10-Q

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, 2012

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 incorporation or organization)	(I.R.S. Employer Identification No.)
4155 Lafayette Road, 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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated file or a non-accelerated filer. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act: (Check one)

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company filer	x

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.

As of November 13, 2012, the Registrant had outstanding 7,502,812 shares of the Registrant’s Common stock.

CONTENTS

HOPFED BANCORP, INC.

		PAGE
PART I.	FINANCIAL INFORMATION
The unaudited consolidated condensed financial statements of the Registrant and its wholly owned subsidiaries are as follows:
Item 1.	Financial Statements
	Consolidated Condensed Statements of Financial Condition as of September 30, 2012 (unaudited) and December 31, 2011		2
	Consolidated Condensed Statements of Income (Loss) for the Three and Nine-Month Periods Ended September 30, 2012, and September 30, 2011 (unaudited)		4
	Consolidated Condensed Statements of Comprehensive Income for the Three-Month and Nine-Month Periods Ended September 30, 2012 and September 30, 2011 (unaudited)		6
	Consolidated Condensed Statement of Stockholders’ Equity for the Nine-Month Period Ended September 30, 2012 (unaudited)		7
	Consolidated Condensed Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2012, and September 30, 2011 (unaudited)		8
	Notes to Unaudited Consolidated Condensed Financial Statements		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		53
Item 4.	Controls and Procedures		54
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings		55
Item 1A.	Risk Factors		55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		55
Item 3.	Defaults Upon Senior Securities		55
Item 4.	Mine Safety Disclosure		55
Item 5.	Other Information		55
Item 6.	Exhibits		56
SIGNATURES			57

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HOPFED BANCORP, INC.

Consolidated Condensed Statements of Financial Condition

(Dollars in Thousands)

	September 30, 2012		December 31, 2011
	(Unaudited )
Assets
Cash and due from banks	$	50,042		44,389
Interest-earning deposits		7,661		4,371
Cash and cash equivalents		57,703		48,760
Federal Home Loan Bank stock		4,428		4,428
Securities available for sale		348,877		383,782
Commerical real estate loans held for sale		2,763		—
Loans receivable, net of allowance for loan losses of $10,490 at September 30, 2012, and $11,262 at December 31, 2011		539,503		556,360
Accrued interest receivable		5,333		6,183
Real estate and other assets owned		681		2,267
Bank owned life insurance		9,373		9,135
Premises and equipment, net		22,750		23,431
Deferred tax assets		—		1,132
Intangible asset		341		519
Other assets		4,981		4,823
Total assets	$	996,733		1,040,820
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing accounts	$	88,451		79,550
Interest-bearing accounts:
Interest bearing checking accounts		131,952		130,114
Savings and money market accounts		74,314		70,443
Other time deposits		474,539		519,988
Total deposits		769,256		800,095
Advances from Federal Home Loan Bank		44,222		63,319
Repurchase agreements		42,799		43,080
Subordinated debentures		10,310		10,310
Advances from borrowers for taxes and insurance		639		153
Dividends payable		179		176
Deferred tax liability		628		—
Accrued expenses and other liabilities		5,439		5,204
Total liabilities		873,472		922,337

See accompanying Notes to Unaudited Consolidated Condensed Financial Statements.

2

HOPFED BANCORP, INC.

Consolidated Condensed Statements of Financial Condition, Continued

(Dollars in Thousands)

	September 30, 2012			December 31, 2011
	(Unaudited)
Stockholders’ equity
Preferred stock, par value $0.01 per share; authorized - 500,000 shares; 18,400 shares issued and outstanding with a liquidation preference of $18,400,000 at September 30, 2012, and December 31, 2011		—			—
Common stock, par value $.01 per share; authorized 15,000,000 shares; 7,905,728 issued and 7,502,812 outstanding at September 30, 2012, and 7,895,336 issued and 7,492,420 outstanding at December 31, 2011		79			79
Common stock warrants (253,666 issued and outstanding)		556			556
Additional paid-in-capital		76,127			75,967
Retained earnings-substantially restricted		41,330			39,591
Treasury stock (at cost, 402,916 shares at September 30, 2012, and December 31, 2011)		(5,076	)		(5,076	)
Accumulated other comprehensive income, net of taxes		10,245			7,366
Total stockholders’ equity		123,261			118,483
Total liabilities and stockholders’ equity	$	996,733			1,040,820

The consolidated condensed statement of financial condition at December 31, 2011, has been derived from the audited financial statements as of that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

See accompanying Notes to Unaudited Consolidated Condensed Financial Statements.

3

HOPFED BANCORP, INC.

Consolidated Condensed Statements of Income (Loss)

(Dollars in Thousands)

(Unaudited)

	For the Three Month Periods Ended September 30,				For the Nine Month Periods Ended September 30,
	2012		2011		2012		2011
Interest and dividend income:
Loans receivable	$	7,403		8,332		22,617		25,254
Investment in securities, taxable		2,014		2,581		6,823		8,003
Nontaxable securities available for sale		573		532		1,695		1,733
Interest-earning deposits		6		5		20		13
Total interest and dividend income		9,996		11,450		31,155		35,003
Interest expense:
Deposits		2,640		3,543		8,279		11,179
Advances from Federal Home Loan Bank		1,017		625		2,155		1,946
Repurchase agreements		236		238		721		668
Subordinated debentures		185		186		553		551
Total interest expense		4,078		4,592		11,708		14,344
Net interest income		5,918		6,858		19,447		20,659
Provision for loan losses		506		475		1,775		5,445
Net interest income after provision for loan losses		5,412		6,383		17,672		15,214
Non-interest income:
Service charges		963		1,020		2,874		2,828
Merchant card income		212		194		620		571
Mortgage origination revenue		218		295		684		425
Gain on sale of securities		944		1,247		1,618		2,297
Other than temporarily impairment on available for sale securities		—		—		—		(14	)
Income from bank owned life insurance		80		84		238		249
Financial services commission		280		272		778		691
Other operating income		200		169		641		717
Total non-interest income		2,897		3,281		7,453		7,764

See accompanying Notes to Unaudited Consolidated Condensed Financial Statements.

4

HOPFED BANCORP, INC.

Consolidated Condensed Statements of Income (Loss), Continued

(Dollars in Thousands, Except Per Share Amounts)

(Unaudited)

	For the Three Month Periods Ended September 30,				For the Nine Month Periods Ended September 30,
	2012		2011		2012		2011
Non-interest expenses:
Salaries and benefits	$	3,447		3,309		10,515		9,987
Occupancy expense		875		867		2,614		2,452
Data processing expense		610		653		1,863		2,056
State deposit tax		161		151		485		476
Intangible amortization expense		48		65		178		227
Professional services expense		435		293		1,320		986
Deposit insurance and examination expense		419		445		1,272		1,604
Advertising expense		324		324		952		931
Postage and communications expense		146		140		444		421
Supplies expense		64		96		280		294
Loss on disposal of equipment		5		5		13		145
Loss on sale of real estate owned		68		570		287		1,642
Real estate owned expenses		19		16		90		216
Other operating expenses		350		193		1,196		575
Total non-interest expense		6,971		7,127		21,509		22,012
Income before income tax expense		1,338		2,537		3,616		966
Income tax expense		263		909		652		375
Net income		1,075		1,628		2,964		591
Less:
Dividend on preferred shares		229		232		689		688
Accretion dividend on preferred shares		27		28		83		83
Net income (loss) available (attributable) to common shareholders	$	819	$	1,368	$	2,192	($	180	)
Net income (loss) available (attributable) to common shareholders
Per share, basic	$	0.11	$	0.18	$	0.29	($	0.02	)
Per share, diluted	$	0.11	$	0.18	$	0.29	($	0.02	)
Dividend per share	$	0.02	$	0.02	$	0.06	$	0.18
Weighted average shares outstanding - basic		7,487,283		7,481,448		7,485,571		7,456,750
Weighted average shares outstanding - diluted		7,487,283		7,481,448		7,485,571		7,456,750

See accompanying Notes to Unaudited Consolidated Condensed Financial Statements.

5

HOPFED BANCORP, INC.

Consolidated Condensed Statements of Comprehensive Income

(Dollars in Thousands)

(Unaudited)

	For the Three Month Periods Ended September 30,						For the Nine Month Periods Ended September 30,
	2012			2011			2012			2011
Net income	$	1,075			1,628			2,964			591
Other comprehensive income, net of tax:
Unrealized gain on investment securities available for sale, net of tax effect of ($1,180) and ($2,218) for the three month periods ended September 30, 2012, and September 30, 2011, respectively; and ($2,008) and ($3,801) for the nine month periods ended September 30, 2012, and September 30, 2011, respectively		1,770			4,306			3,897			7,378
Unrealized gain on derivatives, net of tax effect of ($5) and $77 for the three month periods ending September 30, 2012, and September 30, 2011, respectively; and ($26) and $97 for the nine month periods ended September 30, 2012, and September 30, 2011, respectively.		10			(149	)		50			(188	)
Reclassification adjustment for gains included in net income (loss), net of tax effect of $321 and $424 for the three month periods ended September 30, 2012, and September 30, 2011, respectively: and $550 and $781 for the nine month periods ended September 30, 2012, and September 30, 2011, respectively.		(623	)		(823	)		(1,068	)		(1,516	)
Comprehensive income	$	2,232			4,962			5,843			6,265

See accompanying Notes to Unaudited Consolidated Condensed Financial Statements.

6

HOPFED BANCORP, INC.

Consolidated Condensed Statement of Stockholders’ Equity

For the Nine Month Period Ended September 30, 2012

(Dollars in Thousands, Except Share Amounts)

(Unaudited)

																	Accumulated
	Shares						Common		Additional								Other		Total
	Common Stock		Preferred Stock		Common Stock		Stock Warrants		Capital Surplus		Retained Earnings			Treasury Stock			Comprehensive Income		Stockholders Equity
Balance at December 31, 2011		7,492,420		18,400	$	79		556		75,967		39,591			(5,076	)		7,366		118,483
Restricted stock awards		10,392		—		—		—		—		—			—			—		—
Consolidated net income		—		—		—		—		—		2,964			—			—		2,964
Compensation expense, restricted stock awards		—		—		—		—		77		—			—			—		77
Net change in unrealized gain on securities available for sale, net of income taxes of $1,457		—		—		—		—		—		—			—			2,829		2,829
Net change in unrealized loss on derivatives, net of income taxes of $26		—		—		—		—		—		—			—			50		50
Cash dividend to preferred stockholder		—		—		—		—		—		(690	)		—			—		(690	)
Accretion of preferred stock discount		—		—		—		—		83		(83	)		—			—		—
Cash dividend to common stockholders		—		—		—		—		—		(452	)		—			—		(452	)
Balance September 30, 2012		7,502,812		18,400	$	79		556		76,127		41,330			(5,076	)		10,245		123,261

See accompanying Notes to Unaudited Consolidated Condensed Financial Statements

7

HOPFED BANCORP, INC.

Consolidated Condensed Statements of Cash Flows

(Dollars in Thousands)

(Unaudited)

	For the Nine Month Periods Ended September 30,
	2012			2011
Cash flows from operating activities:
Net cash provided by operating activities	$	5,716			7,893
Cash flows from investing activities
Proceeds from sales, calls and maturities of securities available for sale		140,001			143,369
Purchase of securities available for sale		(101,768	)		(158,954	)
Net decrease in loans		13,978			23,228
Purchase of Federal Home Loan Bank stock		—			(50	)
Proceeds from sale of foreclosed assets		2,403			7,124
Purchase of premises and equipment		(517	)		(665	)
Net cash provided by investing activities		54,097			14,052
Cash flows from financing activities:
Net increase in non-interest bearing deposits		8,901			8,631
Net decrease in time and other deposits		(39,740	)		(24,044	)
Increase in advances from borrowers for taxes and insurance		486			384
Advances from Federal Home Loan Bank		8,000			30,000
Repayment of advances from Federal Home Loan Bank		(27,097	)		(42,708	)
Net increase (decrease) in repurchase agreements		(281	)		(1,696	)
Dividend paid on preferred stock		(690	)		(690	)
Dividends paid on common stock		(449	)		(1,758	)
Net cash used in financing activities		(50,870	)		(31,881	)
Increase (decrease) in cash and cash equivalents		8,943			(9,936	)
Cash and cash equivalents, beginning of period		48,760			60,984
Cash and cash equivalents, end of period	$	57,703			51,048
Supplemental disclosures of cash flow information:
Interest paid	$	6,279			7,447
Income taxes paid	$	1,545			1,445
Supplemental disclosures of non-cash investing and financing activities:
Loans charged off	$	3,086			2,069
Foreclosures and in substance foreclosures of loans during period	$	1,104			3,515
Net unrealized gains on investment securities classified as available for sale	$	4,286			8,882
Increase in deferred tax liability related to unrealized gains on investments	$	1,457			(2,923	)
Dividends declared and payable	$	150			176
Issue of unearned restricted stock	$	74			87

See accompanying Notes to Unaudited Consolidated Condensed Financial Statements

8

NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

HopFed Bancorp, Inc. (the “Company”) was formed at the direction of Heritage Bank, formerly 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, and its sole business is that of the converted Bank. The Bank owns 100% of the stock of Fall and Fall Insurance Agency (“Fall & Fall”) of Fulton, Kentucky. Fall & Fall sells life and casualty insurance to both individuals and businesses. The majority of Fall & Fall’s customer base is within the geographic footprint of the Bank.

The Bank operates a mortgage division, Heritage Mortgage Services, in Clarksville, Tennessee with agents located in several of its markets. The Bank has a financial services division, Heritage Solutions, with offices in Murray, Kentucky, Kingston Springs, Tennessee and Pleasant View, Tennessee. Heritage Solutions agents travel throughout western Kentucky and middle Tennessee offering fixed and variable annuities, mutual funds and brokerage services.

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States of America 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 U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for fair representation have been included. The results of operations and other data for the three and nine month periods ended September 30, 2012, are not necessarily indicative of results that may be expected for the entire fiscal year ending December 31, 2012.

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, 2011. The accounting policies followed by the Company are set forth in the Summary of Significant Accounting Policies in the Company’s December 31, 2011, Consolidated Financial Statements.

9

(2) INCOME (LOSS) PER SHARE

The following schedule reconciles the numerators and denominators of the basic and diluted income (loss) per share (“IPS”) computations for the three and nine month periods ended September 30, 2012, and September 30, 2011. Diluted common shares arise from the potentially dilutive effect of the Company’s stock options and warrants outstanding.

	Three Month Periods Ended
	September 30,
	2012		2011
Basic IPS:
Net income available to common stockholders	$	819,000	$	1,368,000
Average common shares outstanding		7,487,283		7,481,448
Net income per share available to common shareholders, basic	$	0.11	$	0.18
Diluted IPS:
Net income available to common stockholders	$	819,000	$	1,368,000
Average common shares outstanding		7,487,283		7,481,448
Dilutive effect of stock options		—		—
Average diluted shares outstanding		7,487,283		7,481,448
Net income per share available to common shareholders, diluted	$	0.11	$	0.18

	Nine Month Periods Ended
	September 30,
	2012		2011
Basic IPS:
Net income (loss) available (attributable) to common stockholders	$	2,192,000	($	180,000	)
Average common shares outstanding		7,485,571		7,456,750
Net income (loss) per share available (attributable) to common shareholders, basic	$	0.29	($	0.02	)
Diluted IPS:
Net income (loss) available (attributable) to common stockholders	$	2,192,000	($	180,000	)
Average common shares outstanding		7,485,571		7,456,750
Dilutive effect of stock options		—		—
Average diluted shares outstanding		7,485,571		7,456,750
Net income (loss) per share available (attributable) to common shareholders, diluted	$	0.29	($	0.02	)

10

(3) STOCK COMPENSATION

The Company incurred compensation cost related to the HopFed Bancorp, Inc. 2004 Long Term Incentive Plan of $22,700 and $76,700 for the three and nine month periods ended September 30, 2012, respectively, and $29,000 and $90,000 for the three and nine month period ended September 30, 2011, respectively. The Company issued 10,392 and 10,972 shares of restricted stock during the nine month periods ended September 30, 2012, and September 30, 2011, respectively. The Company did not issue any restricted stock during the three month period ended September 30, 2012. The table below provides a detail of the Company’s future compensation expense related to restricted stock vesting at September 30, 2012:

Year ending December 31,	Future Expense
2012	$	22,001
2013		73,739
2014		45,760
2015		27,575
2016		7,797
Total	$	176,872

The compensation committee may make additional awards of restricted stock, thereby increasing the future expense related to this plan. In addition, award vesting may be accelerated due to certain events as outlined in the restricted stock award agreement. Any acceleration of vesting will change the timing of, but not the aggregate amount of, compensation expense incurred.

11

(4) SECURITIES

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluations. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

At September 30, 2012, the Company has nine securities with unrealized losses. The amortized cost of securities and their estimated fair values at September 30, 2012, were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Restricted:
FHLB stock	$	4,428		—		—			4,428
Unrestricted:
U.S. government and agency securities:
Agency debt securities	$	148,554		5,052		(15	)		153,591
Tax free municipal bonds		62,930		5,958		—			68,888
Taxable municipal bonds		11,647		1,348		(11	)		12,984
Trust preferred securities		2,000		—		(578	)		1,422
Mortgage-backed securities:
GNMA		20,459		1,436		(3	)		21,892
FNMA		60,060		2,809		—			62,869
FHLMC		5,115		202		—			5,317
NON-AGENCY CMOs		5,419		69		—			5,488
AGENCY CMOs		15,950		488		(12	)		16,426
	$	332,134		17,362		(619	)		348,877

12

The amortized cost of securities and their estimated fair values at December 31, 2011, was as follows:

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
			(Dollars in Thousands)
Restricted:
FHLB stock	$	4,428		—		—			4,428
Unrestricted:
U.S. government and agency securities:	$	171,141		3,511		(65	)		174,587
Tax free municipal bonds		60,432		4,623		—			65,055
Taxable municipal bonds		12,846		1,059		—			13,905
Trust preferred securities		2,000		—		(1,007	)		993
Mortgage-backed securities:
GNMA		30,427		1,413		(19	)		31,821
FNMA		59,195		2,101		(1	)		61,295
FHLMC		15,108		491		—			15,599
NON-AGENCY CMOs		2,012		7		(223	)		1,796
AGENCY CMOs		18,163		568		—			18,731
	$	371,324		13,773		(1,315	)		383,782

13

The scheduled maturities of debt securities available for sale at September 30, 2012, were as follows:

September 30, 2012	Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Due within one year	$	535	$	538
Due in one to five years		10,095		10,311
Due in five to ten years		23,790		26,033
Due in more than ten years		52,381		56,826
		86,801		93,708
Amortizing agency bonds		138,330		143,177
Mortgage-backed securities		107,003		111,992
Total debt securities available for sale	$	332,134	$	348,877

The scheduled maturities of debt securities available for sale at December 31, 2011, were as follows:

December 31, 2011	Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Due within one year	$	461		464
Due in one to five years		6,844		6,929
Due in five to ten years		24,471		26,153
Due after ten years		72,460		75,804
		104,236		109,350
Amortizing agency bonds		142,183		145,190
Mortgage-backed securities		124,905		129,242
Total debt securities available for sale	$	371,324		383,782

14

The estimated fair value and unrealized loss amounts of temporarily impaired investments as of September 30, 2012, are as follows:

	Less than 12 months					12 months or longer					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale
U.S. government and agency securities:
Agency debt securities	$	6,674		(15	)		—		—			6,674		(15	)
Taxable municipals		862		(11	)		—		—			862		(11	)
Tax free municipals		—		—			—		—			—		—
Trust preferred securities		—		—			1,422		(578	)		1,422		(578	)
Mortgage-backed securities:
GNMA		—		—			1,565		(3	)		1,565		(3	)
FNMA		—		—			—		—			—		—
FHLMC		—		—			—		—			—		—
NON-AGENCY CMOs		—		—			—		—			—		—
AGENCY CMOs		1,860		(12	)		—		—			1,860		(12	)
Total Available for Sale	$	9,396		(38	)		2,987		(581	)		12,383		(619	)

The estimated fair value and unrealized loss amounts of temporarily impaired investments as of December 31, 2011, were as follows:

	Less than 12 months					12 months or longer					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale
U.S. government and agency securities:
Agency debt securities	$	20,422		(54	)		2,007		(11	)		22,429		(65	)
Taxable municipal bonds		—		—			—		—			—		—
Tax free municipal bonds		—		—			—		—			—		—
Trust preferred securities		—		—			993		(1,007	)		993		(1,007	)
Mortgage-backed securities:
GNMA		1,925		(19	)		—		—			1,925		(19	)
FNMA		—		—			81		(1	)		81		(1	)
FHLMC		—		—			—		—			—		—
NON-AGENCY CMOs		—		—			1,494		(223	)		1,494		(223	)
AGENCY CMOs		—		—			—		—			—		—
Total Available for Sale	$	22,347		(73	)		4,575		(1,242	)		26,922		(1,315	)

15

At September 30, 2012, securities with a book value of approximately $122.6 million and a market value of approximately $132.6 million were pledged to various municipalities for deposits in excess of FDIC limits as required by law. The Federal Home Loan Bank of Cincinnati has issued letters of credit in the Bank’s name totaling $15.5 million secured by the Bank’s loan portfolio to secure additional municipal deposits.

At September 30, 2012, securities with a book and market value of approximately $26.8 million were sold under agreements to repurchase from various customers. Furthermore, the Company has two wholesale repurchase agreements with third parties secured by investments with a combined book value of $21.2 million and a market value of $22.0 million. One repurchase agreement is in the amount of $6.0 million and has a maturity of September 18, 2016 and is currently callable on a quarterly basis and has a fixed rate of interest of 4.36%. The second repurchase agreement, in the amount of $10.0 million, has a maturity of September 5, 2014, is currently callable quarterly and has a fixed rate of interest of 4.28%.

16

(5) LOANS

Set forth below is selected data relating to the composition of the loan portfolio by type of loan at September 30, 2012 and December 31, 2011. At September 30, 2012 and December 31, 2011, there were no concentrations of loans exceeding 10% of total loans other than as disclosed below:

	September 30, 2012		September 30, 2012			December 31, 2011		December 31, 2011
	Amount		Percent			Amount		Percent
	(Dollars in Thousands)
Real estate loans:
One-to-four family (closed end) first mortgages	$	165,439		30.1	%	$	171,192		30.2	%
Second mortgages (closed end)		5,382		1.0	%		6,209		1.1	%
Home equity lines of credit		37,962		6.9	%		38,694		6.8	%
Multi-family		33,243		6.0	%		33,739		5.9	%
Construction		15,694		2.8	%		11,931		2.1	%
Land for development		47,189		8.6	%		52,338		9.2	%
Farmland		38,821		7.1	%		34,841		6.1	%
Non-residential real estate		133,747		24.3	%		148,644		26.2	%
Total mortgage loans		477,477		86.8	%		497,588		87.6	%
Consumer loans		13,094		2.4	%		15,110		2.7	%
Commercial loans		59,252		10.8	%		54,673		9.7	%
Total other loans		72,346		13.2	%		69,783		12.4	%
Total loans, gross		549,823		100.0	%		567,371		100.0	%
Deferred loan cost, net of income		170					251
Less allowance for loan losses		10,490					11,262
Total loans	$	539,503				$	556,360

17

The Bank assigns an industry standard NAICS code to each loan in the Bank’s portfolio. By assigning a standard code to each type of loan, management can more readily determine concentrations in risk by industry, location and loan type. This information is most useful when analyzing the Bank’s non-residential real estate loan portfolio. At September 30, 2012, and December 31, 2011, the Bank’s non-residential real estate, land for development and farmland loan portfolio was made up of the following loan types:

	Balance		Balance
	September 30, 2012		December 31, 2011
	(Dollars in Thousands)
Land & development	$	47,189		52,338
Construction		5,933		6,151
Manufacturing		3,861		4,172
Professional and Technical		2,051		2,300
Retail Trade		10,771		12,019
Other Services		17,199		17,767
Finance & Insurance		375		141
Agricultural, Forestry, Fishing & Hunting		38,821		33,473
Real Estate and Rental and Leasing		45,771		50,770
Wholesale Trade		8,569		6,235
Arts, Entertainment & Recreation		3,526		5,309
Accomodations / Food Service		23,025		25,255
Healthcare and Social Assistance		4,614		10,140
Educational Services		25		30
Transportation & Warehousing		1,325		1,638
Information		2,568		2,646
Non-industry		1,089		3,219
Admin Support / Waste Mgmt		3,045		2,220
Total	$	219,757		235,823

The allowance for loan losses totaled $10.5 million at September 30, 2012, $11.3 million at December 31, 2011, and $13.5 million at September 30, 2011. The ratio of the allowance for loan losses to total loans was 1.91% at September 30, 2012, 1.98% at December 31, 2011, and 2.33% at September 30, 2011. The following table indicates the type and level of non-accrual loans at the periods indicated below:

	September 30, 2012		December 31, 2011		September 30, 2011
	(Dollars in Thousands)
One-to-four family mortgages	$	2,795		2,074		1,857
Home equity line of credit		24		134		137
Junior lien		—		101		—
Multi-family		190		—		—
Construction		—		—		—
Land		3,279		1,330		1,331
Non-residential real estate		1,268		2,231		639
Farmland		49		—		—
Consumer loans		59		9		9
Commercial loans		2,160		254		278
Total non-accrual loans	$	9,824		6,133		4,251

18

The following table provides a detail of the Company’s activity in the allowance for loan loss account by loan type for the year ended September 30, 2012:

Nine month period ended September 30, 2012	Balance December 31, 2011		Charge off 2012			Recovery 2012		General Provision 2012			Specific Provision 2012			Ending Balance Period Ending September 30, 2012
	(Table in Thousands)
One-to-four family mortgages	$	2,640		(282	)		77		237			(323	)		2,349
Home equity line of credit		408		(65	)		5		(15	)		1			334
Junior liens		277		(1	)		3		(34	)		(87	)		158
Multi-family		1,201		(416	)		—		(648	)		576			713
Construction		139		—			—		(11	)		279			407
Land		1,332		(1,033	)		234		491			930			1,954
Non-residential real estate		3,671		(799	)		100		63			638			3,673
Consumer loans		262		(284	)		110		151			23			262
Commercial loans		1,332		(206	)		10		(68	)		(428	)		640
	$	11,262		(3,086	)		539		166			1,609			10,490
The following table provides a detail of the Company’s activity in the allowance for loan loss account by loan type for the year ended December 31, 2011:
Year Ended December 31, 2011	Balance December 31, 2010		Charge off 2011			Recovery 2011		General Provision 2011			Specific Provision 2011			Ending Balance Year Ending December 31, 2011
	(Table in Thousands)
One-to-four family mortgages	$	1,097		(758	)		139		1,687			475			2,640
Home equity line of credit		212		(123	)		—		245			74			408
Junior liens		146		(27	)		1		79			78			277
Multi-family		2,022		(89	)		—		26			(758	)		1,201
Construction		657		(353	)		—		(91	)		(74	)		139
Land		865		(308	)		30		353			392			1,332
Non-residential real estate		4,025		(2,645	)		84		1,114			1,093			3,671
Consumer loans		108		(371	)		112		425			(12	)		262
Commercial loans		698		(201	)		20		305			510			1,332
	$	9,830		(4,875	)		386		4,143			1,778			11,262

The Company’s general provisions represent the current eight quarter loss history of the Company by loan type. The loss history is weighted using the sum of the quarter digit method, placing more emphasis on the most recent quarterly result and may be further adjusted for any adverse trends in the local or national markets. A negative general provision indicates that the Company’s recent loss history has improved over prior periods or has been specifically reserved for and that lower amounts of general provisions are necessary.

19

The table below presents past due and non-accrual balances at September 30, 2012, and December 31, 2011, by loan classification allocated between performing and non-performing:

	Currently		30 - 89 Days		Non-accrual		Special		Impaired Loans Currently Performing
September 30, 2012	Performing		Past Due		Loans		Mention		Substandard		Doubful		Total
					(Dollars in Thousands)
One-to-four family mortgages	$	154,241		2,240		2,795		1,940		4,223		—		165,439
Home equity line of credit		35,454		55		24		1,202		1,227		—		37,962
Junior liens		4,722		10		—		73		577		—		5,382
Multi-family		20,297		—		190		6,192		6,564		—		33,243
Construction		11,606		—		—		—		4,088		—		15,694
Land		17,540		—		3,279		9,069		17,301		—		47,189
Non-residential real estate		142,193		575		1,317		3,732		24,751		—		172,568
Consumer loans		12,541		86		59		2		406		—		13,094
Commercial loans		49,873		19		2,160		837		6,363		—		59,252
	$	448,467		2,985		9,824		23,047		65,500		—		549,823

	Currently Performing		30 - 89 Days Past Due		Non-accrual Loans		Special Mention		Impaired Loans Currently Performing
December 31, 2011									Substandard		Doubtful		Total
					(Dollars in Thousands)
One-to-four family mortgages	$	153,375		628		2,074		9,163		5,722		230		171,192
Home equity line of credit		36,528		5		134		1,664		134		229		38,694
Junior liens		4,778		312		101		521		497		—		6,209
Multi-family		20,715		—		—		7,073		5,951		—		33,739
Construction		9,943		107		—		213		1,668		—		11,931
Land		17,570		237		1,330		24,714		7,488		999		52,338
Non-residential real estate		142,190		487		2,231		24,782		13,678		117		183,485
Consumer loans		14,399		28		9		268		386		20		15,110
Commercial loans		45,509		506		254		4,003		4,385		16		54,673
Total	$	445,007		2,310		6,133		72,401		39,909		1,611		567,371

All loans listed as 30 – 89 days past due are not performing as agreed. Loans listed as non-accrual may or may not be performing as agreed but have significant weaknesses that makes it doubtful as to whether the loan will continue to perform as agreed. Loans listed as special mention, substandard and doubtful are paying as agreed. However, the customer’s financial statements may indicate weaknesses in their current cash flow, the customer’s industry may be in decline due to current economic conditions, collateral values used to secure the loan may be declining, or the Company may be concerned about the customer’s future business prospects. At September 30, 2012, loans held for sale totaling $2,763,000 were previously classified as non-accrual. Included in loans held for sale is a $760,000 land development loan and a $2.0 million Commercial real estate loan. The sale of both loans settled November 5, 2012.

The Bank does not originate loans it considers sub-prime and is not aware of any exposure to the additional credit concerns associated with sub-prime lending in either the Company’s loan or investment portfolios. The Company does have a significant amount of construction and land development loans. Management reports to the Company’s Board of Directors on the status of the Company’s specific construction and development loans as well as the market trends in those markets in which the Company actively participates.

20

The Company’s annualized net charge off ratios for the nine month periods ended September 30, 2012, September 30, 2011, and the year ended December 31, 2011, were 0.61%, 0.39% and 0.76%, respectively. The ratios of allowance for loan losses to non-accrual loans at September 30, 2012, September 30, 2011, and December 31, 2011, were 106.78%, 318.49%, and 183.62% respectively. The following table sets forth an analysis of the Bank’s allowance for loan losses for the periods ended:

	September 30, 2012			December 31, 2011			September 30, 2011
	(Dollars in Thousands, Except Percentages)
Beginning balance, allowance for loan loss	$	11,262			9,830			9,830
Charge offs
One-to-four family mortgages		(282	)		(758	)		(441	)
Home equity line of credit		(65	)		(123	)		(57	)
Junior liens		(1	)		(27	)		—
Multi-family		(416	)		(89	)		(89	)
Construction		—			(353	)		(353	)
Land		(1,033	)		(308	)		(198	)
Non-residential real estate		(799	)		(2,645	)		(572	)
Consumer loans		(284	)		(371	)		(326	)
Commercial loans		(206	)		(201	)		(33	)
Total charge offs		(3,086	)		(4,875	)		(2,069	)
Recoveries
One-to-four family mortgages		77			139			136
Home equity line of credit		5			—			—
Junior liens		3			1			1
Multi-family		—			—			—
Construction		—			—			—
Land		234			30			30
Non-residential real estate		100			84			84
Consumer loans		110			112			82
Commercial loans		10			20			2
Total recoveries		539			386			335
Net Charge offs		(2,547	)		(4,489	)		(1,734	)
Provision for loan losses		1,775			5,921			5,445
Ending balance	$	10,490			11,262			13,541
Average loan balance, gross	$	556,332			575,133			592,417
Ratio of net charge offs to average outstanding loans during the period		0.61	%		0.76	%		0.39	%

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.

21

The Company conducts annual reviews on all loan relationships above one million to ascertain the borrowers continued ability to service their debt as agreed. In addition to the credit relationships mentioned above, management may classify any credit relationship once it becomes aware of adverse credit trends for that customer. Typically, the annual review consists of updated financial statements for borrowers and any guarantors, a review of the borrower’s credit history with the Company and other creditors, and current income tax information.

As a result of this review, management will classify loans based on their credit risk. Additionally, the Company provides a risk grade for all loans past due more than sixty days. The Company uses the following risk definitions for risk grades:

Satisfactory loans of average strength may have some deficiency or vulnerability to changing economic or industry conditions. These customers should have reasonable amount of capital and operating ratios. Secured loans may lack in margin or liquidity. Loans to individuals, perhaps supported in dollars of net worth, but with supporting assets may be difficult to liquidate.

Watch loans are acceptable credits: (1) that need continual monitoring, such as out-of territory or asset-based loans (since the Bank does not have an asset-based lending department), or (2) with a marginal risk level to business concerns and individuals that; (a) have exhibited favorable performance in the past, though currently experiencing negative trends; (b) are in an industry that is experiencing volatility or is declining, and their performance is less than industry norms; and (c) are experiencing unfavorable trends in their financial position, such as one-time net losses or declines in asset values. These marginal borrowers may have early warning signs of problems such as occasional overdrafts and minor delinquency. If considered marginal, a loan would be a “watch” until financial data demonstrated improved performance or further deterioration to a “substandard” grade usually within a 12-month period. In the table on page 23, Watch loans are included with satisfactory loans and classified as Pass.

Loans classified as Other Loans Especially Mentioned are considered currently protected but are potentially weak. These loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard classification. The credit risk may be relatively minor yet constitutes an unwarranted risk in light of the circumstances surrounding a specific loan. These credit weaknesses, if not checked or corrected, will weaken the loan or inadequately protect the Bank’s credit position at some future date.

22

A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. The loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. This does not imply ultimate loss of the principal, but may involve burdensome administrative expenses and the accompanying cost to carry the credit. Examples of substandard loans include those to borrowers with insufficient or negative cash flow, negative net worth coupled with inadequate guarantor support, inadequate working capital, and/or significantly past-due loans and overdrafts.

A loan classified Doubtful has all the weaknesses inherent in a substandard credit except that the weaknesses make collection or liquidation in full (on the basis of currently existing facts, conditions, and values) highly questionable and improbable. The possibility of loss is extremely high, but because of certain pending factors charge-off is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans. The doubtful classification is applied to that portion of the credit in which the full collection of principal and interest is questionable.

A loan is considered to be classified when management determines that it is probable that the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. The value of individually classified loans is measured based on the present value of expected payments using the fair value of the collateral if the loan is collateral dependent. Currently, it is management’s practice to classify all substandard or doubtful loans as classified. At September 30, 2012, December 31, 2011, and September 30, 2011, the Company’s classified loans totaled $75.8 million, $49.3 million and $56.8 million, respectively. At September 30, 2012, December 31, 2011, and September 30, 2011, the Company’s specific reserve for impaired loans totaled $3.6 million, $4.1 million and $6.0 million, respectively.

23

A summary of the Company’s loans, including their respective regulatory classification and their respective specific reserve at September 30, 2012, is as follows:

			Special		Impaired Loans						Specific Reserve for		Reserve for Performing
September 30, 2012	Pass		Mention		Substandard		Doubful		Total		Impairment		Loans
	(Dollars in Thousands)
One-to-four family mortgages	$	156,358		1,940		7,025		116		165,439		509		1,840
Home equity line of credit		35,510		1,201		1,251		—		37,962		14		320
Junior liens		4,727		74		581		—		5,382		104		54
Multi-family		20,298		6,191		6,754		—		33,243		356		357
Construction		11,606		—		4,088		—		15,694		294		113
Land		17,539		9,070		20,580		—		47,189		888		1,066
Non-residential real estate		142,397		3,809		26,362		—		172,568		1,228		2,445
Consumer loans		12,577		12		505		—		13,094		102		160
Commercial loans		49,892		837		8,523		—		59,252		86		554
Total	$	450,904		23,134		75,669		116		549,823		3,581		6,909

A summary of the Company’s impaired loans, including their respective regulatory classification and their respective specific reserve at December 31, 2011, is as follows:

			Special		Impaired Loans						Specific Reserve for		Allowance for Performing
December 31, 2011	Pass		Mention		Substandard		Doubful		Total		Impairment		Loans
	(Dollars in Thousands)
One-to-four family mortgages	$	153,375		9,434		8,153		230		171,192		728		1,912
Home equity line of credit		36,528		1,694		233		239		38,694		131		277
Junior liens		4,778		622		809		—		6,209		180		97
Multi-family		20,715		7,073		5,951		—		33,739		26		1,175
Construction		9,943		213		1,775		—		11,931		14		125
Land		17,570		24,714		9,055		999		52,338		924		408
Non-residential real estate		142,190		25,077		16,101		117		183,485		1,374		2,297
Consumer loans		14,399		268		423		20		15,110		80		182
Commercial loans		45,509		4,009		5,034		121		54,673		623		709
Total	$	445,007		73,104		47,534		1,726		567,371		4,080		7,182

24

Impaired loans by classification type and the related valuation allowance amounts at September 30, 2012, were as follows:

	At September 30, 2012						For the nine month period ended September 30, 2012
Impaired loans with no recorded allowance:	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
One-to-four family mortgages	$	4,618		4,618		—		6,538		171
Home equity line of credit		976		976		—		787		32
Junior liens		477		477		—		375		22
Multi-family		3,025		3,025		—		3,394		78
Construction		—		—		—		2,562		—
Land		16,967		16,967		—		19,971		289
Non-residential real estate		21,066		21,066		—		21,495		1,038
Consumer loans		115		115		—		62		5
Commercial loans		2,444		2,444		—		2,895		207
Total	$	49,688		49,688		—		58,079		1,842
	At September 30, 2012						For the nine month period ended September 30, 2012
Impaired loans with recorded allowance:	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
One-to-four family mortgages	$	2,523		2,523		509		3,149		108
Home equity line of credit		275		275		14		176		8
Junior liens		104		104		104		331		10
Multi-family		3,729		3,729		356		3,590		178
Construction		4,088		4,088		294		1,460		83
Land		3,613		3,613		888		5,274		145
Non-residential real estate		5,296		5,296		1,228		6,708		271
Consumer loans		390		390		102		217		1
Commercial loans		6,079		6,079		86		4,552		42
Total	$	26,097		26,097		3,581		25,457		846
Total impaired loans	$	75,785		75,785		3,581		83,536		2,688

25

On a periodic basis, the Bank may modify the terms of certain loans. In evaluating whether a restructuring constitutes a troubled debt restructuring (TDR), Financial Accounting Standards Board has issued Accounting Standards Update 310 (ASU 310); A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring. In evaluating whether a restructuring constitutes a TDR, the Bank must separately conclude that both of the following exist:

• The restructuring constitutes a concession

• The debtor is experiencing financial difficulties

ASU 310 provides the following guidance for the Bank’s evaluation of whether it has granted a concession as follows:

• If a debtor does not otherwise have access to funds at a market interest rate for debt with similar risk characteristics as the restructured debt, the restructured debt would be considered a below market rate, which may indicate that the Bank may have granted a concession. In that circumstance, the Bank should consider all aspects of the restructuring in determining whether it has granted a concession, the creditor must make a separate assessment about whether the debtor is experiencing financial difficulties to determine whether the restructuring constitutes a TDR.

• A temporary or permanent increase in the interest rate on a loan as a result of a restructuring does not eliminate the possibility of the restructuring from being considered a concession if the new interest rate on the loan is below the market interest rate for loans of similar risk characteristics.

• A restructuring that results in a delay in payment that is insignificant is not a concession. However, the Bank must consider a variety of factors in assessing whether a restructuring resulting in a delay in payment is insignificant.

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Troubled Debt Restructuring

Due to challenges in the local and national economy that persisted into 2012, the Company has had more of its customers incur financial problems. These customers may request temporary or permanent modification of loans in an effort to avoid foreclosure. The Company analyzes each request separately and grants loan modifications based on the customer’s ability to eventually repay the loan and return to the original loan terms, the customer’s current loan status and the current and projected future value of the Bank’s collateral. Loans that are modified as a result of a customer’s financial distress are classified as Troubled Debt Restructuring (TDR). The classification of a loan as TDR is important in that it indicates that a particular customer may not be past due but represents a credit weakness due to the Bank’s willingness to modify loan terms based on the financial weakness of the borrower. The classification of a loan as a TDR may represent the Company’s “last best chance” to work with a distressed customer before foreclosure proceedings begin.

A summary of the Company’s loans classified as Troubled Debt Restructurings (TDR’s) that are reported as performing at September 30, 2012 and December 31, 2011, is below:

	September 30, 2012			December 31, 2011
TDR by Loan Type:	(Dollars in Thousands)
One-to-four family mortgages	$	2,001			2,521
Home equity line of credit		204			—
Junior lien		—			857
Multi-family		236			—
Construction		3,145			—
Land		4,801			941
Non-residential real estate		2,490			3,367
Farmland		956			—
Consumer loans		8			33
Commercial loans		371			125
Total TDR		14,212			7,844
Less:
TDR in non-accrual status
One-to-four family mortgages		(1,449	)		(1,410	)
Home equity line of credit		—			—
Junior lien		—			(100	)
Multi-family		—			—
Construction		—			—
Land		(2,490	)		—
Non-residential real estate		(956	)		(1	)
Consumer loans		—			(1	)
Commercial loans		—			(105	)
Total performing TDR	$	9,317			6,227

At September 30, 2012, the Company’s level of performing Troubled Debt Restructurings (“TDRs”) was $9.3 million, as compared to $6.2 million at December 31, 2011. A summary of the activity in loans classified as performing TDRs for the nine month period ended September 30, 2012, is as follows:

	Balance at December 31, 2011		New TDR		Loss or Foreclosure		Removed due to performance		Balance at September 30,  2012
	(Dollars in Thousands)
One-to-four family mortgages		1,111		146		—		705		552
Home equity line of credit		—		244		—		40		204
Junior Lien		757		—		—		757		—
Multi-family		—		239		—		3		236
Construction		—		3,145		—		—		3,145
Land		941		4,850		233		757		4,801
Farmland		—		956		—		956		—
Non-residential real estate		3,366		—		453		2,913		—
Consumer loans		32		75		2		97		8
Commercial loans		20		931		10		570		371
Total performing TDR		6,227		10,586		698		6,798		9,317

The following is a summary of the activity in loans classified as performing TDR’s for the twelve month period ended December 31, 2011:

	Balance at December 31, 2010		New TDR		Loss or Foreclosure		Removed due to performance		Balance at December 31, 2011
One-to-four family mortgages		2,751		1,163		401		2,402		1,111
Home equity line of credit		114		—		—		114		—
Junior Lien		—		757		—		—		757
Multi-family		246		—		5		241		—
Construction		203		1,438		1,641		—		—
Land		—		1,475		534		—		941
Farmland		—		—		—		—		—
Non-residential real estate		3,915		1,540		1,228		861		3,366
Consumer loans		69		27		9		55		32
Commercial loans		700		102		235		547		20
Total performing TDR		7,998		6,502		4,053		4,220		6,227

(6) REAL ESTATE AND OTHER ASSETS OWNED

The Company’s real estate and other assets owned represent properties and personal collateral acquired through customer loan defaults. The property is recorded at the lower of cost or fair value less estimated cost to sell and carrying cost at the date acquired. Any difference between the book value and estimated market value is recognized as a charge off through the allowance for loan loss account. Additional real estate owned and other asset losses may be determined on individual properties at specific intervals or at the time of disposal. In general, the Company will obtain a new appraisal on all real estate owned with a book balance in excess of $100,000 on an annual basis. Additional losses are recognized as a non-interest expense.

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At September 30, 2012, December 31, 2011, and September 30, 2011, the Company had balances in other real estate assets owned and problem loans consisting of the following:

	September 30, 2012			December 31, 2011			September 30, 2011
	(Dollars in Thousands)
One-to-four family mortgages	$	147			480			218
Multi-family		—			905			2,507
Construction		216			465			535
Land		275			248			665
Non-residential real estate		43			160			635
Consumer loans		—			9			1
Total other assets owned	$	681			2,267			4,561
Total non-accrual loans	$	9,824			6,133			4,251
Total non-performing assets	$	10,505			8,400			8,812
Non-performing asset / Total assets		1.05	%		0.81	%		0.83	%

The following is a summary of the activity in the Company’s real estate and other assets owned for the nine month period ending September 30, 2012:

	Balance		Activity During 2012					Reduction			Gain (Loss)			Balance
	12/31/2011		Foreclosures		Sales			in Values			on Sale			9/30/2012
	(Dollars in Thousands)
One-to-four family mortgages	$	480		658		(855	)		(107	)		(29	)		147
Multi-family		905		—		(875	)		—			(30	)		—
Construction		465		—		(235	)		—			(14	)		216
Land		248		383		(269	)		(68	)		(19	)		275
Non-residential real estate		160		63		(160	)		(20	)		—			43
Consumer assets		9		—		(9	)		—			—			—
Total	$	2,267		1,104		(2,403	)		(195	)		(92	)		681

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(7) INVESTMENTS IN AFFILIATED COMPANIES

Investments in affiliated companies accounted for under the equity method consist of 100% of the common stock of HopFed Capital Trust 1 (“Trust”), a wholly-owned statutory business trust. The Trust was formed on September 25, 2003. Summary financial information for the Trust follows (dollars in thousands):

Summary Statements of Financial Condition

	At September 30, 2012		At December 31, 2011
Asset - investment in subordinated debentures issued by HopFed Bancorp, Inc.	$	10,310		10,310
Liabilities		—		—
Stockholder’s equity – trust preferred securities		10,000		10,000
Common stock (100% Owned by HopFed Bancorp, Inc.)		310		310
Total stockholders’ equity	$	10,310		10,310

Summary Statement of Income

	Three Month Periods Ended September 30,				Nine Month Period Ended September 30,
	2012		2011		2012		2011
Income – interest income from subordinated debenturesissued by HopFed Bancorp, Inc.	$	93		91	$	282		265
Net income	$	93		91	$	282		265

Summary Statement of Stockholders’ Equity

	Trust Preferred Securities		Common Stock		Retained Earnings			Total Stockholders’ Equity
Beginning balances, December 31, 2011	$	10,000		310		—			10,310
Net income		—		—		282			282
Dividends:
Trust preferred securities		—		—		(274	)		(274	)
Common paid to HopFed Bancorp, Inc.		—		—		(8	)		(8	)
Ending balances, September 30, 2012	$	10,000		310		—			10,310

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(8) FAIR VALUE OF ASSETS AND LIABILITIES

In September 2006, the FASB issued ASC 820-10, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value. The statement establishes a fair value hierarchy which requires an entity to maximize the use of observable input and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.

• Level 1 is for assets and liabilities that management has obtained quoted prices (unadjusted for transaction cost) or identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

• Level 2 is for assets and liabilities in which significant unobservable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 is for assets and liabilities in which significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of securities available for sale are determined by a matrix pricing, which is a mathematical technique that is widely used in the industry to value debt securities without exclusively using quoted prices for the individual securities in the Company’s portfolio but rather by relying on the securities relationship to other benchmark quoted securities. Impaired loans are valued at the net present value of expected payments using the fair value of any assigned collateral. The values for bank owned life insurance are obtained from stated values from the respective insurance companies. The liability associated with the Company’s derivative is obtained from a quoted value supplied by our correspondent banker. The value of real estate owned is obtained from appraisals completed on properties at the time of acquisition and annually thereafter.

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Assets and Liabilities Measured on a Recurring Basis

The assets and liabilities measured at fair value on a recurring basis are summarized below:

September 30, 2012	Total carrying Value in the Consolidated Balance sheet at		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Assets
Available for sale securities	$	348,877		—		347,455		1,422
Bank owned life insurance		9,373		—		9,373		—
Liabilities
Interest rate swap		1,220		—		1,220		—

December 31, 2011	Total carrying Value in the Consolidated Balance sheet at		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Assets
Available for sale securities	$	383,782		—		382,789		993
Bank owned life insurance		9,135		—		9,135		—
Liabilities
Interest rate swap		1,297		—		1,297		—

The assets measured at fair value on a non-recurring basis are summarized below for September 30, 2012:

September 30, 2012	Total carrying Value in the Consolidated Balance sheet at		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Assets
Other real estate owned	$	681		—		—	$	681
Impaired loans, net of reserve of $3,581	$	72,204		—		—	$	72,204

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The assets measured at fair value on a non-recurring basis are summarized below for December 31, 2011:

December 31, 2011	Total carrying value in the consolidated balance sheet		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	at December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Assets
Other real estate owned	$	2,258		—		—	$	2,258
Other assets owned		9		—		—		9
Impaired loans, net of reserve of $4,080		45,180		—		—		45,180

The table below includes a roll-forward of the consolidated condensed statement of financial condition items for the nine month periods ended September 30, 2012, and September 30, 2011, (including the change in fair value) for assets and liabilities classified by HopFed Bancorp, Inc. within level 3 of the valuation hierarchy for assets and liabilities measured at fair value on a recurring basis. When a determination is made to classify an asset or liability within level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, since level 3 assets and liabilities typically include, in addition to the unobservable or level 3 components, observable components (that is components that are actively quoted and can be validated to external sources), the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.

	2012				2011
Nine month period ended September 30,	Available for Sale Securities		Liabilities		Available for Sale Securities			Liabilities
			(Dollars in Thousands)
Fair value, January 1,	$	993		—	$	1,277			—
Change in unrealized gains (losses) included in other comprehensive income for assets and liabilities still held at September 30,		429		—		(231	)		—
Purchases, issuances and settlements, net		—		—		—			—
Transfers in and/or out of Level 3		—		—		—			—
Fair value, September 30,	$	1,422		—	$	1,046			—

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The estimated fair values of financial instruments were as follows at September 30, 2012:

					Estimated Fair Value Measurement at September 30, 2012 Using
	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(Dollars in Thousands)
Financial Assets:
Cash and due from banks	$	50,042		50,042	$	50,042		—		—
Interest-earning deposits		7,661		7,661		7,661		—		—
Securities available for sale		348,877		348,877		—		347,455		1,422
Federal Home Loan Bank stock		4,428		4,428		—		4,428		—
Commercial real estate held for sale		2,763		2,763		—		2,763		—
Loans receivable		539,503		573,132		—		—		573,132
Accrued interest receivable		5,333		5,333		—		5,333		—
Bank owned life insurance		9,373		9,373		—		9,373		—
Financial liabilities:
Deposits		769,256		780,206		298,496		481,710		—
Advances from borrowers for taxes and insurance		639		639		—		—		633
Advances from Federal Home Loan Bank		44,222		48,655		—		48,655		—
Repurchase agreements		42,799		44,252		26,799		17,453		—
Subordinated debentures		10,310		10,099		—		—		10,099
Off-balance-sheet liabilities:
Commitments to extend credit		—		—		—		—		—
Commercial letters of credit		—		—		—		—		—
Market value of interest rate swap		1,220		1,220		—		1,220		—

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The estimated fair values of financial instruments were as follows at December 31, 2011:

					Estimated Fair Value Measurement at December 31, 2011 Using
	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(Dollars in Thousands)
Financial Assets:
Cash and due from banks	$	44,389		44,389	$	44,389		—		—
Interest-earning deposits		4,371		4,371		4,371		—		—
Securities available for sale		383,782		383,782		—		382,789		993
Federal Home Loan Bank stock		4,428		4,428		—		4,428		—
Loans receivable		556,360		585,734		—		—		585,734
Accrued interest receivable		6,183		6,183		—		6,183		—
Bank owned life insurance		9,135		9,135		—		9,135		—
Financial liabilities:
Deposits		800,095		811,415		280,107		531,308		—
Advances from borrowers for taxes and insurance		153		153		—		—		153
Advances from Federal Home Loan Bank		63,319		69,206		3,000		66,287		—
Repurchase agreements		43,080		44,969		27,080		17,889		—
Subordinated debentures		10,310		10,099		—		—		10,099
Off-balance-sheet liabilities:
Commitments to extend credit		—		—		—		—		—
Commercial letters of credit		—		—		—		—		—
Market value of interest rate swap		1,297		1,297		—		1,297		—

(9) ISSUANCE OF SHARES

On December 12, 2008, HopFed Bancorp issued and sold 18,400 shares of preferred stock to the United States Treasury (Treasury) for $18,400,000 pursuant to the Capital Purchase Program. The Company also issued 243,816 common stock warrants to the Treasury as a condition to its participation in the Capital Purchase Program. The warrants have an exercise price of $11.32 each and are immediately exercisable. The warrants expire in ten years from the date of issuance. The preferred stock has no stated maturity and is non-voting, other than having class voting rights on certain matters, and pays cumulative dividends quarterly at a rate of 5% per year for the first five years and 9% thereafter.

34

On September 22, 2010, and September 21, 2011, the Board of Directors declared a 2% common stock dividend to be paid to shareholders of record on September 30, 2010 and October 3, 2011, respectively. As a result of the common stock dividends, total shares outstanding increased by 143,458 at September 30, 2010, and 146,485 on October 3, 2011. In addition, the Company is obligated to adjust the number and strike price of warrants issued to the United States Treasury under the Capital Purchase Program. At November 10, 2012, the warrant balance is 253,666 shares and the warrant strike price is $10.88.

(10) STOCK OPTIONS

At September 30, 2012, all stock options outstanding were issued under the HopFed Bancorp, Inc. 1999 Stock Option Plan. At September 30, 2012, the Company can no longer issue options under this plan. The remaining 20,808 options are fully vested and outstanding until June 1, 2014, with an exercise price of $16.67 per share.

(11) DERIVATIVE INSTRUMENTS

Under guidelines of Financial Accounting Standards Board (“FASB”) ASC 815, Derivative and Hedging Activities, as amended, all derivative instruments are required to be carried at fair value on the consolidated statement of financial position. ASC 815 provides special hedge accounting provisions, which permit the change in fair value of the hedge item related to the risk being hedged to be recognized in earnings in the same period and in the same income statement line as the change in the fair value of the derivative.

A derivative instrument designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset, liability or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges under ASC 815. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Cash value hedges are accounted for by recording the fair value of the derivative instrument and the fair value related to the risk being hedged of the hedged asset or liability on the consolidated statement of financial position with corresponding offsets recorded in the consolidated statement of financial position.

The adjustment to the hedged asset or liability is included in the basis of the hedged item, while the fair value of the derivative is recorded as a freestanding asset or liability. Actual cash receipts or payments and related amounts accrued during the period on derivatives included in a fair value hedge relationship are recorded as adjustments to the income or expense recorded on the hedged asset or liability.

35

Under both the fair value and cash flow hedge methods, derivative gains and losses not effective in hedging the change in fair value or expected cash flows of the hedged item are recognized immediately in the income statement. At the hedge’s inception and at least quarterly thereafter, a formal assessment is performed to determine whether changes in the fair values or cash flows of the derivative instrument has been highly effective in offsetting changes in the fair values or cash flows of the hedged items and whether they are expected to be highly effective in the future. If it is determined a derivative instrument has not been, or will not continue to be highly effective as a hedge, hedged accounting is discontinued. ASC 815 basis adjustments recorded on hedged assets and liabilities are amortized over the remaining life of the hedged item beginning no later than when hedge accounting ceases. There were no fair value hedging gains or losses, as a result of hedge ineffectiveness, recognized for the three and nine month periods ended September 30, 2012, or the year ended December 31, 2011.

In October of 2008, the Bank entered into an interest rate swap agreement for a term of seven years and an amount of $10.0 million. The Bank will pay a fixed rate of 7.27% for seven years and receive an amount equal to the three-month London Interbank Lending Rate (LIBOR) plus 3.10%. The interest rate swap is classified as a cash flow hedge by the Bank and will be tested quarterly for effectiveness. At September 30, 2012, and December 31, 2011, the cost of the Bank to terminate the cash flow hedge was approximately $1,220,000 and $1,297,000, respectively.

(12) REGULATORY AGREEMENT

On April 30, 2010, the Company and the Bank each entered into an informal Memorandum of Understanding (MOU) with its primary regulator at that time, the Office of Thrift Supervision (OTS). On October 11, 2012, the Office of the Comptroller of the Currency terminated the MOU with the Bank. At this time, the MOU between the Company and the Federal Reserve Bank remains in effect.

The Company’s MOU requires us to obtain prior written approval prior to the declaration of a common stock dividend, borrow money from any source and pay a cash dividend to the Bank. The Company may continue to pay other normal operating expenses, and may pay interest on HopFed Capital Trust 1 and dividends on preferred stock held by the United States Department of Treasury without regulatory approval if the Bank maintains a Tier 1 Capital Ratio of 8.00% and a Total Risk Based Capital Ratio of 12.00%. At September 30, 2012, the Company’s Tier 1 Ratio was 12.33% and its Total Risk Based Capital was 22.31%.

The Board of Directors and management of the Company have taken various actions to comply with the terms and conditions of the MOU, and will continue to take all actions believed to be necessary for compliance. The Board and management will continue to work closely with the Federal Reserve in order to comply with the terms and conditions of the MOU.

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(13) REGULATORY CHANGES

Effective July 21, 2011, pursuant to Section 312 of Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) (i) the regulatory functions and rulemaking authority of the OTS with regard to federally chartered savings and loans associations (including the Company’s wholly owned bank subsidiary) were transferred to the Office of the Comptroller of the Currency (“OCC”) and the (ii) regulatory functions and rulemaking authority of the OTS in regards to saving and loan companies, including HopFed Bancorp, Inc., were transferred to the Board of Governors of the Federal Reserve System (“FRB”). Beginning on July 21, 2011, the OCC became the primary regulator of the Bank and is vested with the authority to enforce the Bank’s MOU. Also beginning July 21, 2011, the Company became subject to the regulation of the FRB, which is vested with authority to enforce the Company’s MOU.

The Bank is subject to various regulatory capital requirements now administered by the Office of the Comptroller of the Currency as successor to the OTS (see discussion above regarding “Regulatory Changes”). Failure to meet minimum capital requirements can result in certain mandatory—and possible additional discretionary—actions by regulators that, if undertaken, could have a direct and material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

37

Federal Reserve Notices of Proposed Rulemaking

On June 7, 2012, the Board of Governors of the Federal Reserve System issued three related notices of proposed rulemaking (the “NPRs”) relating to implementation of revised capital rules reflecting requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Base III international capital standards. Among other things, if adopted as currently proposed, the NPRs would result in a new capital standard consisting of common equity tier 1 capital; would increase capital ratios required for certain existing capital categories and add a requirement for a capital conservation buffer (failure to meet these standards would result in limitations on capital distributions, as well as executive bonuses); and would add more conservative standards for securities included in regulatory capital, which would phase-out trust preferred securities as a component of tier 1 capital commencing January 1, 2013. In addition, the NPRs would deduct more assets from regulatory capital and revise methodologies for determining risk-weighted assets, including applying a more risk-sensitive treatment to residential mortgage exposures and to past due or nonaccrual loans. The NPRs provide for various phase-in periods over the next several years. The final regulations applicable to the Company and the Bank may be substantially different from those proposed in the NPRs. Management will continue to evaluate the potential impact of the NPRs to ensure the capital levels of both the Company and the Bank exceed the amounts required to be deemed “well capitalized.” The Company and the Bank will be subject to many provisions in the NPRs, but until final rules are issued we cannot predict the actual effect.

(14) EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

In January 2011, the FASB issued ASU 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in ASU 2010-20 which temporarily delayed the effective date of the disclosures about troubled debt restructuring in ASU 2010-20. This delay was intended to allow the FASB time to complete its deliberations on what constitutes a troubled debt restructuring.

In April 2011, the FASB issued ASU 2011-02, A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring. The provisions of ASU 2011-02 provide additional guidance related to determining whether a creditor has granted a concession, including factors and examples for creditors to consider in evaluating when a credit restructuring results in a delay in payment that is insignificant, prohibits creditors from using the borrowers interest cost as a factor in determining whether the lender has granted a concession to the borrower, and added factors for creditors to use in determining whether a borrower is experiencing financial difficulties. A provision in ASU 2011-02 ends the FASB’s deferral of additional disclosures about troubled debt restructuring as required by ASU 2010-20. The provisions of ASU 2011-02 were effective for the Company’s reporting period ending September 30, 2011. The adoption of ASU 2011-02 did not have a material impact on the Company’s consolidated financial statements of income, condition and cash flow.

38

In May 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in United States of America generally accepted accounting principles (U.S. GAAP) and international Financial Reporting Standards (Topic 820) – Fair Value Measurement (ASU 2011-04), to provide consistent definition of the fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 was effective for reporting periods ending after March 30, 2012, and was applied prospectively. The implementation of ASU 2011-04 did not have a material impact on the Company’s consolidated financial statements of income, condition and cash flows.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income, new disclosure guidance related to the presentation of the Statement of Comprehensive Income. This guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity and requires presentation of reclassification adjustments on the face of the income statement. The effective date of this pronouncement is December 15, 2011. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements of income, condition, and cash flow.

In September 2011, the FASB issued ASU No. 2011-8, Intangibles – Goodwill and other, regarding testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting until is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill reporting unit is more than its carrying amount, the two-step goodwill impairment test is not required. The new guidance was effective on January 1, 2012. The implementation of ASU 2011-8 did not have a material impact on the Company’s consolidated financial statements of income, condition and cash flow.

In December 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards update No. 2011-05. This update to Comprehensive Income (Topic 220) defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income. The deferral supersedes only the paragraphs pertaining to how and where reclassification adjustments are presented. The amendments in this update were effective for public entities for reporting periods beginning after December 15, 2011.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

The consolidated condensed financial statements as of September 30, 2012, and December 31, 2011, and for the three and nine month periods ended September 30, 2012, and September 30, 2011, included herein have been prepared by the Company, without an audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in interim financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the financial statements and notes thereon included in the Company’s 2011 Annual Report to Stockholders on Form 10-K.

Certain of the Company’s accounting policies are important to the portrayal of the Company’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances, which could affect these material judgments, include, but without limitation, changes in interest rates, in the performance of the economy or in the financial condition of borrowers. Management believes that its critical accounting policies include determining the allowance for loan losses, determining the fair value of securities and other financial instruments, and assessing other than temporary impairments of securities.

Comparison of Financial Condition at September 30, 2012, and December 31, 2011

At September 30, 2012, total assets decreased $44.1 million, to $996.7 million, as compared to December 31, 2011, due to lower levels of available for sale investments. Management has liquidated investments to fund the reduction in higher costing borrowings, retail time deposits and brokered deposits. Securities available for sale declined from $383.8 million at December 31, 2011, to $348.9 million at September 30, 2012. At September 30, 2012, and December 31, 2011, securities classified as “available for sale” had an amortized cost of $332.2 million and $371.3 million, respectively.

The Company ownership of Federal Home Loan Bank of Cincinnati (“FHLB”) stock, at cost totaled $4.4 million at December 31, 2011, and September 30, 2012. Total Federal Home Loan Bank “FHLB” borrowings decreased $19.1 million, from $63.3 million at December 31, 2011, to $44.2 million at September 30, 2012. The reduction in FHLB advances were funded by the liquidation of investment securities, many of which were experiencing increased prepayment speeds due to the Federal Reserve Bank’s decision to utilize quantitative easing (“QE 3”) in an attempt to stimulate economic activity. Total repurchase balances decreased from $43.1 million at December 31, 2011, to $42.8 million at September 30, 2012.

Net loans totaled $539.5 million and $556.4 million at September 30, 2012, and December 31, 2011, respectively. Loan demand remains tepid. Given the current weakness in the economy, the Company remains highly selective in both its underwriting standards and types of loans being originated.

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At September 30, 2012, deposits decreased to $769.3 million from $800.1 million at December 31, 2011, due to a $45.4 million reduction in time deposits. At September 30, 2012, non-interest checking account balances increased to $88.5 million, or 11.5% of total deposits. The average cost of all deposits during the three and nine month periods ended September 30, 2012, was 1.36% and 1.38%, respectively, as compared to 1.71% and 1.79% for the three and nine month periods ended September 30, 2011, respectively, and 1.72% for the year ended December 31, 2011. 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. Given weak loan demand and poor investment alternatives, the Company has chosen to reduce its balances of higher costing time deposits.

Comparison of Operating Results for the Nine Month Periods Ended September 30, 2012 and 2011.

Net Income. The Company’s net income available to common shareholders was $2.2 million for the nine month period ended September 30, 2012, as compared to a net loss attributable to common shareholders of $180,000 for the nine month period ended September 30, 2011. The Company’s results for the nine month period ended September 30, 2011, were negatively affected by a $5.4 million provision for loan loss expense, as compared to a $1.8 million provision expense for the nine month period ended September 30, 2012.

Net Interest Income. Net interest income for the nine month period ended September 30, 2012, was $19.4 million, as compared to $20.7 million for the nine month period ended September 30, 2011. The decline in net interest income for the nine months ended September 30, 2012, as compared to September 30, 2011, was due to a $34.4 million decline in the average balance of loans outstanding and $480,000 in FHLB prepayment penalties. The decline in loans outstanding was partially offset by both lower deposit rates, a decrease in the average balance of FHLB advances and an increased level of non-interest bearing deposit balances.

For the nine months ended September 30, 2012, the average yield on loans was 5.53%, as compared to 5.81% for the nine month period ended September 30, 2011. For the nine month period ended September 30, 2012, income on taxable securities declined to $6.8 million, from $8.0 million for the nine month period ended September 30, 2011. For the nine month period ended September 30, 2012, the average balance of taxable securities increased by $25.0 million as compared to the nine month period ended September 30, 2011, while the average balance of tax free municipal securities increased by $837,000.

For the nine month period ended September 30, 2012, the yield on taxable securities was 2.82%, compared to 3.59% for the nine-month period ended September 30, 2011. The decline in yields on taxable securities is the result of lower available yields on currently available investments as well as a decision by management to increase the portfolio’s allocation of adjustable rate securities. In addition, the investment portfolio has experienced an increase in prepayments on amortizing loans. The increased level of cash flow acts to reduce both current yields as well as increasing the amount of premium amortization on bonds.

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For the nine month period ended September 30, 2012, the tax equivalent yield on tax free securities was 4.91%, compared to 5.07% for the nine-month period ended September 30, 2011. The yield on tax free securities has held relatively constant due to the relative stability in both the size and composition of the portfolio. Furthermore, lower yields on new purchases can be partially offset by a lower cost of funds, reducing the Company’s TEFRA tax effect.

For the nine month periods ended September 30, 2012, and September 30, 2011, the Company’s cost of interest bearing liabilities was 1.88% and 2.17%, respectively. The Company’s decision to incur $480,000 in FHLB prepayment fees increased our cost of interest bearing liabilities by 0.07%. The lower cost of interest bearing liabilities was the result of lower short term interest rates. At September 30, 2012, and September 30, 2011, the Company’s net interest margin was 2.84% and 3.01%, respectively.

Average Balances, Yields and Interest Expenses. The table below summarizes the overall effect of changes in both interest rates and the average balances of interest earning assets and liabilities for the nine-month periods ended September 30, 2012, and September 30, 2011. Yields on assets and cost of liabilities are derived by dividing income or expense by the average daily balances of interest earning assets and liabilities for the appropriate nine-month periods.

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Average balances for loans include loans classified as non-accrual, net of the allowance for loan losses. The table adjusts tax-free investment income by $798,000 for September 30, 2012, and $810,000 for September 30, 2011, for a tax equivalent rate using a cost of funds rate of 2.00% for September 30, 2012, and 2.20% for September 30, 2011. The table adjusts tax-free loan income by $7,000 for September 30, 2012, and $27,000 for September 30, 2011, for a tax equivalent rate using the same cost of funds rate:

	Average		Income and			Average			Average		Income and			Average
	Balance		Expense			Rates			Balance		Expense			Rates
	9/30/2012		9/30/2012			9/30/2012			9/30/2011		9/30/2011			9/30/2011
	(Dollars in Thousands, Except Percentages)
Loans	$	545,464	$	22,624			5.53	%	$	579,888	$	25,281			5.81	%
Investments AFS taxable		322,091		6,823			2.82	%		297,112		8,003			3.59	%
Investment AFS tax free		67,714		2,493			4.91	%		66,877		2,543			5.07	%
Interest earning deposits		14,918		20			0.18	%		8,666		13			0.15	%
Total interest earning assets		950,187		31,960			4.48	%		952,543		35,840			5.02	%
Other assets		87,878								121,080
Total assets	$	1,038,065							$	1,073,623
Retail time deposits	$	444,553		6,538			1.96	%	$	470,894		8,608			2.44	%
Brokered deposits		52,558		754			1.91	%		84,139		1,222			1.94	%
Now accounts		145,015		888			0.82	%		137,961		1,256			1.21	%
MMDA and savings accounts		73,983		99			0.18	%		67,369		93			0.18	%
FHLB borrowings		61,336		2,155			4.68	%		72,557		1,946			3.58	%
Repurchase agreements		40,968		721			2.35	%		39,676		668			2.24	%
Subordinated debentures		10,310		553			7.15	%		10,310		551			7.13	%
Total interest bearing liabilities		828,723		11,708			1.88	%		882,906		14,344			2.17	%
Non-interest bearing deposits		82,800								72,216
Other liabilities		5,717								4,905
Shareholders equity		120,825								113,596
Total liabilities and shareholder equity	$	1,038,065							$	1,073,623
Net interest income			$	20,252							$	21,496
Interest rate spread							2.60	%							2.85	%
Net interest margin				2.84	%							3.01	%

Interest Income. For the nine month periods ended September 30, 2012, and September 30, 2011, the Company’s total interest income was $31.2 million and $35.0 million, respectively. As our loan demand has slowed down, the Company continues to have a greater dependency on investment income. The average balance of loans receivable declined from $579.9 million for the nine months ended September 30, 2011, to $545.5 million for the nine month period ended September 30, 2012. The ratio of average interest-earning assets to average interest-bearing liabilities increased from 107.89% for the nine month period ended September 30, 2011, to 114.66% for the nine month period ended September 30, 2012.

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Interest Expense. Interest expense declined approximately $2.6 million for the nine month period ended September 30, 2012, as compared to September 30, 2011. The decline was attributable to lower market interest rates, the re-pricing of higher costing deposits, and a reduction in the average balance of FHLB borrowings. The average cost of interest-bearing retail time deposits declined from 2.44% for the nine month period ended September 30, 2011, to 1.96% for the nine months ended September 30, 2012. Over the same period, the average balance of interest bearing retail time deposits declined $26.3 million, from $470.9 million for the nine months ended September 30, 2011, to $444.6 million for the nine months ended September 30, 2012.

The average cost of brokered deposits remained relatively stable during the nine month period ended September 30, 2012, at 1.91% as compared to 1.94% for the nine month period ended September 30, 2011. Over the same period, the average balance of brokered deposits declined $31.5 million to $52.6 million for the nine month period ended September 30, 2012. For the nine month period ended September 30, 2012, the Company’s total cost of deposits was 1.38% as compared to 1.79% for the nine month period ended September 30, 2011.

The average balance of funds borrowed from the FHLB declined $11.3 million, from $72.6 million for the nine months ended September 30, 2011, to $61.3 million for the nine month period ended September 30, 2012. The average cost of borrowed funds from the FHLB was 3.58% for the nine months ended September 30, 2011, and 4.68% for the nine months ended September 30, 2012, as prepayment penalties added 1.04% to FHLB borrowings for the nine months ended September 30, 2012. The average balance of repurchase agreements increased from $39.7 million for the nine months ended September 30, 2011, to $41.0 million for the nine months ended September 30, 2012. The average cost of repurchase agreements increased from 2.24% for the nine months ended September 30, 2011, to 2.35% for the nine months ended September 30, 2012.

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 and 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 Company determined that an additional $1.8 million in provision for loan loss was required for the nine months ended September 30, 2012, compared to a $5.4 million in provision for loan loss expense for the nine months ended September 30, 2011.

Non-Interest Income. There was a $311,000 decrease in non-interest income in the nine month period ended September 30, 2012, as compared to the same period in 2011. The decline in non-interest income was largely the result of a $679,000 decline in gains realized on the sale of investments. For the nine month period ended September 30, 2012, the Company earned $684,000 in mortgage origination income, as compared to $425,000 during the nine month period ended September 30, 2011, as lower mortgage rates spurred refinancing activity. For the nine month period ended September 30, 2012, the Company earned $778,000 in financial services commission, as compared to $691,000 in income for the nine month period ended September 30, 2011.

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For the nine month period ended September 30, 2012, income from service charges and merchant card income increased by $95,000 as compared to the nine month period ended September 30, 2011, due to a higher number of checking accounts opened which offset the loss of income due to regulatory changes.

Non-Interest Expenses. There was a $503,000 decline in total non-interest expenses in the nine-month period ended September 30, 2012, as compared to the same period in 2011. The most significant change in non-interest expenses for the nine month period ended September 30, 2012, was a $1.4 million decline in losses incurred on the sale of other real estate owned as compared to the same nine month period in 2011. This expense has declined due to the Company’s continued success in reducing the balance of other real estate owned.

For the nine months ended September 30, 2012, salaries and benefits expense increased by $528,000 over the nine month period ended September 30, 2011. For the nine month period ended September 30, 2012, other expenses increasing more than $200,000 as compared to the same period in 2011 including professional services which increased by $334,000 and other operating expenses which increased by $621,000 as compared to the same period in 2011. The most significant reason for the increases in non-interest expenses was the increased regulatory requirements placed on the Company.

Income Taxes. The effective tax rate for the nine-month period ended September 30, 2012, was 18.0%, compared to an effective tax rate of 38.8% for the nine-month period ended September 30, 2011. The Company’s income tax rate remains low due to the amount of tax free income as well as a relatively low level of pre-tax income.

Comparison of Operating Results for the Three Month Periods Ended September 30, 2012 and 2011.

Net Income. The Company’s net income available to common shareholders was $819,000 for the three month period ended September 30, 2012, as compared to net income available to common shareholders of $1,368,000 for the three month period ended September 30, 2011.

Net Interest Income. Net interest income for the three month period ended September 30, 2012, was $5.9 million, as compared to $6.9 million for the three month period ended September 30, 2011. The decline in net interest income for the three month period ended September 30, 2012, compared to September 30, 2011, was primarily due to a $27.8 million decline in the average balance of loans outstanding and $480,000 of FHLB prepayment penalties incurred. As a result of the changes in deposits, the Company’s average cost of all deposits declined from 1.71% for the three month period ended September 30, 2011, to 1.36% for the three month period ended September 30, 2012, resulting in a $903,000 decline in interest expense on deposits.

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For the three months ended September 30, 2012, the average yield on loans was 5.48%, as compared to 5.87% for the three month period ended September 30, 2011. For the three month period ended September 30, 2012, income on taxable securities declined to $2.0 million, from $2.6 million for the three month period ended September 30, 2011. For the three month period ended September 30, 2012, the average balance of taxable securities increased by $5.2 million as compared to the three month period ended September 30, 2011 while the average balance of tax free securities increased by $4.7 million over the same period.

For the three month period ending September 30, 2012, the yield on taxable securities was 2.61%, as compared to 3.40% for the three-month period ended September 30, 2011. The decline in yields on taxable securities is the result of lower available yields on currently available investments, a decision by management to increase the portfolio’s allocation of adjustable rate securities and an increase in the prepayments on securities, resulting in high premium amortizations and lower reinvestment rates.

For the three month period ended September 30, 2012, the tax equivalent yield on tax free securities was 4.87%, compared to 4.83% for the three-month period ended September 30, 2011. The yield on tax free securities has held relatively constant due to the relative stability in both the size and composition of the portfolio. Furthermore, lower yields on new purchases can be partially offset by a lower cost of funds, reducing the Company’s TEFRA tax effect.

For the three month periods ended September 30, 2012 and September 30, 2011, the Company’s cost of interest bearing liabilities was 2.03% and 2.10%, respectively. At September 30, 2012, and September 30, 2011, the Company’s net interest margin was 2.67% and 3.00%, respectively. For the three month period ended September 30, 2012, the Company’s cost of interest bearing liabilities was 0.24% higher and its net interest margin 0.24% lower due to the presence of $480,000 in FHLB prepayment penalties.

Average Balances, Yields and Interest Expenses. The table below summarizes the overall effect of changes in both interest rates and the average balances of interest earning assets and liabilities for the three-month periods ended September 30, 2012, and September 30, 2011. Yields on assets and cost of liabilities are derived by dividing income or expense by the average daily balances of interest earning assets and liabilities for the appropriate three-month periods.

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Average balances for loans include loans classified as non-accrual, net of the allowance for loan losses. The table adjusts tax-free investment income by $273,000 for September 30, 2012, and $250,000 for September 30, 2011, for a tax equivalent rate using a cost of funds rate of 2.00% for September 30, 2012, and 2.00% for September 30, 2011. The table adjusts tax-free loan income by $2,000 for September 30, 2012, and $7,000 for September 30, 2011, for a tax equivalent rate using the same cost of funds rate:

	Average Balance 9/30/2012		Income & Expense 9/30/2012			Average Rates 9/30/2012			Average Balance 9/30/2011		Income & Expense 9/30/2011			Average Rates 9/30/2011
	(Dollars in Thousands, Except Percentages)
Loans	$	540,811	$	7,405			5.48	%	$	568,600	$	8,339			5.87	%
Investments AFS taxable		308,578		2,014			2.61	%		303,384		2,581			3.40	%
Investment AFS tax free		69,420		846			4.87	%		64,712		782			4.83	%
Interest earning deposits		10,555		6			0.23	%		12,720		5			0.16	%
Total interest earning assets		929,364		10,271			4.42	%		949,416		11,707			4.93	%
Other assets		87,537								118,896
Total assets	$	1,016,901							$	1,068,312
Retail time deposits	$	430,568		2,064			1.92	%	$	475,287		2,773			2.33	%
Brokered deposits		49,181		258			2.10	%		76,557		374			1.95	%
Now accounts		140,424		285			0.81	%		133,022		358			1.08	%
MMDA and savings accounts		75,031		33			0.18	%		68,913		38			0.22	%
FHLB borrowings		58,962		1,017			6.90	%		70,575		625			3.54	%
Repurchase agreements		39,093		236			2.41	%		39,323		238			2.42	%
Subordinated debentures		10,310		185			7.18	%		10,310		186			7.22	%
Total interest bearing liabilities		803,569		4,078			2.03	%		873,987		4,592			2.10	%
Non-interest bearing deposits		84,079								74,077
Other liabilities		6,284								4,983
Stockholders’ equity		122,969								115,265
Total liabilities and stockholders’ equity	$	1,016,901							$	1,068,312
Net interest income			$	6,193							$	7,115
Interest rate spread							2.39	%							2.83	%
Net yield on interest earning assets				2.67	%							3.00	%

Interest Income. For the three month periods ended September 30, 2012, and September 30, 2011, the Company’s total interest income was $10.0 million and $11.5 million, respectively. Loan demand remains weak and the Company has reduced the amount of investments available for sale to fund the decline in both FHLB loan balances and time deposits. The average balance of loans receivable declined from $568.6 million for the three months ended September 30, 2011, to $540.8 million for the three month period ended September 30, 2012. The ratio of average interest-earning assets to average interest-bearing liabilities increased from 108.63% for the three months ended September 30, 2011, to 115.65% for the three months ended September 30, 2012 as the Company reduced the average size of its balance sheet.

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Interest Expense. Interest expense declined approximately $500,000 for the three months ended September 30, 2012, as compared to September 30, 2011. The decline was attributable to lower market interest rates, the re-pricing of higher costing deposits, and a reduction in the average balance of time deposits but was partially offset by the $480,000 in FHLB prepayment penalties. The average cost of interest-bearing retail time deposits declined from 2.33% for the three month period ended September 30, 2011, to 1.92% for the three months ended September 30, 2012. Over the same period, the average balance of interest bearing retail time deposits declined $44.7 million, from $475.3 million for the three months ended September 30, 2011, to $430.6 million for the three months ended September 30, 2012. In the three month period ended December 31, 2012, the Company has $96.8 million in time deposits scheduled to mature with a weighted average cost of approximately 2.00%.

The average cost of brokered deposits increased from 1.95% for the three months ended September 30, 2011, to 2.10% for the three months ended September 30, 2012, as lower costing deposits have matured and not been renewed. Over the same period, the average balance of brokered deposits declined $27.4 million to $49.2 million for the three month period ended September 30, 2012. For the three month period ended September 30, 2012, the Company’s total cost of deposits was 1.36%, as compared to 1.71% for the three month period ended September 30, 2011.

The average balance of funds borrowed from the FHLB declined $11.6 million, from $70.6 million for the three months ended September 30, 2011, to $59.0 million for the three month period ended September 30, 2012. The average cost of borrowed funds from the FHLB was 3.54% for the three months ended September 30, 2011, and 6.90% for the three months ended September 30, 2012. For the three month period ended September 30, 2012, borrowing cost would have been 3.64% excluding FHLB prepayment penalties. The average balance of repurchase agreements decreased from $39.3 million for the three months ended September 30, 2011, to $39.1 million for the three months ended September 30, 2012. The average cost of repurchase agreements decreased from 2.42% for the three months ended September 30, 2011, to 2.41% for the three months ended September 30, 2012.

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 and 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 Company determined that an additional $506,000 in provision for loan loss was required for the three months ended September 30, 2012, compared to a $475,000 in provision for loan loss expense for the three months ended September 30, 2011.

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Non-Interest Income. There was a $384,000 decrease in non-interest income in the three months ended September 30, 2012, as compared to the same period in 2011. The decrease in non-interest income was largely the result of a $303,000 reduction in gains realized on the sale of available for sale securities as management sold selective securities to fund liquidations in FHLB advances, brokered and higher cost time deposits. For the three month period ended September 30, 2012, the Company earned $218,000 in mortgage origination income as compared to $295,000 during the three month period ended September 30, 2011. For the three month periods ended September 30, 2012 and 2011, income from service charges and merchant card income was $1.2 million, respectively as the presence of higher checking account balances was offset by the negative effects of increased regulations on service charge income.

Non-Interest Expenses. For the three-month period ended September 30, 2012, and September 30, 2011, total non-interest expenses declined by $156,000. For the three months ended September 30, 2012, salaries and benefits expense increased by $138,000, professional services expenses increased by $142,000 and other operating expenses increased by $157,000 over the three month period ended September 30, 2011. For the three month period ended September 30, 2012, no other operating expenses increased by more than $100,000 as compared to the three month period ended September 30, 2011. The most significant reduction non-interest expenses for the three month period ended September 30, 2012, as compared to the three month period ended September 30, 2011, is a $502,000 reduction in losses on the sale of other real estate owned.

Income Taxes. The effective tax rate for the three-month period ending September 30, 2012, was 19.7% as compared to 35.8% for the three month period ended September 30, 2011.

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 current 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. In the past, the Company was required to seek approval from the Office of Thrift Supervision prior to the declaration of a dividend to common shareholders. Currently, we are required to seek approval for each cash common dividend payment from the Federal Reserve Bank.

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At September 30, 2012, the company brokered deposits consisted of the following:

Date Issued	Interest Rate			Current Balance		Maturity Date			Call Option
10/16/2009		2.30	%	$	3,011,000		10/16/2012
3/3/2010		1.75	%		2,032,000		3/4/2013
1/22/2010		2.20	%		3,092,000		7/22/2013
3/2/2010		2.00	%		3,204,000		9/2/2013
9/22/2010		1.15	%		2,144,000		3/22/2014
7/1/2011		1.00	%		3,000,000		5/1/2014
8/11/2009		3.00	%		5,095,000		8/11/2014
7/9/2012		0.54	%		3,159,000		1/9/2015
7/27/2012		0.70	%		3,590,000		7/27/2015	1
12/21/2010		1.70	%		805,000		12/21/2015
1/3/2011		1.00	%		1,874,000		1/3/2016	1
9/21/2012		0.60	%		2,500,000		1/21/2016
7/9/2012		0.70	%		2,309,000		3/9/2016
3/17/2011		2.25	%		1,500,000		3/17/2016
10/13/2011		1.35	%		2,086,000		10/13/2016	1
3/9/2012		1.00	%		3,044,000		12/9/2016	1
7/9/2012		0.98	%		1,446,000		1/9/2017
7/27/2012		0.50	%		1,496,000		7/27/2017
9/22/2011		1.00	%		2,127,000		9/22/2017	1
10/6/2010		1.25	%		540,000		10/6/2020	1
		1.44	%	$	48,054,000

⁽¹⁾  Denotes brokered deposit with rising rate feature in which the company has an option to call the deposit at specific intervals.

50

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 September 30, 2012, the Bank exceeded all regulatory capital requirements.

The table below presents certain information relating to the Company’s and Bank’s capital compliance at September 30, 2012:

	Company					Bank
	Amount		Percent			Amount		Percent
	(Dollars in Thousands)
Tier 1 Leverage	$	122,826		12.33	%	$	106,947		10.91	%
Tier 1 Risk based	$	122,826		21.09	%	$	106,947		18.46	%
Total Risk Based Capital	$	130,115		22.31	%	$	114,229		19.72	%

At September 30, 2012, the Bank had outstanding commitments to originate loans totaling $15.0 million and undisbursed commitments on loans outstanding of $67.9 million. Management believes that the Bank’s sources of funds are sufficient to fund all of its outstanding commitments. Certificates of deposits scheduled to mature in one year or less from September 30, 2012, totaled $268.5 million. Management believes that a significant percentage of such deposits will remain with the Bank.

The Bank’s FHLB borrowings are secured by a blanket security agreement pledging the Bank’s 1-4 family first mortgage loans and non-residential real estate loans. At September 30, 2012, the Bank has pledged all eligible 1-4 family first mortgages and non-residential real estate loans that may be pledged under this agreement.

51

At September 30, 2012, the Company has outstanding borrowings of $44.2 million from the FHLB with maturities ranging from March 2016 to January 2019. In the three month period ended September 30, 2012, the Company liquidated $20.0 million in FHLB advances and recognized prepayment penalties of approximately $480,000. A schedule of FHLB borrowings at September 30, 2012, is provided below:

Outstanding Balance		Rate			Maturity		Note
		(Dollars in thousands)
	$  4,000		5.34	%		03/17/16
	7,000		4.25	%		05/01/17	Quarterly callable
	10,000		4.56	%		06/28/17	Quarterly callable
	10,000		4.26	%		08/17/17	Quarterly callable
	13,222		3.13	%		01/01/19	Monthly principal payments
	$44,222		4.09	%		5.1 years	Weighted average life

At September 30, 2012, the Company had $65.5 million in additional borrowing capacity with the FHLB which includes an overnight line of credit of $30.0 million and $8 million in overnight borrowing capacity from the Company’s correspondent bank.

The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit and financial guarantees written is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making these commitments and conditional obligations as it does for on-balance-sheet instruments.

At September 30, 2012, the Company had the following off-balance sheet commitments (in thousands):

Standby letters of credit	$	762
Unused home equity lines of credit	$	28,383
Unused commercial lines of credit	$	39,535
Commitments to originate loans	$	14,987

52

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 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 actual results of the Company’s asset liability management analysis are highly dependent on the prepayment speed of mortgage backed securities and collateralized mortgage obligations. The United States Treasury’s policy of purchasing longer dated Treasury bonds has the result of lowering mortgage loan rates, allowing more consumers to refinance their mortgages and pay-off their current mortgage, resulting in higher prepayment speeds on mortgage investment products.

The effects of rising interest rates are discussed throughout Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Actual results for the year ending December 31, 2012, will differ from simulations due to timing, magnitude, and the frequency or interest rate changes, market conditions, management strategies, and the timing of the Company’s cash receipts and disbursements.

The Company’s analysis at September 30, 2012, indicates that changes in interest rates are less likely to result in significant changes in the Company’s annual net interest income. A summary of the Company’s net interest income analysis at September 30, 2012, for the twelve month period ending September 30, 2013, is as follows:

	Down 1.00%		No change		Up 1.00%		Up 2.00%		Up 3.00%
	(Dollars in Thousands)
Net interest income	$	26,169	$	26,834	$	27,213	$	27,643	$	28,160

53

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

In accordance with Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), an evaluation was carried out with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the quarter ended September 30, 2012.

Based upon their evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the nine month period ended September 30, 2012, to ensure that material information relating to the Company, including its consolidated subsidiaries, was made known to them by others within those entities, particularly during the period in which this quarterly report on Form 10-Q was being prepared.

Any control system, no matter how well conceived and operated, can provide only reasonable assurance that its objectives are achieved. The design of a control system inherently has limitations, including the controls cost relative to their benefits. Additionally, controls can be circumvented. No cost-effective control system can provide absolute assurance that all control issues and instances of fraud will be detected.

The Company is subject to Section 404 of The Sarbanes-Oxley Act of 2002. Section 404 requires management to assess and report on the effectiveness of the Company’s internal controls over financial reporting.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the Company’s fiscal quarter ended September 30, 2012, that have materially affected, or are reasonable likely to materially affect, the Company’s internal control over financial reporting.

54

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company currently has no material pending legal proceedings. An individual has filed a lawsuit against Heritage Bank, our thrift subsidiary, in a Tennessee court. The lawsuit alleges that Heritage Bank did not provide adequate disclosures as to fees assessed for a non-customer using Heritage Bank’s automated teller machines (“ATM’s). The plaintiff is seeking unspecified damages, pre-judgment cost and attorney fees. The Company and the Bank are aggressively contesting the allegations made in the lawsuit. Based on our current knowledge, neither the Company nor the Bank believe that any liability arising from this matter will have a material adverse effect on the Company’s consolidated financial condition, operating results or cash flows.

Item 1A. Risk Factors

There have been no material changes to our risk factors as previously disclosed in Part 1, Item 1A of our annual report on Form 10K for the fiscal year ended December 31, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None

(b) None

(c) None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosure

Not Applicable

Item 5. Other Information

None

55

Item 6. Exhibits

31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for John E. Peck, Chief Executive Officer.
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Billy C. Duvall, Chief Financial Officer.
32.1	Certification Pursuant to Section 18 U.S.C. Section 1350 for John E. Peck, Chief Executive Officer.
32.2	Certification Pursuant to Section 18 U.S.C. Section 1350 for Billy C. Duvall, Chief Financial Officer.
101	The following materials from the Company’s quarterly report on Form 10-Q for the three and nine month periods ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statement of Financial Condition as of September 30, 2012 (unaudited) and December 31, 2011, (ii) Condensed Consolidated Statements of Income (Loss) for the three and nine month periods ended September 30, 2012 and 2011 (unaudited), (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine month periods ended September 31, 2012 and 2011 (unaudited), (iv) Condensed Consolidated Statements of Cash Flows, for the nine month periods ended September 30, 2012 and 2011 (unaudited), (v) Consolidated Condensed Statement of Stockholders’ Equity for the nine month period ended September 30, 2012 (unaudited) and (vi) Notes to Condensed Consolidated Financial Statements (unaudited), tagged as blocks of text.

56

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, 2012	/s/ John E. Peck
	John E. Peck
	President and Chief Executive Officer
Date: November 14, 2012	/s/ Billy C. Duvall
	Billy C. Duvall
	Senior Vice President, Chief Financial
	Officer and Treasurer

57

EX-31.1

Exhibit 31.1

CERTIFICATION

I, John E. Peck, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of HopFed Bancorp, Inc.;

(2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

(3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonable likely to materially affect, the registrants internal control over financial reporting; and

(5) The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant roles in the registrant’s internal control over financial reporting.

Date: November 14, 2012	/s/ John. E. Peck
	John E. Peck, Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Billy C. Duvall, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of HopFed Bancorp, Inc.;

(2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

(3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonable likely to materially affect, the registrants internal control over financial reporting; and

(5) The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant roles in the registrant’s internal control over financial reporting.

Date: November 14, 2012	/s/ Billy C. Duvall
	Billy C. Duvall, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of HopFed Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John E. Peck, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and the result of operations of the Company.

Date: November 14, 2012

/s/ John E. Peck

John E. Peck, Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to HopFed Bancorp, Inc. and will be retained by HopFed Bancorp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. The information furnished herein shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of HopFed Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Billy C. Duvall, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and the result of operations of the Company.

Date: November 14, 2012

/s/ Billy C. Duvall

Billy C. Duvall, Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to HopFed Bancorp, Inc. and will be retained by HopFed Bancorp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. The information furnished herein shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

XML

Securities (Details Textual) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012 Contract securities
Securities (Textual) [Abstract]
Number of securities with unrealized losses	9
Securities pledged to municipalities for deposits in excess of FDIC limits, book value	$ 122.6
Securities pledged to municipalities for deposits in excess of FDIC limits, market value	132.6
Letter of credit issued by FHLB	15.5
Securities with market value sold under agreements to repurchase from various customers	26.8
Number of wholesale repurchase agreements with third parties secured by investments	2
Wholesale repurchase agreements with combined book value	21.2
Wholesale repurchase agreements with combined market value	22.0
Investment repurchase agreement, amount	6.0
Repurchase agreement, maturity date	Sep. 18, 2016
Repurchase agreement, interest rate	4.36%
Investment repurchase agreement, amount	$ 10.0
Repurchase agreement, maturity date	Sep. 05, 2014
Repurchase agreement, interest rate	4.28%

XML

Investments in Affiliated Companies (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Summary Statement of Income
Income - interest income from subordinated debentures issued by HopFed Bancorp, Inc.	$ 9,996,000	$ 11,450,000	$ 31,155,000	$ 35,003,000
Summary Statement of Stockholders' Equity
Beginning balance			118,483,000
Net income	819,000	1,368,000	2,192,000	(180,000)
Trust preferred securities	(229,000)	(232,000)	(689,000)	(688,000)
Cash dividend to common stockholders			(452,000)
Ending balance	123,261,000		123,261,000
Subsidiaries [Member]
Summary Statements of Financial Condition
Asset - investment in subordinated debentures issued by HopFed Bancorp, Inc.	10,310,000		10,310,000		10,310,000
Liabilities
Total stockholders' equity	10,310,000		10,310,000		10,310,000
Summary Statement of Income
Income - interest income from subordinated debentures issued by HopFed Bancorp, Inc.	93,000	91,000	282,000	265,000
Net income	93,000	91,000	282,000	265,000
Summary Statement of Stockholders' Equity
Beginning balance			10,310,000
Net income			282,000
Trust preferred securities			(274,000)
Cash dividend to common stockholders			(8,000)
Ending balance	10,310,000		10,310,000
Investments in Affiliated Companies (Textual) [Abstract]
Percent of common stock of HopFed Bancorp, Inc.	100.00%		100.00%
Common stock [Member]
Summary Statement of Stockholders' Equity
Beginning balance					310,000
Ending balance	310,000		310,000		310,000
Common stock [Member] | Subsidiaries [Member]
Summary Statements of Financial Condition
Total stockholders' equity	310,000		310,000		310,000
Retained Earnings [Member]
Summary Statement of Stockholders' Equity
Beginning balance
Net income			282,000
Trust preferred securities			(274,000)
Cash dividend to common stockholders			(8,000)
Ending balance
Trust preferred securities [Member]
Summary Statement of Stockholders' Equity
Beginning balance					10,000,000
Ending balance	10,000,000		10,000,000		10,000,000
Trust preferred securities [Member] | Subsidiaries [Member]
Summary Statements of Financial Condition
Total stockholders' equity	$ 10,000,000		$ 10,000,000		$ 10,000,000

XML

Loans (Details 8) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Dec. 31, 2010
Company's loans classified as troubled debt restructurings (TDR's)
Total TDR	$ 14,212	$ 7,844
Total performing TDR	9,317	6,227	7,998
One-to-four family mortgages [Member]
Company's loans classified as troubled debt restructurings (TDR's)
Total TDR	2,001	2,521
TDR in non-accrual status	(1,449)	(1,410)
Total performing TDR	552	1,111	2,751
Home equity line of credit [Member]
Company's loans classified as troubled debt restructurings (TDR's)
Total TDR	204
TDR in non-accrual status
Total performing TDR	204		114
Junior lien [Member]
Company's loans classified as troubled debt restructurings (TDR's)
Total TDR		857
TDR in non-accrual status		(100)
Total performing TDR		757
Multi-family [Member]
Company's loans classified as troubled debt restructurings (TDR's)
Total TDR	236
TDR in non-accrual status
Total performing TDR	236		246
Construction [Member]
Company's loans classified as troubled debt restructurings (TDR's)
Total TDR	3,145
TDR in non-accrual status
Total performing TDR	3,145		203
Land [Member]
Company's loans classified as troubled debt restructurings (TDR's)
Total TDR	4,801	941
TDR in non-accrual status	(2,490)
Total performing TDR	4,801	941
Non-residential real estate [Member]
Company's loans classified as troubled debt restructurings (TDR's)
Total TDR	2,490	3,367
TDR in non-accrual status	(956)	(1)
Total performing TDR		3,366	3,915
Farmland [Member]
Company's loans classified as troubled debt restructurings (TDR's)
Total TDR	956
Total performing TDR
Consumer loans [Member]
Company's loans classified as troubled debt restructurings (TDR's)
Total TDR	8	33
TDR in non-accrual status		(1)
Total performing TDR	8	32	69
Commercial loans [Member]
Company's loans classified as troubled debt restructurings (TDR's)
Total TDR	371	125
TDR in non-accrual status		(105)
Total performing TDR	$ 371	$ 20	$ 700

XML

Fair Value of Assets and Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Securities available for sale	$ 348,877	$ 383,782
Fair Value, Measurements, Recurring [Member]
Assets
Securities available for sale	348,877	383,782
Bank owned life insurance	9,373	9,135
Liabilities
Interest rate swap	1,220	1,297
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member]
Assets
Securities available for sale
Bank owned life insurance
Liabilities
Interest rate swap
Significant Other Observable Inputs (Level 2) [Member]
Assets
Bank owned life insurance	9,373
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member]
Assets
Securities available for sale	347,455	382,789
Bank owned life insurance		9,135
Liabilities
Interest rate swap	1,220	1,297
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member]
Assets
Securities available for sale	$ 1,422	$ 993

XML

Loans (Details 6) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Summary of the company's impaired loans
Total loans, gross	$ 549,823	$ 567,371
Specific Reserve for Impairment	3,581	4,080
Reserve for Performing Loans	6,909	7,182
Pass [Member]
Summary of the company's impaired loans
Total loans, gross	450,904	445,007
Special Mention [Member]
Summary of the company's impaired loans
Total loans, gross	23,134	73,104
Substandard [Member]
Summary of the company's impaired loans
Total loans, gross	75,669	47,534
Doubtful [Member]
Summary of the company's impaired loans
Total loans, gross	116	1,726
One-to-four family mortgages [Member]
Summary of the company's impaired loans
Total loans, gross	165,439	171,192
Specific Reserve for Impairment	509	728
Reserve for Performing Loans	1,840	1,912
One-to-four family mortgages [Member] | Pass [Member]
Summary of the company's impaired loans
Total loans, gross	156,358	153,375
One-to-four family mortgages [Member] | Special Mention [Member]
Summary of the company's impaired loans
Total loans, gross	1,940	9,434
One-to-four family mortgages [Member] | Substandard [Member]
Summary of the company's impaired loans
Total loans, gross	7,025	8,153
One-to-four family mortgages [Member] | Doubtful [Member]
Summary of the company's impaired loans
Total loans, gross	116	230
Home equity line of credit [Member]
Summary of the company's impaired loans
Total loans, gross	37,962	38,694
Specific Reserve for Impairment	14	131
Reserve for Performing Loans	320	277
Home equity line of credit [Member] | Pass [Member]
Summary of the company's impaired loans
Total loans, gross	35,510	36,528
Home equity line of credit [Member] | Special Mention [Member]
Summary of the company's impaired loans
Total loans, gross	1,201	1,694
Home equity line of credit [Member] | Substandard [Member]
Summary of the company's impaired loans
Total loans, gross	1,251	233
Home equity line of credit [Member] | Doubtful [Member]
Summary of the company's impaired loans
Total loans, gross		239
Junior liens [Member]
Summary of the company's impaired loans
Total loans, gross	5,382	6,209
Specific Reserve for Impairment	104	180
Reserve for Performing Loans	54	97
Junior liens [Member] | Pass [Member]
Summary of the company's impaired loans
Total loans, gross	4,727	4,778
Junior liens [Member] | Special Mention [Member]
Summary of the company's impaired loans
Total loans, gross	74	622
Junior liens [Member] | Substandard [Member]
Summary of the company's impaired loans
Total loans, gross	581	809
Multi-family [Member]
Summary of the company's impaired loans
Total loans, gross	33,243	33,739
Specific Reserve for Impairment	356	26
Reserve for Performing Loans	357	1,175
Multi-family [Member] | Pass [Member]
Summary of the company's impaired loans
Total loans, gross	20,298	20,715
Multi-family [Member] | Special Mention [Member]
Summary of the company's impaired loans
Total loans, gross	6,191	7,073
Multi-family [Member] | Substandard [Member]
Summary of the company's impaired loans
Total loans, gross	6,754	5,951
Construction [Member]
Summary of the company's impaired loans
Total loans, gross	15,694	11,931
Specific Reserve for Impairment	294	14
Reserve for Performing Loans	113	125
Construction [Member] | Pass [Member]
Summary of the company's impaired loans
Total loans, gross	11,606	9,943
Construction [Member] | Special Mention [Member]
Summary of the company's impaired loans
Total loans, gross		213
Construction [Member] | Substandard [Member]
Summary of the company's impaired loans
Total loans, gross	4,088	1,775
Land for development [Member]
Summary of the company's impaired loans
Total loans, gross	47,189	52,338
Specific Reserve for Impairment	888	924
Reserve for Performing Loans	1,066	408
Land for development [Member] | Pass [Member]
Summary of the company's impaired loans
Total loans, gross	17,539	17,570
Land for development [Member] | Special Mention [Member]
Summary of the company's impaired loans
Total loans, gross	9,070	24,714
Land for development [Member] | Substandard [Member]
Summary of the company's impaired loans
Total loans, gross	20,580	9,055
Land for development [Member] | Doubtful [Member]
Summary of the company's impaired loans
Total loans, gross		999
Non-residential real estate [Member]
Summary of the company's impaired loans
Total loans, gross	172,568	183,485
Specific Reserve for Impairment	1,228	1,374
Reserve for Performing Loans	2,445	2,297
Non-residential real estate [Member] | Pass [Member]
Summary of the company's impaired loans
Total loans, gross	142,397	142,190
Non-residential real estate [Member] | Special Mention [Member]
Summary of the company's impaired loans
Total loans, gross	3,809	25,077
Non-residential real estate [Member] | Substandard [Member]
Summary of the company's impaired loans
Total loans, gross	26,362	16,101
Non-residential real estate [Member] | Doubtful [Member]
Summary of the company's impaired loans
Total loans, gross		117
Consumer loans [Member]
Summary of the company's impaired loans
Total loans, gross	13,094	15,110
Specific Reserve for Impairment	102	80
Reserve for Performing Loans	160	182
Consumer loans [Member] | Pass [Member]
Summary of the company's impaired loans
Total loans, gross	12,577	14,399
Consumer loans [Member] | Special Mention [Member]
Summary of the company's impaired loans
Total loans, gross	12	268
Consumer loans [Member] | Substandard [Member]
Summary of the company's impaired loans
Total loans, gross	505	423
Consumer loans [Member] | Doubtful [Member]
Summary of the company's impaired loans
Total loans, gross		20
Commercial loans [Member]
Summary of the company's impaired loans
Total loans, gross	59,252	54,673
Specific Reserve for Impairment	86	623
Reserve for Performing Loans	554	709
Commercial loans [Member] | Pass [Member]
Summary of the company's impaired loans
Total loans, gross	49,892	45,509
Commercial loans [Member] | Special Mention [Member]
Summary of the company's impaired loans
Total loans, gross	837	4,009
Commercial loans [Member] | Substandard [Member]
Summary of the company's impaired loans
Total loans, gross	8,523	5,034
Commercial loans [Member] | Doubtful [Member]
Summary of the company's impaired loans
Total loans, gross		$ 121

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Income (Loss) Per Share (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Basic IPS:
Net income (loss) available (attributable) to common stockholders	$ 819,000	$ 1,368,000	$ 2,192,000	$ (180,000)
Average common shares outstanding	7,487,283	7,481,448	7,485,571	7,456,750
Net income (loss) per share available (attributable) to common shareholders, basic	$ 0.11	$ 0.18	$ 0.29	$ (0.02)
Diluted IPS:
Net income (loss) available (attributable) to common stockholders	$ 819,000	$ 1,368,000	$ 2,192,000	$ (180,000)
Average common shares outstanding	7,487,283	7,481,448	7,485,571	7,456,750
Dilutive effect of stock options
Average diluted shares outstanding	7,487,283	7,481,448	7,485,571	7,456,750
Net income (loss) per share available (attributable) to common shareholders, diluted	$ 0.11	$ 0.18	$ 0.29	$ (0.02)

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Fair Value of Assets and Liabilities (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Available for Sale Securities [Member]
Roll-forward of the consolidated condensed statement of financial condition items
Fair value, January 1,	$ 993	$ 1,277
Change in unrealized gains (losses) included in other comprehensive income for assets and liabilities still held at September 30,	429	(231)
Purchases, issuances and settlements, net
Transfers in and/or out of Level 3
Fair value, September 30,	1,422	1,046
Liabilities [Member]
Roll-forward of the consolidated condensed statement of financial condition items
Fair value, January 1,
Change in unrealized gains (losses) included in other comprehensive income for assets and liabilities still held at September 30,
Purchases, issuances and settlements, net
Transfers in and/or out of Level 3
Fair value, September 30,

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Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2012

Income (Loss) Per Share [Abstract]

Reconciliation of basic and diluted income (loss) per share

	Three Month Periods Ended
	September 30,
	2012		2011
Basic IPS:
Net income available to common stockholders	$	819,000	$	1,368,000
Average common shares outstanding		7,487,283		7,481,448
Net income per share available to common shareholders, basic	$	0.11	$	0.18
Diluted IPS:
Net income available to common stockholders	$	819,000	$	1,368,000
Average common shares outstanding		7,487,283		7,481,448
Dilutive effect of stock options		—		—
Average diluted shares outstanding		7,487,283		7,481,448
Net income per share available to common shareholders, diluted	$	0.11	$	0.18

	Nine Month Periods Ended
	September 30,
	2012		2011
Basic IPS:
Net income (loss) available (attributable) to common stockholders	$	2,192,000	($	180,000	)
Average common shares outstanding		7,485,571		7,456,750
Net income (loss) per share available (attributable) to common shareholders, basic	$	0.29	($	0.02	)
Diluted IPS:
Net income (loss) available (attributable) to common stockholders	$	2,192,000	($	180,000	)
Average common shares outstanding		7,485,571		7,456,750
Dilutive effect of stock options		—		—
Average diluted shares outstanding		7,485,571		7,456,750
Net income (loss) per share available (attributable) to common shareholders, diluted	$	0.29	($	0.02	)

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Loans (Details Textual) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Dec. 31, 2010
Loans (Textual) [Abstract]
Loans receivable, allowance for loan losses	$ 10,490,000	$ 13,500,000	$ 11,262,000
Ratio of the allowance for loan losses to total loans	1.91%	2.33%	1.98%
Company's annualized net charge off ratios	0.61%	0.39%	0.76%
Ratios of allowance for loan losses to non-accrual loans	106.78%	183.62%	318.49%
Company's impaired loans	75,785,000	56,800,000	49,300,000
Related Allowance	3,581,000	6,000,000	4,100,000
Concentrations of loans	0		0
Minimum percentage of concentrations of loans	10.00%		10.00%
Loans past due period for classify to risk grade	60 days
Loans past due period for classify to substandard grade	12 months
Annual reviews of loan to ascertain the borrowers continued ability to service	1,000,000
Loans held for sale amount	2,763,000
Commercial real estate loan	2,000,000
Troubled Debt Restructurings Amount	9,317,000		6,227,000	7,998,000
Land for development [Member]
Loans (Additional Textual) [Abstract]
Land development loan	$ 760,000

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Loans (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Non-accrual loans
Total non-accrual loans	$ 9,824	$ 6,133	$ 4,251
One-to-four family mortgages [Member]
Non-accrual loans
Total non-accrual loans	2,795	2,074	1,857
Home equity line of credit [Member]
Non-accrual loans
Total non-accrual loans	24	134	137
Junior lien [Member]
Non-accrual loans
Total non-accrual loans		101
Multi-family [Member]
Non-accrual loans
Total non-accrual loans	190
Construction [Member]
Non-accrual loans
Total non-accrual loans
Land [Member]
Non-accrual loans
Total non-accrual loans	3,279	1,330	1,331
Non-residential real estate [Member]
Non-accrual loans
Total non-accrual loans	1,268	2,231	639
Farmland [Member]
Non-accrual loans
Total non-accrual loans	49
Consumer loans [Member]
Non-accrual loans
Total non-accrual loans	59	9	9
Commercial loans [Member]
Non-accrual loans
Total non-accrual loans	$ 2,160	$ 254	$ 278

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Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Maturities of debt securities available for sale
Due within one year, Amortized Cost	$ 535	$ 461
Due in one to five years, Amortized Cost	10,095	6,844
Due in five to ten years, Amortized Cost	23,790	24,471
Due in more than ten years, Amortized Cost	52,381	72,460
Total, Amortized Cost	86,801	104,236
Total debt securities available for sale, Amortized Cost	332,134	371,324
Due within one year, Estimated Fair Value	538	464
Due in one to five years, Estimated Fair Value	10,311	6,929
Due in five to ten years, Estimated Fair Value	26,033	26,153
Due in more ten years, Estimated Fair Value	56,826	75,804
Total, Estimated Fair Value	93,708	109,350
Total debt securities available for sale, Estimated Fair Value	348,877	383,782
Amortizing agency bonds [Member]
Maturities of debt securities available for sale
Total, Amortized Cost	138,330	142,183
Total, Estimated Fair Value	143,177	145,190
Mortgage-backed securities [Member]
Maturities of debt securities available for sale
Total, Amortized Cost	107,003	124,905
Total, Estimated Fair Value	$ 111,992	$ 129,242

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Real Estate and Other Assets Owned (Details 1) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Summary of the activity in the Company's real estate and other assets owned
Beginning balance	$ 2,267
Foreclosures	1,104
Sales	(2,403)
Reduction in Values	(195)
Gain (Loss) on Sale	(92)
Ending balance	681
One-to-four family mortgages [Member]
Summary of the activity in the Company's real estate and other assets owned
Beginning balance	480
Foreclosures	658
Sales	(855)
Reduction in Values	(107)
Gain (Loss) on Sale	(29)
Ending balance	147
Multi-family [Member]
Summary of the activity in the Company's real estate and other assets owned
Beginning balance	905
Sales	(875)
Gain (Loss) on Sale	(30)
Construction [Member]
Summary of the activity in the Company's real estate and other assets owned
Beginning balance	465
Sales	(235)
Gain (Loss) on Sale	(14)
Ending balance	216
Land [Member]
Summary of the activity in the Company's real estate and other assets owned
Beginning balance	248
Foreclosures	383
Sales	(269)
Reduction in Values	(68)
Gain (Loss) on Sale	(19)
Ending balance	275
Non-residential real estate [Member]
Summary of the activity in the Company's real estate and other assets owned
Beginning balance	160
Foreclosures	63
Sales	(160)
Reduction in Values	(20)
Ending balance	43
Consumer assets [Member]
Summary of the activity in the Company's real estate and other assets owned
Beginning balance	9
Sales	$ (9)

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Stock Options (Details) (USD $)	Sep. 30, 2012
Stock Options (Textual) [Abstract]
Fully vested remaining stock options	20,808
Option exercise price	$ 16.67

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Loans (Details 7) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Impaired loans with no recorded allowance:
Recorded Investment	$ 49,688
Unpaid Principal Balance	49,688
Average Recorded Investment	58,079
Interest Income Recognized	1,842
Impaired loans with recorded allowance:
Recorded Investment	26,097
Unpaid Principal Balance	26,097
Related Allowance	3,581	4,100	6,000
Average Recorded Investment	25,457
Interest Income Recognized	846
Total impaired loans Recorded Investment	75,785	49,300	56,800
Total impaired loans Unpaid Principal Balance	75,785
Total impaired loans Average Recorded Investment	83,536
Total impaired loans Related Allowance	3,581	4,100	6,000
Total impaired loans Interest Income Recognized	2,688
One-to-four family mortgages [Member]
Impaired loans with no recorded allowance:
Recorded Investment	4,618
Unpaid Principal Balance	4,618
Average Recorded Investment	6,538
Interest Income Recognized	171
Impaired loans with recorded allowance:
Recorded Investment	2,523
Unpaid Principal Balance	2,523
Related Allowance	509
Average Recorded Investment	3,149
Interest Income Recognized	108
Total impaired loans Related Allowance	509
Home equity line of credit [Member]
Impaired loans with no recorded allowance:
Recorded Investment	976
Unpaid Principal Balance	976
Average Recorded Investment	787
Interest Income Recognized	32
Impaired loans with recorded allowance:
Recorded Investment	275
Unpaid Principal Balance	275
Related Allowance	14
Average Recorded Investment	176
Interest Income Recognized	8
Total impaired loans Related Allowance	14
Junior liens [Member]
Impaired loans with no recorded allowance:
Recorded Investment	477
Unpaid Principal Balance	477
Average Recorded Investment	375
Interest Income Recognized	22
Impaired loans with recorded allowance:
Recorded Investment	104
Unpaid Principal Balance	104
Related Allowance	104
Average Recorded Investment	331
Interest Income Recognized	10
Total impaired loans Related Allowance	104
Multi-family [Member]
Impaired loans with no recorded allowance:
Recorded Investment	3,025
Unpaid Principal Balance	3,025
Average Recorded Investment	3,394
Interest Income Recognized	78
Impaired loans with recorded allowance:
Recorded Investment	3,729
Unpaid Principal Balance	3,729
Related Allowance	356
Average Recorded Investment	3,590
Interest Income Recognized	178
Total impaired loans Related Allowance	356
Construction [Member]
Impaired loans with no recorded allowance:
Average Recorded Investment	2,562
Impaired loans with recorded allowance:
Recorded Investment	4,088
Unpaid Principal Balance	4,088
Related Allowance	294
Average Recorded Investment	1,460
Interest Income Recognized	83
Total impaired loans Related Allowance	294
Land [Member]
Impaired loans with no recorded allowance:
Recorded Investment	16,967
Unpaid Principal Balance	16,967
Average Recorded Investment	19,971
Interest Income Recognized	289
Impaired loans with recorded allowance:
Recorded Investment	3,613
Unpaid Principal Balance	3,613
Related Allowance	888
Average Recorded Investment	5,274
Interest Income Recognized	145
Total impaired loans Related Allowance	888
Non-residential real estate [Member]
Impaired loans with no recorded allowance:
Recorded Investment	21,066
Unpaid Principal Balance	21,066
Average Recorded Investment	21,495
Interest Income Recognized	1,038
Impaired loans with recorded allowance:
Recorded Investment	5,296
Unpaid Principal Balance	5,296
Related Allowance	1,228
Average Recorded Investment	6,708
Interest Income Recognized	271
Total impaired loans Related Allowance	1,228
Consumer loans [Member]
Impaired loans with no recorded allowance:
Recorded Investment	115
Unpaid Principal Balance	115
Average Recorded Investment	62
Interest Income Recognized	5
Impaired loans with recorded allowance:
Recorded Investment	390
Unpaid Principal Balance	390
Related Allowance	102
Average Recorded Investment	217
Interest Income Recognized	1
Total impaired loans Related Allowance	102
Commercial loans [Member]
Impaired loans with no recorded allowance:
Recorded Investment	2,444
Unpaid Principal Balance	2,444
Average Recorded Investment	2,895
Interest Income Recognized	207
Impaired loans with recorded allowance:
Recorded Investment	6,079
Unpaid Principal Balance	6,079
Related Allowance	86
Average Recorded Investment	4,552
Interest Income Recognized	42
Total impaired loans Related Allowance	$ 86

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Consolidated Condensed Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net cash provided by operating activities	$ 5,716	$ 7,893
Cash flows from investing activities:
Proceeds from sales, calls and maturities of securities available for sale	140,001	143,369
Purchase of securities available for sale	(101,768)	(158,954)
Net decrease in loans	13,978	23,228
Purchase of Federal Home Loan Bank stock		(50)
Proceeds from sale of foreclosed assets	2,403	7,124
Purchase of premises and equipment	(517)	(665)
Net cash provided by investing activities	54,097	14,052
Cash flows from financing activities:
Net increase in non-interest bearing deposits	8,901	8,631
Net decrease in time and other deposits	(39,740)	(24,044)
Increase in advances from borrowers for taxes and insurance	486	384
Advances from Federal Home Loan Bank	8,000	30,000
Repayment of advances from Federal Home Loan Bank	(27,097)	(42,708)
Net increase (decrease) in repurchase agreements	(281)	(1,696)
Dividend paid on preferred stock	(690)	(690)
Dividends paid on common stock	(449)	(1,758)
Net cash used in financing activities	(50,870)	(31,881)
Increase (Decrease) in cash and cash equivalents	8,943	(9,936)
Cash and cash equivalents, beginning of period	48,760	60,984
Cash and cash equivalents, end of period	57,703	51,048
Supplemental disclosures of cash flow information:
Interest paid	6,279	7,447
Income taxes paid	1,545	1,445
Supplemental disclosures of non-cash investing and financing activities:
Loans charged off	3,086	2,069
Foreclosures and in substance foreclosures of loans during period	1,104	3,515
Net unrealized gains on investment securities classified as available for sale	4,286	8,882
Increase in deferred tax liability related to unrealized gains on investments	1,457	(2,923)
Dividends declared and payable	150	176
Issue of unearned restricted stock	$ 74	$ 87

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Derivative Instruments (Details) (USD $)	1 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended
	Oct. 31, 2008	Sep. 30, 2012	Sep. 30, 2012	Dec. 31, 2011
Derivative Instruments (Textual) [Abstract]
Hedging gains or losses		$ 0	$ 0	$ 0
Duration of interest rate swap agreement	7 years
Interest rate swap amount	10,000,000
Fixed rate of interest rate swap agreement to be paid			7.27%
Interest rate to be received under swap agreement			Three-month London Interbank Lending Rate (LIBOR) plus 3.10%
LIBOR		3.10%	3.10%
Cost of termination of cash flow hedge		$ 1,220,000	$ 1,220,000	$ 1,297,000

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Loans (Details 3) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Allowance for loan loss account by loan
Beginning balance	$ 11,262	$ 9,830	$ 9,830
Charge offs	(3,086)	(2,069)	(4,875)
Recovery	539	335	386
General Provision	166		4,143
Specific Provision	1,609		1,778
Ending balance	10,490	13,541	11,262
One-to-four family mortgages [Member]
Allowance for loan loss account by loan
Beginning balance	2,640	1,097	1,097
Charge offs	(282)	(441)	(758)
Recovery	77	136	139
General Provision	237		1,687
Specific Provision	(323)		475
Ending balance	2,349		2,640
Home equity line of credit [Member]
Allowance for loan loss account by loan
Beginning balance	408	212	212
Charge offs	(65)	(57)	(123)
Recovery	5
General Provision	(15)		245
Specific Provision	1		74
Ending balance	334		408
Junior liens [Member]
Allowance for loan loss account by loan
Beginning balance	277	146	146
Charge offs	(1)		(27)
Recovery	3	1	1
General Provision	(34)		79
Specific Provision	(87)		78
Ending balance	158		277
Multi-family [Member]
Allowance for loan loss account by loan
Beginning balance	1,201	2,022	2,022
Charge offs	(416)	(89)	(89)
Recovery
General Provision	(648)		26
Specific Provision	576		(758)
Ending balance	713		1,201
Construction [Member]
Allowance for loan loss account by loan
Beginning balance	139	657	657
Charge offs		(353)	(353)
Recovery
General Provision	(11)		(91)
Specific Provision	279		(74)
Ending balance	407		139
Land [Member]
Allowance for loan loss account by loan
Beginning balance	1,332	865	865
Charge offs	(1,033)	(198)	(308)
Recovery	234	30	30
General Provision	491		353
Specific Provision	930		392
Ending balance	1,954		1,332
Non-residential real estate [Member]
Allowance for loan loss account by loan
Beginning balance	3,671	4,025	4,025
Charge offs	(799)	(572)	(2,645)
Recovery	100	84	84
General Provision	63		1,114
Specific Provision	638		1,093
Ending balance	3,673		3,671
Consumer loans [Member]
Allowance for loan loss account by loan
Beginning balance	262	108	108
Charge offs	(284)	(326)	(371)
Recovery	110	82	112
General Provision	151		425
Specific Provision	23		(12)
Ending balance	262		262
Commercial loans [Member]
Allowance for loan loss account by loan
Beginning balance	1,332	698	698
Charge offs	(206)	(33)	(201)
Recovery	10	2	20
General Provision	(68)		305
Specific Provision	(428)		510
Ending balance	$ 640		$ 1,332

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Real Estate and Other Assets Owned (Tables)

9 Months Ended

Sep. 30, 2012

Real Estate and Other Assets Owned [Abstract]

Presentation of balances in other real estate and assets owned consisting other non-performing loan

	September 30, 2012			December 31, 2011			September 30, 2011
	(Dollars in Thousands)
One-to-four family mortgages	$	147			480			218
Multi-family		—			905			2,507
Construction		216			465			535
Land		275			248			665
Non-residential real estate		43			160			635
Consumer loans		—			9			1
Total other assets owned	$	681			2,267			4,561
Total non-accrual loans	$	9,824			6,133			4,251
Total non-performing assets	$	10,505			8,400			8,812
Non-performing asset / Total assets		1.05	%		0.81	%		0.83	%

Summary of the activity in the Company's real estate and other assets owned

	Balance		Activity During 2012					Reduction			Gain (Loss)			Balance
	12/31/2011		Foreclosures		Sales			in Values			on Sale			9/30/2012
	(Dollars in Thousands)
One-to-four family mortgages	$	480		658		(855	)		(107	)		(29	)		147
Multi-family		905		—		(875	)		—			(30	)		—
Construction		465		—		(235	)		—			(14	)		216
Land		248		383		(269	)		(68	)		(19	)		275
Non-residential real estate		160		63		(160	)		(20	)		—			43
Consumer assets		9		—		(9	)		—			—			—
Total	$	2,267		1,104		(2,403	)		(195	)		(92	)		681

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Loans (Tables)

9 Months Ended

Sep. 30, 2012

Loans [Abstract]

Composition of the loan portfolio by type of loan

	September 30, 2012		September 30, 2012			December 31, 2011		December 31, 2011
	Amount		Percent			Amount		Percent
	(Dollars in Thousands)
Real estate loans:
One-to-four family (closed end) first mortgages	$	165,439		30.1	%	$	171,192		30.2	%
Second mortgages (closed end)		5,382		1.0	%		6,209		1.1	%
Home equity lines of credit		37,962		6.9	%		38,694		6.8	%
Multi-family		33,243		6.0	%		33,739		5.9	%
Construction		15,694		2.8	%		11,931		2.1	%
Land for development		47,189		8.6	%		52,338		9.2	%
Farmland		38,821		7.1	%		34,841		6.1	%
Non-residential real estate		133,747		24.3	%		148,644		26.2	%
Total mortgage loans		477,477		86.8	%		497,588		87.6	%
Consumer loans		13,094		2.4	%		15,110		2.7	%
Commercial loans		59,252		10.8	%		54,673		9.7	%
Total other loans		72,346		13.2	%		69,783		12.4	%
Total loans, gross		549,823		100.0	%		567,371		100.0	%
Deferred loan cost, net of income		170					251
Less allowance for loan losses		10,490					11,262
Total loans	$	539,503				$	556,360

Non-residential real estate loan portfolio

	Balance		Balance
	September 30, 2012		December 31, 2011
	(Dollars in Thousands)
Land & development	$	47,189		52,338
Construction		5,933		6,151
Manufacturing		3,861		4,172
Professional and Technical		2,051		2,300
Retail Trade		10,771		12,019
Other Services		17,199		17,767
Finance & Insurance		375		141
Agricultural, Forestry, Fishing & Hunting		38,821		33,473
Real Estate and Rental and Leasing		45,771		50,770
Wholesale Trade		8,569		6,235
Arts, Entertainment & Recreation		3,526		5,309
Accomodations / Food Service		23,025		25,255
Healthcare and Social Assistance		4,614		10,140
Educational Services		25		30
Transportation & Warehousing		1,325		1,638
Information		2,568		2,646
Non-industry		1,089		3,219
Admin Support / Waste Mgmt		3,045		2,220
Total	$	219,757		235,823

Non-accrual loans

	September 30, 2012		December 31, 2011		September 30, 2011
	(Dollars in Thousands)
One-to-four family mortgages	$	2,795		2,074		1,857
Home equity line of credit		24		134		137
Junior lien		—		101		—
Multi-family		190		—		—
Construction		—		—		—
Land		3,279		1,330		1,331
Non-residential real estate		1,268		2,231		639
Farmland		49		—		—
Consumer loans		59		9		9
Commercial loans		2,160		254		278
Total non-accrual loans	$	9,824		6,133		4,251

Allowance for loan loss account by loan

Nine month period ended September 30, 2012	Balance December 31, 2011		Charge off 2012			Recovery 2012		General Provision 2012			Specific Provision 2012			Ending Balance Period Ending September 30, 2012
	(Table in Thousands)
One-to-four family mortgages	$	2,640		(282	)		77		237			(323	)		2,349
Home equity line of credit		408		(65	)		5		(15	)		1			334
Junior liens		277		(1	)		3		(34	)		(87	)		158
Multi-family		1,201		(416	)		—		(648	)		576			713
Construction		139		—			—		(11	)		279			407
Land		1,332		(1,033	)		234		491			930			1,954
Non-residential real estate		3,671		(799	)		100		63			638			3,673
Consumer loans		262		(284	)		110		151			23			262
Commercial loans		1,332		(206	)		10		(68	)		(428	)		640
	$	11,262		(3,086	)		539		166			1,609			10,490

Year Ended December 31, 2011	Balance December 31, 2010		Charge off 2011			Recovery 2011		General Provision 2011			Specific Provision 2011			Ending Balance Year Ending December 31, 2011
	(Table in Thousands)
One-to-four family mortgages	$	1,097		(758	)		139		1,687			475			2,640
Home equity line of credit		212		(123	)		—		245			74			408
Junior liens		146		(27	)		1		79			78			277
Multi-family		2,022		(89	)		—		26			(758	)		1,201
Construction		657		(353	)		—		(91	)		(74	)		139
Land		865		(308	)		30		353			392			1,332
Non-residential real estate		4,025		(2,645	)		84		1,114			1,093			3,671
Consumer loans		108		(371	)		112		425			(12	)		262
Commercial loans		698		(201	)		20		305			510			1,332
	$	9,830		(4,875	)		386		4,143			1,778			11,262

Past due and non-accrual balances by loan classification

	Currently		30 - 89 Days		Non-accrual		Special		Impaired Loans Currently Performing
September 30, 2012	Performing		Past Due		Loans		Mention		Substandard		Doubful		Total
					(Dollars in Thousands)
One-to-four family mortgages	$	154,241		2,240		2,795		1,940		4,223		—		165,439
Home equity line of credit		35,454		55		24		1,202		1,227		—		37,962
Junior liens		4,722		10		—		73		577		—		5,382
Multi-family		20,297		—		190		6,192		6,564		—		33,243
Construction		11,606		—		—		—		4,088		—		15,694
Land		17,540		—		3,279		9,069		17,301		—		47,189
Non-residential real estate		142,193		575		1,317		3,732		24,751		—		172,568
Consumer loans		12,541		86		59		2		406		—		13,094
Commercial loans		49,873		19		2,160		837		6,363		—		59,252
	$	448,467		2,985		9,824		23,047		65,500		—		549,823

	Currently Performing		30 - 89 Days Past Due		Non-accrual Loans		Special Mention		Impaired Loans Currently Performing
December 31, 2011									Substandard		Doubtful		Total
					(Dollars in Thousands)
One-to-four family mortgages	$	153,375		628		2,074		9,163		5,722		230		171,192
Home equity line of credit		36,528		5		134		1,664		134		229		38,694
Junior liens		4,778		312		101		521		497		—		6,209
Multi-family		20,715		—		—		7,073		5,951		—		33,739
Construction		9,943		107		—		213		1,668		—		11,931
Land		17,570		237		1,330		24,714		7,488		999		52,338
Non-residential real estate		142,190		487		2,231		24,782		13,678		117		183,485
Consumer loans		14,399		28		9		268		386		20		15,110
Commercial loans		45,509		506		254		4,003		4,385		16		54,673
Total	$	445,007		2,310		6,133		72,401		39,909		1,611		567,371

Bank's allowance for loan losses

	September 30, 2012			December 31, 2011			September 30, 2011
	(Dollars in Thousands, Except Percentages)
Beginning balance, allowance for loan loss	$	11,262			9,830			9,830
Charge offs
One-to-four family mortgages		(282	)		(758	)		(441	)
Home equity line of credit		(65	)		(123	)		(57	)
Junior liens		(1	)		(27	)		—
Multi-family		(416	)		(89	)		(89	)
Construction		—			(353	)		(353	)
Land		(1,033	)		(308	)		(198	)
Non-residential real estate		(799	)		(2,645	)		(572	)
Consumer loans		(284	)		(371	)		(326	)
Commercial loans		(206	)		(201	)		(33	)
Total charge offs		(3,086	)		(4,875	)		(2,069	)
Recoveries
One-to-four family mortgages		77			139			136
Home equity line of credit		5			—			—
Junior liens		3			1			1
Multi-family		—			—			—
Construction		—			—			—
Land		234			30			30
Non-residential real estate		100			84			84
Consumer loans		110			112			82
Commercial loans		10			20			2
Total recoveries		539			386			335
Net Charge offs		(2,547	)		(4,489	)		(1,734	)
Provision for loan losses		1,775			5,921			5,445
Ending balance	$	10,490			11,262			13,541
Average loan balance, gross	$	556,332			575,133			592,417
Ratio of net charge offs to average outstanding loans during the period		0.61	%		0.76	%		0.39	%

Summary of the Company's impaired loans

			Special		Impaired Loans						Specific Reserve for		Reserve for Performing
September 30, 2012	Pass		Mention		Substandard		Doubful		Total		Impairment		Loans
	(Dollars in Thousands)
One-to-four family mortgages	$	156,358		1,940		7,025		116		165,439		509		1,840
Home equity line of credit		35,510		1,201		1,251		—		37,962		14		320
Junior liens		4,727		74		581		—		5,382		104		54
Multi-family		20,298		6,191		6,754		—		33,243		356		357
Construction		11,606		—		4,088		—		15,694		294		113
Land		17,539		9,070		20,580		—		47,189		888		1,066
Non-residential real estate		142,397		3,809		26,362		—		172,568		1,228		2,445
Consumer loans		12,577		12		505		—		13,094		102		160
Commercial loans		49,892		837		8,523		—		59,252		86		554
Total	$	450,904		23,134		75,669		116		549,823		3,581		6,909

			Special		Impaired Loans						Specific Reserve for		Allowance for Performing
December 31, 2011	Pass		Mention		Substandard		Doubful		Total		Impairment		Loans
	(Dollars in Thousands)
One-to-four family mortgages	$	153,375		9,434		8,153		230		171,192		728		1,912
Home equity line of credit		36,528		1,694		233		239		38,694		131		277
Junior liens		4,778		622		809		—		6,209		180		97
Multi-family		20,715		7,073		5,951		—		33,739		26		1,175
Construction		9,943		213		1,775		—		11,931		14		125
Land		17,570		24,714		9,055		999		52,338		924		408
Non-residential real estate		142,190		25,077		16,101		117		183,485		1,374		2,297
Consumer loans		14,399		268		423		20		15,110		80		182
Commercial loans		45,509		4,009		5,034		121		54,673		623		709
Total	$	445,007		73,104		47,534		1,726		567,371		4,080		7,182

Impaired loans by classification type

	At September 30, 2012						For the nine month period ended September 30, 2012
Impaired loans with no recorded allowance:	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
One-to-four family mortgages	$	4,618		4,618		—		6,538		171
Home equity line of credit		976		976		—		787		32
Junior liens		477		477		—		375		22
Multi-family		3,025		3,025		—		3,394		78
Construction		—		—		—		2,562		—
Land		16,967		16,967		—		19,971		289
Non-residential real estate		21,066		21,066		—		21,495		1,038
Consumer loans		115		115		—		62		5
Commercial loans		2,444		2,444		—		2,895		207
Total	$	49,688		49,688		—		58,079		1,842
	At September 30, 2012						For the nine month period ended September 30, 2012
Impaired loans with recorded allowance:	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
One-to-four family mortgages	$	2,523		2,523		509		3,149		108
Home equity line of credit		275		275		14		176		8
Junior liens		104		104		104		331		10
Multi-family		3,729		3,729		356		3,590		178
Construction		4,088		4,088		294		1,460		83
Land		3,613		3,613		888		5,274		145
Non-residential real estate		5,296		5,296		1,228		6,708		271
Consumer loans		390		390		102		217		1
Commercial loans		6,079		6,079		86		4,552		42
Total	$	26,097		26,097		3,581		25,457		846
Total impaired loans	$	75,785		75,785		3,581		83,536		2,688

Company's loans classified as Troubled Debt Restructurings (TDR's)

	September 30, 2012			December 31, 2011
TDR by Loan Type:	(Dollars in Thousands)
One-to-four family mortgages	$	2,001			2,521
Home equity line of credit		204			—
Junior lien		—			857
Multi-family		236			—
Construction		3,145			—
Land		4,801			941
Non-residential real estate		2,490			3,367
Farmland		956			—
Consumer loans		8			33
Commercial loans		371			125
Total TDR		14,212			7,844
Less:
TDR in non-accrual status
One-to-four family mortgages		(1,449	)		(1,410	)
Home equity line of credit		—			—
Junior lien		—			(100	)
Multi-family		—			—
Construction		—			—
Land		(2,490	)		—
Non-residential real estate		(956	)		(1	)
Consumer loans		—			(1	)
Commercial loans		—			(105	)
Total performing TDR	$	9,317			6,227

Summary of activity of loan performing as troubled debt restructuring

	Balance at December 31, 2011		New TDR		Loss or Foreclosure		Removed due to performance		Balance at September 30,  2012
	(Dollars in Thousands)
One-to-four family mortgages		1,111		146		—		705		552
Home equity line of credit		—		244		—		40		204
Junior Lien		757		—		—		757		—
Multi-family		—		239		—		3		236
Construction		—		3,145		—		—		3,145
Land		941		4,850		233		757		4,801
Farmland		—		956		—		956		—
Non-residential real estate		3,366		—		453		2,913		—
Consumer loans		32		75		2		97		8
Commercial loans		20		931		10		570		371
Total performing TDR		6,227		10,586		698		6,798		9,317

	Balance at December 31, 2010		New TDR		Loss or Foreclosure		Removed due to performance		Balance at December 31, 2011
One-to-four family mortgages		2,751		1,163		401		2,402		1,111
Home equity line of credit		114		—		—		114		—
Junior Lien		—		757		—		—		757
Multi-family		246		—		5		241		—
Construction		203		1,438		1,641		—		—
Land		—		1,475		534		—		941
Farmland		—		—		—		—		—
Non-residential real estate		3,915		1,540		1,228		861		3,366
Consumer loans		69		27		9		55		32
Commercial loans		700		102		235		547		20
Total performing TDR		7,998		6,502		4,053		4,220		6,227

XML

Fair Value of Assets and Liabilities (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Other real estate owned	$ 681	$ 2,267
Fair Value, Measurements, Nonrecurring [Member]
Assets
Other real estate owned	681	2,258
Other assets owned		9
Impaired loans, net of reserve	72,204	45,180
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets
Other real estate owned
Other assets owned
Impaired loans, net of reserve
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets
Other real estate owned
Other assets owned
Impaired loans, net of reserve
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets
Other real estate owned	681	2,258
Other assets owned		9
Impaired loans, net of reserve	$ 72,204	$ 45,180

XML

Loans (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Past due and non-accrual balances by loan classification
Currently Performing	$ 448,467	$ 445,007
30-89 Days Past Due	2,985	2,310
Non-accrual Loans	9,824	6,133	4,251
Special Mention	23,047	72,401
Impaired Loans Currently Performing Substandard	65,500	39,909
Impaired Loans Currently Performing Doubtful		1,611
Total loans, gross	549,823	567,371
One-to-four family mortgages [Member]
Past due and non-accrual balances by loan classification
Currently Performing	154,241	153,375
30-89 Days Past Due	2,240	628
Non-accrual Loans	2,795	2,074	1,857
Special Mention	1,940	9,163
Impaired Loans Currently Performing Substandard	4,223	5,722
Impaired Loans Currently Performing Doubtful		230
Total loans, gross	165,439	171,192
Home equity line of credit [Member]
Past due and non-accrual balances by loan classification
Currently Performing	35,454	36,528
30-89 Days Past Due	55	5
Non-accrual Loans	24	134	137
Special Mention	1,202	1,664
Impaired Loans Currently Performing Substandard	1,227	134
Impaired Loans Currently Performing Doubtful		229
Total loans, gross	37,962	38,694
Junior liens [Member]
Past due and non-accrual balances by loan classification
Currently Performing	4,722	4,778
30-89 Days Past Due	10	312
Non-accrual Loans		101
Special Mention	73	521
Impaired Loans Currently Performing Substandard	577	497
Impaired Loans Currently Performing Doubtful
Total loans, gross	5,382	6,209
Multi-family [Member]
Past due and non-accrual balances by loan classification
Currently Performing	20,297	20,715
Non-accrual Loans	190
Special Mention	6,192	7,073
Impaired Loans Currently Performing Substandard	6,564	5,951
Impaired Loans Currently Performing Doubtful
Total loans, gross	33,243	33,739
Construction [Member]
Past due and non-accrual balances by loan classification
Currently Performing	11,606	9,943
30-89 Days Past Due		107
Non-accrual Loans
Special Mention		213
Impaired Loans Currently Performing Substandard	4,088	1,668
Impaired Loans Currently Performing Doubtful
Total loans, gross	15,694	11,931
Land [Member]
Past due and non-accrual balances by loan classification
Currently Performing	17,540	17,570
30-89 Days Past Due		237
Non-accrual Loans	3,279	1,330	1,331
Special Mention	9,069	24,714
Impaired Loans Currently Performing Substandard	17,301	7,488
Impaired Loans Currently Performing Doubtful		999
Total loans, gross	47,189	52,338
Non-residential real estate [Member]
Past due and non-accrual balances by loan classification
Currently Performing	142,193	142,190
30-89 Days Past Due	575	487
Non-accrual Loans	1,268	2,231	639
Special Mention	3,732	24,782
Impaired Loans Currently Performing Substandard	24,751	13,678
Impaired Loans Currently Performing Doubtful		117
Total loans, gross	172,568	183,485
Consumer loans [Member]
Past due and non-accrual balances by loan classification
Currently Performing	12,541	14,399
30-89 Days Past Due	86	28
Non-accrual Loans	59	9	9
Special Mention	2	268
Impaired Loans Currently Performing Substandard	406	386
Impaired Loans Currently Performing Doubtful		20
Total loans, gross	13,094	15,110
Commercial loans [Member]
Past due and non-accrual balances by loan classification
Currently Performing	49,873	45,509
30-89 Days Past Due	19	506
Non-accrual Loans	2,160	254	278
Special Mention	837	4,003
Impaired Loans Currently Performing Substandard	6,363	4,385
Impaired Loans Currently Performing Doubtful		16
Total loans, gross	59,252	54,673
Farmland [Member] | Non-residential real estate [Member]
Past due and non-accrual balances by loan classification
Non-accrual Loans	$ 1,317

XML

Investments in Affiliated Companies (Tables)

9 Months Ended

Sep. 30, 2012

Investments in Affiliated Companies [Abstract]

Summary of financial information for Trust

	At September 30, 2012		At December 31, 2011
Asset - investment in subordinated debentures issued by HopFed Bancorp, Inc.	$	10,310		10,310
Liabilities		—		—
Stockholder’s equity – trust preferred securities		10,000		10,000
Common stock (100% Owned by HopFed Bancorp, Inc.)		310		310
Total stockholders’ equity	$	10,310		10,310

	Three Month Periods Ended September 30,				Nine Month Period Ended September 30,
	2012		2011		2012		2011
Income – interest income from subordinated debenturesissued by HopFed Bancorp, Inc.	$	93		91	$	282		265
Net income	$	93		91	$	282		265

	Trust Preferred Securities		Common Stock		Retained Earnings			Total Stockholders’ Equity
Beginning balances, December 31, 2011	$	10,000		310		—			10,310
Net income		—		—		282			282
Dividends:
Trust preferred securities		—		—		(274	)		(274	)
Common paid to HopFed Bancorp, Inc.		—		—		(8	)		(8	)
Ending balances, September 30, 2012	$	10,000		310		—			10,310

XML

Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value of Assets and Liabilities [Abstract]

Assets and liabilities measured at fair value on recurring basis

September 30, 2012	Total carrying Value in the Consolidated Balance sheet at		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Assets
Available for sale securities	$	348,877		—		347,455		1,422
Bank owned life insurance		9,373		—		9,373		—
Liabilities
Interest rate swap		1,220		—		1,220		—

December 31, 2011	Total carrying Value in the Consolidated Balance sheet at		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Assets
Available for sale securities	$	383,782		—		382,789		993
Bank owned life insurance		9,135		—		9,135		—
Liabilities
Interest rate swap		1,297		—		1,297		—

Assets measured at fair value on non-recurring basis

September 30, 2012	Total carrying Value in the Consolidated Balance sheet at		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Assets
Other real estate owned	$	681		—		—	$	681
Impaired loans, net of reserve of $3,581	$	72,204		—		—	$	72,204

December 31, 2011	Total carrying value in the consolidated balance sheet		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	at December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Assets
Other real estate owned	$	2,258		—		—	$	2,258
Other assets owned		9		—		—		9
Impaired loans, net of reserve of $4,080		45,180		—		—		45,180

Roll-forward of consolidated condensed statement of financial condition items

	2012				2011
Nine month period ended September 30,	Available for Sale Securities		Liabilities		Available for Sale Securities			Liabilities
			(Dollars in Thousands)
Fair value, January 1,	$	993		—	$	1,277			—
Change in unrealized gains (losses) included in other comprehensive income for assets and liabilities still held at September 30,		429		—		(231	)		—
Purchases, issuances and settlements, net		—		—		—			—
Transfers in and/or out of Level 3		—		—		—			—
Fair value, September 30,	$	1,422		—	$	1,046			—

Estimated fair values of financial instruments

					Estimated Fair Value Measurement at September 30, 2012 Using
	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(Dollars in Thousands)
Financial Assets:
Cash and due from banks	$	50,042		50,042	$	50,042		—		—
Interest-earning deposits		7,661		7,661		7,661		—		—
Securities available for sale		348,877		348,877		—		347,455		1,422
Federal Home Loan Bank stock		4,428		4,428		—		4,428		—
Commercial real estate held for sale		2,763		2,763		—		2,763		—
Loans receivable		539,503		573,132		—		—		573,132
Accrued interest receivable		5,333		5,333		—		5,333		—
Bank owned life insurance		9,373		9,373		—		9,373		—
Financial liabilities:
Deposits		769,256		780,206		298,496		481,710		—
Advances from borrowers for taxes and insurance		639		639		—		—		633
Advances from Federal Home Loan Bank		44,222		48,655		—		48,655		—
Repurchase agreements		42,799		44,252		26,799		17,453		—
Subordinated debentures		10,310		10,099		—		—		10,099
Off-balance-sheet liabilities:
Commitments to extend credit		—		—		—		—		—
Commercial letters of credit		—		—		—		—		—
Market value of interest rate swap		1,220		1,220		—		1,220		—

					Estimated Fair Value Measurement at December 31, 2011 Using
	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(Dollars in Thousands)
Financial Assets:
Cash and due from banks	$	44,389		44,389	$	44,389		—		—
Interest-earning deposits		4,371		4,371		4,371		—		—
Securities available for sale		383,782		383,782		—		382,789		993
Federal Home Loan Bank stock		4,428		4,428		—		4,428		—
Loans receivable		556,360		585,734		—		—		585,734
Accrued interest receivable		6,183		6,183		—		6,183		—
Bank owned life insurance		9,135		9,135		—		9,135		—
Financial liabilities:
Deposits		800,095		811,415		280,107		531,308		—
Advances from borrowers for taxes and insurance		153		153		—		—		153
Advances from Federal Home Loan Bank		63,319		69,206		3,000		66,287		—
Repurchase agreements		43,080		44,969		27,080		17,889		—
Subordinated debentures		10,310		10,099		—		—		10,099
Off-balance-sheet liabilities:
Commitments to extend credit		—		—		—		—		—
Commercial letters of credit		—		—		—		—		—
Market value of interest rate swap		1,297		1,297		—		1,297		—

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Consolidated Condensed Statement of Stockholder's Equity (Unaudited) (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2012
Consolidated Condensed Statement of Stockholders' Equity [Abstract]
Net change in unrealized gain on securities available for sale, income taxes	$ 1,457
Net change in unrealized loss on derivatives, net of income taxes	$ 26

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Basis of Presentation (Details)	9 Months Ended
	Sep. 30, 2012
Basis of Presentation (Textual) [Abstract]
Percentage of stock of Fall and Fall Insurance Agency owned by Bank	100.00%

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Loans (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	100.00%	100.00%
Total loans, gross	$ 549,823	$ 567,371
Deferred loan cost, net of income	170	251
Less allowance for loan losses	10,490	11,262	13,500
Total loans	539,503	556,360
Real estate loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	86.80%	87.60%
Total loans, gross	477,477	497,588
Consumer loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	2.40%	2.70%
Total loans, gross	13,094	15,110
Commercial loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	10.80%	9.70%
Total loans, gross	59,252	54,673
Total other loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	13.20%	12.40%
Total loans, gross	72,346	69,783
One-to-four family (closed end) first mortgages [Member]
Composition of the loan portfolio by type of loan
Total loans, gross	165,439	171,192
One-to-four family (closed end) first mortgages [Member] | Real estate loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	30.10%	30.20%
Total loans, gross	165,439	171,192
Second mortgages (closed end) [Member] | Real estate loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	1.00%	1.10%
Total loans, gross	5,382	6,209
Home equity line of credit [Member]
Composition of the loan portfolio by type of loan
Total loans, gross	37,962	38,694
Home equity line of credit [Member] | Real estate loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	6.90%	6.80%
Total loans, gross	37,962	38,694
Multi-family [Member]
Composition of the loan portfolio by type of loan
Total loans, gross	33,243	33,739
Multi-family [Member] | Real estate loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	6.00%	5.90%
Total loans, gross	33,243	33,739
Construction [Member]
Composition of the loan portfolio by type of loan
Total loans, gross	15,694	11,931
Construction [Member] | Real estate loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	2.80%	2.10%
Total loans, gross	15,694	11,931
Land for development [Member]
Composition of the loan portfolio by type of loan
Total loans, gross	47,189	52,338
Land for development [Member] | Real estate loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	8.60%	9.20%
Total loans, gross	47,189	52,338
Farmland [Member] | Real estate loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	7.10%	6.10%
Total loans, gross	38,821	34,841
Non-residential real estate [Member]
Composition of the loan portfolio by type of loan
Total loans, gross	172,568	183,485
Non-residential real estate [Member] | Real estate loans [Member]
Composition of the loan portfolio by type of loan
Loans and Leases Receivable in Percentage	24.30%	26.20%
Total loans, gross	$ 133,747	$ 148,644

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Real Estate and Other Assets Owned (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2012
Real Estate and Other Assets Owned (Textual) [Abstract]
Minimum book balance for appraisal on all real estate owned	$ 100,000

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Consolidated Condensed Statements of Financial Condition (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Cash and due from banks	$ 50,042	$ 44,389
Interest-earning deposits	7,661	4,371
Cash and cash equivalents	57,703	48,760
Federal Home Loan Bank stock	4,428	4,428
Securities available for sale	348,877	383,782
Commercial real estate loans held for sale	2,763
Loans receivable, net of allowance for loan losses of $10,490 at September 30, 2012, and $11,262 at December 31, 2011	539,503	556,360
Accrued interest receivable	5,333	6,183
Real estate and other assets owned	681	2,267
Bank owned life insurance	9,373	9,135
Premises and equipment, net	22,750	23,431
Deferred tax assets		1,132
Intangible asset	341	519
Other assets	4,981	4,823
Total assets	996,733	1,040,820
Deposits:
Non-interest-bearing accounts	88,451	79,550
Interest-bearing accounts:
Interest bearing checking accounts	131,952	130,114
Savings and money market accounts	74,314	70,443
Other time deposits	474,539	519,988
Total deposits	769,256	800,095
Advances from Federal Home Loan Bank	44,222	63,319
Repurchase agreements	42,799	43,080
Subordinated debentures	10,310	10,310
Advances from borrowers for taxes and insurance	639	153
Dividends payable	179	176
Deferred tax liability	628
Accrued expenses and other liabilities	5,439	5,204
Total liabilities	873,472	922,337
Stockholders' equity
Preferred stock, par value $0.01 per share; authorized - 500,000 shares; 18,400 shares issued and outstanding with a liquidation preference of $18,400,000 at September 30, 2012, and December 31, 2011
Common stock, par value $.01 per share; authorized 15,000,000 shares; 7,905,728 issued and 7,502,812 outstanding at September 30, 2012, and 7,895,336 issued and 7,492,420 outstanding at December 31, 2011	79	79
Common stock warrants (253,666 issued and outstanding)	556	556
Additional paid-in-capital	76,127	75,967
Retained earnings-substantially restricted	41,330	39,591
Treasury stock (at cost, 402,916 shares at September 30, 2012, and December 31, 2011)	(5,076)	(5,076)
Accumulated other comprehensive income, net of taxes	10,245	7,366
Total stockholders' equity	123,261	118,483
Total liabilities and stockholders' equity	$ 996,733	$ 1,040,820

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Loans (Details 5) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Bank's allowance for loan losses
Beginning balance	$ 11,262	$ 9,830	$ 9,830
Charge offs	(3,086)	(2,069)	(4,875)
Recovery	539	335	386
Net Charge offs	(2,547)	(1,734)	(4,489)
Provision for loan losses	1,775	5,445	5,921
Ending balance	10,490	13,541	11,262
Average loan balance, gross	556,332	592,417	575,133
Ratio of net charge offs to average outstanding loans during the period	0.61%	0.39%	0.76%
One-to-four family mortgages [Member]
Bank's allowance for loan losses
Beginning balance	2,640	1,097	1,097
Charge offs	(282)	(441)	(758)
Recovery	77	136	139
Ending balance	2,349		2,640
Home equity line of credit [Member]
Bank's allowance for loan losses
Beginning balance	408	212	212
Charge offs	(65)	(57)	(123)
Recovery	5
Ending balance	334		408
Junior liens [Member]
Bank's allowance for loan losses
Beginning balance	277	146	146
Charge offs	(1)		(27)
Recovery	3	1	1
Ending balance	158		277
Multi-family [Member]
Bank's allowance for loan losses
Beginning balance	1,201	2,022	2,022
Charge offs	(416)	(89)	(89)
Recovery
Ending balance	713		1,201
Construction [Member]
Bank's allowance for loan losses
Beginning balance	139	657	657
Charge offs		(353)	(353)
Recovery
Ending balance	407		139
Land [Member]
Bank's allowance for loan losses
Beginning balance	1,332	865	865
Charge offs	(1,033)	(198)	(308)
Recovery	234	30	30
Ending balance	1,954		1,332
Non-residential real estate [Member]
Bank's allowance for loan losses
Beginning balance	3,671	4,025	4,025
Charge offs	(799)	(572)	(2,645)
Recovery	100	84	84
Ending balance	3,673		3,671
Consumer loans [Member]
Bank's allowance for loan losses
Beginning balance	262	108	108
Charge offs	(284)	(326)	(371)
Recovery	110	82	112
Ending balance	262		262
Commercial loans [Member]
Bank's allowance for loan losses
Beginning balance	1,332	698	698
Charge offs	(206)	(33)	(201)
Recovery	10	2	20
Ending balance	$ 640		$ 1,332

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Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Consolidated Condensed Statements of Comprehensive Income (Loss) [Abstract]
Unrealized gain on investment securities available for sale, tax effect	$ (1,180)	$ (2,218)	$ (2,008)	$ (3,801)
Unrealized gain (loss) on derivatives, tax effect	(5)	77	(26)	97
Reclassification adjustment for gains included in net income (loss), tax effect	$ 321	$ 424	$ 550	$ 781

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Fair Value of Assets and Liabilities (Details Textual) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Fair Value of Assets and Liabilities (Textual) [Abstract]
Related Allowance	$ 3,581	$ 4,100	$ 6,000

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Stock Compensation (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Restricted stock [Member]
Stock Compensation (Textual) [Abstract]
Shares of restricted stock issued			10,392	10,972
2004 Long Term Incentive Plan [Member]
Stock Compensation (Textual) [Abstract]
Compensation cost related to the HopFed Bancorp, Inc.	$ 22,700	$ 29,000	$ 76,700	$ 90,000

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Regulatory Changes

9 Months Ended

Sep. 30, 2012

Regulatory Changes [Abstract]

REGULATORY CHANGES

(13) REGULATORY CHANGES

Effective July 21, 2011, pursuant to Section 312 of Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) (i) the regulatory functions and rulemaking authority of the OTS with regard to federally chartered savings and loans associations (including the Company’s wholly owned bank subsidiary) were transferred to the Office of the Comptroller of the Currency (“OCC”) and the (ii) regulatory functions and rulemaking authority of the OTS in regards to saving and loan companies, including HopFed Bancorp, Inc., were transferred to the Board of Governors of the Federal Reserve System (“FRB”). Beginning on July 21, 2011, the OCC became the primary regulator of the Bank and is vested with the authority to enforce the Bank’s MOU. Also beginning July 21, 2011, the Company became subject to the regulation of the FRB, which is vested with authority to enforce the Company’s MOU.

The Bank is subject to various regulatory capital requirements now administered by the Office of the Comptroller of the Currency as successor to the OTS (see discussion above regarding “Regulatory Changes”). Failure to meet minimum capital requirements can result in certain mandatory—and possible additional discretionary—actions by regulators that, if undertaken, could have a direct and material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Federal Reserve Notices of Proposed Rulemaking

On June 7, 2012, the Board of Governors of the Federal Reserve System issued three related notices of proposed rulemaking (the “NPRs”) relating to implementation of revised capital rules reflecting requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Base III international capital standards. Among other things, if adopted as currently proposed, the NPRs would result in a new capital standard consisting of common equity tier 1 capital; would increase capital ratios required for certain existing capital categories and add a requirement for a capital conservation buffer (failure to meet these standards would result in limitations on capital distributions, as well as executive bonuses); and would add more conservative standards for securities included in regulatory capital, which would phase-out trust preferred securities as a component of tier 1 capital commencing January 1, 2013. In addition, the NPRs would deduct more assets from regulatory capital and revise methodologies for determining risk-weighted assets, including applying a more risk-sensitive treatment to residential mortgage exposures and to past due or nonaccrual loans. The NPRs provide for various phase-in periods over the next several years. The final regulations applicable to the Company and the Bank may be substantially different from those proposed in the NPRs. Management will continue to evaluate the potential impact of the NPRs to ensure the capital levels of both the Company and the Bank exceed the amounts required to be deemed “well capitalized.” The Company and the Bank will be subject to many provisions in the NPRs, but until final rules are issued we cannot predict the actual effect.

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Securities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Amortized cost of securities and their estimated fair values
Amortized Cost	$ 332,134	$ 371,324
Gross Unrealized Gains	17,362	13,773
Gross Unrealized Losses	(619)	(1,315)
Estimated Fair Value	348,877	383,782
U.S. government and agency unrestricted securities [Member]
Amortized cost of securities and their estimated fair values
Amortized Cost		171,141
Gross Unrealized Gains		3,511
Gross Unrealized Losses		(65)
Estimated Fair Value		174,587
FHLB stock [Member] | Restricted [Member]
Amortized cost of securities and their estimated fair values
Amortized Cost	4,428	4,428
Estimated Fair Value	4,428	4,428
Agency debt securities [Member] | U.S. government and agency unrestricted securities [Member]
Amortized cost of securities and their estimated fair values
Amortized Cost	148,554
Gross Unrealized Gains	5,052
Gross Unrealized Losses	(15)
Estimated Fair Value	153,591
Tax free municipal bonds [Member] | U.S. government and agency unrestricted securities [Member]
Amortized cost of securities and their estimated fair values
Amortized Cost	62,930	60,432
Gross Unrealized Gains	5,958	4,623
Estimated Fair Value	68,888	65,055
Taxable municipal bonds [Member] | U.S. government and agency unrestricted securities [Member]
Amortized cost of securities and their estimated fair values
Amortized Cost	11,647	12,846
Gross Unrealized Gains	1,348	1,059
Gross Unrealized Losses	(11)
Estimated Fair Value	12,984	13,905
Trust preferred securities [Member] | U.S. government and agency unrestricted securities [Member]
Amortized cost of securities and their estimated fair values
Amortized Cost	2,000	2,000
Gross Unrealized Losses	(578)	(1,007)
Estimated Fair Value	1,422	993
GNMA [Member] | Mortgage-backed securities [Member]
Amortized cost of securities and their estimated fair values
Amortized Cost	20,459	30,427
Gross Unrealized Gains	1,436	1,413
Gross Unrealized Losses	(3)	(19)
Estimated Fair Value	21,892	31,821
FNMA [Member] | Mortgage-backed securities [Member]
Amortized cost of securities and their estimated fair values
Amortized Cost	60,060	59,195
Gross Unrealized Gains	2,809	2,101
Gross Unrealized Losses		(1)
Estimated Fair Value	62,869	61,295
FHLMC [Member] | Mortgage-backed securities [Member]
Amortized cost of securities and their estimated fair values
Amortized Cost	5,115	15,108
Gross Unrealized Gains	202	491
Estimated Fair Value	5,317	15,599
NON-AGENCY CMOs [Member] | Mortgage-backed securities [Member]
Amortized cost of securities and their estimated fair values
Amortized Cost	5,419	2,012
Gross Unrealized Gains	69	7
Gross Unrealized Losses		(223)
Estimated Fair Value	5,488	1,796
AGENCY CMOs [Member] | Mortgage-backed securities [Member]
Amortized cost of securities and their estimated fair values
Amortized Cost	15,950	18,163
Gross Unrealized Gains	488	568
Gross Unrealized Losses	(12)
Estimated Fair Value	$ 16,426	$ 18,731

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Effect of New Accounting Pronouncements (Policies)

9 Months Ended

Sep. 30, 2012

Effect of New Accounting Pronouncements [Abstract]

Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings

In January 2011, the FASB issued ASU 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in ASU 2010-20 which temporarily delayed the effective date of the disclosures about troubled debt restructuring in ASU 2010-20. This delay was intended to allow the FASB time to complete its deliberations on what constitutes a troubled debt restructuring.

Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in United States of America generally accepted accounting principles (U.S. GAAP) and international Financial Reporting Standards

In May 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in United States of America generally accepted accounting principles (U.S. GAAP) and international Financial Reporting Standards (Topic 820) – Fair Value Measurement (ASU 2011-04), to provide consistent definition of the fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 was effective for reporting periods ending after March 30, 2012, and was applied prospectively. The implementation of ASU 2011-04 did not have a material impact on the Company’s consolidated financial statements of income, condition and cash flows.

Derivative and Hedging Activities

Under guidelines of Financial Accounting Standards Board (“FASB”) ASC 815, Derivative and Hedging Activities, as amended, all derivative instruments are required to be carried at fair value on the consolidated statement of financial position. ASC 815 provides special hedge accounting provisions, which permit the change in fair value of the hedge item related to the risk being hedged to be recognized in earnings in the same period and in the same income statement line as the change in the fair value of the derivative.

Comprehensive Income

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income, new disclosure guidance related to the presentation of the Statement of Comprehensive Income. This guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity and requires presentation of reclassification adjustments on the face of the income statement. The effective date of this pronouncement is December 15, 2011. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements of income, condition, and cash flow.

In December 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards update No. 2011-05. This update to Comprehensive Income (Topic 220) defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income. The deferral supersedes only the paragraphs pertaining to how and where reclassification adjustments are presented. The amendments in this update were effective for public entities for reporting periods beginning after December 15, 2011.

Intangibles - Goodwill and other

In September 2011, the FASB issued ASU No. 2011-8, Intangibles – Goodwill and other, regarding testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting until is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill reporting unit is more than its carrying amount, the two-step goodwill impairment test is not required. The new guidance was effective on January 1, 2012. The implementation of ASU 2011-8 did not have a material impact on the Company’s consolidated financial statements of income, condition and cash flow.

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Consolidated Condensed Statement of Stockholders' Equity (Unaudited) (USD $) In Thousands, except Share data	Total USD ($)	Common Stock USD ($)	Preferred Stock	Common Stock Warrants USD ($)	Additional Capital Surplus USD ($)	Retained Earnings USD ($)	Treasury Stock USD ($)	Accumulated Other Comprehensive Income USD ($)
Beginning balance at Dec. 31, 2011	$ 118,483	$ 79		$ 556	$ 75,967	$ 39,591	$ (5,076)	$ 7,366
Beginning balance, Shares at Dec. 31, 2011		7,492,420	18,400
Restricted stock awards, Shares		10,392
Consolidated net income	2,964					2,964
Compensation expense, restricted stock awards	77				77
Net change in unrealized gain on securities available for sale, net of income taxes of $1457	2,829							2,829
Net change in unrealized loss on derivatives, net of income taxes of $26	50							50
Cash dividend to preferred stockholder	(690)					(690)
Accretion of preferred stock discount					83	(83)
Cash dividend to common stockholders	(452)					(452)
Ending balance at Sep. 30, 2012	$ 123,261	$ 79		$ 556	$ 76,127	$ 41,330	$ (5,076)	$ 10,245
Ending balance, Shares at Sep. 30, 2012		7,502,812	18,400

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Consolidated Condensed Statements of Financial Condition (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Consolidated Condensed Statements of Financial Condition [Abstract]
Loans receivable, allowance for loan losses	$ 10,490,000	$ 11,262,000
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	18,400	18,400
Preferred stock, shares outstanding	18,400	18,400
Preferred stock liquidation preference	$ 18,400,000	$ 18,400,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	7,905,728	7,895,336
Common stock, shares outstanding	7,502,812	7,492,420
Common stock warrants, issued	253,666	253,666
Common stock warrants, outstanding	253,666	253,666
Treasury stock, shares	402,916	402,916

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Fair Value of Assets and Liabilities

9 Months Ended

Sep. 30, 2012

Fair Value of Assets and Liabilities [Abstract]

FAIR VALUE OF ASSETS AND LIABILITIES

(8) FAIR VALUE OF ASSETS AND LIABILITIES

In September 2006, the FASB issued ASC 820-10, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value. The statement establishes a fair value hierarchy which requires an entity to maximize the use of observable input and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.

• Level 1 is for assets and liabilities that management has obtained quoted prices (unadjusted for transaction cost) or identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

• Level 2 is for assets and liabilities in which significant unobservable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 is for assets and liabilities in which significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of securities available for sale are determined by a matrix pricing, which is a mathematical technique that is widely used in the industry to value debt securities without exclusively using quoted prices for the individual securities in the Company’s portfolio but rather by relying on the securities relationship to other benchmark quoted securities. Impaired loans are valued at the net present value of expected payments using the fair value of any assigned collateral. The values for bank owned life insurance are obtained from stated values from the respective insurance companies. The liability associated with the Company’s derivative is obtained from a quoted value supplied by our correspondent banker. The value of real estate owned is obtained from appraisals completed on properties at the time of acquisition and annually thereafter.

Assets and Liabilities Measured on a Recurring Basis

The assets and liabilities measured at fair value on a recurring basis are summarized below:

September 30, 2012	Total carrying Value in the Consolidated Balance sheet at		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Assets
Available for sale securities	$	348,877		—		347,455		1,422
Bank owned life insurance		9,373		—		9,373		—
Liabilities
Interest rate swap		1,220		—		1,220		—

December 31, 2011	Total carrying Value in the Consolidated Balance sheet at		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Assets
Available for sale securities	$	383,782		—		382,789		993
Bank owned life insurance		9,135		—		9,135		—
Liabilities
Interest rate swap		1,297		—		1,297		—

The assets measured at fair value on a non-recurring basis are summarized below for September 30, 2012:

September 30, 2012	Total carrying Value in the Consolidated Balance sheet at		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Assets
Other real estate owned	$	681		—		—	$	681
Impaired loans, net of reserve of $3,581	$	72,204		—		—	$	72,204

The assets measured at fair value on a non-recurring basis are summarized below for December 31, 2011:

December 31, 2011	Total carrying value in the consolidated balance sheet		Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	at December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Assets
Other real estate owned	$	2,258		—		—	$	2,258
Other assets owned		9		—		—		9
Impaired loans, net of reserve of $4,080		45,180		—		—		45,180

The table below includes a roll-forward of the consolidated condensed statement of financial condition items for the nine month periods ended September 30, 2012, and September 30, 2011, (including the change in fair value) for assets and liabilities classified by HopFed Bancorp, Inc. within level 3 of the valuation hierarchy for assets and liabilities measured at fair value on a recurring basis. When a determination is made to classify an asset or liability within level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, since level 3 assets and liabilities typically include, in addition to the unobservable or level 3 components, observable components (that is components that are actively quoted and can be validated to external sources), the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.

	2012				2011
Nine month period ended September 30,	Available for Sale Securities		Liabilities		Available for Sale Securities			Liabilities
			(Dollars in Thousands)
Fair value, January 1,	$	993		—	$	1,277			—
Change in unrealized gains (losses) included in other comprehensive income for assets and liabilities still held at September 30,		429		—		(231	)		—
Purchases, issuances and settlements, net		—		—		—			—
Transfers in and/or out of Level 3		—		—		—			—
Fair value, September 30,	$	1,422		—	$	1,046			—

The estimated fair values of financial instruments were as follows at September 30, 2012:

					Estimated Fair Value Measurement at September 30, 2012 Using
	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(Dollars in Thousands)
Financial Assets:
Cash and due from banks	$	50,042		50,042	$	50,042		—		—
Interest-earning deposits		7,661		7,661		7,661		—		—
Securities available for sale		348,877		348,877		—		347,455		1,422
Federal Home Loan Bank stock		4,428		4,428		—		4,428		—
Commercial real estate held for sale		2,763		2,763		—		2,763		—
Loans receivable		539,503		573,132		—		—		573,132
Accrued interest receivable		5,333		5,333		—		5,333		—
Bank owned life insurance		9,373		9,373		—		9,373		—
Financial liabilities:
Deposits		769,256		780,206		298,496		481,710		—
Advances from borrowers for taxes and insurance		639		639		—		—		633
Advances from Federal Home Loan Bank		44,222		48,655		—		48,655		—
Repurchase agreements		42,799		44,252		26,799		17,453		—
Subordinated debentures		10,310		10,099		—		—		10,099
Off-balance-sheet liabilities:
Commitments to extend credit		—		—		—		—		—
Commercial letters of credit		—		—		—		—		—
Market value of interest rate swap		1,220		1,220		—		1,220		—

The estimated fair values of financial instruments were as follows at December 31, 2011:

					Estimated Fair Value Measurement at December 31, 2011 Using
	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(Dollars in Thousands)
Financial Assets:
Cash and due from banks	$	44,389		44,389	$	44,389		—		—
Interest-earning deposits		4,371		4,371		4,371		—		—
Securities available for sale		383,782		383,782		—		382,789		993
Federal Home Loan Bank stock		4,428		4,428		—		4,428		—
Loans receivable		556,360		585,734		—		—		585,734
Accrued interest receivable		6,183		6,183		—		6,183		—
Bank owned life insurance		9,135		9,135		—		9,135		—
Financial liabilities:
Deposits		800,095		811,415		280,107		531,308		—
Advances from borrowers for taxes and insurance		153		153		—		—		153
Advances from Federal Home Loan Bank		63,319		69,206		3,000		66,287		—
Repurchase agreements		43,080		44,969		27,080		17,889		—
Subordinated debentures		10,310		10,099		—		—		10,099
Off-balance-sheet liabilities:
Commitments to extend credit		—		—		—		—		—
Commercial letters of credit		—		—		—		—		—
Market value of interest rate swap		1,297		1,297		—		1,297		—

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 13, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	HOPFED BANCORP INC
Entity Central Index Key	0001041550
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		7,502,812

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Issuance of Shares

9 Months Ended

Sep. 30, 2012

Issuance of Shares [Abstract]

ISSUANCE OF SHARES

(9) ISSUANCE OF SHARES

On December 12, 2008, HopFed Bancorp issued and sold 18,400 shares of preferred stock to the United States Treasury (Treasury) for $18,400,000 pursuant to the Capital Purchase Program. The Company also issued 243,816 common stock warrants to the Treasury as a condition to its participation in the Capital Purchase Program. The warrants have an exercise price of $11.32 each and are immediately exercisable. The warrants expire in ten years from the date of issuance. The preferred stock has no stated maturity and is non-voting, other than having class voting rights on certain matters, and pays cumulative dividends quarterly at a rate of 5% per year for the first five years and 9% thereafter.

On September 22, 2010, and September 21, 2011, the Board of Directors declared a 2% common stock dividend to be paid to shareholders of record on September 30, 2010 and October 3, 2011, respectively. As a result of the common stock dividends, total shares outstanding increased by 143,458 at September 30, 2010, and 146,485 on October 3, 2011. In addition, the Company is obligated to adjust the number and strike price of warrants issued to the United States Treasury under the Capital Purchase Program. At November 10, 2012, the warrant balance is 253,666 shares and the warrant strike price is $10.88.

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Consolidated Condensed Statements of Income (Loss) (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Interest and dividend income:
Loans receivable	$ 7,403	$ 8,332	$ 22,617	$ 25,254
Investment in securities, taxable	2,014	2,581	6,823	8,003
Nontaxable securities available for sale	573	532	1,695	1,733
Interest-earning deposits	6	5	20	13
Total interest and dividend income	9,996	11,450	31,155	35,003
Interest expense:
Deposits	2,640	3,543	8,279	11,179
Advances from Federal Home Loan Bank	1,017	625	2,155	1,946
Repurchase agreements	236	238	721	668
Subordinated debentures	185	186	553	551
Total interest expense	4,078	4,592	11,708	14,344
Net interest income	5,918	6,858	19,447	20,659
Provision for loan losses	506	475	1,775	5,445
Net interest income after provision for loan losses	5,412	6,383	17,672	15,214
Non-interest income:
Service charges	963	1,020	2,874	2,828
Merchant card income	212	194	620	571
Mortgage origination revenue	218	295	684	425
Gain on sale of securities	944	1,247	1,618	2,297
Other than temporarily impairment on available for sale securities				(14)
Income from bank owned life insurance	80	84	238	249
Financial services commission	280	272	778	691
Other operating income	200	169	641	717
Total non-interest income	2,897	3,281	7,453	7,764
Non-interest expenses:
Salaries and benefits	3,447	3,309	10,515	9,987
Occupancy expense	875	867	2,614	2,452
Data processing expense	610	653	1,863	2,056
State deposit tax	161	151	485	476
Intangible amortization expense	48	65	178	227
Professional services expense	435	293	1,320	986
Deposit insurance and examination expense	419	445	1,272	1,604
Advertising expense	324	324	952	931
Postage and communications expense	146	140	444	421
Supplies expense	64	96	280	294
Loss on disposal of equipment	5	5	13	145
Loss on sale of real estate owned	68	570	287	1,642
Real estate owned expenses	19	16	90	216
Other operating expenses	350	193	1,196	575
Total non-interest expense	6,971	7,127	21,509	22,012
Income before income tax expense	1,338	2,537	3,616	966
Income tax expense	263	909	652	375
Net income	1,075	1,628	2,964	591
Less: Dividend on preferred shares	229	232	689	688
Accretion dividend on preferred shares	27	28	83	83
Net income (loss) available (attributable) to common shareholders	$ 819	$ 1,368	$ 2,192	$ (180)
Net income (loss) available (attributable) to common shareholders
Per share, basic	$ 0.11	$ 0.18	$ 0.29	$ (0.02)
Per share, diluted	$ 0.11	$ 0.18	$ 0.29	$ (0.02)
Dividend per share	$ 0.02	$ 0.02	$ 0.06	$ 0.18
Weighted average shares outstanding - basic	7,487,283	7,481,448	7,485,571	7,456,750
Weighted average shares outstanding - diluted	7,487,283	7,481,448	7,485,571	7,456,750

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Stock Compensation

9 Months Ended

Sep. 30, 2012

Stock Compensation [Abstract]

STOCK COMPENSATION

(3) STOCK COMPENSATION

The Company incurred compensation cost related to the HopFed Bancorp, Inc. 2004 Long Term Incentive Plan of $22,700 and $76,700 for the three and nine month periods ended September 30, 2012, respectively, and $29,000 and $90,000 for the three and nine month period ended September 30, 2011, respectively. The Company issued 10,392 and 10,972 shares of restricted stock during the nine month periods ended September 30, 2012, and September 30, 2011, respectively. The Company did not issue any restricted stock during the three month period ended September 30, 2012. The table below provides a detail of the Company’s future compensation expense related to restricted stock vesting at September 30, 2012:

Year ending December 31,	Future Expense
2012	$	22,001
2013		73,739
2014		45,760
2015		27,575
2016		7,797
Total	$	176,872

The compensation committee may make additional awards of restricted stock, thereby increasing the future expense related to this plan. In addition, award vesting may be accelerated due to certain events as outlined in the restricted stock award agreement. Any acceleration of vesting will change the timing of, but not the aggregate amount of, compensation expense incurred.

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Income (Loss) Per Share

9 Months Ended

Sep. 30, 2012

Income (Loss) Per Share [Abstract]

INCOME (LOSS) PER SHARE

(2) INCOME (LOSS) PER SHARE

The following schedule reconciles the numerators and denominators of the basic and diluted income (loss) per share (“IPS”) computations for the three and nine month periods ended September 30, 2012, and September 30, 2011. Diluted common shares arise from the potentially dilutive effect of the Company’s stock options and warrants outstanding.

	Three Month Periods Ended
	September 30,
	2012		2011
Basic IPS:
Net income available to common stockholders	$	819,000	$	1,368,000
Average common shares outstanding		7,487,283		7,481,448
Net income per share available to common shareholders, basic	$	0.11	$	0.18
Diluted IPS:
Net income available to common stockholders	$	819,000	$	1,368,000
Average common shares outstanding		7,487,283		7,481,448
Dilutive effect of stock options		—		—
Average diluted shares outstanding		7,487,283		7,481,448
Net income per share available to common shareholders, diluted	$	0.11	$	0.18

	Nine Month Periods Ended
	September 30,
	2012		2011
Basic IPS:
Net income (loss) available (attributable) to common stockholders	$	2,192,000	($	180,000	)
Average common shares outstanding		7,485,571		7,456,750
Net income (loss) per share available (attributable) to common shareholders, basic	$	0.29	($	0.02	)
Diluted IPS:
Net income (loss) available (attributable) to common stockholders	$	2,192,000	($	180,000	)
Average common shares outstanding		7,485,571		7,456,750
Dilutive effect of stock options		—		—
Average diluted shares outstanding		7,485,571		7,456,750
Net income (loss) per share available (attributable) to common shareholders, diluted	$	0.29	($	0.02	)

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Effect of New Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

Effect of New Accounting Pronouncements [Abstract]

EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

(14) EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

In January 2011, the FASB issued ASU 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in ASU 2010-20 which temporarily delayed the effective date of the disclosures about troubled debt restructuring in ASU 2010-20. This delay was intended to allow the FASB time to complete its deliberations on what constitutes a troubled debt restructuring.

In April 2011, the FASB issued ASU 2011-02, A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring. The provisions of ASU 2011-02 provide additional guidance related to determining whether a creditor has granted a concession, including factors and examples for creditors to consider in evaluating when a credit restructuring results in a delay in payment that is insignificant, prohibits creditors from using the borrowers interest cost as a factor in determining whether the lender has granted a concession to the borrower, and added factors for creditors to use in determining whether a borrower is experiencing financial difficulties. A provision in ASU 2011-02 ends the FASB’s deferral of additional disclosures about troubled debt restructuring as required by ASU 2010-20. The provisions of ASU 2011-02 were effective for the Company’s reporting period ending September 30, 2011. The adoption of ASU 2011-02 did not have a material impact on the Company’s consolidated financial statements of income, condition and cash flow.

In May 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in United States of America generally accepted accounting principles (U.S. GAAP) and international Financial Reporting Standards (Topic 820) – Fair Value Measurement (ASU 2011-04), to provide consistent definition of the fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 was effective for reporting periods ending after March 30, 2012, and was applied prospectively. The implementation of ASU 2011-04 did not have a material impact on the Company’s consolidated financial statements of income, condition and cash flows.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income, new disclosure guidance related to the presentation of the Statement of Comprehensive Income. This guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity and requires presentation of reclassification adjustments on the face of the income statement. The effective date of this pronouncement is December 15, 2011. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements of income, condition, and cash flow.

In September 2011, the FASB issued ASU No. 2011-8, Intangibles – Goodwill and other, regarding testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting until is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill reporting unit is more than its carrying amount, the two-step goodwill impairment test is not required. The new guidance was effective on January 1, 2012. The implementation of ASU 2011-8 did not have a material impact on the Company’s consolidated financial statements of income, condition and cash flow.

In December 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards update No. 2011-05. This update to Comprehensive Income (Topic 220) defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income. The deferral supersedes only the paragraphs pertaining to how and where reclassification adjustments are presented. The amendments in this update were effective for public entities for reporting periods beginning after December 15, 2011.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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Stock Options

9 Months Ended

Sep. 30, 2012

Stock Options [Abstract]

STOCK OPTIONS

(10) STOCK OPTIONS

At September 30, 2012, all stock options outstanding were issued under the HopFed Bancorp, Inc. 1999 Stock Option Plan. At September 30, 2012, the Company can no longer issue options under this plan. The remaining 20,808 options are fully vested and outstanding until June 1, 2014, with an exercise price of $16.67 per share.

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Real Estate and Other Assets Owned

9 Months Ended

Sep. 30, 2012

Real Estate and Other Assets Owned [Abstract]

REAL ESTATE AND OTHER ASSETS OWNED

(6) REAL ESTATE AND OTHER ASSETS OWNED

The Company’s real estate and other assets owned represent properties and personal collateral acquired through customer loan defaults. The property is recorded at the lower of cost or fair value less estimated cost to sell and carrying cost at the date acquired. Any difference between the book value and estimated market value is recognized as a charge off through the allowance for loan loss account. Additional real estate owned and other asset losses may be determined on individual properties at specific intervals or at the time of disposal. In general, the Company will obtain a new appraisal on all real estate owned with a book balance in excess of $100,000 on an annual basis. Additional losses are recognized as a non-interest expense.

At September 30, 2012, December 31, 2011, and September 30, 2011, the Company had balances in other real estate assets owned and problem loans consisting of the following:

	September 30, 2012			December 31, 2011			September 30, 2011
	(Dollars in Thousands)
One-to-four family mortgages	$	147			480			218
Multi-family		—			905			2,507
Construction		216			465			535
Land		275			248			665
Non-residential real estate		43			160			635
Consumer loans		—			9			1
Total other assets owned	$	681			2,267			4,561
Total non-accrual loans	$	9,824			6,133			4,251
Total non-performing assets	$	10,505			8,400			8,812
Non-performing asset / Total assets		1.05	%		0.81	%		0.83	%

The following is a summary of the activity in the Company’s real estate and other assets owned for the nine month period ending September 30, 2012:

	Balance		Activity During 2012					Reduction			Gain (Loss)			Balance
	12/31/2011		Foreclosures		Sales			in Values			on Sale			9/30/2012
	(Dollars in Thousands)
One-to-four family mortgages	$	480		658		(855	)		(107	)		(29	)		147
Multi-family		905		—		(875	)		—			(30	)		—
Construction		465		—		(235	)		—			(14	)		216
Land		248		383		(269	)		(68	)		(19	)		275
Non-residential real estate		160		63		(160	)		(20	)		—			43
Consumer assets		9		—		(9	)		—			—			—
Total	$	2,267		1,104		(2,403	)		(195	)		(92	)		681

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Issuance of Shares (Details) (USD $)						9 Months Ended	1 Months Ended
	Nov. 10, 2012	Oct. 03, 2011	Sep. 21, 2011	Sep. 30, 2010	Sep. 22, 2010	Sep. 30, 2012 Parent [Member]	Dec. 31, 2008 Parent [Member] Preferred stock [Member]
Issuance of Shares (Textual) [Abstract]
Preferred stock shares issued and sold							18,400
Value of shares of preferred stock issued and sold							$ 18,400,000
Number of common stock warrants issued under Capital Purchase Program						243,816
Exercise price of common stock warrants issued under Capital Purchase Program						$ 11.32
Expiration period of common stock warrants issued under Capital Purchase Program						10 years
Percentage of cumulative dividends of preferred stock pays annually						5.00%
First specified period for cumulative dividends of preferred stock						5 years
Cumulative dividends quarterly thereafter						9.00%
Issuance of Shares (Additional Textual) [Abstract]
Percentage of common stock dividend			2.00%		2.00%
Number of common stock outstanding increased due to common stock dividends		146,485		143,458
Number of common stock warrants outstanding	253,666
Exercise price of common stock warrants	$ 10.88

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Securities

9 Months Ended

Sep. 30, 2012

Securities [Abstract]

SECURITIES

(4) SECURITIES

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluations. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

At September 30, 2012, the Company has nine securities with unrealized losses. The amortized cost of securities and their estimated fair values at September 30, 2012, were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Restricted:
FHLB stock	$	4,428		—		—			4,428
Unrestricted:
U.S. government and agency securities:
Agency debt securities	$	148,554		5,052		(15	)		153,591
Tax free municipal bonds		62,930		5,958		—			68,888
Taxable municipal bonds		11,647		1,348		(11	)		12,984
Trust preferred securities		2,000		—		(578	)		1,422
Mortgage-backed securities:
GNMA		20,459		1,436		(3	)		21,892
FNMA		60,060		2,809		—			62,869
FHLMC		5,115		202		—			5,317
NON-AGENCY CMOs		5,419		69		—			5,488
AGENCY CMOs		15,950		488		(12	)		16,426
	$	332,134		17,362		(619	)		348,877

The amortized cost of securities and their estimated fair values at December 31, 2011, was as follows:

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
			(Dollars in Thousands)
Restricted:
FHLB stock	$	4,428		—		—			4,428
Unrestricted:
U.S. government and agency securities:	$	171,141		3,511		(65	)		174,587
Tax free municipal bonds		60,432		4,623		—			65,055
Taxable municipal bonds		12,846		1,059		—			13,905
Trust preferred securities		2,000		—		(1,007	)		993
Mortgage-backed securities:
GNMA		30,427		1,413		(19	)		31,821
FNMA		59,195		2,101		(1	)		61,295
FHLMC		15,108		491		—			15,599
NON-AGENCY CMOs		2,012		7		(223	)		1,796
AGENCY CMOs		18,163		568		—			18,731
	$	371,324		13,773		(1,315	)		383,782

The scheduled maturities of debt securities available for sale at September 30, 2012, were as follows:

September 30, 2012	Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Due within one year	$	535	$	538
Due in one to five years		10,095		10,311
Due in five to ten years		23,790		26,033
Due in more than ten years		52,381		56,826
		86,801		93,708
Amortizing agency bonds		138,330		143,177
Mortgage-backed securities		107,003		111,992
Total debt securities available for sale	$	332,134	$	348,877

The scheduled maturities of debt securities available for sale at December 31, 2011, were as follows:

December 31, 2011	Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Due within one year	$	461		464
Due in one to five years		6,844		6,929
Due in five to ten years		24,471		26,153
Due after ten years		72,460		75,804
		104,236		109,350
Amortizing agency bonds		142,183		145,190
Mortgage-backed securities		124,905		129,242
Total debt securities available for sale	$	371,324		383,782

The estimated fair value and unrealized loss amounts of temporarily impaired investments as of September 30, 2012, are as follows:

	Less than 12 months					12 months or longer					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale
U.S. government and agency securities:
Agency debt securities	$	6,674		(15	)		—		—			6,674		(15	)
Taxable municipals		862		(11	)		—		—			862		(11	)
Tax free municipals		—		—			—		—			—		—
Trust preferred securities		—		—			1,422		(578	)		1,422		(578	)
Mortgage-backed securities:
GNMA		—		—			1,565		(3	)		1,565		(3	)
FNMA		—		—			—		—			—		—
FHLMC		—		—			—		—			—		—
NON-AGENCY CMOs		—		—			—		—			—		—
AGENCY CMOs		1,860		(12	)		—		—			1,860		(12	)
Total Available for Sale	$	9,396		(38	)		2,987		(581	)		12,383		(619	)

The estimated fair value and unrealized loss amounts of temporarily impaired investments as of December 31, 2011, were as follows:

	Less than 12 months					12 months or longer					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale
U.S. government and agency securities:
Agency debt securities	$	20,422		(54	)		2,007		(11	)		22,429		(65	)
Taxable municipal bonds		—		—			—		—			—		—
Tax free municipal bonds		—		—			—		—			—		—
Trust preferred securities		—		—			993		(1,007	)		993		(1,007	)
Mortgage-backed securities:
GNMA		1,925		(19	)		—		—			1,925		(19	)
FNMA		—		—			81		(1	)		81		(1	)
FHLMC		—		—			—		—			—		—
NON-AGENCY CMOs		—		—			1,494		(223	)		1,494		(223	)
AGENCY CMOs		—		—			—		—			—		—
Total Available for Sale	$	22,347		(73	)		4,575		(1,242	)		26,922		(1,315	)

At September 30, 2012, securities with a book value of approximately $122.6 million and a market value of approximately $132.6 million were pledged to various municipalities for deposits in excess of FDIC limits as required by law. The Federal Home Loan Bank of Cincinnati has issued letters of credit in the Bank’s name totaling $15.5 million secured by the Bank’s loan portfolio to secure additional municipal deposits.

At September 30, 2012, securities with a book and market value of approximately $26.8 million were sold under agreements to repurchase from various customers. Furthermore, the Company has two wholesale repurchase agreements with third parties secured by investments with a combined book value of $21.2 million and a market value of $22.0 million. One repurchase agreement is in the amount of $6.0 million and has a maturity of September 18, 2016 and is currently callable on a quarterly basis and has a fixed rate of interest of 4.36%. The second repurchase agreement, in the amount of $10.0 million, has a maturity of September 5, 2014, is currently callable quarterly and has a fixed rate of interest of 4.28%.

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Loans

9 Months Ended

Sep. 30, 2012

Loans [Abstract]

LOANS

(5) LOANS

Set forth below is selected data relating to the composition of the loan portfolio by type of loan at September 30, 2012 and December 31, 2011. At September 30, 2012 and December 31, 2011, there were no concentrations of loans exceeding 10% of total loans other than as disclosed below:

	September 30, 2012		September 30, 2012			December 31, 2011		December 31, 2011
	Amount		Percent			Amount		Percent
	(Dollars in Thousands)
Real estate loans:
One-to-four family (closed end) first mortgages	$	165,439		30.1	%	$	171,192		30.2	%
Second mortgages (closed end)		5,382		1.0	%		6,209		1.1	%
Home equity lines of credit		37,962		6.9	%		38,694		6.8	%
Multi-family		33,243		6.0	%		33,739		5.9	%
Construction		15,694		2.8	%		11,931		2.1	%
Land for development		47,189		8.6	%		52,338		9.2	%
Farmland		38,821		7.1	%		34,841		6.1	%
Non-residential real estate		133,747		24.3	%		148,644		26.2	%
Total mortgage loans		477,477		86.8	%		497,588		87.6	%
Consumer loans		13,094		2.4	%		15,110		2.7	%
Commercial loans		59,252		10.8	%		54,673		9.7	%
Total other loans		72,346		13.2	%		69,783		12.4	%
Total loans, gross		549,823		100.0	%		567,371		100.0	%
Deferred loan cost, net of income		170					251
Less allowance for loan losses		10,490					11,262
Total loans	$	539,503				$	556,360

The Bank assigns an industry standard NAICS code to each loan in the Bank’s portfolio. By assigning a standard code to each type of loan, management can more readily determine concentrations in risk by industry, location and loan type. This information is most useful when analyzing the Bank’s non-residential real estate loan portfolio. At September 30, 2012, and December 31, 2011, the Bank’s non-residential real estate, land for development and farmland loan portfolio was made up of the following loan types:

	Balance		Balance
	September 30, 2012		December 31, 2011
	(Dollars in Thousands)
Land & development	$	47,189		52,338
Construction		5,933		6,151
Manufacturing		3,861		4,172
Professional and Technical		2,051		2,300
Retail Trade		10,771		12,019
Other Services		17,199		17,767
Finance & Insurance		375		141
Agricultural, Forestry, Fishing & Hunting		38,821		33,473
Real Estate and Rental and Leasing		45,771		50,770
Wholesale Trade		8,569		6,235
Arts, Entertainment & Recreation		3,526		5,309
Accomodations / Food Service		23,025		25,255
Healthcare and Social Assistance		4,614		10,140
Educational Services		25		30
Transportation & Warehousing		1,325		1,638
Information		2,568		2,646
Non-industry		1,089		3,219
Admin Support / Waste Mgmt		3,045		2,220
Total	$	219,757		235,823

The allowance for loan losses totaled $10.5 million at September 30, 2012, $11.3 million at December 31, 2011, and $13.5 million at September 30, 2011. The ratio of the allowance for loan losses to total loans was 1.91% at September 30, 2012, 1.98% at December 31, 2011, and 2.33% at September 30, 2011. The following table indicates the type and level of non-accrual loans at the periods indicated below:

	September 30, 2012		December 31, 2011		September 30, 2011
	(Dollars in Thousands)
One-to-four family mortgages	$	2,795		2,074		1,857
Home equity line of credit		24		134		137
Junior lien		—		101		—
Multi-family		190		—		—
Construction		—		—		—
Land		3,279		1,330		1,331
Non-residential real estate		1,268		2,231		639
Farmland		49		—		—
Consumer loans		59		9		9
Commercial loans		2,160		254		278
Total non-accrual loans	$	9,824		6,133		4,251

The following table provides a detail of the Company’s activity in the allowance for loan loss account by loan type for the year ended September 30, 2012:

Nine month period ended September 30, 2012	Balance December 31, 2011		Charge off 2012			Recovery 2012		General Provision 2012			Specific Provision 2012			Ending Balance Period Ending September 30, 2012
	(Table in Thousands)
One-to-four family mortgages	$	2,640		(282	)		77		237			(323	)		2,349
Home equity line of credit		408		(65	)		5		(15	)		1			334
Junior liens		277		(1	)		3		(34	)		(87	)		158
Multi-family		1,201		(416	)		—		(648	)		576			713
Construction		139		—			—		(11	)		279			407
Land		1,332		(1,033	)		234		491			930			1,954
Non-residential real estate		3,671		(799	)		100		63			638			3,673
Consumer loans		262		(284	)		110		151			23			262
Commercial loans		1,332		(206	)		10		(68	)		(428	)		640
	$	11,262		(3,086	)		539		166			1,609			10,490
The following table provides a detail of the Company’s activity in the allowance for loan loss account by loan type for the year ended December 31, 2011:
Year Ended December 31, 2011	Balance December 31, 2010		Charge off 2011			Recovery 2011		General Provision 2011			Specific Provision 2011			Ending Balance Year Ending December 31, 2011
	(Table in Thousands)
One-to-four family mortgages	$	1,097		(758	)		139		1,687			475			2,640
Home equity line of credit		212		(123	)		—		245			74			408
Junior liens		146		(27	)		1		79			78			277
Multi-family		2,022		(89	)		—		26			(758	)		1,201
Construction		657		(353	)		—		(91	)		(74	)		139
Land		865		(308	)		30		353			392			1,332
Non-residential real estate		4,025		(2,645	)		84		1,114			1,093			3,671
Consumer loans		108		(371	)		112		425			(12	)		262
Commercial loans		698		(201	)		20		305			510			1,332
	$	9,830		(4,875	)		386		4,143			1,778			11,262

The Company’s general provisions represent the current eight quarter loss history of the Company by loan type. The loss history is weighted using the sum of the quarter digit method, placing more emphasis on the most recent quarterly result and may be further adjusted for any adverse trends in the local or national markets. A negative general provision indicates that the Company’s recent loss history has improved over prior periods or has been specifically reserved for and that lower amounts of general provisions are necessary.

The table below presents past due and non-accrual balances at September 30, 2012, and December 31, 2011, by loan classification allocated between performing and non-performing:

	Currently		30 - 89 Days		Non-accrual		Special		Impaired Loans Currently Performing
September 30, 2012	Performing		Past Due		Loans		Mention		Substandard		Doubful		Total
					(Dollars in Thousands)
One-to-four family mortgages	$	154,241		2,240		2,795		1,940		4,223		—		165,439
Home equity line of credit		35,454		55		24		1,202		1,227		—		37,962
Junior liens		4,722		10		—		73		577		—		5,382
Multi-family		20,297		—		190		6,192		6,564		—		33,243
Construction		11,606		—		—		—		4,088		—		15,694
Land		17,540		—		3,279		9,069		17,301		—		47,189
Non-residential real estate		142,193		575		1,317		3,732		24,751		—		172,568
Consumer loans		12,541		86		59		2		406		—		13,094
Commercial loans		49,873		19		2,160		837		6,363		—		59,252
	$	448,467		2,985		9,824		23,047		65,500		—		549,823

	Currently Performing		30 - 89 Days Past Due		Non-accrual Loans		Special Mention		Impaired Loans Currently Performing
December 31, 2011									Substandard		Doubtful		Total
					(Dollars in Thousands)
One-to-four family mortgages	$	153,375		628		2,074		9,163		5,722		230		171,192
Home equity line of credit		36,528		5		134		1,664		134		229		38,694
Junior liens		4,778		312		101		521		497		—		6,209
Multi-family		20,715		—		—		7,073		5,951		—		33,739
Construction		9,943		107		—		213		1,668		—		11,931
Land		17,570		237		1,330		24,714		7,488		999		52,338
Non-residential real estate		142,190		487		2,231		24,782		13,678		117		183,485
Consumer loans		14,399		28		9		268		386		20		15,110
Commercial loans		45,509		506		254		4,003		4,385		16		54,673
Total	$	445,007		2,310		6,133		72,401		39,909		1,611		567,371

All loans listed as 30 – 89 days past due are not performing as agreed. Loans listed as non-accrual may or may not be performing as agreed but have significant weaknesses that makes it doubtful as to whether the loan will continue to perform as agreed. Loans listed as special mention, substandard and doubtful are paying as agreed. However, the customer’s financial statements may indicate weaknesses in their current cash flow, the customer’s industry may be in decline due to current economic conditions, collateral values used to secure the loan may be declining, or the Company may be concerned about the customer’s future business prospects. At September 30, 2012, loans held for sale totaling $2,763,000 were previously classified as non-accrual. Included in loans held for sale is a $760,000 land development loan and a $2.0 million Commercial real estate loan. The sale of both loans settled November 5, 2012.

The Bank does not originate loans it considers sub-prime and is not aware of any exposure to the additional credit concerns associated with sub-prime lending in either the Company’s loan or investment portfolios. The Company does have a significant amount of construction and land development loans. Management reports to the Company’s Board of Directors on the status of the Company’s specific construction and development loans as well as the market trends in those markets in which the Company actively participates.

The Company’s annualized net charge off ratios for the nine month periods ended September 30, 2012, September 30, 2011, and the year ended December 31, 2011, were 0.61%, 0.39% and 0.76%, respectively. The ratios of allowance for loan losses to non-accrual loans at September 30, 2012, September 30, 2011, and December 31, 2011, were 106.78%, 318.49%, and 183.62% respectively. The following table sets forth an analysis of the Bank’s allowance for loan losses for the periods ended:

	September 30, 2012			December 31, 2011			September 30, 2011
	(Dollars in Thousands, Except Percentages)
Beginning balance, allowance for loan loss	$	11,262			9,830			9,830
Charge offs
One-to-four family mortgages		(282	)		(758	)		(441	)
Home equity line of credit		(65	)		(123	)		(57	)
Junior liens		(1	)		(27	)		—
Multi-family		(416	)		(89	)		(89	)
Construction		—			(353	)		(353	)
Land		(1,033	)		(308	)		(198	)
Non-residential real estate		(799	)		(2,645	)		(572	)
Consumer loans		(284	)		(371	)		(326	)
Commercial loans		(206	)		(201	)		(33	)
Total charge offs		(3,086	)		(4,875	)		(2,069	)
Recoveries
One-to-four family mortgages		77			139			136
Home equity line of credit		5			—			—
Junior liens		3			1			1
Multi-family		—			—			—
Construction		—			—			—
Land		234			30			30
Non-residential real estate		100			84			84
Consumer loans		110			112			82
Commercial loans		10			20			2
Total recoveries		539			386			335
Net Charge offs		(2,547	)		(4,489	)		(1,734	)
Provision for loan losses		1,775			5,921			5,445
Ending balance	$	10,490			11,262			13,541
Average loan balance, gross	$	556,332			575,133			592,417
Ratio of net charge offs to average outstanding loans during the period		0.61	%		0.76	%		0.39	%

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.

The Company conducts annual reviews on all loan relationships above one million to ascertain the borrowers continued ability to service their debt as agreed. In addition to the credit relationships mentioned above, management may classify any credit relationship once it becomes aware of adverse credit trends for that customer. Typically, the annual review consists of updated financial statements for borrowers and any guarantors, a review of the borrower’s credit history with the Company and other creditors, and current income tax information.

As a result of this review, management will classify loans based on their credit risk. Additionally, the Company provides a risk grade for all loans past due more than sixty days. The Company uses the following risk definitions for risk grades:

Satisfactory loans of average strength may have some deficiency or vulnerability to changing economic or industry conditions. These customers should have reasonable amount of capital and operating ratios. Secured loans may lack in margin or liquidity. Loans to individuals, perhaps supported in dollars of net worth, but with supporting assets may be difficult to liquidate.

Watch loans are acceptable credits: (1) that need continual monitoring, such as out-of territory or asset-based loans (since the Bank does not have an asset-based lending department), or (2) with a marginal risk level to business concerns and individuals that; (a) have exhibited favorable performance in the past, though currently experiencing negative trends; (b) are in an industry that is experiencing volatility or is declining, and their performance is less than industry norms; and (c) are experiencing unfavorable trends in their financial position, such as one-time net losses or declines in asset values. These marginal borrowers may have early warning signs of problems such as occasional overdrafts and minor delinquency. If considered marginal, a loan would be a “watch” until financial data demonstrated improved performance or further deterioration to a “substandard” grade usually within a 12-month period. In the table on page 23, Watch loans are included with satisfactory loans and classified as Pass.

Loans classified as Other Loans Especially Mentioned are considered currently protected but are potentially weak. These loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard classification. The credit risk may be relatively minor yet constitutes an unwarranted risk in light of the circumstances surrounding a specific loan. These credit weaknesses, if not checked or corrected, will weaken the loan or inadequately protect the Bank’s credit position at some future date.

A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. The loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. This does not imply ultimate loss of the principal, but may involve burdensome administrative expenses and the accompanying cost to carry the credit. Examples of substandard loans include those to borrowers with insufficient or negative cash flow, negative net worth coupled with inadequate guarantor support, inadequate working capital, and/or significantly past-due loans and overdrafts.

A loan classified Doubtful has all the weaknesses inherent in a substandard credit except that the weaknesses make collection or liquidation in full (on the basis of currently existing facts, conditions, and values) highly questionable and improbable. The possibility of loss is extremely high, but because of certain pending factors charge-off is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans. The doubtful classification is applied to that portion of the credit in which the full collection of principal and interest is questionable.

A loan is considered to be classified when management determines that it is probable that the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. The value of individually classified loans is measured based on the present value of expected payments using the fair value of the collateral if the loan is collateral dependent. Currently, it is management’s practice to classify all substandard or doubtful loans as classified. At September 30, 2012, December 31, 2011, and September 30, 2011, the Company’s classified loans totaled $75.8 million, $49.3 million and $56.8 million, respectively. At September 30, 2012, December 31, 2011, and September 30, 2011, the Company’s specific reserve for impaired loans totaled $3.6 million, $4.1 million and $6.0 million, respectively.

A summary of the Company’s loans, including their respective regulatory classification and their respective specific reserve at September 30, 2012, is as follows:

			Special		Impaired Loans						Specific Reserve for		Reserve for Performing
September 30, 2012	Pass		Mention		Substandard		Doubful		Total		Impairment		Loans
	(Dollars in Thousands)
One-to-four family mortgages	$	156,358		1,940		7,025		116		165,439		509		1,840
Home equity line of credit		35,510		1,201		1,251		—		37,962		14		320
Junior liens		4,727		74		581		—		5,382		104		54
Multi-family		20,298		6,191		6,754		—		33,243		356		357
Construction		11,606		—		4,088		—		15,694		294		113
Land		17,539		9,070		20,580		—		47,189		888		1,066
Non-residential real estate		142,397		3,809		26,362		—		172,568		1,228		2,445
Consumer loans		12,577		12		505		—		13,094		102		160
Commercial loans		49,892		837		8,523		—		59,252		86		554
Total	$	450,904		23,134		75,669		116		549,823		3,581		6,909

A summary of the Company’s impaired loans, including their respective regulatory classification and their respective specific reserve at December 31, 2011, is as follows:

			Special		Impaired Loans						Specific Reserve for		Allowance for Performing
December 31, 2011	Pass		Mention		Substandard		Doubful		Total		Impairment		Loans
	(Dollars in Thousands)
One-to-four family mortgages	$	153,375		9,434		8,153		230		171,192		728		1,912
Home equity line of credit		36,528		1,694		233		239		38,694		131		277
Junior liens		4,778		622		809		—		6,209		180		97
Multi-family		20,715		7,073		5,951		—		33,739		26		1,175
Construction		9,943		213		1,775		—		11,931		14		125
Land		17,570		24,714		9,055		999		52,338		924		408
Non-residential real estate		142,190		25,077		16,101		117		183,485		1,374		2,297
Consumer loans		14,399		268		423		20		15,110		80		182
Commercial loans		45,509		4,009		5,034		121		54,673		623		709
Total	$	445,007		73,104		47,534		1,726		567,371		4,080		7,182

Impaired loans by classification type and the related valuation allowance amounts at September 30, 2012, were as follows:

	At September 30, 2012						For the nine month period ended September 30, 2012
Impaired loans with no recorded allowance:	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
One-to-four family mortgages	$	4,618		4,618		—		6,538		171
Home equity line of credit		976		976		—		787		32
Junior liens		477		477		—		375		22
Multi-family		3,025		3,025		—		3,394		78
Construction		—		—		—		2,562		—
Land		16,967		16,967		—		19,971		289
Non-residential real estate		21,066		21,066		—		21,495		1,038
Consumer loans		115		115		—		62		5
Commercial loans		2,444		2,444		—		2,895		207
Total	$	49,688		49,688		—		58,079		1,842
	At September 30, 2012						For the nine month period ended September 30, 2012
Impaired loans with recorded allowance:	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
One-to-four family mortgages	$	2,523		2,523		509		3,149		108
Home equity line of credit		275		275		14		176		8
Junior liens		104		104		104		331		10
Multi-family		3,729		3,729		356		3,590		178
Construction		4,088		4,088		294		1,460		83
Land		3,613		3,613		888		5,274		145
Non-residential real estate		5,296		5,296		1,228		6,708		271
Consumer loans		390		390		102		217		1
Commercial loans		6,079		6,079		86		4,552		42
Total	$	26,097		26,097		3,581		25,457		846
Total impaired loans	$	75,785		75,785		3,581		83,536		2,688

On a periodic basis, the Bank may modify the terms of certain loans. In evaluating whether a restructuring constitutes a troubled debt restructuring (TDR), Financial Accounting Standards Board has issued Accounting Standards Update 310 (ASU 310); A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring. In evaluating whether a restructuring constitutes a TDR, the Bank must separately conclude that both of the following exist:

• The restructuring constitutes a concession

• The debtor is experiencing financial difficulties

ASU 310 provides the following guidance for the Bank’s evaluation of whether it has granted a concession as follows:

• If a debtor does not otherwise have access to funds at a market interest rate for debt with similar risk characteristics as the restructured debt, the restructured debt would be considered a below market rate, which may indicate that the Bank may have granted a concession. In that circumstance, the Bank should consider all aspects of the restructuring in determining whether it has granted a concession, the creditor must make a separate assessment about whether the debtor is experiencing financial difficulties to determine whether the restructuring constitutes a TDR.

• A temporary or permanent increase in the interest rate on a loan as a result of a restructuring does not eliminate the possibility of the restructuring from being considered a concession if the new interest rate on the loan is below the market interest rate for loans of similar risk characteristics.

• A restructuring that results in a delay in payment that is insignificant is not a concession. However, the Bank must consider a variety of factors in assessing whether a restructuring resulting in a delay in payment is insignificant.

Troubled Debt Restructuring

Due to challenges in the local and national economy that persisted into 2012, the Company has had more of its customers incur financial problems. These customers may request temporary or permanent modification of loans in an effort to avoid foreclosure. The Company analyzes each request separately and grants loan modifications based on the customer’s ability to eventually repay the loan and return to the original loan terms, the customer’s current loan status and the current and projected future value of the Bank’s collateral. Loans that are modified as a result of a customer’s financial distress are classified as Troubled Debt Restructuring (TDR). The classification of a loan as TDR is important in that it indicates that a particular customer may not be past due but represents a credit weakness due to the Bank’s willingness to modify loan terms based on the financial weakness of the borrower. The classification of a loan as a TDR may represent the Company’s “last best chance” to work with a distressed customer before foreclosure proceedings begin.

A summary of the Company’s loans classified as Troubled Debt Restructurings (TDR’s) that are reported as performing at September 30, 2012 and December 31, 2011, is below:

	September 30, 2012			December 31, 2011
TDR by Loan Type:	(Dollars in Thousands)
One-to-four family mortgages	$	2,001			2,521
Home equity line of credit		204			—
Junior lien		—			857
Multi-family		236			—
Construction		3,145			—
Land		4,801			941
Non-residential real estate		2,490			3,367
Farmland		956			—
Consumer loans		8			33
Commercial loans		371			125
Total TDR		14,212			7,844
Less:
TDR in non-accrual status
One-to-four family mortgages		(1,449	)		(1,410	)
Home equity line of credit		—			—
Junior lien		—			(100	)
Multi-family		—			—
Construction		—			—
Land		(2,490	)		—
Non-residential real estate		(956	)		(1	)
Consumer loans		—			(1	)
Commercial loans		—			(105	)
Total performing TDR	$	9,317			6,227

At September 30, 2012, the Company’s level of performing Troubled Debt Restructurings (“TDRs”) was $9.3 million, as compared to $6.2 million at December 31, 2011. A summary of the activity in loans classified as performing TDRs for the nine month period ended September 30, 2012, is as follows:

	Balance at December 31, 2011		New TDR		Loss or Foreclosure		Removed due to performance		Balance at September 30,  2012
	(Dollars in Thousands)
One-to-four family mortgages		1,111		146		—		705		552
Home equity line of credit		—		244		—		40		204
Junior Lien		757		—		—		757		—
Multi-family		—		239		—		3		236
Construction		—		3,145		—		—		3,145
Land		941		4,850		233		757		4,801
Farmland		—		956		—		956		—
Non-residential real estate		3,366		—		453		2,913		—
Consumer loans		32		75		2		97		8
Commercial loans		20		931		10		570		371
Total performing TDR		6,227		10,586		698		6,798		9,317

The following is a summary of the activity in loans classified as performing TDR’s for the twelve month period ended December 31, 2011:

	Balance at December 31, 2010		New TDR		Loss or Foreclosure		Removed due to performance		Balance at December 31, 2011
One-to-four family mortgages		2,751		1,163		401		2,402		1,111
Home equity line of credit		114		—		—		114		—
Junior Lien		—		757		—		—		757
Multi-family		246		—		5		241		—
Construction		203		1,438		1,641		—		—
Land		—		1,475		534		—		941
Farmland		—		—		—		—		—
Non-residential real estate		3,915		1,540		1,228		861		3,366
Consumer loans		69		27		9		55		32
Commercial loans		700		102		235		547		20
Total performing TDR		7,998		6,502		4,053		4,220		6,227

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Investments in Affiliated Companies

9 Months Ended

Sep. 30, 2012

Investments in Affiliated Companies [Abstract]

INVESTMENTS IN AFFILIATED COMPANIES

(7) INVESTMENTS IN AFFILIATED COMPANIES

Investments in affiliated companies accounted for under the equity method consist of 100% of the common stock of HopFed Capital Trust 1 (“Trust”), a wholly-owned statutory business trust. The Trust was formed on September 25, 2003. Summary financial information for the Trust follows (dollars in thousands):

Summary Statements of Financial Condition

	At September 30, 2012		At December 31, 2011
Asset - investment in subordinated debentures issued by HopFed Bancorp, Inc.	$	10,310		10,310
Liabilities		—		—
Stockholder’s equity – trust preferred securities		10,000		10,000
Common stock (100% Owned by HopFed Bancorp, Inc.)		310		310
Total stockholders’ equity	$	10,310		10,310

Summary Statement of Income

	Three Month Periods Ended September 30,				Nine Month Period Ended September 30,
	2012		2011		2012		2011
Income – interest income from subordinated debenturesissued by HopFed Bancorp, Inc.	$	93		91	$	282		265
Net income	$	93		91	$	282		265

Summary Statement of Stockholders’ Equity

	Trust Preferred Securities		Common Stock		Retained Earnings			Total Stockholders’ Equity
Beginning balances, December 31, 2011	$	10,000		310		—			10,310
Net income		—		—		282			282
Dividends:
Trust preferred securities		—		—		(274	)		(274	)
Common paid to HopFed Bancorp, Inc.		—		—		(8	)		(8	)
Ending balances, September 30, 2012	$	10,000		310		—			10,310

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Regulatory Agreement (Details)	Sep. 30, 2012	Apr. 30, 2010
Regulatory Agreement (Textual) [Abstract]
Tier 1 Capital Ratio	12.33%	8.00%
Total Risk Based Capital Ratio	22.31%	12.00%

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Stock Compensation (Details) (USD $)	Sep. 30, 2012
Company's future compensation expense related to restricted stock vesting
2012	$ 22,001
2013	73,739
2014	45,760
2015	27,575
2016	7,797
Total	$ 176,872

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Real Estate and Other Assets Owned (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Presentation of balances in other real estate and assets owned consisting other non-performing loan
Total other assets owned	$ 681	$ 2,267	$ 4,561
Total non-accrual loans	9,824	6,133	4,251
Total non-performing assets	10,505	8,400	8,812
Non-performing asset / Total assets	1.05%	0.81%	0.83%
One-to-four family mortgages [Member]
Presentation of balances in other real estate and assets owned consisting other non-performing loan
Total other assets owned	147	480	218
Total non-accrual loans	2,795	2,074	1,857
Multi-family [Member]
Presentation of balances in other real estate and assets owned consisting other non-performing loan
Total other assets owned		905	2,507
Total non-accrual loans	190
Construction [Member]
Presentation of balances in other real estate and assets owned consisting other non-performing loan
Total other assets owned	216	465	535
Total non-accrual loans
Land [Member]
Presentation of balances in other real estate and assets owned consisting other non-performing loan
Total other assets owned	275	248	665
Total non-accrual loans	3,279	1,330	1,331
Non-residential real estate [Member]
Presentation of balances in other real estate and assets owned consisting other non-performing loan
Total other assets owned	43	160	635
Total non-accrual loans	1,268	2,231	639
Consumer loans [Member]
Presentation of balances in other real estate and assets owned consisting other non-performing loan
Total other assets owned		9	1
Total non-accrual loans	$ 59	$ 9	$ 9

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Regulatory Agreement

9 Months Ended

Sep. 30, 2012

Regulatory Agreement [Abstract]

REGULATORY AGREEMENT

(12) REGULATORY AGREEMENT

On April 30, 2010, the Company and the Bank each entered into an informal Memorandum of Understanding (MOU) with its primary regulator at that time, the Office of Thrift Supervision (OTS). On October 11, 2012, the Office of the Comptroller of the Currency terminated the MOU with the Bank. At this time, the MOU between the Company and the Federal Reserve Bank remains in effect.

The Company’s MOU requires us to obtain prior written approval prior to the declaration of a common stock dividend, borrow money from any source and pay a cash dividend to the Bank. The Company may continue to pay other normal operating expenses, and may pay interest on HopFed Capital Trust 1 and dividends on preferred stock held by the United States Department of Treasury without regulatory approval if the Bank maintains a Tier 1 Capital Ratio of 8.00% and a Total Risk Based Capital Ratio of 12.00%. At September 30, 2012, the Company’s Tier 1 Ratio was 12.33% and its Total Risk Based Capital was 22.31%.

The Board of Directors and management of the Company have taken various actions to comply with the terms and conditions of the MOU, and will continue to take all actions believed to be necessary for compliance. The Board and management will continue to work closely with the Federal Reserve in order to comply with the terms and conditions of the MOU.

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Stock Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Stock Compensation [Abstract]

Company's future compensation expense related to restricted stock vesting

Year ending December 31,	Future Expense
2012	$	22,001
2013		73,739
2014		45,760
2015		27,575
2016		7,797
Total	$	176,872

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Loans (Details 9) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Summary of activity of loan performing as troubled debt restructuring
Beginning Balance	$ 6,227	$ 7,998
New TDRs	10,586	6,502
Loss or Foreclosure	698	4,053
Removed due to performance	6,798	4,220
Ending Balance	9,317	6,227
One-to-four family mortgages [Member]
Summary of activity of loan performing as troubled debt restructuring
Beginning Balance	1,111	2,751
New TDRs	146	1,163
Loss or Foreclosure		401
Removed due to performance	705	2,402
Ending Balance	552	1,111
Home equity line of credit [Member]
Summary of activity of loan performing as troubled debt restructuring
Beginning Balance		114
New TDRs	244
Removed due to performance	40	114
Ending Balance	204
Junior lien [Member]
Summary of activity of loan performing as troubled debt restructuring
Beginning Balance	757
New TDRs		757
Removed due to performance	757
Ending Balance		757
Multi-family [Member]
Summary of activity of loan performing as troubled debt restructuring
Beginning Balance		246
New TDRs	239
Loss or Foreclosure		5
Removed due to performance	3	241
Ending Balance	236
Construction [Member]
Summary of activity of loan performing as troubled debt restructuring
Beginning Balance		203
New TDRs	3,145	1,438
Loss or Foreclosure		1,641
Ending Balance	3,145
Land [Member]
Summary of activity of loan performing as troubled debt restructuring
Beginning Balance	941
New TDRs	4,850	1,475
Loss or Foreclosure	233	534
Removed due to performance	757
Ending Balance	4,801	941
Non-residential real estate [Member]
Summary of activity of loan performing as troubled debt restructuring
Beginning Balance	3,366	3,915
New TDRs		1,540
Loss or Foreclosure	453	1,228
Removed due to performance	2,913	861
Ending Balance		3,366
Farmland [Member]
Summary of activity of loan performing as troubled debt restructuring
Beginning Balance
New TDRs	956
Loss or Foreclosure
Removed due to performance	956
Ending Balance
Consumer loans [Member]
Summary of activity of loan performing as troubled debt restructuring
Beginning Balance	32	69
New TDRs	75	27
Loss or Foreclosure	2	9
Removed due to performance	97	55
Ending Balance	8	32
Commercial loans [Member]
Summary of activity of loan performing as troubled debt restructuring
Beginning Balance	20	700
New TDRs	931	102
Loss or Foreclosure	10	235
Removed due to performance	570	547
Ending Balance	$ 371	$ 20

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Loans (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	$ 219,757	$ 235,823
Land & development [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	47,189	52,338
Construction [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	5,933	6,151
Manufacturing [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	3,861	4,172
Professional and Technical [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	2,051	2,300
Retail Trade [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	10,771	12,019
Other Services [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	17,199	17,767
Finance & Insurance [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	375	141
Agricultural, Forestry, Fishing & Hunting [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	38,821	33,473
Real Estate and Rental and Leasing [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	45,771	50,770
Wholesale Trade [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	8,569	6,235
Arts, Entertainment & Recreation [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	3,526	5,309
Accommodations / Food Service [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	23,025	25,255
Healthcare and Social Assistance [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	4,614	10,140
Educational Services [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	25	30
Transportation & Warehousing [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	1,325	1,638
Information [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	2,568	2,646
Non-industry [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	1,089	3,219
Admin Support / Waste Mgmt [Member]
Non-residential real estate loan portfolio
Non-residential real estate loan portfolio, Total	$ 3,045	$ 2,220

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Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Consolidated Condensed Statements of Comprehensive Income (Loss) [Abstract]
Net income	$ 1,075	$ 1,628	$ 2,964	$ 591
Other comprehensive income, net of tax:
Unrealized gain on investment securities available for sale, net of tax effect of ($1,180) and ($2,218) for the three month periods ended September 30, 2012, and September 30, 2011, respectively; and $(2,008) and ($3,801) for the nine month periods ended September 30, 2012, and September 30, 2011, respectively	1,770	4,306	3,897	7,378
Unrealized gain on derivatives, net of tax effect of ($5) and $77 for the three month periods ending September 30, 2012, and September 30, 2011, respectively; and ($26) and $97 for the nine month periods ended September 30, 2012, and September 30, 2011, respectively	10	(149)	50	(188)
Reclassification adjustment for gains included in net income (loss), net of tax effect of $321 and $424 for the three month periods ended September 30, 2012, and September 30, 2011, respectively: and $550 and $781 for the nine month periods ended September 30, 2012, and September 30, 2011, respectively.	(623)	(823)	(1,068)	(1,516)
Comprehensive income	$ 2,232	$ 4,962	$ 5,843	$ 6,265

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Basis of Presentation

9 Months Ended

Sep. 30, 2012

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

(1) BASIS OF PRESENTATION

HopFed Bancorp, Inc. (the “Company”) was formed at the direction of Heritage Bank, formerly 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, and its sole business is that of the converted Bank. The Bank owns 100% of the stock of Fall and Fall Insurance Agency (“Fall & Fall”) of Fulton, Kentucky. Fall & Fall sells life and casualty insurance to both individuals and businesses. The majority of Fall & Fall’s customer base is within the geographic footprint of the Bank.

The Bank operates a mortgage division, Heritage Mortgage Services, in Clarksville, Tennessee with agents located in several of its markets. The Bank has a financial services division, Heritage Solutions, with offices in Murray, Kentucky, Kingston Springs, Tennessee and Pleasant View, Tennessee. Heritage Solutions agents travel throughout western Kentucky and middle Tennessee offering fixed and variable annuities, mutual funds and brokerage services.

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States of America 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 U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for fair representation have been included. The results of operations and other data for the three and nine month periods ended September 30, 2012, are not necessarily indicative of results that may be expected for the entire fiscal year ending December 31, 2012.

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, 2011. The accounting policies followed by the Company are set forth in the Summary of Significant Accounting Policies in the Company’s December 31, 2011, Consolidated Financial Statements.

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Fair Value of Assets and Liabilities (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financial liabilities:
Repurchase agreements	$ 26,800
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]
Financial assets:
Cash and due from banks	50,042	44,389
Interest-earning deposits	7,661	4,371
Financial liabilities:
Deposits	298,496	280,107
Advances from Federal Home Loan Bank		3,000
Repurchase agreements	26,799	27,080
Off-balance sheet liabilities:
Commitments to extend credit
Commercial letters of credit
Significant Other Observable Inputs (Level 2) [Member]
Financial assets:
Securities available for sale	347,455	382,789
Federal Home Loan Bank stock	4,428	4,428
Commercial real estate held for sale	2,763
Accrued interest receivable	5,333	6,183
Bank owned life insurance	9,373	9,135
Financial liabilities:
Deposits	481,710	531,308
Advances from Federal Home Loan Bank	48,655	66,287
Repurchase agreements	17,453	17,889
Off-balance sheet liabilities:
Commitments to extend credit
Commercial letters of credit
Market value of interest rate swap	1,220	1,297
Significant Unobservable Inputs (Level 3) [Member]
Financial assets:
Securities available for sale	1,422	993
Loans receivable	573,132	585,734
Financial liabilities:
Advances from borrowers for taxes and insurance	633	153
Subordinated debentures	10,099	10,099
Off-balance sheet liabilities:
Commitments to extend credit
Commercial letters of credit
Carrying Amount [Member]
Financial assets:
Cash and due from banks	50,042	44,389
Interest-earning deposits	7,661	4,371
Securities available for sale	348,877	383,782
Federal Home Loan Bank stock	4,428	4,428
Commercial real estate held for sale	2,763
Loans receivable	539,503	556,360
Accrued interest receivable	5,333	6,183
Bank owned life insurance	9,373	9,135
Financial liabilities:
Deposits	769,256	800,095
Advances from borrowers for taxes and insurance	639	153
Advances from Federal Home Loan Bank	44,222	63,319
Repurchase agreements	42,799	43,080
Subordinated debentures	10,310	10,310
Off-balance sheet liabilities:
Commitments to extend credit
Commercial letters of credit
Market value of interest rate swap	1,220	1,297
Estimated Fair Value [Member]
Financial assets:
Cash and due from banks	50,042	44,389
Interest-earning deposits	7,661	4,371
Securities available for sale	348,877	383,782
Federal Home Loan Bank stock	4,428	4,428
Commercial real estate held for sale	2,763
Loans receivable	573,132	585,734
Accrued interest receivable	5,333	6,183
Bank owned life insurance	9,373	9,135
Financial liabilities:
Deposits	780,206	811,415
Advances from borrowers for taxes and insurance	639	153
Advances from Federal Home Loan Bank	48,655	69,206
Repurchase agreements	44,252	44,969
Subordinated debentures	10,099	10,099
Off-balance sheet liabilities:
Commitments to extend credit
Commercial letters of credit
Market value of interest rate swap	$ 1,220	$ 1,297

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Securities (Tables)

9 Months Ended

Sep. 30, 2012

Securities [Abstract]

Amortized cost of securities and their estimated fair values

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Restricted:
FHLB stock	$	4,428		—		—			4,428
Unrestricted:
U.S. government and agency securities:
Agency debt securities	$	148,554		5,052		(15	)		153,591
Tax free municipal bonds		62,930		5,958		—			68,888
Taxable municipal bonds		11,647		1,348		(11	)		12,984
Trust preferred securities		2,000		—		(578	)		1,422
Mortgage-backed securities:
GNMA		20,459		1,436		(3	)		21,892
FNMA		60,060		2,809		—			62,869
FHLMC		5,115		202		—			5,317
NON-AGENCY CMOs		5,419		69		—			5,488
AGENCY CMOs		15,950		488		(12	)		16,426
	$	332,134		17,362		(619	)		348,877

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
			(Dollars in Thousands)
Restricted:
FHLB stock	$	4,428		—		—			4,428
Unrestricted:
U.S. government and agency securities:	$	171,141		3,511		(65	)		174,587
Tax free municipal bonds		60,432		4,623		—			65,055
Taxable municipal bonds		12,846		1,059		—			13,905
Trust preferred securities		2,000		—		(1,007	)		993
Mortgage-backed securities:
GNMA		30,427		1,413		(19	)		31,821
FNMA		59,195		2,101		(1	)		61,295
FHLMC		15,108		491		—			15,599
NON-AGENCY CMOs		2,012		7		(223	)		1,796
AGENCY CMOs		18,163		568		—			18,731
	$	371,324		13,773		(1,315	)		383,782

Maturities of debt securities available for sale

September 30, 2012	Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Due within one year	$	535	$	538
Due in one to five years		10,095		10,311
Due in five to ten years		23,790		26,033
Due in more than ten years		52,381		56,826
		86,801		93,708
Amortizing agency bonds		138,330		143,177
Mortgage-backed securities		107,003		111,992
Total debt securities available for sale	$	332,134	$	348,877

December 31, 2011	Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Due within one year	$	461		464
Due in one to five years		6,844		6,929
Due in five to ten years		24,471		26,153
Due after ten years		72,460		75,804
		104,236		109,350
Amortizing agency bonds		142,183		145,190
Mortgage-backed securities		124,905		129,242
Total debt securities available for sale	$	371,324		383,782

Estimated fair value and unrealized loss amounts of temporarily impaired investments

	Less than 12 months					12 months or longer					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale
U.S. government and agency securities:
Agency debt securities	$	6,674		(15	)		—		—			6,674		(15	)
Taxable municipals		862		(11	)		—		—			862		(11	)
Tax free municipals		—		—			—		—			—		—
Trust preferred securities		—		—			1,422		(578	)		1,422		(578	)
Mortgage-backed securities:
GNMA		—		—			1,565		(3	)		1,565		(3	)
FNMA		—		—			—		—			—		—
FHLMC		—		—			—		—			—		—
NON-AGENCY CMOs		—		—			—		—			—		—
AGENCY CMOs		1,860		(12	)		—		—			1,860		(12	)
Total Available for Sale	$	9,396		(38	)		2,987		(581	)		12,383		(619	)

	Less than 12 months					12 months or longer					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in Thousands)
Available for sale
U.S. government and agency securities:
Agency debt securities	$	20,422		(54	)		2,007		(11	)		22,429		(65	)
Taxable municipal bonds		—		—			—		—			—		—
Tax free municipal bonds		—		—			—		—			—		—
Trust preferred securities		—		—			993		(1,007	)		993		(1,007	)
Mortgage-backed securities:
GNMA		1,925		(19	)		—		—			1,925		(19	)
FNMA		—		—			81		(1	)		81		(1	)
FHLMC		—		—			—		—			—		—
NON-AGENCY CMOs		—		—			1,494		(223	)		1,494		(223	)
AGENCY CMOs		—		—			—		—			—		—
Total Available for Sale	$	22,347		(73	)		4,575		(1,242	)		26,922		(1,315	)

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Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Estimated fair value and unrealized loss amounts of temporarily impaired investments
Estimated Fair Value, Less than 12 months	$ 9,396	$ 22,347
Unrealized Losses, Less than 12 months	(38)	(73)
Estimated fair value, 12 months or longer	2,987	4,575
Unrealized losses, 12 months or longer	(581)	(1,242)
Estimated fair value	12,383	26,922
Unrealized losses	(619)	(1,315)
Agency debt securities [Member] | U.S. government and agency securities [Member]
Estimated fair value and unrealized loss amounts of temporarily impaired investments
Estimated Fair Value, Less than 12 months	6,674	20,422
Unrealized Losses, Less than 12 months	(15)	(54)
Estimated fair value, 12 months or longer		2,007
Unrealized losses, 12 months or longer		(11)
Estimated fair value	6,674	22,429
Unrealized losses	(15)	(65)
Taxable municipals [Member] | U.S. government and agency securities [Member]
Estimated fair value and unrealized loss amounts of temporarily impaired investments
Estimated Fair Value, Less than 12 months	862
Unrealized Losses, Less than 12 months	(11)
Estimated fair value, 12 months or longer
Unrealized losses, 12 months or longer
Estimated fair value	862
Unrealized losses	(11)
Tax free municipals [Member] | U.S. government and agency securities [Member]
Estimated fair value and unrealized loss amounts of temporarily impaired investments
Estimated Fair Value, Less than 12 months
Unrealized Losses, Less than 12 months
Estimated fair value, 12 months or longer
Unrealized losses, 12 months or longer
Estimated fair value
Unrealized losses
Trust preferred securities [Member] | U.S. government and agency securities [Member]
Estimated fair value and unrealized loss amounts of temporarily impaired investments
Estimated fair value, 12 months or longer	1,422	993
Unrealized losses, 12 months or longer	(578)	(1,007)
Estimated fair value	1,422	993
Unrealized losses	(578)	(1,007)
GNMA [Member] | Mortgage-backed securities [Member]
Estimated fair value and unrealized loss amounts of temporarily impaired investments
Estimated Fair Value, Less than 12 months		1,925
Unrealized Losses, Less than 12 months		(19)
Estimated fair value, 12 months or longer	1,565
Unrealized losses, 12 months or longer	(3)
Estimated fair value	1,565	1,925
Unrealized losses	(3)	(19)
FNMA [Member] | Mortgage-backed securities [Member]
Estimated fair value and unrealized loss amounts of temporarily impaired investments
Estimated Fair Value, Less than 12 months
Unrealized Losses, Less than 12 months
Estimated fair value, 12 months or longer		81
Unrealized losses, 12 months or longer		(1)
Estimated fair value		81
Unrealized losses		(1)
FHLMC [Member] | Mortgage-backed securities [Member]
Estimated fair value and unrealized loss amounts of temporarily impaired investments
Estimated Fair Value, Less than 12 months
Unrealized Losses, Less than 12 months
Estimated fair value, 12 months or longer
Unrealized losses, 12 months or longer
Estimated fair value
Unrealized losses
NON-AGENCY CMOs [Member] | Mortgage-backed securities [Member]
Estimated fair value and unrealized loss amounts of temporarily impaired investments
Estimated Fair Value, Less than 12 months
Unrealized Losses, Less than 12 months
Estimated fair value, 12 months or longer		1,494
Unrealized losses, 12 months or longer		(223)
Estimated fair value		1,494
Unrealized losses		(223)
AGENCY CMOs [Member] | Mortgage-backed securities [Member]
Estimated fair value and unrealized loss amounts of temporarily impaired investments
Estimated Fair Value, Less than 12 months	1,860
Unrealized Losses, Less than 12 months	(12)
Estimated fair value, 12 months or longer
Unrealized losses, 12 months or longer
Estimated fair value	1,860
Unrealized losses	$ (12)

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Derivative Instruments

9 Months Ended

Sep. 30, 2012

Derivative Instruments [Abstract]

DERIVATIVE INSTRUMENTS

(11) DERIVATIVE INSTRUMENTS

Under guidelines of Financial Accounting Standards Board (“FASB”) ASC 815, Derivative and Hedging Activities, as amended, all derivative instruments are required to be carried at fair value on the consolidated statement of financial position. ASC 815 provides special hedge accounting provisions, which permit the change in fair value of the hedge item related to the risk being hedged to be recognized in earnings in the same period and in the same income statement line as the change in the fair value of the derivative.

A derivative instrument designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset, liability or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges under ASC 815. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Cash value hedges are accounted for by recording the fair value of the derivative instrument and the fair value related to the risk being hedged of the hedged asset or liability on the consolidated statement of financial position with corresponding offsets recorded in the consolidated statement of financial position.

The adjustment to the hedged asset or liability is included in the basis of the hedged item, while the fair value of the derivative is recorded as a freestanding asset or liability. Actual cash receipts or payments and related amounts accrued during the period on derivatives included in a fair value hedge relationship are recorded as adjustments to the income or expense recorded on the hedged asset or liability.

Under both the fair value and cash flow hedge methods, derivative gains and losses not effective in hedging the change in fair value or expected cash flows of the hedged item are recognized immediately in the income statement. At the hedge’s inception and at least quarterly thereafter, a formal assessment is performed to determine whether changes in the fair values or cash flows of the derivative instrument has been highly effective in offsetting changes in the fair values or cash flows of the hedged items and whether they are expected to be highly effective in the future. If it is determined a derivative instrument has not been, or will not continue to be highly effective as a hedge, hedged accounting is discontinued. ASC 815 basis adjustments recorded on hedged assets and liabilities are amortized over the remaining life of the hedged item beginning no later than when hedge accounting ceases. There were no fair value hedging gains or losses, as a result of hedge ineffectiveness, recognized for the three and nine month periods ended September 30, 2012, or the year ended December 31, 2011.

In October of 2008, the Bank entered into an interest rate swap agreement for a term of seven years and an amount of $10.0 million. The Bank will pay a fixed rate of 7.27% for seven years and receive an amount equal to the three-month London Interbank Lending Rate (LIBOR) plus 3.10%. The interest rate swap is classified as a cash flow hedge by the Bank and will be tested quarterly for effectiveness. At September 30, 2012, and December 31, 2011, the cost of the Bank to terminate the cash flow hedge was approximately $1,220,000 and $1,297,000, respectively.