Exhibit 99.1

 

NEWS
FOR IMMEDIATE RELEASE		CONTACT:		John E. Peck President and CEO (270) 885-1171

HOPFED BANCORP, INC. REPORTS FIRST QUARTER RESULTS

HOPKINSVILLE, Ky. (May 3, 2012) – HopFed Bancorp, Inc. (NASDAQ: HFBC) (the “Company”), the holding company for Heritage Bank (the “Bank”), today reported results for the three month period ended March 31, 2012. For the three month period ended March 31, 2012, the Company’s net income available to common shareholders was $470,000, or $0.06 per share basic and diluted, compared to a net loss attributable to common shareholders of $2.1 million, or ($0.28) per share basic and diluted, for the three month period ended March 31, 2011. The Company’s operating results for the three month period ended March 31, 2011, were strongly influenced by a $721,000 gain on the sale of investments and a $4.5 million provision for loan loss expense.

Commenting on the first quarter results, John E. Peck, President and Chief Executive Officer, said, “The Company’s operating results were disappointing due to the continued decline in loan volumes and an increase in classified assets. At March 31, 2012, net loan balances were $550.1 million, a decline of $6.3 million as compared to December 31, 2011. Management remains optimistic that loan growth will return during the second half of 2012 as customer inquiries for lending services have increased in the last sixty days.”

Mr. Peck continued, “At March 31, 2012, the Company’s total classified loans increased to $82.2 million. The increase was the result of a developer filing bankruptcy as well as declining cash flows and reduced property values of projects previously risk graded as special mention. As a result of these actions, the Company’s provision for loan loss expense for the quarter was $869,000 as compared to previously budgeted levels of $475,000.”

Mr. Peck concluded, “The Company continues to improve its deposit mix as total non-interest bearing deposits exceed 10% of total deposits. At March 31, 2012, time deposits account for 62.0% of total deposits, compared to 67.0% at March 31, 2011.

Total brokered deposits are $51.2 million, or 6.3% of deposits, compared to $87.4 million at March 31, 2011. In the second half of 2012, the Company will experience an increase in the amount of maturing liabilities that will provide the opportunity to reduce the Company’s interest expense.”

Financial Highlights

 

•

The Company’s and Bank’s capital ratios remain strong. At March 31, 2012, the Company’s tangible book value was $13.29 per share (basic and diluted) and our tangible common equity ratio was 9.62%. The Bank’s tier 1 capital and total risk based capital ratios at March 31, 2012, were 10.05% and 18.59%, respectively. At March 31, 2012, the Company’s tier 1 capital and total risk based capital ratios were 11.51% and 21.33%, respectively.

 

•

At March 31, 2012, the Company’s and Bank’s net classified asset to risk based capital ratios were 63.3% and 73.1%, respectively. Net classified assets include all classified assets less any reserve allocation against the allowance for loan losses. At December 31, 2011, these ratios were 43.0% for the Company and 49.9% for the Bank.

 

•

At March 31, 2012, the Company’s allowance for loan loss totaled $10.6 million, or 1.89% of total loans and 94.59% of non-accrual loans. In the three month period ended March 31, 2012, the Company’s net charge offs totaled $1.5 million.

 

•

For the three month period ended March 31, 2012, the Company’s net interest margin was 2.97%, as compared to 3.13% for the three month period ended December 31, 2011, and 2.94% for the three month period ended March 31, 2011. The Company’s net interest margin continues to decline as outstanding loan balances decline and higher yielding investments continued to be called. Management believes that the current interest rate environment will continue to put pressure on net interest margins.

 

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HFBC Reports First Quarter Results

Page 2

May 3, 2012

 

Asset Quality

At March 31, 2012, the Company’s level of non-accrual loans totaled $11.2 million, as compared to $6.1 million at December 31, 2011. The increase in non-accrual loans was the result of two land development loans totaling $3.2 million and three non-residential real estate loans totaling $3.6 million being placed into non-accrual status.

A summary of non-accrual loans at March 31, 2012, and December 31, 2011, is as follows:

 

		March 31, 2012				December 31, 2011
		(Dollars in Thousands)
One-to-four family mortgages		$	2,294				2,175
Home equity line of credit			100				134
Multi-family			—				—
Construction			—				—
Land			5,042				3,561
Non-residential real estate			3,630				—
Consumer loans			18				9
Commercial loans			132				254
Total		$	11,216				6,133

At March 31, 2012, non-accrual loans plus other real estate owned totaled $12.4 million, or 1.18% of total assets, as compared to $8.4 million, or 0.81% of total assets, at December 31, 2011. The Company’s level of other real estate owned has declined from $2.3 million at December 31, 2011, to $1.2 million at March 31, 2012.

A summary of the activity in other real estate owned for the three month period ended March 31, 2012, is as follows:

 

		Activity During 2012
		Balance 12/31/2011				Foreclosures				Sales				Reduction in Values				Gain (Loss) on Sales				Balance 3/31/2012
		(Dollars in Thousands)
One-to-four family mortgages			480				218				(134	)			(38	)			14				540
Multi-family			905				—				(875	)			—				(30	)			—
Construction			465				—				(235	)			—				(14	)			216
Land			248				376				(141	)			(39	)			(19	)			425
Non-residential real estate			160				—				(140	)			(20	)			—				—
Consumer assets			9				—				(9	)			—				—				—
Total			2,267				594				(1,534	)			(97	)			(49	)			1,181

At March 31, 2012, the Company’s level of loans classified as substandard and doubtful were $80.5 million and $1.6 million, respectively, as compared to $47.5 million and $1.7 million, respectively, at December 31, 2011. The Company’s specific reserve for impaired loans was $4.5 million at March 31, 2012, and $4.1 million at December 31, 2011, respectively.

For the three month period ended March 31, 2012, the Company’s net charge-offs totaled $1.5 million, an annualized rate of 1.08% of average loans. For the twelve month period ended December 31, 2011, the Company’s net charge-offs totaled $4.4 million, an annualized rate of 0.76% of average loans.

 

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HFBC Reports First Quarter Results

Page 3

May 3, 2012

 

At March 31, 2012, the Company’s level of performing Troubled Debt Restructurings (“TDRs”) was $6.7 million, as compared to $6.2 million at December 31, 2011. A summary of the activity in loans classified as TDRs for the twelve month period ended December 31, 2011, is as follows:

 

		Balance at December 31, 2011				New TDR				Loss or Foreclosure				Removed due to performance				Balance at March 31, 2012
		(Dollars in Thousands)
One-to-four family mortgages			2,521				100				—				73				2,548
Home equity line of credit			—				244				—				—				244
Junior Lien			857				—				—				857				—
Multi-family			—				239				—				—				239
Construction			—				—				—				—				—
Land			941				—				7				—				934
Non-residential real estate			3,367				—				253				—				3,114
Consumer loans			33				76				—				—				109
Commercial loans			125				931				—				—				1,056
Total TDR			7,844				1,590				260				930				8,244

A summary of TDRs and non-performing TDRs at March 31, 2012, and December 31, 2011, is stated below:

 

		March 31, 2012				December 31, 2011
		(Dollars in Thousands)
One-to-four family mortgages		$	2,548				2,521
Home equity line of credit		$	244				—
Junior lien			—				857
Multi-family			239				—
Construction			—				—
Land			934				941
Non-residential real estate			3,114				3,367
Consumer loans			109				33
Commercial loans			1,056				125
Total TDR		$	8,244				7,844
Less:
TDR in non-accrual status
One-to-four family mortgages			(1,469	)			(1,410	)
Home equity line of credit			—				—
Junior lien			—				(100	)
Multi-family			—				—
Construction			—				—
Land			—				—
Non-residential real estate			—				(1	)
Consumer loans			—				(1	)
Commercial loans			(106	)			(105	)
Total performing TDR		$	6,669			$	6,227

 

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HFBC Reports First Quarter Results

Page 4

May 3, 2012

 

Net Interest Income

For the three month period ended March 31, 2012, the Company’s net interest income was $6.9 million, compared to $7.2 million for the three month period ended December 31, 2011, and $6.8 million for the three month period ended March 31, 2011. The decline in linked quarter net interest income was the result of the continued decline in loans outstanding and declining yields on investment alternatives. The Company’s re-pricing opportunities on its liabilities are expected to be limited during the first half of 2012, with deposit maturities increasing during the last six months of 2012.

For the three month period ended March 31, 2012, the Company’s net interest margin was 2.97%, as compared to 3.13% for the three month period ended December 31, 2011, and 2.94% for the three month period ended March 31, 2011. The Company remains dependent on improved loan demand for improvement in our net interest margin.

Non-interest Income

Non-interest income for the three month period ended March 31, 2012, was $1.9 million, as compared to $2.4 million for the three month periods ended December 31, 2011, and March 31, 2011, respectively. The decline in non-interest income for the three month period ended March 31, 2012, as compared to the three month periods ended December 31, 2011, and March 31, 2011, was primarily the result of a reduction in gains on the sale of securities of $677,000 and $556,000, respectively.

For the three month period ended March 31, 2012, the Company experienced improved levels of non-interest income related to mortgage loan origination activity, financial services activities, and improved income from service charges as compared to the three month period ended March 31, 2011. On a linked quarter basis, non-interest income declined by $512,000, strongly influenced by the $556,000 decline in gains on the sale of securities.

Non-interest Expense

Non-interest expenses were $7.1 million, $6.7 million and $7.4 million for the three month periods ended March 31, 2012, December 31, 2011, and March 31, 2011, respectively. For the three month period ended March 31, 2012, the increase in non-interest expense compared to the three month period ended December 31, 2011, was largely the result of a $228,000 increase in salaries and benefits and an $86,000 increase in losses on the sale of other real estate owned. Approximately $100,000 of the increase in the linked quarter salaries and benefits expense is estimated to be the result of higher costs typically experienced in the first quarter of each year due to higher payroll taxes and vacation accruals. The remaining increase in salaries and benefits expense was the result of higher payroll cost due to annual raises and an increase in the number of employees.

Balance Sheet

Total assets were $1.05 billion at March 31, 2012, an increase of $13.4 million as compared to December 31, 2011. The increase in assets is largely the result of higher deposit balances despite a $15.5 million reduction in time deposit balances.

At March 31, 2012, brokered deposits totaled $51.2 million, as compared to $58.3 million at December 31, 2011. The Company continues to experience success growing its core deposit base as non-interest checking accounts increased from $79.5 million at December 31, 2011, to $87.8 million at March 31, 2012.

For the three month period ended March 31, 2012, net loans declined by approximately $6.3 million, to $550.1 million as compared to $556.4 million at December 31, 2011. In the Company’s market area, desirable lending opportunities remained limited, making meaningful loan growth challenging.

 

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HFBC Reports First Quarter Results

Page 5

May 3, 2012

 

The Company

HopFed Bancorp, Inc. is the holding company for Heritage Bank headquartered in Hopkinsville, Kentucky. The Bank has eighteen offices in western Kentucky and middle Tennessee in addition to its subsidiary, Fall & Fall Insurance of Fulton, Kentucky. The Company has two additional operating divisions including Heritage Solutions of Murray, Kentucky, Hopkinsville, Kentucky, Kingston Springs, Tennessee and Pleasant View, Tennessee, which offers a broad line of financial services. Heritage Mortgage Services of Clarksville, Tennessee offers long term fixed rate 1- 4 family mortgages loans that are sold into the secondary market in all communities in the Company’s general market area. The Bank offers a broad line of banking and financial products and services with the personalized focus of a community banking organization. More information about HopFed Bancorp and Heritage Bank may be found on its website www.bankwithheritage.com.

Forward-Looking Information

Information contained in this press release, other than historical information, may be considered forward-looking in nature and is subject to various risk, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. Among the key factors that may have a direct bearing on the Company’s operating results, performance or financial condition are competition and the demand for the Company’s products and services, and other factors as set forth in filings with the Securities and Exchange Commission.

 

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HFBC Reports First Quarter Results

Page 6

May 3, 2012

 

HOPFED BANCORP, INC.

Balance Sheet

(Dollars in thousands)

 

		March 31, 2012				December 31, 2011
		(Unaudited)
Assets
Cash and due from banks		$	37,887				44,389
Interest-earning deposits in Federal Home Loan Bank			10,472				4,371
Cash and cash equivalents			48,359				48,760
Federal Home Loan Bank stock, at cost			4,428				4,428
Securities available for sale			405,686				383,782
Loans held for sale			515				—
Loans receivable, net of allowance for loan losses of $10,609 at March 31, 2012, and $11,262 at December 31, 2011			550,066				556,360
Accrued interest receivable			5,328				6,183
Real estate and other assets owned			1,181				2,267
Bank owned life insurance			9,214				9,135
Premises and equipment, net			23,217				23,431
Deferred tax assets			910				1,132
Intangible asset			454				519
Other assets			4,923				4,823
Total assets		$	1,054,281				1,040,820
Liabilities and Stockholders’ Equity
Liabilities
Deposits
Non-interest-bearing accounts		$	87,838				79,550
Interest-bearing accounts
NOW accounts			146,672				130,114
Savings and money market accounts			75,227				70,443
Other time deposits			504,461				519,988
Total deposits			814,198				800,095
Advances from Federal Home Loan Bank			62,368				63,319
Repurchase agreements			42,477				43,080
Subordinated debentures			10,310				10,310
Advances from borrowers for taxes and insurance			241				153
Dividends payable			178				176
Accrued expenses and other liabilities			5,508				5,204
Total liabilities			935,280				922,337

This information is preliminary and based on company data available at the time of the presentation.

 

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HFBC Reports First Quarter Results

Page 7

May 3, 2012

 

HOPFED BANCORP, INC.

Balance Sheet

(Dollars in thousands)

 

		March 31, 2012				December 31, 2011
		(Unaudited)
Stockholders’ equity
Preferred stock, par value $0.01 per share; authorized - 500,000 shares; 18,400 shares issued and outstanding with a liquidation preference of $18,400,000 at March 31, 2012, and December 31, 2011			—				—
Common stock, par value $.01 per share; authorized 15,000,000 shares; 7,896,902 issued and 7,493,986 outstanding at March 31, 2012, and 7,895,336 issued and 7,492,420 outstanding at December 31, 2011 (a)			79				79
Common stock warrants (253,666 issued and outstanding) (a)			556				556
Additional paid-in-capital			76,022				75,967
Retained earnings-substantially restricted			39,908				39,591
Treasury stock (at cost, 402,916 shares at March 31, 2012, and December 31, 2011)			(5,076	)			(5,076	)
Accumulated other comprehensive income, net of taxes			7,512				7,366
Total stockholders’ equity			119,001				118,483
Total liabilities and stockholders’ equity		$	1,054,281				1,040,820

 

(a)	Shares and warrants have been restated to reflect stock dividends distributed through October 18, 2011

This information is preliminary and based on company data available at the time of the presentation.

 

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HFBC Reports First Quarter Results

Page 8

May 3, 2012

 

HOPFED BANCORP, INC.

Selected Financial Data

(Dollars in thousands)

 

		For the Three Month Periods Ended March 31,
		2012				2011
Interest and dividend income:
Loans receivable			7,801				8,482
Investment in securities, taxable			2,375				2,690
Nontaxable securities available for sale			575				611
Interest-earning deposits			8				4
Total interest and dividend income			10,759				11,787
Interest expense:
Deposits			2,884				3,905
Advances from Federal Home Loan Bank			573				694
Repurchase agreements			248				205
Subordinated debentures			187				185
Total interest expense			3,892				4,989
Net interest income			6,867				6,798
Provision for loan losses			869				4,518
Net interest income after provision for loan losses			5,998				2,280
Non-interest income:
Service charges			938				856
Merchant card income			196				182
Mortgage origination revenue			203				72
Gain on sale of securities			44				721
Other than temporarily impairment on available for sale securities			—				(14	)
Income from bank owned life insurance			79				89
Financial services commission			227				187
Other operating income			230				272
Total non-interest income			1,917				2,365

This information is preliminary and based on company data available at the time of the presentation.

 

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HFBC Reports First Quarter Results

Page 9

May 3, 2012

 

HOPFED BANCORP, INC.

Selected Financial Data

(Dollars in thousands, except share and per share data)

 

		For the Three Month  Periods Ended March 31,
		2012				2011
Non-interest expenses:
Salaries and benefits			3,507				3,326
Occupancy expense			855				788
Data processing expense			625				687
State deposit tax			162				168
Intangible amortization expense			65				81
Professional services expense			388				315
Deposit insurance and examination expense			419				592
Advertising expense			304				279
Postage and communications expense			141				148
Supplies expense			111				96
Loss on disposal of equipment			6				138
Loss on sale of real estate owned			147				509
Real estate owned expenses			46				73
Other operating expenses			323				249
Total non-interest expense			7,099				7,449
Income before income tax expense			816				(2,804	)
Income tax expense			89				(960	)
Net income			727				(1,844	)
Less:
Dividend on preferred shares			229				227
Accretion dividend on preferred shares			28				27
Net income available to common shareholders		$	470				(2,098	)
Net income available to common shareholders
Per share, basic		$	0.06			($	0.28	)
Per share, diluted		$	0.06			($	0.28	)
Dividend per share		$	0.02			$	0.08
Weighted average shares outstanding - basic (a)			7,484,475				7,465,077
Weighted average shares outstanding - diluted (a)			7,484,475				7,465,077

 

(a)	Weighted average shares have been adjusted to reflect a 2% stock dividend on October 18, 2011

This information is preliminary and based on company data available at the time of the presentation.

 

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HFBC Reports First Quarter Results

Page 10

May 3, 2012

 

HOPFED BANCORP, INC.

Selected Financial Data

(Dollars in thousands)

 

		For the Three Months  Ended
		3/31/2012				12/31/2011				Change from Prior Quarter
Interest and dividend income:
Loans receivable			7,801				8,239				(438	)
Investment in securities, taxable			2,375				2,462				(87	)
Nontaxable securities available for sale			575				530				45
Interest-earning deposits			8				6				2
Total interest and dividend income			10,759				11,237				(478	)
Interest expense:
Deposits			2,884				3,028				(144	)
Advances from Federal Home Loan Bank			573				611				(38	)
Repurchase agreements			248				241				7
Subordinated debentures			187				191				(4	)
Total interest expense			3,892				4,071				(179	)
Net interest income			6,867				7,166				(299	)
Provision for loan losses			869				476				393
Net interest income after provision for loan losses			5,998				6,690				(692	)
Non-interest income:
Service charges			938				985				(47	)
Merchant card income			196				197				(1	)
Mortgage orgination revenue			203				295				(92	)
Gain on sale of securities			44				600				(556	)
Income from bank owned life insurance			79				66				13
Other than temporarily impairment on available for sale securities			—				(141	)			141
Financial services commission			227				203				24
Other operating income			230				224				6
Total non-interest income			1,917				2,429				(512	)

This information is preliminary and based on company data available at the time of the presentation.

 

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HFBC Reports First Quarter Results

Page 11

May 3, 2012

 

HOPFED BANCORP, INC.

Selected Financial Data

(Dollars in thousands, except share and per share data)

 

		For the Three Months  Ended
		3/31/2012				12/31/2011				Change from Prior Quarter
Non-interest expenses:
Salaries and benefits		$	3,507				3,279				228
Occupancy expense			855				817				38
Data processing expense			625				589				36
State deposit tax			162				151				11
Intangible amortization expense			65				65				—
Professional services expense			388				386				2
Deposit insurance and examination expense			419				417				2
Advertising expense			304				304				0
Postage and communications expense			141				128				13
Supplies expense			111				105				6
Loss on disposal of equipment			6				—				6
Loss on sale of real estate owned			147				61				86
Real estate owned expenses			46				60				(14	)
Other operating expenses			323				319				4
Total non-interest expense			7,099				6,681				418
Income before income tax expense			816				2,438				(1,622	)
Income tax expense			89				109				(20	)
Net income			727				2,329				(1,602	)
Less:
Dividend on preferred shares			229				232				(3	)
Accretion dividend on preferred shares			28				28				—
Net income (loss) available (attributable) to common stockholders		$	470				2,069				(1,599	)
Net income (loss) available (attributable) to common stockholders
Per share, basic		$	0.06			$	0.28				(0.22	)
Per share, diluted		$	0.06			$	0.28				(0.22	)
Dividend per share		$	0.02			$	0.02
Weighted average shares outstanding - basic			7,484,475				7,484,420
Weighted average shares outstanding - diluted			7,484,475				7,484,420

This information is preliminary and based on company data available at the time of the presentation.

 

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HFBC Reports First Quarter Results

Page 12

May 3, 2012

 

HOPFED BANCORP, INC.

Selected Financial Data

The table below adjusts tax-free investment income for the three month periods ended March 31, 2012, and March 31, 2011, by $271,000 and $284,000, respectively; for a tax equivalent rate using a cost of funds rate of 2.00% for the three month period ended March 31, 2012, and 2.25% for the three month period ended March 31, 2011. The table adjusts tax-free loan income by $3,000 for three month period ended March 31, 2012, and $9,000 for the three month period ended March 31, 2011, for a tax equivalent rate using the same cost of funds rate:

 

		Average Balance 3/31/2012				Income and Expense 3/31/2012				Average Rates 3/31/2012				Average Balance 3/31/2011				Income and Expense 3/31/2011				Average Rates 3/31/2011
		(Table Amounts in Thousands, Except Percentages)
Loans		$	551,579				7,807				5.66	%		$	592,517				8,491				5.73	%
Investments AFS taxable			329,819				2,375				2.88	%			297,358				2,690				3.62	%
Investment AFS tax free			65,669				846				5.15	%			67,368				895				5.32	%
Federal funds			13,817				8				0.23	%			6,771				4				0.24	%
Total interest earning assets			960,884				11,036				4.59	%			964,014				12,080				5.01	%
Other assets			92,340												121,659
Total assets		$	1,053,224											$	1,085,673
Interest bearing checking			143,858				294				0.82	%			143,644				444				1.24	%
Saving / MMDA			72,434				33				0.18	%			66,708				55				0.33	%
Retail time deposits			457,461				2,289				2.00	%			467,196				2,890				2.47	%
Brokered deposits			57,345				267				1.86	%			92,406				516				2.23	%
FHLB borrowings			62,969				573				3.64	%			76,566				694				3.63	%
Repurchase agreements			44,043				248				2.25	%			40,631				205				2.02	%
Subordinated debentures			10,310				188				7.29	%			10,310				185				7.18	%
Total interest bearing liabilities			848,420				3,892				1.83	%			897,461				4,989				2.22	%
Non-interest bearing deposits			80,503												70,150
Other liabilities			5,164												6,004
Stockholders’ equity			119,137												112,058
Total liabilities and stockholders’ equity		$	1,053,224											$	1,085,673
Net change in interest earning assets and interest bearing liabilities							7,144				2.76	%							7,091				2.79	%
Net yield on interest earning assets							2.97	%											2.94	%

This information is preliminary and based on company data available at the time of the presentation.

 

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