purchase price was $7.3 million, including $3.6 million of cash and 210,732 shares of common stock valued at $3.7 million. In addition to the $7.3 million, the Company paid $341,000
of cash to certain former employees and directors of CWE Bancorp in exchange for all of their outstanding options to purchase CWE Bancorp common stock. The Company recorded goodwill of $3.9 million and a core deposit intangible of $708,000. CWE had
two branch locations with approximately $12.0 million in loans and $41.4 million in deposits at March 31, 2006.

The gross carrying
amount of the core deposit intangible at September 30, 2008 and 2007 was $708,000 and the accumulated amortization at September 30, 2008 and 2007 was $347,000 and $208,000, respectively. The core deposit intangible amortization expense for
the years ended September 30, 2008, 2007 and 2006 was $139,000, $157,000 and $51,000, respectively. At September 30, 2008 the estimated core deposit intangible amortization expense for the next four years is as follows:



|                         |  |   |        
|------------------------ |  | - | -------
|Year ended September 30: |  |   |        
|2009                     |  | $ | 118,000
|2010                     |  |   | 95,000 
|2011                     |  |   | 69,000 
|2012                     |  |   | 38,000 



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|3. | DEBT AND EQUITY SECURITIES
|-- | --------------------------

The amortized cost and
estimated fair value of debt and equity securities held to maturity and available for sale at September 30, 2008 and 2007 are summarized as follows:



|                                                  |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           
|------------------------------------------------- |  | ------------- | ---------- | - | -------------------- | - | --------------------- |  | - | ------------------- | - |  | - | ----------
|                                                  |  | AmortizedCost |            |   | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | EstimatedFair Value
|September 30, 2008:                               |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Available for Sale:                               |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Equity securities                                 |  | $             | 744,500    |   |                      | $ |                      |  | $ | (11,500             | ) |  | $ | 733,000   
|                                                  |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           
|                                                  |  |               |            |  
|September 30, 2007:                               |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Held to Maturity:                                 |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Debt obligations of government sponsored entities |  | $             | 5,979,878  |   |                      |   |                      |  | $ | (647                | ) |  | $ | 5,979,231 
|                                                  |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Weighted average rate at end of period            |  |               | 5.26       | % |                      |   |                       |  |   |                     |   |  |   |           
|                                                  |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Available for Sale:                               |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Equity securities                                 |  | $             | 4,004,798  |   |                      | $ | 74,272                |  | $ | (114,441            | ) |  | $ | 3,964,629 
|Debt obligations of government sponsored entities |  |               | 7,049,392  |   |                      |   |                      |  |   | (6,220              | ) |  |   | 7,043,172 
|                                                  |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Total                                             |  | $             | 11,054,190 |   |                      | $ | 74,272                |  | $ | (120,661            | ) |  | $ | 11,007,801
|                                                  |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Weighted average rate at end of period            |  |               | 4.76       | % |                      |   |                       |  |   |                     |   |  |   |           
|                                                  |  |               |            |   |                      |   |                       |  |   |                     |   |  |   |           

The summary below displays the length of time securities available for sale and held to maturity
were in a continuous unrealized loss position as of September 30, 2008 and 2007. The unrealized losses were not deemed to be other-than-temporary and there is no intention to dispose of these investments. The Company has the ability and intent
to hold these investments until the values recover.



|                    |  |                                                                             |         |                   |   |                     |  |                  |   |                     |   |                  |  |   |         |  |   |       
|------------------- |  | --------------------------------------------------------------------------- | ------- | ----------------- | - | ------------------- |  | ---------------- | - | ------------------- | - | ---------------- |  | - | ------- |  | - | ------
|                    |  | Length of Time in Continuous Unrealized Loss Position at September 30, 2008
|                    |  | Less than 12 months                                                         |         | 12 months or more |   | Total              
|                    |  | EstimatedFair Value                                                         |         | UnrealizedLosses  |   | EstimatedFair Value |  | UnrealizedLosses |   | EstimatedFair Value |   | UnrealizedLosses
|Available for Sale: |  |                                                                             |         |                   |   |                     |  |                  |   |                     |   |                  |  |   |         |  |   |       
|Equity securities   |  | $                                                                           | 144,000 |                   | $ | 11,500              |  | $                |  |                     | $ |                 |  | $ | 144,000 |  | $ | 11,500
|                    |  |                                                                             |         |                   |   |                     |  |                  |   |                     |   |                  |  |   |         |  |   |       



|                                                  |  |                                                                             |            |                   |   |                     |  |                  |           |                     |   |                  |  |   |            |  |   |        
|------------------------------------------------- |  | --------------------------------------------------------------------------- | ---------- | ----------------- | - | ------------------- |  | ---------------- | --------- | ------------------- | - | ---------------- |  | - | ---------- |  | - | -------
|                                                  |  | Length of Time in Continuous Unrealized Loss Position at September 30, 2007
|                                                  |  | Less than 12 months                                                         |            | 12 months or more |   | Total              
|                                                  |  | EstimatedFair Value                                                         |            | UnrealizedLosses  |   | EstimatedFair Value |  | UnrealizedLosses |           | EstimatedFair Value |   | UnrealizedLosses
|Held to Maturity:                                 |  |                                                                             |            |                   |   |                     |  |                  |           |                     |   |                  |  |   |            |  |   |        
|Debt obligations of government sponsored entities |  | $                                                                           | 5,979,231  |                   | $ | 647                 |  | $                |          |                     | $ |                 |  | $ | 5,979,231  |  | $ | 647    
|Available for Sale:                               |  |                                                                             |            |                   |   |                     |  |                  |           |                     |   |                  |  |   |            |  |   |        
|Equity securities                                 |  |                                                                             |           |                   |   |                    |  |                  | 2,295,700 |                     |   | 114,441          |  |   | 2,295,700  |  |   | 114,441
|Debt obligations of government sponsored entities |  |                                                                             | 7,043,172  |                   |   | 6,220               |  |                  |          |                     |   |                 |  |   | 7,043,172  |  |   | 6,220  
|                                                  |  |                                                                             |            |                   |   |                     |  |                  |           |                     |   |                  |  |   |            |  |   |        
|Total                                             |  | $                                                                           | 13,022,403 |                   | $ | 6,867               |  | $                | 2,295,700 |                     | $ | 114,441          |  | $ | 15,318,103 |  | $ | 121,308
|                                                  |  |                                                                             |            |                   |   |                     |  |                  |           |                     |   |                  |  |   |            |  |   |        



-46-



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Proceeds from sales of available-for-sale securities were $57.5 million, $5.9 million and $7.4 million
for the years ended September 30, 2008, 2007, and 2006, respectively. Gross gains of $392,000, $273,000 and $127,000 were realized on these sales during the years ended September 30, 2008, 2007 and 2006, respectively. Gross losses of $8.3
million and $4,000 were realized on these sales during the years ended September 30, 2008 and 2006, respectively. There were no such losses during the year September 30, 2007. The losses in 2008 were primarily the result of a $7.9 million
loss on the sale of the Companys entire portfolio of Fannie Mae preferred stock, consisting of 350,000 shares of 8.25% Series S fixed-rate preferred stock, which was classified as available for sale. The announcement on September 7, 2008
that the Treasury Department was placing Fannie Mae into conservatorship and eliminating dividends on its common and preferred securities caused the market value of these securities to fall to minimal levels. Management determined these securities
no longer met the Companys investment criteria.



|4. | MORTGAGE-BACKED SECURITIES
|-- | --------------------------

Mortgage-backed
securities held to maturity and available for sale at September 30, 2008 and 2007 are summarized as follows:



|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|-------------------------------------- |  | ------------------ | ---------- | - | -------------------- | - | --------------------- |  | - | ------------------- | - |  | - | ----------
|                                       |  | September 30, 2008
|                                       |  | AmortizedCost      |            |   | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | EstimatedFair Value
|Held to Maturity:                      |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Mortgage-backed securities:            |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|FHLMC                                  |  | $                  | 3,556      |   |                      | $ | 376                   |  | $ | (3                  | ) |  | $ | 3,929     
|GNMA                                   |  |                    | 282,820    |   |                      |   | 29,312                |  |   | (308                | ) |  |   | 311,824   
|FNMA                                   |  |                    | 15,434,529 |   |                      |   | 48,119                |  |   | (214,043            | ) |  |   | 15,268,605
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Total                                  |  |                    | 15,720,905 |   |                      |   | 77,807                |  |   | (214,354            | ) |  |   | 15,584,358
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Collateralized mortgage obligations:   |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|FHLMC                                  |  |                    | 23,592     |   |                      |   |                      |  |   | (298                | ) |  |   | 23,294    
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Total                                  |  |                    | 23,592     |   |                      |   |                      |  |   | (298                | ) |  |   | 23,294    
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Total                                  |  | $                  | 15,744,497 |   |                      | $ | 77,807                |  | $ | (214,652            | ) |  | $ | 15,607,652
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Weighted average rate at end of period |  |                    | 4.91       | % |                      |   |                       |  |   |                     |   |  |   |           
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Available for Sale:                    |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Mortgage-backed securities:            |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|GNMA                                   |  | $                  | 263,833    |   |                      | $ | 15,657                |  | $ |                    |   |  | $ | 279,490   
|FNMA                                   |  |                    | 1,957,014  |   |                      |   |                      |  |   | (14,006             | ) |  |   | 1,943,008 
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Total                                  |  |                    | 2,220,847  |   |                      |   | 15,657                |  |   | (14,006             | ) |  |   | 2,222,498 
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Collateralized mortgage obligations:   |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|GNMA                                   |  |                    | 8,105,406  |   |                      |   |                      |  |   | (147,238            | ) |  |   | 7,958,168 
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Total                                  |  |                    | 8,105,406  |   |                      |   |                      |  |   | (147,238            | ) |  |   | 7,958,168 
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Total                                  |  | $                  | 10,326,253 |   |                      | $ | 15,657                |  | $ | (161,244            | ) |  | $ | 10,180,666
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           
|Weighted average rate at end of period |  |                    | 4.16       | % |                      |   |                       |  |   |                     |   |  |   |           
|                                       |  |                    |            |   |                      |   |                       |  |   |                     |   |  |   |           



-47-



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|                                       |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|-------------------------------------- |  | ------------------ | --------- | - | -------------------- | - | --------------------- |  | - | ------------------- | - |  | - | ---------
|                                       |  | September 30, 2007
|                                       |  | AmortizedCost      |           |   | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | EstimatedFair Value
|Held to Maturity:                      |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|Mortgage-backed securities:            |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|FHLMC                                  |  | $                  | 12,046    |   |                      | $ | 686                   |  | $ |                    |   |  | $ | 12,732   
|GNMA                                   |  |                    | 326,662   |   |                      |   | 27,420                |  |   |                    |   |  |   | 354,082  
|                                       |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|Total                                  |  |                    | 338,708   |   |                      |   | 28,106                |  |   |                    |   |  |   | 366,814  
|                                       |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|Collateralized mortgage obligations:   |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|FHLMC                                  |  |                    | 32,772    |   |                      |   | 43                    |  |   |                    |   |  |   | 32,815   
|                                       |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|Total                                  |  |                    | 32,772    |   |                      |   | 43                    |  |   |                    |   |  |   | 32,815   
|                                       |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|Total                                  |  | $                  | 371,480   |   |                      | $ | 28,149                |  | $ |                    |   |  | $ | 399,629  
|                                       |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|Weighted average rate at end of period |  |                    | 8.87      | % |                      |   |                       |  |   |                     |   |  |   |          
|                                       |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|Available for Sale:                    |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|Mortgage-backed securities:            |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|GNMA                                   |  | $                  | 306,267   |   |                      | $ | 15,388                |  | $ |                    |   |  | $ | 321,655  
|FNMA                                   |  |                    | 2,406,112 |   |                      |   | 28                    |  |   | (72,593             | ) |  |   | 2,333,547
|                                       |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|Total                                  |  | $                  | 2,712,379 |   |                      | $ | 15,416                |  | $ | (72,593             | ) |  | $ | 2,655,202
|                                       |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          
|Weighted average rate at end of period |  |                    | 4.25      | % |                      |   |                       |  |   |                     |   |  |   |          
|                                       |  |                    |           |   |                      |   |                       |  |   |                     |   |  |   |          

Proceeds from sales of available-for-sale mortgage-backed securities were $780,000 for the year
ended September 30, 2006. There were no such sales during the years ended September 30, 2008 or 2007.

The summary below displays
the length of time mortgage-backed securities held to maturity and available for sale were in a continuous unrealized loss position as of September 30, 2008 and 2007. The Company has the ability and intent to hold these securities until such
time as the values recover or the securities repay or mature. Further, the Company believes the deterioration in value is attributable to changes in market interest rates and not the credit quality of the issuers.



-48-



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|                                    |  |                                                                             |            |   |                   |   |         |                     |  |                  |           |                     |   |        |                  |   |            |   |  |   |         |  
|----------------------------------- |  | --------------------------------------------------------------------------- | ---------- | - | ----------------- | - | ------- | ------------------- |  | ---------------- | --------- | ------------------- | - | ------ | ---------------- | - | ---------- | - |  | - | ------- | -
|                                    |  | Length of Time in Continuous Unrealized Loss Position at September 30, 2008 |           
|                                    |  | Less than 12 months                                                         |            |   | 12 months or more |   | Total   |                    
|                                    |  | EstimatedFair Value                                                         |            |   | UnrealizedLosses  |   |         | EstimatedFair Value |  | UnrealizedLosses |           | EstimatedFair Value |   |        | UnrealizedLosses |  
|Available for Sale:                 |  |                                                                             |            |   |                   |   |         |                     |  |                  |           |                     |   |        |                  |   |            |   |  |   |         |  
|Mortgage-backed securities          |  | $                                                                           | 1,943,008  |   |                   | $ | 14,006  |                     |  | $                |          |                     | $ |       |                  | $ | 1,943,008  |   |  | $ | 14,006  |  
|Collateralized mortgage obligations |  |                                                                             | 7,958,168  |   |                   |   | 147,238 |                     |  |                  |          |                     |   |       |                  |   | 7,958,168  |   |  |   | 147,238 |  
|                                    |  |                                                                             |            |   |                   |   |         |                     |  |                  |           |                     |   |        |                  |   |            |   |  |   |         |  
|                                    |  |                                                                             | 9,901,176  |   |                   |   | 161,244 |                     |  |                  |          |                     |   |       |                  |   | 9,901,176  |   |  |   | 161,244 |  
|                                    |  |                                                                             |            |   |                   |   |         |                     |  |                  |           |                     |   |        |                  |   |            |   |  |   |         |  
|                                    |  |                                                                             |            |   |                   |  
|                                    |  | AmortizedCost                                                               |            |   | UnrealizedLosses  |   |         | AmortizedCost       |  | UnrealizedLosses |           | AmortizedCost       |   |        | UnrealizedLosses |  
|Held to Maturity:                   |  |                                                                             |            |   |                   |   |         |                     |  |                  |           |                     |   |        |                  |   |            |   |  |   |         |  
|Mortgage-backed securities          |  |                                                                             | 10,201,656 |   |                   |   | 214,354 |                     |  |                  |          |                     |   |       |                  |   | 10,201,656 |   |  |   | 214,354 |  
|Collateralized mortgage obligations |  |                                                                             | 23,592     |   |                   |   | 298     |                     |  |                  |          |                     |   |       |                  |   | 23,592     |   |  |   | 298     |  
|                                    |  |                                                                             |            |   |                   |   |         |                     |  |                  |           |                     |   |        |                  |   |            |   |  |   |         |  
|                                    |  |                                                                             | 10,225,248 |   |                   |   | 214,652 |                     |  |                  |          |                     |   |       |                  |   | 10,225,248 |   |  |   | 214,652 |  
|                                    |  |                                                                             |            |   |                   |   |         |                     |  |                  |           |                     |   |        |                  |   |            |   |  |   |         |  
|Total                               |  | $                                                                           | 20,126,424 |   |                   | $ | 375,896 |                     |  | $                |          |                     | $ |       |                  | $ | 20,126,424 |   |  | $ | 375,896 |  
|                                    |  |                                                                             |            |   |                   |   |         |                     |  |                  |           |                     |   |        |                  |   |            |   |  |   |         |  
|Percent of total                    |  |                                                                             | 100.0      | % |                   |   | 100.0   | %                   |  |                  |          |                     |   |       |                  |   | 100.0      | % |  |   | 100.0   | %
|                                    |  |                                                                             |            |   |                   |   |         |                     |  |                  |           |                     |   |        |                  |   |            |   |  |   |         |  
|                                    | 
|                                    |  | Length of Time in Continuous Unrealized Loss Position at September 30, 2007 |           
|                                    |  | Less than 12 months                                                         |            |   | 12 months or more |   | Total   |                    
|                                    |  | EstimatedFair Value                                                         |            |   | UnrealizedLosses  |   |         | EstimatedFair Value |  | UnrealizedLosses |           | EstimatedFair Value |   |        | UnrealizedLosses |  
|Available for Sale:                 |  |                                                                             |            |   |                   |   |         |                     |  |                  |           |                     |   |        |                  |   |            |   |  |   |         |  
|Mortgage-backed securities          |  | $                                                                           | 16,990     |   |                   | $ | 11      |                     |  | $                | 2,300,724 |                     | $ | 72,582 |                  | $ | 2,317,714  |   |  | $ | 72,593  |  
|                                    |  |                                                                             |            |   |                   |   |         |                     |  |                  |           |                     |   |        |                  |   |            |   |  |   |         |  

The amortized cost and estimated market values of held-to-maturity and available-for-sale
mortgage-backed securities at September 30, 2008, by contractual maturity, are shown below.



|                            |  |                  |            |                    |   |               |  |                    |            |  |   |           
|--------------------------- |  | ---------------- | ---------- | ------------------ | - | ------------- |  | ------------------ | ---------- |  | - | ----------
|                            |  | Held to Maturity |            | Available for Sale
|                            |  | AmortizedCost    |            | EstimatedFairValue |   | AmortizedCost |  | EstimatedFairValue
|Term to Maturity:           |  |                  |            |                    |   |               |  |                    |            |  |   |           
|One year or less            |  | $                | 166        |                    | $ | 166           |  | $                  | 2,381      |  | $ | 2,378     
|Over one through five years |  |                  | 1,705      |                    |   | 1,819         |  |                    | 1,954,633  |  |   | 1,940,630 
|Over five through ten years |  |                  | 282,820    |                    |   | 311,824       |  |                    |           |  |   |          
|Over ten years              |  |                  | 15,459,806 |                    |   | 15,293,843    |  |                    | 8,369,239  |  |   | 8,237,658 
|                            |  |                  |            |                    |   |               |  |                    |            |  |   |           
|Total                       |  | $                | 15,744,497 |                    | $ | 15,607,652    |  | $                  | 10,326,253 |  | $ | 10,180,666
|                            |  |                  |            |                    |   |               |  |                    |            |  |   |           

Actual maturities of mortgage-backed securities may differ from scheduled maturities depending on
the repayment characteristics and experience of the underlying financial instruments.



-49-



---

Mortgage-backed securities with carrying values totaling approximately $8.4 million at September 30,
2008 were pledged to secure deposits of public entities, trust funds, and for other purposes as required by law.



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

Loans receivable at
September 30, 2008 and 2007 are summarized as follows:



|                                          |  |      |               |   |      |   |             |  
|----------------------------------------- |  | ---- | ------------- | - | ---- | - | ----------- | -
|                                          |  | 2008 |               |   | 2007 |  
|Real estate mortgage:                     |  |      |               |   |      |   |             |  
|Residential first mortgage                |  | $    | 253,132,315   |   |      | $ | 232,063,073 |  
|Residential second mortgage               |  |      | 86,348,973    |   |      |   | 100,142,463 |  
|Multi-family residential                  |  |      | 32,546,370    |   |      |   | 30,219,199  |  
|Commercial real estate                    |  |      | 261,166,327   |   |      |   | 200,205,837 |  
|Real estate construction and development: |  |      |               |   |      |   |             |  
|Residential                               |  |      | 34,511,026    |   |      |   | 45,427,668  |  
|Multi-family                              |  |      | 9,607,101     |   |      |   | 13,899,603  |  
|Commercial                                |  |      | 55,263,607    |   |      |   | 39,594,005  |  
|Commercial and industrial                 |  |      | 137,688,076   |   |      |   | 77,641,815  |  
|Equity lines                              |  |      | 225,357,406   |   |      |   | 219,539,073 |  
|Consumer and installment                  |  |      | 6,895,479     |   |      |   | 6,918,612   |  
|                                          |  |      |               |   |      |   |             |  
|                                          |  |      | 1,102,516,680 |   |      |   | 965,651,348 |  
|Add (less):                               |  |      |               |   |      |   |             |  
|Deferred loan costs                       |  |      | 5,204,730     |   |      |   | 5,162,991   |  
|Loans in process                          |  |      | (6,223,362    | ) |      |   | (10,566,888 | )
|Allowance for loan losses                 |  |      | (12,761,532   | ) |      |   | (10,421,304 | )
|                                          |  |      |               |   |      |   |             |  
|Total                                     |  | $    | 1,088,736,516 |   |      | $ | 949,826,147 |  
|                                          |  |      |               |   |      |   |             |  
|Weighted average rate at end of period    |  |      | 6.02          | % |      |   | 7.44        | %
|                                          |  |      |               |   |      |   |             |  

The Bank has made loans to officers and directors in the ordinary course of business on
substantially the same terms and conditions, including interest rates and collateral, as those prevailing for comparable transactions with other customers and did not, in the opinion of management, involve more than normal credit risk.

Changes in loans to senior officers and directors for the years ended September 30, 2008 and 2007 are summarized as follows:



|                                 |  |   |            |  
|-------------------------------- |  | - | ---------- | -
|Balance, September 30, 2006      |  | $ | 441,637    |  
|Additions                        |  |   | 1,478,957  |  
|Repayments and reclassifications |  |   | (594,226   | )
|                                 |  |   |            |  
|Balance, September 30, 2007      |  |   | 1,326,368  |  
|Additions                        |  |   | 12,537,766 |  
|Repayments and reclassifications |  |   | (3,142,826 | )
|                                 |  |   |            |  
|Balance, September 30, 2008      |  | $ | 10,721,308 |  
|                                 |  |   |            |  

Home equity lines of credit to senior officers and directors totaled $1.0 million of which
$226,000 had been disbursed as of September 30, 2008. A standby letter of credit in favor of a director in the amount of $5.0 million was outstanding as of September 30, 2008.



-50-



---

At September 30, 2008, 2007 and 2006, the Bank was servicing loans for others totaling approximately
$29.1 million, $17.6 million and $21.9 million, respectively. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and foreclosure processing. Loan servicing
income is recorded on the accrual basis and includes servicing fees received from investors and certain charges collected from borrowers.



|6. | ALLOWANCE FOR LOAN LOSSES
|-- | -------------------------

The following table
represents activity in the allowance for loan losses for the years ended September 30, 2008, 2007 and 2006:



|                                        |  |      |            |      |   |            |  |   |          
|--------------------------------------- |  | ---- | ---------- | ---- | - | ---------- |  | - | ---------
|                                        |  | 2008 |            | 2007 |   | 2006      
|Balance, beginning of year              |  | $    | 10,421,304 |      | $ | 7,817,317  |  | $ | 6,805,958
|Provision charged to expense            |  |      | 7,734,641  |      |   | 3,855,257  |  |   | 1,501,375
|Allowance of acquired institution       |  |      |           |      |   |           |  |   | 282,442  
|Charge-offs:                            |  |      |            |      |   |            |  |   |          
|Residential real estate first mortgage  |  |      | 939,946    |      |   | 193,300    |  |   | 119,186  
|Residential real estate second mortgage |  |      | 1,600,479  |      |   | 521,216    |  |   | 377,749  
|Commercial and multi-family real estate |  |      | 374,000    |      |   |           |  |   |         
|Real estate construction & development  |  |      | 454,688    |      |   | 119,000    |  |   |         
|Commercial & industrial                 |  |      | 355,529    |      |   |           |  |   | 7,500    
|Home equity                             |  |      | 1,674,075  |      |   | 296,066    |  |   | 88,216   
|Consumer and other                      |  |      | 232,670    |      |   | 163,825    |  |   | 189,836  
|                                        |  |      |            |      |   |            |  |   |          
|Total charge-offs                       |  |      | 5,631,387  |      |   | 1,293,407  |  |   | 782,487  
|                                        |  |      |            |      |   |            |  |   |          
|Recoveries                              |  |      |            |      |   |            |  |   |          
|Residential real estate first mortgage  |  |      | 1,940      |      |   | 426        |  |   | 3,586    
|Residential real estate second mortgage |  |      | 669        |      |   |           |  |   |         
|Home equity                             |  |      | 223,874    |      |   | 16,636     |  |   | 2,660    
|Consumer and other                      |  |      | 10,491     |      |   | 25,075     |  |   | 3,783    
|                                        |  |      |            |      |   |            |  |   |          
|Total recoveries                        |  |      | 236,974    |      |   | 42,137     |  |   | 10,029   
|                                        |  |      |            |      |   |            |  |   |          
|Balance, end of year                    |  | $    | 12,761,532 |      | $ | 10,421,304 |  | $ | 7,817,317
|                                        |  |      |            |      |   |            |  |   |          

A summary of impaired loans at September 30, 2008, 2007 and 2006 is summarized as follows:



|                                                         |  |      |            |      |   |           |  |   |          
|-------------------------------------------------------- |  | ---- | ---------- | ---- | - | --------- |  | - | ---------
|                                                         |  | 2008 |            | 2007 |   | 2006     
|Non-accrual loans                                        |  | $    | 10,351,668 |      | $ | 6,448,834 |  | $ | 939,863  
|Impaired loans continuing to accrue interest             |  |      | 6,301,376  |      |   | 253,541   |  |   | 344,585  
|                                                         |  |      |            |      |   |           |  |   |          
|Total impaired loans                                     |  | $    | 16,653,044 |      | $ | 6,702,375 |  | $ | 1,284,448
|                                                         |  |      |            |      |   |           |  |   |          
|Allowance for losses on specific impaired loans          |  | $    | 2,019,943  |      | $ | 1,228,467 |  | $ | 310,421  
|Impaired loans with no related allowance for loan losses |  |      | 4,433,339  |      |   |          |  |   |         

The average balance of impaired loans during the years ended September 30, 2008, 2007 and
2006 was $11.7 million, $4.0 million and $1.1 million, respectively.

Interest income recognized on non-accrual loans was approximately
$369,000, $347,000, and $69,000 for the years ended September 30, 2008, 2007 and 2006, respectively. The difference between interest that would have been recognized under the original terms of non-accrual and renegotiated loans and interest
actually recognized on such loans was $445,000, $286,000 and $41,000 for 2008, 2007 and 2006, respectively. Impaired loans continuing to accrue interest are loans that are more than 90 days past due; however, the loans are well secured and remain in
process of collection.



-51-



---

|7. | REAL ESTATE ACQUIRED IN SETTLEMENT OF LOANS
|-- | -------------------------------------------

Real
estate acquired in settlement of loans at September 30, 2008 and 2007 is summarized as follows:



|                          |  |      |           |   |      |   |           |  
|------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                          |  | 2008 |           |   | 2007 |  
|Residential real estate   |  | $    | 3,936,579 |   |      | $ | 3,163,691 |  
|Less allowance for losses |  |      | (417,773  | ) |      |   | (74,035   | )
|                          |  |      |           |   |      |   |           |  
|Total                     |  | $    | 3,518,806 |   |      | $ | 3,089,656 |  
|                          |  |      |           |   |      |   |           |  

Activity in the allowance for losses on real estate acquired in settlement of loans for the years
ended September 30, 2008, 2007 and 2006 is summarized as follows:



|                                          |  |      |          |   |      |   |         |      |  |   |          |  
|----------------------------------------- |  | ---- | -------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                          |  | 2008 |          |   | 2007 |   |         | 2006 | 
|Balance, beginning of year                |  | $    | 74,035   |   |      | $ | 26,350  |      |  | $ | 64,833   |  
|Provision charged to non-interest expense |  |      | 755,773  |   |      |   | 115,535 |      |  |   | 102,884  |  
|Charge-offs                               |  |      | (412,035 | ) |      |   | (67,850 | )    |  |   | (141,367 | )
|                                          |  |      |          |   |      |   |         |      |  |   |          |  
|Balance, end of year                      |  | $    | 417,773  |   |      | $ | 74,035  |      |  | $ | 26,350   |  
|                                          |  |      |          |   |      |   |         |      |  |   |          |  



|8. | PREMISES AND EQUIPMENT
|-- | ----------------------

Premises and equipment at
September 30, 2008 and 2007 are summarized as follows:



|                                  |  |      |             |   |      |   |            |  
|--------------------------------- |  | ---- | ----------- | - | ---- | - | ---------- | -
|                                  |  | 2008 |             |   | 2007 |  
|Land                              |  | $    | 5,228,180   |   |      | $ | 5,228,180  |  
|Office buildings and improvements |  |      | 15,286,402  |   |      |   | 15,062,783 |  
|Furniture and equipment           |  |      | 9,855,427   |   |      |   | 9,171,432  |  
|                                  |  |      |             |   |      |   |            |  
|                                  |  |      | 30,370,009  |   |      |   | 29,462,395 |  
|Less accumulated depreciation     |  |      | (10,516,583 | ) |      |   | (9,072,950 | )
|                                  |  |      |             |   |      |   |            |  
|Total                             |  | $    | 19,853,426  |   |      | $ | 20,389,445 |  
|                                  |  |      |             |   |      |   |            |  

Depreciation expense on premises and equipment totaled $1.7 million, $1.5 million and $1.4 million
for the years ended September 30, 2008, 2007, and 2006, respectively.

Certain facilities of the Bank are leased under various
operating leases. Amounts paid for rent expense for the fiscal years ended September 30, 2008, 2007 and 2006 were approximately $514,000, $428,000 and $324,000, respectively. At September 30, 2008, future minimum rental commitments under
non-cancelable leases are as follows:



|                                  |  |   |          
|--------------------------------- |  | - | ---------
|Due in years ending September 30, |  |   |          
|2009                              |  | $ | 589,156  
|2010                              |  |   | 523,246  
|2011                              |  |   | 506,930  
|2012                              |  |   | 476,444  
|2013                              |  |   | 488,688  
|Thereafter                        |  |   | 1,483,773
|                                  |  |   |          
|Total                             |  | $ | 4,068,237
|                                  |  |   |          



-52-



---

Rental income received from the Companys office building located at 415 DeBaliviere in St. Louis,
Missouri for the years ended September 30, 2008, 2007 and 2006 was $83,000, $84,000, and $71,000, respectively.



|9. | DEPOSITS
|-- | --------

Deposits at September 30, 2008 and
2007 are summarized as follows:



|                              |  |        |             |              |       |   |        |   |              |  |       |  
|----------------------------- |  | ------ | ----------- | ------------ | ----- | - | ------ | - | ------------ |  | ----- | -
|                              |  | Amount |             | InterestRate |       |   | Amount |   | InterestRate | 
|Transaction accounts:         |  |        |             |              |       |   |        |   |              |  |       |  
|Non-interest-bearing checking |  | $      | 76,404,474  |              |      | % |        | $ | 57,004,801   |  |      | %
|Interest-bearing checking     |  |        | 178,697,883 |              | 2.51  |   |        |   | 57,815,627   |  | 1.79  |  
|Passbook savings accounts     |  |        | 25,828,504  |              | 0.32  |   |        |   | 28,908,862   |  | 0.29  |  
|Money market                  |  |        | 149,141,121 |              | 2.12  |   |        |   | 173,949,915  |  | 4.05  |  
|                              |  |        |             |              |       |   |        |   |              |  |       |  
|Total transaction accounts    |  |        | 430,071,982 |              | 1.80  |   |        |   | 317,679,205  |  | 2.57  |  
|                              |  |        |             |              |       |   |        |   |              |  |       |  
|Certificates of deposit:      |  |        |             |              |       |   |        |   |              |  |       |  
|0.00% to 0.99%                |  |        |            |              |      |   |        |   |             |  |      |  
|1.00% to 1.99%                |  |        | 21,467,917  |              | 1.73  |   |        |   | 2,536,477    |  | 1.51  |  
|2.00% to 2.99%                |  |        | 183,701,575 |              | 2.73  |   |        |   | 3,804,761    |  | 2.61  |  
|3.00% to 3.99%                |  |        | 196,727,656 |              | 3.51  |   |        |   | 39,393,317   |  | 3.68  |  
|4.00% to 4.99%                |  |        | 17,265,297  |              | 4.51  |   |        |   | 31,676,984   |  | 4.56  |  
|5.00% to 5.99%                |  |        | 65,627,520  |              | 5.28  |   |        |   | 439,990,518  |  | 5.25  |  
|10.00% to 10.99%              |  |        | 449,418     |              | 10.00 |   |        |   | 407,434      |  | 10.00 |  
|                              |  |        |             |              |       |   |        |   |              |  |       |  
|Total certificates of deposit |  |        | 485,239,383 |              | 3.41  |   |        |   | 517,809,491  |  | 5.06  |  
|                              |  |        |             |              |       |   |        |   |              |  |       |  
|Total                         |  | $      | 915,311,365 |              | 2.65  | % |        | $ | 835,488,696  |  | 4.11  | %
|                              |  |        |             |              |       |   |        |   |              |  |       |  

The aggregate amounts of certificates of deposit with a minimum principal amount of $100,000 were
$221.2 million and $278.6 million at September 30, 2008 and 2007, respectively. Certificates of deposit at September 30, 2008 and 2007 include time deposits obtained from national brokers totaling $128.9 million and $190.4 million,
respectively, with weighted-average interest rates of 3.85% and 5.36%, respectively.



-53-



---

At September 30, 2008, the scheduled maturities of certificates of deposit were as follows:



|                                       |  |   |            
|-------------------------------------- |  | - | -----------
|Maturing within:                       |  |   |            
|Three months ending December 31, 2008  |  | $ | 210,194,909
|Three months ending March 31, 2009     |  |   | 97,130,196 
|Three months ending June 30, 2009      |  |   | 75,647,181 
|Three months ending September 30, 2009 |  |   | 37,793,813 
|Year ending September 30, 2010         |  |   | 39,935,590 
|Year ending September 30, 2011         |  |   | 13,241,186 
|Year ending September 30, 2012         |  |   | 9,932,898  
|Year ending September 30, 2013         |  |   | 1,363,610  
|Thereafter                             |  |   |           
|                                       |  |   |            
|Total                                  |  | $ | 485,239,383
|                                       |  |   |            

A summary of interest expense on deposits for the years ended September 30, 2008, 2007 and
2006 is as follows:



|                          |  |      |            |      |   |            |  |   |           
|------------------------- |  | ---- | ---------- | ---- | - | ---------- |  | - | ----------
|                          |  | 2008 |            | 2007 |   | 2006      
|Interest-bearing checking |  | $    | 2,092,618  |      | $ | 1,131,379  |  | $ | 695,670   
|Passbook savings          |  |      | 91,819     |      |   | 106,841    |  |   | 115,329   
|Money market              |  |      | 5,293,977  |      |   | 6,575,821  |  |   | 3,117,420 
|Certificates of deposit   |  |      | 19,963,029 |      |   | 23,523,456 |  |   | 15,696,337
|                          |  |      |            |      |   |            |  |   |           
|Total                     |  | $    | 27,441,443 |      | $ | 31,337,497 |  | $ | 19,624,756
|                          |  |      |            |      |   |            |  |   |           



|10. | ADVANCES FROM THE FEDERAL HOME LOAN BANK
|--- | ----------------------------------------

Advances
from the Federal Home Loan Bank of Des Moines at September 30, 2008 and 2007 are summarized as follows:



|                                                        |  |        |             |                             |      |   |        |   |                             |  |      |  
|------------------------------------------------------- |  | ------ | ----------- | --------------------------- | ---- | - | ------ | - | --------------------------- |  | ---- | -
|                                                        |  | 2008   |             |                             | 2007 |  
|Maturing within the year ending September 30,           |  | Amount |             | WeightedAverageInterestRate |      |   | Amount |   | WeightedAverageInterestRate | 
|2008                                                    |  | $      |            |                             |     | % |        | $ | 117,300,000                 |  | 4.62 | %
|2009 ($10.0 million callable quarterly)                 |  |        | 149,600,000 |                             | 2.38 |   |        |   | 30,100,000                  |  | 5.31 |  
|2010 ($4.5 million callable quarterly)                  |  |        | 32,000,000  |                             | 3.63 |   |        |   | 7,000,000                   |  | 5.54 |  
|2015 ($25.0 million callable in FY 2011 and thereafter) |  |        | 25,000,000  |                             | 2.70 |   |        |   |                            |  |     |  
|Thereafter                                              |  |        | 4,000,000   |                             | 5.48 |   |        |   | 4,000,000                   |  | 5.48 |  
|                                                        |  |        |             |                             |      |   |        |   |                             |  |      |  
|Total                                                   |  | $      | 210,600,000 |                             | 2.67 | % |        | $ | 158,400,000                 |  | 4.81 | %
|                                                        |  |        |             |                             |      |   |        |   |                             |  |      |  

The average balances of advances from the Federal Home Loan Bank of Des Moines (FHLB)
were $224.5 million and $168.5 million, respectively, and the maximum month-end balances were $265.5 million and $203.5 million, respectively, for the years ended September 30, 2008 and 2007. The average rates paid during the years ended
September 30, 2008 and 2007 were 3.54% and 5.20%, respectively.

The Bank has the ability to borrow funds from the FHLB equal to 35%
of the Banks total assets under a blanket agreement which assigns all investments in FHLB stock as well as qualifying first mortgage loans as



-54-



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collateral to secure the amounts borrowed. In addition to the $210.6 million in advances outstanding at September 30, 2008, the Bank had approximately
$76.4 million in additional borrowing capacity available to it under this arrangement. The assets underlying the FHLB borrowings are under the Banks physical control.



|11. | BORROWINGS FROM THE FEDERAL RESERVE BANK
|--- | ----------------------------------------

Borrowings from the Federal Reserve Bank represent short-term borrowings from the Federal Reserve Bank of St. Louis discount window and are typically extended for periods of 28 days or less. Outstanding borrowings at
September 30, 2008 totaled $40 million with an interest rate of 2.25% and an average maturity of eight days. The average balances of these borrowings were $34.1 million and $1,000, respectively, and the maximum month-end balances were $112.0
million and $0, respectively, for the years ended September 30, 2008 and 2007. The average rates paid during the years ended September 30, 2008 and 2007 were 2.28% and 6.25%, respectively.

The Bank has the ability to borrow funds from the Federal Reserve under an agreement that assigns certain qualifying loans as collateral to secure the
amounts borrowed. At September 30, 2008, $224.2 million of commercial loans were assigned under this arrangement. The assets underlying these borrowings are under the Banks physical control. In addition to the $40.0 million in advances
outstanding at September 30, 2008, the Bank had approximately $128.1 million in additional borrowing capacity available to it under this arrangement.



|12. | SUBORDINATED DEBENTURES
|--- | -----------------------

On March 30, 2004,
Pulaski Financial Statutory Trust I (Trust I), a Connecticut statutory trust, issued $9.0 million of adjustable-rate preferred securities. The proceeds from this issuance, along with the Companys $279,000 capital contribution for
Trust Is common securities, were used to acquire $9.3 million aggregate principal amount of the Companys floating rate junior subordinated deferrable interest debentures due in 2034 which constitute the sole asset of Trust I. The
interest rate on the debentures and the capital securities at September 30, 2008 was 5.52% and is adjustable quarterly at 2.70% over the three-month LIBOR.

The stated maturity of the Trust I debenture is June 17, 2034. In addition, the Trust I debentures are subject to redemption at par at the option of the Company, subject to prior regulatory approval, in whole or
in part on any interest payment date on or after June 17, 2009.

On December 15, 2004, Pulaski Financial Statutory Trust II
(Trust II), a Delaware statutory trust, issued $10.0 million of adjustable-rate preferred securities. The proceeds from this issuance, along with the Companys $310,000 capital contribution for Trust IIs common securities,
were used to acquire $10.3 million of the Companys floating rate junior subordinated deferrable interest debentures due in 2034, which constitute the sole asset of Trust II. The interest rate on the debentures and the capital securities at
September 30, 2008 was 4.68% and is adjustable quarterly at 1.86% over the three-month LIBOR.

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



|13. | NOTE PAYABLE
|--- | ------------

The note payable at
September 30, 2008 and 2007 is a variable-rate obligation of the Company that is payable to a correspondent bank and is secured by all of the Banks common stock. At September 30, 2008 and 2007, there were outstanding borrowings of
$7.6 million and $3.0 million, respectively. At September 30, 2007, the interest rate was set at the correspondent banks prime rate less 1.25%, or 6.50% and interest was payable quarterly. Principal was payable quarterly in installments
of $85,000 each plus a final payment equal to all unpaid principal on May 20, 2010, the maturity date. During the year ended September 30, 2008, the Company modified the terms of this note.



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The note matured on September 30, 2008 and the terms of the new note were still being negotiated with the lender at September 30, 2008.

The average balances of these borrowings were $4.9 million and $3.2 million, respectively, and the maximum month-end balances were $7.7 million and
$3.3 million, respectively, for the years ended September 30, 2008 and 2007. The average rates paid during the years ended September 30, 2008 and 2007 were 4.97% and 7.08%, respectively.



|14. | INCOME TAXES
|--- | ------------

Income tax expense for the years
ended September 30, 2008, 2007 and 2006 is summarized as follows:



|                 |  |      |            |   |      |   |           |      |  |   |           |  
|---------------- |  | ---- | ---------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                 |  | 2008 |            |   | 2007 |   |           | 2006 | 
|Current:         |  |      |            |   |      |   |           |      |  |   |           |  
|Federal          |  | $    | 3,577,591  |   |      | $ | 4,158,012 |      |  | $ | 5,343,626 |  
|State            |  |      | 118,700    |   |      |   | 592,800   |      |  |   | 722,816   |  
|Deferred benefit |  |      | (3,011,846 | ) |      |   | (249,519  | )    |  |   | (641,767  | )
|                 |  |      |            |   |      |   |           |      |  |   |           |  
|Total            |  | $    | 684,445    |   |      | $ | 4,501,293 |      |  | $ | 5,424,675 |  
|                 |  |      |            |   |      |   |           |      |  |   |           |  

Income tax expense for the years ended September 30, 2008, 2007 and 2006 differs from that
computed at the federal statutory rate of 34% as follows:



|                                                  |  |        |           |   |      |      |   |        |   |           |   |  |      |        |  |   |           |   |  |      |  
|------------------------------------------------- |  | ------ | --------- | - | ---- | ---- | - | ------ | - | --------- | - |  | ---- | ------ |  | - | --------- | - |  | ---- | -
|                                                  |  | 2008   |           |   | 2007 |      |   | 2006   |  
|                                                  |  | Amount |           |   | %    |      |   | Amount |   |           | % |  |      | Amount |  |   | %         |  
|Tax at statutory federal income tax rate          |  | $      | 1,214,884 |   |      | 34.0 | % |        | $ | 4,584,537 |   |  | 34.0 | %      |  | $ | 5,189,328 |   |  | 34.0 | %
|Non-taxable income from bank owned life insurance |  |        | (351,042  | ) |      | (9.8 | ) |        |   | (345,376  | ) |  | (2.5 | )      |  |   | (287,884  | ) |  | (1.9 | )
|Non-taxable interest and dividends                |  |        | (129,368  | ) |      | (3.6 | ) |        |   | (71,877   | ) |  | (0.5 | )      |  |   | (55,566   | ) |  | (0.4 | )
|State taxes, net of federal benefit               |  |        | 78,342    |   |      | 2.2  |   |        |   | 391,248   |   |  | 2.9  |        |  |   | 477,058   |   |  | 3.1  |  
|Other                                             |  |        | (128,371  | ) |      | (3.6 | ) |        |   | (57,239   | ) |  | (0.5 | )      |  |   | 101,739   |   |  | 0.7  |  
|                                                  |  |        |           |   |      |      |   |        |   |           |   |  |      |        |  |   |           |   |  |      |  
|Total                                             |  | $      | 684,445   |   |      | 19.2 | % |        | $ | 4,501,293 |   |  | 33.4 | %      |  | $ | 5,424,675 |   |  | 35.5 | %
|                                                  |  |        |           |   |      |      |   |        |   |           |   |  |      |        |  |   |           |   |  |      |  



-56-



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The components of deferred tax assets and liabilities are as follows:



|                                                  |  |      |           |      |   |          
|------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                                  |  | 2008 |           | 2007
|Deferred tax assets:                              |  |      |           |      |   |          
|Allowance for loan losses                         |  | $    | 4,983,936 |      | $ | 3,940,132
|Restricted stock awards                           |  |      | 21,424    |      |   | 14,071   
|Deferred compensation                             |  |      | 1,403,395 |      |   | 1,474,127
|FAS 123 restricted stock                          |  |      | 133,704   |      |   | 60,953   
|Unrealized gains on securities available-for-sale |  |      | 59,693    |      |   | 37,284   
|Loss on derivative instruments                    |  |      |          |      |   | 162,848  
|Equity investments                                |  |      | 7,336     |      |   |         
|Capital loss carryover                            |  |      | 2,007,637 |      |   |         
|Other                                             |  |      | 147,977   |      |   | 121,732  
|                                                  |  |      |           |      |   |          
|Total deferred tax assets                         |  |      | 8,765,102 |      |   | 5,811,147
|                                                  |  |      |           |      |   |          
|Deferred tax liabilities:                         |  |      |           |      |   |          
|FHLB stock dividends                              |  |      | 152,311   |      |   | 152,311  
|Core deposit intangible                           |  |      | 137,405   |      |   | 190,254  
|Premises and equipment                            |  |      | 369,081   |      |   | 366,699  
|Other                                             |  |      | 43,664    |      |   | 51,088   
|                                                  |  |      |           |      |   |          
|Total deferred tax liabilities                    |  |      | 702,461   |      |   | 760,352  
|                                                  |  |      |           |      |   |          
|Net deferred tax assets                           |  | $    | 8,062,641 |      | $ | 5,050,795
|                                                  |  |      |           |      |   |          

Effective October 1, 2007, the Company adopted the provisions of FIN. 48. The Company had no
cumulative effect adjustment recognized upon adoption. At September 30, 2008, the Company had $180,000 of unrecognized tax benefits, $139,000 of which would affect the effective tax rate if recognized. The Company recognizes interest related to
uncertain tax positions in income tax expense and classifies such interest and penalties in the liability for unrecognized tax benefits. As of September 30, 2008, the Company had approximately $41,000 accrued for the payment of interest and
penalties. The tax years ended September 30, 2005 through 2008 remain open to examination by the taxing jurisdictions to which the Company is subject.

The aggregate changes in the balance of gross unrealized tax benefits, which excludes interest and penalties, for the year ended September 30, 2008 is a follows:



|                                                                   |  |   |        
|------------------------------------------------------------------ |  | - | -------
|Balance at September 30, 2007                                      |  | $ | 108,000
|Increases related to tax positions taken during a prior period     |  |   |       
|Decreases related to tax positions taken during a prior period     |  |   |       
|Increases related to tax positions taken during the current period |  |   | 31,000 
|Decreases related to tax positions taken during the current period |  |   |       
|Decreases related to settlements with taxing authorities           |  |   |       
|Decreases related to the expiration of the statute of limitations  |  |   |       
|                                                                   |  |   |        
|Balance at September 30, 2008                                      |  | $ | 139,000
|                                                                   |  |   |        

Retained earnings at September 30, 2008 included earnings of approximately $4.1 million
representing tax bad debt deductions, net of actual bad debts and bad debt recoveries, for which no provision for federal income taxes has been made. If these amounts are used for any purpose other than to absorb loan losses, they will be subject to
federal income taxes at the then prevailing corporate rate.



-57-



---

The net deferred tax asset at September 30, 2008 includes $2.0 million of deferred tax assets
related to capital loss carryovers generated by losses on the sales of equity securities during September 2008, primarily the sale of the Companys entire portfolio of Fannie Mae preferred stock. At the time of sale, the losses on the sale of
the Fannie Mae preferred stock were classified as capital losses for Federal income tax purposes and, accordingly, could only be deducted on the Companys income tax return to the extent they could be used to offset capital gains. On
October 3, 2008, the Emergency Economic Stabilization Act of 2008 was enacted, which provided ordinary loss treatment (subject to restrictions) for sales by financial institutions of devalued preferred stock of Fannie Mae and Freddie Mac sold
between January 1, 2008 and September 6, 2008, or held as of September 6, 2008. However, under Statement of Accounting Standards No. 109, Accounting for Income Taxes (SFAS No. 109), these losses must
be treated as capital losses for financial accounting purposes at September 30, 2008, but will then be treated as ordinary losses during the quarter ended December 31, 2008.

A valuation allowance should be provided on deferred tax assets when it is more likely than not that some portion of the assets will not be realized. The
Company has not established a valuation allowance at September 30, 2008 or 2007 because management believes that all criteria for recognition have been met, including the existence of a history of taxes paid or qualifying tax planning
strategies that are sufficient to support the realization of deferred tax assets.



|15. | STOCKHOLDERS EQUITY
|--- | --------------------

During fiscal 2008, the
Company paid quarterly cash dividends on common stock of $0.095 per share on July 16, 2008 and $0.09 per share on April 14, 2008, January 14, 2008 and October 15, 2007. During fiscal 2007, the Company paid quarterly cash
dividends on common stock of $0.09 per share on July 16, 2007 and $0.085 on April 16, 2007, January 22, 2007 and October 16, 2006.

During fiscal 2008, the Company repurchased 51,898 of its common shares with a total value of $593,000, which are available for issuance upon exercise of stock options and purchased 11,605 of its common shares with a
total value of $120,000, which were deposited into the Companys equity trust plan.



|16. | REGULATORY CAPITAL REQUIREMENTS
|--- | -------------------------------

The Company is
not subject to any separate capital requirements from those of the Bank. 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 which, 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. 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 (OTS), requires that the Bank maintain minimum ratios, as defined in the regulations, of tangible capital of 1.5%, core capital of 4.0% and total risk-based capital of 8.0%. The Bank is
also subject to prompt corrective action capital requirement regulations set forth by the OTS. As defined in the regulations, the OTS requires the Bank to maintain minimum total and Tier I capital to risk-weighted assets and Tier I capital to
average assets. The Bank met all capital adequacy requirements to which it was subject at September 30, 2008.

As of
September 30, 2008, 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 and Tier I leverage ratios as



-58-



---

set forth in the following table. There are no conditions or events since that notification that management believes have changed the Banks category.



|                                                    |  |                        |         |       |                              |   |        |                                                                               |        |  |      |        |  |       |         |  |       |  
|--------------------------------------------------- |  | ---------------------- | ------- | ----- | ---------------------------- | - | ------ | ----------------------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------- |  | ----- | -
|                                                    |  | Actual                 |         |       | For CapitalAdequacy Purposes |   |        | To be Categorized asWell CapitalizedUnder PromptCorrective
ActionProvisions |       
|                                                    |  | Amount                 |         | Ratio |                              |   | Amount |                                                                               | Ratio  |  |      | Amount |  | Ratio |        
|                                                    |  | (Dollars in thousands) |        
|As of September 30, 2008:                           |  |                        |         |       |                              |   |        |                                                                               |        |  |      |        |  |       |         |  |       |  
|Tangible capital (to total assets)                  |  | $                      | 102,884 |       | 7.93                         | % |        | $                                                                             | 19,471 |  | 1.50 | %      |  |       | N/A     |  | N/A   |  
|Total risk-based capital (to risk-weighted assets)  |  |                        | 114,838 |       | 10.59                        | % |        |                                                                               | 86,769 |  | 8.00 | %      |  | $     | 108,462 |  | 10.00 | %
|Tier I risk-based capital (to risk-weighted assets) |  |                        | 102,884 |       | 9.49                         | % |        |                                                                               | N/A    |  | N/A  |        |  |       | 65,077  |  | 6.00  | %
|Tier I leverage capital (to average assets)         |  |                        | 102,884 |       | 7.93                         | % |        |                                                                               | 51,923 |  | 4.00 | %      |  |       | 64,904  |  | 5.00  | %
|                                                    |  |                        |         |       |                              |  
|As of September 30, 2007:                           |  |                        |         |       |                              |   |        |                                                                               |        |  |      |        |  |       |         |  |       |  
|Tangible capital (to total assets)                  |  | $                      | 98,974  |       | 8.79                         | % |        | $                                                                             | 16,892 |  | 1.50 | %      |  |       | N/A     |  | N/A   |  
|Total risk-based capital (to risk-weighted assets)  |  |                        | 108,751 |       | 11.18                        | % |        |                                                                               | 77,790 |  | 8.00 | %      |  | $     | 97,237  |  | 10.00 | %
|Tier I risk-based capital (to risk-weighted assets) |  |                        | 98,974  |       | 10.18                        | % |        |                                                                               | N/A    |  | N/A  |        |  |       | 58,342  |  | 6.00  | %
|Tier I leverage capital (to average assets)         |  |                        | 98,974  |       | 8.79                         | % |        |                                                                               | 45,045 |  | 4.00 | %      |  |       | 56,307  |  | 5.00  | %

A reconciliation of the Banks Tier I stockholders equity and regulatory risk-based
capital at September 30, 2008 follows:



|                                                  |  |                |         |  
|------------------------------------------------- |  | -------------- | ------- | -
|                                                  |  | (in thousands) |        
|Tier I stockholders equity                       |  | $              | 107,186 |  
|Deduct:                                           |  |                |         |  
|Intangible assets                                 |  |                | (4,300  | )
|Disallowed servicing rights                       |  |                | (92     | )
|Add:                                              |  |                |         |  
|Unrealized gains on available for sale securities |  |                | 90      |  
|                                                  |  |                |         |  
|Tangible capital                                  |  |                | 102,884 |  
|Add:                                              |  |                |         |  
|General valuation allowances                      |  |                | 11,954  |  
|                                                  |  |                |         |  
|Total risk-based capital                          |  | $              | 114,838 |  
|                                                  |  |                |         |  

The Bank is prohibited from paying cash dividends if the effect thereof would be to reduce the
regulatory capital of the Bank below the amount required for the liquidation account that the Bank established in connection with the consummation of the conversion from the mutual holding company structure on December 2, 1998.

OTS regulations impose limitations upon payment of capital distributions to the Company. Under the regulations, the prior approval of the OTS is required
prior to any capital distribution if the total capital distributions for the calendar year exceed net income for that year plus the amount of retained net income for



-59-



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the preceding two years or the Bank would be undercapitalized following the distribution. None of the Banks dividend payments to the Company during the
three years ended September 30, 2008 were in excess of the amounts that required prior approval of the OTS.

Subsequent to
September 30, 2008, the Company applied for $32.5 million in preferred stock in the U.S. Treasurys Troubled Asset Relief Program Capital Purchase Program. Under this program, the U.S. Treasury will make $250 billion of capital
available to U.S. financial institutions, which for certain public institutions like the Company, will be in the form of preferred stock. In conjunction with the purchase of preferred stock, the Treasury will receive warrants to purchase common
stock with an aggregate market price equal to 15% of the total amount of the preferred investment. Participating financial institutions will be required to adopt the Treasurys standards for executive compensation and corporate governance for
the period during which the Treasury holds equity issued under the TARP Capital Purchase Program and will be restricted from increasing dividends to common shareholders or repurchasing common stock for three years without the consent of the
Treasury.



|17. | EMPLOYEE BENEFITS
|--- | -----------------

The Company maintains
shareholder-approved, stock-based incentive plans, which permit the granting of options to purchase common stock of the Company and awards 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. The plans authorize the granting 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 granting of restricted shares of common stock. Stock awards are generally granted with an exercise price equal to the market value of the Companys shares at the date of grant and generally vest over
a period of three to five years. Generally, option and share awards provide for accelerated vesting if there is a change in control (as defined in the plans). The exercise period for all stock options generally may not exceed 10 years from the date
of grant. Shares used to satisfy stock awards and stock option exercises are generally issued from treasury stock. At September 30, 2008, the Company had 185,727 reserved but unissued shares that can be awarded in the form of stock options or
restricted share awards.

Restricted Stock AwardsA summary of the Companys restricted stock awards as of
and for the years ended September 30, 2008, 2007 and 2006 is as follows:



|                               |  |        |   |      |                                     |       |        |        |   |                                     |   |        |  |         |                                     |  |   |      
|------------------------------ |  | ------ | - | ---- | ----------------------------------- | ----- | ------ | ------ | - | ----------------------------------- | - | ------ |  | ------- | ----------------------------------- |  | - | -----
|                               |  | 2008   |   | 2007 |                                     | 2006 
|                               |  | Number |   |      | WeightedAverageGrant-DateFair
Value |       | Number |        |   | WeightedAverageGrant-DateFair Value |   | Number |  |         | WeightedAverageGrant-DateFair Value
|Nonvested at beginning of year |  | 3,105  |   |      | $                                   | 10.21 |        | 5,543  |   |                                     | $ | 9.85   |  | 16,548  |                                     |  | $ | 6.89 
|Granted                        |  |       |   |      |                                     |      |        |       |   |                                     |   |       |  |        |                                     |  |   |     
|Vested                         |  | (2,438 | ) |      |                                     | 9.39  |        | (2,438 | ) |                                     |   | 9.39   |  | (10,505 | )                                   |  |   | 4.99 
|Forfeited                      |  |       |   |      |                                     |      |        |       |   |                                     |   |       |  | (500    | )                                   |  |   | 14.00
|                               |  |        |   |      |                                     |       |        |        |   |                                     |   |        |  |         |                                     |  |   |      
|Nonvested at end of year       |  | 667    |   |      | $                                   | 13.20 |        | 3,105  |   |                                     | $ | 10.21  |  | 5,543   |                                     |  | $ | 9.85 
|                               |  |        |   |      |                                     |       |        |        |   |                                     |   |        |  |         |                                     |  |   |      



-60-



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Stock Option AwardsA summary of the Companys stock option program as of and for
the years ended September 30, 2008, 2007 and 2006 is as follows:



|                              |  |          |   |      |                              |       |                         |   |                                                 |  |        |  |         |                              |  |        |       |  |                              |   |  |   |      
|----------------------------- |  | -------- | - | ---- | ---------------------------- | ----- | ----------------------- | - | ----------------------------------------------- |  | ------ |  | ------- | ---------------------------- |  | ------ | ----- |  | ---------------------------- | - |  | - | -----
|                              |  | 2008     |   | 2007 |                              | 2006 
|                              |  | Number   |   |      | WeightedAverageExercisePrice |       | AggregateIntrinsicValue |   | WeightedAverageRemainingContractualLife (years) |  | Number |  |         | WeightedAverageExercisePrice |  | Number |       |  | WeightedAverageExercisePrice
|Outstandingbeginning of year |  | 780,008  |   |      | $                            | 8.51  |                         |   |                                                 |  |        |  | 824,800 |                              |  | $      | 8.23  |  | 862,217                      |   |  | $ | 6.87 
|Granted                       |  | 330,550  |   |      |                              | 11.44 |                         |   |                                                 |  |        |  | 44,500  |                              |  |        | 15.20 |  | 109,000                      |   |  |   | 16.61
|Exercised                     |  | (245,542 | ) |      |                              | 4.70  |                         |   |                                                 |  |        |  | (60,567 | )                            |  |        | 6.54  |  | (135,092                     | ) |  |   | 5.90 
|Forfeited                     |  | (76,783  | ) |      |                              | 14.05 |                         |   |                                                 |  |        |  | (28,725 | )                            |  |        | 15.09 |  | (11,325                      | ) |  |   | 12.70
|                              |  |          |   |      |                              |       |                         |   |                                                 |  |        |  |         |                              |  |        |       |  |                              |   |  |   |      
|Outstandingend of year       |  | 788,233  |   |      |                              | 10.38 |                         | $ | 922,921                                         |  | 6.5    |  | 780,008 |                              |  |        | 8.51  |  | 824,800                      |   |  |   | 8.23 
|                              |  |          |   |      |                              |       |                         |   |                                                 |  |        |  |         |                              |  |        |       |  |                              |   |  |   |      
|Exercisable at end of year    |  | 380,522  |   |      |                              | 8.24  |                         | $ | 922,921                                         |  | 4.0    |  | 573,486 |                              |  |        | 6.37  |  | 549,329                      |   |  |   | 5.57 
|                              |  |          |   |      |                              |       |                         |   |                                                 |  |        |  |         |                              |  |        |       |  |                              |   |  |   |      

The weighted-average fair value per share of options granted during the years ended
September 30, 2008, 2007 and 2006 was $2.98, $4.15, and $4.65, respectively. Cash received from stock options exercised totaled $1.2 million, $396,000 and $797,000 during the years ended September 30, 2008, 2007 and 2006, respectively. The
total intrinsic value of stock options exercised totaled $1.5 million, $566,000 and $1.5 million during the years ended September 30, 2008, 2007 and 2006, respectively. Senior officers and directors exercised 146,880 options during the year
ended September 30, 2008. In order for awardees to meet tax obligations, 11,025 shares were withheld by the Company.

The following is
a summary of the options outstanding at September 30, 2008:



|                         |  |             |  |                                                 |  |                               |       |        |         |                               |   |      
|------------------------ |  | ----------- |  | ----------------------------------------------- |  | ----------------------------- | ----- | ------ | ------- | ----------------------------- | - | -----
|                         |  | Outstanding |  | Exercisable                                    
|Range of Exercise Prices |  | Number      |  | Weighted AverageRemainingContractual Life (yrs) |  | WeightedAverageExercise Price |       | Number |         | WeightedAverageExercise Price
|$2.70    $4.29          |  | 91,777      |  | 1.56                                            |  | $                             | 3.00  |        | 91,777  |                               | $ | 3.00 
|5.13      6.12          |  | 111,761     |  | 3.45                                            |  |                               | 5.68  |        | 111,761 |                               |   | 5.68 
|6.30    10.01           |  | 79,500      |  | 6.10                                            |  |                               | 8.72  |        | 52,000  |                               |   | 8.25 
|10.05    11.10          |  | 41,357      |  | 9.27                                            |  |                               | 10.87 |        | 803     |                               |   | 10.09
|11.13    11.94          |  | 148,250     |  | 9.06                                            |  |                               | 11.24 |        | 5,250   |                               |   | 11.65
|11.95    12.84          |  | 112,750     |  | 9.21                                            |  |                               | 12.78 |        | 9,900   |                               |   | 12.23
|12.85    13.99          |  | 93,000      |  | 6.05                                            |  |                               | 13.18 |        | 60,244  |                               |   | 13.17
|14.00    15.97          |  | 49,338      |  | 7.77                                            |  |                               | 15.40 |        | 18,887  |                               |   | 15.47
|15.98    16.90          |  | 34,000      |  | 7.75                                            |  |                               | 16.52 |        | 13,000  |                               |   | 16.54
|16.91    18.70          |  | 26,500      |  | 5.42                                            |  |                               | 18.01 |        | 16,900  |                               |   | 18.18
|                         |  |             |  |                                                 |  |                               |       |        |         |                               |   |      
|$2.70  $18.70           |  | 788,233     |  | 6.51                                            |  | $                             | 10.38 |        | 380,522 |                               | $ | 8.24 
|                         |  |             |  |                                                 |  |                               |       |        |         |                               |   |      



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A summary of total stock-based compensation expense for the years ended September 30, 2008, 2007 and
2006 follows:



|                    |  |      |         |      |   |         |  |   |        
|------------------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                    |  | 2008 |         | 2007 |   | 2006   
|Total expense:      |  |      |         |      |   |         |  |   |        
|Pre-tax             |  | $    | 465,000 |      | $ | 307,000 |  | $ | 345,000
|After-tax           |  |      | 293,000 |      |   | 197,000 |  |   | 214,000
|Earnings per share: |  |      |         |      |   |         |  |   |        
|Basic               |  | $    | 0.03    |      | $ | 0.03    |  | $ | 0.02   
|Diluted             |  |      | 0.03    |      |   | 0.03    |  |   | 0.02   

As of September 30, 2008, the total unrecognized compensation expense related to non-vested
stock awards was approximately $1.2 million and the related weighted average period over which it is expected to be recognized is approximately 3.52 years.

The fair value of stock options granted in 2008, 2007 and 2006 was estimated on the date of grant using the Black-Scholes option pricing model with the following average assumptions:



|                         |  |       |   |  |       |   |  |       |  
|------------------------ |  | ----- | - |  | ----- | - |  | ----- | -
|                         |  | 2008  |   |  | 2007  |   |  | 2006  |  
|Risk free interest rate  |  | 4.22  | % |  | 4.56  | % |  | 4.40  | %
|Expected volatility      |  | 27.83 | % |  | 27.50 | % |  | 27.93 | %
|Expected life in years   |  | 5.5   |   |  | 5.7   |   |  | 6.0   |  
|Dividend yield           |  | 2.28  | % |  | 2.13  | % |  | 1.82  | %
|Expected forfeiture rate |  | 1.28  | % |  | 1.24  | % |  | 1.50  | %

Equity Trust PlanThe Company maintains an Equity Trust Plan for the benefit of
key loan officers and sales staff. The plan is designed to recruit and retain top-performing loan officers and other key revenue-producing employees who are instrumental to the Companys success. The plan allows the recipients to defer a
percentage of commissions earned, which is partially matched by the Company and paid into a rabbi trust for the benefit of the participants. The assets of the trust are limited to the purchase of Company shares in the open market. Awards generally
vest over a period of three to five years, and the participants will forgo any accrued but unvested benefits if they voluntarily leave the Company. At September 30, 2008, 226,992 shares had been purchased on behalf of the participants at an
average price of $14.13. Shares distributed to participants during the fiscal year were 26,108, with a market value at the time of distribution totaling $311,000 and 8,373 shares were withheld by the Bank in order for the awardees to meet their tax
obligations. Vested shares in the plan are treated as issued and outstanding when computing basic and diluted earnings per share, whereas unvested shares are treated as issued and outstanding only when computing diluted earnings per share.

Employee Stock Ownership PlanThe Bank maintained a tax-qualified stock ownership plan for all eligible employees
(ESOP). At September 30, 2005, the total amount of the ESOP loan had been repaid and all shares held by the ESOP had been committed to be released. The remaining 28,491 unallocated shares at September 30, 2005 were allocated to
participants accounts subsequent to December 31, 2005. Compensation expense under the ESOP plan was $762,000 for the year ended September 30, 2005. There was no compensation expense associated with this plan during any of the years
ended September 30, 2008, 2007 or 2006. There were 610,484 and 611,500 shares of the Companys common stock held in the plan at September 30, 2007 and 2006, respectively. Effective September 1, 2008, the ESOP was merged into the
Companys 401(k) Savings Plan.

401(k) Savings PlanThe Bank maintains a 401(k) savings plan for eligible
employees. Effective July 1, 2006, the Bank matched 75% of each participants contribution up to a maximum of 5% of salary. Prior to



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that date, the Bank matched 50% of each participants contribution up to a maximum of 4% of salary. The Banks contributions to this plan were
$591,000, $573,000 and $349,000 for the years ended September 30, 2008, 2007 and 2006, respectively.

Supplemental Retirement
AgreementIn January 1998, the Bank entered into a Supplemental Retirement Benefit agreement with its former chief executive officer. Under the terms of the agreement, the former officer is entitled to receive $2,473 monthly, for a
period of 15 years commencing upon his retirement. The net present value of these payments is reflected in other liabilities and totaled $105,000, $126,000 and $145,000 at September 30, 2008, 2007 and 2006, respectively. Compensation expense
under this agreement totaled $9,000, $10,000 and $12,000 for the years ended September 30, 2008, 2007 and 2006, respectively.

Employment AgreementsThe Company and the Bank maintain an employment agreement with the CEO. The initial term of the agreement is three years. Commencing on the first anniversary of the effective date of
May 1, 2008, the term of the agreement decreases to two years. Under the agreement, the Bank pays the CEO a base salary, which is reviewed at least annually and may be increased at the discretion of the Board of Directors. In addition, the CEO
received a stock option grant on the effective date covering 100,000 shares of the Companys common stock, which vests ratably over a period of five years. The CEO is also entitled to receive health and welfare benefits provided to other
Company and Bank employees. Additionally, the agreement provides for severance payments and continued medical coverage for 24 months if employment is terminated following a change in control or upon an event of termination as defined in the
agreement. In the event of a change in control and subsequent termination of employment, the CEO will receive a lump sum payment equal to two times his average annual compensation computed using his base pay rate at the date of termination plus any
bonus or incentive compensation earned by him in the prior fiscal year. The lump sum payment will include an amount for any required excise tax due under the Internal Revenue Code of 1986. The agreement also prohibits the CEO from soliciting the
services of any of the Companys employees, and from competing with the Company, for a period of two years after termination.

Separation and Release AgreementThe Company entered into a Separation and Release Agreement with its former CEO in conjunction with his separation from the Company on May 1, 2008. Under the agreement, the former CEO
received a lump sum payment of $1,450,000 and will continue to participate in the Banks health, life and disability insurance programs, at the Banks expense, for a period of 36 months from the separation date. The agreement also provides
that the former CEO will continue to serve as a member of the Board of Directors of the Bank and the Company until his current terms expire and will receive compensation for such service in the same manner and to the same extent as other
non-employee directors. In addition, the agreement provides that the former CEO will serve as a consultant to the Company for 36 months following his separation date and shall receive an annual retainer of $100,000 for such service. The lump-sum
payment was charged to salaries and employee benefits expense when paid. The annual retainer fee and expenses associated with the health, life and disability insurance programs will be charged to salaries and employee benefits expense as they are
earned over the term of the agreement.



|18. | RECONCILIATION OF BASIC EARNINGS PER SHARE TO DILUTED EARNINGS PER SHARE
|--- | ------------------------------------------------------------------------

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



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|                                            |  |                           |            |      |   |            |  |   |          
|------------------------------------------- |  | ------------------------- | ---------- | ---- | - | ---------- |  | - | ---------
|                                            |  | Years Ended September 30,
|                                            |  | 2008                      |            | 2007 |   | 2006      
|Net income                                  |  | $                         | 2,888,744  |      | $ | 8,982,639  |  | $ | 9,838,053
|                                            |  |                           |            |      |   |            |  |   |          
|Weighted average shares outstandingbasic   |  |                           | 9,914,220  |      |   | 9,814,396  |  |   | 9,205,525
|Effect of dilutive securities:              |  |                           |            |      |   |            |  |   |          
|Treasury stock held in equity trust         |  |                           | 171,470    |      |   | 140,917    |  |   | 121,479  
|Employee stock options and awards           |  |                           | 153,611    |      |   | 300,389    |  |   | 390,729  
|                                            |  |                           |            |      |   |            |  |   |          
|Weighted average shares outstandingdiluted |  |                           | 10,239,301 |      |   | 10,255,702 |  |   | 9,717,733
|                                            |  |                           |            |      |   |            |  |   |          
|Earnings per share:                         |  |                           |            |      |   |            |  |   |          
|Basic                                       |  | $                         | 0.29       |      | $ | 0.92       |  | $ | 1.07     
|Diluted                                     |  |                           | 0.28       |      |   | 0.88       |  |   | 1.01     

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 fiscal years ended 2008, 2007 and 2006 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. As of September 30, 2008, these options expire in various periods through 2014.



|                                |  |         |  |         |  |       
|------------------------------- |  | ------- |  | ------- |  | ------
|                                |  | 2008    |  | 2007    |  | 2006  
|Number of option shares         |  | 432,563 |  | 142,201 |  | 55,865
|Equivalent anti-dilutive shares |  | 615,246 |  | 180,417 |  | 68,438



|19. | CONTINGENCIES
|--- | -------------

The Company is a defendant in legal
actions arising from normal business activities. Management, after consultation with counsel, believes that the resolution of these actions will not have any material adverse effect on the Companys consolidated financial statements.



|20. | DERIVATIVES
|--- | -----------

The Company originates and purchases
derivative financial instruments, including interest rate lock commitments, forward contracts to sell mortgage-backed securities and interest rate swaps. Derivative financial instruments originated by the Company consist of interest rate lock
commitments to originate residential loans. At September 30, 2008, the Company had issued $137.4 million of unexpired interest rate lock commitments to loan customers compared to $144.7 million of unexpired commitments at September 30,
2007.

The Company typically economically hedges interest rate lock 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 that has characteristics similar to the bank-issued



-64-



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commitment but its fair value changes directly opposite to 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 with investors 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 totaling $19.0 million in notional value at September 30, 2007. These hedges were matched against $15.3 million of interest rate lock commitments at September 30, 2007 that were to be sold
through the mandatory delivery of loan pool sales. There were no such commitments at September 30, 2008.

The carrying value of the
interest-rate lock commitment liabilities included in the consolidated balance sheets was a credit balance of $125,000 at September 30, 2007. The carrying value of the forward sales commitment assets included in the consolidated balance sheets
was a credit balance of $25,000 at September 30, 2007.

Interest Rate SwapsThe Company entered into interest rate swap
agreements in November 2004, which were designed to convert the fixed rates paid on certain brokered certificates of deposit into variable, LIBOR-based rates. The swap agreements resulted in the counterparty paying a fixed rate to the Company while
the Company paid a variable, LIBOR-based rate to the counterparty. During the first six months of fiscal year 2006, changes in the estimated fair values of these derivatives were recognized as charges or credits to earnings, as appropriate, during
the periods in which the changes occurred. Effective January 1, 2006, the Company designated $80.0 million of interest rate swaps as fair value hedges of $80.0 million of the fixed-rate, brokered certificates of deposit under SFAS
No. 133 using long-haul, fair-value, hedge accounting. All interest-rate swap agreements outstanding at September 30, 2007 were called by the counterparties during the year ended September 30, 2008 due to the declining interest-rate
environment. At September 30, 2007, these fair value hedges were considered to be highly effective and any hedge ineffectiveness was deemed not material. The notional amounts of the liabilities being hedged were $80.0 million at
September 30, 2007. At September 30, 2007, there were no swaps in a net settlement receivable position and swaps in a net settlement payable position totaled $864,000. The net amounts recognized on fair value hedges were gains of $396,000
and $586,000 for the years ended September 30, 2008 and 2007, respectively.

The maturity date, notional amounts, interest rates paid
and received, and fair value of the Companys interest rate swap agreements as of September 30, 2007 are presented in the table below:



|                   |  |                |            |                  |      |   |                      |      |   |                    |   |          |  
|------------------ |  | -------------- | ---------- | ---------------- | ---- | - | -------------------- | ---- | - | ------------------ | - | -------- | -
|Maturity Date      |  | NotionalAmount |            | InterestRatePaid |      |   | InterestRateReceived |      |   | EstimatedFairValue |  
|October 20, 2008   |  | $              | 10,000,000 |                  | 5.50 | % |                      | 4.30 | % |                    | $ | (55,664  | )
|November 19, 2009  |  |                | 10,000,000 |                  | 5.52 | % |                      | 3.50 | % |                    |   | (26,557  | )
|November 23, 2009  |  |                | 10,000,000 |                  | 5.46 | % |                      | 3.75 | % |                    |   | (72,534  | )
|November 26, 2010  |  |                | 10,000,000 |                  | 5.49 | % |                      | 4.13 | % |                    |   | (205,111 | )
|November 26, 2010  |  |                | 5,000,000  |                  | 5.48 | % |                      | 4.13 | % |                    |   | (101,518 | )
|November 26, 2010  |  |                | 5,000,000  |                  | 5.47 | % |                      | 4.13 | % |                    |   | (100,482 | )
|January 24, 2010   |  |                | 10,000,000 |                  | 5.44 | % |                      | 3.70 | % |                    |   | (43,702  | )
|January 28, 2011   |  |                | 10,000,000 |                  | 5.47 | % |                      | 4.30 | % |                    |   | (178,348 | )
|February 25, 2011  |  |                | 5,000,000  |                  | 5.47 | % |                      | 4.80 | % |                    |   | (48,365  | )
|September 14, 2012 |  |                | 5,000,000  |                  | 5.58 | % |                      | 4.25 | % |                    |   | (31,931  | )
|                   |  |                |            |                  |      |   |                      |      |   |                    |   |          |  
|Total              |  | $              | 80,000,000 |                  |      |   |                      |      |   |                    | $ | (864,212 | )
|                   |  |                |            |                  |      |   |                      |      |   |                    |   |          |  

The gross amounts of interest paid to and received from the counterparty under the swap agreements
and the related average interest rates during the years ended September 30, 2008 and 2007 are as follows:



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|                                |  |      |         |   |      |   |         |  
|------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                |  | 2008 |         |   | 2007 |  
|Interest paid (variable rate):  |  |      |         |   |      |   |         |  
|Total amount (000s)             |  | $    | 1,824.9 |   |      | $ | 4,298.4 |  
|Average interest rate           |  |      | 4.46    | % |      |   | 5.37    | %
|                                |  |     
|Interest received (fixed rate): |  |      |         |   |      |   |         |  
|Total amount (000s)             |  | $    | 2,103.9 |   |      | $ | 3,232.5 |  
|Average interest rate           |  |      | 3.86    | % |      |   | 4.04    | %

The Company entered into two $14 million notional value interest-rate swap contracts during 2008
totaling $28 million notional value. These contracts supported a $14 million, variable-rate, commercial loan relationship and were used to allow the commercial loan customer to pay a fixed interest rate to the Bank, while the Bank, in turn,
charged the customer a floating interest rate on the loan. Under the terms of the swap contract between the Bank and the loan customer, the customer pays the Bank a fixed interest rate of 6.58%, while the Bank pays the customer a variable interest
rate of one-month LIBOR plus 2.30%. Under the terms of a similar but separate swap contract between the Bank and a major securities broker, the Bank pays the broker a fixed interest rate of 6.58%, while the broker pays the Bank a variable interest
rate of one-month LIBOR plus 2.30%. The two contracts have identical terms except for the interest rates and interest does not begin to accrue until May 2009. The contracts are scheduled to mature on May 15, 2015. While these two swap
derivatives generally work together as an interest-rate hedge, the Company has not designated them for hedge treatment under SFAS No. 133. Consequently, both derivatives are marked to fair value through either a charge or credit to current
earnings.



|21. | FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK
|--- | -----------------------------------------------------------------------------------

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers by
issuing commitments to extend credit. Such commitments are agreements to lend to a customer provided there is no violation of any condition established in the contract. These commitments generally have fixed expiration dates or other termination
clauses and may require the borrower to pay a fee. The Bank evaluates each customers creditworthiness on a case-by-case basis.

At
September 30, 2008, the Bank had firm commitments to originate loans of approximately $137.4 million, of which $65.4 million were committed to be sold. Of the remaining $72.0 million to be retained, $539,000 were at fixed rates. At
September 30, 2007, the Bank had firm commitments to originate loans of approximately $144.7 million of which $65.9 million were committed to be sold. Of the remaining $78.7 million to be retained, $249,000 were at fixed rates. Additionally,
the Bank had outstanding commitments to borrowers under unused equity lines of credit, commercial lines of credit and consumer lines of credit totaling $235.9 million, $53.8 million and $258,000, respectively, at September 30, 2008
compared to $252.9 million, $38.1 million and $234,000, respectively, at September 30, 2007.

At September 30, 2008 and 2007, the
Bank had loans receivable held for sale totaling $72.0 million and $58.5 million, respectively, substantially all of which were under firm commitments to be sold on a best-efforts basis. Any unrealized loss on these commitment obligations is
considered in conjunction with the Banks lower of cost or market valuation on its loans held-for-sale.

Standby letters of credit are
conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. These standby letters of credit are primarily issued for a fee to support contractual obligations of the Banks customers. The credit risk
involved with issuing letters of credit is essentially the same as the risk involved in extending loans to customers. At September 30, 2008, the Bank had 56 letters of credit totaling approximately $11.1 million due to expire no later than
September 2012 compared to 48 letters of credit totaling approximately $7.1 million due to expire no later than May 2011 at September 30, 2007.

Substantially all of the Banks loans are to borrowers located in St. Louis, Kansas City and the surrounding Missouri counties.



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|22. | FAIR VALUE OF FINANCIAL INSTRUMENTS
|--- | -----------------------------------

Estimated
fair values of financial instruments have been estimated by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is necessarily required to interpret market data used to develop the
estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company might realize in a current market exchange. The use of different market assumptions and/or estimation methodologies could
have a material effect on the estimated fair value amounts.

The fair value estimates presented herein are based on pertinent information
available to management as of September 30, 2008 and 2007. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of
these financial statements since that date. Therefore, current estimates of fair value may differ significantly from the amounts presented herein.

Carrying values and estimated fair values at September 30, 2008 and 2007 are summarized as follows:



|                                                         |  |                           |               |                    |   |                           |  |                    |             |  |   |            
|-------------------------------------------------------- |  | ------------------------- | ------------- | ------------------ | - | ------------------------- |  | ------------------ | ----------- |  | - | -----------
|                                                         |  | 2008                      |               | 2007              
|                                                         |  | CarryingValue             |               | EstimatedFairValue |   | CarryingValue             |  | EstimatedFairValue
|ASSETS:                                                  |  |                           |               |                    |   |                           |  |                    |             |  |   |            
|Cash and cash equivalents                                |  | $                         | 29,078,000    |                    | $ | 29,078,000                |  | $                  | 23,675,000  |  | $ | 23,675,000 
|Debt securitiesHTM                                      |  |                           |              |                    |   |                          |  |                    | 5,980,000   |  |   | 5,979,000  
|Debt securitiesAFS                                      |  |                           |              |                    |   |                          |  |                    | 7,043,000   |  |   | 7,043,000  
|Equity securitiesAFS                                    |  |                           | 733,000       |                    |   | 733,000                   |  |                    | 3,965,000   |  |   | 3,965,000  
|Capital Stock of FHLB                                    |  |                           | 10,896,000    |                    |   | 10,896,000                |  |                    | 8,306,000   |  |   | 8,306,000  
|Mortgage-backed securitiesHTM                           |  |                           | 15,744,000    |                    |   | 15,608,000                |  |                    | 371,000     |  |   | 400,000    
|Mortgage-backed securitiesAFS                           |  |                           | 10,181,000    |                    |   | 10,181,000                |  |                    | 2,655,000   |  |   | 2,655,000  
|Loans receivable held for sale                           |  |                           | 71,966,000    |                    |   | 73,189,000                |  |                    | 58,536,000  |  |   | 59,449,000 
|Loans receivable                                         |  |                           | 1,088,737,000 |                    |   | 1,102,715,000             |  |                    | 949,826,000 |  |   | 943,357,000
|Accrued interest receivable                              |  |                           | 5,615,000     |                    |   | 5,615,000                 |  |                    | 6,605,000   |  |   | 6,605,000  
|                                                         |  |                           |               |                   
|LIABILITIES:                                             |  |                           |               |                    |   |                           |  |                    |             |  |   |            
|Deposits                                                 |  |                           | 915,311,000   |                    |   | 915,311,000               |  |                    | 835,489,000 |  |   | 835,489,000
|Advances from the FHLB                                   |  |                           | 210,600,000   |                    |   | 210,269,000               |  |                    | 158,400,000 |  |   | 157,287,000
|Borrowings from the Federal Reserve Bank                 |  |                           | 40,000,000    |                    |   | 40,000,000                |  |                    |            |  |   |           
|Note payable                                             |  |                           | 7,640,000     |                    |   | 7,640,000                 |  |                    | 2,980,000   |  |   | 2,980,000  
|Derivative liabilities                                   |  |                           |              |                    |   |                          |  |                    | 864,000     |  |   | 864,000    
|Subordinated debentures                                  |  |                           | 19,589,000    |                    |   | 17,051,000                |  |                    | 19,589,000  |  |   | 19,589,000 
|Accrued interest payable                                 |  |                           | 1,506,000     |                    |   | 1,506,000                 |  |                    | 2,531,000   |  |   | 2,531,000  
|Due to other banks                                       |  |                           | 14,378,000    |                    |   | 14,378,000                |  |                    | 17,485,000  |  |   | 17,485,000 
|                                                         |  |                          
|                                                         |  | 2008                      |               | 2007              
|                                                         |  | Contractor NotionalAmount |               | EstimatedFairValue |   | Contractor NotionalAmount |  | EstimatedFairValue
|OFF BALANCE SHEET FINANCIAL INSTRUMENTS:                 |  |                           |               |                    |   |                           |  |                    |             |  |   |            
|Commitments to originate first and second mortgage loans |  | $                         | 113,697,000   |                    | $ |                          |  | $                  | 112,911,000 |  | $ |           
|Commitments to originate non-mortgage loans              |  |                           | 23,733,000    |                    |   |                          |  |                    | 31,742,000  |  |   |           
|Unused Lines of Credit                                   |  |                           | 290,018,000   |                    |   |                          |  |                    | 291,268,000 |  |   |           

The following methods and assumptions were used to estimate the fair value of the financial
instruments:

Cash and Cash EquivalentsThe carrying amount approximates fair value.



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Securities and Mortgage-backed SecuritiesEstimated fair values of securities and
mortgage-backed securities are based on quoted market prices and prices obtained from independent pricing services. If quoted market prices are not available, fair values are estimated using quoted market prices for similar instruments.

Equity securitiesEstimated fair values are based on stock market prices for publicly quoted stocks, and a broker-provided market
value for the Community Reinvestment Act Fund.

Capital Stock of the Federal Home Loan BankThe carrying amount
approximates fair value.

Loans Receivable Held for SaleThe estimated fair value of loans held for sale is determined
based upon recent historic sales premiums.

Loans ReceivableThe fair value of loans receivable is estimated based on
present values using applicable risk-adjusted spreads to the U. S. Treasury curve to approximate current interest rates applicable to each category of such financial instruments. No adjustment was made to the interest rates for changes in credit
risk of performing loans where there are no known credit concerns. Management segregates loans in appropriate risk categories. Management believes that the risk factor embedded in the interest rates along with the allowance for loan losses
applicable to the performing loan portfolio results in a fair valuation of such loans.

Accrued Interest ReceivableThe
carrying value approximates fair value.

DepositsThe estimated fair value of demand deposits and savings accounts is
the amount payable on demand at the reporting date. The estimated fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows of existing deposits using rates currently available on advances from the
Federal Home Loan Bank having similar characteristics.

Derivative LiabilitiesThe fair value is based on quoted market
prices by the counter-party.

Advances from Federal Home Loan BankThe estimated fair value of advances from Federal
Home Loan Bank is determined by discounting the future cash flows of existing advances using rates currently available on advances from Federal Home Loan Bank having similar characteristics.

Borrowings from the Federal Reserve BankThe carrying value approximates fair value since the balance at September 30, 2008
matured in eight days.

Note PayableThe carrying value approximates fair value since it is a variable rate obligation.

Due to Other BanksThe carrying value approximates fair value since the amounts are generally settled in cash on the
next business day.

Subordinated DebenturesThe estimated fair values of subordinated debentures are determined by
discounting the estimated future cash flows using rates currently available on debentures having similar characteristics.

Accrued
Interest PayableThe carrying value approximates fair value.

Off-Balance Sheet ItemsThe estimated fair
value of commitments to originate or purchase loans is based on the fees currently charged to enter into similar agreements and the difference between current levels of interest rates and the committed rates. The Company believes such commitments
have been made on terms which are competitive in the markets in which it operates; however, no premium or discount is offered thereon, and accordingly, the Company has not assigned a value to such instruments for purposes of this disclosure.



|23. | IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
|--- | ----------------------------------------------

In
September 2006, the FASB issued Statement No. 157, Fair Value Measurements (SFAS No. 157), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting standards, and
expands disclosures about fair value measurements. SFAS No. 157 is effective for financial



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statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. In March 2008, the FASB issued
Staff Position No. FAS 157-2 (FSP No. 157-2), which delays the effective date of SFAS No. 157 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements
on a recurring basis (at least annually), to fiscal years and interim periods beginning after November 15, 2008. Management has evaluated the requirements of SFAS No. 157 and believes it will not have a material effect on the
Companys financial condition or results of operations.

In September 2006, the FASB issued Statement No. 158,
Employers Accounting for Defined Benefit Pension and Other Postretirement Plans (SFAS No. 158), which requires balance sheet recognition of the funded status of pension and other postretirement benefits with the
offset to accumulated other comprehensive income. Employers will recognize actuarial gains and losses, prior service cost, and any remaining transition amounts when recognizing a plans funded status. SFAS No. 158 was effective for the
Company beginning October 1, 2007. The adoption of SFAS No. 158 did not have a material effect on the Companys financial condition or results of operations.

In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an
amendment of FASB Statement No. 115 (SFAS No. 159). SFAS No. 159 provides companies with an option to report selected financial assets and liabilities at estimated fair value. Most of the provisions of SFAS
No. 159 are elective; however, the amendment to SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities that own trading and available-for-sale securities. The fair value option
created by SFAS No. 159 permits an entity to measure eligible items at fair value as of specified election dates. The fair value option (a) may generally be applied instrument by instrument, (b) is irrevocable unless a new election
date occurs, and (c) must be applied to the entire instrument and not to only a portion of the instrument. SFAS No. 159 is effective as of the beginning of an entitys first fiscal year beginning after November 15, 2007. Early
adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of the fiscal year, has not yet issued financial statements for any interim period of such year, and elects to
apply the provisions of SFAS No. 157. Management has evaluated the requirements of SFAS No. 159 and believes it will not have a material effect on the Companys financial condition or results of operations.

In December 2007, the FASB issued Statement No. 141 (revised 2007), Business CombinationsA Replacement of FASB Statement
No. 141 (SFAS 141(R)) and Statement No. 160, Noncontrolling Interests in Consolidated Financial StatementsAn Amendment of ARB No. 51 (SFAS 160). SFAS 141(R) establishes principles and
requirements for how an acquirer recognizes and measures certain items in a business combination, as well as disclosures about the nature and financial effects of a business combination. SFAS 160 establishes accounting and reporting standards
surrounding noncontrolling interest, or minority interests, which are the portions of equity in a subsidiary not attributable, directly or indirectly, to a parent. The pronouncements are effective for fiscal years beginning on or after
December 15, 2008 and apply prospectively to business combinations. Presentation and disclosure requirements related to noncontrolling interests must be retrospectively applied. Management is currently evaluating the impact of SFAS 141(R) on
its accounting for future acquisitions and the impact of SFAS 160 on the Companys consolidated financial statements.

In March 2008,
the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging ActivitiesAn Amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 requires enhanced qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Management is currently evaluating the impact of SFAS 161 on the Companys consolidated financial statements.



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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), which 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 was effective for the Company beginning October 1, 2007. The adoption of Interpretation No. 48 did not have a material effect on the Companys financial condition
or results of operations.

In September 2006, the Emerging Issues Task Force Issue 06-4, Accounting for Deferred Compensation and
Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements, was ratified. This EITF Issue addresses accounting for separate agreements that split life insurance policy benefits between an employer and employee. The
issue requires the employer to recognize a liability for future benefits payable to the employee under these agreements. The effects of applying this issue must be recognized through either a change in accounting principle through an adjustment to
equity or through the retrospective application to all prior periods. The consensus in this issue is effective for fiscal years beginning after December 15, 2007, with earlier application permitted. Management has evaluated the requirements of
the issue and believes it will not have a material effect on the Companys financial condition or results of operations.

In November
2007, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 109, Written Loan Commitments Recorded at Fair Value through Earnings (SAB No. 109). SAB No. 109 provides revised guidance
on the valuation of written loan commitments accounted for at fair value through earnings. Former guidance under SAB No. 105, Application of Accounting Principles to Loan Commitments, indicated that the expected net future cash
flows related to the associated servicing of the loan should not be incorporated into the measurement of the fair value of a derivative loan commitment. The new guidance under SAB No. 109 requires these cash flows to be included in the fair
value measurement. SAB No. 109 requires this view to be applied on a prospective basis to derivative loan commitments issued or modified in the first quarter of 2008. The Companys application of SAB No. 109 in 2008 did not have a
material effect on its consolidated financial statements.



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|24. | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
|--- | ---------------------------------------------

The
results of operations by quarter for 2008 and 2007 were as follows:



|                                              |  |              |            |               |   |              |  |               |            |  |    |            |  
|--------------------------------------------- |  | ------------ | ---------- | ------------- | - | ------------ |  | ------------- | ---------- |  | -- | ---------- | -
|Year Ended September 30, 2008                 |  | FirstQuarter |            | SecondQuarter |   | ThirdQuarter |  | FourthQuarter |           
|Interest income                               |  | $            | 19,370,147 |               | $ | 18,988,843   |  | $             | 17,676,509 |  | $  | 17,230,048 |  
|Interest expense                              |  |              | 11,168,654 |               |   | 10,125,021   |  |               | 8,168,527  |  |    | 8,190,757  |  
|                                              |  |              |            |               |   |              |  |               |            |  |    |            |  
|Net interest income                           |  |              | 8,201,493  |               |   | 8,863,822    |  |               | 9,507,982  |  |    | 9,039,291  |  
|Provision for loan losses                     |  |              | 1,032,551  |               |   | 1,728,140    |  |               | 2,140,974  |  |    | 2,832,976  |  
|                                              |  |              |            |               |   |              |  |               |            |  |    |            |  
|Net interest income after loan loss provision |  |              | 7,168,942  |               |   | 7,135,682    |  |               | 7,367,008  |  |    | 6,206,315  |  
|Non-interest income                           |  |              | 2,978,526  |               |   | 3,842,570    |  |               | 3,254,655  |  |    | (5,161,141 | )
|Non-interest expense                          |  |              | 6,280,016  |               |   | 6,916,229    |  |               | 8,277,107  |  |    | 7,746,016  |  
|                                              |  |              |            |               |   |              |  |               |            |  |    |            |  
|Income (loss) before taxes                    |  |              | 3,867,452  |               |   | 4,062,023    |  |               | 2,344,556  |  |    | (6,700,842 | )
|Income tax expense (benefit)                  |  |              | 1,135,300  |               |   | 1,513,742    |  |               | 685,260    |  |    | (2,649,857 | )
|                                              |  |              |            |               |   |              |  |               |            |  |    |            |  
|Net income (loss)                             |  | $            | 2,732,152  |               | $ | 2,548,281    |  | $             | 1,659,296  |  | $  | (4,050,985 | )
|                                              |  |              |            |               |   |              |  |               |            |  |    |            |  
|Earnings per sharebasic                      |  | $            | 0.28       |               | $ | 0.26         |  | $             | 0.17       |  | ($ | 0.40       | )
|Earnings per sharediluted                    |  | $            | 0.27       |               | $ | 0.25         |  | $             | 0.16       |  | ($ | 0.39       | )
|Weighted average shares outstandingbasic     |  |              | 9,780,132  |               |   | 9,854,302    |  |               | 9,983,506  |  |    | 10,039,042 |  
|Weighted average shares outstandingdiluted   |  |              | 10,186,789 |               |   | 10,209,176   |  |               | 10,271,469 |  |    | 10,289,791 |  
|                                              |  |              |            |              
|Year Ended September 30, 2007                 |  | FirstQuarter |            | SecondQuarter |   | ThirdQuarter |  | FourthQuarter |           
|Interest income                               |  | $            | 16,375,236 |               | $ | 16,960,960   |  | $             | 18,267,199 |  | $  | 19,321,325 |  
|Interest expense                              |  |              | 9,468,772  |               |   | 9,981,138    |  |               | 11,000,847 |  |    | 11,383,124 |  
|                                              |  |              |            |               |   |              |  |               |            |  |    |            |  
|Net interest income                           |  |              | 6,906,464  |               |   | 6,979,822    |  |               | 7,266,352  |  |    | 7,938,201  |  
|Provision for loan losses                     |  |              | 681,553    |               |   | 573,482      |  |               | 1,911,482  |  |    | 688,740    |  
|                                              |  |              |            |               |   |              |  |               |            |  |    |            |  
|Net interest income after loan loss provision |  |              | 6,224,911  |               |   | 6,406,340    |  |               | 5,354,870  |  |    | 7,249,461  |  
|Non-interest income                           |  |              | 2,597,829  |               |   | 2,784,350    |  |               | 3,263,413  |  |    | 2,375,551  |  
|Non-interest expense                          |  |              | 5,022,285  |               |   | 5,966,637    |  |               | 5,660,103  |  |    | 6,123,768  |  
|                                              |  |              |            |               |   |              |  |               |            |  |    |            |  
|Income before taxes                           |  |              | 3,800,455  |               |   | 3,224,053    |  |               | 2,958,180  |  |    | 3,501,244  |  
|Income taxes                                  |  |              | 1,314,010  |               |   | 1,019,761    |  |               | 974,637    |  |    | 1,192,885  |  
|                                              |  |              |            |               |   |              |  |               |            |  |    |            |  
|Net income                                    |  | $            | 2,486,445  |               | $ | 2,204,292    |  | $             | 1,983,543  |  | $  | 2,308,359  |  
|                                              |  |              |            |               |   |              |  |               |            |  |    |            |  
|Earnings per sharebasic                      |  | $            | 0.25       |               | $ | 0.22         |  | $             | 0.20       |  | $  | 0.25       |  
|Earnings per sharediluted                    |  | $            | 0.24       |               | $ | 0.21         |  | $             | 0.19       |  | $  | 0.24       |  
|Weighted average shares outstandingbasic     |  |              | 9,823,850  |               |   | 9,829,899    |  |               | 9,825,886  |  |    | 9,778,411  |  
|Weighted average shares outstandingdiluted   |  |              | 10,269,066 |               |   | 10,265,321   |  |               | 10,266,592 |  |    | 10,222,156 |  



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|25. | CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS.
|--- | ---------------------------------------------------

The following table presents the condensed parent-company-only balance sheets as of September 30, 2008 and 2007, and the condensed parent-company-only statements of income and cash flows of the Company for the years ended
September 30, 2008, 2007 and 2006:



|                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ---------- | -
|                                                        |  | 2008 |             |   | 2007 |   |             |      | 
|Condensed Balance Sheets                                |  |      |             |   |      |   |             |      |  |   |            |  
|ASSETS:                                                 |  |      |             |   |      |   |             |      |  |   |            |  
|Cash and cash equivalents                               |  | $    | 92,312      |   |      | $ | 302,510     |      |  |   |            |  
|Investment in Bank                                      |  |      | 107,185,843 |   |      |   | 103,407,450 |      |  |   |            |  
|Investments                                             |  |      | 735,378     |   |      |   | 1,684,765   |      |  |   |            |  
|Intercompany loan                                       |  |      | 2,000,000   |   |      |   |            |      |  |   |            |  
|Other assets                                            |  |      | 1,554,250   |   |      |   | 392,365     |      |  |   |            |  
|                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|Total assets                                            |  | $    | 111,567,783 |   |      | $ | 105,787,090 |      |  |   |            |  
|                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|LIABILITIES:                                            |  |      |             |   |      |   |             |      |  |   |            |  
|Note payable                                            |  | $    | 7,640,000   |   |      | $ | 2,980,000   |      |  |   |            |  
|Subordinated debentures                                 |  |      | 19,589,000  |   |      |   | 19,589,000  |      |  |   |            |  
|Dividends payable                                       |  |      | 970,251     |   |      |   | 894,694     |      |  |   |            |  
|Other liabilities                                       |  |      | 1,008,026   |   |      |   | 1,518,905   |      |  |   |            |  
|                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|Total liabilities                                       |  |      | 29,207,277  |   |      |   | 24,982,599  |      |  |   |            |  
|                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|STOCKHOLDERS EQUITY                                    |  |      | 82,360,506  |   |      |   | 80,804,491  |      |  |   |            |  
|                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|Total liabilities and stockholders equity              |  | $    | 111,567,783 |   |      | $ | 105,787,090 |      |  |   |            |  
|                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|                                                        |  |      |            
|                                                        |  | 2008 |             |   | 2007 |   |             | 2006 | 
|Condensed Statements of Income                          |  |      |             |   |      |   |             |      |  |   |            |  
|Interest income                                         |  | $    | 122,189     |   |      | $ | 207,364     |      |  | $ | 100,792    |  
|Interest expense                                        |  |      | 1,479,892   |   |      |   | 1,741,136   |      |  |   | 1,639,069  |  
|                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|Net interest expense                                    |  |      | (1,357,703  | ) |      |   | (1,533,772  | )    |  |   | (1,538,277 | )
|Non-interest income                                     |  |      | 760,633     |   |      |   | 788,160     |      |  |   | 464,102    |  
|Non-interest expense                                    |  |      | 675,571     |   |      |   | 576,027     |      |  |   | 569,313    |  
|                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|Loss before income taxes and equity in earnings of Bank |  |      | (1,272,641  | ) |      |   | (1,321,639  | )    |  |   | (1,643,488 | )
|Income tax benefit                                      |  |      | (406,564    | ) |      |   | (457,900    | )    |  |   | (575,561   | )
|                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|Net loss before equity in earnings of Bank              |  |      | (866,077    | ) |      |   | (863,739    | )    |  |   | (1,067,927 | )
|Equity in earnings of Bank, net of tax                  |  |      | 3,754,821   |   |      |   | 9,846,378   |      |  |   | 10,905,980 |  
|                                                        |  |      |             |   |      |   |             |      |  |   |            |  
|Net Income                                              |  | $    | 2,888,744   |   |      | $ | 8,982,639   |      |  | $ | 9,838,053  |  
|                                                        |  |      |             |   |      |   |             |      |  |   |            |  



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|                                                                           |  |      |            |   |      |   |            |      |  |   |             |  
|-------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ----------- | -
|                                                                           |  | 2008 |            |   | 2007 |   |            | 2006 | 
|Condensed Statements of Cash Flows                                         |  |      |            |   |      |   |            |      |  |   |             |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                      |  |      |            |   |      |   |            |      |  |   |             |  
|Net income                                                                 |  | $    | 2,888,744  |   |      | $ | 8,982,639  |      |  | $ | 9,838,053   |  
|Adjustments to reconcile net income to net cash from operating activities: |  |      |            |   |      |   |            |      |  |   |             |  
|Equity in earnings of Bank                                                 |  |      | (3,754,821 | ) |      |   | (9,846,378 | )    |  |   | (10,905,980 | )
|Net change in other assets and liabilities                                 |  |      | (952,797   | ) |      |   | 1,436,715  |      |  |   | 483,560     |  
|Gain on sale of investment in joint venture                                |  |      | (30,755    | ) |      |   |           |      |  |   |            |  
|Realized loss (gain) on sale of investments                                |  |      | 25,955     |   |      |   | (143,720   | )    |  |   | (123,188    | )
|                                                                           |  |      |            |   |      |   |            |      |  |   |             |  
|Net cash (used in) provided by operating activities                        |  |      | (1,823,674 | ) |      |   | 429,256    |      |  |   | (707,555    | )
|                                                                           |  |      |            |   |      |   |            |      |  |   |             |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                      |  |      |            |   |      |   |            |      |  |   |             |  
|Cash paid for investment in joint venture                                  |  |      | (233,691   | ) |      |   | (100,000   | )    |  |   | (67,620     | )
|Dividends received from Bank                                               |  |      | 3,000,000  |   |      |   |           |      |  |   | 4,000,000   |  
|Capital contribution to Bank                                               |  |      | (3,000,000 | ) |      |   |           |      |  |   | (11,000,000 | )
|(Increase) decrease in intercompany loan                                   |  |      | (2,000,000 | ) |      |   | 3,375,000  |      |  |   | (2,150,000  | )
|Purchases of investments                                                   |  |      |           |   |      |   | (150,000   | )    |  |   | (500,000    | )
|Proceeds from sale of investment in joint venture                          |  |      | 49,375     |   |      |   |           |      |  |   |            |  
|Proceeds from sales of investments                                         |  |      | 425,985    |   |      |   | 772,648    |      |  |   | 575,365     |  
|Principal payments on mortgage-backed securities                           |  |      | 13,425     |   |      |   | 27,545     |      |  |   | 54,680      |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |             |  
|Net cash (used in) provided by investing activities                        |  |      | (1,744,906 | ) |      |   | 3,925,193  |      |  |   | (9,087,575  | )
|                                                                           |  |      |            |   |      |   |            |      |  |   |             |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                      |  |      |            |   |      |   |            |      |  |   |             |  
|Cash paid for acquired entities                                            |  |      |           |   |      |   |           |      |  |   | (3,925,378  | )
|Proceeds from note payable                                                 |  |      | 5,000,000  |   |      |   |           |      |  |   |            |  
|Payment of note payable                                                    |  |      | (340,000   | ) |      |   | (340,000   | )    |  |   | (255,000    | )
|Proceeds from common stock offering                                        |  |      |           |   |      |   |           |      |  |   | 16,139,230  |  
|Equity trust shares purchased                                              |  |      | (120,000   | ) |      |   | (1,248,787 | )    |  |   | (1,959,000  | )
|Proceeds from stock options exercised                                      |  |      | 1,153,623  |   |      |   | 395,836    |      |  |   | 797,429     |  
|Proceeds received from Bank for stock-based compensation                   |  |      | 1,119,489  |   |      |   | 1,411,905  |      |  |   | 2,026,437   |  
|Proceeds from cash received in dividend reinvestment plan                  |  |      | 695,389    |   |      |   | 393,061    |      |  |   | 276,582     |  
|Treasury stock issued                                                      |  |      | 191,835    |   |      |   |           |      |  |   |            |  
|Stock repurchase                                                           |  |      | (593,253   | ) |      |   | (1,415,545 | )    |  |   | (88,301     | )
|Dividends paid on common stock                                             |  |      | (3,748,701 | ) |      |   | (3,487,814 | )    |  |   | (3,152,569  | )
|                                                                           |  |      |            |   |      |   |            |      |  |   |             |  
|Net cash provided by (used in) financing activities                        |  |      | 3,358,382  |   |      |   | (4,291,344 | )    |  |   | 9,859,430   |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |             |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                       |  |      | (210,198   | ) |      |   | 63,105     |      |  |   | 64,300      |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                             |  |      | 302,510    |   |      |   | 239,405    |      |  |   | 175,105     |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |             |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                   |  | $    | 92,312     |   |      | $ | 302,510    |      |  | $ | 239,405     |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |             |  

* * * * *



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COMMON STOCK INFORMATION

The common stock of the Company is listed on the NASDAQ Global Select Market under the symbol PULB. As of December 10, 2008, there were approximately
3,275 stockholders of record of the Company, including brokers or other nominees.

The following table sets forth market price and dividend information for
the Companys common stock for fiscal years 2008 and 2007.



|               |  |      |       |     |   |                   |  |   |      
|-------------- |  | ---- | ----- | --- | - | ----------------- |  | - | -----
|               |  | High |       | Low |   | DividendPer Share
|Fiscal 2008    |  |      |       |     |   |                   |  |   |      
|               |  |      |      
|First Quarter  |  | $    | 13.47 |     | $ | 9.40              |  | $ | 0.090
|               |  |      |      
|Second Quarter |  | $    | 12.18 |     | $ | 9.69              |  | $ | 0.090
|               |  |      |      
|Third Quarter  |  | $    | 13.24 |     | $ | 9.43              |  | $ | 0.090
|               |  |      |      
|Fourth Quarter |  | $    | 11.50 |     | $ | 7.57              |  | $ | 0.095
|               |  |      |      
|Fiscal 2007    |  |      |       |     |   |                   |  |   |      
|               |  |      |      
|First Quarter  |  | $    | 16.75 |     | $ | 15.23             |  | $ | 0.085
|               |  |      |      
|Second Quarter |  | $    | 16.97 |     | $ | 15.07             |  | $ | 0.085
|               |  |      |      
|Third Quarter  |  | $    | 16.04 |     | $ | 14.24             |  | $ | 0.085
|               |  |      |      
|Fourth Quarter |  | $    | 16.90 |     | $ | 12.11             |  | $ | 0.090



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DIRECTORS AND OFFICERS



|                                                                                                                                   |  |                                                                        
|---------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------
|Directors                                                                                                                          |  | Senior Officers of Pulaski Bank                                        
|                                                                                                                                   | 
|Stanley J. Bradshaw Chairman of the Board of the Company Principal, Bradshaw Capital Management                                    |  | Gary W. Douglass Chief Executive Officer                               
|                                                                                                                                   | 
|Lee S. Wielansky Vice Chairman of the Board of the Company Chairman and Chief Executive Officer of Midland Development Group, Inc. |  | W. Thomas Reeves President                                             
|                                                                                                                                   | 
|William M. Corrigan, Jr. Partner, Armstrong Teasdale LLP                                                                           |  | Ramsey K. Hamadi Chief Financial Officer                               
|                                                                                                                                   | 
|William A. Donius Chairman of the Board of the Bank                                                                                |  | Brian J. Björkman President, Commercial
Lending                        
|                                                                                                                                   | 
|Gary W. Douglass President and Chief Executive Officer                                                                             |  | Matthew A. Locke President, Mortgage Lending                           
|                                                                                                                                   | 
|Leon A. Felman Managing Partner of Felman Family Partnership LP                                                                    |  | Cheri G. Bliefernich Executive Vice
President, Banking Operations      
|                                                                                                                                   | 
|Michael R. Hogan Retired Chief Administrative Officer and Chief Financial Officer of Sigma-Aldrich Corporation                     |  | Paul D. Grosse Regional
President                                      
|                                                                                                                                   | 
|Timothy K. Reeves President and Owner of Keenan Properties of St. Louis                                                            |  | Diane L. Hughes Senior Vice President, Kansas
City Loan Operations     
|                                                                                                                                   | 
|Steven C. Roberts President of The Roberts Companies                                                                               |  | Rita M. Kuster Senior Vice President, Commercial
Lending               
|                                                                                                                                   | 
|Emeritus Director                                                                                                                  |  | Paul J. Milano Treasurer and Controller                                
|                                                                                                                                   | 
|Thomas F. Hack Retired Thrift Executive                                                                                            |  | Christopher A. Purcell Senior Vice President, St.
Louis Loan Operations
|                                                                                                                                   | 
|                                                                                                                                   |  | Lisa K. Simpson Senior Vice President,
Director of Human Resources     



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CORPORATE INFORMATION

Corporate Headquarters

12300 Olive Boulevard

St. Louis, Missouri

314.878.2210

www.pulaskibankstl.com

Independent Auditors

KPMG LLP

St. Louis, Missouri

General Counsel

Armstrong Teasdale LLP

St. Louis, Missouri

Kappel, Neill and Wolff LLC

St. Louis, Missouri

Special Securities Counsel

Kilpatrick Stockton LLP

Washington, D.C.

Stock Transfer Agent

Registrar and Transfer Company

Cranford, New Jersey

800.866.1340

www.rtco.com

ANNUAL
MEETING

The annual meeting of the stockholders will be held Thursday, February 5, 2009 at 2:00 p.m., Central Time, at
The St. Louis Mariott West, 660 Maryville Centre Drive, St. Louis, Missouri, 63141.



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