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 September 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 November 13, 2000, 3,932,649 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 September 30, 2000 and December 31, 1999....................................... 1 Consolidated Statements of Income for the Three-Month and Nine-Month Periods Ended September 30, 2000 and 1999................... 2 Consolidated Statements of Comprehensive Income for the Three-Month and Nine-Month Periods Ended September 30, 2000 and 1999.... 3 Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2000 and 1999................... 4 Notes to Unaudited Condensed Financial Statements.................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................. 5 Item 3. Quantitative and Qualitative Disclosures About Market Risk.........................................................11 PART II. OTHER INFORMATION ----------------- 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
September 30, December 31, ASSETS 2000 1999 ---- ---- (Unaudited) (In thousands) Cash and due from banks ................................. $ 2,060 $ 4,537 Interest-bearing deposits in Federal Home Loan Bank ("FHLB") ............................... 60 251 Federal funds sold ...................................... 65 4,100 Investment securities available for sale ................ 90,145 71,423 Investment securities held to maturity (Estimated market values of $8,427 and $10,078 at September 30, 2000 and December 31, 1999, respectively) ..................... 8,296 9,958 Loans receivable, net ................................... 125,667 113,532 Accrued interest receivable ............................. 2,015 1,095 Real estate owned ....................................... 141 -- Premises and equipment, net ............................. 2,438 2,472 Deferred tax assets ..................................... 931 515 Other assets ............................................ 88 23 --------- --------- Total assets ................................... $ 231,906 $ 207,906 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits .............................................. $ 162,884 160,905 Advances from FHLB .................................... 20,650 -- Federal income taxes .................................. 749 369 Advance payments from borrowers for taxes and insurance 314 156 Other liabilities ..................................... 1,329 2,130 --------- --------- Total liabilities .............................. 185,926 163,560 --------- --------- Shareholders' equity: Common stock .......................................... 40 39 Additional paid in capital ............................ 25,188 24,214 Treasury stock, at cost ............................... (96) -- Retained earnings, substantially restricted ........... 21,689 20,991 Accumulated other comprehensive income (loss) ........... (841) (898) --------- --------- Total shareholders' equity ..................... 45,980 44,346 --------- --------- Total liabilities and shareholders' equity .. $ 231,906 $ 207,906 ========= =========
See accompanying Notes to Unaudited Condensed Financial Statements. 1 HOPFED BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months For the Nine Months Ended September 30, Ended September 30, --------------------- ------------------------ 2000 1999 2000 1999 ---- ---- ---- ---- (Dollars in thousands, except per share data) Interest income: Interest on loans ..................... $ 2,446 $ 2,072 $ 6,751 $ 6,244 Interest and dividends on investments . 1,811 1,308 5,367 3,611 Time deposit interest income .......... 7 115 28 646 ---------- ---------- ---------- ---------- Total interest income .................... 4,264 3,495 12,146 10,501 ---------- ---------- ---------- ---------- Interest expense: Interest on deposits .................. 2,003 1,762 5,826 5,299 Interest on advances .................. 356 -- 833 -- ---------- ---------- ---------- ---------- Total interest expense ................... 2,359 1,762 6,659 5,299 ---------- ---------- ---------- ---------- Net interest income ........................ 1,905 1,733 5,487 5,202 Provision for loan losses .................. 311 5 331 15 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses ....................... 1,594 1,728 5,156 5187 ---------- ---------- ---------- ---------- Other income: Loan and other service fees ........... 113 123 348 342 Securities gains ...................... -- 6,524 -- 6,524 Other, net ............................ 14 13 45 43 ---------- ---------- ---------- ---------- Total other income .................... 127 6,660 393 6,909 ---------- ---------- ---------- ---------- Noninterest expense: Salaries and benefits ................. 502 1,127 1,663 4,087 Federal insurance premium ............. 9 22 27 68 Occupancy expense, net ................ 55 48 151 142 Data processing ....................... 39 41 121 106 Other operating expenses .............. 162 199 537 577 ---------- ---------- ---------- ---------- Total other expenses .................. 767 1,437 2,499 4,980 ---------- ---------- ---------- ---------- Income before income taxes ................. 954 6,951 3,050 7,116 Income tax expense ......................... 302 2,404 1,032 2,553 ---------- ---------- ---------- ---------- Net income ................................. $ 652 $ 4,547 $ 2,018 $ 4,563 ========== ========== ========== ========== Basic net income per share ................. $ 0.16 $ 1.19 $ 0.50 $ 1.21 Diluted net income per share ............... $ 0.16 $ 1.19 $ 0.50 $ 1.21 Dividends per share ........................ $ 0.11 $ 0.075 $ 0.295 $ 0.225 Weighted average: Common shares ......................... 4,004,138 4,098,162 3,999,215 4,066,957 Less: unallocated ESOP Shares ......... -- 286,447 -- 288,896 ---------- ---------- ---------- ---------- 4,004,138 3,811,715 3,999,215 3,778,061 ========== ========== ========== ==========
See accompanying Notes to Unaudited Condensed Financial Statements. 2 HOPFED BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
For the Three Months For the Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 2000 1999 2000 1999 ---- ---- ---- ---- (In Thousands) Net income $ 652 $ 4,547 $ 2,018 $ 4,563 Other comprehensive income, net of tax Unrealized holding gains (losses) arising during period net of tax effect of $372 and ($219) for the three months ended September 30, 2000 and 1999, respectively, and $30 and ($807) for the nine months ended September 30, 2000 and 1999, 722 (425) 57 (1,566) respectively Less:reclassification adjustment for gains included in net income net of tax effect of $2,218 for each of the three months and nine months ended 0 (4,306) 0 (4,306) September 30, 1999 ------- ------- ------- ------- Comprehensive income (loss) $ 1,374 $ (184) $ 2,075 $(1,309) ======= ======= ======= =======
See Accompanying Notes to Unaudited Condensed Financial Statements 3 HOPFED BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended September 30, ------------------------ 2000 1999 ---- ---- (In thousands) Cash flows from operating activities: Net income ............................................ $ 2,018 $ 4,563 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses ............................. 331 15 Provision for depreciation ............................ 89 84 FHLB stock dividend ................................... (110) (100) Amortization of investment security premiums .......... 31 27 Accretion of investment security discounts ............ (13) (260) Gain on sale of investments ........................... -- (6,524) Unallocated ESOP shares ............................... -- 87 MRP shares ............................................ 454 1,291 (Increase) decrease in: Accrued interest receivable ........................... (920) 197 Other assets .......................................... (65) 131 Increase (decrease) in: Current income taxes payable .......................... (223) 1,786 Deferred income taxes ................................. 156 34 Accrued expenses and other liabilities ................ (414) 1,483 -------- -------- Net cash provided by operating activities ............. 1,334 2,814 -------- -------- Cash flows from investing activities: Net decrease in interest earning deposits in FHLB ..... 191 140 Net decrease in federal funds sold .................... 4,035 1,099 Proceeds from maturities of held-to-maturity securities 1,668 16,986 Proceeds from sale of available-for-sale securities ... 6,502 37,200 Purchases of available-for-sale securities ............ (25,049) (50,998) Net increase in loans ................................. (12,465) (4,738) Real estate acquired in settlement of loans ........... (141) -- Purchases of premises/equipment ....................... (56) (43) -------- -------- Net cash (used) provided by investing activities ...... (25,315) (354) -------- -------- Cash flows from financing activities: Net increase (decrease) in demand deposits ............ (3,665) 1,739 Net increase (decrease) in time deposits .............. 5,644 (2,863) Advances from FHLB .................................... 20,650 -- Increase in advance payments by borrowers for taxes and insurance ................... 158 153 Net dividends paid .................................... (1,187) (845) Payment on loan to ESOP ............................... -- 73 Purchases of treasury stock ........................... (96) -- -------- -------- Net cash provided (used) in financing activities ...... 21,504 (1,743) -------- -------- Increase (decrease) in cash and cash equivalents ........... (2,477) 717 Cash and cash equivalents, beginning of period ............. 4,537 1,905 -------- -------- Cash and cash equivalents, end of period ................... 2,060 2,622 ======== ======== Supplemental disclosures of cash flow information Cash paid for income taxes ............................ $ 1,107 $ 600 -------- -------- Cash paid for interest ................................ $ 6,712 $ 5,298 ======== ========
See accompanying Notes to Unaudited Condensed Financial Statements. 4 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 assets are the outstanding capital stock of the converted Bank, a portion of the net proceeds of the conversion, and a note receivable from the Company's Employee Stock Ownership Plan, and its sole business is that of the converted Bank and the investment of funds held by it. The accompanying unaudited consolidated 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 nine month period ended September 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. The Consolidated Statement of Financial Condition at December 31, 1999, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 Total assets increased by $24.0 million, from $207.9 million at December 31, 1999 to $231.9 million at September 30, 2000. Investment securities available for sale increased from $71.4 million at December 31, 1999 to $90.1 million at September 30, 2000. Federal funds sold decreased from $4.1 million at December 31, 1999, to $65,000 at September 30, 2000. 5 At September 30, 2000, investments classified as "held to maturity" were carried at amortized cost of $8.3 million and had an estimated fair market value of $8.4 million. The loan portfolio increased $12.2 million during the nine months ended September 30, 2000, including an increase of $3.6 million in commercial loans. During the three months ended September 30, 2000, a total of $1.3 million in commercial loans was originated, compared to $782,000 in the three months ended September 30, 1999. Net loans totaled $125.7 million and $113.5 million at September 30, 2000 and December 31, 1999, respectively. For the nine months ended September 30, 2000, the average yield on loans was 7.63%, compared to 7.57% for the year ended December 31, 1999. The allowance for loan losses totaled $609,000 at September 30, 2000, an increase of $331,000 from the allowance of $278,000 December 31, 1999. The ratio of the allowance for loan losses to loans was .48% and .24% at September 30, 2000 and December 31, 1999, respectively. Also at September 30, 2000, non-performing loans were $327,000, or .26% 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 September 30, 2000 and December 31, 1999 was 186.2% 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 $141,000 at September 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 September 30, 2000, deposits increased to $162.9 million from $160.9 million at December 31, 1999, a net increase of $2.0 million. The average cost of deposits during the nine months ended September 30, 2000 and the year ended December 31, 1999 was 4.89% 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 NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 NET INCOME. Net income for the nine months ended September 30, 2000 was $2.0 million, compared to net income of $4.6 million for the nine months ended September 30, 1999. Excluding the gain on sale of FHLMC stock, net income for the nine months ended September 30, 1999, would have been approximately $257,000. During the nine months ended September 30, 1999, the Company incurred additional compensation expense of $2.1 million attributable to additional employee benefits which were approved at the 1999 Annual Meeting of Stockholders. 6 NET INTEREST INCOME. Net interest income for the nine months ended September 30, 2000 was $5.5 million, compared to $5.2 million for the nine months ended September 30, 1999. The increase in net interest income for the nine months ended September 30, 2000 was primarily due to enhanced yields as a result of a more diversified loan portfolio and increased investment in securities available for sale. For the nine months ended September 30, 2000, the average yield on total interest-earning assets was 7.42%, compared to 6.54% for the nine months ended September 30, 1999, and the average cost of interest-bearing liabilities was 5.05% for the nine months ended September 30, 2000, compared to 4.65% for the nine months ended September 30, 1999. As a result, the Bank's interest rate spread for the nine months ended September 30, 2000 was 2.37%, compared to 1.89% for the nine months ended September 30, 1999, and its net yield on interest-earning assets was 3.35% for the nine months ended September 30, 2000, compared to 3.24% for the nine months ended September 30, 1999. INTEREST INCOME. Interest income increased by $1.6 million, from $10.5 million to $12.1 million, or by 15.2%, during the nine months ended September 30, 2000 compared to the same period in 1999. This increase primarily resulted from strategically increasing loans outstanding and investment securities. The average balance of securities available for sale increased $16.0 million, from $74.4 million during the nine months ended September 30, 1999, to $90.4 million during the nine months ended September 30, 2000, while the average balance of securities held to maturity decreased $6.1 million, from $15.3 million during the nine months ended September 30, 1999 to $9.2 million during the nine months ended September 30, 2000. In addition, average time deposits and other interest-earning cash deposits decreased $12.6 million, from $13.3 million during the nine months ended September 30, 1999 to $693,000 during the nine months ended September 30, 2000. Overall, average total interest-earning assets increased $4.2 million, or 1.9%, from $214.0 million during the nine months ended September 30, 1999 to $218.2 million during the nine months ended September 30, 2000. The ratio of average interest-earning assets to average interest-bearing liabilities decreased from 140.76% for the nine months ended September 30, 1999 to 124.02% for the nine months ended September 30, 2000. INTEREST EXPENSE. Interest expense increased $1.4 million, or 25.7%, to $6.7 million for the nine months ended September 30, 2000, compared to $5.3 million for the same period in 1999. The increase was attributable to an increase of $527,000 in interest on deposits and interest on FHLB advances of $833,000. During the nine months ended September 30, 2000, the Bank borrowed approximately $20.7 million from the FHLB of Cincinnati in order to fund increases in loans and investments. The average cost of interest-bearing deposits increased from 4.65% during the nine months ended September 30, 1999 to 5.05% during the nine months ended September 30, 2000. Over the same period, the average balance of interest-bearing deposits increased $6.8 million, from $152.1 million at September 30, 1999 to $158.9 million at September 30, 2000, or 4.5%. OTHER INCOME. Other income decreased $6.5 million to $393,000 for the nine months ended September 30, 2000, compared to $6.9 million for the nine months ended September 30,1999. The decrease was attributable to a $6.5 million gain on the sale of FHLMC stock in the nine months ended September 30, 1999. 7 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 $330,600 provision for loan loss was required for the nine months ended September 30, 2000, compared to an additional $15,000 provision for the nine months ended September 30, 1999. The higher provision for loan losses was based on the Bank's increased emphasis on commercial lending and a general weakening of the economy in the Bank's market area during the third quarter of 2000. NON-INTEREST EXPENSE. There was a $2.5 million decrease in total non-interest expense in the nine months ended September 30, 2000 compared to the same period in 1999, primarily due to a $2.4 million decrease in salaries and benefits. INCOME TAXES. The effective tax rate for the nine months ended September 30, 2000 was 33.8%, compared to 35.9% for the same period in 1999. The high effective tax rate for the nine months ended September 30, 1999, was attributable to $398,000 of expenses being non-deductible for tax purposes. The decrease in income tax expense of $1.5 million in the nine months ended September 30, 2000, compared to the same period in 1999 was primarily due to a decrease of $4.1 million in income before income taxes. COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 NET INCOME. Net income for the three months ended September 30, 2000 was $652,000, compared to net income of $4.5 million for the three months ended September 30, 1999. Excluding the gain on sale of FHLMC stock, net income for the three months ended September 30, 1999, would have been approximately $241,000. During the three months ended September 30, 1999, the Company incurred additional compensation expense resulting from additional employee benefits which were approved at the 1999 Annual Meeting of Stockholders. NET INTEREST INCOME. Net interest income was $1.9 million for the three months ended September 30, 2000, compared to net interest income of $1.7 million for the three months ended September 30, 1999. For the three months ended September 30, 2000, the average yield on total interest-earning assets was 7.66%, compared to 6.55% for the three months ended September 30, 1999, and the average cost of interest-bearing liabilities was 5.27% for the three months ended September 30, 2000, compared to 4.65% for the three months ended September 30, 1999. As a result, the Bank's interest rate spread for the three months ended September 30, 2000 was 2.39%, compared to 1.90% for the three months ended September 30, 1999, and its net yield on interest-earning assets was 3.42% for the three months ended September 30, 2000, compared to 3.25% for the three months ended September 30, 1999. INTEREST INCOME. Interest income increased by $769,000, from $3.5 million to $4.3 million, during the three months ended September 30, 2000, compared to the same period in 1999. The average balance of securities held to maturity declined $2.2 million, from $10.8 million during the three months ended September 30, 1999 to $8.6 million during the three months ended 8 September 30, 2000. In addition, average time deposits and other interest-earning cash deposits decreased $9.1 million, from $9.6 million at September 30, 1999 to $499,000 at September 30, 2000. Overall, average total interest-earning assets increased $9.2 million, or 4.3%, from September 30, 1999 to September 30, 2000. The ratio of average interest-earning assets to average interest-bearing liabilities decreased from 140.66% for the three months ended September 30, 1999 to 124.28% for the three months ended September 30, 2000. INTEREST EXPENSE. Interest expense increased $597,000, or 33.9%, to $2.4 million for the three months ended September 30, 2000, compared to $1.8 million for the same period in 1999. The increase was attributable to an increase of $241,000 in interest on deposits and interest on FHLB advances of $356,000. The average cost of interest-bearing deposits increased from 4.65% during the three months ended September 30, 1999 to 5.27% during the three months ended September 30, 2000. Over the same period, the average balance of interest-bearing deposits increased $6.6 million, from $151.7 million during the three months ended September 30, 1999 to $158.3 million during the three months ended September 30, 2000, or 4.3%. The average balance of advances from the FHLB was $20.8 million during the nine months ended September 30, 2000, compared to none during the same period in 1999. PROVISION FOR LOAN LOSSES. The Bank determined that an additional $310,200 provision for loan loss was required for the three months ended September 30, 2000, compared to an additional $5,000 provision for the three months ended September 30, 1999. The higher provision for loan losses was based on the Bank's increased emphasis on commercial lending and a general weakening of the economy in the Bank's market area during the third quarter of 2000. OTHER INCOME. Other income decreased $6.6 million to $127,000 for the three months ended September 30, 2000, compared to $6.7 million for the three months ended September 30, 1999. The decrease was attributable to a $6.5 million gain on the sale of FHLMC stock in the three months ended September 30, 1999. NON-INTEREST EXPENSE. There was a $670,000 decrease in total non-interest expense in the three months ended September 30, 2000 compared to the same period in 1999, primarily due to a $625,000 decrease in salaries and benefits. INCOME TAXES. The effective tax rate for the three months ended September 30, 2000 was 31.7%, compared to 34.6% for the same period in 1999. The decrease in income tax expense of $2.1 million in the three months ended September 30, 2000 compared to the same period in 1999 was primarily due to a $6.0 million decrease in income before income taxes. LIQUIDITY AND CAPITAL RESOURCES. The Company has no business other than that of the Bank and investing funds held by it. Management of the Company believes that dividends that may be paid by the Bank to the Company will provide sufficient funds for its 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. 9 The Bank's principal sources of funds for operations are deposits from its primary market areas, principal and interest payments on loans, earnings on investment securities, and proceeds from maturing investment securities. The principal uses of funds by the Bank include the origination of 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 September 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 3.0%, 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 September 30, 2000, the Bank exceeded all regulatory capital requirements. The table below presents certain information relating to the Bank's capital compliance at September 30, 2000. Amount Percent ------ ------- (Dollars in thousands) Tangible Capital . . . . . . . . . . $44,158 18.93 % Core Capital . . . . . . . . . . . . 44,158 18.93% Risk-Based Capital . . . . . . . . . 44,767 48.20% At September 30, 2000, the Bank had outstanding commitments to originate loans totaling $1.4 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 September 30, 2000 totaled $66.5 million. Management believes that a significant percentage of such deposits will remain with the Bank. During the three month period ended September 30, 2000, the Company paid a dividend of $0.11 per share of Common Stock, or a total dividend of $440,000, and the Company declared a dividend of $0.11 per share of Common Stock, or a total dividend of $440,000 to be paid in October 2000. FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements. Additional written or oral forward-looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise. The words "believe," "expect," "seek," and "intend" and similar expressions identify forward-looking statements, which speak only as of the date the statement is made. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may include, but are not limited to, projections of income or loss, expenditures, acquisitions, plans for future operations, financing 10 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 does not believe that material changes in market risk exposures occurred during the nine months ended September 30, 2000. PART II. OTHER INFORMATION 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 Hopkinsville Federal Savings Bank and Michael L. Woolfolk (b) Current Report on Form 8-K dated September 20, 2000 reporting under Item 4 thereof a change in the Company's certifying accountant and under Item 5 thereof the approval of the repurchase of up to 200,000 shares of the Company's common stock. 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: November 14, 2000 /s/ John E. Peck ---------------------------------------------- John E. Peck President and Chief Executive Officer Date: November 14, 2000 /s/ Peggy R. Noel ---------------------------------------------- Peggy R. Noel Executive Vice President and Chief Financial Officer 12