-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HVlhBrHHhLBz8VM+7r62qa/R9RyGZWGs/t5JgKHrnXCsTMX1voS0g0BAyT+aotlA dgmG45g5l4I/oZNKnk/TXQ== /in/edgar/work/20000814/0001025537-00-000095/0001025537-00-000095.txt : 20000921 0001025537-00-000095.hdr.sgml : 20000921 ACCESSION NUMBER: 0001025537-00-000095 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOPFED BANCORP INC CENTRAL INDEX KEY: 0001041550 STANDARD INDUSTRIAL CLASSIFICATION: [6035 ] IRS NUMBER: 561995728 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23667 FILM NUMBER: 699196 BUSINESS ADDRESS: STREET 1: 2700 FORT CAMPBELL BLVD CITY: HOPKINSVILLE STATE: KY ZIP: 42440 BUSINESS PHONE: 5028851171 MAIL ADDRESS: STREET 1: 2700 FORT CAMPBELL BLVD CITY: HOPKINSVILLE STATE: KY ZIP: 42440 10-Q 1 0001.txt HOPFED BANCORP INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 000-23667 ----------------- HOPFED BANCORP, INC. -------------------- (Exact name of registrant as specified in its charter) Delaware 61-1322555 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2700 Fort Campbell Boulevard, Hopkinsville, Kentucky 42240 - ---------------------------------------------------- -------- (Address of principal executive offices) (Zip Code) 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 As of June 30, 2000, 4,004,349 shares of Common Stock were issued and outstanding. CONTENTS PAGE ---- PART I. FINANCIAL INFORMATION --------------------- Item 1. Financial Statements Consolidated Statements of Financial Condition as of June 30, 2000 and December 31, 1999....................................... 2 Consolidated Statements of Income for the Three-Month and Six-Month Periods Ended June 30, 2000 and 1999........................ 3 Consolidated Statements of Comprehensive Income for the Three-Month and Six-Month Periods Ended June 30, 2000 and 1999.......... 4 Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2000 and 1999........................ 5 Notes to Unaudited Condensed Financial Statements.................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................. 6 Item 3. Quantitative and Qualitative Disclosures About Market Risk.........................................................11 PART II. OTHER INFORMATION ----------------- Item 4. Submission of Matters to a Vote of Security Holders..................11 Item 6. Exhibits and Reports on Form 8-K.....................................11 SIGNATURES....................................................................12 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HOPFED BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, December 31, ASSETS 2000 1999 ----------- ------------ (Unaudited) (In thousands) Cash and due from banks ................................. $ 2,510 $ 4,537 Interest-bearing deposits in Federal Home Loan Bank ("FHLB") ............................... 22 251 Federal funds sold ...................................... 150 4,100 Investment securities available for sale ................ 91,915 71,423 Investment securities held to maturity (Estimated market values of $8,906 and $10,078 at June 30, 2000 and December 31, 1999, respectively) ..................... 8,810 9,958 Loans receivable, net ................................... 118,812 113,532 Accrued interest receivable ............................. 2,008 1,095 Real estate owned ....................................... 258 -- Premises and equipment, net ............................. 2,468 2,472 Deferred tax assets ..................................... 1,154 515 Other assets ............................................ 429 23 --------- --------- Total assets ................................... $ 228,536 $ 207,906 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits .............................................. $ 162,603 $ 160,905 Advances from FHLB .................................... 18,385 -- Federal income taxes .................................. 1,015 369 Advance payments from borrowers for taxes and insurance 267 156 Other liabilities ..................................... 1,124 2,130 --------- --------- Total liabilities .............................. 183,394 163,560 --------- --------- Shareholders' Equity: Common stock .......................................... 40 39 Additional paid in capital ............................ 25,188 24,214 Retained earnings, substantially restricted ........... 21,477 20,991 Accumulated other comprehensive loss .................. (1,563) (898) --------- --------- Total shareholders' equity ..................... 45,142 44,346 --------- --------- Total liabilities and shareholders' equity .. $ 228,536 $ 207,906 ========= =========
See accompanying Notes to Unaudited Condensed Financial Statements. 2 HOPFED BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months For the Six Months Ended June 30, Ended June 30, -------------------------------------- ----------------------------------- 2000 1999 2000 1999 ----------------- ----------------- --------------- --------------- (Dollars in thousands, except per share data) Interest income: Interest on loans...................... $ 2,125 $ 2,079 $ 4,305 $ 4,172 Interest and dividends on investments.. 1,849 1,103 3,556 2,303 Time deposit interest income........... 7 323 21 531 ------------- -------------- ------------ ------------ Total interest income.............. 3,981 3,505 7,882 7,006 ------------- -------------- ------------ ------------ Interest expense: Interest on deposits................... 1,930 1,763 3,823 3,537 Interest on advances................... 292 -- 477 -- ------------- -------------- ------------ ------------ Total interest expense............ 2,222 1,763 4,300 3,537 ------------- -------------- ------------ ------------ Net interest income......................... 1,759 1,742 3,582 3,469 Provision for loan losses................... 10 5 20 10 ------------- -------------- ------------ ------------ Net interest income after provision for loan losses........................ 1,749 1,737 3,562 3,459 ------------- -------------- ------------ ------------ Noninterest income: Loan and other service fees............ 120 117 235 219 Other, net............................. 19 19 31 30 ------------- ------------- ------------ ------------ Total noninterest income........... 139 136 266 249 ------------- -------------- ------------ ------------ Noninterest expenses: Salaries and benefits.................. 595 2,336 1,161 2,960 Federal insurance premium.............. 8 22 18 46 Occupancy expense, net................. 49 47 96 94 Data processing........................ 40 28 82 65 Other operating expenses............... 202 229 375 378 ------------- -------------- ------------ ------------ Total noninterest expenses......... 894 2,662 1,732 3,543 ------------- -------------- ------------ ------------ Income (loss) before income taxes........... 994 (789) 2,096 165 Income tax expense (recovery)............... 355 (212) 730 149 ------------- -------------- ------------ ------------ Net income (loss)........................... 639 (577) 1,366 16 ============= ============== ============ ============ Basic net income (loss) per share........... $ .16 $ (.15) $ .34 $ .00 Diluted net income (loss) per share......... $ .16 $ (.15) $ .34 $ .00 Dividends per share......................... $ .11 $ .075 $ .185 $ .15 ============= ============== ============ ============ Weighted Average: Common Shares.......................... 3,999,807 4,068,376 3,996,682 $ 4,051,096 Less: unallocated ESOP Shares........... -- 288,426 -- 288,426 ------------- -------------- ------------ ------------ 3,999,807 3,779,950 3,996,682 3,762,670 ============= ============== ============ ============
See accompanying Notes to Unaudited Condensed Financial Statements. 3 HOPFED BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
For the Three Months For the Six Months Ended June 30 Ended June 30 ---------------------------- ----------------------------- 2000 1999 2000 1999 ------------- ---------- ------------- ----------- (In Thousands) Net income (loss) $ 639 $ (577) $ 1,366 $ 16 Other comprehensive income, net of tax Unrealized holding gains (losses) arising during period net of tax effect of ($55) and ($271) for the three months ended June 30, 2000 and 1999, respectively, and ($343) and ($588) for the six months ended June 30, 2000 and 1999, respectively (106) (527) (665) (1,141) Less:reclassification adjustment for gains included in net income 0 0 0 0 ---------- ------- ---------- -------- Comprehensive income (loss) $ 533 $ (1,104) $ 701 $ (1,125) ========== ======= ========== ========
See accompanying Notes to Unaudited Condensed Financial Statements 4 HOPFED BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, ------------------------- 2000 1999 ------------ ----------- (In thousands) Cash flows from operating activities: Net income ............................................ $ 1,366 $ 16 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses ............................. 21 10 Provision for depreciation ............................ 55 57 FHLB stock dividend ................................... (72) (65) Accretion of investment security discounts ............ (9) (52) Amortization of investment security premiums .......... 20 17 Unallocated ESOP shares ............................... -- 58 MRP Shares ............................................ 974 1,291 (Increase) decrease in Accrued interest receivable ........................... (913) 310 Other assets .......................................... (406) (505) Increase (decrease) in: Current income taxes payable .......................... 44 -- Deferred income taxes ................................. 306 22 Accrued expenses and other liabilities ................ (1,139) 613 -------- -------- Net cash provided by operating activities ............. 247 1,772 -------- -------- Cash flows from investing activities: Net (increase) decrease in interest earning deposits in FHLB ........................................... 229 (1,076) Net decrease in federal funds sold .................... 3,950 339 Proceeds from maturities of held-to-maturity securities 1,152 16,103 Proceeds from sale of available-for-sale securities ... 3,606 22,534 Purchases of available-for-sale securities ............ (25,048) (36,678) Net increase in loans ................................. (5,301) (3,065) Real estate acquired in settlement of loans ........... (258) -- Purchases of premises/equipment ....................... (51) (40) -------- -------- Net cash used in investing activities ................. (21,721) (1,883) -------- -------- Cash flows from financing activities: Net increase in demand deposits ....................... 756 2,528 Net increase (decrease) in time deposits .............. 942 (2,431) Advances from FHLB .................................... 18,385 -- Increase in advance payments by borrowers for taxes and insurance ................. 111 101 Net dividends paid .................................... (747) (560) Payment on loan to ESOP ............................... -- 48 -------- -------- Net cash used in financing activities ................. 19,447 (314) -------- -------- Decrease in cash and cash equivalents ...................... (2,027) (425) Cash and cash equivalents, beginning of period ............. 4,537 1,905 -------- -------- Cash and cash equivalents, end of period ................... 2,510 1,480 ======== ======== Supplemental disclosures of cash flow information Cash paid for income taxes ............................ $ 381 $ 600 ======== ======== Cash paid for interest ................................ $ 4,316 $ 3,536 ======== ========
See accompanying Notes to Unaudited Condensed Financial Statements. 5 NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION HopFed Bancorp, Inc. (the "Company") was formed at the direction of 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 asset is the outstanding capital stock of the converted Bank, and its sole business is that of the converted Bank and the investment of funds held by it. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") 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 GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for fair presentation have been included. The results of operations and other data for the six month period ended June 30, 2000 are not necessarily indicative of results that may be expected for the entire fiscal year ending December 31, 2000. The accompanying unaudited financial statements should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. The accounting policies followed by the Company are set forth in the Summary of Significant Accounting Policies in the Company's December 31, 1999 Consolidated Financial Statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2000 AND DECEMBER 31, 1999 Total assets increased by $20.6 million, from $207.9 million at December 31, 1999 to $228.5 million at June 30, 2000. Investment securities available for sale increased from $71.4 million at December 31, 1999 to $91.9 million at June 30, 2000. Federal funds sold decreased from $4.1 million at December 31, 1999, to $150,000 at June 30, 2000. At June 30, 2000, investments classified as "held to maturity" were carried at amortized cost of $8.8 million and had an estimated fair market value of $8.9 million, and securities classified as "available for sale" had an estimated fair market value of $91.9 million. The loan portfolio increased $5.3 million during the six months ended June 30, 2000. Net loans totaled $118.8 million and $113.5 million at June 30, 2000 and December 31, 1999, respectively. For the six months ended June 30, 2000, the average yield on loans was 7.46%, compared to 7.57% for the year ended December 31, 1999. The allowance for loan losses totaled $299,000 at June 30, 2000, an increase of $21,000 from the allowance of $278,000 December 31, 1999. The ratio of the allowance for loan losses to 6 loans was .25% and .24% at June 30, 2000 and December 31, 1999, respectively. Also at June 30, 2000, non-performing loans were $374,000, or .31% of total loans, compared to $58,000, or .05% of total loans, at December 31, 1999, and the ratio of allowance for loan losses to non-performing loans at June 30, 2000 and December 31, 1999 was 79.9% and 479.3%, 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 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. Minimal losses on loans have been incurred in prior years. Real estate owned of $258,000 at June 30, 2000 represents one parcel of residential property on which the Bank held a first mortgage and which was acquired by the Bank in a sale initiated by the second mortgagee. In 1999, the Company determined to retain its deposit base through an increase in overall deposit rates. At June 30, 2000, deposits increased to $162.6 million from $160.9 million at December 31, 1999, a net increase of $1.7 million. The average cost of deposits during the six months ended June 30, 2000 and the year ended December 31, 1999 was 4.81% and 4.62%, 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 SIX MONTHS ENDED JUNE 30, 2000 AND 1999 NET INCOME. Net income for the six months ended June 30, 2000 was $1.4 million, compared to net income of $16,000 for the six months ended June 30, 1999. The increase in net earnings for the six months resulted primarily from additional compensation expense in 1999 of $1.8 million resulting from employee benefits which were approved at the 1999 Annual Meeting of Stockholders. Excluding such compensation expense, for the six months ended June 30, 1999, net income after tax would have been approximately $1.3 million. As discussed below, the increase was also attributable to a $103,000 increase in total interest income. NET INTEREST INCOME. Net interest income for the six months ended June 30, 2000 was $3.6 million, compared to $3.5 million for the six months ended June 30, 1999. The increase in net interest income for the six months ended June 30, 2000 was primarily due to increases of $133,000 and $1.3 million in interest on loans and interest and dividends on investments, respectively. For the six months ended June 30, 2000, the Bank's average yield on average interest-earning assets was 7.30%, compared to 6.53% for the six months ended June 30, 1999, and its average cost of interest-bearing liabilities was 4.93% for the six months ended June 30, 2000, compared to 4.64% for the six months ended June 30, 1999. As a result, the Bank's interest rate spread for the six months ended June 30, 2000 was 2.37%, compared to 1.89% for the six months ended June 30, 1999, and its net yield on interest-earning assets was 3.32% for the six months ended June 30, 2000, compared to 3.23% for the six months ended June 30, 1999. INTEREST INCOME. Interest income increased by $900,000, from $7.0 million to $7.9 million, or by 12.9%, during the six months ended June 30, 2000 compared to the same period 7 in 1999. This increase primarily resulted from restructuring of the investment portfolio which produced an increase of $1.3 million in interest and dividends on investments. The average balance of securities available for sale increased $17.6 million, from $72.7 million at June 30, 1999, to $90.3 million at June 30, 2000, while the average balance of securities held to maturity decreased $7.4 million, from $16.9 million at June 30, 1999 to $9.5 million at June 30, 2000. In addition, average time deposits and other interest-earning cash deposits decreased $14.1 million, from $14.9 million at June 30, 1999 to $790,000 at June 30, 2000. Overall, average total interest-earning assets increased $1.4 million, or 0.65%, from June 30, 1999 to June 30, 2000. The ratio of average interest-earning assets to average interest-bearing liabilities decreased from 140.80% for the six months ended June 30, 1999 to 123.88% for the six months ended June 30, 2000. INTEREST EXPENSE. Interest expense increased $763,000, or 21.57%, to $4.3 million for the six months ended June 30, 2000, compared to $3.5 million for the same period in 1999. The increase was attributable to an increase of $286,000 in interest on deposits and interest on FHLB advances of $477,000. During the six months ended June 30, 2000, the Bank borrowed approximately $18.4 million from the FHLB of Cincinnati in order to fund increases in loans and investments. The average cost of average interest-bearing deposits increased from 4.64% at June 30, 1999 to 4.93% at June 30, 2000. Over the same period, the average balance of deposits increased $6.7 million, from $152.4 million at June 30, 1999 to $159.1 million at June 30, 2000, or 4.40%. 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 Bank determined that an additional $20,400 provision for loan losses was required for the six months ended June 30, 2000. NON-INTEREST EXPENSES. There was a $1.8 million decrease in total non-interest expenses in the six months ended June 30, 2000 compared to the same period in 1999, primarily due to a $1.8 million decrease in salaries and benefits. INCOME TAXES. The effective tax rate for the six months ended June 30, 2000 was 34.8%, compared to 90.3% for the same period in 1999. The abnormally high effective tax rate for the six months ended June 30, 1999, was attributable to $277,000 of expenses being non-deductible for tax purposes. The increase in income tax expense of $581,000 in the six months ended June 30, 2000 compared to the same period in 1999 was primarily due to an increase of $1.9 million in income before income taxes. COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999 NET INCOME. Net income for the three months ended June 30, 2000 was $639,000, compared to a net loss of $577,000 for the three months ended June 30, 1999. The increase in net income for the three months ended June 30, 2000 resulted primarily from compensation expense in 1999 related to additional employee benefits which were approved at the 1999 Annual Meeting of Stockholders. 8 NET INTEREST INCOME. Net interest income for each of the three months ended June 30, 2000 and June 30, 1999 was $1.7 million. For the three months ended June 30, 2000, the average yield on total interest-earning assets was 7.26%, compared to 6.53% for the three months ended June 30, 1999, and the average cost of interest-bearing liabilities was 5.02% for the three months ended June 30, 2000, compared to 4.62% for the three months ended June 30, 1999. As a result, the interest rate spread for the three months ended June 30, 2000 was 2.24%, compared to 1.91% for the three months ended June 30, 1999, and the net yield on interest-earning assets was 3.21% for the three months ended June 30, 2000, compared to 3.25% for the three months ended June 30, 1999. INTEREST INCOME. Interest income increased by $476,000, from $3.5 million to $4.0 million, or by 13.58%, during the three months ended June 30, 2000 compared to the same period in 1999. The average balance of securities available for sale increased $17.4 million, from $74.9 million at June 30, 1999 to $92.3 million at June 30, 2000, while the average balance of securities held to maturity decreased $2.5 million, from $11.7 million at June 30, 1999 to $9.2 million at June 30, 2000. In addition, average time deposits and other interest-earning cash deposits decreased $16.9 million, from $17.4 million at June 30, 1999 to $507,000 at June 30, 2000. The average balance of loans receivable at June 30, 2000 was $117.2 million, an increase of $6.5 million from the average balance at June 30, 1999. Overall, average total interest-earning assets increased $4.4 million, or 2.06%, from June 30, 1999 to June 30, 2000. The ratio of average interest-earning assets to average interest-bearing liabilities decreased from 140.77% for the three months ended June 30, 1999 to 123.87% for the three months ended June 30, 2000. INTEREST EXPENSE. Interest expense increased $459,000, or 26.04%, to $2.2 million for the three months ended June 30, 2000, compared to $1.8 million for the same period in 1999. The increase was attributable to an increase of $167,000 in interest on deposits and interest on FHLB advances of $292,000. The average cost of average interest-bearing deposits increased from 4.62% at June 30, 1999 to 5.02% at June 30, 2000. Over the same period, the average balance of deposits increased $6.5 million, from $152.6 million at June 30, 1999 to $159.1 million at June 30, 2000, or 4.26%. The average balance of advances from the FHLB was $17.9 million at June 30, 2000 compared to none at June 30, 1999. PROVISION FOR LOAN LOSSES. The Bank determined that an additional $10,200 provision for loan losses was required for the three months ended June 30, 2000, compared to an additional $5,100 provision for the three months ended June 30, 1999. NON-INTEREST EXPENSES. There was a $1.8 million decrease in total non-interest expenses in the three months ended June 30, 2000 compared to the same period in 1999, primarily due to a $1.7 million decrease in salaries and benefits. INCOME TAXES. The effective tax rate for the three months ended June 30, 2000 was 35.7%, compared to 26.9% for the same period in 1999. The increase in income tax expense of $567,000 in the three-month period compared to the same period in 1999 was primarily due to a $1.8 million increase in income before income taxes. 9 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 initial operations and liquidity 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 is required by current federal regulations to maintain specified liquid assets of at least 5% of its net withdrawable accounts plus short-term borrowings. Short-term liquid assets (those maturing in one year or less) may not be less than 1% of the Bank's liquidity base. At June 30, 2000, the Bank met all regulatory liquidity requirements, and management believes that the liquidity levels maintained are adequate to meet potential deposit outflows, loan demand and normal operations. 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 June 30, 2000, the Bank exceeded all regulatory capital requirements. The table below presents certain information relating to the Bank's capital compliance at June 30, 2000. Amount Percent ------ ------- (Dollars in thousands) Tangible Capital . . . . . . . . . . $ 45,578 19.78 % Core Capital . . . . . . . . . . . . $ 45,578 19.78 % Risk-Based Capital . . . . . . . . $ 45,876 52.98 % At June 30, 2000, the Bank had outstanding commitments to originate loans totaling $4.0 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 June 30, 2000 totaled $66.7 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 10 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. 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 is unable to predict future changes in market rates and their impact on the Company's profitability. The Company does not believe that material changes in market risk exposures have occurred since December 31, 1999. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 10, 2000, the Company held its Annual Meeting of Stockholders at which the following matters were considered and voted on: Proposal I - Election of Directors: Nominees For Withheld - -------- --- -------- Peggy R. Noel 421,069 8,740 There were no abstentions or broker non-votes. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 27 - Financial Data Schedule (SEC use only) Exhibit 10.1 - Employment Agreement by and between HopFed Bancorp, Inc. and John E. Peck Exhibit 10.2 - Employment Agreement by and between Hopkinsville Federal Savings Bank and John E. Peck (b) None. 11 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. HOPFED BANCORP, INC. Date: August 14, 2000 /s/ John E. Peck ----------------- John E. Peck President and Chief Executive Officer Date: August 14, 2000 /s/ Peggy R. Noel ------------------ Peggy R. Noel Executive Vice President, Chief Financial Officer and Chief Operations Officer 12 EX-10.1 2 0002.txt EMPLOYMENT AGREEMENT-HOPFED/PECK Exhibit 10.1 EMPLOYMENT AGREEMENT -------------------- THIS AGREEMENT is entered into as of the 31st day of May 2000, by and between HopFed Bancorp, Inc. (the "Company") and John E. Peck (the "Employee"). WHEREAS, the Company desires to employ the Employee; and WHEREAS, the Employee is willing to commence employment with the Company on the terms and conditions set forth below, and the Board of Directors has determined that such terms are reasonable and in the best interests of the Company. NOW, THEREFORE, it is AGREED as follows: 1. Employment. The Employee is hereby employed by the Company. Effective July 3, 2000, the Employee shall serve as President and Chief Executive Officer of the Company. Except to the extent that the Board of Directors of the Company (the "Board") shall have delegated a portion of such authority to one or more other officers, as President and Chief Executive Officer of the Company the Employee shall have general charge and direction of the business of the Company, shall see that all orders and resolutions of the Board are carried into effect, and shall perform such other administrative and management services for the Company as are currently rendered and as are customarily performed by persons situated in a similar executive capacity. The Employee shall also promote, by entertainment or otherwise, as and to the extent permitted by law, the business of the Company. 2. Consideration from Company Joint, and Several Liability. In lieu of paying the Employee a base salary during the term of this Agreement, the Company hereby agrees that to the extent permitted by law, it shall be jointly and severally liable with its subsidiary, Hopkinsville Federal Savings Bank (the "Bank"), for the payment of all amounts due under the employment agreement of even date herewith between the Bank and the Employee. Nevertheless, the Board may in its discretion at any time during the term of this Agreement agree to pay the Employee a base salary for the remaining term of this Agreement. If the Board agrees to pay such salary, the Board shall thereafter review, not less often than annually, the rate of the Employee's salary, and in its sole discretion may decide to increase his salary. 3. Discretionary Bonuses. The Employee shall participate in an equitable manner with all other senior management employees of the Company in discretionary bonuses that the Board may award from time to time to the Company's senior management employees. No other compensation provided for in this Agreement shall be deemed a substitute for the Employee's right to participate in such discretionary bonuses. 4. (a) Participation in Retirement, Medical and Other Plans. The Employee shall be entitled to participate in any plan that the Company maintains for the benefit of its employees if the plan relates to (i) pension, profit-sharing, or other retirement benefits, (ii) medical insurance or the reimbursement of medical or dependent care expenses, or (iii) other group benefits, including disability and life insurance plans. 1 Exhibit 10.1 (b) Employee Benefits. The Employee shall participate in any fringe benefits that are or may become available to the Company's senior management employees, including, for example: any stock option or incentive compensation plans and any other benefits that are commensurate with the responsibilities and functions to be performed by the Employee under this Agreement. (c) Stock Options. As of the date hereof, and as an inducement to the Employee's entering into this Agreement with the Company, the Employee shall be granted options to acquire 40,000 shares of the Company's common stock under the Company's 2000 Stock Option Plan. The stock options shall be granted at the fair market value of the Company's common stock as of the close of business on the date hereof, shall be subject to a four-year vesting schedule (i.e., 25% of such options shall vest on each of the later of May 31, 2001 or the business day subsequent to the 2001 Annual Meeting of Stockholders (the "Annual Meeting"), May 31, 2002, May 31, 2003 and May 31, 2004), shall become fully exercisable upon a "change in control" (as defined in the Section 11(a) hereof) and shall be for a term of 10 years. Such options shall be incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), subject to approval of the 2000 Stock Option Plan by the Company's stockholders at the Annual Meeting. If the 2000 Stock Option Plan is not approved at the Annual Meeting, such options shall not be incentive stock options as defined in Section 422 of the Code. (d) Expenses. The Employee shall be reimbursed for all reasonable out-of-pocket business expenses that he shall incur in connection with his services under this Agreement upon substantiation of such expenses in accordance with the policies of the Company. 5. Term. The Company hereby employs the Employee, and the Employee hereby accepts such employment under this Agreement, for the period commencing on July 3, 2000 (the "Effective Date") and ending 36 months thereafter (or such earlier date as is determined in accordance with Section 9 hereof). Additionally, on each annual anniversary date from the Effective Date, this Agreement and the Employee's term of employment shall be extended for an additional one-year period beyond the then effective expiration date, provided that the Board determines in a duly adopted resolution that the performance of the Employee has met the Board's requirements and standards, and that this Agreement shall be extended. 6. Loyalty Full Time and Attention. (a) During the period of his employment hereunder and except for illness, reasonable vacation periods, and reasonable leaves of absence, the Employee shall devote all his full business time, attention, skill, and efforts to the faithful performance of his duties hereunder to the Company and its subsidiaries; provided that, from time to time, the Employee may serve on the board of directors of, and hold any other offices or positions in, companies or organizations, that will not present any conflict of interest with the Company or any of its subsidiaries or affiliates, or unfavorably affect the performance of Employee's duties pursuant to this Agreement, or will not violate any applicable statute or regulation. "Full business time" is hereby defined as that amount of time usually devoted to like companies by similarly situated 2 Exhibit 10.1 executive officers. During the term of his employment under this Agreement, the Employee shall not engage in any business or activity contrary to the business affairs or interests of the Company, or be gainfully employed in any other position or job other than as provided above. (b) Nothing contained in this Section 6 shall be deemed to prevent or limit the Employee's right to invest in the capital stock or other securities of any business dissimilar from that of the Company, or, solely as a passive or minority investor, in any business. 7. Standards. The Employee shall perform his duties under this Agreement in accordance with such reasonable standards as the Board may establish from time to time. The Company will provide the Employee with the working facilities and staff customary for similar executive officers and necessary for him to perform his duties. 8. Vacation and Sick Leave. The Employee shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his duties under this Agreement in accordance with the terms set forth below, all such voluntary absences to count as vacation time; provided that: (a) The Employee shall be entitled to an annual vacation in accordance with the policies periodically established by the Board for senior management employees of the Company. (b) The Employee shall not receive any additional compensation from the Company on account of his failure to take a vacation, and the Employee shall not accumulate unused vacation from one fiscal year to the next, except in either case to the extent authorized by the Board. (c) In addition to the aforesaid paid vacations, the Employee shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his employment obligations with the Company for such additional periods of time and for such valid and legitimate reasons as the Board may in its discretion approve. Further, the Board may grant to the Employee a leave or leaves of absence, with or without pay, at such time or times and upon such terms and conditions as the Board in its discretion may determine. (d) In addition, the Employee shall be entitled to an annual sick leave benefit as established by the Board. 9. Termination and Termination Pay. Subject to Section 11 hereof, the Employee's employment hereunder may be terminated under the following circumstances: (a) Death. The Employee's employment under this Agreement shall terminate upon his death during the term of this Agreement, in which event the Employee's estate shall be entitled to receive the compensation due the Employee through the last day of the calendar month in which his death occurred. 3 Exhibit 10.1 (b) Disability. The Company may terminate the Employee's employment after having established, through a determination by the Board, the Employee's Disability. For purposes of this Agreement, "Disability" means a physical or mental infirmity that impairs the Employee's ability to substantially perform his duties under this Agreement and that results in the Employee becoming eligible for long-term disability benefits under the Company's long-term disability plan (or, if the Company has no such plan in effect, that impairs the Employee's ability to substantially perform his duties under this Agreement for a period of 180 consecutive days). The Employee shall be entitled to the compensation and benefits provided for under this Agreement for (i) any period during the term of this Agreement and prior to the establishment of the Employee's Disability during which the Employee is unable to work due to the physical or mental infirmity, or (ii) any period of Disability that is prior to the Employee's termination of employment pursuant to this Section 9(b); provided that any benefits paid pursuant to the Company's long-term disability plan will continue as provided in such plan. (c) For Just Cause. The Board may, by written notice to the Employee, immediately terminate his employment at any time, for Just Cause. The Employee shall have no right to receive compensation or other benefits for any period after termination for Just Cause. Termination for "Just Cause" shall mean termination because of, in the good faith determination of the Board, the Employee's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Just Cause unless there shall have been delivered to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board (excluding the Employee if a member of the Board) at a meeting of the Board called and held for the purpose (after reasonable notice to the Employee and an opportunity for the Employee to be heard before the Board), finding that in the good faith opinion of the Board the Employee was guilty of conduct set forth above in the second sentence of this Subsection (c) and specifying the particulars thereof in detail. (d) Without Just Cause. Subject to the provisions of Section 11 hereof, the Board may, by written notice to the Employee, immediately terminate his employment at any time for any reason; provided that, if such termination is for any reason other than pursuant to Sections 9(a), (b) or (c) above, the Employee shall be entitled to receive the following compensation and benefits: (i) the salary provided pursuant to Section 2 hereof, up to the date of expiration of the term (including any renewal term then in effect) of this Agreement (the "Termination Date") and (ii) the cost to the Employee of obtaining all health, life, disability and other benefits (excluding any bonus, stock option or other compensation benefits) in which the Employee would have been eligible to participate through the Termination Date based upon the benefit levels substantially equal to those that the Company provided for the Employee at the date of termination of employment. Said sum shall be paid, at the option of the Employee, either (1) in periodic payments over the remaining term of this Agreement, as if the Employee's employment had not terminated, or (2) in one lump sum within 10 days of such termination. 4 Exhibit 10.1 (e) Termination or Suspension Under Federal Law. (1) If the Employee is removed and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C. ss.1818(e)(4) or (g)(1)), all obligations of the Company under this Agreement shall terminate, as of the effective date of the order, but vested rights of the parties shall not be affected. (2) If the Bank is in default (as "defined in Section 3(x)(1) of FDIA), all obligations under this Agreement shall terminate as of the date of default; however, this Paragraph 9(e)(2) shall not affect the vested rights of the parties. (3) All obligations under this Agreement shall terminate, except to the extent that continuation of this Agreement is necessary for the continued operation of the Company and the Bank: (A) by the Director of the Office of Thrift Supervision ("OTS"), or his or her designee, at the time that the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the FDIA; or (B) by the Director of the OTS, or his or her designee, at the time that the Director of the OTS, or his or her designee, approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director of the OTS to be in an unsafe or unsound condition. Such action shall not affect any vested rights of the parties. (4) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C.ss.1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the Employee from participating in the conduct of the Bank's affairs, the Company's obligations under this Agreement shall be suspended as of the date of such service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Company may in its discretion (A) pay the Employee all or part of the compensation withheld while its contract obligations were suspended, and (B) reinstate (in whole or in part) any of its obligations that were suspended. (5) If any of the provisions of this Paragraph 9(e) conflict with 12 C.F.R.ss.563.39(b), the latter shall prevail. (f) Voluntary Termination by Employee. Subject to the provisions of Section 11 hereof, the Employee may voluntarily terminate employment with the Company during the term of this Agreement, upon at least 60 days' prior written notice to the Board, in which case the Employee shall receive, only his compensation, vested rights and employee benefits accrued up to the date of his termination. (g) Limitation by Section 18(k) of the FDIA. Notwithstanding anything herein to the contrary, any payments made to the Employee pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the FDIA (12 U.S.C. ss.1828(k)) and any regulations promulgated thereunder. 5 Exhibit 10.1 10. No Mitigation. The Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Employee in any subsequent employment. 11. Change in Control. (a) Notwithstanding any provision herein to the contrary, if the Employee's employment under this Agreement is terminated by the Company, without the Employee's prior written consent and for a reason other than for Just Cause, death or disability in connection with or within 12 months after any change in control of the Bank or the Company, which has not been approved in advance by a two-thirds vote of the full Board of Directors of each of the Bank and the Company, the Employee shall be paid an amount equal to two times the Employee's "Base Salary" as defined in the employment agreement of even date herewith between the Bank and the Employee. The term "change in control" shall mean (1) a change in the ownership, holding or power to vote more than 25% of the Bank's or the Company's voting stock, (2) a change in the ownership or possession of the ability to control the election of a majority of the Bank's or the Company's directors, or (3) a change in the ownership or possession of the ability to exercise a controlling influence over the management or policies of the Bank or the Company by any person or by persons acting as a "group" (within the meaning of Section 13(d) of the Securities Exchange Act of 1934) (except that, in the case of (1), (2) and (3) hereof), ownership or control of the Bank or its directors by the Company itself shall not constitute a change in control. The term "person" means an individual other than the Employee, or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity not specifically listed herein. (b) The sum of the amount payable under Section 11(a) hereof and any other "parachute payment" as defined under Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), shall not exceed 2.99 times the Employee's "base amount" as defined in Section 280G(b)(3) of the Code. (c) Notwithstanding the foregoing, but only to the extent required under federal banking law, the amount payable under Section 11(a) hereof shall be reduced to the extent that on the date of the Employee's termination of employment, the amount payable under Section 11(a) exceeds the limitation on severance benefits set forth in Regulatory Bulletin 27a of the OTS, as in effect on such termination date. (d) In the event that any dispute arises between the Employee and the Company as to the terms or interpretation of this Agreement, including this Section 11, whether instituted by formal legal proceedings or otherwise, including an action that Employee takes to enforce the terms of this Section 11 or to defend against any action taken by the Company, the Employee shall be reimbursed for all costs and expenses, including reasonable attorneys' fees, arising from such disputes or proceedings, provided that the Employee shall have obtained a final judgment by a court of competent jurisdiction in his or her favor. Such reimbursement shall be paid within 10 days of Employee's providing the Company with 6 Exhibit 10.1 written evidence, which may be in the form, among others, of a canceled check or receipt, of any costs or expenses incurred by the Employee. 12. Successors and Assigns. (a) This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Company that shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the corporation. (b) Since the Company is contracting for the unique and personal skills of the Employee, the Employee shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Company. 13. Amendments. No amendments or additions to this Agreement shall be binding unless made in writing and signed by all of the parties, except as herein otherwise specifically provided. 14. Applicable Law. This Agreement shall be governed in all respects, whether as to its validity, construction, capacity, performance or otherwise, by the laws of the Commonwealth of Kentucky, except to the extent that Federal law shall be deemed to apply. 15. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 16. Entire Agreement. This Agreement, together with any understanding or modifications thereof as agreed to in writing by the parties, shall constitute the entire agreement between the parties hereto. IN WITNESS WHEREOF the parties have executed this Agreement on the day and year first above written. ATTEST: HOPFED BANCORP, INC. ________________________ By:____________________________________ Secretary WD Kelley, Chairman of the Board WITNESS: - ------------------------ ---------------------------------- John E. Peck 7 EX-10.2 3 0003.txt EMPLOYMENT AGREEMENT-HOPKINSVILLE/PECK Exhibit 10.2 EMPLOYMENT AGREEMENT -------------------- THIS AGREEMENT is entered into as of the 31st day of May, 2000, by and between Hopkinsville Federal Savings Bank (the "Bank") and John E. Peck (the "Employee"). WHEREAS, the Bank desires to employ the Employee; and WHEREAS, the Employee is willing to commence employment with the Bank on the terms and conditions set forth below, and the Board of Directors of the Bank has determined that such terms and conditions are reasonable and in the best interests of the Bank. NOW, THEREFORE, it is AGREED as follows: 1. Employment. The Employee is hereby employed by the Bank. Effective July 3, 2000, the Employee shall serve as President and Chief Executive Officer of the Bank. Except to the extent that the Board of Directors of the Bank (the "Board") shall have delegated a portion of such authority to one or more other officers, as President and Chief Executive Officer the Employee shall have general charge and direction of the business of the Bank, shall see that all orders and resolutions of the Board are carried into effect, and shall perform such other administrative and management services for the Bank as are currently rendered and as are customarily performed by persons situated in a similar executive capacity. The Employee shall also promote, by entertainment or otherwise, as and to the extent permitted by law, the business of the Bank. 2. Base Compensation. Prior to July 3, 2000, the Bank agrees to pay the Employee $1,000. Thereafter, the Bank agrees to pay the Employee as President and Chief Executive Officer during the term of this Agreement a salary (the "Base Salary") at the rate of $116,500 per annum through July 3, 2001, at the rate of $122,325 per annum through July 3, 2002 and at the rate of $128,442 per annum through July 3, 2003, payable in cash not less frequently than monthly. The Board shall review, not less often than annually, the rate of the Employee's Base Salary, and in its sole discretion may decide to increase his Base Salary. 3. Discretionary Bonuses. The Employee shall participate in an equitable manner with all other senior management employees of the Bank in discretionary bonuses that the Board may award from time to time to the Bank's senior management employees. No other compensation provided for in this Agreement shall be deemed a substitute for the Employee's right to participate in such discretionary bonuses. 4. (a) Participation in Retirement, Medical and Other Plans. The Employee shall be entitled to participate in any plan that the Bank maintains for the benefit of its employees if the plan relates to (i) pension, profit-sharing, or other retirement benefits, (ii) medical insurance or the reimbursement of medical or dependent care expenses, or (iii) other group benefits, including disability and life insurance plans. 1 Exhibit 10.2 (b) Employee Benefits. The Employee shall participate in any fringe benefits that are or may become available to the Bank's senior management employees, including, for example: any stock option or incentive compensation plans and any other benefits that are commensurate with the responsibilities and functions to be performed by the Employee under this Agreement. (c) Expenses. The Employee shall be reimbursed for all reasonable out-of-pocket business expenses that he shall incur in connection with his services under this Agreement upon substantiation of such expenses in accordance with the policies of the Bank. (d) Automobile. The Bank shall provide the Employee with the use of an automobile, including all related maintenance, repairs and other costs. The Bank shall also, at its own expense, provide comprehensive insurance coverage for such automobile, naming the Employee as a named insured. The Employee shall take proper care of such automobile and shall be responsible for all damage to such automobile resulting from any misuse or neglect thereof. (e) Relocation Expenses. The Bank shall assist the Employee with relocation expenses, some or all of which may be taxable income to the Employee, as follows: (1) Reasonable expenses incurred in moving furniture, normal household goods and personal belongings to Hopkinsville, Kentucky. (2) Reasonable temporary living expenses in Hopkinsville, Kentucky while awaiting occupancy of the Employee's new quarters. Such temporary living quarters shall consist of an apartment, hotel or similar residence. Hotel expenses shall be reimbursed for overnight lodging if Bank related. 5. Term. The Bank hereby employs the Employee, and the Employee hereby accepts such employment under this Agreement, for the period commencing on the date hereof (the "Effective Date") and ending 36 months thereafter (or such earlier date as is determined in accordance with Section 9 hereof). Additionally, on each annual anniversary date from the Effective Date, this Agreement and the Employee's term of employment shall be extended for an additional one-year period beyond the then effective expiration date, provided that the Board determines in a duly adopted resolution that the performance of the Employee has met the Board's requirements and standards, and that this Agreement shall be extended. Prior to each such anniversary date, the Board shall meet to review the Employee's performance and determine whether this Agreement should be extended. 6. Loyalty, Full Time and Attention. (a) During the period of his employment hereunder and except for illness, reasonable vacation periods, and reasonable leaves of absence, the Employee shall devote all his full business time, attention, skill, and efforts to the faithful performance of his duties 2 Exhibit 10.2 hereunder; provided that, from time to time, the Employee may serve on the board of directors of, and hold any other offices or positions in, companies or organizations, that will not present any conflict of interest with the Bank or any of its subsidiaries or affiliates, or unfavorably affect the performance of Employee's duties pursuant to this Agreement, or will not violate any applicable statute or regulation. "Full business time" is hereby defined as that amount of time usually devoted to like companies by similarly situated executive officers. During the term of his employment under this Agreement, the Employee shall not engage in any business or activity contrary to the business affairs or interests of the Bank, or be gainfully employed in any other position or job other than as provided above. (b) Nothing contained in this Section 6 shall be deemed to prevent or limit the Employee's right to invest in the capital stock or other securities of any business dissimilar from that of the Bank, or, solely as a passive or minority investor, in any business. 7. Standards. The Employee shall perform his duties under this Agreement in accordance with such reasonable standards as the Board may establish from time to time. The Bank will provide the Employee with the working facilities and staff customary for similar executive officers and necessary for him to perform his duties. 8. Vacation and Sick Leave. The Employee shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his duties under this Agreement in accordance with the terms set forth below, all such voluntary absences to count as vacation time; provided that: (a) The Employee shall be entitled to an annual vacation in accordance with the policies periodically established by the Board for senior management employees of the Bank. (b) The Employee shall not receive any additional compensation from the Bank on account of his failure to take a vacation, and the Employee shall not accumulate unused vacation from one fiscal year to the next, except in either case to the extent authorized by the Board. (c) In addition to the aforesaid paid vacations, the Employee shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his employment obligations with the Bank for such additional periods of time and for such valid and legitimate reasons as the Board may in its discretion approve. Further, the Board may grant to the Employee a leave or leaves of absence, with or without pay, at such time or times and upon such terms and conditions as the Board in its discretion may determine. (d) In addition, the Employee shall be entitled to an annual sick leave benefit as established by the Board. 9. Termination and Termination Pay. Subject to Section 11 hereof, the Employee's employment hereunder may be terminated under the following circumstances: 3 Exhibit 10.2 (a) Death. The Employee's employment under this Agreement shall terminate upon his death during the term of this Agreement, in which event the Employee's estate shall be entitled to receive the compensation due the Employee through the last day of the calendar month in which his death occurred. (b) Disability. The Bank may terminate the Employee's employment after having established, through a determination by the Board, the Employee's Disability. For purposes of this Agreement, "Disability" means a physical or mental infirmity that impairs the Employee's ability to substantially perform his duties under this Agreement and that results in the Employee becoming eligible for long-term disability benefits under the Bank's long-term disability plan (or, if the Bank has no such plan in effect, that impairs the Employee's ability to substantially perform his duties under this Agreement for a period of 180 consecutive days). The Employee shall be entitled to the compensation and benefits provided for under this Agreement for (i) any period during the term of this Agreement and prior to the establishment of the Employee's Disability during which the Employee is unable to work due to the physical or mental infirmity, or (ii) any period of Disability that is prior to the Employee's termination of employment pursuant to this Section 9(b); provided that any benefits paid pursuant to the Bank's long-term disability plan will continue as provided in such plan. (c) For Just Cause. The Board may, by written notice to the Employee, immediately terminate his employment at any time, for Just Cause. The Employee shall have no right to receive compensation or other benefits for any period after termination for Just Cause. Termination for "Just Cause" shall mean termination because of, in the good faith determination of the Board, the Employee's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Just Cause unless there shall have been delivered to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board (excluding the Employee if a member of the Board) at a meeting of the Board called and held for the purpose (after reasonable notice to the Employee and an opportunity for the Employee to be heard before the Board), finding that in the good faith opinion of the Board the Employee was guilty of conduct set forth above in the second sentence of this Subsection (c) and specifying the particulars thereof in detail. (d) Without Just Cause. Subject to the provisions of Section 11 hereof, the Board may, by written notice to the Employee, immediately terminate his employment at any time for any reason; provided that, if such termination is for any reason other than pursuant to Sections 9(a), (b) or (c) above, the Employee shall be entitled to receive the following compensation and benefits: (i) the salary provided pursuant to Section 2 hereof, up to the date of expiration of the term (including any renewal term then in effect) of this Agreement (the "Termination Date") and (ii) the cost to the Employee of obtaining all health, life, disability and other benefits (excluding any bonus, stock option or other compensation benefits) in which 4 Exhibit 10.2 the Employee would have been eligible to participate through the Termination Date based upon the benefit levels substantially equal to those that the Bank provided for the Employee at the date of termination of employment. Said sum shall be paid, at the option of the Employee, either (1) in periodic payments over the remaining term of this Agreement, as if the Employee's employment had not terminated, or (2) in one lump sum within 10 days of such termination. (e) Termination or Suspension Under Federal Law. (1) If the Employee is removed and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C. ss.1818(e)(4) or (g)(1)), all obligations of the Bank under this Agreement shall terminate, as of the effective date of the order, but vested rights of the parties shall not be affected. (2) If the Bank is in default (as defined in Section 3(x)(1) of FDIA), all obligations under this Agreement shall terminate as of the date of default; however, this Paragraph 9(e)(2) shall not affect the vested rights of the parties. (3) All obligations under this Agreement shall terminate, except to the extent that continuation of this Agreement is necessary for the continued operation of the Bank: (A) by the Director of the Office of Thrift Supervision ("OTS"), or his or her designee, at the time that the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the FDIA; or (B) by the Director of the OTS, or his or her designee, at the time that the Director of the OTS, or his or her designee, approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director of the OTS to be in an unsafe or unsound condition. Such action shall not affect any vested rights of the parties. (4) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C.ss.1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the Employee from participating in the conduct of the Bank's affairs, the Bank's obligations under this Agreement shall be suspended as of the date of such service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (A) pay the Employee all or part of the compensation withheld while its contract obligations were suspended, and (B) reinstate (in whole or in part) any of its obligations that were suspended. (5) If any of the provisions of this Paragraph 9(e) conflict with 12 C.F.R.ss. 563.39(b), the latter shall prevail. (f) Voluntary Termination by Employee. Subject to the provisions of Section 11 hereof, the Employee may voluntarily terminate employment with the Bank during the term of this Agreement, upon at least 60 days' prior written notice to the Board, in which case the Employee shall receive only his compensation, vested rights and employee benefits accrued up to the date of his termination. 5 Exhibit 10.2 (g) Limitation by Section 18(k) of the FDIA. Notwithstanding anything herein to the contrary, any payments made to the Employee pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the FDIA (12 U.S.C. ss. 1828(k)) and any regulations promulgated thereunder. 10. No Mitigation. The Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Employee in any subsequent employment. 11. Change in Control. (a) Notwithstanding any provision herein to the contrary, if the Employee's employment under this Agreement is terminated by the Bank, without the Employee's prior written consent and for a reason other than for Just Cause, death or disability in connection with or 12 months after any change in control of the Bank or which has not been approved in advance by a two-thirds vote of the full Board of Directors of each of the Bank and the Company, the Employee shall be paid an amount equal to two times the Employee's Base Salary as of the date of termination. Said sum shall be paid in one lump sum within 10 days of such termination. The term "change in control" shall mean (1) a change in the ownership, holding or power to vote more than 25% of the Bank's or Company's voting stock, (2) a change in the ownership or possession of the ability to control the election of a majority of the Bank's or Company's directors, or (3) a change in the ownership or possession of the ability to exercise a controlling influence over the management or policies of the Bank or the Company by any person or by persons acting as a "group" (within the meaning of Section 13(d) of the Securities Exchange Act of 1934) (except that, in the case of (1), (2) and (3) hereof, ownership or control of the Bank or its directors by the Company itself shall not constitute a change in control. The term "person" means an individual other than the Employee, or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity not specifically listed herein. (b) The sum of the amount payable under Section 11(a) hereof and any other "parachute payment" as defined under Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), shall not exceed 2.99 times the Employee's "base amount" as defined in Section 280G(b)(3) of the Code. (c) Notwithstanding the foregoing, but only to the extent required under federal banking law, the amount payable under Section 11(a) hereof shall be reduced to the extent that on the date of the Employee's termination of employment, the amount payable under Section 11(a) exceeds the limitation on severance benefits set forth in Regulatory Bulletin 27a of the OTS, as in effect on such termination date. (d) In the event that any dispute arises between the Employee and the Bank as to the terms or interpretation of this Agreement, including this Section 11, whether 6 Exhibit 10.2 instituted by formal legal proceedings or otherwise, including an action that Employee takes to enforce the terms of this Section 11 or to defend against any action taken by the Bank, the Employee shall be reimbursed for all costs and expenses, including reasonable attorneys' fees, arising from such disputes or proceedings, provided that the Employee shall have obtained a final judgment by a court of competent jurisdiction in his favor. Such reimbursement shall be paid within 10 days of Employee's providing the Bank with written evidence, which may be in the form, among others, of a canceled check or receipt, of any costs or expenses incurred by the Employee. 12. Successors and Assigns. (a) This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Bank that shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the corporation. (b) Since the Bank is contracting for the unique and personal skills of the Employee, the Employee shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Bank. 13. Amendments. No amendments or additions to this Agreement shall be binding unless made in writing and signed by all of the parties, except as herein otherwise specifically provided. 14. Applicable Law. This Agreement shall be governed in all respects, whether as to its validity, construction, capacity, performance or otherwise, by the laws of the Commonwealth of Kentucky, except to the extent that Federal law shall be deemed to apply. 15. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof 16. Entire Agreement. This Agreement, together with any understanding or modifications thereof as agreed to in writing by the parties, shall constitute the entire agreement between the parties hereto. 7 Exhibit 10.2 IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written. ATTEST: HOPKINSVILLE FEDERAL SAVINGS BANK ________________________ By:_____________________________________ Secretary WD Kelley, Chairman of the Board WITNESS: - ------------------------ ------------------------------------- John E. Peck 8 EX-27 4 0004.txt FDS -- HOPFED BANCORP
9 1,000 U.S. DOLLARS 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 1 2,510 22 150 0 91,915 8,810 8,906 118,812 299 228,536 162,603 18,385 1,015 0 0 0 40 45,102 228,536 4,305 3,556 21 7,882 3,823 477 3,582 20 0 1,732 2,096 1,366 0 0 1,366 .342 .342 3.32 0 374 0 0 278 0 0 299 299 0 0
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