<TABLE>
<CAPTION>
                                                                             PULASKI BANCORP, INC. AND SUBSIDIARY
                                                                           SELECTED FINANCIAL CONDITION AND OTHER
                                                                                              DATA OF THE COMPANY


                                                                        At December 31,
                                              --------------------------------------------------------------------
                                                2000          1999           1998           1997            1996
                                              --------       --------      ---------      ---------       --------
(In Thousands)

Financial Condition data:

Total amount of:

<S>                                           <C>            <C>           <C>            <C>             <C>
Assets                                        $244,529       $236,550      $ 199,792      $ 181,732       $160,722
Loans receivable, net                          152,287        134,522        100,894        102,212         96,258
Securities available for sale                    6,327          5,906          5,642          5,367          5,034
Mortgage-backed securities                      60,614         71,399         55,728         50,856         42,281
Investment securities                            6,948          6,947          6,946         10,000          5,000
Deposits                                       189,333        169,008        174,808        153,227        147,209
Advances and other borrowings                   29,000         42,000            455          5,636            -
Stockholders' equity                            24,395         23,783         22,806         21,689         12,445

<CAPTION>

                                                              For the Year Ended December 31,
                                              ---------------------------------------------------------------------
                                                2000           1999          1998            1997           1996
                                              --------       --------      ---------      ---------       --------
(In Thousands)

Operating data:

Interest income                                $17,915        $14,391        $13,426        $12,702        $11,614
Interest expense                                10,517          8,317          7,790          7,347          6,872

Net interest income                              7,398          6,074          5,636          5,355          4,742
Provision for loan losses                           91            113            114            168            107
Non-interest income                                674            562            295            178            145
Non-interest expenses                            4,965          4,600          4,160          3,571          4,243
Income taxes                                     1,120            738            626            673            195
                                              --------       --------      ---------      ---------       --------

Net income                                    $ 1,896        $ 1,185        $ 1,031        $ 1,121          $ 342
                                              ========       ========       ========       ========         =====

</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                                           At or For the Year Ended December 31,
                                               ------------------------------------------------------------------
                                                2000           1999          1998            1997           1996
                                               ------         ------         ------         ------          -----


Selected Financial Ratios:

<S>                                             <C>            <C>            <C>            <C>            <C>
Return on average assets (1)                     0.79%          0.55%          0.54%          0.64%          0.59%
Return on average equity (1)                     7.95%          5.11%          4.63%          6.01%          7.72%
Average equity/average assets                    9.88%         10.85%         11.69%         10.64%          7.60%
Interest rate spread                             2.73%          2.49%          2.59%          2.80%          2.76%
Net yield on average
 interest-earning assets                         3.18%          2.94%          3.08%          3.18%          3.01%
Non-interest expenses to
 average assets (1)                              2.06%          2.15%          2.18%          2.04%          2.01%
Efficiency ratios (1)                           64.91%         69.32%         70.14%         64.55%         67.14%
Equity/total assets                              9.98%         10.05%         11.41%         11.93%          7.74%
Capital ratios:
     Tangible                                    9.81%          9.67%         11.41%         11.93%          7.75%
     Core                                        9.81%          9.67%         11.41%         11.93%          7.75%
     Risk-based                                 18.41%         20.95%         25.86%         28.28%         19.27%
Non-performing loans
 to total assets                                 0.13%          0.29%          0.47%          0.49%          0.83%
Non-performing loans
 to total loans receivable                       0.18%          0.43%          0.80%          0.79%          1.29%
Non-performing assets
 to total assets                                 0.13%          0.31%          0.53%          0.53%          0.92%
Allowance for loan losses
 to non-performing loans                       386.41%        167.95%        109.89%        102.47%         63.55%
Average interest-earning
 assets/average
 interest-bearing liabilities                    1.10x          1.11x          1.12x          1.09x          1.06x
Net interest income after
 provision for loan losses to
 non-interest expenses (1)                       1.47x          1.30x          1.33x          1.45x          1.41x
</TABLE>

(1)    Excludes  for the year ended  December 31,  1996,  one-time  SAIF special
       assessment of $962,000 and the related income tax benefit of $346,000.



<PAGE>
                              PULASKI BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


         Pulaski Bancorp, Inc. ("the Company"), is the stock holding company for
Pulaski Savings Bank ("the Bank").  The Company is headquartered in Springfield,
New Jersey and its principal  business  currently  consists of the operations of
the Bank. Pulaski Bancorp, M.H.C., a mutual holding company formed in connection
with the Bank's  conversion  to stock form and  reorganization  into the holding
company form of  organization,  which was consummated July 12, 1999, owns 58% of
the Company's  outstanding common stock at December 31, 2000. The Bank's results
of  operations  are  dependent  primarily on net interest  income,  which is the
difference  between the income earned on its loan and securities  portfolios and
its cost of funds,  consisting of the interest paid on deposits and  borrowings.
Results of operations  are also affected by the Bank's  non-interest  income and
expense.  The Bank's  non-interest  income consists  primarily of fees and other
service  charges.  The  Bank's  non-interest  expense  principally  consists  of
compensation and employee benefits, office occupancy and equipment expenses, the
cost of  foreclosed  real  estate  operations,  and other  expenses.  Results of
operations are also  significantly  affected by general economic and competitive
conditions,  particularly  changes in interest  rates,  government  policies and
actions of regulatory authorities. Future changes in applicable law, regulations
or government policies may materially impact the Bank.

Discussion of Forward-Looking Statements

When used or  incorporated  by  reference  in  disclosure  documents,  the words
"anticipate",  "estimate",  "expect",  "project",  "target",  "goal" and similar
expressions   are  intended  to  identify   forward-looking   statements.   Such
forward-looking  statements  are  subject to certain  risks,  uncertainties  and
assumptions.  Should one or more of these risks or uncertainties materialize, or
should  underlying   assumptions  prove  incorrect,   actual  results  may  vary
materially  from those  anticipated,  estimated,  expected or  projected.  These
forward-looking  statements  speak  only  as of the  date of the  document.  The
Company  expressly  disclaims any obligation or undertaking to publicly  release
any updates or revisions to any  forward-looking  statement  contained herein to
reflect  any change in the  Company's  expectation  with  regard  thereto or any
change in events,  conditions or  circumstances  on which any such  statement is
based.

General

The Company's principal business is the ownership and operation of the Bank. The
Bank's  principal  business  has  been and  continues  to be  attracting  retail
deposits from the general  public and investing  those  deposits,  together with
funds generated from operations, primarily in one-to-four family, owner occupied
residential mortgage loans and construction loans. In addition,  in times of low
loan demand,  the Bank will invest in  mortgage-backed  securities to supplement
its  lending  portfolio.   The  Bank  also  invests,  to  a  lesser  extent,  in
multi-family  residential  mortgage loans,  commercial  real estate loans,  home
equity and second mortgage loans and consumer loans.

Comparison of Financial Condition at December 31, 2000 and 1999

The  Company's  assets at December  31, 2000,  totalled  $244.5  million,  which
represents an increase of $7.9 million or 3.3% as compared to $236.6  million at
December 31, 1999,  primarily  due to an increase in loans  receivable  of $17.8
million  partially offset by a decrease in  mortgage-backed  securities of $10.8
million.



                                      - 1 -

                              PULASKI BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Cash and cash  equivalents  increased  $2.9  million or 42.6% to $9.7 million at
December 31, 2000, from $6.8 million at December 31, 1999,  primarily reflecting
a $3.1 million increase in interest-bearing deposits.

The Company did not have  trading  account  securities  at  December  31,  2000.
Trading  account  securities  at December  31, 1999,  amounted to $2.8  million.
Proceeds  from  sales  of  the  trading   account   securities  were  placed  in
interest-bearing securities during the year ended December 31, 2000.

Securities  available  for sale  increased  $421,000 or 7.1% to $6.3  million at
December 31, 2000, compared with $5.9 million at December 31, 1999. The increase
during the year ended  December 31, 2000,  resulted  primarily from purchases of
securities  available for sale of $390,000,  along with a decrease of unrealized
loss on such  portfolio of $31,000.  Investment  securities  held to maturity at
December 31, 2000 and 1999, amounted to $6.9 million.

Mortgage-backed  securities held to maturity decreased $10.8 million or 15.1% to
$60.6  million at December 31, 2000,  as compared with $71.4 million at December
31,  1999.  The  decrease  during the year ended  December  31,  2000,  resulted
primarily from principal repayments of $10.7 million.

Net loans amounted to $152.3 million and $134.5 million at December 31, 2000 and
1999, respectively,  which represents an increase of $17.8 million or 13.2%. The
increase during the year ended December 31, 2000,  resulted  primarily from loan
originations and purchases exceeding loan principal repayments.  The increase in
loans was funded primarily from increase in deposits.

Deposits  at  December  31,  2000,  increased  $20.3  million or 12.0% to $189.3
million when compared with $169.0 million at December 31, 1999.

At December  31, 2000 and 1999,  borrowed  money  amounted to $29.0  million and
$42.0 million,  respectively,  representing advances from Federal Home Loan Bank
of New York  ("FHLB").  During 1999,  the Bank had adopted a strategy where such
advances were primarily used for the purchase of mortgage-backed securities held
to maturity and the funding of loan  originations and purchases to seek a higher
rate of return.

Stockholders' equity amounted to $24.4 million and $23.8 million at December 31,
2000 and 1999, respectively.  During the years ended December 31, 2000 and 1999,
cash dividends of $275,000 and $309,000,  respectively,  were paid on the Bank's
and Company's  common stock.  During the years ended December 31, 2000 and 1999,
the Company repurchased 154,643 shares and 27,600 shares,  respectively,  of its
common  stock,  at prices  ranging  from $7.94 to $9.69,  for $1.3  million  and
$224,000, respectively, under a stock repurchase program.








                                      - 2 -
<PAGE>

                              PULASKI BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operating Results for The Years Ended December 31, 2000 and 1999

GENERAL

Net income  increased by  $711,000,  or 60.0%,  to $1.9 million  during the year
ended December 31, 2000,  compared with $1.2 million for the year ended December
31,  1999.  The  increase  in net income  during the 2000 period  resulted  from
increases in total interest  income of $3.5 million and  non-interest  income of
$112,000,  along with a decrease in provision for loan losses of $22,000,  which
more than offset increases in total interest expense,  non-interest expenses and
income taxes of $2.2 million, $365,000 and $382,000, respectively.

INTEREST INCOME

Interest  income on loans during the year ended December 31, 2000,  increased by
$2.9 million,  or 32.0%,  to $12.1 million when compared to $9.2 million  during
1999.  The increase  during the 2000 period  resulted  from an increase of $28.7
million or 24.5% in the average balance of loans outstanding from $117.1 million
in 1999 to $145.8 million in 2000,  along with an increase of 47 basis points in
the yield earned on the loan portfolio from 7.85% in 1999 to 8.32% in 2000.

Interest on mortgage-backed  securities held to maturity increased $642,000,  or
16.8%, during the year ended December 31, 2000, to $4.5 million compared to $3.8
million for 1999.  During the year ended December 31, 2000, the average  balance
of mortgage-backed  securities outstanding increased $212,000 from $65.3 million
in 1999 from $65.5 million in 2000, along with an increase of 96 basis points to
6.83% in 2000  from  5.87% in 1999 in the yield  earned  on the  mortgage-backed
securities portfolio.

Interest earned on investment  securities held to maturity increased by $43,000,
or 10.6%,  from $406,000 for the year ended December 31, 1999,  when compared to
$449,000  for 2000.  The  increase  during  2000  resulted  from an  increase of
$462,000 in the average balance of the investment  securities  portfolio,  along
with an  increase  of 20 basis  points  in the yield  earned  on the  investment
securities  portfolio  to 6.46% in 2000 from 6.26% in 1999.  Interest  earned on
securities  available  for sale  amounted to $390,000 and $310,000 for the years
ended December 31, 2000 and 1999, respectively.

Interest on other  interest-earning  assets decreased  $181,000,  or 27.6%, from
$655,000  during the year ended  December 31, 1999,  to $474,000 for 2000.  Such
decrease  was  attributable  to a decrease  of $3.4  million,  or 29.0%,  in the
average balance of other interest-earning  assets outstanding from $11.7 million
in 1999 to $8.3  million in 2000,  sufficient  to offset an increase of 11 basis
points in the yield earned on other  interest-earning  assets from 5.62% in 1999
to 5.73% in 2000.

INTEREST EXPENSE

Interest on deposits  increased  $650,000,  or 8.7%, to $8.1 million  during the
year ended  December 31, 2000  compared to $7.5  million for 1999.  The increase
during 2000 was  attributable  to an increase of 27 basis  points in the average
cost of  interest-bearing  deposits  from 4.39% for 1999 to 4.66% for 2000 along
with an increase of $4.1 million, or 2.4%, from $170.3 million in 1999 to $174.4
million in 2000 in the average balance of interest-bearing deposits outstanding.
Interest on borrowed  money  amounted to $2.4  million and  $846,000  during the
years ended December 31, 2000 and 1999,  respectively.  The increase during 2000
was  attributable  to an  increase of $21.8  million in the  average  borrowings
outstanding, along with an increase of 92 basis points in the cost of borrowings
from 5.54% for 1999 to 6.46% for 1999.

                                      - 3 -
<PAGE>

                              PULASKI BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


NET INTEREST INCOME

Net interest income for the year ended December 31, 2000, increased $1.3 million
or 21.8%,  to $7.4 million for 2000 from $6.1 million for 1999. The net interest
rate spread  increased from 2.49% in 1999 to 2.73% in 2000 and the interest rate
margin  increased  from 2.94% in 1999 to 3.18% in 2000.  The increase  primarily
resulted from a 73 basis points increase in the yield on interest-earning assets
from  6.97% in 1999 to 7.70% in 2000 which more than  offset an  increase  of 49
basis points in the cost of average  interest-bearing  liabilities from 4.48% in
1999 to 4.97% in 2000.

PROVISION FOR LOAN LOSSES

During the years ended December 31, 2000 and 1999, the Bank provided $91,000 and
$113,000,  respectively,  for loan losses.  The Bank  maintains an allowance for
loan losses based on  management's  evaluation of the risks inherent in its loan
portfolio which gives due  consideration to changes in general market conditions
and in the nature and volume of the Bank's loan activity. The allowance for loan
losses amounted to $1.2 million at December 31, 2000, representing .69% of total
loans and 386.4% of  non-performing  loans as compared to an  allowance  of $1.1
million at December  31,  1999,  representing  .73% of total loans and 167.9% of
non-performing  loans.  The Bank  monitors  its loan  portfolio  and  intends to
continue to provide for loan losses based on its ongoing  periodic review of the
loan portfolio and general market conditions.

NON-INTEREST INCOME

Non-interest income increased by $112,000 or 19.9% from $562,000 during the year
ended  December 31, 1999 to $674,000 for the year ended  December 31, 2000.  The
increase in  non-interest  income  during 2000 resulted from an increase in fees
and service charges of $9,000, an increase in trading account income of $523,000
and an increase in  miscellaneous  income of $2,000,  which were  sufficient  to
offset  a  decrease  in gain  on sale of  deposits  of the  Harrison  branch  of
$423,000, which occurred in 1999.

During the years ended December 31, 2000 and 1999,  the Bank  purchased  trading
account securities of $3.6 million and $7.1 million,  respectively, and proceeds
from  sales  of  such  securities   amounted  $6.9  million  and  $4.3  million,
respectively, resulting in realized gains on such sales of $286,000 and $41,000,
respectively.  Unrealized gains on trading account securities  totalled $139,000
in 2000 while unrealized losses on trading account securities  totalled $139,000
for the year ended  December 31, 1999.  During the year ended  December 31, 1999
the Bank sold its  deposits of $5.7  million  held at its  Harrison,  New Jersey
branch office at a gain of $423,000.

NON-INTEREST EXPENSES

Non-interest  expenses increased  $364,000,  or 7.9%, to $5.0 million during the
year  ended  December  31,  2000  compared  to $4.6  million  for the year ended
December  31,  1999.  Salaries and  employee  benefits,  the major  component of
non-interest  expenses,  increased  $339,000  or 12.8%  during  the  year  ended
December 31, 2000, while occupancy, equipment and loss on foreclosed real estate
increased by $125,000, $13,000, and $3,000,  respectively,  which increases were
partially  offset by decreases in  advertising,  federal  insurance  premium and
miscellaneous  expenses  of  $14,000,  $67,000 and  $34,000,  respectively.  The
increase in salaries and employee  benefits was primarily a result of additional
personnel. The decrease in federal insurance expense resulted from a decrease in
premium charged by Federal Insurance Deposit Corporation.

                                      - 4 -
<PAGE>

                              PULASKI BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


INCOME TAXES

Income tax expense  totaled  $1.1  million and  $738,000  during the years ended
December  31,  2000  and  1999,  respectively.  The  increase  in 2000  resulted
primarily  from an increase in pre-tax  income of $1.1  million.  The  effective
income tax rates were 37.1% and 38.4%  during the years ended  December 31, 2000
and 1999, respectively.

Liquidity and Capital Resources

The  Company's   primary  sources  of  funds  are  deposits,   amortization  and
prepayments of loan and  mortgage-backed  securities  principal,  FHLB advances,
maturities of investment  securities and funds provided from  operations.  While
scheduled loan and  mortgage-backed  securities  amortization  and maturities of
investment securities are a relatively predictable source of funds, deposit flow
and loan and  mortgage-backed  securities  prepayments are greatly influenced by
market interest rates, economic conditions and competition.

The Bank is required to maintain  minimum  levels of liquid assets as defined by
the Office of Thrift Supervision ("OTS")  regulations.  This requirement,  which
may vary from time to time,  depending  upon  economic  conditions  and  deposit
flows,  is based upon a percentage of deposits and  short-term  borrowings.  The
required  ratio  currently is 4.0%. The Bank's  liquidity  averaged 22.0% during
December,  2000. The Bank adjusts its liquidity  levels in order to meet funding
needs for deposit  outflows,  payments of real estate taxes from escrow accounts
on mortgage loans,  repayment of borrowings,  when applicable,  and loan funding
commitments.  The Bank also adjusts its liquidity  level as  appropriate to meet
its asset/liability  objectives.  In addition, the Bank invests its excess funds
in federal funds and overnight  deposits with the FHLB, which provides liquidity
to meet lending requirements.  Federal funds sold and interest-bearing  deposits
in other banks at December 31, 2000 and 1999,  amounted to $5.5 million and $2.8
million, respectively.

The primary  sources of  investing  activities  are lending  and  investment  in
mortgage-backed  securities.  In addition to funding new loan production and the
purchases  of  mortgage-backed   securities  through  operations  and  financing
activities,  new loan production and the purchase of mortgage-backed  securities
were also funded by principal  repayments on existing loans and  mortgage-backed
securities.

During the years ended  December 31, 2000 and 1999,  cash  dividends paid on the
Company's  and the Bank's  common  stock  amounted  to  $275,000  and  $309,000,
respectively.  Pulaski Bancorp, M.H.C. waived its right to receive dividends. If
Pulaski  Bancorp,  M.H.C.  had not waived its right to  receive  dividends,  the
amount of such  dividends,  during the years ended  December  31, 2000 and 1999,
would have been $369,000 and $358,000, respectively.

Liquidity  management  is  both a  daily  and  long-term  function  of  business
management.  Excess liquidity is generally  invested in short-term  investments,
such as federal funds and interest-earning  deposits. If the Bank requires funds
beyond its ability to generate them internally,  borrowing agreements exist with
the FHLB, which provide an additional  source of funds. At December 31, 2000 and
1999, borrowed money amounted to $29.0 million and $42.0 million, respectively.

                                      - 5 -
<PAGE>

                             PULASKI BANCORP, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The Bank  anticipates  that it will have sufficient  funds available to meet its
current  loan  commitments.  At  December  31,  2000,  the Bank has  outstanding
commitments to originate, fund or purchase loans of $13.4 million.  Certificates
of  deposit  scheduled  to mature in one year or less,  at  December  31,  2000,
totaled  $120.0  million.   Management  believes  that,  based  upon  historical
experience, a significant portion of such deposits will remain with the Bank.

At  December  31,  2000,  the  Bank  exceeded  each  of the  three  OTS  capital
requirements.  The Bank's  tangible,  core and  risk-based  capital  ratios were
9.81%,  9.81% and 18.41%,  respectively,  which is above the required  levels of
1.5%  for  tangible  capital,  4.0%  for core  capital  and 8.0% for  risk-based
capital.  The Bank qualifies as  "well-capitalized"  under the prompt corrective
action regulations of the OTS.

Impact of Inflation and Changing Prices

The consolidated financial statements and the related data presented herein have
been prepared in accordance with generally accepted accounting principles, which
requires the measurement of financial position and operating results in terms of
historical dollars, without considering changes in the relative purchasing power
of money over time due to inflation.

Unlike most industrial companies, virtually all of the assets and liabilities of
the Bank and Company are monetary in nature. As a result,  interest rates have a
more significant impact on the performance than the effects of general levels of
inflation.  Interest rates do not  necessarily  move in the same direction or in
the same  magnitude as the prices of goods and services  because such prices are
affected by inflation to a larger extent than interest rates.



                                      -6-
<PAGE>

                        [leterhead PULASKI BANCORP. INC.]


                      MANAGEMENT RESPONSIBILITY STATEMENT

Management of Pulaski  Bancorp,  Inc. and its subsidiary is responsible  for the
preparation  of the financial  statements  and all other  financial  information
included in this report. The consolidated  financial statements were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis. All financial  information included in this report agrees in all material
aspects with the financial  statements.  In preparing the financial  statements,
management makes informed estimates and judgements with  consideration  given to
materiality, about the expected results of various events and transactions.

Management  maintains  a system of internal  accounting  control  that  includes
personnel  selection,   appropriate  division  of  responsibilities  and  formal
procedures  and  polices  consistent  with  high  standards  of  accounting  and
administrative  practice.  Consideration has been given to the necessary balance
between  the costs of systems of  internal  control  and the  benefits  derived.
Management reviews and modifies its system of accounting and internal control in
light  of  changes  in  conditions  and  operations  as well as in  response  to
recommendations  from the independent  certified public accountants and internal
auditors.  Management  believes  the  accounting  and internal  control  systems
provide   reasonable   assurance  that  assets  are  safeguarded  and  financial
information is reliable.

The Board of  Directors  (the  "Board")  is  responsible  for  determining  that
management  fulfills  its  responsibilities  in  the  preparation  of  financial
statements  and the control of operations.  The Board  appoints the  independent
certified  public  accountants  and  internal  auditors.  The Board  meets  with
management,  the independent certified pubic accountants and reviews the work of
the internal auditors, and approves the overall scope of audit work, related fee
arrangements, and reviews audit reports and findings.


/s/Thomas Bentkowski
-------------------
Thomas Benthowski - President

/s/John T. Robertson
--------------------
John T. Robertson - Executive Vice President

/s/Lee Wagstaff
---------------
Lee Wagstaff - Treasurer

January 26,2001

                                       7

<PAGE>
                         [letterhead RADICS & CO., LLC]

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------






To The Board of Directors
Pulaski Bancorp, Inc. and Subsidiary



We have audited the accompanying  consolidated statements of financial condition
of Pulaski Bancorp,  Inc. (the "Company") and Subsidiary as of December 31, 2000
and 1999,  and the  related  consolidated  statements  of income,  comprehensive
income, changes in stockholders' equity and cash flows for the years then ended.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. These standards require that we plan and perform the audits to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.

In our opinion,  the above mentioned  consolidated  financial statements present
fairly,  in all material  respects,  the financial  position of Pulaski Bancorp,
Inc. and  Subsidiary as of December 31, 2000 and 1999,  and the results of their
operations  and their cash flows for the years then ended,  in  conformity  with
generally accepted accounting principles.


                                                            /s/Radics & Co., LLC
                                                            --------------------
                                                               Radics & Co., LLC
January 26, 2001

                                       8
<PAGE>
<TABLE>
<CAPTION>
                                                PULASKI BANCORP, INC. AND SUBSIDIARY
                                           CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                           ----------------------------------------------




                                                                                                            December 31,
                                                                                               -----------------------------------
Assets                                                                   Note(s)                    2000                  1999
------                                                                 -----------             -------------         -------------
<S>                                                                    <C>                    <C>                   <C>
Cash and amounts due from depository institutions                                               $ 4,193,914           $ 3,966,072
Interest-bearing deposits                                                                         3,546,318               454,547
Federal funds sold                                                                                1,950,000             2,350,000
                                                                                              -------------         -------------
              Cash and cash equivalents                                  1 and 16                 9,690,232             6,770,619

Term deposits                                                            3 and 16                    99,000               197,000
Trading account securities                                               1 and 16                        --             2,790,500
Securities available for sale                                          1, 4 and 16                6,326,981             5,906,451
Investment securities held to maturity                                 1, 5 and 16                6,947,582             6,947,017
Mortgage-backed securities held to maturity                            1, 6 and 16               60,614,491            71,399,443
Loans receivable                                                       1, 7 and 16              152,287,340           134,522,001
Real estate owned                                                           1                            --                49,822
Premises and equipment                                                   1 and 8                  4,060,664             4,037,888
Federal Home Loan Bank of New York stock                                    11                    2,350,000             2,100,000
Accrued interest receivable                                            1, 9 and 16                1,437,088             1,218,056
Other assets                                                           1, 13 and 14                 715,747               611,493
                                                                                              -------------         -------------
              Total assets                                                                    $ 244,529,125         $ 236,550,290
                                                                                              =============         =============

Liabilities and stockholders' equity
------------------------------------

Liabilities
-----------

Deposits                                                                10 and 16             $ 189,332,804         $ 169,007,650
Borrowed money                                                          11 and 16                29,000,000            42,000,000
Advance payments by borrowers for taxes                                                             958,747               919,231
Other liabilities                                                           13                      842,931               840,521
                                                                                              -------------         -------------
              Total liabilities                                                                 220,134,482           212,767,402
                                                                                              -------------         -------------
Commitments and contingencies                                           15 and 16                        --                    --

Stockholders' equity                                                  1,2,12,13, 14
--------------------
                                                                          and 17
Preferred stock; $.01 par value, 2,000,000 shares
  authorized; issued and outstanding - none
Common stock; $.01 par value, 13,000,000 shares
  authorized, 2,108,088 shares issued; 1,925,845
  shares (2000) and 2,080,488 (1999) outstanding                                                     21,081                21,081
Paid-in capital                                                                                   9,805,369             9,833,349
Retained earnings - substantially restricted                                                     16,542,655            14,912,410
Unearned Recognition Retention Plan ("RRP") shares                                                 (276,350)             (428,702)
Unearned Employee Stock Ownership Plan ("ESOP")                                                    (101,936)             (278,439)
Accumulated other comprehensive (loss)                                                              (51,000)              (52,480)
Treasury stock, at cost; 182,243 shares (2000) and
  27,600 shares (1999)                                                                           (1,545,176)             (224,331)
                                                                                              -------------         -------------
              Total stockholders' equity                                                         24,394,643            23,782,888
                                                                                              -------------         -------------
              Total liabilities and stockholders' equity                                      $ 244,529,125         $ 236,550,290
                                                                                              =============         =============
</TABLE>
See notes to consolidated financial statements.


                                       9
<PAGE>
<TABLE>
<CAPTION>
                                          PULASKI BANCORP, INC. AND SUBSIDIARY
                                            CONSOLIDATED STATEMENTS OF INCOME
                                            ---------------------------------


                                                                                           Year Ended December 31,
                                                                                       --------------------------------
                                                                          Note(s)           2000             1999
                                                                         -----------   ---------------  ---------------
<S>                                                                       <C>             <C>              <C>
Interest income:
      Loans                                                               1 and 7         $12,128,529      $ 9,187,993
      Mortgage-backed securities held to maturity                            1              4,474,505        3,832,019
      Investment securities held to maturity                                 1                448,605          406,383
      Securities available for sale                                          1                389,530          309,953
      Other interest-earning assets                                                           473,570          654,679
                                                                                          -----------      -----------

           Total interest income                                                           17,914,739       14,391,027
                                                                                          -----------      -----------
Interest expense:
      Deposits                                                               10             8,121,324        7,471,264
      Borrowed money                                                         11             2,395,552          845,478
                                                                                          -----------      -----------

           Total interest expense                                                          10,516,876        8,316,742
                                                                                          -----------      -----------

Net interest income                                                                         7,397,863        6,074,285
Provision for loan losses                                                 1 and 7              91,000          113,000
                                                                                          -----------      -----------

Net interest income after provision for loan losses                                         7,306,863        5,961,285
                                                                                          -----------      -----------
Non-interest income:
      Fees and service charges                                                                226,239          216,510
      Trading account income (loss)                                          1                424,884          (97,894)
      Gain on sale of deposits                                                                     --          422,554
      Miscellaneous                                                                            22,575           20,949
                                                                                          -----------      -----------

           Total non-interest income                                                          673,698          562,119
                                                                                          -----------      -----------
Non-interest expenses:
      Salaries and employee benefits                                         13             2,978,624        2,639,764
      Occupancy expense of premises                                          1                557,218          431,907
      Equipment                                                              1                409,503          397,220
      Loss on real estate owned                                              1                  3,434              631
      Advertising                                                                              93,940          107,906
      Federal insurance premium                                                                35,484          101,835
      Miscellaneous                                                          13               886,016          920,465
                                                                                          -----------      -----------

           Total non-interest expenses                                                      4,964,219        4,599,728
                                                                                          -----------      -----------

Income before income taxes                                                                  3,016,342        1,923,676
Income taxes                                                              1 and 14          1,120,375          738,431
                                                                                          -----------      -----------

Net income                                                                                $ 1,895,967      $ 1,185,245
                                                                                          ===========      ===========

Net income per common share:                                              1 and 13
      Basic/diluted                                                                            $ 0.98           $ 0.58
                                                                                            =========        =========
Dividends declared per common share                                          17                $ 0.33           $ 0.32
                                                                                            =========        =========

Weighted average number of common shares
  outstanding:                                                            1 and 13
      Basic/diluted                                                                         1,928,530        2,043,181
                                                                                            =========        =========

</TABLE>
See notes to consolidated financial statements.

                                       10
<PAGE>
<TABLE>
<CAPTION>

                                          PULASKI BANCORP, INC. AND SUBSIDIARY
                                     CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                     -----------------------------------------------



                                                                                             Year Ended December 31,
                                                                                          ----------------------------
                                                                                            2000             1999
                                                                                          -----------      -----------
<S>                                                                                       <C>              <C>
Net income                                                                                $ 1,895,967      $ 1,185,245
Other comprehensive income (loss):
      Unrealized gain (loss) on securities available
       for sale, net of income taxes (benefit) of $29,520
       and  $(16,560), respectively                                                             1,480          (29,440)
                                                                                          -----------      -----------

Comprehensive income                                                                      $ 1,897,447      $ 1,155,805
                                                                                          ===========      ===========



</TABLE>
See notes to consolidated financial statements.

                                       11

<PAGE>
<TABLE>
<CAPTION>
                                               PULASKI BANCORP, INC. AND SUBSIDIARY
                                    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                    ----------------------------------------------------------


                                                                                                   Unearned           Unearned
                                                Common           Paid-in           Retained           RRP                ESOP
                                                stock            Capital           Earnings          Shares             Shares
                                             ------------     ------------      ------------      ------------      ------------
<S>                                          <C>              <C>               <C>               <C>               <C>
Balance - December 31, 1998                  $     21,081     $  9,854,730      $ 14,029,016      $   (581,054)     $   (495,144)

Net income for the year ending
  December 31, 1999                                  --               --           1,185,245              --                --
Unrealized (loss) on securities
 available for sale, net of income taxes             --               --                --                --             (29,440)
Cash dividend                                        --               --            (309,127)             --                --
ESOP shares committed to
  to be released                                     --            (21,381)            7,276              --             216,705
Amortization of unearned
 RRP shares                                          --               --                --             152,352              --
Treasury stock, at cost                              --               --                --                --                --
                                             ------------     ------------      ------------      ------------      ------------

Balance - December 31, 1999                        21,081        9,833,349        14,912,410          (428,702)         (278,439)

Net income for the year ending
  December 31, 2000                                  --               --           1,895,967              --                --
Unrealized gain on securities
 available for sale, net of income taxes             --               --                --                --                --
Cash dividend                                        --               --            (275,410)             --                --
ESOP shares committed to
  to be released                                     --            (27,980)            9,688              --             176,503
Amortization of unearned
 RRP shares                                          --               --                --             152,352              --
Treasury stock, at cost                              --               --                --                --                --
                                             ------------     ------------      ------------      ------------      ------------

Balance - December 31, 2000                  $     21,081     $  9,805,369      $ 16,542,655      $   (276,350)     $   (101,936)
                                             ============     ============      ============      ============      ============

<CAPTION>
                                                Accumulated
                                                   Other                            Total
                                              Comprehensive      Treasury        Stockholders'
                                                  (Loss)           Stock            Equity
                                             ------------      ------------      ------------
<S>                                          <C>               <C>               <C>
Balance - December 31, 1998                  $    (23,040)     $       --        $ 22,805,589

Net income for the year ending
  December 31, 1999                                  --                --           1,185,245
Unrealized (loss) on securities
 available for sale, net of income taxes          (29,440)             --             (29,440)
Cash dividend                                        --                --            (309,127)
ESOP shares committed to
  to be released                                     --                --             202,600
Amortization of unearned
 RRP shares                                          --                --             152,352
Treasury stock, at cost                              --            (224,331)         (224,331)
                                             ------------      ------------      ------------

Balance - December 31, 1999                       (52,480)         (224,331)       23,782,888

Net income for the year ending
  December 31, 2000                                  --                --           1,895,967
Unrealized gain on securities
 available for sale, net of income taxes            1,480              --               1,480
Cash dividend                                        --                --            (275,410)
ESOP shares committed to
  to be released                                     --                --             158,211
Amortization of unearned
 RRP shares                                          --                --             152,352
Treasury stock, at cost                              --          (1,320,845)       (1,320,845)
                                             ------------      ------------      ------------

Balance - December 31, 2000                  $    (51,000)     $ (1,545,176)     $ 24,394,643
                                             ============      ============      ============

</TABLE>


See notes to consolidated financial statements.


                                        12
<PAGE>
<TABLE>
<CAPTION>
                                         PULASKI BANCORP, INC. AND SUBSIDIARY
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        -------------------------------------


                                                                                         Year Ended December 31,
                                                                                      ------------------------------
                                                                                       2000                  1999
                                                                                      ----------         -----------
<S>                                                                                  <C>                 <C>
Cash flows from operating activities:
     Net income                                                                      $ 1,895,967         $ 1,185,245
     Adjustments to reconcile net income to net cash
       provided by (used in) operating activities:
         Depreciation and amortization of premises
           and equipment                                                                 265,058             270,239
         Amortization of premiums and accretion of
           discounts, net                                                                (29,143)              5,929
         Accretion of deferred loan fees                                                (457,817)           (247,540)
         Provision for loan losses                                                        91,000             113,000
         Purchases of trading account securities                                      (3,635,942)         (7,074,557)
         Proceeds from sales of trading account securities                             6,921,709           4,289,672
         Realized gain on sales of trading account securities                           (285,979)            (41,011)
         Unrealized (gain) loss on trading account securities                           (138,905)            138,905
         Gain on sale of deposits                                                            --             (422,554)
         (Gain) on sale of real estate owned                                              (3,981)             (3,225)
         (Increase) in accrued interest receivable                                      (219,032)           (246,490)
         Deferred income taxes (benefit)                                                  16,017             (93,270)
         (Increase) decrease in other assets                                            (149,791)             12,963
         Increase (decrease) in accrued interest payable
           on deposits                                                                   857,865            (210,538)
         Increase (decrease) in other liabilities                                          2,410             (16,333)
         Amortization of cost of stock contributed to RRP                                152,352             152,352
         ESOP shares committed to be released                                            158,211             202,600
                                                                                      ----------         -----------

         Net cash provided by (used in) operating activities                           5,439,999          (1,984,613)
                                                                                      ----------         -----------

Cash flows from investing activities:
     Proceeds from maturities of term deposits                                           197,000                 --
     Purchases of term deposits                                                          (99,000)                --
     Purchases of securities available for sale                                         (389,530)           (309,953)
     Proceeds from calls of investment securities
       held to maturity                                                                      --             2,000,000
     Proceeds from maturities of investment securities
       held to maturity                                                                      --             1,000,000
     Purchases of investment securities held to maturity                                     --            (3,000,000)
     Principal repayments on mortgage-backed securities
       held to maturity                                                               10,743,147          21,367,610
     Purchases of mortgage-backed securities held
       to maturity                                                                           --          (37,148,665)
     Purchases of loans                                                               (6,611,451)        (12,278,685)
     Net change in loan receivable                                                   (10,808,676)        (21,254,415)
     Proceeds from sales of real estate owned                                             82,879             133,851
     Capitalized costs on real estate owned                                               (7,471)            (10,003)
     Additions to premises and equipment                                                (287,834)           (445,595)
     Purchase of Federal Home Loan Bank of New
       York stock                                                                       (250,000)           (653,800)
                                                                                      ----------         -----------

         Net cash (used in) investing activities                                      (7,430,936)        (50,599,655)
                                                                                      ----------         -----------
</TABLE>
See notes to consolidated financial statements.


                                        13
<PAGE>
<TABLE>
<CAPTION>
                                        PULASKI BANCORP, INC. AND SUBSIDIARY
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        -------------------------------------


                                                                                        Year Ended December 31,
                                                                                   --------------------------------
                                                                                      2000               1999
                                                                                     -----------        -----------
<S>                                                                                 <C>                <C>
Cash flows from financing activities:
     Net increase in deposits                                                       $19,467,289           $ 78,585
     Cash paid for sale of deposits                                                           -         (5,245,867)
     Net (decrease) increase in short-term borrowed money                           (13,000,000)        42,000,000
     Repayments of long-term borrowed money                                                  --           (454,805)
     Net increase in advance payments
      by borrowers for taxes                                                             39,516            145,870
     Cash dividends                                                                    (275,410)          (309,127)
     Purchases of treasury stock                                                     (1,320,845)          (224,331)
                                                                                    -----------        -----------

        Net cash provided by financing activities                                     4,910,550         35,990,325
                                                                                    -----------        -----------

Net  increase (decrease) in cash and cash
     equivalents                                                                      2,919,613        (16,593,943)
Cash and cash equivalents - beginning                                                 6,770,619         23,364,562
                                                                                    -----------        -----------

Cash and cash equivalents - ending                                                  $ 9,690,232        $ 6,770,619
                                                                                    ===========        ===========


Supplemental disclosure of cash flow information:
    Cash paid during the year for:
        Income taxes                                                                $ 1,195,697          $ 635,588
        Interest                                                                      9,623,981          8,488,175

Supplemental schedule of noncash investing activities:
     Transfer of loans receivable to real estate owned                                   21,605             39,819

</TABLE>


See notes to consolidated financial statements.

                                       14
<PAGE>
                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


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

         Basis of financial statement presentation
         -----------------------------------------

         The  consolidated  financial  statements,  which have been  prepared in
         conformity with generally accepted accounting  principles,  include the
         accounts of Pulaski Bancorp,  Inc. (the "Company") and its wholly owned
         subsidiary,  Pulaski Savings Bank (the "Bank"),  a federally  chartered
         stock   institution.   All   significant   intercompany   accounts  and
         transactions have been eliminated in the consolidation.

         In preparing  the  consolidated  financial  statements,  management  is
         required to make  estimates  and  assumptions  that affect the reported
         amounts of assets and  liabilities  as of the date of the  statement of
         consolidated  financial  condition  and  revenues  and expenses for the
         period then ended. Actual results could differ significantly from those
         estimates.  A material  estimate that is  particularly  susceptible  to
         significant  change relates to the  determination  of the allowance for
         loan losses.  Management believes that the allowance for loan losses is
         adequate.  While  management  uses  available  information to recognize
         losses on loans,  future additions to the allowance for loan losses may
         be  necessary  based on changes in  economic  conditions  in the Bank's
         market area.

         In addition,  various regulatory agencies, as an integral part of their
         examination process, periodically review the allowance for loan losses.
         Such  agencies  may  require  the Bank to  recognize  additions  to the
         allowance based on their judgments about information  available to them
         at the time of their examinations.

         Business
         --------

         The Company's  primary  business is the operation of the Bank. The Bank
         provides  the usual  products  and services of banking such as deposits
         and mortgage,  consumer and commercial  loans. At December 31, 2000 and
         1999,  approximately  58% and  54%,  respectively,  of the  issued  and
         outstanding stock of the Company is owned by Pulaski Bancorp, M.H.C., a
         mutual holding company.

         Cash and cash equivalents
         -------------------------

         Cash and cash equivalents  include cash and amounts due from depository
         institutions,  interest-bearing  deposits with  original  maturities of
         three months or less, and federal funds sold. Generally,  federal funds
         sold are sold for one-day periods.

         Investment and mortgage-backed securities
         -----------------------------------------

         Debt securities that the enterprise has the positive intent and ability
         to hold to maturity are classified as  held-to-maturity  securities and
         reported at amortized cost. Debt and equity  securities that are bought
         and held  principally  for the purpose of selling them in the near term
         are classified as trading  securities and reported at fair value,  with
         unrealized  holding  gains and losses  included in  earnings.  Debt and
         equity   securities  not  classified  as  trading   securities  nor  as
         held-to-maturity  securities  are  classified  as  available  for  sale
         securities and reported at fair value, with unrealized holding gains or
         losses, net of deferred income taxes, reported in the accumulated other
         comprehensive income (loss) component of stockholders' equity.

                                        15
<PAGE>
                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
---------------------------------------------------------

         Investment and mortgage-backed securities (Cont'd.)
         ---------------------------------------------------

         Interest and dividend income on securities, which includes amortization
         of premiums and accretion of discounts,  is recognized when earned. The
         adjusted  cost basis of an  identified  security sold or called is used
         for determining  security gains and losses recognized in the statements
         of income.


         Loans receivable
         ----------------

         Loans  receivable  is  stated  at  unpaid  principal  balances  less an
         allowance for loan losses and deferred loan fees and costs. Interest is
         calculated by use of the actuarial  method. An allowance is established
         for the loss of uncollected  interest on loans,  other than passbook or
         certificate  loans,  which are more than ninety days  delinquent  as to
         principal or interest.  Such interest ultimately  collected is credited
         to income in the period of recovery.

         Loan  origination  fees and certain direct loan  origination  costs are
         deferred  and  accreted,  by  use  of  the  level-yield  method,  as an
         adjustment of yield over the contractual lives of the related loans.

         Allowance for loan losses
         -------------------------

         An  allowance  for loan  losses  is  maintained  at a level  considered
         adequate to absorb loan losses.  Management of the Bank, in determining
         the allowance for loan losses, considers the risks inherent in its loan
         portfolio and changes in the nature and volume of its loan  activities,
         along with general economic and real estate market conditions. The Bank
         utilizes a two tier approach:  (1) identification of impaired loans and
         the  establishment  of specific loss allowances on such loans;  and (2)
         establishment of general  valuation  allowances on the remainder of its
         loan  portfolio.  The Bank  maintains a loan review system which allows
         for  a   periodic   review  of  its  loan   portfolio   and  the  early
         identification  of  potential  impaired  loans.  Such system takes into
         consideration,  among other things,  delinquency status, size of loans,
         type and estimated fair value of collateral and financial  condition of
         the  borrowers.  Specific  loan loss  allowances  are  established  for
         identified  loans based on a review of such  information.  General loan
         loss allowances are based upon a combination of factors including,  but
         not limited to, actual loan loss  experience,  composition  of the loan
         portfolio,  current  economic  conditions  and  management's  judgment.
         Although  management  believes that adequate  specific and general loan
         loss  allowances  are  established,  actual losses are  dependent  upon
         future  events  and,  as such,  further  additions  to the level of the
         allowance for loan losses may be necessary.

         Impaired  loans are  measured  based on the  present  value of expected
         future cash flows discounted at the loan's effective  interest rate or,
         as a practical expedient,  at the loan's observable market price or the
         fair value of the  collateral  if the loan is collateral  dependent.  A
         loan is deemed to be impaired when,  based on current  information  and
         events,  it is  probable  that the Bank will be unable to  collect  all
         amounts due according to the contractual terms of the loan agreement.




                                       16
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
---------------------------------------------------------

         Allowance for loan losses (Cont'd.)
         -----------------------------------

         All loans identified as impaired are evaluated independently.  The Bank
         does  not  aggregate  such  loans  for  evaluation  purposes.  Payments
         received on impaired loans are applied first to interest receivable and
         then to principal.

         Concentration of risk
         ---------------------

         The lending activities are concentrated in loans secured by real estate
         located in the State of New Jersey.

         Real estate owned
         -----------------

         Real estate owned  consists of real estate  acquired by  foreclosure or
         deed in lieu of foreclosure. Real estate owned is initially recorded at
         the  lower  of cost or  fair  value  at the  date of  acquisition  and,
         thereafter,  carried at the lower of such initially  recorded amount or
         fair value less estimated  selling costs.  Costs incurred in developing
         or preparing  properties for sale are capitalized.  Expenses of holding
         properties are charged to operations as incurred.  Gains or losses from
         sales of such properties are recognized as incurred.

         Premises and equipment
         ----------------------

         Premises and equipment are comprised of land, at cost,  and  buildings,
         building  improvements,  leasehold  improvements  and  furnishings  and
         equipment,  at cost less  accumulated  depreciation  and  amortization.
         Depreciation and amortization charges are computed on the straight-line
         method over the following estimated useful lives:

                    Buildings and improvement           10 to 40 years
                    Furnishings and equipment            5 to 10 years
                    Leasehold improvements              Shorter of useful
                                                         life or term of lease


         Significant  renewals and  betterments  are charged to the premises and
         equipment account. Maintenance and repairs are charged to operations in
         the period incurred.

         Income taxes
         ------------

         The Company and its subsidiary  file a consolidated  federal income tax
         return.  Income taxes are allocated based on the contribution of income
         to the  consolidated  income  tax  return.  Separate  state  income tax
         returns are filed.

         Federal  and state  income  taxes  have been  provided  on the basis of
         reported  income.  The amounts  reflected on the  Company's tax returns
         differ from these  provisions due principally to temporary  differences
         in the reporting of certain  items for  financial  reporting and income
         tax reporting purposes.


                                       17
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
---------------------------------------------------------

         Income taxes (Cont'd.)
         ----------------------

         Deferred  income tax expense or benefit is  determined  by  recognizing
         deferred  tax  assets  and  liabilities  for the  estimated  future tax
         consequences   attributable  to  temporary   differences   between  the
         financial statement carrying amounts of existing assets and liabilities
         and their respective tax bases. Deferred tax assets and liabilities are
         measured using enacted tax rates expected to apply to taxable income in
         the years in which  those  temporary  differences  are  expected  to be
         recovered  or  settled.  The  realization  of  deferred  tax  assets is
         assessed and a valuation allowance provided,  when necessary,  for that
         portion of the asset which more  likely than not will not be  realized.
         Management  believes,  based upon current facts, that it is more likely
         than not that there will be sufficient  taxable  income in future years
         to realize all deferred  tax assets.  The effect on deferred tax assets
         and  liabilities  of a change in tax rates is recognized in earnings in
         the period that includes the enactment date.

         Accounting for stock based compensation
         ---------------------------------------

         The Financial  Accounting  Standards Board ("FASB") issued Statement of
         Financial   Accounting  Standards  ("SFAS")  No.  123  "Accounting  for
         Stock-Based  Compensation" which establishes  financial  accounting and
         reporting standards for stock-based employees compensation plans. While
         all entities are  encouraged  to adopt the "fair value based method" of
         accounting for employee  stock  compensation  plans,  SFAS No. 123 also
         allows an entity to  continue to measure  compensation  cost under such
         plans using the "intrinsic value based method"  specified in Accounting
         Principles  Board  Opinion  No.  25,  "Accounting  for Stock  Issued to
         Employees" ("APB 25").

         Under the fair value based method, compensation cost is measured at the
         grant date based on the value of the award and is  recognized  over the
         service period,  usually the vesting  period.  Fair value is determined
         using an option  pricing  model that takes into account the stock price
         at the grant date, the exercise price, the expected life of the option,
         the  volatility of the underlying  stock and the expected  dividends on
         it,  and the risk  free  interest  rate over the  expected  life of the
         option.  Under the intrinsic value based method,  compensation  cost is
         the  excess,  if any,  of the quoted  market  price of the stock at the
         grant date or other  measurement  date over the amount an employee must
         pay to acquire the stock.

         The Company has elected to account for stock-based  compensation  under
         APB 25 and the pro forma  disclosures  of net income and  earnings  per
         share  required  by SFAS  No.  123  have  been  included  in Note 13 to
         consolidated financial statements.

         Net income per common share
         ---------------------------

         Basic net income per common share is  calculated by dividing net income
         by the weighted  average number of shares of common stock  outstanding,
         adjusted  for  unearned  shares  of the ESOP and the RRP.  Diluted  net
         income per share is calculated by adjusting the weighted average number
         of  shares  of  common  stock  outstanding  to  include  the  effect of
         potential  common shares,  if dilutive,  calculated  using the treasury
         stock method.



                                       18
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
--------------------------------------------------------

         Net income per share (Cont'd.)
         ------------------------------

         During the years ended  December 31, 2000 and 1999,  diluted net income
         per share did not differ  from basic net income per share as there were
         no contracts  or  securities  excercisable  or which could be converted
         into common stock which had a dilutive effect. Stock options,  unearned
         RRP shares and ESOP  shares not  committed  to be  released  existed at
         December 31, 2000 and 1999.

         Interest rate risk
         ------------------

         The Bank is principally  engaged in the business of attracting deposits
         from the  general  public  and  using  these  deposits,  together  with
         borrowings  and other funds,  to purchase  securities and to make loans
         secured by real estate and, to a lesser  extent,  consumer  loans.  The
         potential  for  interest-rate  risk exists as a result of the generally
         shorter  duration  of  interest-sensitive  liabilities  compared to the
         generally  longer duration of  interest-sensitive  assets.  In a rising
         rate environment,  liabilities will reprice faster than assets, thereby
         reducing net interest  income.  For this reason,  management  regularly
         monitors the maturity structure of the Bank's interest sensitive assets
         and liabilities in order to measure its level of interest-rate risk and
         to plan for future volatility.

         Impact of new accounting standards
         ----------------------------------

         The FASB issued SFAS No. 133,  "Accounting  for Derivative  Instruments
         and  Hedging   Activities",   to  establish  accounting  and  reporting
         standards for  derivative  instruments,  including  certain  derivative
         instruments  embedded in other contracts  (collectively  referred to as
         derivatives), and for hedging activities. SFAS No. 133 requires that an
         entity recognize all derivatives as either assets or liabilities in the
         statements of financial  position and measure those instruments at fair
         value. If certain  conditions are met, a derivative may be specifically
         designated  as (a) a hedge of the exposure to changes in the fair value
         of a recognized asset or liability or an unrecognized  firm commitment,
         (b) a hedge of the  exposure  to  variable  cash flows of a  forecasted
         transaction,  or (c) a hedge of the foreign currency  exposure of a net
         investment in a foreign operation, an unrecognized firm commitment,  an
         available-for-sale   security,   or   a    foreign-currency-denominated
         forecasted transaction. The accounting for changes in the fair value of
         a derivative (that is, gains and losses) depends on the intended use of
         the derivative and the resulting designation.





                                       19
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
--------------------------------------------------------

         Impact of new accounting standards (Cont'd.)
         --------------------------------------------

         At the date of  initial  application  of SFAS No.  133,  an entity  may
         transfer  any  held-to-maturity  security  into the  available-for-sale
         category  or the trading  category.  An entity will then be able in the
         future to designate a security transferred into the  available-for-sale
         category as the hedged item, or its variable  interest  payments as the
         cash flow hedged transactions, in a hedge of the exposure to changes in
         market interest rates,  changes in foreign currency  exchange rates, or
         changes  in  the  overall  fair  value.   (SFAS  No.  133  precludes  a
         held-to-maturity security from being designated as the hedged item in a
         fair value hedge of market interest rate risk or the risk of changes in
         its  overall  fair value and  precludes  the  variable  cash flows of a
         held-to-maturity   security   from  being   designated  as  the  hedged
         transaction  in a cash flow hedge of market  interest rate risk).  SFAS
         No. 133 provides that such transfers from the held-to-maturity category
         at the date of  initial  adoption  shall  not  call  into  question  an
         entity's  intent to hold  other  debt  securities  to  maturity  in the
         future.

         SFAS No. 133 is effective  for all fiscal  quarters of all fiscal years
         beginning after June 15, 2000, the quarter ended March 31, 2001 for the
         Company  and  subsidiary.  Initial  application  shall  be  as  of  the
         beginning of an entity's fiscal quarter.  Earlier application of all of
         the provisions of SFAS No. 133 is permitted only as of the beginning of
         a  fiscal  quarter.  Earlier  application  of  selected  provisions  or
         retroactive   application  of  provisions  of  SFAS  No.  133  are  not
         permitted.

         The  implementation  of SFAS No. 133 did not have a material  impact on
         consolidated financial position or results of operations.

         Reclassification

         Certain amounts for prior periods have been  reclassified to conform to
         the current period's presentation.


2.   REORGANIZATION AND STOCKHOLDERS' EQUITY
--------------------------------------------

On  January  28,  1999,  the Board of  Directors  of the Bank  adopted a Plan of
Reorganization  whereby the Bank would become a  wholly-owned  subsidiary of the
Company.  On April 23, 1999, the  stockholders  of the Bank approved the Plan of
Reorganization and the formation of Pulaski Bancorp,  Inc. On July 12, 1999, the
Company issued 2,108,088 shares of common stock to the existing  stockholders of
the Bank in  exchange  for the  common  stock of the Bank on a one for one share
basis and became the owner of 100% of the common stock of the Bank.  As a result
of  the  reorganization,   the  Bank's  minority  stockholders  became  minority
stockholders  of the  Company  and  the  Bank's  majority  stockholder,  Pulaski
Bancorp,  M.H.C., became the Company's majority stockholder.  The reorganization
did not  materially  impact the  financial  condition or  operations of the Bank
and/or the Company.






                                       20
<PAGE>
                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



2.   REORGANIZATION AND STOCKHOLDERS' EQUITY (Cont'd.)
------------------------------------------------------

During the year ended  December 31, 2000 and 1999, the Company  repurchased,  in
the open market, 154,643 and 27,600 shares, respectively, of its common stock at
an aggregate cost of $1,321,000 and $224,000,  respectively.  These  repurchases
are  reflected as treasury  stock in the  consolidated  statements  of financial
condition.



3.   TERM DEPOSITS
------------------

<TABLE>
<CAPTION>
                                                           December 31,
                                    ----------------------------------------------------------
                                               2000                          1999
                                    -------------------------      --------------------------
                                                    Weighted                        Weighted
                                                     Average                         Average
                                      Amount           Rate           Amount           Rate
                                      ------           ----           ------           ----
<S>                                 <C>                <C>         <C>                 <C>
Due within one year                 $     --             --        $   197,000         5.82%
Due after one through two years         99,000         6.77%         --                  --
                                    ----------                     -----------

                                    $   99,000         6.77%       $   197,000         5.82%
                                    ==========                     ===========


</TABLE>


4.   SECURITIES AVAILABLE FOR SALE
----------------------------------


<TABLE>
<CAPTION>
                                                         December 31, 2000
                                   ------------------------------------------------------------
                                                          Gross Unrealized
                                                  -----------------------------     Carrying
                                      Cost           Gains            Losses          Value
                                   -----------     ----------        --------      ------------
<S>                                <C>             <C>               <C>           <C>
Equity securities:
       Mutual Fund                 $  6,377,981    $       --        $ 51,000      $ 6,326,981
                                   ============    ==========        ========      ===========
<CAPTION>
                                                         December 31, 1999
                                   ------------------------------------------------------------
                                                          Gross Unrealized
                                                  -----------------------------     Carrying
                                      Cost           Gains            Losses          Value
                                   -----------     ----------        --------      ------------
<S>                                <C>             <C>                <C>           <C>
Equity securities:
       Mutual Fund                 $  5,988,451    $       --         $ 82,000      $ 5,906,451
                                   ============    ==========         ========      ===========


</TABLE>
There were no sales of  securities  available  for sale  during the years  ended
December 31, 2000 and 1999.


                                       21
<PAGE>
                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

5.       INVESTMENT SECURITIES HELD TO MATURITY
-----------------------------------------------

<TABLE>
<CAPTION>
                                                                                   December 31, 2000
                                                          ---------------------------------------------------------------
                                                                                    Gross Unrealized
                                                             Carrying        ---------------------------        Estimated
                                                               Value           Gain               Losses       Fair Value
                                                             -----------     ---------           -------       ----------
<S>                                                          <C>             <C>                 <C>           <C>
U.S. Government Agencies securities:
       Maturing after one year through five years            $ 1,000,000     $      --            $ 4,790       $  995,210
       Maturing after five years through ten years             5,000,000            --             50,380        4,949,620
Trust preferred maturing after twenty years                      947,582            --             37,372          910,210
                                                             -----------     ---------            -------       ----------

                                                             $ 6,947,582     $      --            $92,542       $6,855,040
                                                             ===========     =========            =======       ==========

<CAPTION>
                                                                                   December 31, 1999
                                                            --------------------------------------------------------------
                                                                                    Gross Unrealized
                                                              Carrying      -----------------------------      Estimated
                                                                Value          Gain               Losses       Fair Value
                                                            -----------     ----------          ---------      ----------
<S>                                                         <C>             <C>                 <C>            <C>
U.S. Government Agencies securities:
       Maturing after one year through five years           $ 1,000,000     $       --          $  38,594      $  961,406
       Maturing after five years through ten years            5,000,000             --            192,034       4,807,966
Trust preferred maturing after twenty years                     947,017             --             19,607         927,410
                                                            -----------     ----------          ---------      ----------

                                                            $ 6,947,017     $       --          $ 250,235      $6,696,782
                                                            ===========     ==========          =========      ==========

</TABLE>

There were no sales of investment  securities  held to maturity during the years
ended December 31, 2000 and 1999.

6.       MORTGAGE-BACKED SECURITIES HELD TO MATURITY
----------------------------------------------------

<TABLE>
<CAPTION>

                                                                              December 31, 2000
                                                         --------------------------------------------------------------
                                                                              Gross Unrealized
                                                           Carrying        -------------------------        Estimated
                                                            Value            Gains           Losses         Fair Value
                                                         ------------      ---------       ---------       ------------
<S>                                                      <C>                <C>             <C>            <C>
Government National Mortgage Association                 $ 12,087,788       $ 76,766        $ 28,918       $ 12,135,636
Federal National Mortgage Association                      15,042,104         53,911          94,003         15,002,012
Federal Home Loan Mortgage Corporation                      8,983,073         12,422          74,369          8,921,126
Collateralized mortgage obligation issued
  by U.S. Government Agencies                              24,107,430         74,589              --         24,182,018
Small Business Administration                                 394,096             --           3,417            390,679
                                                         ------------      ---------       ---------       ------------

                                                         $ 60,614,491      $ 217,688       $ 200,707       $ 60,631,471
                                                         ============      =========       =========       ============

<CAPTION>

                                                                              December 31, 1999
                                                         --------------------------------------------------------------
                                                                               Gross Unrealized
                                                          Carrying         -------------------------        Estimated
                                                            Value            Gains           Losses         Fair Value
                                                         ------------      ---------       ---------       ------------
<S>                                                      <C>                <C>             <C>            <C>
Government National Mortgage Association                 $ 14,272,475      $ 106,640       $ 357,326       $ 14,021,789
Federal National Mortgage Association                      20,033,644         29,588         417,371         19,645,861
Federal Home Loan Mortgage Corporation                     12,548,383         11,370         208,022         12,351,731
Collateralized mortgage obligation issued
  by U.S. Government Agencies                              24,137,682              -          12,424         24,125,258
Small Business Administration                                 407,259              -           4,636            402,623
                                                         ------------      ---------       ---------       ------------

                                                         $ 71,399,443      $ 147,598       $ 999,779       $ 70,547,262
                                                        =============      =========       =========       ============
</TABLE>

                                       22
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



6.    MORTGAGE-BACKED SECURITIES HELD TO MATURITY (Cont'd.)
-------------------------------------------------

There were no sales of  mortgage-backed  securities  held to maturity during the
years  ended  December  31,  2000 and  1999.  At  December  31,  2000 and  1999,
mortgage-backed   securities   held  to  maturity   with   carrying   values  of
approximately $347,000 and $366,000, respectively, were pledged to secure public
funds on deposit.


7.    LOANS RECEIVABLE
----------------------

<TABLE>
<CAPTION>

                                                                  December 31,
                                                       ---------------------------------
                                                            2000                1999
                                                       -------------       -------------
<S>                                                     <C>                 <C>
Real estate mortgage:
        One-to-four family                              $ 98,095,325        $ 99,743,852
        Multi-family dwellings                             2,960,018           2,500,609
        Non-residential                                   15,205,058           6,967,956
        VA guaranteed                                        139,177             292,531
        FHA insured                                           31,689              75,072
                                                       -------------       -------------

                                                         116,431,267         109,580,020
                                                       -------------       -------------

Real estate construction and land acquisition             44,000,121          36,900,620
                                                       -------------       -------------

Consumer:
        Second mortgages                                   7,718,376           6,575,574
        Equity lines of credit                             3,958,450           3,027,747
        Passbook or certificate                              198,243             126,669
        Cash reserve                                           1,833                  --
        Automobile                                            43,562                  --
                                                       -------------       -------------

                                                          11,920,464           9,729,990
                                                       -------------       -------------

                Total loans                              172,351,852         156,210,630
                                                       -------------       -------------

Less:   Loans in process                                  18,128,956          19,759,682
        Deferred loan fees                                   741,556             793,947
        Allowance for loan losses                          1,194,000           1,135,000
                                                       -------------       -------------

                                                          20,064,512          21,688,629
                                                       -------------       -------------

                                                       $ 152,287,340       $ 134,522,001
                                                       =============       =============

</TABLE>

                                       23
<PAGE>
                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

7.    LOANS RECEIVABLE (Cont'd.)
--------------------------------

The Bank has  entered  into  lending  transactions,  in the  ordinary  course of
business,  with executive  officers and directors of the Company and Bank and to
their   associates  on  the  same  terms  as  those  prevailing  for  comparable
transactions  with other borrowers.  A summary of activity related to such loans
is as follows:

<TABLE>
<CAPTION>

                                                             Year Ended
                                                            December 31,
                                                       ----------------------
                                                        2000            1999
                                                       ------          ------
                                                           (In Thousands)
<S>                                                     <C>            <C>
             Balance - beginning                        $ 342          $ 352
             New loans                                     20              -
             Repayments                                   (86)           (10)
                                                        -----          -----

             Balance - ending                           $ 276          $ 342
                                                        =====          =====

</TABLE>
The following is an analysis of the allowance for loan losses:

<TABLE>
<CAPTION>

                                                            Year Ended December 31,
                                                         ----------------------------
                                                           2000             1999
                                                         -----------      -----------
<S>                                                      <C>              <C>
              Balance - beginning                        $ 1,135,000      $ 1,022,000
              Provision charged to operations                 91,000          113,000
              Loans charged off                              (32,000)              --
                                                         -----------      -----------

              Balance - ending                           $ 1,194,000      $ 1,135,000
                                                         ===========      ===========

</TABLE>

Nonaccrual  loans totalled  $309,000 and $676,000 at December 31, 2000 and 1999,
respectively.  Nonaccrual  loans are  those on which  income  under the  accrual
method has been  discontinued  with  subsequent  interest  payments  credited to
interest income when received or, if the ultimate collectibility of principal is
in doubt,  applied as principal  reductions.  The amount of additional  interest
income that would have been  recognized on  non-accrual  loans if such loans had
continued to perform in accordance with their  contractual  terms was $7,000 and
$51,000 for the years ended December 31, 2000 and 1999, respectively.

Impaired loans and related amounts recorded in the allowance for loan losses are
as follows:

<TABLE>
<CAPTION>
                                                              December 31,
                                                       --------------------------
                                                         2000              1999
                                                       ---------        ---------
<S>                                                    <C>              <C>
Recorded investment in impaired loans:
          With recorded allowances                     $ 125,128        $ 277,179
          Without recorded allowances                    380,932          183,248
                                                       ---------        ---------

               Total impaired loans                      506,060          460,427
Related allowance for loan losses                         26,000           41,000
                                                       ---------        ---------

               Net impaired loans                      $ 480,060        $ 419,427
                                                       =========        =========
</TABLE>

                                       24


<PAGE>
                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


7.    LOANS RECEIVABLE  (Cont'd.)
---------------------------------

The average recorded  investment in impaired loans was $516,000 and $465,000 for
the years  ended  December  31,  2000 and 1999,  respectively.  Interest  income
recognized on such loans totalled  approximately  $60,000 and $28,000 during the
years ended  December 31, 2000 and 1999,  respectively,  of which  approximately
$54,000 and  $20,000 in 2000 and 1999,  respectively,  was  recorded on the cash
basis.



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

<TABLE>
<CAPTION>


                                                               December 31,
                                                     ------------------------------
                                                        2000                 1999
                                                     ----------         -----------

<S>                                                  <C>                 <C>
Land                                                 $ 613,561           $ 613,561
                                                     ----------         -----------

Buildings and improvements                            3,769,185           3,769,185
Less accumulated depreciation                         1,157,067           1,028,028
                                                     ----------         -----------

                                                      2,612,118           2,741,157
                                                     ----------         -----------

Future office site                                      272,493              63,698
                                                     ----------         -----------

Leasehold improvements                                   82,298              82,298
Less accumulated amortization                            11,238               3,907
                                                     ----------         -----------

                                                         71,060              78,391
                                                     ----------         -----------

Furnishings and equipment                             1,300,316           1,225,184
Less accumulated depreciation                           808,884             684,103
                                                     ----------         -----------

                                                        491,432             541,081
                                                     ----------         -----------

                                                     $4,060,664         $ 4,037,888
                                                     ==========         ===========
</TABLE>


9.    ACCRUED INTEREST RECEIVABLE
---------------------------------

<TABLE>
<CAPTION>
                                                                   December 31,
                                                         -----------------------------
                                                           2000                 1999
                                                         ----------          ---------
<S>                                                      <C>                 <C>
Loans                                                    $ 923,900           $ 673,166
Mortgage-backed securities held to maturity                424,639             459,024
Other interest-earning assets                               88,549              85,866
                                                        ----------          ----------

                                                        $1,437,088          $1,218,056
                                                        ==========          ==========
</TABLE>



                                       25
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


10.      DEPOSITS
-----------------


<TABLE>
<CAPTION>
                                                                          December 31,
                                                 ---------------------------------------------------------------
                                                             2000                                1999
                                                 --------------------------          ---------------------------
                                                 Weighted                            Weighted
                                                 Average                             Average
                                                   Rate             Amount             Rate              Amount
                                                   ----             ------             ----              ------
<S>                                                 <C>           <C>                   <C>            <C>
Demand accounts:
       Non-interest-bearing                           --%         $ 3,889,586             --%          $ 2,596,191
       Interest-bearing                             3.20%          28,953,278           3.17%           25,639,560
                                                                -------------                        -------------

                                                    2.82%          32,842,864           2.88%           28,235,751

Savings and club accounts                           2.36%          23,964,205           2.34%           25,825,091
Certificates of deposit                             5.97%         132,525,735           5.04%          114,946,808
                                                                -------------                        -------------

                                                    4.96%       $ 189,332,804           4.27%        $ 169,007,650
                                                                =============                        =============
</TABLE>


The scheduled maturities of certificates of deposit are as follows:

<TABLE>
<CAPTION>
                                                             December 31,
                                                 -----------------------------------
                                                      2000                   1999
                                                 -------------          ------------
<S>                                              <C>                    <C>
              One year or less                   $ 120,010,835          $ 97,446,008
              After one to two years                 8,892,600            13,027,900
              After two to three years               2,481,600             2,208,100
              After three years                      1,140,700             2,264,800
                                                 -------------          ------------

                                                 $ 132,525,735          $114,946,808
                                                 =============          ============
</TABLE>
At December 31, 2000 and 1999,  certificates  of deposits with a denomination of
more than  $100,000  amounted  to  approximately  $15,408,000  and  $11,383,000,
respectively.

Interest expense on deposits consists of:

<TABLE>
<CAPTION>
                                                             December 31,
                                                 -----------------------------------
                                                      2000                   1999
                                                 -------------          ------------
<S>                                              <C>                    <C>
Demand accounts                                  $     906,689          $    727,804
Savings and club accounts                              590,470               606,401
Certificates of deposit                              6,624,165             6,137,059
                                                 -------------           -----------

                                                 $   8,121,324           $ 7,471,264
                                                 =============           ===========
</TABLE>

                                       26
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


11.   BORROWED MONEY
--------------------

<TABLE>
<CAPTION>

                                                                                  December 31,
                                                      --------------------------------------------------------------------------
                                                                     2000                                       1999
                                                      -------------------------------         ----------------------------------
                                                        Weighted                                Weighted
                                                      Average Rate             Amount         Average Rate               Amount
                                                      ------------             ------         ------------               ------

<S>                                                        <C>              <C>                    <C>               <C>
Overnight line of credit advance                              -             $           -          5.10%             $ 10,000,000
Advances from Federal Home Loan Bank
  maturing within one year                                 6.67%               17,000,000          6.37%               18,000,000
Securities sold under agreement to repurchase
  maturing within one year                                 6.60%               12,000,000          5.96%               14,000,000
                                                                             ------------                            ------------

                                                           6.62%             $ 29,000,000          5.93%             $ 42,000,000
                                                                             ============                            ============

</TABLE>


The Bank has an  overnight  line of credit  with FHLB  subject  to the terms and
conditions of the lenders  overnight advance program under which $24,310,800 and
$10,224,000 was unused at December 31, 2000 and 1999, respectively.  At December
31, 2000, advances under this line of credit, which expires on October 30, 2001,
are made for one day  periods.  The advances are secured by stock of the FHLB in
the  amount  of  $2,350,000  and  $2,100,000  at  December  31,  2000 and  1999,
respectively.


<TABLE>
<CAPTION>
                                                                                                  December 31,
                                                                                       ------------------------------
                                                                                         2000                  1999
                                                                                       ---------             --------
                                                                                          (Dollars In Thousands)
<S>                                                                                    <C>                   <C>
              FHLB borrowings:

              Average balance outstanding during the year                              $ 37,154              $ 10,286
              Average interest rate during the year                                        6.44   %              5.49 %
              Maximum balance outstanding at any month end                             $ 39,900              $ 22,000

              Investment  and   mortgage-backed   securities  held  to  maturity
               underlying the agreements to repurchase at year end:
                  Carrying value                                                       $ 24,107              $ 24,138
                  Estimated fair value                                                 $ 24,182              $ 24,125

</TABLE>
12.   REGULATORY CAPITAL
------------------------

The Bank is subject to various regulatory capital  requirements  administered by
the federal banking agencies.  Failure to meet minimum capital  requirements can
initiate certain mandatory,  and possibly additional  discretionary,  actions by
regulators that, if undertaken, could have a direct material effect on the Bank.
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.

                                       27
<PAGE>
                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



12.   REGULATORY CAPITAL  (Cont'd.)
-----------------------------------

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  the Bank to  maintain  minimum  amounts  and ratios of Total and Tier 1
capital (as defined in the  regulations) to  risk-weighted  assets (as defined),
and of Tier 1 capital to  adjusted  total  assets (as  defined).  The  following
tables present a  reconciliation  of capital per generally  accepted  accounting
principles  ("GAAP") and  regulatory  capital and  information  as to the Bank's
capital levels at the dates presented:


<TABLE>
<CAPTION>
                                                            December 31,
                                                      ----------------------
                                                       2000            1999
                                                      -------        -------
                                                          (In Thousands)
<S>                                                   <C>            <C>
GAAP, core and tangible capital                       $23,996        $22,880
Add:  general valuation allowance                       1,168          1,068
                                                      -------        -------

Total regulatory capital                              $25,164        $23,948
                                                      =======        =======

<CAPTION>
                                                                                                              To Be Well
                                                                                                          Capitalized Under
                                                                              Minimum Capital              Prompt Corrective
                                                    Actual                     Requirements               Actions Provisions
                                            ----------------------       -----------------------        --------------------
                                             Amount         Ratio         Amount         Ratio          Amount         Ratio
                                            --------       -------        ------         -----          ------         -----
December 31, 2000                                                         (Dollars in Thousands)
-----------------
<S>                                         <C>             <C>           <C>              <C>          <C>             <C>
Total Capital
 (to risk-weighted assets)                  $25,164         18.41%        $10,935          8.00%        $13,669         10.00%

Tier 1 Capital
 (to risk-weighted assets)                   23,996         17.55%             --            --           8,201          6.00%

Core (Tier 1) Capital
 (to adjusted total assets)                  23,996          9.81%          9,781          4.00%         12,226          5.00%

Tangible Capital
 (to adjusted total assets)                  23,996          9.81%          3,668          1.50%             --            --

</TABLE>






                                       28
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



12.   REGULATORY CAPITAL  (Cont'd.)
-----------------------------------

<TABLE>
<CAPTION>


                                                                                                             To Be Well
                                                                                                          Capitalized Under
                                                                               Minimum Capital            Prompt Corrective
                                                  Actual                       Requirements               Actions Provisions
                                            --------------------           ---------------------         ---------------------
                                            Amount         Ratio           Amount          Ratio         Amount          Ratio
                                            ------         -----           ------          ----          ------          -----
December 31, 1999                                                       (Dollars in Thousands)
-----------------
<S>                                         <C>             <C>           <C>              <C>          <C>             <C>
Total Capital
 (to risk-weighted assets)                  $23,948         20.95%        $ 9,146          8.00%        $11,433         10.00%

Tier 1 Capital
 (to risk-weighted assets)                   22,880         20.01%             --            --           6,860          6.00%

Core (Tier 1) Capital
 (to adjusted total assets)                  22,880          9.67%          9,462          4.00%         11,828          5.00%

Tangible Capital
 (to adjusted total assets)                  22,880          9.67%          3,548          1.50%             --            --

</TABLE>

As of June 30,  1999,  the most  recent  notification  from the Office of Thrift
Supervision  ("OTS"),  the Bank was  categorized as  well-capitalized  under the
regulatory  framework  for prompt  corrective  action.  There are no  conditions
existing  or events  which have  occurred  since  notification  that  management
believes have changed the institution's category.




                                       29
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



13.  BENEFIT PLANS
------------------

Retirement Plan
---------------

The Bank has a  non-contributory  pension plan covering all eligible  employees.
The  plan  is  a  defined  benefit  plan  which  provides  benefits  based  on a
participant's years of service and compensation. The Bank's funding policy is to
contribute  annually  the maximum  amount  that can be  deducted  for income tax
purposes. The following table sets forth the plan's funded status:

<TABLE>
<CAPTION>

                                                                                          December 31,
                                                                                --------------------------------
                                                                                    2000                 1999
                                                                                -----------          -----------
<S>                                                                             <C>                  <C>
Projected benefit obligation - beginning                                        $ 2,562,227          $ 2,333,977
      Service cost                                                                  121,059              114,067
      Interest cost                                                                 176,132              159,532
      Actuarial loss                                                                147,501              120,367
      Settlements                                                                  (213,886)            (165,716)
                                                                                -----------          -----------

Projected benefit obligation - ending                                             2,793,033            2,562,227
                                                                                -----------          -----------

Plan assets at fair value - beginning                                             2,289,096            2,135,192
      Actual return on plan assets                                                  119,848              119,023
      Contributions                                                                 190,093              200,597
      Settlements                                                                  (213,886)            (165,716)
                                                                                -----------          -----------

Plan assets at fair value - ending                                                2,385,151            2,289,096
                                                                                -----------          -----------

Projected benefit obligation in excess of fair value                               (407,882)            (273,131)
Unrealized net loss                                                                 543,941              380,790
Unrecognized transition obligation                                                    8,730               11,642
                                                                                -----------          -----------

Prepaid pension cost included in other assets                                   $   144,789          $   119,301
                                                                                ===========          ===========

</TABLE>


                                       30
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



13.  BENEFIT PLANS (Cont'd.)
------------------

The following table sets forth the components of net periodic pension cost:

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                            ----------------------------
                                                               2000              1999
                                                            ---------          ---------
<S>                                                         <C>                <C>
      Net periodic pension cost include the following:
           Service cost                                     $ 121,059          $ 114,067
           Interest cost                                      176,132            159,532
           Expected return on plan assets                    (155,246)          (145,307)
           Amortization of unrecognized net loss               19,748              9,121
           Amortization of transition obligation                2,912              2,912
                                                            ---------          ---------

                                                            $ 164,605          $ 140,325
                                                            =========          =========

</TABLE>
Assumptions used to develop the net periodic pension cost were:

<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                                            ------------------------
                                                             2000              1999
                                                            -----              ----
<S>                                                          <C>               <C>
Discount rate                                                6.5%              6.5%
Expected long-term rate of return                            6.5%              6.5%
Rate of increase in compensation levels                      4.0%              4.0%

</TABLE>
Directors' Consultation and Retirement Plan ("DCRP")
----------------------------------------------------

The  Bank  has an  unfunded  retirement  plan for  non-employee  directors.  The
benefits are payable  based on term of service as a director.  The discount rate
and expected  long-term  rate of return used in computing the actuarial  present
value of the  projected  benefit  obligation  was 6.5%.  The  increase in future
compensation levels used was 5.0%.

                                       31
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



13.      BENEFIT PLANS (Cont'd.)
--------------------------------

The following  table sets forth the DCRP's status and components of net periodic
cost:

<TABLE>
<CAPTION>

                                                                   December 31,
                                                             ------------------------------
                                                               2000                 1999
                                                             ---------            ---------

<S>                                                          <C>                  <C>
Projected benefit obligation - beginning                     $ 377,576            $ 380,737

      Service cost                                              36,819               49,542
      Interest cost                                             23,741               20,021
      Actuarial (gain) loss                                    (12,329)             (72,724)
                                                             ---------            ---------

Projected benefit obligation - ending                          425,807              377,576
                                                             ---------            ---------

Plan assets at fair value                                           --                   --
                                                             ---------            ---------

Projected benefit obligation in excess of fair value          (425,807)            (377,576)
Unrealized net (gain)                                          (44,128)             (50,807)
Unrecognized transition obligation                             190,076              207,355
                                                              --------            ---------

Accrued liability included in other liabilities              $(279,859)           $(221,028)
                                                             ==========           =========

<CAPTION>

                                                                  Year Ended December 31,
                                                                -------------------------
                                                                  2000             1999
                                                                --------         --------
<S>                                                             <C>              <C>
Net periodic cost includes the following:
      Service cost                                              $ 36,819         $ 49,542
      Interest cost                                               23,741           20,021
      Amortization of:
          Transition cost                                         17,279           17,279
          Unrealized gain                                        (19,008)         (19,437)
                                                                --------         --------

                                                                $ 58,831         $ 67,405
                                                                ========         ========
<CAPTION>

                                                                  Year Ended December 31,
                                                                -------------------------
                                                                  2000             1999
                                                                --------         --------
<S>                                                             <C>              <C>
Assumptions used to develop the net periodic cost were:

      Discount rate                                                6.5%             6.5%
      Rate of increase in compensation levels                      4.0%             4.0%


</TABLE>

                                       32


<PAGE>
                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



13.      BENEFIT PLANS (Cont'd.)
--------------------------------

Savings Plan
------------

The Bank sponsors a Savings and Investment Plan (the "Savings  Plan"),  pursuant
to Section  401(k) of the Internal  Revenue  Code,  for all eligible  employees.
Employees may elect to save up to 10% of their compensation. The Bank will match
25% of the first 6% of each  employee's  contribution.  The Savings Plan expense
amounted to  approximately  $18,000 and $17,000 for the years ended December 31,
2000 and 1999, respectively.

ESOP
----

An ESOP  was  established  for  all  eligible  employees  who  had  completed  a
twelve-month  period of  employment  with the Bank and at least  1,000  hours of
service and had attained the age of 21. The ESOP used  $761,760 in proceeds from
a term loan obtained from a third-party financial institution to purchase 76,176
shares of Bank common stock in the initial public offering of the Bank. The term
loan principal is payable over twenty equal quarterly installments through March
31,  2002.  Concurrent  with  the  re-organization  on July 12,  1999,  the ESOP
exchanged  all the stock of the Bank with the common  stock of the  Company  and
refinanced the outstanding loan from the third party financial  institution with
the Company on substantially the same terms and conditions. Interest on the term
loan is payable quarterly,  at a floating rate of 0.5% over the prime rate. Each
year,  the Bank intends to make  discretionary  contributions  to the ESOP which
will be equal to principal and interest  payments required on the term loan. The
loan is further  paid down by the amount of  dividends  paid on the common stock
owned by the ESOP.

Shares purchased with the loan proceeds were initially pledged as collateral for
the term loan and are held in a suspense  account  for future  allocation  among
participants.  Contributions  to the ESOP and shares  released from the suspense
account will be allocated among the  participants on the basis of  compensation,
as described by the ESOP, in the year of allocation.

The  ESOP is  accounted  for in  accordance  with  Statement  of  Position  93-6
"Accounting  for  Employee  Stock  Ownership  Plans,"  which  was  issued by the
American   Institute  of  Certified   Public   Accountants   in  November  1993.
Accordingly, the ESOP shares pledged as collateral are reported as unearned ESOP
shares in the statements of financial  condition.  As shares are committed to be
released from collateral, compensation expense equal to the current market price
of the shares is  recorded,  and the  shares  become  outstanding  for basic net
income per common share computations. ESOP compensation expense was $158,000 and
$203,000 for the year ended December 31, 2000 and 1999, respectively.



                                       33
<PAGE>
                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



13.      BENEFIT PLANS (Cont'd.)
--------------------------------

ESOP (Cont'd.)
--------------

The ESOP shares were as follows:

<TABLE>
<CAPTION>

                                                                    December 31,
                                                            ---------------------------
                                                              2000               1999
                                                            --------           --------

<S>                                                         <C>               <C>
           Allocated shares                                   62,609             46,282
           Shares released                                     3,373              2,050
           Unreleased shares                                  10,194             27,844
                                                            --------          ---------

           Total ESOP shares                                  76,176             76,176
                                                            ========          =========

           Fair value of unreleased shares                  $ 97,480          $ 229,713
                                                            ========          =========
</TABLE>


Stock-Based Incentive Plan

The Bank has a Stock-Based  Incentive Plan (the "Incentive  Plan"),  under which
stock  awards  are  granted  for the  benefit  of  directors,  officers  and key
employees in the form of the Incentive Plan. These awards are exercisable at the
rate of 20% per year over 5 years.  In  October  1997,  38,088  shares of Bank's
common  stock,  having  a market  value of  $761,760,  were  contributed  to the
Incentive  Plan by the Bank  from its  authorized  but  unissued  common  stock.
Expense of $152,000  related to the Incentive  Plan was recorded  during both of
the years ended December 31, 2000 and 1999,  respectively.  Concurrent  with the
reorganization in 1999, the Company adopted the Incentive Plan and the Incentive
Plan  exchanged  all its shares of common stock of the Bank for shares of common
stock of the Company.

Pursuant to the Incentive  Plan,  the Bank granted stock options for the benefit
of  directors,  officers,  and other key  employees.  Options  granted under the
Incentive  Plan are  exercisable  over a period not to exceed ten years from the
date of grant.  Under the  Incentive  Plan,  the  exercise  price of each option
equals the market price of the common stock on the date of grant.  The Incentive
Plan was amended in 1999 to substitute shares of common stock of the Company for
shares of common stock of the Bank. There were 95,220 options, all of which were
granted  during  1997,  outstanding  at December  31,  2000 and 1999,  having an
exercise price of $20.00 per share.  None of the options were  exercised  during
the years ended December 31, 2000 and 1999.




                                       34
<PAGE>
                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

13.  BENEFIT PLANS (Cont'd.)
----------------------------

Stock-based Incentive Plan (Cont'd.)
------------------------------------

As permitted by SFAS No. 123,  compensation  cost for stock option's granted has
been  recognized  based on the intrinsic  value method instead of the fair value
based method.  The weighted  average fair value of options  granted during 1997,
all of which have exercise  prices equal to the market price of the common stock
as of the grant date, was estimated using the Black-Sholes option-pricing model.
Such fair  value  and the  assumptions  used for  estimating  fair  value are as
follows:

     Weighted average grant - date fair value per share                   $7.70
     Expected common stock dividend yield                                  1.50%
     Expected volatility                                                  30.71%
     Expected option life                                                7 years
     Risk-free interest rate                                               6.11%


Had the fair  value  based  method  been used,  net  income for the years  ended
December 31, 2000 and 1999, would have decreased to approximately $1,802,000 and
$1,091,000,  respectively,  and net income per  share,  both basic and  diluted,
would have been reduced to $0.93 and $0.53, respectively.


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

The Bank qualifies as a thrift  institution under the provisions of the Internal
Revenue Code and, therefore,  the tax bad debt deduction must be either based on
direct  charge offs and/or  calculated  under the  experience  method.  Retained
earnings at December 31, 2000,  included  approximately $2.0 million of such bad
debt, for which income taxes have not been provided.  If such amount is used for
purposes other than to absorb bad debts, including distributions in liquidation,
it will be subject to income tax at the then current rate.

The components of income taxes are summarized as follows:

<TABLE>
<CAPTION>

                                                       Year Ended December 31,
                                                    ---------------------------
                                                       2000              1999
                                                    ----------        ---------
<S>                                                 <C>               <C>
       Current tax expense:
            Federal income                          $1,020,664        $ 768,059
            State income                                83,694           63,642
                                                    ----------        ---------

                                                     1,104,358          831,701
                                                    ----------        ---------
       Deferred tax expense (benefit):
            Federal income                              14,895          (85,493)
            State income                                 1,122           (7,777)
                                                    ----------        ---------

                                                        16,017          (93,270)
                                                    ----------         ---------

                                                    $1,120,375         $738,431
                                                    ===========        =========
</TABLE>


                                       35
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

14.  INCOME TAXES (Cont'd.)
---------------------------

The following table presents a reconciliation  between the reported income taxes
and the income  taxes which would be  computed  by applying  the normal  federal
income tax rate of 34% to income before income taxes.

<TABLE>
<CAPTION>

                                                                                  Year Ended December 31,
                                                                                ---------------------------
                                                                                   2000              1999
                                                                                ----------        ---------
<S>                                                                             <C>               <C>
       Federal income tax                                                       $1,025,556        $ 654,050
       Increases in taxes resulting from:
            New Jersey savings institution tax,
              net of federal income tax effect                                      55,979           36,871
            Other items, net                                                        38,840           47,510
                                                                                ----------        ---------

       Effective income tax                                                     $1,120,375        $ 738,431
                                                                                ==========        =========
</TABLE>


The  income tax  effects of  existing  temporary  differences  that give rise to
significant portions of net deferred income tax assets are as follows:

<TABLE>
<CAPTION>

                                                                                         December 31,
                                                                                 ---------------------------
                                                                                    2000             1999
                                                                                 ---------        ---------
<S>                                                                               <C>             <C>
       Deferred income tax assets:
            Deferred loan fees                                                    $ 67,167        $ 164,795
            Deferred compensation                                                   74,749           59,485
            Reserve for uncollected interest                                         3,898           21,843
            Benefit plans                                                           56,136           46,855
            Allowance for loan losses in excess of bad debt
              reserves                                                             295,518          216,523
            Unrealized loss on available for sale securities                            --           29,520
                                                                                 ---------        ---------

                                                                                   497,468          539,021
       Deferred income tax liabilities:
            Depreciation                                                            81,296           77,312
                                                                                 ---------        ---------

       Deferred income tax assets, net, included in other assets                 $ 416,172        $ 461,709
                                                                                 ==========       =========
</TABLE>


                                       36
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



15.   COMMITMENTS AND CONTINGENCIES
-----------------------------------

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.  These
financial   instruments  include  commitments  to  extend  credit  and  purchase
securities.  The commitments involve, to varying degrees, elements of credit and
interest  rate risk in excess of the amounts  recognized  in the  statements  of
financial  condition.  The  Bank's  exposure  to  credit  loss in the  event  of
nonperformance by the other party to the financial instrument for commitments to
extend  credit  is  represented  by the  contractual  notional  amount  of those
instruments.  The Bank uses the same credit policies in making commitments as it
does for on-balance-sheet  instruments.  The Bank had the following  outstanding
commitments:

<TABLE>
<CAPTION>

                                                                                                December 31,
                                                                                    ---------------------------------
                                                                                      2000                   1999
                                                                                    ------------        -------------
<S>                                                                                 <C>                 <C>
        Loan origination commitments expiring in three months or less               $ 4,413,600         $ 10,186,000
                                                                                    ============        ============

        Loan participation purchase commitments                                     $ 4,111,000          $ 1,513,000
                                                                                    ============         ===========

        Unused home equity lines of credit                                          $ 4,866,000          $ 4,096,000
                                                                                    ============         ===========

</TABLE>


At  December  31,  2000,  of the  $4,413,600  in  outstanding  loan  origination
commitments,  $2,757,500 were for one through two year  construction  loans with
interest  rates which will float at either  1.00% or 1.50% above the prime rate,
$297,100  were for fixed rate mortgage  loans with  interest  rates ranging from
7.125% to 7.875%,  $875,000 were for adjustable  rate  commercial  loans with an
initial  interest  rate of 9.75% and  $484,000  were for second  mortgages  with
interest rates ranging from 7.59% to 8.75%.

At December 31, 2000,  the loan  participation  purchase  commitments  represent
commitments to purchase participation interests in loans where the interest rate
will be set at the  funding  date based upon the  Federal  Home Loan Bank of New
York C.I.P. advance rate plus a margin of .375% to .50%.

The  undisbursed  funds from approved lines of credit under a homeowners  equity
lending program, unless they are specifically cancelled by notice from the Bank,
represent firm commitments  available to the respective borrowers on demand. The
interest  rate  charged for any month on funds  disbursed  under this program is
from .25% below the prime rate to 1.75% above the prime rate.

Commitments  to originate  loans are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require payment of a fee. The Bank evaluates each customer's creditworthiness on
a  case-by-case  basis.  The  amount  of  collateral  obtained  by the Bank upon
extension  of  credit  is  based  on  management's   credit  evaluation  of  the
counterparty. Collateral held may vary but primarily includes one-to-four family
residential properties.



                                       37
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


15.   COMMITMENTS AND CONTINGENCIES (Cont'd.)
---------------------------------------------

Rentals under long-term  operating leases for certain branch offices amounted to
approximately  $145,000  and $87,000 for the years ended  December  31, 2000 and
1999,  respectively.  At December 31, 2000, the minimum rental commitments under
all non-cancellable leases with initial or remaining terms of more than one year
were as follows:

         Year Ending                                      Minimum
         December 31,                                      Rate
         ------------                                  ----------

         2001                                          $  142,000
         2002                                             147,000
         2003                                             151,000
         2004                                             155,000
         2005                                             160,000
         Thereafter                                     1,004,000
                                                       ----------

                                                       $1,759,000
                                                       ==========


The Company and Bank also have,  in the normal  course of business,  commitments
for services and supplies. Management does not anticipate losses on any of these
transactions.

The Company and Bank are parties to various litigation which arises primarily in
the ordinary  course of  business.  In the opinion of  management,  the ultimate
disposition of such litigation should not have a material effect on consolidated
financial position or operations.


16. ESTIMATED FAIR VALUES OF CONSOLIDATED FINANCIAL INSTRUMENTS
---------------------------------------------------------------

The fair value of a financial  instrument  is defined as the amount at which the
instrument could be exchanged in a current  transaction between willing parties,
other than a forced or liquidation sale.  Significant  estimations were used for
the  purposes of this  disclosure.  Estimated  fair values have been  determined
using the best  available  data and  estimation  methodology  suitable  for each
category of financial instruments.

         Cash and cash equivalents and accrued interest receivable
         ---------------------------------------------------------

         The carrying amounts for cash and cash equivalents and accrued interest
         receivable approximate fair value.

         Term deposits
         -------------

         The fair value of term deposits is estimated by discounting future cash
         flows,  using rates which are currently  available for term deposits of
         similar remaining maturities.




                                       38
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



16. ESTIMATED FAIR VALUES OF CONSOLIDATED FINANCIAL INSTRUMENTS (Cont'd.)
-------------------------------------------------------------------------

         Securities
         ----------

         The fair values for trading  account  securities and for investment and
         mortgage-backed  securities available for sale and held to maturity, as
         well as  commitments to purchase such  securities,  are based on quoted
         market prices or dealer prices,  if available.  If quoted market prices
         or dealer  prices  are not  available,  fair value is  estimated  using
         quoted market prices or dealer prices for similar securities.

         Loans receivable
         ----------------

         The fair value of loans  receivable is estimated by discounting  future
         cash flows, using the current rates at which similar loans with similar
         remaining  maturities  would be made to borrowers  with similar  credit
         ratings.

         Deposits
         --------

         For demand,  savings and club  accounts,  fair value  approximates  the
         carrying   amount   reported   in   the   financial   statements.   For
         fixed-maturity  certificates  of deposit,  fair value is  estimated  by
         discounting  future  cash  flows,  using  rates  currently  offered for
         deposits of similar remaining maturities.

         Borrowed money
         --------------

         The fair value of borrowed  money is  estimated by  discounting  future
         cash flows,  using the current  rates  available  for  borrowings  with
         similar remaining maturities.

         Commitments to extend credit
         ----------------------------

         The fair value of  commitments  is estimated  using the fees  currently
         charged to enter into  similar  agreements,  taking  into  account  the
         remaining terms of the agreements and the present  creditworthiness  of
         the  counterparties.  For fixed-rate loan commitments,  fair value also
         considers the difference  between  current levels of interest rates and
         the committed rates.


                                       39
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



16. ESTIMATED FAIR VALUES OF CONSOLIDATED FINANCIAL INSTRUMENTS (Cont'd.)
-------------------------------------------------------------------------

The carrying  amounts and estimated fair values of financial  instruments are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                                December 31,
                                                         -----------------------------------------------------------
                                                                  2000                             1999
                                                         --------------------------       --------------------------
                                                         Carrying        Estimated        Carrying        Estimated
                                                           Value         Fair Value         Value         Fair Value
                                                         --------        ---------        --------        ---------
<S>                                                       <C>             <C>              <C>              <C>
Financial assets
----------------
Cash and cash equivalents                                 $ 9,690         $ 9,690          $ 6,771          $ 6,771
Term deposits                                                  99              99              197              197
Trading account securities                                     --              --            2,791            2,791
Securities available for sale                               6,327           6,327            5,906            5,906
Investment securities held to maturity                      6,948           6,855            6,947            6,697
Mortgage-backed securities held to maturity                60,614          60,631           71,399           70,547
Loans receivable                                          152,287         151,577          134,522          133,137
Accrued interest receivable                                 1,437           1,437            1,218            1,218

Financial liabilities
---------------------
Deposits                                                  189,333         189,414          169,008          169,131
Borrowed money                                             29,000          29,008           42,000           42,019

Commitments
-----------
To originate or purchase loans                              8,495           8,495           11,699           11,699
Unused lines of credit                                      4,866           4,866            4,096            4,096
</TABLE>


Fair  value  estimates  are made at a specific  point in time based on  relevant
market  information  and  information  about  the  financial  instrument.  These
estimates do not reflect any premium or discount that could result from offering
for sale at one time the entire holdings of a particular  financial  instrument.
Because no market exists for a significant portion of the financial instruments,
fair value  estimates  are based on judgments  regarding  future  expected  loss
experience,   current  economic  conditions,  risk  characteristics  of  various
financial  instruments,  and other  factors.  These  estimates are subjective in
nature, involve uncertainties and matters of judgment and, therefore,  cannot be
determined with precision. Changes in assumptions could significantly affect the
estimates.

In addition, fair value estimates are based on existing on-and-off balance sheet
financial  instruments  without  attempting to estimate the value of anticipated
future  business,  and exclude the value of assets and liabilities  that are not
considered financial instruments.  Other significant assets and liabilities that
are not  considered  financial  assets  and  liabilities  include  premises  and
equipment  and  advance  payments  by  borrowers  for  taxes and  insurance.  In
addition,  the tax ramifications  related to the realization of unrealized gains
and losses can have a  significant  effect on fair value  estimates and have not
been considered in any of the estimates.



                                       40
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



16. ESTIMATED FAIR VALUES OF CONSOLIDATED FINANCIAL INSTRUMENTS (Cont'd.)
-------------------------------------------------------------------------

Finally,  reasonable  comparability  between  financial  institutions may not be
likely due to the wide range of  permitted  valuation  techniques  and  numerous
estimates which must be made given the absence of active  secondary  markets for
many of the financial instruments.  This lack of uniform valuation methodologies
introduces a greater degree of subjectivity to these estimated fair values.



17.   DIVIDENDS AND RESTRICTIONS THEREON
----------------------------------------

Pulaski Bancorp,  M.H.C.  waived its right to receive dividends  declared by the
Bank and the Company  during the years ended December 31, 2000 and 1999. The OTS
requires  that  retained  earnings  be  restricted  by the amount of such waived
dividends.  Such  restricted  amounts  aggregated  $1,319,000  and  $950,000  at
December 31, 2000 and 1999, respectively.

OTS regulations impose  limitations upon all capital  distributions by a savings
institution  including  cash  dividends,  payments to repurchase  its shares and
payments to shareholders of another institution in a cash-out merger.  Under the
regulation,  an  application  to and the prior  approval  of the OTS is required
prior to any capital  distribution if the institution does not meet the criteria
for  "expedited   treatment"  of  applications   under  OTS  regulations  (i.e.,
generally,  examination  ratings in the two top  categories),  the total capital
distributions  for the  calendar  year  exceed net income for that year plus the
amount of retained net income for the preceding two years, the institution would
be  undercapitalized  following  the  distribution  or  the  distribution  would
otherwise  be contrary to a statute,  regulation  or  agreement  with OTS. If an
application is not required,  the institution must still provide prior notice to
OTS of the capital distribution.  In the event the Bank's capital fell below its
regulatory  requirements or the OTS notified it that it was in need of more than
normal  supervision,  the Bank's ability to make capital  distributions could be
restricted.  In addition, the OTS could prohibit a proposed capital distribution
by any institution, which would otherwise be permitted by the regulation, if the
OTS  determines  that such  distribution  would  constitute an unsafe or unsound
practice.



18.  PARENT ONLY FINANCIAL INFORMATION
--------------------------------------

The Company operates its wholly owned subsidiary,  the Bank. The earnings of the
Bank are recognized  under the equity method of  accounting.  The Company had no
earnings prior to July 12, 1999.



                                       41
<PAGE>

                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



18.  PARENT ONLY FINANCIAL INFORMATION  (Con't.)
------------------------------------------------

     Condensed statements of financial condition
     -------------------------------------------
<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                   ----------------------------------
                                                                                        2000                 1999
                                                                                    ------------         ------------
<S>                                                                                 <C>                  <C>
        Assets
        ------
        Cash and amounts due from financial institution                             $    299,605         $    786,507
        Investment in Pulaski Savings Bank                                            23,995,647           22,880,438
        Loan receivable                                                                  101,936              278,439
        Other assets                                                                      20,213               13,255
                                                                                    ------------         ------------

             Total assets                                                           $ 24,417,401         $ 23,958,639
                                                                                    ============         ============


        Liabilities and stockholders' equity
        ------------------------------------

        Other liabilities                                                           $     22,758         $    175,751
        Stockholders' equity                                                          24,394,643           23,782,888
                                                                                    ------------         ------------

             Total liabilities and stockholders' equity                             $ 24,417,401         $ 23,958,639
                                                                                    ============         ============
</TABLE>

     Condensed statements of income
     ------------------------------
<TABLE>
<CAPTION>
                                                                                                          From Inception
                                                                                      Year Ended        (July 12, 1999) to
                                                                                    December 31,          December 31,
                                                                                         2000                  1999
                                                                                     -----------             ---------

<S>                                                                                  <C>                     <C>
        Interest income                                                                 $ 29,007             $ 18,537
        Equity earnings in subsidiary                                                  1,933,166              829,122
                                                                                     -----------             ---------

                                                                                       1,962,173              847,659

        Expenses                                                                          84,869               41,660
                                                                                      -----------             ---------

        Net income before income tax (benefit)                                         1,877,304              805,999
        Income tax (benefit)                                                             (18,663)              (7,862)
                                                                                     -----------             ---------

        Net income                                                                   $ 1,895,967             $ 813,861
                                                                                     ===========             =========

</TABLE>


                                       42


<PAGE>
                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


18.  PARENT ONLY FINANCIAL INFORMATION (Cont'd)
-----------------------------------------------
     Condensed Statements of Cash Flows
     ----------------------------------
<TABLE>
<CAPTION>
                                                                                                        From Inception
                                                                                      Year Ended      (July 12, 1999) to
                                                                                     December 31,         December 31,
                                                                                         2000                 1999
                                                                                     -----------          ------------
        Cash flows from operating activities
        ------------------------------------
<S>                                                                                  <C>                    <C>
        Net income                                                                   $ 1,895,967            $  813,861
        Equity earnings in the subsidiary                                             (1,933,166)             (829,122)
        (Increase) in other assets                                                        (6,958)              (13,255)
        (Decrease) increase in other liabilities                                        (152,993)              175,751
                                                                                     -----------          ------------

           Net cash (used in) provided by operating activities                          (197,150)              147,235
                                                                                     -----------          ------------

        Cash flows from investing activities
        ------------------------------------

        Net decrease (increase) in loans receivable                                      176,503              (278,439)
        Dividends from subsidiary                                                      1,130,000             1,300,000
                                                                                     -----------          ------------

           Net cash provided by investing activities                                   1,306,503             1,021,561
                                                                                     -----------          ------------

        Cash flows from financing activities
        ------------------------------------

        Dividend paid                                                                   (275,410)             (157,958)
        Purchase of treasury stock                                                    (1,320,845)             (224,331)
                                                                                     -----------          ------------

           Net cash used on financing activities                                      (1,596,255)             (382,289)
                                                                                     -----------          ------------

        Net (decrease) increase in cash and cash equivalents                            (486,902)              786,507
        Cash and cash equivalents - beginning                                            786,507                    --
                                                                                     -----------          ------------

        Cash and cash equivalents - ending                                           $   299,605          $    786,507
                                                                                     ===========          ============


        Supplemental schedule of non-cash investing activities
        ------------------------------------------------------

        Issuance of common stock                                                     $        --             $  21,081
        Paid-in capital                                                                       --             9,850,183
        Equity earnings in subsidiary                                                         --            14,249,231
                                                                                     -----------          ------------

        Investment in subsidiary                                                     $        --          $ 24,120,495
                                                                                     ===========          ============

</TABLE>

                                       43
<PAGE>



                      PULASKI BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



19.    QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)
--------------------------------------------------------


<TABLE>
<CAPTION>

                                                                           Year Ended December 31, 2000
                                                                -------------------------------------------------
                                                                First         Second        Third         Fourth
                                                                Quarter       Quarter       Quarter       Quarter
                                                                -------       -------       -------       -------
                                                                     (In thousands, except per share data)

<S>                                                             <C>           <C>           <C>           <C>
Interest income                                                 $ 4,114       $ 4,425       $ 4,639       $ 4,737
Interest expense                                                  2,362         2,539         2,784         2,832
                                                                -------       -------       -------       -------

Net interest income                                               1,752         1,886         1,855         1,905
Provision for loan losses                                            25            25            16            25
Non-interest income                                                 281           163            99           131
Non-interest expense                                              1,262         1,227         1,201         1,275
Income taxes                                                        280           296           270           274
                                                                -------       -------       -------       -------

Net income                                                      $   466       $   501       $   467       $   462
                                                                =======       =======       =======       =======

Basic and diluted net income per
  common share                                                  $  0.24       $  0.26       $  0.24       $  0.24
                                                                =======       =======       =======       =======

<CAPTION>
                                                                           Year Ended December 31, 1999
                                                               ---------------------------------------------------
                                                               First         Second         Third         Fourth
                                                               Quarter(1)    Quarter(1)     Quarter       Quarter
                                                                -------       -------       -------       -------
                                                                    (In thousands, except per share data)

Interest income                                                 $ 3,320       $ 3,354       $ 3,685       $ 4,032
Interest expense                                                  1,920         1,906         2,129         2,362
                                                                -------       -------       -------       -------

Net interest income                                               1,400         1,448         1,556         1,670
Provision for loan losses                                            25            36            25            27
Non-interest income                                                  68            18           450            26
Non-interest expenses                                             1,082         1,152         1,148         1,218
Income taxes                                                        163           105           305           165
                                                                -------       -------       -------       -------

Net income                                                      $   198       $   173       $   528       $   286
                                                                =======       =======       =======       =======

Basic and diluted net income per
  common share                                                  $  0.10       $  0.08       $  0.26       $  0.14
                                                                =======       =======       =======       =======
</TABLE>
(1)  Quarterly  financial  data  (unaudited)  for Pulaski  Savings Bank prior to
re-organization.

                                       44

<PAGE>
                PULASKI BANCORP, INC. AND SUBSIDIARY


                         Board of Directors
--------------------------------------------------------------

Edward J. Mizerski
    Chairman of the Board and retired banker
Peter C. Pietrucha
    Vice Chairman of the Board and attorney at law
Thomas Bentkowski
    President and Chief Executive Officer
Eugene J. Bogucki, M.D.
    Retired physician and surgeon
Anthony C. Majeski
    Certified Public Accountant and retired banker
Walter F. Rusak
    Principal of Grove Street School, K-5, Irvington,
    New Jersey
John T. Robertson
    Executive Vice President and  Chief Operating Officer


                         Officers
-------------------------------------------------------------------------

Thomas Bentkowski.........................................President & CEO
John T. Robertson..........................Executive Vice President & COO
Lee Wagstaff..............................Vice President, Treasurer & CFO
Valerie Kaminski...............................Vice President & Secretary
Kevin Aylward (1)...................... Vice President & Mortgage Officer
Patrick Paolella.....................................Vice President & HRO
Lynn Carnevale.................................. Assistant Vice President
Rose Ricciardi...................................Assistant Vice President
Valerie Nabb......................................... Assistant Secretary
Kristen Bourgeau......................................Assistant Treasurer
Robert Campbell.......................................Assistant Treasurer
Marion Cottrell.......................................Assistant Treasurer
Anna Fairfax..........................................Assistant Treasurer
Rana Hanclich.........................................Assistant Treasurer
Donna Queiroz.........................................Assistant Treasurer
Kimberly Weichhan.....................................Assistant Treasurer
Ruth Wozniewicz.......................................Assistant Treasurer
E. Cynthia Wyres......................................Assistant Treasurer
(1) Resigned January 6, 2001

                  Stockholder Inquiries
-------------------------------------------------------------------------

Patrick Paolella, Vice President
Pulaski Bancorp, Inc.
130 Mountain Avenue
Springfield, New Jersey  07081
(973) 564-9000

<PAGE>
                 Annual Report on Form 10-KSB
    --------------------------------------------------

     A copy of the Company's report on Form 10-K, as
     filed with the Office of Thrift
     10-KSB is available without charge by
     written request addressed as set forth under
     Stockholder Inquiries.

                          Counsel
     --------------------------------------------------
     Alfred R. Kinney
     2040 Millburn Avenue - Suite 101
     Maplewood, New Jersey  07040

                      Special Counsel
     --------------------------------------------------


     Muldoon Murphy & Faucette LLP
     5101 Wisconsin Avenue, N.W.
     Washington, D.C.  20016


                      Independent Auditors
     --------------------------------------------------

     Radics & Co., LLC
     55 U.S. Highway 46 East
     Pine Brook, New Jersey  07058

                      Stock Transfer Agent
     --------------------------------------------------

     Registrar and Transfer Co.
     10 Commerce Drive
     Cranford, New Jersey  07016
     (908) 497-2300

                     Market Makers
     --------------------------------------------------

     Friedman, Billings, Ramsey & Co., Inc.

     Ryan, Beck & Co., Inc.

     Herzog, Heine, Geduld, Inc.

     Tucker Anthony, Inc.

     Knight Securities, L.P.


                                       45
<PAGE>





                    PULASKI BANCORP, INC.

 Market For Common Stock and Related Matters
-----------------------------------------------------

Pulaski  Bancorp,  Inc.'s  common  stock is presently
quoted  on the  National  Association  of  Securities
Dealers automated  quotations small cap market system
under the symbol "PLSK". At March 15, 2001, 1,920,845
shares of the Company's outstanding common stock were
held by approximately 644 persons or entities.

The  following  table  sets  forth  the  high and low
closing  sales  prices  per  common  shares  for  the
periods  indicted.  Such  prices  do not  necessarily
reflect retail markups, markdowns or commissions.

                                                    Closing Prices
                                              ---------------------------
Quarter Ended                                      High            Low
                                              -----------     -----------

Pulaski Savings Bank:
March 31, 1999                                   $11 1/4          $9 3/8
June 30, 1999                                    9 13/16          8 1/32

Pulaski Bancorp, Inc.:
September 30, 1999                                 8 3/4          8 3/16
December 31, 1999                                  8 1/2           6 3/4
March 31, 2000                                     8 1/4           7 5/8
June 30, 2000                                      8 1/4           7 1/8
September 30, 2000                                    10           7 1/8
December 31, 2000                                     10           8 1/8


                                                         Dividends
                                                           Paid
                                                         --------

Pulaski Savings Bank:
March 31, 1999                                            $ 0.08
June 30, 1999                                               0.08

Pulaski Bancorp, Inc.:
September 30, 1999                                          0.08
December 31, 1999                                           0.08
March 31, 2000                                              0.08
June 30, 2000                                               0.08
September 30, 2000                                          0.08
December 31, 2000                                           0.09


Future  dividend  policy  will be  determined  by the
Board of Directors after giving  consideration to the
Company's financial condition, results of operations,
tax status,  economic  conditions  and other factors.
The  Board may also  consider  the  payment  of stock
dividends  from time to time,  in addition  to, or in
lieu of cash dividends.

                                       46