HOPFED BANCORP, INC 
By HOPKINSVILLE, Ky., Jan. 25 /PRNewswire-FirstCall/ -- HopFed Bancorp, Inc. (Nasdaq: HFBC) (the "Company") today reported results for the three and twelve-month periods ended December 31, 2009. For the three month period ended December 31, 2009, net income available for common shareholders was $1,953,000, or $0.55 per share (basic and diluted), compared to a net loss available to common shareholders of ($2,875,000), or ($0.80) per share (basic and diluted) for the three month period ended September 30, 2009, and net income available to common shareholders of $657,000, or $0.18 per share (basic and diluted) for the three month period ended December 31, 2008. For the twelve month period ended December 31, 2009, net income available for common shareholders was $944,000, or $0.26 per share (basic and diluted) as compared to net income available to common shareholders of $4,559,000, or $1.28 per share basic and $1.27 per share diluted for the twelve month period ended December 31, 2008.
The results of operations for the three month period ended September 30, 2009, and the twelve month period ended December 31, 2009, were strongly influenced by a $5.0 million goodwill impairment charge that was disclosed in the Company's September 30, 2009, Quarterly Report on Form 10-Q.
Commenting on the fourth quarter results, John E. Peck, president and chief executive officer, said, "We believe the Company's performance in the fourth quarter was outstanding. The Company achieved above average earnings performance in spite of difficult economic headwinds and significant one-time events that had a negative impact on the quarter. The Company has made significant progress in lowering its cost of funds and increasing its net interest margin."
Highlights from the Fourth Quarter
-- Heritage Bank, the Company's wholly owned subsidiary, remains well
capitalized by regulatory standards with a Tier One Capital Ratio in
excess of 8.00% and a Total Risk Based Capital Ratio of 13.2%.
-- The Company's provision for loan loss expense was $884,000 and $4.2
million for the three and twelve- month periods ended December 31, 2009,
respectively, as compared to $735,000 and $2.4 million for the three and
twelve month periods ended December 31, 2008.
-- During the quarter, the Company determined that two Private Label CMOs
were Other than Temporarily Impaired due to high defaults rates
occurring with their portfolios. As a result, the Company incurred a
$200,000 charge to reduce the book value of these securities. This
action reduced the Company's quarterly and annual net income by
$132,000, or $0.04 per share (basic and diluted).
-- The Company reduced interest income on loans by approximately $229,000,
representing all interest earned but uncollected on loans in non-accrual
status. This action reduced the Company's fourth quarter net income by
approximately $151,000. The action reduced the Company's fourth quarter
net interest margin by 10 basis points and its annual net interest
margin by 3 basis points.
Asset Quality
At December 31, 2009, the Company's non-performing loans total $11.3 million, or 1.74% of total loans. Nonperforming assets totaled $13.2 million, or 1.28% of total assets. As a result of the problems related to these two credits, the Company incurred an additional $884,000 in provision for loan loss expense. At December 31, 2009, the Company's allowance for loan loss balance was $8.9 million, or 1.36% to total loans and 78% of nonperforming loans. For the year ended December 31, 2009, the Company's net charge offs totaled $1.5 million, or 0.23% of average loans.
Net Interest Income
For the three and twelve month periods ended December 31, 2009, the Company's net interest income was $7.0 million and $26.8 million, respectively, compared to $5.7 million and $23.1 million, respectively, for the same periods in 2008. The Company's net interest income for the three month period ended September 30, 2009, was $6.9 million. The Company's level of net interest income was adversely affected by the elimination of all non-accrual loan interest. As compared to the third quarter of 2009, interest expense on deposits declined by approximately $440,000 and total interest expense declined by approximately $500,000 despite a $3.95 million increase in the average balance of interest bearing liabilities. For the quarters ended March 31, 2009, June 30, 2009, September 30, 2009 and December 31, 2009, the Company's quarterly net interest margin was 2.89%, 2.93%, 3.02% and 3.07%, respectively. At December 31, 2009, the Company's reversal of all interest on non-accrual loans reduced that Company's quarterly net interest margin by 10 basis points and year to date net interest margin by 3 basis points.
Non-interest Income
Non-interest income for the three month period ended December 31, 2009 was $3.0 million as compared to $2.1 million for the three month period ended September 30, 2009 and $1.8 million for the three month period ended December 31, 2008. The increase in net interest income was largely the result of $1.1 million in security gains taken during the fourth quarter of 2009. Bank owned life insurance income also experienced a significant one-time increase as management made adjustments to the Company's income accretion rates. Non-interest income was negatively influenced by the $200,000 other than temporary impairment charge on two Private Label CMOs. Other non-interest income categories are largely unchanged as compared to prior periods.
Non-interest Expense
For the three month periods ended December 31, 2009 and September 30, 2009, non-interest expenses excluding goodwill impairment charges declined by $621,000. For the twelve month period ended December 31, 2009, noninterest expenses excluding goodwill impairment charges increased by $3.1 million, as compared to the twelve month period ended December 31, 2008. The most significant increase in operating expenses was in deposit insurance and examination fees, which increased by $1.6 million. During the same period, salary and benefits increased by $784,000, data processing expenses increased by $335,000, and other operating expenses increased by $271,000. At December 31, 2009, the Company prepaid $4.6 million in additional FDIC fees to be expensed over the next three years.
Balance Sheet
Total assets were $1.03 billion at December 31, 2009, an increase of $62.0 million from December 31, 2008. During the same period, the Company's deposits grew at an annualized rate of 11.4%, to $794.1 million, while gross loans grew at an annualized rate of 2.6% to $651.2 million. The Company's total borrowings from the Federal Home Loan Bank of Cincinnati declined to $102.5 million at December 31, 2009, from $130.0 million at December 31, 2008.
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, Hopkinsville, Kentucky, Kingston Springs, 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 www.bankwithheritage.com.
Information contained in this press release, other than historical information, may be considered forwardlooking 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.
HOPFED BANCORP, INC.
Selected Financial Data
(Dollars in thousands)
Selected Financial Indicators as of:
------------------------------------
December 31, September 30, December 31,
2009 2009 2008
------------- -------------- -------------
Total assets $1,029,159 $1,022,123 $967,560
Loans
receivable,
gross 651,206 656,471 634,489
Securities
available for
sale 289,691 305,462 246,952
Securities held
to maturity --- --- 454
Required
investment in
FHLB stock, at
cost 4,281 4,281 4,050
Allowance for
loan loss 8,851 8,429 6,133
Total deposits 794,144 765,381 713,005
Total FHLB
borrowings 102,465 125,307 130,012
Repurchase
agreements 36,060 32,926 28,679
Stockholders'
equity 79,949 80,694 78,284
Book value per
share, gross $17.12 $17.33 $16.67
Tangible book
value per share $16.80 $16.98 $14.77
Allowance for
loan loss /
Gross loans 1.36% 1.28% 0.97%
Non-performing
assets /Total
asset 1.28% 0.86% 0.86%
Non-performing
loans /Total
loans 1.74% 1.12% 1.16%
Annualized net
charge off
ratio 0.23% 0.21% 0.20%
Tier 1 Capital -
Bank 8.05% 7.89% 7.77%
Total Risk Based
Capital -Bank 13.25% 13.23% 12.62%
Year to date tax
equivalent net
yield
on interest
earning assets 2.97% 2.95% 3.04%
HOPFED BANCORP, INC.
Selected Financial Data
(Dollars in thousands)
For the Three For the Twelve
Months Months
Ended December Ended December
31, 31,
2009 2008 2009 2008
---- ---- ---- ----
Interest and dividend
income:
Loans receivable $9,683 10,098 38,921 41,421
Investment in securities,
taxable 2,977 2,202 12,647 7,270
Nontaxable securities
available for sale 475 162 1,565 639
Interest-earning deposits --- 29 8 147
--- --- --- ---
Total interest and
dividend income 13,135 12,491 53,141 49,477
------ ------ ------ ------
Interest expense:
Deposits 4,796 5,458 20,833 20,789
Advances from Federal Home
Loan Bank 962 922 4,070 3,940
Repurchase agreements 179 223 767 1,079
Subordinated debentures 196 207 642 612
--- --- --- ---
Total interest expense 6,133 6,810 26,312 26,420
----- ----- ------ ------
Net interest income 7,002 5,681 26,829 23,057
Provision for loan losses 884 735 4,199 2,417
--- --- ----- -----
Net interest income after
provision for loan losses 6,118 4,946 22,630 20,640
----- ----- ------ ------
Non-interest income:
Service charges 1,082 1,115 4,222 4,535
Merchant card income 162 144 612 576
Gain on sale of loans 82 23 271 135
Gain on sale of AFS
securities 1,134 --- 2,715 718
Other than temporary
impairment charge
on AFS securities (200) --- (200) ---
Income from bank owned
life insurance 261 67 481 270
Financial services
commission 245 215 983 1,055
Other operating income 274 229 1,141 1,055
--- --- ----- -----
Total non-interest income 3,040 1,793 10,225 8,344
----- ----- ------ -----
HOPFED BANCORP, INC.
Selected Financial Data
(Dollars in thousands, except share and per share data)
For the Three For the Twelve
Months Months
Ended December 31, Ended December 31,
2009 2008 2009 2008
---- ---- ---- ----
Non-interest
expenses:
Salaries and
benefits $2,936 2,789 12,240 11,456
Occupancy expense 762 770 3,074 2,882
Data processing
expense 659 575 2,595 2,260
State deposit tax 154 128 619 512
Intangible
amortization 98 204 651 847
expense
Impairment charge
on --- --- 4,989 ---
goodwill
Professional
services 225 352 1,002 1,271
expense
Advertising
expense 328 361 1,304 1,167
Postage and
communications 136 146 616 622
expense
Supplies expense 101 88 363 341
Deposit insurance
and 343 144 2,026 463
examination
expense
Losses and
expenses related 102 39 241 104
to real estate
owned
Other operating
expenses 221 127 763 492
--- --- --- ---
Total non-
interest expense 6,065 5,723 30,483 22,417
----- ----- ------ ------
Income (loss)
before income 3,093 1,016 2,372 6,567
tax expense
Income tax
expense
(benefit) 880 303 397 1,952
--- --- --- -----
Net income (loss) $2,213 713 1,975 4,615
------ --- ----- -----
Less:
Dividend on
preferred shares $232 $50 920 $50
Accretion
dividend on $28 $6 111 $6
preferred shares --- --- --- ---
Net income
available to $1,953 657 944 4,559
common
stockholders ====== === === =====
Net income
available to
common
stockholders
Per share, basic $0.55 0.18 0.26 1.28
===== ==== ==== ====
Per share,
diluted $0.55 0.18 0.26 1.27
===== ==== ==== ====
Dividend per
share $0.12 0.12 0.48 0.48
===== ==== ==== ====
Weighted average
shares 3,574,375 3,571,713 3,569,969 3,572,127
outstanding -
basic ========= ========= ========= =========
Weighted average
shares 3,574,375 3,576,604 3,569,969 3,597,483
outstanding -
diluted ========= ========= ========= =========
HOPFED BANCORP, INC.
Reconciliation of Non-GAAP Measures Presented in Earnings
Release
(Dollars in thousands, except per share data)
For the Twelve
Months
--------------
Ended December 31,
------------------
2009 2008
---- ----
Total non-interest expense 30,483 22,417
Goodwill impairment charge 4,989 ---
----- ---
Operating expenses 25,494 22,417
====== ======
Net income (loss) available to
common shareholders as reported $944 $4,559
Goodwill impairment, net of
tax benefit 3,293 ---
----- ---
Adjusted earnings $4,237 $4,559
====== ======
Basic earnings (loss) per
common share as reported $0.26 $1.28
Goodwill impairment, net of
tax benefit $0.93 ---
----- ---
Adjusted basic common
earnings per common share $1.19 $1.28
===== =====
Diluted earnings (loss) per
common share as reported $0.26 $1.27
Goodwill impairment, net of
tax benefit 0.93 ---
---- ---
Adjusted basic common
earnings per common share $1.19 $1.27
===== =====
Use of Non-GAAP financial measures
The above table presents computations and other financial information excluding the goodwill impairment charge (nonGAAP). The goodwill impairment charge is included in the financial results presented in accordance with generally accepted accounting principles (GAAP). The Company believes that the exclusion of goodwill impairment in expressing net operating income (loss), operating expenses and earnings (loss) per share data provides a more meaningful basis for period to period comparisons which will assist investors in analyzing the operating performance and comparable periods in the prior years with the internally prepared projections. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited.
HOPFED BANCORP, INC.
Selected Financial Data
(Dollars in thousands)
For the Three
-------------
Months Ended
------------
12/31/2009 9/30/2009 Change from
Prior
---------- --------- Quarter
--------
Interest and dividend income:
Loans receivable $9,683 $9,898 ($215)
Investment in securities, taxable $2,977 3,179 (202)
Nontaxable securities available
for sale $475 428 47
Interest-earning deposits --- --- ---
--- --- ---
Total interest and dividend
income 13,135 13,505 (370)
------ ------ ----
Interest expense:
Deposits 4,796 5,237 (441)
Advances from Federal Home Loan
Bank 962 1,032 (70)
Repurchase agreements 179 198 (19)
Subordinated debentures 196 168 28
--- --- ---
Total interest expense 6,133 6,635 (502)
----- ----- ----
Net interest income 7,002 6,870 132
Provision for loan losses 884 1,379 (495)
--- ----- ----
Net interest income after
provision for loan losses 6,118 5,491 627
----- ----- ---
Non-interest income:
Service charges 1,082 1,118 (36)
Merchant card income 162 153 9
Gain on sale of loans 82 69 13
Gain on sale of securities 1,134 114 1,020
Other than temporary impairment (200) --- (200)
Income from bank owned life
insurance 261 73 188
Financial services commission 245 262 (17)
Other operating income 274 296 (22)
--- --- ---
HOPFED BANCORP, INC.
Selected Financial Data
(Dollars in thousands, except share and per share data)
For the Three
Months Ended
12/31/2009 9/30/2009 Change from
Prior
---------- --------- Quarter
--------
Non-interest expenses:
Salaries and benefits 2,936 3,086 (150)
Occupancy expense 762 814 (52)
Data processing expense 659 666 (7)
State deposit tax 154 154 ---
Intangible amortization
expense 98 146 (48)
Impairment charge on goodwill --- 4,989 (4,989)
Professional services expense 225 242 (17)
Advertising expense 328 333 (5)
Postage and communications
expense 136 157 (21)
Supplies expense 101 91 10
Deposit insurance and
examination 343 798 (455)
expense
Losses and expenses related to
real 102 35 67
estate owned
Other operating expenses 221 164 57
--- --- ---
Total non-interest expense 6,065 11,675 (5,610)
----- ------ ------
Income (loss) before income
tax expense 3,093 (4,099) 7,192
Income tax expense (benefit) 880 (1,484) 2,364
--- ------ -----
Net income (loss) available to
common stockholders $2,213 ($2,615) 4,828
------ ------- -----
Less:
Dividends on preferred shares 232 232 ---
Accretion dividend on
preferred shares 28 28 ---
--- --- ---
Net income (loss) available to
common stockholders $1,953 ($2,875) 4,828
------ ------- -----
Net income (loss) available to
common stockholders
Per share, basic $0.55 ($0.80) 1.35
===== ====== ====
Per share, diluted $0.55 ($0.80) 1.35
===== ====== ====
Dividends per share $0.12 $0.12 ---
===== ===== ===
Weighted average shares
outstanding - 3,574,375 3,571,716
basic ========= =========
Weighted average shares
outstanding - 3,574,375 3,571,716
diluted ========= =========
SOURCE HopFed Bancorp, Inc.
