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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2004

OR

Commission File Number: 000-23667

HOPFED BANCORP, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (270) 885-1171

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

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

As of May 9, 2004, the Registrant had issued and outstanding 3,630,396 shares of the Registrant’s Common Stock.

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CONTENTS

HOPFED BANCORP, INC.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HOPFED BANCORP, INC.

Consolidated Statements of Financial Condition

The balance sheet at December 31, 2003 has been derived from the audited financial statements of that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

See accompanying Notes to Unaudited Consolidated Financial Statements.

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HOPFED BANCORP, INC.

Consolidated Statements of Income

(Unaudited)

See accompanying Notes to Unaudited Consolidated Financial Statements.

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HOPFED BANCORP, INC.

Consolidated Statements of Comprehensive Income

(Unaudited)

See accompanying Notes to Unaudited Consolidated Financial Statements.

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HOPFED BANCORP, INC.

Consolidated Statements of Cash Flows

(Unaudited)

See accompanying Notes to Unaudited Consolidated Financial Statements.

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NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

HopFed Bancorp, Inc. (the “Company”) was formed at the direction of Heritage Bank, formerly Hopkinsville Federal Savings Bank (the “Bank”), to become the holding company of the Bank upon the conversion of the Bank from a federally chartered mutual savings bank to a federally chartered stock savings bank. The conversion was consummated on February 6, 1998. The Company’s primary assets are the outstanding capital stock of the converted Bank, and its sole business is that of the converted Bank.

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for fair representation have been included. The results of operations and other data for the three-month period ended March 31, 2004, are not necessarily indicative of results that may be expected for the entire fiscal year ending December 31, 2004.

The following schedule reconciles the numerators and denominators of the basic and diluted earnings per share (“EPS”) computations for the three-months ended March 31, 2004 and 2003. Diluted common shares arise from the potentially dilutive effect of the Company’s Stock Options outstanding.

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The Company accounts for its stock option plans in accordance with the provision of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock issued to Employees, and related interpretations, as permitted by SFAS 123, Accounting for Stock-Based Compensation. As such, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. SFAS 123 requires entities which continue to apply the provisions of APB Opinion No. 25 to provide pro-forma earnings per share disclosure for stock option grants made in 1995 and subsequent years as if the fair value based method defined in SFAS 123 had been applied. SFAS 148, Accounting for Stock-Based Compensation – Transition and Disclosure – an amendment of FASB No. 123, provides that an entity that has transitioned to the accounting treatment prescribed by SFAS 123 may use the intrinsic value method in lieu of the fair value based method for determining the fair value of stock options at the date of grant. SFAS 148 requires disclosure in addition to SFAS 123 if APB Opinion No. 25 is currently being applied.

The Company applies Accounting Principles Board Opinion No. 25 (APB), Accounting for Stock Issued to Employees, and related interpretations in the accounting for the plan. No compensation cost has been recognized for the plan because the stock option prices are equal to or greater than the fair value at the grant date. The table below is a reconciliation of reported and pro forma net income and earnings per share had compensation cost for the plan been determined based on the fair value of SFAS 123, Accounting for Stock-Based Compensation, as amended:

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Comparison of Financial Condition at March 31, 2004 and December 31, 2003

Total assets increased by $9.5 million, from $531.5 million at December 31, 2003 to $541.0 million at March 31, 2004. Securities available for sale increased from $143.5 million at December 31, 2003 to $147.7 million at March 31, 2004. Federal funds sold decreased from $2.2 million at December 31, 2003 to $1.6 million at March 31, 2004.

At March 31, 2004, investments classified as “held to maturity” were carried at an amortized cost of $17.0 million and had an estimated fair market value of $17.4 million, and securities classified as “available for sale” had an estimated fair market value of $147.7 million.

The loan portfolio increased $5.8 million during the three months ended March 31, 2004. Net loans totaled $340.5 million and $334.7 million at March 31, 2004 and December 31, 2003, respectively. For the three months ended March 31, 2004, the average yield on loans was 5.60%, compared to 6.14% for the year ended December 31, 2003.

The allowance for loan losses totaled $2.8 million at March 31, 2004, an increase of $224,000 from an allowance of $2.6 million at December 31, 2003. The ratio of the allowance for loan losses to loans was 0.82% and 0.76% at March 31, 2004 and December 31, 2003, respectively. Also at March 31, 2004, non-performing loans were $796,000, or 0.23% of total loans, compared to $1,144,000, or 0.34% of total loans, at December 31, 2003, and the ratio of allowance for loan losses to non-performing loans at March 31, 2004 and December 31, 2003 was 351.3% and 225.2%, respectively.

The determination of the allowance for loan losses is based on management’s analysis, performed on a quarterly basis. Various factors are considered, including the market value of the underlying collateral, growth and composition of the loan portfolio, the relationship of the

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allowance for loan losses to outstanding loans, historical loss experience, delinquency trends and prevailing economic conditions. Although management believes its allowance for loan losses is adequate, there can be no assurance that additional allowances will not be required or that losses on loans will not be incurred.

The Company continues to experience a higher than normal level of losses in the indirect automobile loan portfolio. The Company’s indirect lending program, begun in 2001, grew to $28 million at December 31, 2002. By the end of 2002, the credit quality of the portfolio began to decline and the Company made underwriting adjustments to improve credit quality. The indirect loan portfolio’s charge off ratio was approximately 1.9% in 2003, accounting for approximately 50% of total loan losses, while the portfolio’s outstanding balance accounted for less than 6% of the Company’s outstanding loan portfolio. The balance of the indirect automobile portfolio continues to decline and was approximately $19 million at March 31, 2004. The Company anticipates that loan losses on the indirect portfolio will continue to remain high as a percentage of its outstanding balance through 2004 due to a declining balance of the portfolio and anticipated losses of approximately $350,000. The remainder of the Company’s loan portfolio continues to perform well. With the return of the 101^st Airborne from Iraq, the Company anticipates that local economic conditions will improve in 2004.

At March 31, 2004, deposits increased to $421.1 million from $417.5 million at December 31, 2003, a net increase of $3.6 million. The average cost of deposits during the period ended March 31, 2004 and the year ended December 31, 2003 was 2.46% and 2.88%, respectively. Management continually evaluates the investment alternatives available to customers and adjusts the pricing on its deposit products to more actively manage its funding costs while remaining competitive in its market area.

Comparison of Operating Results for the Three Months Ended March 31, 2004 and 2003

Net Income. Net income for the three months ended March 31, 2004 was $ 947,000, compared to net income of $996,000 for the three months ended March 31, 2003. The decline in net income for the three months primarily resulted from a declining yield on assets and increasing operating expenses. Operating expenses increased largely due to the relocation of two retail offices and the opening of a third retail office in the last twelve months.

Net Interest Income. Net interest income for the three months ended March 31, 2004 was $3.3 million, compared to $2.9 million for the three months ended March 31, 2003. The increase in net interest income for the three months ended March 31, 2004 was primarily due to an increase in both total loans outstanding and investments. For the three months ended March 31, 2004, the Company’s average yield on average interest-earning assets was 5.04%, compared to 5.60% for the three months ended March 31, 2003, and its average cost of interest-bearing liabilities was 2.59% for the three months ended March 31, 2004, compared to 3.20% for the three months ended March 31, 2003. As a result, the Company’s interest rate spread for the three months ended March 31, 2004 was 2.45%, compared to 2.40% for the three months ended March 31, 2003, and its net yield on interest-earning assets was 2.66% for the three months ended March 31, 2004, compared to 2.72% for the three months ended March 31, 2003.

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Interest Income. Interest income increased by $389,000 from $5.9 million to $6.3 million, or by 6.6%, during the three months ended March 31, 2004 compared to the same period in 2003. This increase primarily resulted from growth in the investment portfolio, producing a $400,000 increase in interest income on investments. Despite significant loan growth, interest income on loans declined due to lower yields. The average balance of loans receivable increased $39.1 million from $298.0 million at March 31, 2003 to $337.1 million at March 31, 2004. The average balance of investment securities increased $38.7 million, from $123.8 million at March 31, 2003 to $162.5 million at March 31, 2004. Average time deposits and other interest-earning cash deposits decreased $ 7.9 million, from $11.1 million at March 31, 2003 to $ 3.2 million at March 31, 2004. The ratio of average interest-earning assets to average interest-bearing liabilities decreased from 111.19% for the three months ended March 31, 2003 to 109.18% for the three months ended March 31, 2004. The decline in the interest earning asset ratio is largely the result of $5 million of additional bank owned life insurance purchased in the fourth quarter of 2003.

Interest Expense. Interest expense declined $68,000 for the three months ended March 31, 2004 as compared to the same period in 2003. The decline was primarily attributable to a lower cost of deposits that offset growth in both deposits and borrowed funds. The average cost of average interest-bearing deposits decreased from 3.11% at March 31, 2003 to 2.46% at March 31, 2004. Over the same period, the average balance of deposits increased $46.5 million, from $374.5 million at March 31, 2003 to $421.0 million at March 31, 2004 and the average balance of borrowed funds increased $39.6 million, from $23.6 million at March 31, 2003 to $63.2 million at March 31, 2004. The average cost of average borrowed funds decreased from 4.55% at March 31, 2003 to 3.39% at March 31, 2004 as the company increased borrowings with the Federal Home Loan Bank to take advantage of short and medium term interest rates. The Company also issued $10.3 million in subordinated debentures in September of 2003 at a variable rate of the three month libor plus 3.10%.

Provision for Loan Losses. The allowance for loan losses is established through a provision for loan losses based on management’s evaluation of the risk inherent in its loan portfolio and the general economy. Such evaluation considers numerous factors including, general economic conditions, loan portfolio composition, prior loss experience, the estimated fair value of the underlying collateral and other factors that warrant recognition in providing for an adequate loan loss allowance. The Company determined that an additional $300,000 provision for loan loss was required for the three months ended March 31, 2004.

Non Interest Income. There was a $223,000 decline in non-interest income in the three months ended March 31, 2004 compared to the same period in 2003. This decline is the result of several factors, including a $147,000 decline in gains on the sale of investments and an $86,000 decline is gains associated with the sale of fixed rate mortgages. In the first quarter of 2003, market conditions were more favorable to recognizing gains on the sale of these investments and fixed rate loans. The Company believes it is unlikely that these market conditions will exist in the remainder of 2004.

Non Interest Expenses. There was a $373,000 increase in total non-interest expenses in the three months ended March 31, 2004 compared to the same period in 2003, primarily due to the addition of one branch office in November 2003 and the relocation of two additional offices in 2003.

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Income Taxes. The effective tax rate for the three months ended March 31, 2004 was 33.5%, compared to 32.0% for the same period in 2003.

Liquidity and Capital Resources. The Company has no business other than that of the Bank. Management believes that dividends that may be paid by the Bank to the Company will provide sufficient funds for its current needs. However, no assurance can be given that the Company will not have a need for additional funds in the future. The Bank is subject to certain regulatory limitations with respect to the payment of dividends to the Company.

The Bank’s principal sources of funds for operations are deposits from its primary market areas, principal and interest payments on loans, proceeds from maturing investment securities and the net conversion proceeds received by it. The principal uses of funds by the Bank include the origination of mortgage and consumer loans and the purchase of investment securities.

The Bank must satisfy three capital standards: a ratio of core capital to adjusted total assets of 4.0%, a tangible capital standard expressed as 1.5% of total adjusted assets, and a combination of core and “supplementary” capital equal to 8.0% of risk-weighted assets. At March 31, 2004, the Bank exceeded all regulatory capital requirements. The table below presents certain information relating to the Company’s and Bank’s capital compliance at March 31, 2004.

At March 31, 2004, the Bank had outstanding commitments to originate loans totaling $3.1 million. Management believes that the Bank’s sources of funds are sufficient to fund all of its outstanding commitments. Certificates of deposits which are scheduled to mature in one year or less from March 31, 2004 totaled $120.1 million. Management believes that a significant percentage of such deposits will remain with the Bank.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. Additional written or oral forward-looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise. The words “believe,” “expect,” “seek,” and “intend” and similar expressions identify forward-looking statements, which speak only as of the date the statement is made. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may include, but are not limited to, projections of income or loss, expenditures, acquisitions, plans for future operations, financing needs or plans relating to services of the Company, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements.

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The Company does not undertake, and specifically disclaims, any obligation to publicly release the results of revisions which may be made to forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company monitors whether material changes in market risk have occurred since year-end. The Company’s income and the value of its assets are strongly influenced by changes in interest rates. The Company does not believe that material changes in Company’s interest rate risk profile have occurred during the three months ended March 31, 2004. In general, an moderate increase in interest rates will improve the Company’s net interest margin due to the Company’s high concentration of variable rate mortgage loans. The market value of the Company’s investment portfolio would decline if interest rates increase. The average life of the investment portfolio would increase by 1.4 years if interest rates immediately increased 2%. The Company’s interest expense on deposits would increase if market rates increase, but at a slower rate due to the maturity diversification of the Company’s certificates of deposit. A severe increase in rates, generally considered to be an increase of 3% or more in one year, would adversely affect both net income and the net present value of the Company’s assets.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures.

In accordance with Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), an evaluation was carried out with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-14(c) and 15d-14(c) under the Exchange Act) as of the end of the quarter ended March 31, 2004. Based upon their evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the three months ended March 31, 2004 to ensure that material information relating to the Company, including its consolidated subsidiaries, was made known to them by others within those entities, particularly during the period in which this Quarterly Report on Form 10-Q was being prepared.

Changes in internal controls over financial reporting.

There was not any change in the Company’s internal control over financial reporting that occurred during the three months ended March 31, 2004 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

ISSUER PURCHASES OF EQUITY SECURITIES

On September 20, 2000, the Company announced that its Board of Directors had approved the repurchase of up to 200,000 shares of its common stock. The stock repurchase program was completed in February 2001. On March 26, 2001, the Company announced that its Board of Directors had approved the repurchase of an additional 300,000 shares. The purchases are being made from time to time on the Nasdaq Stock Market at prices prevailing on that market or in privately negotiated transactions at management’s discretion, depending on market conditions, price of the Company’s common stock, corporate cash requirements and other factors. As of March 31, 2004, a total of 208,909 shares of common stock had been repurchased under the current program. No shares were repurchased during the quarter ended March 31, 2004.

Item 3. Defaults Upon Senior Securities

None

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Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

Current Report on Form 8-K dated January 30, 2004, furnishing under Item 12 the announcement of the Company’s earnings for the quarter and fiscal year ending December 31, 2003.

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SIGNATURES

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

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