HopFed Bancorp, Inc. Reports First Quarter Results

HOPKINSVILLE, Ky., April 23 /PRNewswire-FirstCall/ -- HopFed Bancorp, Inc. (NASDAQ:HFBC) (the "Company") today reported results for the first quarter ended March 31, 2008. Net income for the first quarter ended March 31, 2008, was $1,492,000, or $0.42 per share (basic and diluted), compared with net income of $1,022,000, or $0.28 per share (basic and diluted), for the first quarter ended March 31, 2007.

Commenting on the first quarter results, John E. Peck, president and chief executive officer, said, "The Company's net interest margin improved during the quarter as we were able to reduce our cost of liabilities without experiencing a reduction in total deposits. For the three months ended March 31, 2008, the Company's net interest margin was 3.05%, as compared to 2.89% for the twelve months ended December 31, 2007. Customer demand for deposit services remains robust and the addition of twenty-four cash machines in western Kentucky enhances our visibility in the marketplace. The Company's loan growth is in line with management's projections."

Mr. Peck continued, "The combination of eighteen convenient full service retail locations, 64 cash machines, free online banking with free bill pay and exceptional customer service has resulted in a record growth of new checking account customers. The Bank's 2008 marketing plan is focused on promoting and growing all deposit accounts, with an emphasis on checking accounts. As a result of these efforts, service charge income in the first quarter of 2008 increased by $175,000 as compared to the first quarter of 2007. Management will continue to focus on improving the Company's deposit mix, reducing our interest expense while improving our net interest margin and growing non-interest income."

Commenting on changes in the investment portfolio, Mr. Peck said, "During the first quarter of 2008, the Federal Reserve aggressively reduced the federal funds rate. The reduction in short-term interest rates provided the opportunity for the Company to realize $534,000 in gains on the sales of securities, the vast majority being agency bonds. Coupled with other issues in the credit markets, the Company was able to reinvest these funds into agency mortgage-backed securities at attractive yields.

"In addition, at March 31, 2008, total assets increased to $812.6 million compared with $808.4 million at December 31, 2007, deposits increased to $601.7 million compared with $598.8 million at December 31, 2007, while net loans increased to $585.7 million compared with $576.3 million at December 31, 2007. Federal Home Loan Bank borrowings have decreased to $98.2 million at March 31, 2008, compared to $101.9 million at December 31, 2007. "

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 as well as Fall & Fall Insurance of Fulton, Kentucky, Heritage Solutions of Murray, Kentucky, Dickson, Tennessee and Pleasant View, Tennessee and Heritage Mortgage Services of Clarksville, Tennessee. 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, http://www.bankwithheritage.com/.

Information contained in this press release, other than historical information, may be considered forward-looking in nature and is subject to various risks, 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.

HOPFED BANCORP, INC.
Selected Financial Data
(In thousands, except per share data)

Three Months Ended
March 31,
2008 2007
Earnings Summary
Interest income on loans $10,679 $9,520
Interest income on investments, taxable 1,677 1,967
Interest income on investments, tax exempt 164 122
Interest income on fed funds 58 171
Total interest income 12,578 11,780

Interest expense on deposits 5,463 5,320
Interest expense on subordinated debentures 161 187
Interest expense on repurchase agreements 329 248
Interest expense on FHLB advances 1,068 1,101
Total interest expense 7,021 6,856

Net interest income 5,557 4,924

Provision for loan losses 401 240

Net interest income after provision
for loan losses 5,156 4,684

Non-interest income:
Income from financial services 240 301
Gain on sale of investments 534 --- Gain on sale of loans 64 27
Service charges 1,067 892
Income from bank owned life insurance 68 93
Merchant card income 132 119
Other 299 309
Total non-interest income 2,404 1,741

Three Months Ended
March 31,
2008 2007
Non-interest expense:
Salaries and benefits $2,901 $2,589
Intangible amortization 220 241
Occupancy expense 687 613
Data processing 534 430
State deposit taxes 128 128
Advertising expense 282 253
Professional services expense 256 370
Postage and telephone expense 155 126
Office supplies expense 80 102
Other operating expenses 171 136

Total non-interest expense 5,414 4,988

Net income before income taxes 2,146 1,437
Income tax expense 654 415

Net income $1,492 $1,022

Earnings per share - basic $0.42 $0.28

Earnings per share - diluted $0.42 $0.28

Dividend per share $0.12 $0.12

Weighted average shares outstanding - Basic 3,568,556 3,629,520

Weighted average shares outstanding - Diluted 3,583,017 3,654,726

As of
March 31, 2008 December 31, 2007

Total assets $812,611 $808,352
Loans receivable, gross 590,555 581,094
Securities available for sale 146,339 142,310
Securities held to maturity 4,037 14,095
Federal Home Loan Bank stock, at cost 3,943 3,836
Allowance for loan losses 4,862 4,842
Total deposits 601,728 598,753
FHLB borrowings 98,202 101,882
Repurchase agreements 39,181 37,199
Stockholder's equity 57,250 55,803
Book value per share $16.02 $15.54
Allowance for loan loss as a percent of
gross loans 0.82% 0.83%
Non performing assets as a percent of assets 0.20% 0.12%
Non-accrual loans as a percent of gross loans 0.21% 0.10%
Net yield on interest earning assets 3.05% 2.89%

First Call Analyst:
FCMN Contact:

Source: HopFed Bancorp, Inc.

CONTACT: John E. Peck, President and CEO of HopFed Bancorp, Inc.,
+1-270-885-1171

Web site: http://www.bankwithheritage.com/

2008-04-23 17:47:55 0343777 PRNEWSWIRE