10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

Commission file number 000-23667

HOPFED BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware	61-1322555
(State of jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
4155 Lafayette Road, Hopkinsville, KY	42240
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (270) 885-1171.

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.01 per share

(Title of Class)

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒

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 90 days.    YES  ☒    NO  ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (subsection 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. (as defined in Rule 12b-2 of the Act).

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller Reporting Company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

The registrant’s voting stock is traded on the NASDAQ Stock Market. The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the price ($14.33 per share) at which the stock was sold on June 30, 2017, was approximately $92,177,023. For purposes of this calculation, the term “affiliate” refers to all executive officers and directors of the registrant and all stockholders beneficially owning more than 10% of the registrant’s Common Stock.

As of the close of business on March 6, 2018, 6,635,945 shares of the registrant’s Common Stock were outstanding.

Documents Incorporated By Reference

Part II:

Annual Report to Stockholders for the year ended December 31, 2017.

Part III:

Portions of the definitive proxy statement for the 2018 Annual Meeting of Stockholders.

PART I

ITEM 1. BUSINESS

HopFed Bancorp, Inc.

HopFed Bancorp, Inc. (the “Corporation”) is a bank holding company which incorporated in the state of Delaware and headquartered in Hopkinsville, Kentucky. The Corporation’s principal business activities are conducted through its wholly-owned subsidiary, Heritage Bank USA, Inc. (the “Bank”), a Kentucky state chartered commercial bank engaged in the business of accepting deposits and providing mortgage, consumer, construction and commercial loans to the general public through its retail banking offices. The Bank’s business activities are primarily limited to western Kentucky and middle and western Tennessee. The Bank is subject to competition from other financial institutions. Deposits at the Bank are insured up to the applicable limits by the Federal Deposit Insurance Corporation (FDIC).

The Bank is a Kentucky commercial chartered bank and is supervised by the Kentucky Department of Financial Institutions (“KDFI”) and the FDIC. Supervision of the Corporation is conducted by the Federal Reserve Bank of Saint Louis (“FED”).

The Bank owns JBMM, LLC, a wholly owned limited liability company which owns and manages the Bank’s foreclosed assets. The Bank owns Heritage Interim Corporation, a Tennessee corporation established to facilitate the acquisition of a bank in Tennessee. The proposed acquisition was terminated in August of 2013. The Bank owns Heritage USA Title, LLC, which sells title insurance to the Bank’s real estate loan customers.

The Bank owns Fort Webb LP, LLC, which owns a limited partnership interest in Fort Webb Elderly Housing LP, LLC, a low income senior citizen housing facility in Bowling Green, Kentucky. The facility offers apartments for rent for those senior citizens who qualify and is managed by the Bowling Green, Kentucky Housing Authority.

A substantial portion of the Bank’s loans are secured by real estate in the western Kentucky and middle and west Tennessee markets. In addition, foreclosed real estate is located in this same market. Accordingly, the ultimate ability to collect on a substantial portion of the Bank’s loan portfolio and the recovery of a substantial portion of the carrying amount of foreclosed real estate is susceptible to changes in local market conditions.

Stock Repurchase Activity

At December 31, 2017, the Company may purchase 300,000 shares of treasury stock under the currently active repurchase program. For the year ended December 31, 2017, the Company purchased 92,224 shares of common stock at a weighted average price of $14.19 per share. At December 31, 2017, the Company owns 1,338,620 shares of the Company’s common stock as treasury stock at a weighted average price of $12.44 per share.    

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2015 HopFed Bancorp, Inc. Employee Stock Ownership Plan

On March 2, 2015, the Company implemented the HopFed Bancorp, Inc. 2015 Employee Stock Ownership Plan (the “ESOP”) which covers substantially all employees who are at least 21 years old with at least one year of employment with the Company and/or the Bank. Bank contributions to the ESOP replaced matching and profit sharing contributions to the Heritage Bank 401(k) Plan sponsored by the Bank. All employees of the Company and its subsidiaries meeting the required service requirements participate in the ESOP. The Company’s Board of Directors selected three individuals to serve as trustees.

On March 2, 2015, the ESOP purchased an initial block of 600,000 shares from the Company at a cost of $7,884,000 using the proceeds of the ESOP Loan. In accordance with the ESOP loan documents, the common stock purchased by the ESOP serves as collateral for the ESOP loan. The repayment of the ESOP loan is from discretionary contributions by the Bank to the ESOP and by dividends paid on unearned shares held in the trust over a period ending no later than December 9, 2026. The interest rate on the ESOP Loan is 3.0%. The administrative trustee has custody of the common shares owned by the ESOP. ESOP shares are allocated among participants as the ESOP loan is repaid. The ESOP shares receive dividend payments and dividends on unearned shares are used to make the ESOP loan payment. For the years ended December 31, 2017 and December 31, 2016, the Company incurred compensation expense of $706,000 and $553,000, respectively, to fund the ESOP loan payment. For the years ended December 31, 2017 and December 31, 2016, the Company’s ESOP released 63,798 and 48,067 shares of stock, respectively, to individual employees participating in the plan at December 31, 2017 and December 31, 2016, respectively.

Federal Taxation

The Corporation and the Bank file a consolidated federal income tax return on a calendar year basis. The Company is subject to the federal tax laws and regulations that apply to corporations generally.

Kentucky Taxation

Kentucky corporations, such as the Corporation, are subject to the Kentucky corporation income tax and the Kentucky corporation license (‘franchise”) tax. The income tax is imposed based on the following rates: 4% of the first $50,000 of net taxable income allocated or apportioned to Kentucky; 5% of the next $50,000; and 6% of taxable net income over $100,000. All dividend income received by a corporation is excluded for purposes of arriving at taxable net income.

Tennessee Taxation

The Company and all subsidiaries are subject to Tennessee Franchise and Excise tax on apportioned capital and apportioned income.

Heritage Bank USA, Inc.

State banks are not subject to the Kentucky corporation tax.

The Commonwealth of Kentucky imposes both a “Kentucky Bank Franchise Tax” and “Local Deposits Franchise Tax”. The Kentucky Bank Franchise Tax is an annual tax equal to 1.1% of net capital after apportionment, if applicable. The value of the net capital is calculated annually by deducting from total capital an amount equal to the same percentage of total as the book value of Unites States obligations bears to the book value of the total assets of the financial institution. The Bank, as a financial institution, is exempt from both corporate income and license taxes.

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Competition

The Bank faces significant competition both in originating mortgage and other loans and in attracting deposits. The Bank competes for loans principally on the basis of interest rates, the types of loans it originates, the deposit products it offers and the quality of services it provides to borrowers. The Bank also competes by offering products which are tailored to the local community. Its competition in originating real estate loans comes primarily from other savings institutions, commercial banks and mortgage bankers making loans secured by real estate located in the Bank’s market area. Commercial banks, credit unions and finance companies provide vigorous competition in consumer lending. Competition may increase as a result of the continuing reduction of restrictions on the interstate operations of financial institutions.

At June 30, 2017, the Bank had an 11.6% share of the deposit market in its combined markets. The Bank’s most significant competition for deposits across its entire market area was Community Financial Services Bank with a deposit rate share of 11.4% and Planters Bank of Kentucky with a deposit market share of 10.3%. At June 30, 2017, U.S. Bank N/A held a deposit market share of 8.1%, Branch Bank & Trust of North Carolina and Regions Bank of Birmingham, Alabama each held a market share rate of 6.8%, respectively. In addition, each market contains other community banks that provide competitive products and services within individual markets.

Employees

As of December 31, 2017, the Company and the Bank had 229 full-time equivalent employees, none of whom are represented by a collective bargaining agreement. Management considers the Bank’s relationships with its employees to be good.

Executive Officers of the Registrant

John E. Peck. Mr. Peck has served as President and Chief Executive Officer of both the Company and the Bank since July 2000. Prior to that, Mr. Peck was President and Chief Executive Officer of United Commonwealth Bank and President of Firstar Bank-Calloway County. Mr. Peck was a past Board Member and Chairman of the Christian County Chamber of Commerce, Jennie Stuart Hospital and Murray-Calloway County Hospital. Mr. Peck holds a Bachelor of Science of Business Administration with a concentration in Finance from the University of Louisville. Mr. Peck is a graduate of the Louisiana State University School of Banking. Mr. Peck is a member and serves on the finance committee of the First Baptist Church of Hopkinsville.

Michael L. Woolfolk. Mr. Woolfolk has served as Executive Vice President and Chief Operations Officer of the Bank since August 2000. Mr. Woolfolk was appointed to the Board of Directors of the Company on August 15, 2012. Prior to that, he was President of First-Star Bank-Marshall County, President and Chief Executive Officer of Bank of Marshall County and President of Mercantile Bank. Mr. Woolfolk is a member of First Baptist Church of Hopkinsville.

Billy C. Duvall. Mr. Duvall has served as Senior Vice President, Chief Financial Officer and Treasurer of the Company and the Bank since June 1, 2001. Prior to that, he was an Auditor with Rayburn, Betts & Bates, P.C., independent public accountants and nine years as a Principal Examiner with the National Credit Union Administration. Mr. Duvall holds a Bachelor of Business Administration from Austin Peay State University in Accounting and Finance. Mr. Duvall is a Certified Public Accountant of Virginia. Mr. Duvall is the past Board Chairman for the Pennyroyal Mental Health Center, a member of the Hopkinsville Kiwanis Club, and a member of Southside Church of Christ in Hopkinsville.

Keith Bennett. Mr. Bennett has served as Montgomery County, Tennessee Market President for the Bank since November 2005. Prior to that, Mr. Bennett was Vice President of Commercial Lending for Farmers and Merchants Bank and First Federal Savings and Loan, both of Clarksville, Tennessee. Mr. Bennett served seven years as a field examiner with the Office of Thrift Supervision. Mr. Bennett holds a Bachelor of Business Administration in Accounting from the University of Tennessee at Martin.

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Bailey “Chip” Knight. Mr. Knight was promoted to Chief Credit Officer on January 15, 2016. Mr. Knight has served as a Market President and Senior Lender of the Company since April 2, 2012. In his position as Market President, Mr. Knight was responsible for all retail and lending functions in the three office Cheatham County, Tennessee market. As Senior Lender, Mr. Knight’s responsibilities included relationships with the Company’s largest commercial lending clients as well as assisting other commercial loan officers in the calling and structuring of loan agreements. Prior to April 2012, Mr. Knight was the Regional Executive and Team Lead with Capital Bank and GreenBank, where he was responsible for all retail and lending functions in eight offices located in Northern Middle Tennessee. Mr. Knight has over 25 years of commercial banking experience, all in Middle Tennessee and is a lifelong resident of Montgomery County, Tennessee.

Limitations on Capital Distributions. The Federal Reserve Bank (FRB) has issued a policy statement on the payment of cash dividends by bank holding companies, which provides that a bank holding company should pay cash dividends only to the extent that the holding company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the holding company’s capital needs, asset quality and overall financial condition. The FRB also indicated that it would be inappropriate for a company experiencing serious financial problems to borrow funds to pay dividends. In a recent Supervisory Letter, the FRB staff has stated that, as a general matter, bank holding companies should eliminate cash dividends if net income available to shareholders for the past four quarters, net of dividends previously paid, is not sufficient to fully fund the dividend. Furthermore, under the federal prompt corrective action regulations, the FRB may prohibit a bank holding company from paying any dividends if the holding company’s bank subsidiary is classified as “undercapitalized.”

Seasonality of Revenues and Expenses

The Company’s business is not materially affected by seasonality fluctuations in our business cycle. The Company’s financial health is substantially affected by the overall business cycle and market interest rates.

Supervision and Regulation

Set forth below is a brief description of certain laws that relate to the regulation of the Company and the Bank. The description does not purport to be complete and is qualified in its entirety by reference to applicable laws and regulations.

Regulation of the Company

General. The Company is a bank holding company registered with the FRB. We are subject to examination and supervision by the FRB pursuant to the Bank Holding Company Act of 1956, as amended (the “BHCA”), and are required to file reports and other information regarding our business operations and the business operations of our subsidiaries with the FRB.

Under the BHCA, the Company must obtain the prior approval of the FRB before it may acquire control of another bank or bank holding company, merge or consolidate with another bank holding company, acquire all or substantially all of the assets of another bank or bank holding company, or acquire direct or indirect ownership or control of any voting shares of any bank or bank holding company if, after such acquisition, the Company would directly or indirectly own or control more than 5% of such shares.

Non-Banking Activities. In general, the BHCA and the FRB’s regulations limit the nonbanking activities permissible for bank holding companies to those activities that the FRB has determined to be so closely related to banking or managing or controlling banks to be a proper incident thereto. A bank holding company that elects to be treated as a financial holding company, however, may engage in, and acquire companies engaged in, activities that are considered “financial in nature,” as defined by the Gramm-Leach-Bliley Act and FRB regulations. These activities include, among other things, securities underwriting, dealing and market-making, sponsoring mutual funds and investment companies, insurance underwriting and agency activities, and merchant banking.

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General. A bank holding company is required to serve as a source of financial and managerial strength to its subsidiary banks and may not conduct its operations in an unsafe or unsound manner. In addition, it is the policy of the FRB that a bank holding company should stand ready to use available resources to provide adequate capital to its subsidiary banks during periods of financial stress or adversity and should maintain the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks. A bank holding company’s failure to meet its obligations to serve as a source of strength to its subsidiary banks will generally be considered by the FRB to be an unsafe and unsound banking practice or a violation of the FRB regulations, or both.

Regulatory Capital Requirements. The FRB has adopted regulatory capital regulations pursuant to which it assesses the adequacy of capital in examining and supervising a bank holding company and in analyzing applications to it under the BHCA. The Federal Reserve’s regulatory capital requirements are similar to those imposed on the Bank by the FDIC. See “Regulation of the Bank – Regulatory Capital Requirements.” The FRB, however, has adopted a policy statement that exempts bank holding companies with less than $1.0 billion in consolidated assets that are not engaged in significant non-banking or off-balance sheet activities and that do not have a material amount of debt or equity securities registered with the SEC from its regulatory capital requirements. As long as their bank subsidiaries are well capitalized, such bank holding companies need only maintain a pro forma debt to equity ratio of less than 1.0 in order to pay dividends and repurchase stock and to be eligible for expedited treatment on applications.

Regulation of the Bank

General. As a Kentucky-chartered commercial bank, the Bank is subject to regulation, supervision and examination by the Kentucky Department of Financial Institutions (“KDFI”) and by the Federal Deposit Insurance Corporation (“FDIC”), which insures its deposits to the maximum extent permitted by law. The federal and state laws and regulations applicable to banks regulate, among other things, the scope of their business, their investments, the reserves required to be kept against deposits, the timing of the availability of deposited funds and the nature and amount of and collateral for certain loans. The laws and regulations governing the Bank generally have been promulgated to protect depositors and not for the purpose of protecting stockholders. This regulatory structure also gives the federal and state banking agencies extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. Any change in such regulation, whether by the KDFI, the FDIC or the United States Congress, could have a material impact on the Company, the Bank and their operations.

Regulatory Capital Requirements. The FDIC has promulgated capital adequacy requirements for state-chartered banks that, like the Bank, are not members of the Federal Reserve System. Effective January 1, 2015, the regulatory capital rules were substantially revised to conform to the international regulatory standards agreed to by the Basel Committee on Banking Supervision in the accord often referred to as “Basel III”. The final Basel III capital rule applies to all depository institutions as well as to all top-tier bank and savings and loan holding companies that are not subject to the FRB’s Small Bank Holding Company Policy Statement.

Under the FDIC’s revised regulatory capital regulations, the Bank is required to meet four minimum capital standards: (1) a “Tier 1” or “core” capital leverage ratio equal to at least 4% of total adjusted assets, (2) a common equity Tier 1 (“CET1”) capital ratio equal to 4.5% of risk-weighted assets, (3) a Tier 1 risk-based ratio equal to 6% of risk-weighted assets, and (4) a total capital ratio equal to 8% of total risk-weighted assets. CET1 capital is defined as common stock instruments, retained earnings, any common equity Tier 1 minority interest and, unless an institution has made an “opt-out” election, accumulated other comprehensive income, net of goodwill and certain other intangible assets. Tier 1 or core capital is defined as CET1 capital plus certain qualifying subordinated interests and grandfathered capital instruments. The Bank and Corporation made the opt-out election.

Total capital consists of Tier 1 capital plus Tier 2 or supplementary capital items, which include allowances for loan losses in an amount of up to 1.25% of risk-weighted assets, qualifying subordinated instruments and certain grandfathered capital instruments. An institution’s risk-based capital requirements are measured against risk-weighted assets, which equal the sum of each on-balance-sheet asset and the credit-equivalent amount of each off-balance-sheet item after being multiplied by an assigned risk weight.

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In addition to higher capital requirements, the Basel III capital rule requires banking organizations to maintain a capital conservation buffer of at least 2.5% of risk-weighted assets over and above the minimum risk-based capital requirements. Institutions that do not maintain the required capital buffer will become subject to progressively more stringent limitations on the percentage of earnings that can be paid out in dividends or used for stock repurchases and on the payment of discretionary bonuses to senior executive management. The capital buffer requirement will be phased in over four years beginning January 1, 2016. The fully phased-in capital buffer requirement will effectively raise the minimum required risk-based capital ratios to 7% CET1 capital, 8.5% Tier 1 capital and 10.5% total capital on a fully phased-in basis. The capital conservation buffer at December 31, 2017 is 1.25%.

In assessing an institution’s capital adequacy, the FDIC takes into consideration not only the above numeric factors but also qualitative factors, and has the authority to establish higher capital requirements for individual institutions where necessary.

Prompt Correction Action. Under applicable Federal statute, the federal bank regulatory agencies are required to take “prompt corrective action” with respect to institutions that do not meet specified minimum capital requirements. Under the FDIC’s prompt corrective action regulations, as amended to incorporate the new regulatory capital standards implemented by the final Basel III capital rule, an institution is deemed to be “well-capitalized” if it has a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a Tier 1 leverage ratio of 5% or greater, and a CET1 risk-based ratio of 6.5% or greater and is not subject to a regulatory order, agreement, or directive to meet and maintain a specific capital level for any capital measure. An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital ratio of 6% or greater, a Tier 1 leverage ratio of 4% or greater, and a CET1 risk-based ratio of 4.5% or greater and the institution does not meet the definition of a “well-capitalized” institution. An institution is “under-capitalized” if it does not meet one or more of the “adequately-capitalized” tests. An institution is deemed to be “significantly under-capitalized” if it has a total risk-based capital ratio that is less than 6%, a Tier 1 risk-based capital ratio that is less than 4%, a Tier 1 leverage ratio that is less than 3%, or a CET1 risk-based ratio of less than 3%. An institution is deemed to be “critically under-capitalized” if it has a ratio of tangible equity, as defined in the regulations, to total assets that is equal to or less than 2%.

The prompt corrective action regulations provide for the imposition of a variety of requirements and limitations on institutions that fail to meet the above capital requirements. In particular, the FDIC may require any savings institution that is not “adequately capitalized” to take certain action to increase its capital ratios. If the savings institution’s capital is significantly below the minimum required levels of capital or if it is unsuccessful in increasing its capital ratios, the institution’s activities may be restricted

Deposit Insurance. The Bank’s deposits are insured to applicable limits by the FDIC. Under the Dodd-Frank Act, the maximum deposit insurance amount is $250,000. The Dodd-Frank Act increased the minimum target Deposit Insurance Fund ratio from 1.15% of estimated insured deposits to 1.35% of estimated insured deposits. The FDIC must seek to achieve the 1.35% ratio by June 30, 2020. It is intended that insured institutions with assets of $10 billion or more will fund the increase.

The FDIC has adopted a risk-based premium system that provides for quarterly assessments based on an insured institution’s risk rating. The assessment base is the institution’s average consolidated assets less average tangible equity. Prior to July 1, 2016, insured institutions were assigned to one of four risk categories based on their examination ratings and capital ratios, and annual assessment rates ranged from 2.5 to 45 basis points of an insured institution’s assessment base.

Effective July 1, 2016, the FDIC amended its assessment regulations for banks with less than $10 billion in assets to replace the previous risk categories with updated financial ratios that are designed to better predict the risk of failure of insured institutions. The amended rules became effective during the first quarter after the reserve ratio of the Deposit Insurance Fund reached 1.15% and will remain in effect until the reserve ratio reaches 2.0%.

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The base deposit insurance rates for institutions with assets of less than $10 billion now range from 1.5 to 30 basis points of an institution’s assessment base. Under the amended rules, the FDIC uses an institution’s weighted average CAMELS component ratings and the following financial measures to determine deposit insurance assessments: Tier 1 leverage ratio; ratio of net income before taxes to total assets; ratio of non-performing loans to gross assets; and ratio of other real estate owned to gross assets. In addition, assessments take into consideration an institution’s brokered deposit ratio, one-year asset growth and a loan mix index, which measures the extent to which an institution’s total assets include higher risk loans.

Assessments are based on an insured institution’s classification among four risk categories determined from their examination ratings and capital and other financial ratios. The institution is assigned to a category and the category determines its assessment rate, subject to certain specified risk adjustments.

Insured institutions deemed to pose less risk to the deposit insurance fund pay lower assessments, while greater risk institutions pay higher assessments. In February 2011, the FDIC published a final rule under the Dodd-Frank Act to reform the deposit insurance assessment system. Under such final rule, assessments are based on an institution’s average consolidated total assets minus average tangible equity instead of deposits, which was the FDIC’s prior practice. The rule revised the assessment rate schedule to establish assessments ranging from 2.5 to 45 basis points, based on an institution’s risk classification and possible risk adjustments. The FDIC has authority to increase insurance assessments. Any significant increases would have an adverse effect on the operating expenses and results of operations of the Bank. Management cannot predict what assessment rates will be in the future.

Dividends. The KDFI limits the amount of dividends that can be paid by a state chartered commercial bank to its holding company. The limit is established by adding the current year’s net income plus the prior two years net income. The Bank must reduce the amount of accumulated net income over the last two years plus the current year by the amount of dividends paid to the Corporation during the same period of time. At January 1, 2018, the Bank could pay an additional cash dividend of approximately $3.7 million to the Corporation without the prior approval of the KDFI.

Future earnings of the Bank appropriated to bad debt reserves and deducted for federal income tax purposes are not available for payment of dividends or other distributions to the Company without payment of taxes at the then current tax rate by the Bank on the amount of earnings removed from the reserves for such distributions.

Transactions with Affiliates and Insiders. Generally, transactions between commercial banks or its subsidiaries and its affiliates are required to be on terms as favorable to the commercial bank as transactions with non-affiliates. In addition, certain of these transactions, such as loans to an affiliate, are restricted to a percentage of the savings bank’s capital. Affiliates of the Bank include the Company and any company that is under common control with the Bank. In addition, a commercial bank may not acquire the securities of most affiliates. The KDFI and FDIC have the discretion to treat subsidiaries of commercial banks as affiliates on a case-by-case basis.

Certain transactions with directors, officers or controlling persons are also subject to conflict of interest regulations enforced by the KDFI and FDIC. These conflict of interest regulations and other statutes also impose restrictions on loans to such persons and their related interests. Among other things, such loans must generally be made on terms that are substantially the same as for loans to unaffiliated individuals.

Reserve Requirements. Pursuant to regulations of the FRB, all FDIC-insured depository institutions must maintain average daily reserves at specified levels against their transaction accounts. The Bank met these reserve requirements at December 31, 2017.

Federal Home Loan Bank System. The Federal Home Loan Bank System consists of 12 district Federal Home Loan Banks subject to supervision and regulation by the Federal Housing Finance Board (“FHFB”). The Federal Home Loan Banks provide a central credit facility primarily for member institutions. As a member of the FHLB, the Bank is required to acquire and hold shares of capital stock in the FHLB in an amount at least equal to 1% of the aggregate unpaid principal of its home mortgage loans, home purchase contracts, and similar obligations at the beginning of each year, or 5% of its advances (borrowings) from the FHLB, whichever is greater. The Bank was in compliance with this requirement, with a $4.4 million investment in FHLB stock at December 31, 2017.

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Bank Secrecy Act. The Bank Secrecy Act (“BSA”), as amended by the USA Patriot Act of 2001 and its related regulations, requires insured depository institutions to have policies, procedures, and controls to detect, prevent, and report money laundering and terrorist financing. The statute and regulations also provide for information sharing, subject to conditions, between federal law enforcement agencies and financial institutions, as well as among financial institutions, for counter-terrorism purposes. Federal banking regulators are required, when reviewing bank holding company acquisition and bank merger applications, to take into account the effectiveness of the anti-money laundering activities of the applicants. The bank regulatory agencies have increased the regulatory scrutiny of BSA and anti-money laundering programs maintained by financial institutions. Significant penalties and fines, as well as other supervisory enforcement action, may be imposed on a financial institution for non-compliance with these requirements.

Consumer Protection Laws. In connection with our deposit-taking lending and other activities, the Bank is subject to a number of federal and state laws designed to protect consumers and promote lending and other financial services to various sectors of the economy and population. The Consumer Financial Protection Bureau issues regulations and standards under these federal consumer protection laws, which include, among others, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Electronic Fund Transfer Act, the Truth in Savings Act, and the Fair Credit Reporting Act. The Bank is examined by the FDIC for compliance with these consumer protection rules.

In addition, customer privacy statutes and regulations limit the ability of the Bank to disclose nonpublic consumer information to non-affiliated third-parties. These laws require the Bank to provide notice to our customers regarding privacy policies and practices and to give our customers an option to prevent the Company from sharing their non-public personal information with non-affiliated third parties or with our affiliates.

Community Reinvestment Act. All insured depository institutions have a responsibility under the Community Reinvestment Act (the “CRA”) and related federal regulations to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. In connection with its examination of the Bank, the FDIC is required to assess our record of compliance with the CRA. Such assessment is reviewed by the FRB and/or the FDIC when the Company or the Bank makes application for approval of an expansionary proposal, such as a merger or other acquisition of another bank or the opening of a new branch office. The Bank received a “satisfactory” CRA rating in its most recent assessment by the FDIC.

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Available Information

The Company’s filings with the Securities and Exchange Commission (“SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments thereto, are available on the Company’s website as soon as reasonably practicable after the reports are filed with or furnished to the SEC. Copies can be obtained free of charge in the “Investor Relations” section of the Company’s website at www.bankwithheritage.com.

Forward-Looking Statements

This Annual Report on Form 10-K, including all documents incorporated herein by reference, 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.

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Item 1A. RISK FACTORS

The Company could experience an increase in loan losses, which would reduce the Company’s earnings. Our loan portfolio includes loans with a higher risk of loss which could lead to higher loan losses and non-accrual assets.

We originate commercial real estate loans, construction and development loans, consumer loans, loans secured by farmland, multi-family properties and residential mortgage loans primarily within our market area. Commercial real estate, commercial, farmland, and construction and development loans tend to involve larger loan balances to a single borrower or groups of related borrowers and are most susceptible to a risk of loss during a downturn in the business cycle. These loans also have historically had greater credit risk than other loans for the following reasons:

• Non-residential Real Estate Loans. Repayment is dependent on income generated in amounts sufficient to cover operating expenses and debt service. These loans also involve greater risk because they may not be fully amortizing over a loan period, but may have a balloon payment due at maturity. A borrower’s ability to make a balloon payment typically will depend on being able to either refinance the loan or timely sell the underlying property.

• Commercial Loans. Repayment is generally dependent upon the successful operation of the borrower’s business. In addition, the collateral securing the loans may depreciate over time, be difficult to appraise, be illiquid, or fluctuate in value based on the success of the business.

• Construction and Land Loans. The risk of loss is largely dependent on our initial estimate of whether the property’s value at completion equals or exceeds the cost of property construction and the availability of take-out financing. During the construction phrase, a number of factors can result in delays or cost overruns. If our estimate is inaccurate or if actual construction cost exceed estimates, the value of the property securing our loan may be insufficient to ensure full repayment when completed through a permanent loan, sale of property, or by seizure of collateral.

• Farmland. Repayment is generally dependent upon the successful operation of the borrower’s farming operation. The typical risks to a farming operation include adverse weather conditions, changes to the operation’s farm insurance subsides, changes in commodity prices, sudden increases in the cost of farm production, sudden changes in the level of worldwide agricultural production and sudden changes in the value of the U.S. Dollar. In addition, the value of collateral securing the loans often fluctuates with the long-term trends of commodity prices, and may rise and fall significantly and may be illiquid in times of declining values. In the last two years, commodity prices have remained exceptionally low, making it difficult for farmers to make a profit despite achieving near record yields.

• Multi-family Real Estate Loans. Repayment is dependent on rental income generated in amounts sufficient to cover operating expenses and debt service. These loans also involve greater risk because they may not be fully amortizing over a loan period, but may have a balloon payment due at maturity. A borrower’s ability to make a balloon payment typically will depend on being able to either refinance the loan or timely sell the underlying property. The success of these relationship is dependent on the operator’s ability to maintain high levels of occupancy, adequately maintain the property and to collect rents when due.

11

Rapidly changing interest rate environments could reduce our net interest margin, net interest income, fee income and net income.

Interest and fees on loans and securities, net of interest paid on deposits and borrowings, are a large part of our net income. Interest rates are the key drivers of the Company’s net interest margin and subject to many factors beyond the control of management. As interest rates change, net interest income is affected. Rapid increases in interest rates in the future could result in interest expense increasing faster than interest income because of mismatches in the maturities of the Company’s assets and liabilities. Furthermore, substantially higher rates generally reduce loan demand and may result in slower loan growth. Decreases or increases in interest rates could have a negative effect on the spreads between interest rates earned on assets and the rates of interest paid on liabilities, and therefore decrease net interest income. See “Quantitative and Qualitative Disclosures about Market Risk”.

Liquidity needs could adversely affect the Company’s results of operations and financial condition.

The Company relies on dividends from the Bank as a primary source of funds. The Bank’s primary source of funds is customer deposits and cash flows from investment instruments and loan repayments. While scheduled loan repayments are a relatively stable source, they are subject to the ability of the borrowers to repay their loans. The ability of the borrowers to repay their loans can be adversely affected by a number of factors including:

• Changes in the economic conditions.

• Adverse trends or events affecting the business environment.

• Natural disasters

• Various other factors.

Cash flows from the investment portfolio may be affected by changes in interest rates, resulting in excessive levels of cash flow during periods of declining interest rates and lower levels of cash flow during periods of rising interest rates. Deposit levels may be affected by a number of factors, including both the national market and local competitive interest rate environment, local and national economic conditions, natural disasters and other various events. Accordingly, the Company may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations. Such sources include the FHLB advances, brokered deposits and federal funds lines of credit from correspondent banks. The Company may also pledge investments as collateral to borrow money from third-parties. In certain cases, the Company may sell investment instruments for sizable losses to meet liquidity needs, hurting net income. While the Company believes that these sources are currently adequate, there can be no assurance they will be sufficient to meet future liquidity needs.

We could face risk from our inability to diversify into high growth markets.

The Company’s management considers growth in the nearby Nashville, Tennessee, market critical for our future success. With the potential for our largest current market to experience an economic downturn, market diversification is vital to the future prosperity of our Company.

The financial industry is very competitive.

We face competition in attracting and retaining deposits, making loans, and providing other financial services throughout our market area. Our competitors include other community banks, regional and super-regional banking institutions, national banking institutions, and a wide range of other financial institutions such as credit unions, government-sponsored enterprises, mutual fund companies, insurance companies, brokerage companies, and other non-bank businesses. Many of these competitors have substantially greater resources than the Company.

12

Inability to hire or retain certain key professionals, management and staff could adversely affect our revenues and net income.

We rely on key personnel to manage and operate our business, including major revenue generating functions such as our loan and deposit portfolios. The loss of key staff may adversely affect our ability to maintain and manage these portfolios effectively, which could negatively affect our revenues. In addition, loss of key personnel could result in increased recruiting, hiring, and training expenses, resulting in lower net income.

Management’s analysis of the necessary funding for the allowance for loan loss account may be incorrect or may suddenly change, resulting in lower earnings.

The funding of the allowance for loan loss account is the most significant estimate made by management in its financial reporting to shareholders and regulators. If negative changes to the performance of the Company’s loan portfolio were to occur, management may find it necessary or be required to fund the allowance for loan loss account through additional charges to the Company’s provision for loan loss expense. These changes may occur suddenly and be dramatic in nature. These changes are likely to affect the Company’s financial performance, capital levels and stock price.

The Company is subject to extensive regulation that could limit or restrict its activities.

The Company operates in a highly regulated industry and is subject to examination, supervision, and comprehensive regulation by various federal agencies, including the KDFI and the FDIC. The Company’s regulatory compliance is costly and certain types of activities, including the payment of dividends, mergers and acquisitions, investments, loans and interest rates charged and interest rates paid on deposits and locations of offices are subject to regulatory approval and may be limited by regulation. The Company is also subject to regulatory capital rules established by its regulators, which require it and the Bank to maintain adequate capital to support its and the Bank’s growth.

The laws and regulations applicable to the banking industry could change at any time, and the Company cannot predict the effects of these changes on its business and profitability. The Sarbanes-Oxley Act of 2002, and the related rules and regulations promulgated by the Securities and Exchange Commission and NASDAQ National Market that are now and will be applicable to the Company, have increased the scope, complexity, and cost of corporate governance, reporting and disclosure practices. As a result, the Company has experienced, and may continue to experience, greater compliance cost.

On July 21, 2010, the Dodd-Frank Act was signed into law. The Dodd-Frank Act is having a broad impact on the financial services industry, including significant regulatory and compliance changes. Many of the requirements called for in the Dodd-Frank Act are being implemented over time and most are subject to implementing regulations over the course of several years. Given the uncertainty associated with the manner in which the provisions of the Dodd-Frank Act are implemented by the various regulatory agencies and through regulations, the full extent of the impact such requirements will have on our operations is unclear. The regulatory changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to certain of our business practices, impose upon us more stringent capital, liquidity and leverage requirements, increase our regulatory compliance burden or otherwise adversely affect our business.

Further, we may be required to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements under the Dodd-Frank Act. Failure to comply with the new requirements may negatively affect our results of operations and financial condition. While we cannot predict what effect any presently contemplated or future changes in the laws or regulations or their interpretations would have on us, these changes could be materially adverse to our investors.

13

Even though the Company’s common stock is currently traded on The NASDAQ National Market, the trading volume in the Company’s common stock has been low and the sale of substantial amounts of its common stock in the public market could depress the price of the Company’s common stock.

The trading volume of the Company’s common stock on The NASDAQ National Market is relatively low when compared with larger companies listed on The NASDAQ National Market or other stock exchanges. Thinly traded stocks, such as the Company’s, can be more volatile than stocks trading in an active public market. Because of this, the Company stockholders may not be able to sell their shares at the volumes, prices, or times they desire.

The Company cannot predict the effect, if any, that future sales of its common stock in the market, or availability of shares of its common stock for sale in the market, will have on the market prices of the Company’s common stock. The Company, therefore, can give no assurance that sales of substantial amounts of its common stock in the market, or the potential for large amounts of sale in the market, would not cause the price of its common stock to decline or impair the Company’s ability to raise capital through sales of its common stock.

The market price of the Company’s common stock may fluctuate in the future, and these fluctuations may be unrelated to its performance. General market price declines or overall market volatility in the future could adversely affect the price of the Company’s common stock, and the current market price may not be indicative of future market prices.

The Company conducts virtually all of its business activities in a geographically concentrated area of Middle and West Tennessee and Western Kentucky.

The Company operates eighteen offices located in Middle Tennessee and Western Kentucky. The Company maintains significant business relationships in the markets in which it operates as well as the communities adjoining our offices. Therefore, the Company’s success is directly tied to the economic viability of our markets which may not be representative of the country as a whole. While the Company believes that its credit quality has been strong given the current environment, continued economic stress in the market may result in an increase in non-performing loans and charge offs. Given the limited geographic footprint of our Company, the economic conditions in our marketplace may not be reflective of the entire nation.

If the interest rates rapidly increase the yield curve continues to flatten, our net interest margin will decline and net income may be negatively impacted.

Because of significant competitive pressures in our market and the negative impact of these pressures on our deposit and loan pricing, coupled with the fact that a significant portion of our loan portfolio has variable rate pricing that moves in concert with changes to the One Year Constant Maturity Treasury, Prime Rate or the London Interbank Offered Rate (LIBOR) the interest margin may be negatively impacted. Management anticipates that the current trend of a flatter yield curve, where short-term rates increase more rapidly than long term rates, will continue. A flatter yield curve will put pressure on the Company’s net interest margin, possible resulting in lower levels of net income.

14

Holders of HopFed Capital Trust I have rights that are senior to those of the Company’s common shareholders.

The Company has issued trust preferred securities from a special purpose trust and accompanying junior subordinated debentures. At December 31, 2017, the Company had outstanding trust preferred securities of $10.3 million. Payments of the principal and interest on the trust preferred securities are conditionally guaranteed by the Company. Further, the accompanying junior subordinated debentures the Company issued to the trusts are senior to our common stock. As a result, we must make payments on the junior subordinated debentures before any dividends can be paid on common stock and, in the event of the Company’s dissolution or liquidation, the holders of the junior subordinated debentures must be satisfied before any distributions can be made to the Company’s common shareholders. The Company has the right to defer distributions on its junior subordinated debentures (and the related trust preferred securities) for up to five years, during which time no dividends may be paid on its common stock. If our consolidated financial condition deteriorates or if we do not receive required regulatory approvals, we may be required to defer distributions on our junior subordinated debentures.

New capital requirements for bank holding companies and depository institutions may negatively impact our results of operations.

In July 2013, the Board of Governors of the Federal Reserve Bank approved the final rule for BASEL III capital requirements for all commercial banks charted in the U.S. Under the final rule, minimum requirements have increased for both the quantity and quality of capital held by banking organizations. Consistent with the international Basel framework, the rule includes a new minimum ratio of CET1 capital to risk-weighted assets of 4.5% and a CET1 capital conservation buffer of 2.5% of risk-weighted assets that will apply to all supervised financial institutions. The rule also raises the minimum ratio of tier 1 capital to risk-weighted assets from 4.0% percent to 6.0% percent and includes a minimum leverage ratio of 4.0% for all banking organizations. The transition period for implementation of Basel III was January 1, 2015, through December 31, 2018. At December 31, 2016, the Company met all capital requirements set forth by Basel III as required at the final implementation date of December 31, 2018.

The application of more stringent capital requirements for the Corporation and the Bank may, among other things, result in lower returns on invested capital, require the raising of additional capital, and result in regulatory actions if we were to be unable to comply with such requirements. Furthermore, the imposition of liquidity requirements in connection with the implementation of Basel III could result in our having to lengthen the term and increase the cost of our funding, restructure our business models and/or increase our holdings of liquid assets. Implementation of changes to asset risk weightings for risk based capital calculations, items included or deducted in calculating regulatory capital and/or additional capital conservation buffers could result in management modifying its business strategy and could limit our ability to make distributions, including paying dividends or buying back shares.

A failure in our operational systems or infrastructure, or those of third-parties, could impair our liquidity, disrupt our businesses, result in the unauthorized disclosure of confidential information, damage our reputation and cause financial losses.

Our businesses are dependent on their ability to process and monitor, on a daily basis, a large number of transactions, many of which are highly complex, across numerous and diverse markets. These transactions, as well as the information technology services we provide to clients, often must adhere to client-specific guidelines, as well as legal and regulatory standards. Due to the breadth of our client base and our geographical reach, developing and maintaining our operational systems and infrastructure is challenging, particularly as a result of rapidly evolving legal and regulatory requirements and technological shifts.

Our financial, accounting, data processing or other operating systems and facilities may fail to operate properly or become disabled as a result of events that are wholly or partially beyond our control, such as a spike in transaction volume, cyber-attack or other unforeseen catastrophic events, which may adversely affect our ability to process these transactions or provide services.

15

In addition, our operations rely on the secure processing, storage and transmission of confidential and other information on our computer systems and networks. Although we take protective measures to maintain the confidentiality, integrity and availability of our and our clients’ information across all geographic and product lines, and endeavor to modify these protective measures as circumstances warrant, the nature of the threats continues to evolve. As a result, our computer systems, software and networks may be vulnerable to unauthorized access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks and other events that could have an adverse security impact. Despite the defensive measures we take to manage our internal technological and operational infrastructure, these threats may originate externally from third-parties such as foreign governments, organized crime and other hackers, and outsource or infrastructure-support providers and application developers, or may originate internally from within our organization. Given the increasingly high volume of our transactions, certain errors may be repeated or compounded before they can be discovered and rectified.

We also face the risk of operational disruption, failure, termination or capacity constraints of any of the third-parties that facilitate our business activities, including exchanges, clearing agents, clearing houses or other financial intermediaries. Such parties could also be the source of an attack on, or breach of, our operational systems, data or infrastructure. In addition, as interconnectivity with our clients grows, we increasingly face the risk of operational failure with respect to our clients’ systems.

Although we have not experienced a cyber-incident, if one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our, as well as our clients’ or other third-party operations, which could result in damage to our reputation, substantial costs, regulatory penalties and/or client dissatisfaction or loss. Potential costs of a cyber-incident may include, but would not be limited to, remediation costs, increased protection costs, lost revenue from the unauthorized use of proprietary information or the loss of current and/or future customers, and litigation.

We maintain an insurance policy which we believe provides sufficient coverage at a manageable expense for an institution of our size and scope with similar technological systems. However, we cannot assure that this policy would be sufficient to cover all financial losses, damages, penalties, including lost revenues, should we experience any one or more of our or a third-party’s systems failing or experiencing attack.

Since we engage in lending secured by real estate and may be forced to foreclose on the collateral property and own the underlying real estate, we may be subject to the increased costs associated with the ownership of real property, which could result in reduced net income.

Since we originate loans secured by real estate, we may have to foreclose on the collateral property to protect our investment and may, thereafter, own and operate such property, in which case we are exposed to the risks inherent in the ownership of real estate.

The amount that we, as mortgagee, may realize after a default is dependent upon factors outside of our control, including, but not limited to general and local economic conditions, changing values of property, interest rates, unpaid real estate taxes, environmental issues, operating expenses involved with managing other real estate owned, and the supply and demand for units held for sale as well as other unforeseen cost and delays.

Certain expenditures associated with the ownership of real estate, principally real estate taxes and maintenance costs, may adversely affect the income from the real estate. Therefore, the cost of operating real property may exceed the rental income earned from such property, and we may have to advance funds in order to protect our investment or we may be required to dispose of the real property at a loss.

16

We face risks arising from acquisitions of either other financial institutions or branch locations.

From time to time, we may acquire another financial institution. We face a number of risks arising from acquisition transactions, including difficulties in integrating the acquired business into our operations, difficulties in assimilating and retaining employees and intermediaries, difficulties in retaining the existing customers of the acquired entity, unforeseen liabilities that arise in connection with the acquired business and unfavorable market conditions that could negatively impact our growth expectations for the acquired business. These risks may prevent us from realizing the expected benefits from acquisitions and could result in the impairment of goodwill and/or intangible assets recognized at the time of acquisition.

We face risk from further reductions in the size and makeup of the U.S. Army staffing at Fort Campbell, Kentucky.

The U.S. Army has provided a revised assessment of future staffing cuts that indicates that Fort Campbell may lose a small portion of its active duty military personnel by 2020. The Fort Campbell military installation in the largest employer in the region and a significant reduction in the staffing of the base would have a major negative affect on the economies of Montgomery County, Tennessee and Christian County, Kentucky. The Company has a significant portion of its loan portfolio invested in the area near Fort Campbell.

Stockholder activists could cause a disruption to our business.

Certain institutional investors have indicated that they disagree with the strategic direction of our Company. Our business, operating results or financial condition could be adversely affected by these activists. Any such disruption may result in, among other things:

• Increased operating costs, including increased legal expenses, insurance, administrative expenses and associated costs;

• Affect the market price and volatility of our securities;

• Uncertainties as to our future direction could result in the loss of potential business opportunities, make it more difficult to attract, retain, or motivate qualified personnel, and strain relationships with investors and customers; and

• Activist investors may reduce or delay our ability to effectively execute our current business strategies and the implementation of new strategies.

If the Company were to market itself for sale, the presence and actions of an activist may have a negative impact on the sales price of the Company and may discourage some buyers from making an offer.

Our cash availability at the holding company level may limit the Company’s ability to continue to pay a cash dividend to common shareholders and/or repurchase treasury stock.

At December 31, 2017, the Corporation has cash on hand available to pay common dividends and repurchase treasury stock. The Bank may not receive regulatory approval to pay the Corporation a dividend, which would limit the Company’s ability to repurchase treasury stock and to continue to pay a cash dividend to common shareholders.

17

Extreme weather could disrupt our operations and may negatively affect our profitability.

Some of our operations are located in areas that are susceptible to earthquakes, tornados and other forms of extreme weather. Such weather events could disrupt our operations and have a material adverse effect on our overall operating results of operations. Further, an extreme weather event in any of our market areas could make it more difficult for borrowers to make timely loan payments may reduce the value of collateral used to secured loans.

Changes in the policies of monetary authorities and other government action could adversely affect our profitability.

Our consolidated results of operations are affected by credit policies of monetary authorities, particularly the Federal Reserve. The instruments of monetary policy employed by the Federal Reserve include open market operations in U.S. government securities, changes in the discount rate or federal funds rate on bank borrowing and changes in reserve requirements against bank deposits. In view of changing conditions in the national economy and in the money markets, we are unable to predict future changes in interest rates, deposit levels, loan demand or our business and earnings. Market interest rates and the economy market be negatively influenced by terrorist attacks and political actions.

Technological changes in the banking and financial services industries may negatively impact our results of operations and our ability to compete.

The banking and financial services industries are undergoing rapid changes with frequent introductions of new technology-driven products and services. The use of technology enhances the level of service to customers and may improve the efficiencies and reduce expenses. To remain competitive, financial institutions must continuously evaluate changing consumer preferences with engage those technologies in a cost effective manner. Our future success will depend, in part, on our ability to use the correct technology that will allow the Company to meet the current and future needs of our customer base. Failure to do so may leave the Company in a competitive disadvantage and result in a loss of customer business. The Company’s competition may have greater resources to invest in technology, which may place the Company at a competitive disadvantage.

ITEM 1B. UNRESOLVED STAFF COMMENTS

There are no unresolved staff comments from the Securities and Exchange Commission.

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ITEM 2. PROPERTIES

The following table sets forth information regarding the Bank’s offices at December 31, 2017:

							Approximate
	Year Opened		Owned or Leased		Book Value (1)		Square Footage of Office
	(In thousands)
Main Office:
4155 Lafayette Road
Hopkinsville, Kentucky		2006		Owned	$	3,939		24,072
Branch Offices:
2700 Fort Campbell Boulevard
Hopkinsville, Kentucky		1995		Owned	$	1,090		17,625
Downtown Branch Office
605 South Virginia Street
Hopkinsville, Kentucky		1997		Owned	$	154		756
Murray South Office
210 N. 12th Street
Murray, Kentucky		2003		Owned	$	1,435		5,600
Murray North Office
1601 North 12th Street
Murray, Kentucky		2007		Owned	$	1,017		3,400
Cadiz Branch Office
352 Main Street
Cadiz, Kentucky		1998		Owned	$	321		2,200
Elkton Branch Office
536 W. Main Street
Elkton, Kentucky		1976		Owned	$	90		3,400
Benton Branch Office
105 W. 5th Street
Benton, Kentucky		2003		Owned	$	261		4,800
Benton Branch Office
660 Main Street
Benton, Kentucky		2015		Owned	$	3,430		7,413
Calvert City Office
35 Oak Plaza Drive
Calvert City, Kentucky		2003		Owned	$	949		3,400
Carr Plaza Office
607 N. Highland Drive
Fulton, Kentucky		2002		Owned	$	169		800
Lake Street Office
306 Lake Street
Fulton, Kentucky		2002		Leased	$	845		400
Nashville Loan Production Office
3200 West End Avenue, Suite 500
Nashville, Tennessee		2014		Leased	$	1		3,200
Clarksville Main Street
322 Main Street
Clarksville, Tennessee		2007		Owned	$	1,287		10,000
Brentwood Loan Production Office
214 Overlook Circle, Suite 105
Brentwood, Tennessee		2016		Leased	$	78		1,800
Trenton Road Branch
3845 Trenton Road
Clarksville, Tennessee		2006		Owned	$	2,126		3,362
Madison Street Office
2185 Madison Street
Clarksville, Tennessee		2007		Owned	$	1,274		3,950
Houston County Office
1102 West Main Street
Erin, Tennessee		2006		Owned	$	471		2,390
Ashland City Office
108 Cumberland Street
Ashland City, Tennessee		2006		Owned	$	1,354		7,058
Pleasant View Office
2556 Highway 49 East
Pleasant View, Tennessee		2006		Owned	$	795		2,433
Kingston Springs Office
104 West Kingston Springs Road
Kingston Springs, Tennessee		2006		Owned	$	1,614		9,780
Total					$	22,700

(1) Represents the book value of land, building, furniture, fixtures and equipment owned by the Bank.

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ITEM 3. LEGAL PROCEEDINGS

From time to time, the Company or the Bank is a party to various legal proceedings incident to its business. During 2017, the Company was sued by a shareholder and is subject to a shareholder demand letter. The shareholder lawsuit was dismissed in October 2017. However, the Plaintiff sought reimbursement for legal fees to which the Company filed an objection. On February 7, 2018, the Court of Chancery of the State of Delaware ordered the Company to reimburse the Plaintiff for legal fees totaling $610,000. The reimbursement of legal fees was recognized as an expense for 2017.

ITEM 4. MINE SAFETY DISCLOSURE

None

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERS PURCHASES OF EQUITY SECURITIES.

A cash dividend of $0.04 per share was declared in all four quarters of 2016 and the first quarter of 2017. A cash dividend of $0.05 per share was declared in the second, third and fourth quarters of 2017. The high and low price range of the Company’s common stock for 2017 and 2016 is set forth below:

	Year Ended December 31, 2017				Year Ended December 31, 2016
	High		Low		High		Low
First Quarter	$	15.45	$	13.18	$	12.03	$	11.39
Second Quarter	$	15.23	$	14.20	$	12.40	$	10.85
Third Quarter	$	14.74	$	13.51	$	11.94	$	11.20
Fourth Quarter	$	14.74	$	13.63	$	14.01	$	11.05

At February 28, 2018, the Company estimates that is has approximately 1,100 shareholders, with approximately 700 reported in the name of the shareholder and the remainder recorded in street name.

At December 31, 2017, the Company has 1,338,360 shares of common treasury stock and has an active repurchase plan in which we may purchase up to 300,000 shares of our common stock on the open market or in negotiated transactions.

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The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three month period ended December 31, 2017:

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total number of shares Purchased as part of Publically Announced Programs		Maximium Number of Shares that Yet may be Purchased Under the Program at the end of the period
October 1, 2017, to October 31, 2017		15,903	$	14.30		1,903,360		35,326
November 1, 2017, to November 30, 2017		15,000	$	14.13		1,918,360		330,326
December 1, 2017, to December 31, 2017		20,000	$	14.25		1,938,360		300,000
Total		50,903	$	14.23		1,938,360		300,000

The Federal Reserve Bank has issued a policy statement regarding the payment of dividends and the repurchase of common stock by commercial bank holding companies. In general, dividends should be paid out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital requirements, asset quality and overall financial condition. These regulatory policies may affect the ability of the Company to pay dividends, repurchase shares of common stock or otherwise engage in capital distributions.

ITEM 6. SELECTED FINANCIAL DATA

The information set forth under the caption “Selected Financial Information and Other Data” in the Company’s Annual Report to Stockholders for the year ended December 31, 2017 (Exhibit No. 13.1) is incorporated herein by reference. See Note 13 of Notes of Consolidated Financial Statements, which is incorporated herein by reference.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information set forth under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report to Stockholders for the year ended December 31, 2017 (Exhibit No. 13.1) is incorporated herein by reference.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information set forth under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Interest Rate Sensitivity Analysis” in the Company’s Annual Report to Stockholders for the year ended December 31, 2017 (Exhibit No. 13.1) is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company’s Consolidated Financial Statements together with the related notes and the report of Carr, Riggs & Ingram, LLC, independent registered public accounting firm, all as set forth in the Company’s Annual Report to Stockholders for the year ended December 31, 2017 (Exhibit No. 13.1) are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”) that are designed to insure that information required to be disclosed by it in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decision making regarding required disclosure. The Company, under the supervision and participation of its management, including the Company’s Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report pursuant to the Exchange Act. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that all material information required to be disclosed is this annual report has been accumulated and communicated to them in a manner appropriate to allow timely decisions regarding required disclosures.

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Management Report on Internal Control

The management of HopFed Bancorp, Inc. and its subsidiaries (collectively referred to as the “Company”) is responsible for the preparation, integrity and fair presentation of published financial statements and all other information presented in this annual report. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America over financial reporting (“U.S. GAAP”) and, as such, include amounts based on informed judgments and estimates made by management.

Management is responsible for establishing and maintaining adequate internal control over financial reporting for financial presentations in conformity with U.S. GAAP. Pursuant to the rules and regulations of the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of, the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and included those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company.

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, or that the degree of compliance with the policies and procedures include in such controls may deteriorate.

Management has evaluated the effectiveness of its internal control over financial reporting as of December 31, 2017, based on the control criteria established in a report entitled Internal Control – Integrated Framework (2013 Framework), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that the Company’s internal control over financial reporting is effective as of December 31, 2017.

Carr, Riggs & Ingram, LLC, the independent registered public accounting firm that audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017. The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 is included in this Item under the heading “Report of Independent Registered Public Accounting Firm.”

Date: March 15, 2018	By:	(signed) John E. Peck
		John E. Peck
		President and Chief Executive Officer
	By:	(signed) Billy C. Duvall
		Billy C. Duvall
		Senior Vice President and Treasurer
		(Principal Financial Officer)

23

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

HopFed Bancorp, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of HopFed Bancorp, Inc. and subsidiaries (the “Company”) as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 3017, and the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

Basis for Opinion

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Internal Control. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Carr, Riggs & Ingram, LLC

We have served as the Company’s auditor since 2000.

Nashville, Tennessee

March 15, 2018

24

ITEM 9B. OTHER INFORMATION

Not Applicable

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT

Information regarding directors of the Company is omitted from this Report as the Company will file a definitive proxy statement (the “Proxy Statement”) not later than 120 days after December 31, 2017 and the information included therein under “Proposal I — Election of Directors” is incorporated herein by reference. Information regarding the executive officers of the Company is included under separate caption in Part I of this Form 10-K

Information regarding Section 16(a) beneficial ownership reporting compliance is omitted from this Report as the Company will file the Proxy Statement not later than 120 days after December 31, 2017 and the information included therein under “Section 16(a) Beneficial Ownership Reporting Compliance” is incorporated herein by reference.

Information regarding audit committee financial expert compliance is omitted from this Report as the Company will file the Proxy Statement not later than 120 days after December 31, 2017 and the information contained therein under “Committees of the Board of Directors” is incorporated herein by reference.

The Company has adopted a code of ethics that applies to all directors and employees, including without exception, the principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding executive compensation is omitted from this Report as the Company will file the Proxy Statement not later than 120 days after December 31, 2017 and the information included therein under “Proposal I — Election of Directors” is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this Item is omitted from this Report as the Company will file the Proxy Statement not later than 120 days after December 31, 2017 and the information included therein under “Voting Securities and Principal Holders Thereof” and “Proposal I – Election of Directors” is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Information required by this Item is omitted from this Report as the Company will file the Proxy Statement, not later than 120 days after December 31, 2017 and the information included therein under “Proposal I — Election of Directors” is incorporated herein by reference.

25

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information required by this item is omitted from this report as the Company will file the Proxy Statement not later than 120 days after December 31, 2017, and the information included therein under “Independent Registered Public Accounting Firm” is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following consolidated financial statements of the Company included in the Annual Report to Stockholders for the year ended December 31, 2017, are incorporated herein by reference in Item 8 of this Report. The remaining information appearing in the Annual Report to Stockholders is not deemed to be filed as part of this Report, except as expressly provided herein.

1. Report of Independent Registered Public Accounting Firm.

2. Consolidated Balance Sheets—December 31, 2017 and December 31, 2016.

3. Consolidated Statements of Income for the Years Ended December 31, 2017, 2016 and 2015.

4. Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2017, 2016 and 2015.

5. Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2017, 2016 and 2015.

6. Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015.

7. Notes to Consolidated Financial Statements.

(b) The following exhibits either are filed as part of this Report or are incorporated herein by reference:

Exhibit No. 2.1. Plan of Conversion of Hopkinsville Federal Savings Bank. Incorporated herein by reference to Exhibit No. 2 to Registrant’s Registration Statement on Form S-1 (File No. 333-30215).

Exhibit No.  3.1. Certificate of Incorporation. Incorporated herein by reference to Exhibit 3.1 to Registrant’s Current Report on Form 10-K for the fiscal year ended December 31, 2013.

Exhibit No.  3.2 Bylaws, as amended. Incorporated herein by reference to Exhibit No. 3.2 to Registrant’s Current Report on Form 8-K dated December 5, 2007 (filed on December 6, 2007).

Exhibit No. 4.1. Form of Common Stock Certificate incorporated herein by reference to Exhibit No. 4.1 to Registrant’s Registration Statement on Form S-1 (File No. 333-30215).

Exhibit No. 10.1. HopFed Bancorp, Inc. Management Recognition Plan. Incorporated herein by reference to Exhibit 99.1 to Registration Statement on Form S-8 (File No. 333-79391).

Exhibit No. 10.2. HopFed Bancorp, Inc. 1999 Stock Option Plan. Incorporated herein by reference to Exhibit 99.2 to Registration Statement on Form S-8 (File No. 333-79391).

26

Exhibit No. 10.3. HopFed Bancorp, Inc. 2000 Stock Option Plan. Incorporated herein by reference to Exhibit 10.10 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000.

Exhibit No. 10.4 HopFed Bancorp, Inc. 2004 Long Term Incentive Plan Incorporated herein by reference to Exhibit 99.3 to Registration Statement on Form S-8 (File No. 333-117956) dated August 5, 2004.

Exhibit No. 10.5 HopFed Bancorp, Inc. 2013 Long Term Incentive Plan Incorporated herein by reference to Exhibit 99.3 to Registration Statement on Form S-8 (File No. 333-117956) dated June 28, 2013.

Exhibit No.  10.6. Employment Agreement by and between Registrant and John E. Peck. Incorporated herein by reference to Exhibit No. 10.2 to Registrant’s Current Report on Form 8-K dated April  17, 2008 (filed April  22, 2008).

Exhibit No.  10.7. Employment Agreement by and between Heritage Bank and John E. Peck. Incorporated herein by reference to Exhibit No. 10.2 to Registrant’s Current Report on Form 8-K dated April  1, 2008 (filed April  22, 2008).

Exhibit No.  10.8. Employment Agreement by and between Registrant and Billy C. Duvall. Incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated July  1, 2013 (filed July  1, 2013).

Exhibit No.  10.9. Employment Agreement by and between Heritage Bank and Billy C. Duvall. Incorporated herein by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated July  1, 2013 (filed July  1, 2013).

Exhibit No.  10.10. Employment Agreement by and between Registrant and Michael L. Woolfolk. Incorporated herein by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated April  17, 2008 (filed April  22, 2008).

Exhibit No.  10.11. Employment Agreement by and between Heritage Bank and Michael L. Woolfolk. Incorporated herein by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K dated March  18, 2015 (filed March  18, 2015).

Exhibit No.  10.12 Employment Agreement by and between Heritage Bank and Keith Bennett. Incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated April  25, 2013 (filed April  25, 2013).

Exhibit No.  10.13 Restricted Share Award Agreement with John E. Peck. Incorporated herein by reference to Registrant’s Current Report on Form 8-k dated June 23, 2010 (filed June 28, 2010).

Exhibit No.  10.14 Restricted Share Award Agreement with John E. Peck. Incorporated herein by reference to Exhibits 10.1 and 10.2, respectively, to Registrant’s Current Report on Form 8-k dated June  23, 2012 (filed June  25, 2012).

Exhibit No. 10.15 Employee Stock Ownership Plan. Incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated February 27, 2015 (filed March 3, 2015).

Exhibit No.  10.16 Employee Stock Ownership Trust. Incorporated herein by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated February 27, 2015 (filed March 3, 2015).

Exhibit No.  99.1 Stock Purchase Agreement with Maltese Capital Management. Incorporated herein by reference to Exhibit 99.1 to Registrant’s Current Report on 8-K dated February  2, 2015 (filed February 3, 2015)

27

Exhibit No.  13.1. Annual Report to Stockholders. Except for those portions of the Annual Report to Stockholders for the year ended December  31, 2017, which are expressly incorporated herein by reference, such Annual Report is furnished for the information of the Commission and is not to be deemed “filed” as part of this Report.

Exhibit No.  14.1. Code of Ethics. Incorporated herein by reference to Exhibit 14 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003.

Exhibit No. 21.1 Subsidiaries of the Registrant.

Exhibit No. 23.1. Consent of Independent Registered Public Accounting Firm.

Exhibit No.  31.1 Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a – 14(a) or 15d – 14(a).

Exhibit No. 31.2 Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a – 14(a) or 15d – 14(a).

Exhibit No 32.1. Certification of Principal Executive Officer pursuant to 18 U.S.C. Section  1350, as adopted pursuant to Section  906 of the Sarbanes – Oxley Act of 2002.

Exhibit No 32.2. Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002.

Exhibit 101. The following materials from the Company’s annual report on Form 10-K for the years ended December 31, 2017 and December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statement of Financial Condition as of December 31, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Income for the years ended December 31, 2017, 2016 and 2015, respectively (iii) Condensed Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016, and 2015, respectively (iv) Condensed Consolidated Statements of Cash Flows, for the years ended December 31, 2017, 2016 and 2015 respectively, and (v) Notes to Condensed Consolidated Financial Statements (unaudited), tagged as blocks of text.

(c) All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized.

	HOPFED BANCORP, INC.
	(Registrant)
Date: March 15, 2018	By:	(signed) John E. Peck
		John E. Peck
		President and
		Chief Executive Officer

28

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated and on the dates indicated.

DATE: SIGNATURE AND TITLE:

(signed) John E. Peck	March 15, 2018
John E. Peck
Director, President and Chief Executive Officer
(Principal Executive Officer)
(signed) Billy C. Duvall	March 15, 2018
Billy C. Duvall
Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
(signed) Dr. Harry J. Dempsey	March 15, 2018
Dr. Harry J. Dempsey
Chairman of the Board
(signed) Steve Hunt	March 15, 2018
Steve Hunt
Vice-Chairman of the Board
(signed) Michael Woolfolk	March 15, 2018
Michael Woolfolk
Director, Board Secretary and Executive Vice
President and Chief Operating Officer
(signed) Dr. Thomas I. Miller	March 15, 2018
Dr. Thomas I. Miller
Director
(signed) Ted Kinsey	March 15, 2018
Ted Kinsey
Director
(signed) Clay Smith	March 15, 2018
Clay Smith
Director
(signed) Richard Perkins	March 15, 2018
Richard Perkins
Director

29

EX-13.1

EXHIBIT 13.1

SELECTED FINANCIAL INFORMATION AND OTHER DATA

The following summary of selected financial information and other data does not purport to be complete and is qualified in its entirety by reference to the detailed information and Consolidated Financial Statements and accompanying Notes appearing elsewhere in this Report.

Financial Condition and Other Data

	At December 31,
	2017		2016		2015		2014		2013
	(Dollars in Thousands)
Total amount of:
Assets	$	917,510	$	891,486	$	903,154	$	935,785	$	973,649
Loans receivable, net		637,102		604,286		556,349		539,264		543,632
Cash and due from banks		45,076		25,749		46,926		34,389		37,229
Federal Home Loan Bank stock		4,428		4,428		4,428		4,428		4,428
Securities available for sale		184,791		209,480		237,177		303,628		318,910
Deposits		754,009		732,882		739,406		731,308		762,997
Repurchase agreements		38,353		47,655		45,770		57,358		52,759
FHLB advances		23,000		11,000		15,000		34,000		46,780
Subordinated debentures		10,310		10,310		10,310		10,310		10,310
Total stockholders’ equity		87,412		86,428		87,630		98,402		95,717
Number of active:
Real estate loans
Outstanding		3,941		4,359		4,089		4,527		4,730
Deposit accounts		34,663		38,584		44,174		44,183		44,792
Offices open		18		18		18		18		18

Operating Data

	Year Ended December 31,
	2017		2016		2015		2014			2013
	(Dollars in Thousands)
Interest and dividend income	$	33,755	$	31,727	$	33,122	$	34,680		$	35,857
Interest expense		5,963		5,299		6,550		8,879			10,581
Net interest income before provision for loan losses		27,792		26,428		26,572		25,801			25,276
Provision for loan losses		477		1,241		1,051		(2,273	)		1,604
Net interest income		27,315		25,187		25,521		28,074			23,672
Non-interest income		8,030		7,935		7,602		7,840			9,372
Non-interest expense		29,896		29,856		30,445		33,916			28,638
Income before income taxes		5,449		3,266		2,678		1,998			4,406
Provision for income taxes		2,148		362		274		(201	)		644
Net income	$	3,301	$	2,904	$	2,404	$	2,199		$	3,762

1

Selected Quarterly Information (Unaudited)

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(Dollars in Thousands)
Year Ended December 31, 2017:
Interest and dividend income	$	8,160	$	8,419	$	8,635	$	8,541
Net interest income after provision for losses on loans		6,463		6,906		7,027		6,919
Non-interest income		2,296		1,836		2,030		1,868
Non-interest expense		7,689		7,233		7,168		7,806
Net income (loss)		935		1,141		1,403		(178	)
Year Ended December 31, 2016:
Interest and dividend income	$	8,081	$	7,691	$	8,004	$	7,951
Net interest income after provision for losses on loans		6,218		5,958		6,434		6,577
Non-interest income		2,020		1,970		1,945		2,000
Non-interest expense		7,683		7,609		7,353		7,211
Net income		509		304		985		1,106

2

Key Operating Ratios
	At or for the Year Ended December 31,
	2017			2016			2015
Performance Ratios
Return on average assets (net income available to common shareholders divided by average total assets)		0.36	%		0.33	%		0.27	%
Return on average equity (net income available to common shareholders divided by average total equity)		3.78	%		3.26	%		2.65	%
Interest rate spread (combined weighted average interest rate earned less combined weighted average interest rate cost)		3.23	%		3.21	%		3.20	%
Net interest margin		3.38	%		3.35	%		3.36	%
Ratio of average interest-earning assets to average interest-bearing liabilities on a tax equivalent basis		121.86	%		121.98	%		119.43	%
Ratio of non-interest expense to average total assets on a tax equivalent basis		3.30	%		3.45	%		3.41	%
Ratio of net interest income after provision for loan losses to non-interest expense on a tax equivalent basis		93.23	%		85.11	%		86.68	%
Tax equivalent efficiency ratio (non-interest expense divided by sum of net interest income plus non-interest income)		82.18	%		86.72	%		86.85	%
Asset Quality Ratios
Non-performing assets to total assets at end of period		0.52	%		1.29	%		1.02	%
Non-accrual loans to total loans at end of period		0.20	%		1.49	%		1.32	%
Allowance for loan losses to total loans at end of period		0.75	%		1.00	%		1.01	%
Allowance for loan losses to non-performing loans at end of period		351.49	%		67.36	%		76.80	%
Provision for loan losses to total loans receivable, net		0.07	%		0.20	%		0.19	%
Net charge-offs to average loans outstanding		0.28	%		0.15	%		0.29	%
Capital Ratios
Total equity to total assets at end of period		9.53	%		9.69	%		9.72	%
Average total equity to average assets		9.64	%		10.11	%		10.17	%

	December 31, 2017
Regulatory Capital	(Dollars in Thousands)
	Corporation		Bank
Tier 1 Leverage capital to adjusted total assets	$	95,709	$	95,123
Less: Tier 1 Leverage capital requirement		36,137		36,090
Excess		59,572		59,033
Tier 1 Risk Based capital to risk weighted assets	$	95,709	$	95,123
Less: Tier 1 Risk Based capital requirement		37,764		37,735
Excess		57,945		57,388
Total risk-based capital to risk weighted assets	$	100,535	$	99,949
Less: Risk-based capital requirement		50,352		50,314
Excess		50,183		49,635
Common equity tier 1 capital to risk weighted assets	$	95,709	$	95,123
Less: Common equity tier 1 capital requirement		28,323		28,301
Excess		67,386		66,822

3

Aggregate Contractual Obligations

	Maturity by Period
			Greater		Greater		Greater
December 31, 2017 (In Thousands)	Less than		than 1 year		than 3 year		than
	1 year		to 3 years		to 5 years		5 years		Total
Deposits	$	639,995		98,793		15,221		—		754,009
FHLB borrowings		6,000		17,000		—		—		23,000
Repurchase agreements		38,353		—		—		—		38,353
Subordinated debentures		—		—		—		10,310		10,310
Lease commitments		312		396		225		—		933
Purchase obligations		1,974		1,759		55		—		3,788
Total	$	686,634		117,948		15,501		10,310		830,393

Deposits represent non-interest bearing, money market, savings, interest bearing checking accounts and certificates of deposits held by the Company. Amounts that have an indeterminate maturity period are included in the less than one-year category. FHLB borrowings represent the amounts that are due to Federal Home Loan Bank of Cincinnati. All amounts have fixed maturity dates. Repurchase agreements represent overnight retail repurchase accounts. Retail repurchase agreements mature daily and pay interest based on their account balances.

Subordinated debentures represent the amount borrowed in a private pool trust preferred issuance group on September 25, 2003. The Company’s rate of interest on the debentures is equal to the three-month LIBOR plus 3.10%. On January 11, 2018, the three-month LIBOR rate was 1.72% and the debenture repriced at 4.82%. The debentures re-price and pay interest quarterly and have a thirty-year final maturity. The Company may call the debentures on a quarterly basis. The interest rate of the debentures reset on the 8^th day (or the next business day) of January, April, August and November of each year.

Lease commitments represent the total minimum lease payments under non-cancelable operating leases. The most significant operating contract is for the Company’s data processing services, which re-prices monthly based on the number of accounts and other operational factors. The Company’s operating contract with the current data processing provider is currently set to expire September 30, 2019.

Off Balance Sheet Arrangements    

	Maturity by Period
			Greater		Greater		Greater
December 31, 2017 (In Thousands)	Less than		than 1 year		than 3 year		than
	1 year		to 3 years		to 5 years		5 years		Total
Commercial lines of credit	$	46,184		15,522		218		986		62,910
Commitments to extend credit		22,383		17,242		20,904		10,977		71,506
Standby letters of credit		130		8		5		—		143
Home equity lines of credit		1,296		4,127		7,993		19,285		32,701
Total	$	69,993		36,899		29,120		31,248		167,260

Standby letters of credit represent commitments by the Company to repay a third-party beneficiary when a customer fails to repay a loan or debt instrument. The terms and risk of loss involved in issuing standby letters of credit are similar to those involved in issuing loan commitments and extending credit. In addition to credit risk, the Company also has liquidity risk associated with stand-by letters of credit because funding for these obligations could be required immediately. Unused lines of credit represent commercial and residential equity lines of credit with maturities ranging from one to fifteen years.

4

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

This discussion relates to the consolidated financial condition and results of operations of the Company, which consist of the consolidation of Heritage Bank USA, Inc. (the “Bank”) and HopFed Bancorp, Inc. (the “Corporation”), JBMM LLC, Heritage Interim Corporation, Heritage USA Title LLC, and Fort Webb LLC (collectively referred to as the “Company”). The Corporation became the holding company for the Bank in February 1998. The principal business of the Bank consists of accepting deposits from the public and investing these funds primarily in loans and in investment securities and mortgage-backed securities. The Bank’s loan portfolio consists primarily of loans secured by real estate located in its market area.

Comparison of Financial Condition at December 31, 2017 and December 31, 2016

At December 31, 2017, the Company’s total assets were $917.5 million, representing an increase of $26.0 million compared to December 31, 2016. At December 31, 2017, cash balances were $45.1 million compared to $25.7 million at December 31, 2016. At December 31, 2017, the Company’s balances of securities available for sale were $184.8 million compared to $209.5 million at December 31, 2016. It is the Company’s intent to continue to use a portion of the cash flows provided by the securities portfolio to fund future loan growth as a means to improve profitability.

At December 31, 2017, the Company’s non-interest checking account balances were $136.2 million compared to $131.1 million at December 31, 2016. The growth in checking account balances occurred despite changes to retail deposit offerings that reduced the amount of checking accounts not being assessed a monthly fee. The Company’s time deposit balances increased from $293.1 million at December 31, 2016 to $305.0 million at December 31, 2017 and Company’s Federal Home Loan Bank (“FHLB”) borrowings increased from $11.0 million at December 31, 2016 to $23.0 million at December 31, 2017. Management continues to place a heavy emphasis on core deposit growth, utilizing FHLB borrowing to supplement liquidity needs.

In 2017, the Company foreclosed on a significant substandard loan relationship and recognized a $2.6 million charge off. At December 31, 2017, the balance in the allowance for loan loss account declined to $4.8 million compared to $6.1 million at December 31, 2016. At December 31, 2017, the Company’s lower levels of loans classified as substandard and non-accrual were contributing factors in the Company’s reduced levels of provision for loan loss expense.

At December 31, 2017, net loans outstanding were $637.1 million compared to $604.3 million at December 31, 2016. For the years ended December 31, 2017 and December 31, 2016, loan growth has driven improved profitability levels. The Company’s net loan growth in each of the last two years is as follows (In Thousands):

	Dollar		Percent			Dollar		Percent
	Growth		Growth			Growth		Growth
	12/31/2017		12/31/2017			12/31/2016		12/31/2016
Loan growth, net of the allowance for loan loss		32,816		5.43	%		47,937		8.62	%

In each of the last two years, a significant portion of the Company’s loan growth has occurred in two key markets. At December 31, 2017 and December 31, 2016, the Company’s loan production office (“Nashville LPO”) experienced loan growth of $26.1 million and $27.1 million, respectively. Christian County, Kentucky, the Company’s home market, experienced loan growth of $5.0 million and $24.2 million for the years ended December 31, 2017 and December 31, 2016, respectively. The highly desirable demographics and growth characteristics of the Nashville market will provide the most significant opportunities for the Company’s future loan growth.

5

As the Company’s Nashville LPO office has continued to find success, the Company’s non-residential loan portfolio has experienced significant growth as outlined by the table below:

	12/31/2017			12/31/2016			12/31/2015
	(Dollars in Thousands, Except Percentages)
Non-residential real estate loans	$	224,952		$	182,940		$	149,711
Year over year growth	$	42,012		$	33,229		($	885	)
Growth rate		23.0	%		22.2	%		-0.59	%

Comparison of Operating Results for the Years Ended December 31, 2017 and 2016

The Company’s net income for the year ended December 31, 2017 and December 31, 2016 was $3.3 million and $2.9 million, respectively. The modest improvement in net income was largely the result of loan growth and lower levels of provision for loan loss expenses. The passage of the Tax Cut and Jobs Act of 2017 reduces the Company’s future corporate tax rate but required a $980,000 after-tax expense to reduce the value of the Company’s deferred tax assets. Improvements in net income were further limited by more than $1.1 million in legal expenses that resulted from a shareholder lawsuit and shareholder demand letter.

For the year ended December 31, 2017, total interest income on loans increased $2.4 million compared to December 31, 2016 due to the Company’s $56.1 million increase in the average balance of net loans. For the year ended December 31, 2017, the Company’s interest income on investments declined by $411,000 due to lower average balances of securities as the Company continues to re-allocate cash flows generated by the investment portfolio into loans.

For the year ended December 31, 2017, interest expense was $6.0 million compared to $5.3 million for the year ended December 31, 2016. The increase in interest expense was largely the result of higher short term interest rates as the Federal Reserve Open Market Committee (“FED”) increased its overnight borrowing rate to 1.50% by the end of 2017. In 2017, the Company increased its reliance on both Federal Home Loan Bank borrowings and brokered deposits as loan demand and deposit outflows become more unpredictable during the year.

The average cost of deposits was 0.64% for the year ended December 31, 2017 compared to 0.59% of average deposits for the year ended December 31, 2016. Over the same period, the average balance of deposits increased from $721.8 million for the year ended December 31, 2016 to $747.8 million for the year ended December 31, 2017. For the year ended December 31, 2017, interest expense on the variable rate trust preferred securities issued by the Company increased $48,000 compared to the year ended December 31, 2016 due to an increase in the three month Libor rate.    

The Company determined that an additional $477,000 and $1.2 million in provision for loan loss expense was required for the years ended December 31, 2017 and December 31, 2016, respectively. We reduced our provision expense in 2017 due to lower levels of non-accrual and substandard loans. Management uses a number of factors in determining the amount of provision for loan loss expense that is necessary including the amounts of current periods loan charge offs and recoveries, our perceived trends of asset quality, and the Company’s current growth prospects of its loan portfolio. The Company’s ratio of allowance for loan losses to non-accrual loans at December 31, 2017 and December 31, 2016 was 375.74% and 67.36%, respectively. The following table depicts the level of non-performing loans, classified assets and charge offs at December 31, 2017 and December 31, 2016:

	12/31/2017		12/31/2016
	(Dollars in Thousands)
Non-performing assets		4,742		11,471
Classified assets		10,780		29,339
Net charge offs		1,763		829

6

For the year ended December 31, 2017, total non-interest income was $8.0 million, an increase of $95,000 compared to December 31, 2016. For the year ended December 31, 2017, the slight increase in non-interest income was accomplished despite a $443,000 decline in gains on the sale of securities and a $264,000 decline in mortgage origination income. The decline of income in both gains on the sale of securities and mortgage origination income is partially attributable to rising interest rates as well as increased competition for mortgage originators in the Company’s higher growth markets.

For the year ended December 31, 2017, the Company’s service charge income was $3.2 million, representing an increase of $436,000 compared to the year ended December 31, 2016. The increase in service charge income is the result of changes made by management to the Company’s retail deposit account offerings that increased the number of checking accounts paying a monthly fee. For the year ended December 31, 2017, other non-interest income increased by $306,000 as compared to the year ended December 31, 2016. The increase in other income was largely the result of a $225,000 one-time payment collected from a vendor.

Total non-interest expense for the years ended December 31, 2017 and December 31, 2016 was $29.9 million, respectively. For the year ended December 31, 2017, the Company’s salaries and benefits expense increased by $649,000 compared to the year ended December 31, 2016. The increase in salary and benefit expenses in 2017 compared to 2016 was the result of a $300,000 increase in health insurance benefits and a $349,000 increase in compensation. For the year ended December 31, 2017, professional services expenses were $2.3 million compared to $1.4 million for the year ended December 31, 2016 largely due to legal expenses of approximately $1.1 million incurred as a result of a shareholder lawsuit and shareholder demand letter.

For the year ended December 31, 2017, net foreclosure expenses were $9,000 compared to $448,000 for the year ended December 31, 2016. The decline in net foreclosure expenses for the year ended December 31, 2017 was the result of a reduction in both the number and complexity of foreclosures and higher realized values on properties sold. For the year ended December 31, 2017, other operating expenses were $3.6 million compared to $4.2 million for the year ended December 31, 2016.

Income Taxes. The effective tax rates for the years ended December 31, 2017 and December 31, 2016, was 39.4% and 11.1%, respectively. For the year ended December 31, 2017, the Company’s effective tax rate was largely influenced by the $980,000 reduction in the Company’s deferred tax asset. For the year ended December 31, 2017, higher tax rates were the result of higher levels of taxable income and reduced balances of municipal bonds.

In 2018, Management anticipates that short term interest rates will continue to increase, placing pressures on net interest margins. The Company’s opportunities for improved net income lies in management’s ability to continue to grow the Company’s loan portfolio while maintaining net interest margins at or near current levels. Another key factor to the Company’s future success will be in reducing our operating expenses through reduced legal expenses and improved operational efficiencies.

Comparison of Operating Results for the Years Ended December 31, 2016 and 2015

The Company’s net income for the year ended December 31, 2016 was $2.9 million compared to $2.4 million for the year ended December 31, 2015. The improvement in net income for the year ended December 31, 2016 compared to December 31, 2015 was largely the result of loan growth that occurred in the second half of the year.

Interest income declined $1.4 million from $33.1 million to $31.7 million, or approximately 4.2% during the year ended December 31, 2016 compared to the year ended December 31, 2015. The decline in interest income was largely attributable to a decline in yields on assets, the collection of $830,000 in non-accrual interest in 2015 and a decline in the average balance of our available for sale portfolio.

Interest expense declined to $5.3 million for the year ended December 31, 2016 compared to $6.6 million for 2015. The decline in interest expense was largely attributable to the $791,000 decline in interest expense on deposits and a $351,000 decline on interest expense on subordinated debentures. The Company determined that an additional $1.2 million and $1.1 million in provision for loan loss expense was required for the years ended December 31, 2016 and December 31, 2015, respectively.

7

For the year ended December 31, 2016, non-interest income was $7.9 million compared to $7.6 million for the year ended December 31, 2015. For the year ended December 31, 2016, the Company’s service charge income was $2.8 million, representing a decline of $137,000 as compared to the year ended December 31, 2015.

For the year ended December 31, 2016, income from mortgage origination income was $1.6 million compared to $1.2 million for the year ended December 31, 2015. The increase in mortgage origination revenue for 2016 was the result of an active home market due to the continued low level of mortgage interest rates that were in place in 2016.

Total non-interest expense for the year ended December 31, 2016 was $29.9 million, compared to $30.4 million in 2015. For the year ended December 31, 2016, the Company’s salaries and benefits expense declined by $410,000, or 2.6%, as compared to the year ended December 31, 2015. For the year ended December 31, 2016, other operating expenses were $4.2 million compared to $3.7 million for the year ended December 31, 2015 largely due to higher legal expenses.

Lending Activities

The total gross loans, net of deferred loan fees of $443,000, totaled $641.9 million at December 31, 2017, representing 70.0% of total assets at that date. Set forth below is selected data relating to the composition of the loan portfolio by type of loan at the dates indicated. At December 31, 2017, there were no concentrations of loans exceeding 10% of total loans other than as disclosed below:

	2017						2016						2015						2014						2013
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in Thousands)
Type of Loan:
Real estate loans:
One-to-four family residential	$	200,446			31.2	%	$	185,098			30.3	%		181,414			32.3	%		186,891			34.2	%		192,603			34.9	%
Multi-family residential		37,445			5.8	%		34,284			5.6	%		24,725			4.4	%		25,991			4.8	%		29,736			5.4	%
Construction		30,246			4.7	%		39,255			6.4	%		34,878			6.2	%		24,241			4.4	%		10,618			1.9	%
Non-residential (1)		276,676			43.1	%		254,576			41.7	%		214,410			38.1	%		220,124			40.3	%		244,241			44.2	%
Total real estate loans		544,813			84.8	%		513,213			84.0	%		455,427			81.0	%		457,247			83.7	%		477,198			86.4	%
Other loans:
Consumer loans		8,620			1.3	%		8,717			1.4	%		20,324			3.6	%		14,438			2.7	%		11,167			2.0	%
Commercial loans		88,938			13.9	%		88,907			14.6	%		86,743			15.4	%		74,154			13.6	%		64,041			11.6	%
Total other loans		97,558			15.2	%		97,624			16.0	%		107,067			19.0	%		88,592			16.3	%		75,208			13.6	%
		642,371			100.0	%		610,837			100.0	%		562,494			100.0	%		545,839			100.0	%		552,406			100.0	%
Deferred loan cost, net		(443	)					(439	)					(445	)					(286	)					(92	)
Allowance for loan losses		(4,826	)					(6,112	)					(5,700	)					(6,289	)					(8,682	)
Total	$	637,102					$	604,286						556,349						539,264						543,632

(1) Consists of loans secured by first liens on residential lots and loans secured by first mortgages on commercial real property, farmland and land.

8

Loan Maturity Schedule. The following table sets forth certain information at December 31, 2017 regarding the dollar amount of loans maturing in the portfolio based on their contractual maturity dates. Demand loans, loans having no stated schedule of repayments, loans having no stated maturity, and overdrafts are due in one year or less.

							Due		Due		Due
							3 through 5		5 through 10		10 through 15		Due 15
			Due the year				years after		years after		years after		years after
			ending December 31,				December 31,		December 31,		December 31,		December 31,
	2018		2019		2020		2018		2018		2018		2018		Total
	(Dollars in Thousands)
One-to-four family residential		5,854		10,177		9,725		25,147		33,781		29,863		85,899		200,446
Multi-family residential		15		589		3,938		9,281		19,338		3,427		857		37,445
Construction		16,977		2,875		258		1,885		2,827		4,945		479		30,246
Non-residential		33,277		18,067		22,499		59,565		75,253		30,615		37,400		276,676
Consumer		1,736		1,630		2,646		2,233		375		—		—		8,620
Commercial		26,327		18,189		7,995		10,728		21,714		975		3,010		88,938
Total		84,186		51,527		47,061		108,839		153,288		69,825		127,645		642,371

The following table sets forth at December 31, 2017 the dollar amount of all loans due after December 31, 2017 which had predetermined interest rates and had floating or adjustable interest rates.

	Predetermined Rate		Floating or Adjustable Rate
	(Dollars In Thousands)
One-to-four family residential	$	86,928	$	107,664
Multi-family residential		27,786		9,644
Construction		5,368		7,901
Non-residential		130,199		113,200
Consumer		6,835		49
Commercial		45,292		17,319
Total	$	302,408	$	255,777

Scheduled contractual principal repayments of loans do not reflect the actual life of such assets. The average life of loans is substantially less than their contractual terms because of prepayments. In addition, due-on-sale clauses on loans generally give the lender the right to declare a loan immediately due and payable in the event, among other things, that the borrower sells the real property subject to the mortgage and the loan is not repaid. The average life of mortgage loans tends to increase when current mortgage loan market rates are substantially higher than rates on existing mortgage loans and, conversely, decrease when current mortgage loan market rates are substantially lower than rates on existing mortgage loans.

Management measures commercial real estate (CRE) concentrations as discussed in Concentrations of Commercial Real Estate Lending, Sound Risk Management Practices issued on December 12, 2006 jointly by the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Federal Reserve) and the Federal Deposit Insurance Corporation (FDIC). In this guidance, the agencies make a significant distinction between owner-occupied CRE and non-owner occupied CRE. The agencies have a heightened level of concern with those loans with risk profiles sensitive to the condition of the CRE market.

CRE loans secured by non-farm, non-residential CRE where the primary source of repayment is the cash flow from the ongoing operations and activities conducted by the owner of the property are excluded from the guidance. The Bank has used the FDIC’s call report instructions to calculate that $211.9 million of our loan portfolio, or 211.9% of the Bank’s risk based capital, consists of properties classified as non-owner occupied commercial real estate. Non-owner occupied commercial real estate loans (“NOOCRE”) include all loans secured by multi-family properties, all construction and land development loans and certain other commercial real estate loans identified by regulations as non-owner occupied.

9

At December 31, 2017, 2016 and 2015, the Company’s NOOCRE portfolio consisted of the following:

	12/31/2017		12/31/2016		12/31/2015
	(Dollars in Thousands)
Manufacturing	$	8,952		4,924		303
Medical		5,562		2,490		—
Hotel		17,281		16,364		13,083
Nursing Home		3,408		1,411		550
Office Building		16,105		9,205		4,233
Retail		60,062		43,595		31,026
Warehouse / Other		17,990		26,263		18,200
Total	$	129,360		104,252		67,395

Loan Underwriting Policies. Lending activities are subject to written, non-discriminatory underwriting standards and to loan origination procedures prescribed by the Board of Directors and its management. Detailed loan applications are obtained to determine the ability of borrowers to repay, and the more significant items on these applications are verified through the use of credit reports, financial statements and confirmations. Loan requests exceeding loan officer limits must be approved by the Chief Credit Officer, Chief Executive Officer, Executive Loan Committee of the Board of Directors or the entire Board of Directors.

The Bank offers a residential fixed rate loan program with maturities of 15, 20, and 30 years. The majority of our fixed rate single-family loans are underwritten and closed in accordance with secondary market standards. The Bank originates these loans with intent to sell on the secondary market. However, the Bank may choose to maintain a certain percentage of these loans in our portfolio. The Bank offers both servicing retained and servicing released products in an attempt to meet the needs of our customers. Due to the increasing level of regulatory burden imposed on companies that provide servicing for single family home loans, our pricing strategy provides incentives for the vast majority of our customers to select a servicing released loan product.

The Bank may lend up to 100% of the appraised value of the residential real property securing a mortgage loan. Under its lending policies, the Bank may originate a one-to-four family residential mortgage loan for owner-occupied property with a loan-to-value ratio of up to 95%. In most cases, the Bank requires private mortgage insurance for loan-to-value ratios exceeding 85%. For residential properties that are not owner-occupied, the Bank generally does not lend more than 80% of the appraised value. For all residential mortgage loans, the Bank may increase its lending level on a case-by-case basis.

At December 31, 2017 and December 31, 2016, the Bank held 1-4 family residential mortgages with a loan to value ratio exceeding 90% without private mortgage insurance in the amount of $2.0 million and $2.4 million, respectively. At December 31, 2017, no loans with a loan to value exceeding 90% without private mortgage insurance are past due 30 days or more or in non-accrual status. At December 31, 2016, the Company had approximately $24,000 in loans with a loan to value exceeding 90% without private mortgage insurance past due 30 days or more.

Under applicable law, with certain limited exceptions, loans and extensions of credit outstanding by a commercial bank to a person at one time shall not exceed 15% of the institution’s unimpaired capital and surplus. Loans and extensions of credit fully secured by readily marketable collateral may comprise an additional 10% of unimpaired capital and surplus. Under these limits, the Bank’s loans to one borrower were limited to approximately $15.0 million at December 31, 2017. At that date, the Bank had no lending relationships in excess of the loans-to-one-borrower limit.

10

Non-accrual Loans and Other Problem Assets

The Company’s non-accrual loans to total loan ratio at December 31, 2017 was 0.20%. Loans are placed on a non-accrual status when the loan is past due in excess of 90 days or the collection of principal and interest is doubtful. At December 31, 2017, the Company had $88,000 in loans secured by a single family residence that was past due more than 90 days and still accruing interest. The Company’s total non-performing loan to total loan ratio was 0.21% at December 31, 2017. The following table sets forth information with respect to the Company’s non-performing loans at the dates indicated.        

	At December 31,
	2017			2016			2015			2014			2013
	(Dollars In Thousands)
Accruing loans which are contractually past due 90 days or more:
Residential real estate	$	88			—			—			—			—
Total		88			—			—			—			—
Non-Accrual Loans:
Residential real estate		672			672			2,282			1,501			948
Construction		—			—			—			—			175
Multi-family		—			—			1,968			95			—
Land		40			7,675			1,553			215			1,218
Non-residential real estate		—			208			247			1,159			6,546
Farmland		111			—			166			115			703
Consumer		3			3			8			—			13
Commercial		459			516			1,198			90			463
Total non-performing loans	$	1,373		$	9,074		$	7,422		$	3,175		$	10,066
Percentage of total loans		0.21	%		1.49	%		1.32	%		0.58	%		1.82	%

Federal regulations require commercial banks to classify their assets based on credit quality. In determining the classification of an asset, the Company utilizes a Classified Asset Committee consisting of members of senior management, accounting, credit analysis, loan administration, loan review, internal audit and collections. The committee attempts to determine the value of assets that are potentially impaired as well as the accurate reporting of Troubled Debt Restructuring (TDR) assets as defined later in this report. The committee’s function is an important step in management’s determination as to the necessary level of funding required in the Company’s allowance for loan loss account.

An asset is classified as substandard if it is determined to be inadequately protected by the current retained earnings and paying capacity of the obligor or of the collateral pledged, if any and may or may not be paying as agreed. An asset is classified as doubtful if full collection is highly questionable or improbable. An asset is classified as loss if it is considered uncollectible, even if a partial recovery could be expected in the future. The regulations also provide for a special mention designation, described as assets which do not currently expose a savings institution to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving management’s close attention. Such assets designated as special mention may include non-performing loans consistent with the above definition.

Assets classified as substandard or doubtful with balances exceeding $250,000 require the Company to conduct an impairment test to determine if the establishment of a specific reserve against the allowance for loan loss account is necessary. Typically, the basis for a loan impairment test is the current market value of the collateral, discounted to allow for selling and carrying cost. The Company requires a new appraisal for all impairment testing of collateral when the loan balance exceeds $250,000. If the Company determines that a loan relationship is collateral dependent, it will charge off the portion of that loan that is deemed to be impaired. The Company defines collateral dependent as any loan in that the customer will be unable to reduce the principal balance of the loan without the complete or partial sale of the collateral.

11

State and federal examiners may disagree with management’s classifications. If management does not agree with an examiner’s classification of an asset, it may appeal this determination to the appropriate supervisory examiner with the Kentucky Department of Financial Institutions (“KDFI”) and the FDIC. Management regularly reviews its assets to determine whether any assets require classification or re-classification. At December 31, 2017, the Bank had $10.8 million in loans classified as substandard and no loans classified as doubtful. Loans classified as substandard or doubtful by the Bank meet our classification of impaired loans, as defined by ASC 942-310-45-1. At December 31, 2017 and including our most recent examination, there were no material disagreements between examiners and management regarding risk grading or the funding of the allowance for loan loss account.

The tables below provide a summary of loans classified by the Bank as special mention and substandard by loan type for the years ended December 31, 2017 and December 31, 2016. The table also identifies the amount of the Bank’s allowance for loan loss account specifically allocated to individual loans for the specific periods below:

	Special				Specific Allowance
December 31, 2017	Mention		Substandard		for Impairment
	(Dollars in Thousands)
One-to-four family residential	$	—		572		—
Home equity line of credit		—		412		—
Land		—		555		—
Non-residential real estate		979		7,072		2
Farmland		1,147		451		—
Consumer		—		224		54
Commercial		3,572		1,474		233
Total	$	5,698		10,780		289

	Special				Specific Allowance
December 31, 2016	Mention		Substandard		for Impairment
	(Dollars in Thousands)
One-to-four family residential	$	744		1,253		—
Home equity line of credit		25		550		—
Junior lien		30		11		—
Multi-family		—		3,004		—
Land		35		8,224		1,036
Non-residential real estate		3		10,542		—
Farmland		674		2,290		—
Consumer		—		335		84
Commercial		603		3,130		28
Total	$	2,114		29,339		1,148

Troubled Debt Restructuring

A loan customer may experience financial hardship and make request that the Company modify the original terms of their loan agreement. 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 Company’s collateral. Loans that are modified as a result of a customer’s financial distress are classified as TDRs. The classification of a loan as a TDR is important in that it indicates that a particular customer may not be past due but represents a credit weakness due to the Company’s willingness to modify loan terms based on the financial weakness of the borrower.

12

The table below provides a summary of the activity of loans classified as TDR for the year ended December 31, 2017:

	Balance at		New		Loss on		Loan			Balance at
	December 31, 2016		TDR		Foreclosure		Amortization			December 31, 2017
	(Dollars in Thousands)
Multi-family real estate	$	815		—		—		(815	)		—
Non-residential real estate		5,646		—		—		(2,483	)		3,163
Total TDR	$	6,461		—		—		(3,298	)		3,163
The table below provides a summary of the activity of loans classified as TDR for the year ended December 31, 2016:
	Balance at		New		Loss on		Loan			Balance at
	December 31, 2015		TDR		Foreclosure		Amortization			December 31, 2016
	(Dollars in Thousands)
Multi-family real estate		—		816		—		(1	)		815
Non-residential real estate	$	5,536		228		—		(118	)		5,646
Total TDR	$	5,536		1,044		—		(119	)		6,461

Real estate acquired by the Company as a result of foreclosure is classified as foreclosed assets until such time as it is sold. When such property is acquired, it is recorded at its fair value less estimated costs of sale. At the time of foreclosure, the collateral is reduced in value to its fair market value less holding and selling expenses and the remaining balance is charged against the allowance for loan losses. The value of foreclosed assets is periodically evaluated to ascertain its current market value. Additional reductions in market value are recognized as an expense through a charge to losses on foreclosures. At December 31, 2017, the Company’s total non-performing asset to total asset ratio was 0.52%. The following table sets forth information with respect to the Bank’s real estate and other assets owned at December 31, 2017, December 31, 2016 and December 31, 2015:

	2017		2016		2015
	(Dollars in Thousands)
One-to-four family first mortgages	$	169		135		55
Home equity line of credit		—		28		—
Multi-family		—		1,775		—
Land		3,200		—		943
Non-residential real estate		—		459		738
Total real estate and other assets owned	$	3,369		2,397		1,736

13

Allowance for Loan Losses. In originating loans, the Company recognizes that credit losses will be experienced and that the risk of loss will vary with, among other things, the type of loan being made, the creditworthiness of the borrower over the term of the loan, general economic conditions and, in the case of a secured loan, the quality of the security for the loan. It is management’s policy to maintain an adequate allowance for loan losses based on, among other things, the Company’s and the industry’s historical loan loss experience, evaluation of economic conditions, regular reviews of delinquencies and loan portfolio quality and evolving standards imposed by federal bank examiners and other regulatory agencies. The Company increases its allowance for loan losses by charging provisions for loan losses against the Company’s income.

Management will continue to actively monitor the Company’s asset quality and allowance for loan losses. Management will charge off loans and properties acquired in settlement of loans against the allowances for loan losses on such loans and such properties when appropriate and will provide specific loss allowances when necessary. Although management believes it uses the best information available to make determinations with respect to the allowances for loan losses and believes such allowances are adequate, future adjustments may be necessary if economic conditions differ substantially from the economic conditions in the assumptions used in making the initial determinations.

The Company’s methodology for establishing the allowance for loan losses takes into consideration probable losses that have been identified in connection with specific assets as well as losses that have not been identified but have occurred in the last twelve quarters. Management conducts regular reviews of the Company’s assets and evaluates the need to establish allowances on the basis of this review. Allowances are established by the Board of Directors on a quarterly basis based on an assessment of risk in the Company’s assets taking into consideration the composition and quality of the portfolio, delinquency trends, current charge-off and loss experience, loan concentrations, the state of the real estate market, regulatory reviews conducted in the regulatory examination process and economic conditions generally.

Specific reserves will be provided for individual assets, or portions of assets, when ultimate collection is considered improbable by management based on the current payment status of the assets and the fair value of the security. At the date of foreclosure or other repossession, the Company would transfer the property to foreclosed assets at the lower of cost or estimated fair value and subsequently at the lower of book value or fair value less estimated selling costs. Any portion of the outstanding loan balance in excess of fair value less estimated selling costs would be charged off against the allowance for loan losses. If, upon ultimate disposition of the property, net sales proceeds exceed the net carrying value of the property, a gain on sale of other real estate would be recorded.

Financial institutions must provide adequate disclosure of the methodology used regarding maintenance of an adequate allowance for loan and lease losses and an effective loan review system. The Company utilizes a combination of its twelve quarter loan loss history and the sum of all impairment testing completed on individually classified loans deemed collateral dependent. The charge off history is weighted using the sum of the year’s digits. This method provides a 15.4% weight to the most recent quarterly losses, then 14.1% for the prior quarter’s losses, 12.8% for the 2^nd prior quarter’s losses and 11.5% for the prior quarter’s losses and continuing for twelve quarters.

Using this method, the Company trends for increasing or decreasing levels of charge offs may materially impact the funding level of the allowance for loan loss account. Additionally, the Company reserves the loss amount of any loans deemed to be impaired. The Company also applies certain qualitative factors in reviewing its allowance funding, including local and national delinquency and loss trends, noted concentrations or risk and recent additions to regulatory guidance. Financial institutions regulated by the KDFI and FDIC may require institutions to immediately charge off any portion of a collateral dependent loan that is deemed to be impaired.

14

The following table sets forth an analysis of the Bank’s allowance for loan losses for the years indicated.

	Year Ended December 31,
	2017			2016			2015			2014			2013
	(Dollars in thousands)
Balance at beginning of period	$	6,112			5,700			6,289			8,682			10,648
Loans charged off:
Commercial loans		(2,832	)		(1,016	)		(1,334	)		(501	)		(2,802	)
Consumer loans and overdrafts		(261	)		(422	)		(298	)		(415	)		(649	)
Residential real estate		(66	)		(30	)		(235	)		(316	)		(993	)
Total charge-offs		(3,159	)		(1,468	)		(1,867	)		(1,232	)		(4,444	)
Recoveries		1,396			639			227			1,112			874
Net loans charged off		(1,763	)		(829	)		(1,640	)		(120	)		(3,570	)
Provision for loan losses		477			1,241			1,051			(2,273	)		1,604
Balance at end of period	$	4,826			6,112			5,700			6,289			8,682
Ratio of net charge-offs to average loans outstanding during the period		0.28	%		0.15	%		0.29	%		0.03	%		0.66	%

The following table sets forth the breakdown of the allowance for loan losses by loan category at the dates indicated. Management believes that the allowance can be allocated by category only on an approximate basis. The allocation of the allowance to each category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any category.

	At December 31,
	2017					2016					2015					2014
	Amount		Percent of Allowance in Each Category To Total Allowance			Amount		Percent of Allowance in Each Category To Total Allowance			Amount		Percent of Allowance in Each Category To Total Allowance			Amount		Percent of Allowance in Each Category To Total Allowance
	(Dollars in thousands)
One-to-four family	$	941		19.5	%	$	1,120		18.3	%	$	1,239		21.7	%	$	1,393		22.1	%
Construction		161		3.3	%		277		4.5	%		377		6.6	%		146		2.3	%
Multi-family residential		314		6.5	%		412		6.8	%		227		4.0	%		85		1.4	%
Non-residential		2,379		49.3	%		3,502		57.3	%		2,876		50.5	%		3,667		58.3	%
Other loans		1,031		21.4	%		801		13.1	%		981		17.2	%		998		15.9	%
Total allowance for loan losses	$	4,826		100.0	%	$	6,112		100.0	%	$	5,700		100.0	%	$	6,289		100.0	%

	At December 31, 2013
	Amount		Percent of Allowance In Each Category To Total Allowance
	(Dollars In Thousands)
One-to-four family	$	2,305		26.5	%
Construction		88		1.0	%
Multi-family residential		466		5.4	%
Non-residential		4,534		52.2	%
Other consumer loans		1,289		14.9	%
Total allowance for loan losses	$	8,682		100.0	%

15

Investment Securities

The Company purchases investments in order to maintain the levels of liquid assets required by regulatory authorities and manage cash flow, diversify its assets, obtain yield and to satisfy certain requirements for favorable tax treatment. The principal objective of the investment policy is to earn as high a rate of return as possible while giving consideration to financial risk, credit risk, liquidity risk and interest rate risk. The investment activities of the Company consist primarily of investments in U.S. Government agency securities, municipal and corporate bonds, CMOs (see definition below), and mortgage-backed securities. Typical investments include federally sponsored agency mortgage pass-through and federally sponsored agency and mortgage-related securities. Investment and aggregate investment limitations and credit quality parameters of each class of investment are prescribed in the Company’s investment policy.

The Company purchases U.S. government agency securities for terms fifteen years or less. Securities may or may not have call options. At December 31, 2017, the Company’s agency security portfolio consisted of the following:

	Book		Market
	Value		Value
	(Dollars in Thousands)
Small Business Administration:
Fixed rate bonds		53,046		53,257
Floating rate pools		4,356		4,321
United State Agency Bonds:
Non-Callable		19,061		18,871
Callable		7,747		7,644
Total Agency Bonds		84,210		84,093

Small Business Administration (“SBA”) fixed rates notes have a maturity of either ten or twenty years and may pay interest either monthly or semi-annually with principal typically paid semi-annually. SBA fixed rate notes typically finance commercial real estate and have a ten year prepayment penalty. SBA pools are floating rate securities are typically indexed to either the prime rate or LIBOR and have final maturities of ten, twenty-five or thirty years and pay principal and interest monthly. The interest rates on SBA pools reset quarterly or monthly, providing the Company with lower price volatility as compared to fixed rate securities. The purchase of variable rate securities with low price volatility provides the Company with a source of lower risk liquidity should loan demand improve or interest rates increase. The risk in purchasing SBA Pools is that they are typically purchased at large premiums and therefore carry a greater than higher level of prepayment risk while providing lower yields as compared to many long term fixed rate investment products.

At December 31, 2017, the Company has $27.0 million in tax free municipal bonds and $1.3 million in taxable municipal bonds. The Company’s investment policy limits the Company’s total municipal bond portfolio to 125% of the Bank’s Tier 1 Capital, places a concentration limit on the amounts of municipal bonds per issuer and limits concentrations in the amounts a single state guarantee program can provide to a bond at 75% of Tier 1 Capital. At December 31, 2017, the Company is in compliance with its concentration policy.

Mortgage-backed securities (“MBS”) entitle the Company to receive a pro-rata portion of the cash flow from an identified pool of single family mortgages. A Collateralized Mortgage Obligation (“CMO”) is a pool of single family loans in which the interest and principal cash flows may be structured so that certain classes of ownership receive principal payments in a manner other than a pro-rata basis. Collateralized mortgage-backed securities (“CMBS”) held by the Company are securities collateralized by either a pool or a single multi-family property. The Company has one asset backed security issued by the U.S. Student Loan Marketing Association (“SLMA”).

16

The asset backed security issued by SLMA has a 97% full faith and credit guarantee by the agency has a par value of $3.9 million. The SLMA bond is floating rate security tied to the one month LIBOR rate and re-prices on a monthly basis. At December 31, 2017 and December 31, 2016, the Company owned one mortgage back security with a book and market value of $22,000 and $91,000, respectively, that were not issued by an agency of the U.S. Government. All remaining securities owned by the Company labeled as MBS, CMO or CMBS were issued by a U.S. Government Agency.

At December 31, 2017, the Company’s mortgage backed security portfolio consisted of the following:

	Book		Market
	Value		Value
	(Dollars in Thousands)
CMO - whole loan		23		23
CMO - fixed rate		3,784		3,783
CMBS - fixed rate		4,179		4,142
MBS - fixed rate		59,653		59,201
Asset backed securities		3,750		3,615
Total mortgage backed securities		71,389		70,764

In June of 2008, the Company purchased $2.0 million par value of a private placement subordinated debenture issued by First Financial Services Corporation (“FFKY”), the holding company for First Federal Savings Bank (“First Fed”). The debenture is a thirty year security with a coupon rate of 8.00%. FFKY was a NASDAQ listed commercial bank holding company located in Elizabethtown, Kentucky. In October of 2010, FFKY informed the owners of its subordinated trust, including the Company, that it would defer future dividend payments for up to five years as prescribed by the trust. FFKY had significant asset quality issues that have resulted in negative earnings beginning in 2009. In 2013, the Company recognized a $400,000 other-than-temporary impairment loss on the subordinated debenture issued by FFKY. The recognition of a loss was the result of the Company’s analysis that, despite slowly improving its financial condition, FFKY was not likely to resume dividend payments prior to the end of the five year interest rate extension period.    

On January 1, 2015, FFKY was sold and merged into Community Bank Shares of Indiana, (“CBIN”). On January 12, 2015, the Company was notified by Wilmington Trust that its investment in First Federal Statutory Trust III, (“FFKY Trust”), had elected to terminate the extension period of interest payments effective January 1, 2015. All accrued interest due and payable to all owners of securities through March 15, 2015 was paid to the Trustee in January 2015. On January 21, 2015, the Company determined that FFKY Trust is no longer impaired and has placed the investment back into accrual status. On July 1, 2015, CBIN changed its NASDAQ ticker symbol to YCB. In September of 2016, YCB was sold and merged into Wesbanco of West Virginia (‘WSBC”). WSBC has approximately $9.9 billion in assets. WSBC is well capitalized, highly profitable and appears to maintain strong asset quality. At December 31, 2017, interest payments on this security are current.

Deposit Activities

Deposits are the primary source of the Company’s funds for lending, investment activities and general operational purposes. In addition to deposits, the Company derives funds from loan principal and interest repayments, maturities of investment securities and mortgage-backed securities and interest payments thereon. Although scheduled loan repayments are a relatively stable source of funds, deposit inflows and outflows are influenced by general interest rates, and money market conditions and business cycles. Borrowings may be used on a short-term basis to compensate for reductions in the availability of funds, or on a long-term basis for general corporate purposes. The Company has access to borrow from the FHLB. The Company relies upon retail deposits rather than borrowings as its primary source of funding.

The Company attracts deposits principally from within its market area by offering competitive rates on its deposit instruments, including money market accounts, passbook savings accounts, individual retirement accounts, and certificates of deposit which range in maturity from three months to five years. The Company reviews its deposit mix and pricing on a weekly basis. In determining the characteristics of its deposit accounts, the Company considers the rates offered by competing institutions, lending and liquidity requirements, growth goals and federal regulations.

17

At December 31, 2017, the Company had $60.1 million in brokered deposits, or 8.0% of total deposits compared to $33.4 million at December 31, 2016. The Company utilizes brokered deposits to fill in maturity gaps in an effort to balance the amount of time deposits maturing in any one period and as an alternative source of funding. All brokered deposits are FDIC insured.

The Company attempts to compete for deposits with other institutions in its market area by offering competitively priced deposit instruments that meet the needs of its customers. Additionally, the Company seeks to meet customers’ needs by providing convenient customer service to the community. With the exception of brokered deposits, substantially all of the Company’s depositors are Kentucky or Tennessee residents who reside in the Company’s market area. At December 31, 2017, the Company had deposit programs and balances as described below:

Interest Rate*	Minimum Term	Category	Minimum Amount		Balance		Percentage of Total Deposits
			(In Thousands)
—   %	None	Non-interest bearing	$	100	$	136,197		18.1	%
0.05%	None	Interest checking accounts		1,500		208,496		27.7	%
0.10%	None	Savings and money market		10		104,347		13.8	%
						449,040		59.6	%
		Certificates of Deposit
0.30%	3 months or less	Fixed-term, fixed rate		1,000		60,662		8.0	%
0.49%	3 to 12 months	Fixed-term, fixed-rate		1,000		130,293		17.3	%
1.20%	12 to 24-months	Fixed-term, fixed-rate		1,000		68,714		9.1	%
1.50%	24 to 36-months	Fixed-term, fixed-rate		1,000		30,079		4.0	%
0.95%	36 to 48-months	Fixed-term, fixed-rate		1,000		10,649		1.4	%
1.54%	48 to 60-months	Fixed-term, fixed rate		1,000		4,572		0.6	%
						304,969		40.5	%
					$	754,009		100.0	%

* Represents current interest rate offered by the Bank.

At December 31, 2017, certificates of deposits included approximately $176.8 million of deposits greater than $100,000, as compared to $157.0 million and $169.3 million at December 31, 2016 and December 31, 2015, respectively. Certificates of deposit at December 31, 2017 included approximately $97.8 million of deposits with balances of $250,000 or more compared to $79.7 million and $78.8 million at December 31, 2016 and December 31, 2015, respectively. Such time deposits may be risky because their continued presence in the Company is dependent partially upon the rates paid by the Company rather than any customer relationship and, therefore, may be withdrawn upon maturity if another institution offers higher interest rates. At this time, the Company does not believe that it will need to pay above market rates to maintain such certificates of deposit, but anticipates higher interest rates in the future.

The following table indicates the amount of the Company’s certificates of deposit of $250,000 or more by time remaining until maturity as of December 31, 2017.

Maturity Period	Certificates of Deposit
	(Dollars in Thousands)
Three months or less	$	25,893
Over three through six months		17,934
Over six through 12 months		26,878
Over 12 months		27,139
Total	$	97,844

18

The following table sets forth the change in dollar amount of deposits in the various types of accounts offered by the Company between the dates indicated.

	Balance at December 31, 2017		% of Deposits			Increase (Decrease) from December 31, 2016			Balance at December 31, 2016		% of Deposits			Increase (Decrease) from December 31, 2015
	(Dollars in Thousands)
Non-interest bearing	$	136,197		18.1	%		5,052		$	131,145		17.9	%		6,075
Interest checking		208,496		27.7	%		(851	)		209,347		28.6	%		5,568
Savings and MMDA		104,347		13.8	%		5,035			99,312		13.5	%		3,419
Time deposits		304,969		40.4	%		11,891			293,078		40.0	%		(21,586	)
Total	$	754,009		100.0	%		21,127		$	732,882		100.0	%		(6,524	)

	Balance at December 31, 2015		% of Deposits			Increase (Decrease) from December 31, 2014			Balance at December 31, 2014		% of Deposits
	(Dollars in Thousands)
Non-interest bearing		125,070		16.9	%		10,019			115,051		15.7	%
Interest checking		203,779		27.5	%		17,163			186,616		25.5	%
Savings and MMDA		95,893		13.0	%		(1,833	)		97,726		13.4	%
Time deposits		314,664		42.6	%		(17,251	)		331,915		45.4	%
Total		739,406		100.0	%		8,098			731,308		100.0	%

The following table sets forth the time deposits in the Company classified by rates at the dates indicated.

	At December 31,
	2017		2016		2015
	(Dollars in Thousands)
0.01 - 2.00%	$	303,895		291,516		251,085
2.01 - 4.00%		1,074		1,562		63,579
4.01 - 6.00%		—		—		—
Total	$	304,969		293,078		314,664

The following table sets forth the amount and maturities of time deposits at December 31, 2017.

	Amount Due
	Less Than One Year		1-2 Years		2-3 Years		After 3 Years		Total
	(Dollars in Thousands)
0.00 - 2.00%	$	190,955		68,714		30,032		14,194		303,895
2.01 - 4.00%		—		—		47		1,027		1,074
4.01 - 6.00%		—		—		—		—		—
Total	$	190,955		68,714		30,079		15,221		304,969

19

Quantitative and Qualitative Disclosure about Market Risk

Quantitative Aspects of Market Risk. The principal market risk affecting the Company is risk associated with interest rate volatility (interest rate risk). The Company does not maintain a trading account for investment securities. The Company is not subject to foreign currency exchange rate risk or commodity price risk. Substantially all of the Company’s interest rate risk results from the Company’s lending, deposit taking, and investment activities. This risk could result in reduced net income, loss in fair values of assets and/or increases in fair values of liabilities due to changes in interest rates.

Qualitative Aspects of Market Risk. The Company’s principal financial objective is to achieve long-term profitability while reducing its exposure to fluctuating market interest rates. The Company has sought to reduce the exposure of its earnings to changes in market interest rates by attempting to manage the mismatch between assets and liabilities maturities and interest rates. The principal element in achieving this objective is to increase the interest rate sensitivity of the Company’s interest-earning assets by retaining adjustable rate loans in our portfolio. The Company relies on retail deposits as its primary source of funds. However, management is utilizing brokered deposits, wholesale repurchase agreements and FHLB borrowings as sources of liquidity. As part of its interest rate risk management strategy, the Company promotes demand accounts, overnight repurchase agreements and certificates of deposit with primarily terms of up to five years.

Impact of Inflation and Changing Prices

The consolidated financial statements and notes thereto presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time and due to inflation. The impact of inflation is reflected in the increased cost of the Company’s operations.

Unlike most industrial companies, nearly all the assets and liabilities of the Company are monetary in nature. As a result, changes in interest rates have a greater impact on the Company’s performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services.

Key components of a successful asset/liability strategy are the monitoring and managing of interest rate sensitivity of both the interest-earning asset and interest-bearing liability portfolios. The Company has employed various strategies intended to minimize the adverse effect of interest rate risk on future operations by providing a better match between the interest rate sensitivity between its assets and liabilities. In particular, the Company’s strategies attempt to stabilize net interest income for the long-term by protecting its interest rate spread against increases in interest rates.

Such strategies include the origination of adjustable-rate mortgage loans secured by one-to-four family residential real estate, and, to a lesser extent, multi-family real estate loans and the origination of other loans with interest rates that are more sensitive to adjustment based upon market conditions than long-term, fixed-rate residential mortgage loans. At December 31, 2017, approximately $113.5 million of the $200.4 million of one-to-four family residential loans originated by the Company (comprising 66.0% of such loans) had adjustable rates or will mature within one year.

Asset / Liability Management

Interest Rate Sensitivity Analysis

The Company’s profitability is affected by fluctuations in interest rates. A sudden and substantial increase or decrease in interest rates may adversely impact the Company’s earnings to the extent that the interest rates on interest earning assets and interest bearing liabilities do not change at the same speed, to the same extent or on the same basis. As part of its effort to manage interest rate risk, the Company monitors its net economic value of capital (“EVE”) by using our asset liability software to assist in modeling how changes in interest rates affect the values of various assets and liabilities on the Company’s balance sheet. By calculating our EVE, the Company is able to construct models that show the effect of different interest rate changes on its total capital. This risk analysis is a key tool that allows Company to prepare against constantly changing interest rates.

20

Generally, EVE is a cash flow calculation that takes the present value of all asset cash flows and subtracts the present value of all liability cash flows. The application of the methodology attempts to quantify interest rate risk as the change in the EVE, which would result from a theoretical 200 basis point (1 basis point equals .01%) change in market rates. Both a 300 basis point increase in market interest rates and a 100 basis point decrease in market interest rates are considered.

The following table presents the Company’s EVE at December 31, 2017 as calculated by the Company’s asset liability model for the year period ending December 31, 2017:

Change	Net Portfolio Value
In Rates	$ Amount		$ Change			% Change
	(Dollars in Thousands)
+300 bp	$	77,222	($	18,080	)		(19.0	%)
+200 bp		83,601		(11,701	)		(12.3	%)
+100 bp		90,601		(4,701	)		(4.9	%)
0 bp		95,302		—			—
-100 bp		100,234		4,933			5.2	%

Interest Rate Risk Measures: 200 Basis Point (bp) Rate Shock

Tangible Common Equity Ratio at December 31, 2017	9.6	%
Pre-Shock Tier 1 Capital Ratio at December 31, 2017	10.6	%
Exposure Measure: 2% Increase in Rates	9.3	%

The computation of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments and deposit decay rates, and should not be relied upon as indicative of actual results. The computations do not contemplate any actions the Company could undertake in response to changes in interest rates. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive” and by monitoring an institution’s interest rate sensitivity “gap.” An asset or liability is said to be interest rate sensitive within a specific period if it will mature or re-price within that period.

Interest Income Analysis

As a part of the Company’s asset liability management process, an emphasis is placed on the effect that changes in interest rates have on the net interest income of the Company and the resulting change in the net present value of capital. As a part of its analysis, the Company uses third party software and analytical tools derived from the Company’s regulatory reporting models to analyze the re-pricing characteristics of both assets and liabilities and the resulting net present value of the Company’s capital given various changes in interest rates. The model also uses mortgage prepayment assumptions obtained from third party vendors to anticipate prepayment speeds on both loans and investments.

The Company’s model uses incremental changes in interest rates. For example, a 3.0% change in annual rates includes a 75 basis point change in each of the next four quarters. The Company’s analysis at December 31, 2017 indicates that changes in interest rates are likely to result in modest changes in the Company’s annual net interest income. A summary of the Company’s analysis at December 31, 2017 for the year ending December 31, 2018 is as follows:

	Down 1.00%		No Change		Up 1.00%		Up 2.00%		Up 3.00%
	(Dollars in Thousands)
Net interest income	$	27,479	$	28,939	$	30,036	$	30,884	$	31,611

21

Average Balance, Interest and Average Yields and Rates

The following table sets forth certain information relating to the Company’s average interest-earning assets and average interest-bearing liabilities and reflects the average yield on assets and average cost of liabilities for the periods and at the date indicated. Such yields and costs are derived by dividing income or expense by the average monthly balance of assets or liabilities, respectively, for the periods presented. Average balances are derived from month-end balances. Management does not believe that the use of month-end balances instead of daily balances has caused any material difference in the information presented.

	Years Ended December 31,
	2017								2016								2015
	Average Balance			Interest		Average Yield/ Cost			Average Balance			Interest		Average Yield/ Cost			Average Balance			Interest		Average Yield/ Cost
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable, net (a)	$	626,735			28,222		4.50	%	$	570,674			25,801		4.52	%	$	552,265			25,322		4.59	%
Taxable securities AFS		173,062			4,478		2.59	%		190,843			4,595		2.41	%		203,160			6,149		3.03	%
Non-taxable securities AFS		30,787			1,516		4.93	%		38,981			1,958		5.02	%		52,836			2,464		4.66	%
Other interest-bearing deposits		6,976			96		1.38	%		7,512			46		0.61	%		8,528			22		0.26	%
Total interest-earning assets	$	837,560			34,312		4.10	%	$	808,010			32,400		4.01	%	$	816,789			33,957		4.16	%
Non-interest-earning assets		69,004								72,407								75,032
Total assets	$	906,564							$	880,417							$	891,821
Interest-bearing liabilities:
Deposits	$	619,372			4,810		0.78	%	$	596,109			4,240		0.71	%	$	612,816			5,031		0.82	%
Borrowings		67,924			1,153		1.70	%		66,280			1,059		1.60	%		71,084			1,519		2.14	%
Total interest-bearing liabilities		687,296			5,963		0.87	%		662,389			5,299		0.80	%		683,900			6,550		0.96	%
Non-interest-bearing liabilities		131,832								128,983								117,215
Total liabilities		819,128								791,372								801,115
Common stock		80								79								79
Additional paid-in capital		58,742								58,630								58,544
Retained earnings		50,615								48,678								46,305
Treasury stock		(16,001	)							(14,409	)							(11,449	)
Unearned ESOP shares		(6,225	)							(6,864	)							(5,709	)
Accumulated other comprehensive income		225								2,931								2,936
Total liabilities and equity	$	906,564							$	880,417							$	891,821
Net interest income					28,349								27,101								27,407
Interest rate spread							3.23	%							3.21	%							3.20	%
Net interest margin							3.38	%							3.35	%							3.36	%
Ratio of average interest-earning assets to average interest-bearing liabilities							121.86	%							121.98	%							119.43	%

(a) Average loans include non-performing loans.

(b) Interest income and yields are presented on a fully tax equivalent basis.

22

Rate Volume Analysis

The following table sets forth certain information regarding changes in interest income and interest expense of the Company for the periods indicated. For each category of interest-earning asset and interest-bearing liability, information is provided on changes attributable to: (i) changes in volume (changes in volume from year to year multiplied by the average rate for the prior year) and (ii) changes in rate (changes in the average rate from year to year multiplied by the prior year’s volume). All amounts are quoted on a tax equivalent basis using a cost of funds rate of 0.87% for 2017 and 0.80% for 2016.

	Year Ended December 31,
	2017 vs. 2016									2016 vs. 2017
	Increase (Decrease) due to									Increase (Decrease) due to
	Rate			Volume			Total Increase (Decrease)			Rate			Volume			Total Increase (Decrease)
				(Dollars in Thousands)
Interest-earning assets:
Loans receivable	$	(103	)		2,524			2,421		$	(353	)		832			479
Securities available for sale, taxable		343			(460	)		(117	)		(1,257	)		(297	)		(1,554	)
Securities available for sale, non-taxable		(38	)		(404	)		(442	)		190			(696	)		(506	)
Other interest- earning assets		57			(7	)		50			30			(6	)		24
Total interest-earning assets		259			1,653			1,912			(1,390	)		(167	)		(1,557	)
Interest-bearing liabilities:
Deposits		353			217			570			(592	)		(199	)		(791	)
Borrowings		69			25			94			(397	)		(63	)		(460	)
Total interest-bearing liabilities		422			242			664			(989	)		(262	)		(1,251	)
Increase (decrease) in net interest income	$	(163	)		1,411			1,248		$	(401	)		95			(306	)

Critical Accounting Policies and Estimates

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The financial information contained within these statements is, to a significant extent, financial information that is based on appropriate measures of the financial effects of transactions and events that have already occurred. Based on its consideration of accounting policies that involved the most complex and subjective decisions and assessments, management has identified its most critical accounting policy to be that related to the allowance for loan losses. The Company’s allowance for loan loss methodology incorporates a variety of risk considerations, both quantitative and qualitative; in establishing an allowance for loan loss that management believes is appropriate at each reporting date. Quantitative factors included the Company’s historical loss experience, delinquency and charge-off trends, collateral values, changes in non-performing loans, and other factors. Quantitative factors also incorporate known information about individual loans, including borrower’s sensitivity to economic conditions throughout the southeast and particular, the state of certain industries. Size and complexity of individual credits in relation to loan structure, existing loan policies and pace of portfolio growth are other qualitative factors that are considered in the methodology.

As the Company adds new products and increases the complexity of the loan portfolio, its methodology accordingly may change. In addition, it may report materially different amounts for the provision for loan losses in the statement of operations if management’s assessment of the above factors changes in future periods. This discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes presented elsewhere herein. Although management believes the levels of the allowance for loan losses as of both December 31, 2017 and December 31, 2016 were adequate to absorb inherent losses in the loan portfolio, a decline in local economic conditions, or other factors, could result in increasing losses that cannot be reasonably predicted at this time. The Company also considers its policy on non-accrual loans as a critical accounting policy.

23

Liquidity and Capital Resources

The Company’s primary business is that of the Bank. Management believes dividends that may be paid from the Bank to the Company will provide sufficient funds for the Company’s current and anticipated 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.

Capital Resources. At December 31, 2017, the Bank and Corporation exceeded all regulatory minimum capital requirements. For a detailed discussion of the Kentucky Department of Financial Institutions (“KDFI”) and FDIC capital requirements, and for a tabular presentation of the Bank’s compliance with such requirements, see Note 15 of Notes to Consolidated Financial Statements. See the Company’s Risk Factors, located in our Annual Report filed on SEC form 10-K as of and for the year ended December 31, 2017 for comments related to effects that the implementation of Basel III will have on the Company’s future operations.

Liquidity. Liquidity management is both a daily and long-term function of business management. If the Bank requires funds beyond its ability to generate them internally, the Bank believes that it could borrow funds from the FHLB. At December 31, 2017, the Bank had outstanding advances of $23.0 million from the FHLB and $47.6 million of letters of credit issued by the FHLB to secure municipal deposits. The Bank can immediately borrow an additional $49.1 million from the FHLB and the Company has the ability to pledge another $9.9 million in securities to the FHLB for additional borrowing capacity. The Bank can immediately borrow $12.0 million from its correspondent bank. See Note 6 of Notes to Consolidated Financial Statements.

Subordinated Debentures Issuance. On September 25, 2003, the Company issued $10,310,000 of subordinated debentures in a private placement offering. The securities have a thirty-year maturity and are callable at the issuer’s discretion on a quarterly basis beginning five years after issuance. The securities are priced at a variable rate equal to the three-month LIBOR (London Interbank Offering Rate) plus 3.10%. Interest is paid and the rate of interest may change on a quarterly basis. The Company’s subsidiary, a state chartered commercial bank supervised by the KDFI and the FDIC may recognize the proceeds of trust preferred securities as capital. KDFI and FDIC regulations provide that 25% of Tier I capital may consist of trust preferred proceeds. See Note 9 of Notes to Consolidated Financial Statements.

The Bank’s primary sources of funds consist of deposits, repayment of loans and mortgage-backed securities, maturities of investments and interest-bearing deposits, and funds provided from operations. While scheduled repayments of loans and mortgage-backed securities and maturities of investment securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by the general level of interest rates, economic conditions and competition. The Bank uses its liquidity resources principally to fund existing and future loan commitments, to fund maturing certificates of deposit and demand deposit withdrawals, to invest in other interest-earning assets, to maintain liquidity, and to meet operating expenses.

Management believes that loan repayments and other sources of funds will be adequate to meet the Bank’s liquidity needs for the immediate future. A portion of the Bank’s liquidity consists of cash and cash equivalents. At December 31, 2017, cash and cash equivalents totaled $45.1 million. The level of these assets depends upon the Bank’s operating, investing and financing activities during any given period.

Summary of the Company’s Market Area

Western Kentucky

Small manufacturing and agri-business interests are the largest drivers of the local economy in our Western Kentucky markets. In Western Kentucky, small manufacturing typically revolves around the automotive, transportation, and chemical industries. The manufacturing sector is reasonably strong in the immediate area with most factories operating near capacity. Unemployment rates are low in many counties in Western Kentucky due largely to the rebound in automobile sales.

In 2016, local farmers enjoyed strong yields on their crops. However, the continued weak level of commodity prices has made it difficult for all those involved in the agri-business sector. Agri-business profitability remains marginal at best. In 2017, the agri-business community anticipates the operating conditions will remain challenging without a meaningful increase in commodity prices, which are projected to remain weak into 2018.

24

The tables below are a summary of selected information from the 2010 U.S. Census related to the Company’s current market areas. The source of our future growth projections was the 2011 Kentucky State Data Center at the University of Louisville:

	2010 Median		Median Values
	Household		Owner Occupied		2010			2020			2030			2040
	Income		Housing Units		Census			Estimated			Estimated			Estimated
Calloway	$	39,194	$	105,300		37,191			40,411			43,618			46,607
Christian	$	37,061	$	95,500		73,955			77,840			81,015			82,947
Marshall	$	43,326	$	96,900		31,448			33,023			33,787			33,835
Todd	$	36,989	$	79,700		12,460			12,958			13,292			13,439
Trigg	$	41,825	$	98,300		14,339			16,244			17,913			19,179
Fulton	$	31,965	$	55,300		6,813			6,223			5,535			4,785
Total population						176,206			186,699			195,160			200,792
Estimated ten year population growth						8,542			10,493			8,461			5,632
Estimated population growth rate						5.1	%		6.0	%		4.5	%		2.9	%

Clarksville, Montgomery County, Tennessee (“Clarksville”)

The Clarksville market is the largest market in which the Company has a significant retail banking presence. The Clarksville economy has several large employers and economic drivers including the United States (“U.S.”) Army’s 101^st Airborne Division with approximately 29,000 active duty military personnel and 3,900 civilian employees assigned to the division. Fort Campbell supports the third largest military population in the U.S. Army and the seventh largest in the U.S. Department of Defense. The many services available on the army installation and the community’s modest cost of living have resulted in a sizable military retirement population in the area. Clarksville is also home to Austin Peay State University, a 10,000 student public university as well as a diverse manufacturing sector.

Late in 2017, Hankook Tires began production in a new manufacturing facility in Clarksville. Hankook, a South Korean tire company, has hired approximately 1,000 employees with plans to increase employment to 1,800 and chose Clarksville due to its ideal location, strong transportation network and its proximity to automotive assembly plants owned by Nissan, Volkswagen, Toyota and General Motors. In February 2017, LG Electronics announced plans to construct a new home appliance manufacturing facility in Clarksville anticipates hiring 600 employees. The Clarksville market exhibits stronger growth and income demographics as compared to the communities in Western Kentucky. The 2010 census noted that Clarksville had a median household income of $48,930 and a $129,400 median value of owner occupied housing units. Clarksville’s demographics benefit by its proximity to the Fort Campbell Army base; its proximity to Nashville, Tennessee; and the absence of a state income tax.

	2010			2020			2030			2040
	Census			Estimated			Estimated			Estimated
Clarksville MSA		172,331			221,620			264,680			311,239
Ten year growth rate		27.9	%		28.6	%		19.4	%		17.6	%

25

Middle Tennessee and Nashville MSA

Cheatham County (“Cheatham”) and Houston County (“Houston”) are located in Middle Tennessee. However, Cheatham is located within the Nashville MSA, and its three largest communities are an easy commute to downtown Nashville. Cheatham’s proximity to Nashville has resulted in higher levels of income and population growth as compared to Houston. The Company believes that the tables below support their views that the Clarksville and Nashville MSAs provide the greatest opportunities for growth within our current market area. The Company opened our Nashville LPO in October of 2014 and our Brentwood LPO (located in Williamson County, Tennessee) in October of 2016. The Nashville MSA has a population of approximately 1.6 million (includes Cheatham County, Tennessee) and attractive demographics outlined below:

	2010 Estimated		Population			Median		Median Value
Nashville TN MSA	Census		Change			Household		Owner Occupied
	Population		2000 - 2010			Income		Housing Units
Robertson (Springfield)		66,283		21.8	%	$	50,820	$	149,100
Sumner (Gallatin)		160,645		23.1	%	$	54,916	$	169,100
Wilson (Lebanon)		113,193		28.4	%	$	60,678	$	187,500
Rutherford (Murfreesboro)		262,604		44.3	%	$	53,770	$	157,100
Williamson (Franklin)		183,182		44.7	%	$	87,832	$	335,800
Maury (Columbia)		80,956		16.5	%	$	46,278	$	137,100
Dickson		49,666		15.1	%	$	44,554	$	128,700
Davidson (Nashville)		626,681		10.0	%	$	45,668	$	164,700
Cheatham		39,105		9.0	%	$	52,585	$	155,900

Additional Growth Opportunities

In addition to the Clarksville and Nashville MSA markets, management views promising opportunities for growth in the midsize metropolitan markets near the Company’s current locations. Highly desirable markets include Bowling Green, Kentucky, Hardin, Kentucky, and Louisville, Kentucky. These markets provide desirable demographic and growth opportunities as compared to the Company’s current footprint. As evident in the table below, Kentucky growth opportunities may be most attractive in Bowling Green, which is approximately 65 miles from the Company’s corporate headquarters. The tables below include the two largest counties by population in Kentucky and other communities in Kentucky within a two-hour drive of the Company’s headquarters:

	2010		Population			Median		Median Value
Kentucky	Census		Change			Household		Owner Occupied
	Population		2000 - 2010			Income		Housing Units
Henderson		46,250		3.2	%	$	40,438	$	101,200
Hardin (Elizabethtown)		105,543		12.1	%	$	47,540	$	131,900
Daviess (Owensboro)		96,656		5.6	%	$	42,821	$	106,400
McCracken (Paducah)		65,565		0.1	%	$	41,630	$	107,500
Warren (Bowling Green)		113,792		23.0	%	$	43,954	$	135,400
Fayette (Lexington)		295,803		13.5	%	$	47,469	$	159,200
Jefferson (Louisville)		741,096		6.8	%	$	45,352	$	145,900

Forward-Looking Statements

Management’s discussion and analysis includes certain forward-looking statements addressing, among other things, the Bank’s prospects for earnings, asset growth and net interest margin. Forward-looking statements are accompanied by, and identified with, such terms as “anticipates,” “believes,” “expects,” “intends,” and similar phrases. Management’s expectations for the Company’s future involve a number of assumptions and estimates. Factors that could cause actual results to differ from the expectations expressed herein include: substantial changes in interest rates, and changes in the general economy; changes in the Company’s strategies for credit-risk management, interest-rate risk management and investment activities. Accordingly, any forward-looking statements included herein do not purport to be predictions of future events or circumstances and may not be realized.

26

Stock Performance Comparison

The following graph, which was prepared by SNL Financial LC (“SNL”), shows the cumulative total return of the Common Stock of the Company since December 31, 2012 compared with the (1) NASDAQ Composite Index, comprised of all U.S. Companies quoted on NASDAQ, (2) the SNL Midwest Thrift Index, comprised of publically traded thrifts and thrift holding companies operating in the Midwestern United States, and (3) the SNL Midwest Bank Index, comprised of publically traded commercial banks and bank holding companies operating in the Midwestern United States. Cumulative total return on the Common Stock or the index equals the total increase in the value since December 31, 2012 assuming reinvestment of all dividends paid into the Common Stock or the index, respectively. The graph was prepared assuming that $100 was invested on December 31, 2012 in the Common Stock, the securities included in the indices.

	Period Ending
Index	12/31/12		12/31/13		12/31/14		12/31/15		12/31/16		12/31/17
HopFed Bancorp, Inc.		100.00		133.57		151.18		144.51		164.28		173.76
NASDAQ Composite Index		100.00		140.12		160.78		171.97		187.22		242.71
SNL Midwest Bank Index		100.00		136.91		148.84		151.10		201.89		216.95

27

Consolidated Financial Statements

HopFed Bancorp, Inc.

and Subsidiaries

December 31, 2017, 2016 and 2015

Management Report on Internal Control

The management of HopFed Bancorp, Inc. and its subsidiaries (collectively referred to as the “Company”) is responsible for the preparation, integrity and fair presentation of published financial statements and all other information presented in this annual report. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and, as such, include amounts based on informed judgments and estimates made by management.

Management is responsible for establishing and maintaining adequate internal control over financial reporting for financial presentations in conformity with GAAP. Pursuant to the rules and regulations of the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of, the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and included those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company.

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, or that the degree of compliance with the policies and procedures include in such controls may deteriorate.

Management has evaluated the effectiveness of its internal control over financial reporting as of December 31, 2017 based on the control criteria established in a report entitled Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that the Company’s internal control over financial reporting is effective as of December 31, 2017.

Carr, Riggs & Ingram, LLC, the independent registered public accounting firm that audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017. The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 is included in this Item under the heading “Report of Independent Registered Public Accounting Firm.”

Date: March 15, 2018	By:	(signed) John E. Peck
		John E. Peck
		President and Chief Executive Officer
	By:	(signed) Billy C. Duvall
		Billy C. Duvall
		Senior Vice President and Treasurer
		(Principal Financial Officer)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

HopFed Bancorp, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of HopFed Bancorp, Inc. and subsidiaries (the “Company”) as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 3017, and the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

Basis for Opinion

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Internal Control. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Carr, Riggs & Ingram, LLC

We have served as the Company’s auditor since 2000.

Nashville, Tennessee

March 15, 2018

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

of HopFed Bancorp, Inc.

Hopkinsville, Kentucky

We have audited the accompanying consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows of HopFed Bancorp, Inc. and subsidiaries (the “Company”) for the year ended December 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of HopFed Bancorp Inc. and subsidiaries for the year ended December 31, 2015 in conformity with U.S. generally accepted accounting principles.

/S/ RAYBURN | FITZGERALD PC

Brentwood, Tennessee

March 3, 2016

HopFed Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

December 31, 2017 and 2016

(Dollars in Thousands)

	2017		2016
Assets
Cash and due from banks	$	37,965	$	21,779
Interest-bearing deposits in banks		7,111		3,970
Cash and cash equivalents		45,076		25,749
Federal Home Loan Bank stock, at cost		4,428		4,428
Securities available for sale		184,791		209,480
Loans held for sale		1,539		1,094
Loans receivable, net of allowance for loan losses of $4,826 at December 31, 2017 and $6,112 at December 31, 2016		637,102		604,286
Accrued interest receivable		3,589		3,799
Foreclosed assets, net		3,369		2,397
Bank owned life insurance		10,368		10,662
Premises and equipment, net		22,700		23,461
Deferred tax assets		1,764		3,052
Other assets		2,784		3,078
Total assets	$	917,510	$	891,486
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing accounts	$	136,197	$	131,145
Interest-bearing accounts:
Interest bearing checking accounts		208,496		209,347
Savings and money market accounts		104,347		99,312
Other time deposits		304,969		293,078
Total deposits		754,009		732,882
Advances from Federal Home Loan Bank		23,000		11,000
Repurchase agreements		38,353		47,655
Subordinated debentures		10,310		10,310
Advances from borrowers for taxes and insurance		808		766
Accrued expenses and other liabilities		3,618		2,445
Total liabilities		830,098		805,058

See accompanying notes to consolidated financial statements.

32

HopFed Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets, Continued

December 31, 2017 and 2016

(Dollars in Thousands)

	2017			2016
Stockholders’ equity
Preferred stock, par value $0.01 per share; authorized 500,000 shares; no shares issued or outstanding at December 31, 2017 and December 31, 2016	$	—		$	—
Common stock, par value $.01 per share; authorized 15,000,000 shares; 7,976,131 issued and 6,637,771 outstanding at December 31, 2017 and 7,963,378 issued and 6,717,242 outstanding at December 31, 2016		80			80
Additional paid-in-capital		58,825			58,660
Retained earnings		51,162			49,035
Treasury stock, at cost (1,338,360 shares at December 31, 2017 and 1,246,136 shares at December 31, 2016)		(16,655	)		(15,347	)
Unearned ESOP shares (at cost 434,548 shares at December 31, 2017 and 498,346 at December 31, 2016)		(5,901	)		(6,548	)
Accumulated other comprehensive income (loss)		(99	)		548
Total stockholders’ equity		87,412			86,428
Total liabilities and stockholders’ equity	$	917,510		$	891,486

See accompanying notes to consolidated financial statements

33

HopFed Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

For the Years ended December 31, 2017, 2016 and 2015

(Dollars in Thousands)

	2017		2016		2015
Interest and dividend income
Loans	$	28,167		25,778		25,300
Taxable securities available for sale		4,478		4,595		6,149
Nontaxable securities available for sale		1,014		1,308		1,651
Interest bearing deposits in banks		96		46		22
Total interest and dividend income		33,755		31,727		33,122
Interest expense:
Deposits		4,810		4,240		5,031
Advances from Federal Home Loan Bank		248		163		289
Repurchase agreements		469		508		491
Subordinated debentures		436		388		739
Total interest expense		5,963		5,299		6,550
Net interest income		27,792		26,428		26,572
Provision for loan losses		477		1,241		1,051
Net interest income after provision for loan losses		27,315		25,187		25,521
Non-interest income:
Service charges		3,224		2,788		2,925
Merchant card		1,222		1,224		1,130
Mortgage origination		1,321		1,585		1,175
Realized gains from sale of securities available for sale, net		169		612		691
Income from bank owned life insurance		483		343		335
Financial services commission		536		614		685
Other operating		1,075		769		661
Total non-interest income		8,030		7,935		7,602

See accompanying notes to consolidated financial statements.

34

HopFed Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income, Continued

For the Years ended December 31, 2017, 2016 and 2015

(Dollars in Thousands, Except Per Share Amounts)

	2017		2016			2015
Non-interest expenses:
Salaries and employee benefits		16,049		15,400			15,810
Occupancy		2,920		3,173			3,077
Data processing		2,884		2,942			2,827
State deposit tax		770		990			1,018
Professional services		2,316		1,404			1,506
Advertising		1,354		1,401			1,302
Foreclosed assets, net		9		448			1,227
(Gain) loss on sale of premises and equipment		2		(72	)		1
Other operating		3,592		4,170			3,677
Total non-interest expense		29,896		29,856			30,445
Income before income tax expense		5,449		3,266			2,678
Income tax expense		2,148		362			274
Net income	$	3,301		2,904			2,404
Earnings per share available to common stockholders:
Basic	$	0.53		0.47			0.38
Diluted	$	0.53		0.47			0.38
Weighted average shares outstanding—basic		6,221,632		6,233,860			6,372,277
Weighted average shares outstanding—diluted		6,221,632		6,233,860			6,372,277

See accompanying notes to consolidated financial statements.

35

HopFed Bancorp, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

For the Years ended December 31, 2017, 2016 and 2015

(Dollars in Thousands)

	2017			2016			2015
Net income	$	3,301			2,904			2,404
Other comprehensive income, net of tax:
Unrealized loss on non – other than temporary impaired (“OTTI”) investment securities available for sale, net of taxes		(387	)		(1,351	)		(1,121	)
Unrealized gain (loss) on OTTI securities, net of taxes		(148	)		(170	)		237
Unrealized gain on derivatives, net of taxes		—			—			257
Reclassification adjustment for gains and accretion included in net income, net of taxes		(112	)		(405	)		(456	)
Total other comprehensive loss		(647	)		(1,926	)		(1,083	)
Comprehensive income	$	2,654			978			1,321

See accompanying notes to consolidated financial statements.

36

HopFed Bancorp, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the Years ended December 31, 2017, 2016 and 2015

(Dollars in Thousands, Except Share Amounts)

	Common Shares			Common Stock		Additional Paid-in Capital			Retained Earnings			Common Treasury Stock			Unearned ESOP Shares			Accumulated Other Comprehensive Income (Loss)			Total Equity
Balance January 1, 2015		7,171,282			79		58,466			45,729			(9,429	)		—			3,557			98,402
Net Income		—			—		—			2,404			—			—			—			2,404
Restricted stock awards		2,034			—		—			—			—			—			—			—
Net change in unrealized gain on securities available for sale, net of taxes of $690		—			—		—			—			—			—			(1,340	)		(1,340	)
Net change in unrealized losses on derivatives, net of taxes of ($132)		—			—		—			—			—			—			257			257
Cash dividend to common stockholders ($0.16 per share)		—			—		—			(1,009	)		—			—			—			(1,009	)
Common stock repurchase		(907,505	)		—		—			—			(11,926	)		—			—			(11,926	)
Common stock issued		600,000			—		—			—			7,884			(7,884	)		—			—
ESOP shares earned		—			—		(52	)		—			—			704			—			652
Compensation expense, restricted stock awards		—			—		190			—			—			—			—			190
Balance December 31, 2015		6,865,811			79		58,604			47,124			(13,471	)		(7,180	)		2,474			87,630
Net Income		—			—		—			2,904			—			—			—			2,904
Restricted stock awards		11,679			1		—			—			—			—			—			1
Net change in unrealized gain on securities available for sale, net of taxes of $992		—			—		—			—			—			—			(1,926	)		(1,926	)
Cash dividend to common stockholders ($0.16 per share)		—			—		—			(993	)		—			—			—			(993	)
Common stock repurchase		(160,248	)		—		—			—			(1,876	)		—			—			(1,876	)
ESOP shares earned		—			—		(79	)		—			—			632			—			553
Compensation expense, restricted stock awards		—			—		135			—			—			—			—			135
Balance December 31, 2016		6,717,242		$	80		58,660			49,035			(15,347	)		(6,548	)		548			86,428

37

HopFed Bancorp, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the Years ended December 31, 2017, 2016 and 2015

(Dollars in Thousands, Except Share Amounts)

	Common Shares			Common Stock		Additional Paid-in Capital		Retained Earnings			Common Treasury Stock			Unearned ESOP Shares			Accumulated Other Comprehensive Income (Loss)			Total Equity
December 31, 2016		6,717,242		$	80		58,660		49,035			(15,347	)		(6,548	)		548			86,428
Net Income		—			—		—		3,301			—			—			—			3,301
Restricted stock awards		12,753			—		—		—			—			—			—			—
Net change in unrealized gain on securities available for sale, net of taxes of $172		—			—		—		—			—			—			(647	)		(647	)
Cash dividend to common stockholders ($0.19 per share)		—			—		—		(1,174	)		—			—			—			(1,174	)
Common stock repurchase		(92,224	)		—		—		—			(1,308	)		—			—			(1,308	)
ESOP shares earned		—			—		59		—			—			647			—			706
Compensation expense, restricted stock awards		—			—		106		—			—			—			—			106
Balance December 31, 2017		6,637,771		$	80		58,825		51,162			(16,655	)		(5,901	)		(99	)		87,412

See accompanying notes to consolidated financial statements.

38

HopFed Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Years ended December 31, 2017, 2016 and 2015

(Dollars in Thousands)

	2017			2016			2015
Cash flows from operating activities:
Net income	$	3,301			2,904			2,404
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		477			1,241			1,051
Depreciation		1,225			1,320			1,266
Amortization of intangible assets		—			—			33
Amortization of investment premiums and discounts, net		1,073			1,515			1,650
OTTI recovery on available for sale securities		(17	)		(17	)		(17	)
Expense for deferred income taxes		1,585			267			177
Stock compensation expense		106			135			138
Income from bank owned life insurance		(483	)		(343	)		(335	)
Gain on sale of securities available for sale		(169	)		(612	)		(691	)
Gain on sale of mortgage loans		(1,321	)		(1,585	)		(1,175	)
(Gain) loss on sale of premises and equipment		2			(72	)		1
Proceeds from sale of mortgage loans		51,494			56,309			43,847
(Gain) loss on sale of foreclosed assets		(158	)		(21	)		716
Originations of mortgage loans sold		(50,618	)		(53,026	)		(44,020	)
Decrease in:
Accrued interest receivable		210			340			437
Other assets		389			145			21
Increase (decrease) in accrued expenses and other liabilities		1,173			(1,980	)		933
Net cash provided by operating activities		8,269			6,520			6,436
Cash flows from investing activities:
Proceeds from sales, calls and maturities of securities available for sale		54,416			67,671			120,354
Purchase of securities available for sale		(31,594	)		(43,778	)		(56,875	)
Net increase in loans		(37,605	)		(49,586	)		(19,005	)
Proceeds from sale of foreclosed assets		3,498			1,623			344
Proceeds from death benefit of bank owned life insurance policy		777			—			—
Proceeds from sale of premises and equipment		—			100			—
Purchase of premises and equipment		(466	)		(775	)		(2,361	)
Net cash provided by (used in) investing activities		(10,974	)		(24,745	)		42,457

See accompanying notes to consolidated financial statements.

39

HopFed Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows, Continued

For the Years ended December 31, 2017, 2016 and 2015

(Dollars in Thousands)

	2017			2016			2015
Cash flows from financing activities:
Net increase (decrease) in deposits	$	21,127		($	6,524	)		8,098
Increase in advance payments by borrowers for taxes and insurance		42			152			101
Advances from Federal Home Loan Bank		80,000			26,000			41,000
Repayment of advances from Federal Home Loan Bank		(68,000	)		(30,000	)		(60,000	)
Increase (decrease) in repurchase agreements		(9,302	)		1,885			(11,588	)
Acquisition of treasury stock		(1,308	)		(1,876	)		(11,926	)
Proceeds from repayment of ESOP loan		647			632			704
Dividends paid on common stock		(1,174	)		(993	)		(1,023	)
Net cash provided by (used in) financing activities		22,032			(10,724	)		(34,634	)
Increase (decrease) in cash and cash equivalents		19,327			(28,949	)		14,259
Cash and cash equivalents, beginning of period		25,749			54,698			40,439
Cash and cash equivalents, end of period	$	45,076		$	25,749			54,698
Supplemental disclosures of cash flow information:
Interest paid	$	5,920		$	5,354			6,587
Income taxes (refund) paid		1,044			(564	)		(900	)
Supplemental disclosures of non-cash investing and financing activities:
Loans charged off	$	3,159		$	1,468			1,867
Foreclosures and in-substance foreclosures of loans during year		4,312			2,263			869
Net unrealized losses on investment securities classified as available for sale		(978	)		(2,918	)		(2,030	)
Increase in deferred tax asset related to unrealized gains on investments		331			992			691
Dividends declared and payable		355			288			287
Sale and financing of stock to ESOP		—			—			7,884
Issue of unearned restricted stock		178			145			25

See accompanying notes to consolidated financial statements.

40

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies:

Nature of Operations and Customer Concentration

HopFed Bancorp, Inc. (the “Corporation”) is a bank holding company which incorporated in the state of Delaware and headquartered in Hopkinsville, Kentucky. The Corporation’s principal business activities are conducted through its wholly-owned subsidiary, Heritage Bank USA, Inc. (the “Bank”), a Kentucky state chartered commercial bank engaged in the business of accepting deposits and providing mortgage, consumer, construction and commercial loans to the general public through its retail banking offices. The Bank’s business activities are primarily limited to western Kentucky and middle and western Tennessee. The Bank is subject to competition from other financial institutions. Deposits at the Bank are insured up to the applicable limits by the Federal Deposit Insurance Corporation (FDIC).

The Bank is a Kentucky commercial chartered bank and is supervised by the Kentucky Department of Financial Institutions (“KDFI”) and the FDIC. Supervision of the Corporation is conducted by the Federal Reserve Bank of Saint Louis (“FED”).

The Bank owns JBMM, LLC, a wholly owned limited liability company which owns and manages the Bank’s foreclosed assets. The Bank owns Heritage Interim Corporation, a Tennessee corporation established to facilitate the acquisition of a bank in Tennessee. The proposed acquisition was terminated in August of 2013. The Bank owns Heritage USA Title, LLC, which sells title insurance to the Bank’s real estate loan customers.

The Bank owns Fort Webb LP, LLC, which owns a limited partnership interest in Fort Webb Elderly Housing LP, LLC, a low income senior citizen housing facility in Bowling Green, Kentucky. The facility offers apartments for rent for those senior citizens who qualify and is managed by the Bowling Green, Kentucky Housing Authority.

A substantial portion of the Bank’s loans are secured by real estate in the western Kentucky and middle and west Tennessee markets. In addition, foreclosed real estate is located in this same market. Accordingly, the ultimate ability to collect on a substantial portion of the Bank’s loan portfolio and the recovery of a substantial portion of the carrying amount of foreclosed real estate is susceptible to changes in local market conditions.

Principles of Consolidation

The consolidated financial statements include the accounts of the Corporation, the Bank and its subsidiaries (collectively the “Company”) for all periods. Significant inter-company balances and transactions have been eliminated in consolidation.

Accounting

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and conform to general practices in the banking industry. U.S. GAAP is generally defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), as amended by Accounting Standards Updates (“ASUs”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) are also sources of authoritative U.S. GAAP for SEC registrants.

41

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Accounting (Continued)

The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (VIE) under U.S. GAAP. Voting interest entities in which the total equity investment is a risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decision about the entity’s activities. The Company consolidates voting interest entities in which it has all, or at least a majority of, the voting interest. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The subsidiaries, HopFed Capital Trust I and Fort Webb LP, LLC are VIEs for which the Company is not the primary beneficiary. Accordingly, these accounts are not included in the Company’s consolidated financial statements.

Subsequent Events

The Company has evaluated subsequent events for potential impact and disclosure through the issue date of these consolidated financial statements.

Estimates

In preparing the consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheets and revenues and expenses for each year. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowances for loan losses and foreclosed real estate, management obtains independent appraisals for significant collateral.

Cash and Cash Equivalents

Cash and cash equivalents are defined as cash on hand, amounts due on demand from commercial banks, interest-bearing deposits in other financial institutions and federal funds sold with maturities of three months or less. The Company is required to maintain reserve funds in either cash on hand or on deposit with the Federal Reserve Bank. At December 31, 2017, the Company’s reserve requirement was met with available cash on hand.

42

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Securities

The Company reports debt, readily-marketable equity, mortgage-backed and mortgage related securities in one of the following categories: (i) “trading” (held for current resale) which are to be reported at fair value, with unrealized gains and losses included in earnings; and (ii) “available for sale” (all other debt, equity, mortgage-backed and mortgage related securities) which are to be reported at fair value, with unrealized gains and losses reported net of tax as a separate component of stockholders’ equity. At the time of new security purchases, a determination is made as to the appropriate classification. Realized and unrealized gains and losses on trading securities are included in net income. Unrealized gains and losses on securities available for sale are recognized as direct increases or decreases in stockholders’ equity, net of any tax effect. Cost of securities sold is recognized using the specific identification method. Interest income on securities is recognized as earned. The Company purchases many agency bonds at either a premium or discount to its par value. Premiums and discounts on agency bonds are amortized using the net interest method. For callable bonds purchased at a premium, the premium is amortized to the first call date. If the bond is not called on that date, the premium is fully amortized and the Company recognizes an increase in the net yield of the investment. For agency bonds purchased at a discount, the discount is accreted to the final maturity date. For callable bonds purchased at discount and called before maturity, the Company recognizes a gain on the sale of securities. The Company amortizes premiums and accretes discounts on mortgage back securities and collateralized mortgage obligations based on the securities three-month average prepayment speed. Gains and losses on sales are recorded on the trade date.

Other Than Temporary Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic conditions warrant such evaluation. A decline in the fair value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in the carrying amount to fair value. To determine whether impairment is other-than-temporary, management considers whether the entity expects to recover the entire amortized cost basis of the security by reviewing the present value of the future cash flows associated with the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cost basis is referred to as a credit loss. If a credit loss is identified, management then considers whether it is more-likely-than-not that the Company will be required to sell the security prior to recovery. If management concludes that it is not more-likely-than-not that it will be required to sell the security, then the security is not other-than-temporarily impaired and the shortfall is recorded as a component of equity. If the security is determined to be other-than-temporarily impaired, the credit loss is recognized as a charge to earnings and a new cost basis for the security is established.

43

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Other Securities

Other securities which are not actively traded and may be restricted, such as Federal Home Loan Bank (FHLB) stock are recognized at cost. FHLB stock is periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Loans Receivable and Allowance for Loan Losses

Loans receivable are stated at unpaid principal balances, less the allowance for loan losses and deferred loan cost. ASC 310-20, Nonrefundable Fees and Other Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases, requires the recognition of loan origination fee income over the life of the loan and the recognition of certain direct loan origination costs over the life of the loan. Uncollectible interest on loans that are contractually past due is charged off, or an allowance is established based on management’s periodic evaluation. The Company charges off loans after, in management’s opinion, the collection of all or a large portion of the principal or interest is not probable. The allowance is established by a charge to interest income equal to all interest previously accrued, and income is subsequently recognized only to the extent that cash payments are received while the loan is classified as non-accrual, when the loan is ninety days past due. Loans may be returned to accrual status when all principal and interest amounts contractually due (including arrearages) are reasonably assured of repayment within an acceptable period of time, and there is a sustained period of repayment performance by the borrower in accordance with the contractual terms of interest and principal.

The Company provides an allowance for loan losses and includes a provision for loan losses determined by management. Subsequent recoveries, if any, are credited to the allowance. Management’s periodic evaluation of the adequacy of the allowance is based on the Company’s loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, and current economic conditions. The loss experience is determined by portfolio segment and is based on the actual losses experienced by the Company over the most recent three years.

Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments in accordance with the contractual terms of the loan agreement. Impaired loans and loans classified as Troubled Debt Restructurings (“TDRs”) may be classified as either substandard or doubtful and reserved for based on individual loans risk for loss. Loans not considered impaired may be classified as either special mention or watch and may have an allowance established for it. Typically, unimpaired classified loans exhibit some form of weakness in either industry trends, collateral, or cash flow that result in a default risk greater than that of the Company’s typical loan. All classified amounts include all unpaid interest and fees as well as the principal balance outstanding.

44

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Loans Receivable and Allowance for Loan Losses (Continued)

The measurement of impaired loans may be based on the present value of future cash flows discounted at the historical effective interest rate. However, the majority of the Company’s problem loans become collateral dependent at the time they are judged to be impaired. Therefore, the measurement of impairment requires the Company to obtain a new appraisal to obtain the fair value of the collateral. The appraised value is then discounted to an estimate of the Company’s net realizable value, reducing the appraised value. When the measured amount of an impaired loan is less than the recorded investment in the loan, the impairment is recorded as a charge to income and a valuation allowance, which is included as a component of the allowance for loan losses. For loans not individually evaluated, management considers the Company’s recent charge off history, the Company’s current past due and non-accrual trends, banking industry trends and both local and national economic conditions when making an estimate as to the amount to reserve for losses. Management believes it has established the allowance in accordance with U.S. GAAP and has taken into account the views of its regulators and the current economic environment.

If an asset or portion thereof is classified as a loss, we establish a specific reserve for such amount. If the Company determines that a loan relationship is collateral dependent, the Company will charge off the portion of that loan that is deemed to be impaired against the allowance for loan loss account. The Company defines collateral dependent as any loan in that the customer will be unable to reduce the principal balance of the loan without the complete or partial sale of the collateral. The Company will charge off a portion or all of a loan balance once it deems the collection of any remaining interest and principal due to be unlikely.

Loans Held For Sale

Mortgage loans originated and intended for sale are carried at the lower of cost or estimated fair value as determined on a loan-by-loan basis. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Realized gains and losses are recognized when legal title to the loans has been transferred to the purchaser and sales proceeds have been received and are reflected in the accompanying consolidated statement of operations in gains on mortgage loans sold, net of related costs such as compensation expenses. The Company does not securitize mortgage loans.

Fixed Rate Mortgage Originations

The Company operates a mortgage division that originates mortgage loans in the name of assorted investors, including Federal Home Loan Mortgage Corporation (Freddie Mac). Originations for Freddie Mac are sold through the Bank while originations to other investors are processed for a fee. On a limited basis, loans sold to Freddie Mac may result in the Bank retaining loan servicing rights. In recent years, customers have chosen lower origination rates over having their loan locally serviced; thereby limiting the amount of new loans sold with servicing retained. At December 31, 2017, the Bank maintained a servicing portfolio of one to four family real estate loans of approximately $16.9 million.

45

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosure or repossession are initially recorded at fair value less selling cost when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated cost to sell. Costs of improving the assets are capitalized if the Company determines that it is likely to recover the cost. Other improvement cost and all cost relating to holding the property are expensed. Management conducts periodic valuations and any adjustments to value are recognized in the current period’s operations.

Repurchase Agreements

The Company sells investments from its portfolio to business and municipal customers with a written agreement to repurchase those investments on the next business day. The repurchase product gives business customers the opportunity to earn income on liquid cash reserves. These funds are overnight borrowings of the Company secured by Company assets and are not FDIC insured.

Treasury Stock

The Company may purchase its own common stock either in open market transactions or privately negotiated transactions. The value of the Company’s common stock held in treasury is listed at cost.

Unearned ESOP Shares

The Company offers an Employee Stock Ownership Plan (“ESOP”) to the employees of the Company. The unearned portion of common stock of the Company held in the ESOP Trust is recorded on the balance sheet at cost. Common stock is released from the ESOP Trust to the participants as the Bank makes payments on the loan to the Corporation on behalf of the ESOP Trust.

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income, net of applicable income taxes. Other comprehensive income includes unrealized appreciation (depreciation) on available-for-sale securities, unrealized appreciation (depreciation) on available-for-sale securities for which a portion of an other-than-temporary impairment has been recognized in income, and unrealized appreciation (depreciation) on derivatives.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales, when control over the assets have been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

46

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Revenue Recognition

Mortgage loans held for sale are generally delivered to secondary market investors under best efforts sales commitments entered into prior to the closing of the individual loan. Loan sales and related gains or losses are recognized at settlement. Loan fees earned for the servicing of secondary market loans are recognized as earned. Interest income on loans receivable is reported on the interest method. Interest income is not reported when full loan repayment is in doubt, typically when the loan is impaired, placed in non-accrual status, or payments are past due more than 90 days. Interest is reversed on any loans classified as non-accrual or past due more than 90 days. Interest may continue to accrue on loans over 90 days past due if they are well secured and in the process of collection.

Income Taxes

Income taxes are accounted for through the use of the asset and liability method. Under the asset and liability method, deferred taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in tax rates would be recognized in income in the period that includes the enactment date. Accordingly, deferred tax assets that will be realized after December 31, 2017 were revalued using the tax rates enacted as a result of the 2017 Tax Cuts and Jobs Act resulting in a revaluation charge of $980,000. The Company files its federal and Kentucky income tax returns as well as its Kentucky and Tennessee franchise and excise tax returns on a consolidated basis with its subsidiaries. All taxes are accrued on a separate entity basis.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being recognized on examination. For tax positions not meeting the “more likely than not test”, no benefit is recorded.

Operating Segments

The Company’s continuing operations include one primary segment, retail banking. The retail banking segment involves the origination of commercial, residential and consumer loans as well as the collections of deposits in eighteen branch offices.

Premises and Equipment

Land, land improvements, buildings, and furniture and equipment are carried at cost, less accumulated depreciation and amortization. Buildings and land improvements are depreciated generally by the straight-line method, and furniture and equipment are depreciated under various methods over the estimated useful lives of the assets. The Company capitalizes interest expense on construction in process at a rate equal to the Company’s cost of funds. The estimated useful lives used to compute depreciation are as follows:

Land improvements	5-15 years
Buildings	40 years
Furniture and equipment	5-15 years

47

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Bank Owned Life Insurance

Bank owned life insurance policies (BOLI) are recorded at the cash surrender value or the amount to be realized upon current redemption. The realization of the redemption value is evaluated for each insuring entity that holds insurance contracts annually by management.

Advertising

The Company expenses the production cost of advertising as incurred.

Financial Instruments

The Company has entered into off-balance-sheet financial instruments consisting of commitments to extend credit and commercial letters of credit. Such financial instruments are recorded in the consolidated financial statements when they are funded or related fees are incurred or received.

Fair Values of Financial Instruments (ASC 825) requires disclosure of fair value information about financial instruments, whether or not recognized in the consolidated balance sheets for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Fair value estimates are made at a point in time, based on relevant market information and information about the financial instrument. Accordingly, such estimates involve uncertainties and matters of judgment and therefore cannot be determined with precision. ASC 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The following are the more significant methods and assumptions used by the Company in estimating its fair value disclosures for financial instruments:

Cash and due from banks

The carrying amounts reported in the consolidated balance sheets for cash and due from banks approximate those assets’ fair values because they mature within 90 days or less and do not present credit risk concerns.

Interest-bearing deposits in banks

The carrying amounts reported in the consolidated balance sheets for interest bearing deposits in banks approximate those assets’ fair values because they are considered overnight deposits and may be withdrawn at any time without penalty and do not present credit risk concerns.

48

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Fair Values of Financial Instruments (Continued)

FHLB stock

The fair value of FHLB stock is recognized at cost.

Available-for-sale securities

Fair values for investment securities available-for-sale are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments provided by a third party pricing service. The Company reviews all securities in which the book value is greater than the market value for impairment that is other than temporary. For securities deemed to be other than temporarily impaired, the Company reduces the book value of the security to its market value by recognizing an impairment charge on its income statement.

Loans held for sale

Mortgage loans originated and intended to be sold are carried at the lower of cost or estimated fair value as determined on a loan by loan basis. Gains or losses are recognized at the time of ownership transfer. Net unrealized losses, if any, are recognized through a valuation allowance and charged to income.

Loans receivable

The fair values for of fixed-rate loans and variable rate loans that re-price on an infrequent basis is estimated using discounted cash flow analysis which considers future re-pricing dates and estimated repayment dates, and further using interest rates currently being offered for loans of similar type, terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics. The estimated fair value of variable-rate loans that re-price frequently and have no significant change in credit risk is approximately the carrying value of the loan.

Accrued interest receivable

Fair value is estimated to approximate the carrying amount because such amounts are expected to be received within 90 days or less and any credit concerns have been previously considered in the carrying value.

Deposits

The fair values disclosed for deposits with no stated maturity such as demand deposits, interest-bearing checking accounts and savings accounts are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The fair values for certificates of deposit and other fixed maturity time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on such type accounts or similar accounts to a schedule of aggregated contractual maturities or similar maturities on such time deposits.

Repurchase agreements

Overnight repurchase agreements have a fair value at book, given that they mature overnight.

49

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Fair Values of Financial Instruments (Continued)

Advances from the Federal Home Loan Bank (FHLB)

The fair value of these advances is estimated by discounting the future cash flows of these advances using the current rates at which similar advances or similar financial instruments could be obtained.

Subordinated debentures

The book value of subordinated debentures is cost. The subordinated debentures re-price quarterly at a rate equal to three month libor plus 3.10%.

Dividend Restrictions

The Company is not permitted to pay a dividend to common shareholders if it fails to make a quarterly interest payment to the holders of the Company’s subordinated debentures. Furthermore, the Bank may be restricted in the payment of dividends to the Corporation by the KDFI or FDIC. Any restrictions imposed by either regulator would effectively limit the Company’s ability to pay a dividend to its common stockholders as discussed in Note 16. At December 31, 2017, there were no such restrictions. At December 31, 2017 and December 31, 2016, the Corporation had cash balances on hand to pay common dividends and repurchase treasury stock as outlined in Note 19 of approximately $860,000 and $1.1 million, respectively.

Earnings Per Share

Earnings per share (EPS) consists of two separate components, basic EPS and diluted EPS. Basic EPS is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for each period presented. Diluted EPS is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding plus dilutive common stock equivalents (CSE). CSE consists of dilutive stock options granted through the Company’s stock option plan. Restricted stock awards represent future compensation expense and are dilutive. Anti-dilutive common stock equivalents are not included for the purposes of this calculation. At December 31, 2017 and December 31, 2016, the Company has no warrants or stock options outstanding.

Stock Compensation

Compensation cost is recognized for restricted stock awards issued to employees based on the fair value of these awards at the date of grant. The cost is recognized over the required service period, generally defined as the vesting period.

50

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Effect of New Accounting Pronouncements

In May 2014, the FASB issued new guidance related to “Revenue from Contracts with Customers.” This guidance supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the ASC. The guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016; however, the FASB has agreed to a one-year deferral of the effective date to annual reporting periods beginning after December 15, 2017. The implementation of ASC Topic 605 is not expected to have a material impact on the Company’s Consolidated Financial Statements.

ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (vii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale. ASU 2016-01 will be effective on January 1, 2018, and is not expected to have a material effect on the Company’s Consolidated Financial Statements.

ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, “Revenue from Contracts with Customers.” ASU 2016-02 will be effective for us on January 1, 2019, and will require transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We are currently evaluating the potential impact of ASU 2016-02 on the Company’s Consolidated Financial Statements.

51

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Effect of New Accounting Pronouncements (Continued)

ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Under ASU 2016-09 all excess tax benefits and tax deficiencies related to share-based payment awards should be recognized as income tax expense or benefit in the income statement during the period in which they occur. Previously, such amounts were recorded in the pool of excess tax benefits included in additional paid-in capital, if such pool was available. Because excess tax benefits are no longer recognized in additional paid-in capital, the assumed proceeds from applying the treasury stock method when computing earnings per share should exclude the amount of excess tax benefits that would have previously been recognized in additional paid-in capital. Additionally, excess tax benefits should be classified along with other income tax cash flows as an operating activity rather than a financing activity, as was previously the case. ASU 2016-09 also provides that an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. ASU 2016-09 changes the threshold to qualify for equity classification (rather than as a liability) to permit withholding up to the maximum statutory tax rates (rather than the minimum as was previously the case) in the applicable jurisdictions. ASU 2016-09 was effective on January 1, 2017. The implementation of ASU 2016-09 did not have a material effect on the Company’s Consolidated Financial Statements.

On June 16, 2016, the FASB released its finalized ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The amendments to U.S. GAAP require businesses and other organization to measure the expected credit losses on financial assets, such as loans, securities, bond insurance, and many receivables, the FASB said. The accounting changes apply to instruments recorded on balance sheets at their historical cost, although there are some limited changes to the accounting for debt instruments classified as available-for-sale. Write-downs will be based on historical information, current business conditions, and forecasts, and FASB expects the forecasts to improve the loss estimates on financial assets that are losing value. FASB also said the techniques that are employed today to write down loans and other instruments can still be used, although FASB expects the variables for calculating the losses to change. ASU 2016-13 will become effective on January 1, 2020. Companies are permitted to adopt ASU 2016-13 in fiscal years beginning after December 15, 2018. The Company is currently evaluating the potential impact of ASU 2016-13.

ASU 2016-15 “Statement of Cash Flows” (Topic 230) is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. ASU 2016-15 is effective for public companies for annual periods beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted with retrospective application. The application of ASU 2016-15 did not have a material impact on the Company’s Consolidated Financial Statements.

52

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(1) Summary of Significant Accounting Policies: (Continued)

Effect of New Accounting Pronouncements (Continued)

ASU 2017-08, “Receivables – Nonrefundable Fees and Other Cost” (Topic 310) – amends the amortization period for certain purchased callable debt securities held at a premium. Prior to the issuance of this guidance, premiums were amortized as an adjustment of yield over the contractual life of instrument. ASU 2017-08 premiums on purchased callable debt securities that have an explicit, non-contingent call features that are callable at fixed prices to be amortized to the earliest call date. There are no accounting changes for securities held at a discount. This ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018 and early adoption is permitted. The adoption of ASU 2017-08 is not expected to have a material impact on the Company’s Consolidated Financial Statements.

ASU 2017-09 “Compensation – Stock Compensation” (Topic 718) – clarifies when changes to the terms or conditions of a share-based payment must be accounted for as modifications. Under AUS 2017-09, an entity should account for changes to the terms or conditions of a share-based payment unless all of the following are met:

• The fair value of the modified award is the same as the fair value of the original award immediately before modification,

• The vesting conditions of the modified award is the same as the vesting conditions value of the original award immediately before modification, and

• The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before modification.

ASU 2017-09 will be effective for the Company on January 1, 2018 and is not expected to have a material impact on our consolidated financial statements.

ASU 2017-12 “Derivatives and Hedging (Topic 815) amends the hedge accounting recognition and presentation requirements in ASC 815 to improve the transparency and understandability of information convey to financial statement users about an entity’s risk management activities to better align the entity’s financial reporting for hedging relationships with those risk management activities and to reduce the complexity of and simplify the application of hedge accounting. ASU 2017-12 will be effective for the Company on January 1, 2019 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

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

Reclassifications

Certain items in prior financial statements have been reclassified to conform to the current presentation. Reclassifications had no effect on prior year’s net income or shareholders’ equity.

53

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(2) Securities:

Securities, which consist of debt and equity investments, have been classified in the consolidated balance sheets according to management’s intent. The carrying amount of securities and their estimated fair values follow:

	December 31, 2017
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Restricted:
FHLB stock	$	4,428		—		—			4,428
Available for Sale:
U.S. Agency securities	$	84,210		536		(653	)		84,093
Tax free municipal bonds		26,412		637		(83	)		26,966
Taxable municipal bonds		1,279		5		(1	)		1,283
Trust preferred securities		1,650		35		—			1,685
Mortgage-backed securities		71,389		201		(826	)		70,764
	$	184,940		1,414		(1,563	)		184,791

	December 31, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Restricted:
FHLB stock	$	4,428		—		—			4,428
Available for Sale:
U.S. Treasury securities	$	2,000		1		—			2,001
U.S. Agency securities		83,667		983		(638	)		84,012
Tax free municipal bonds		33,004		1,081		(174	)		33,911
Taxable municipal bonds		2,720		17		(10	)		2,727
Trust preferred securities		1,634		183		—			1,817
Mortgage-backed securities		85,626		437		(1,051	)		85,012
	$	208,651		2,702		(1,873	)		209,480

54

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(2) Securities: (Continued)

The scheduled maturities of debt securities available for sale at December 31, 2017 and December 31, 2016 were as follows:

December 31, 2017	Amortized Cost		Estimated Fair Value
Due within one year	$	2,078		2,095
Due in one to five years		28,692		28,624
Due in five to ten years		18,161		18,287
Due after ten years		7,218		7,443
		56,149		56,449
Amortizing agency bonds		57,402		57,578
Mortgage-backed securities		71,389		70,764
Total unrestricted securities available for sale	$	184,940		184,791

December 31, 2016	Amortized Cost		Estimated Fair Value
Due within one year	$	6,605		6,615
Due in one to five years		13,913		14,067
Due in five to ten years		32,611		32,744
Due after ten years		13,022		13,603
		66,151		67,029
Amortizing agency bonds		56,874		57,439
Mortgage-backed securities		85,626		85,012
Total unrestricted securities available for sale	$	208,651		209,480

55

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(2) Securities: (Continued)

The estimated fair value and unrealized loss amounts of temporarily impaired investments as of December 31, 2017 and December 31, 2016 are as follows:

	Less than 12 months					12 months or longer					Total
December 31, 2017	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Available for sale
U.S. Agency securities	$	41,501		(431	)		9,846		(222	)		51,347		(653	)
Taxable municipals		521		(1	)		—		—			521		(1	)
Tax free municipals		4,860		(51	)		913		(32	)		5,773		(83	)
Mortgage-backed securities		40,441		(289	)		21,566		(537	)		62,007		(826	)
Total Available for Sale	$	87,323		(772	)		32,325		(791	)		119,648		(1,563	)

	Less than 12 months					12 months or longer					Total
December 31, 2016	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Available for sale
U.S. Agency securities	$	41,963		(597	)		3,459		(41	)		45,422		(638	)
Taxable municipals		1,347		(10	)		—		—			1,347		(10	)
Tax free municipals		7,369		(174	)		—		—			7,369		(174	)
Mortgage-backed securities		48,462		(796	)		7,439		(255	)		55,901		(1,051	)
Total Available for Sale	$	99,141		(1,577	)		10,898		(296	)		110,039		(1,873	)

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. Management gives consideration 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.

56

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(2) Securities: (Continued)

At December 31, 2017, the Company has 83 securities with unrealized losses. Management believes these unrealized losses relate to changes in interest rates and not credit quality. Management also believes the Company has the ability to hold these securities until maturity and, therefore, no declines are deemed to be other than temporary. The carrying value of the Company’s investment securities may decline in the future if the financial condition of issuers deteriorates and management determines it is probable that the Company will not recover the entire amortized cost bases of the securities. As a result, there is a risk that other-than-temporary impairment charges may occur in the future.

In June of 2008, the Company purchased $2.0 million par value of a private placement subordinated debenture issued by First Financial Services Corporation (“FFKY”), the holding Company for First Federal Savings Bank (“First Fed”). The debenture is a thirty-year security with a coupon rate of 8.00%. FFKY is a NASDAQ listed commercial bank holding company located in Elizabethtown, Kentucky. In October of 2010, FFKY informed the owners of its subordinated trust, including the Company, that it was deferring the dividend payments for up to five years as prescribed by the trust agreement.

At September 30, 2013, the Company recognized a $400,000 impairment charge related to management’s financial analysis of the issuing institution, and our opinion that it would be unable to make dividend payments after the five-year extension expired. In January 2015, Your Community Bancshares (“YCB”) purchased FFKY. In September of 2016, Wesbanco (“WSBC”) closed on its purchase of YCB. WSBC is a $9.9 billion institution headquartered in West Virginia. WSBC has assumed the debt originally issued by FFKY, and all interest is now current. The Company is currently accreting the $400,000 impairment charge back into income ratably.

During 2017, the Company sold investment securities classified as available for sale for proceeds of $18.0 million resulting in gross gains of $272,000 and gross losses of $103,000. During 2016, the Company sold investment securities classified as available for sale for proceeds of $19.0 million resulting in gross gains of $690,000 and gross losses of $78,000. During 2015, the Company sold investment securities classified as available for sale for proceeds of $84.9 million resulting in gross gains of $1,274,000 and gross losses of $583,000.

As part of its normal course of business, the Bank holds significant balances of municipal and other deposits that require the Bank to pledge investment instruments as collateral. At December 31, 2017, the Bank pledged investments with a book value of $118.0 million and a market value of approximately $119.8 million to various municipal entities as required by law. In addition, the Bank has provided $47.6 million of letters of credit issued by the Federal Home Loan Bank of Cincinnati to collateralize municipal deposits. At December 31, 2016, the Bank pledged investments with a book value of $125.6 million and a market value of approximately $128.4 million to various municipal entities as required by law. In addition, the Bank provided $45.6 million of letters of credit issued by the Federal Home Loan Bank of Cincinnati to collateralize municipal deposits. At December 31, 2017 and December 31, 2016, the collateral for the letters of credit issued are the Bank’s one to four family loan portfolio.

57

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(3) Loans Receivable, Net:

The Company uses the following loan segments as described below:

• One-to-four family first mortgages are closed-end loans secured by residential housing. Loans may be either owner or non-owner occupied properties. If the loan is owner-occupied, the loan is analyzed and under-written as a consumer loan. Loan terms may be up to 30 years.

• Home equity lines of credit may be first or second mortgages secured by one-to-four family properties. Home equity loans carry a variable rate and typically are open ended for a period not to exceed ten years with a fifteen year final maturity. Loans secured by home equity lines of credit are under-written under the Company’s consumer loan guidelines.

• Junior liens are closed-end loans secured by one-to-four family residences with a fixed or variable rate. Typically, the collateral for these loans are owner occupied units with a subordinate lien. Loans secured by junior liens are under-written under the Company’s consumer loan guidelines.

• Multi-family loans are closed-end loans secured by residential housing with five or more units in a single building. Multi-family loans may carry a variable rate of interest or the interest rate on the loan is a fixed rate (usually five years). After the initial fixed rate period, the loan reverts to a variable rate or has balloon maturity. Multi-family loans have amortization terms of up to twenty years and are under-written under the Company’s commercial loan underwriting guidelines.

• Constructions loans may consist of residential or commercial properties and carry a fixed or variable rate for the term of the construction period. Construction loans have a maturity of between twelve and twenty-four months depending on the type of property. After the construction period, loans are amortized over a twenty-year period. All construction loans are under written under the Company’s commercial loan underwriting guidelines for the type of property being constructed.

• Land loans consist of properties currently under development, land held for future development and land held for recreational purposes. Land loans used for recreational purposes are amortized for twenty years and typically carry a fixed rate of interest for one-to-five years with a balloon maturity or floating rate period to follow and are under-written under the Company’s commercial loan underwriting guidelines.

• Loans classified as farmland by the Company include properties that are used exclusively for the production of grain, livestock, poultry or swine. Loans secured by farmland have a maturity of up to twenty years and carry a fixed rate of interest for five to ten years. Loans secured by farmland are under-written under the Company’s commercial loan underwriting guidelines.

58

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(3) Loans Receivable, Net: (Continued)

• Non-residential real estate loans are secured by commercial real estate properties and may be either owner or non-owner occupied. The loans typically have a twenty year maturity and may be fixed for a period of five to ten years. After the initial fixed rate period, the note will either revert to a one year adjustable rate loan or have a balloon maturity. Loans secured by non-residential real estate are under-written under the Company’s commercial loan underwriting standards.

• The Company originates secured and unsecured consumer loans. Collateral for consumer loans may include deposits, brokerage accounts, automobiles and other personal items. Consumer loans are typically fixed for a term of one to five years and are under-written using the Company’s consumer loan policy.

• The Company originates unsecured and secured commercial loans. Secured commercial loans may have business inventory, accounts receivable and equipment as collateral. The typical customer may include all forms of manufacturing, retail and wholesale sales, professional services and various forms of agri-business interest. Commercial loans may be fixed or variable rate and typically have terms between one and five years.

59

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(3) Loans Receivable, Net: (Continued)

Set forth below is selected data relating to the composition of the loan portfolio by type of loan at December 31, 2017 and December 31, 2016:

	December 31, 2017			December 31, 2016
Real estate loans:
One-to-four family (closed end) first mortgages	$	163,565			147,962
Home equity lines of credit		35,697			35,684
Junior liens (closed end)		1,184			1,452
Multi-family		37,445			34,284
Construction		30,246			39,255
Land		14,873			23,840
Non-residential real estate		224,952			182,940
Farmland		36,851			47,796
Total mortgage loans		544,813			513,213
Consumer loans		8,620			8,717
Commercial loans		88,938			88,907
Total other loans		97,558			97,624
Total loans, gross		642,371			610,837
Deferred loan cost, net of fees		(443	)		(439	)
Less allowance for loan losses		(4,826	)		(6,112	)
Total loans	$	637,102		$	604,286

Although the Company has a diversified loan portfolio, 84.8% and 84.0% of the portfolio was concentrated in loans secured by real estate at December 31, 2017 and December 31, 2016, respectively. At December 31, 2017 and December 31, 2016, the majority of these loans are located within the Company’s general operating areas of Western Kentucky and Middle and Western Tennessee.

60

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(3) Loans Receivable, Net: (Continued)

Risk Grade Classifications

The Company uses the following risk definitions for commercial loan risk grades:

Excellent—Loans in this category are to persons or entities of unquestioned financial strength, a highly liquid financial position, with collateral that is liquid and well margined. These borrowers have performed without question on past obligations, and the Bank expects their performance to continue. Internally generated cash flow covers current maturities of long-term debt by a substantial margin. Loans secured by Bank certificates of deposit and savings accounts, with appropriate holds placed on the accounts, are to be rated in this category.

Very Good—These are loans to persons or entities with strong financial condition and above-average liquidity who have previously satisfactorily handled their obligations with the Bank. Collateral securing the Bank’s debt is margined in accordance with policy guidelines. Internally generated cash flow covers current maturities of long-term debt more than adequately. Unsecured loans to individuals supported by strong financial statements and on which repayment is satisfactory may be included in this classification.

Satisfactory—Assets of this grade conform to substantially all the Bank’s underwriting criteria and evidence an average level of credit risk; however, such assets display more susceptibility to economic, technological or political changes since they lack the above average financial strength of credits rated Very Good. Borrower’s repayment capacity is considered to be adequate. Credit is appropriately structured and serviced; payment history is satisfactory.

Acceptable—Assets of this grade conform to most of the Bank’s underwriting criteria and evidence an acceptable, though higher than average, level of credit risk; however, these loans have certain risk characteristics which could adversely affect the borrower’s ability to repay given material adverse trends. Loans in this category require an above average level of servicing and show more reliance on collateral and guaranties to preclude a loss to the Bank should material adverse trends develop. If the borrower is a company, its earnings, liquidity and capitalization are slightly below average when compared to its peers.

Watch—These loans are characterized by borrowers who have marginal cash flow, marginal profitability, or have experienced an unprofitable year and a declining financial condition. The borrower has in the past satisfactorily handled debts with the Bank, but in recent months has either been late, delinquent in making payments, or made sporadic payments. While the Bank continues to be adequately secured, margins have decreased or are decreasing, despite the borrower’s continued satisfactory condition. Other characteristics of borrowers in this class include inadequate credit information, weakness of financial statement and repayment capacity, but with collateral that appears to limit exposure. This classification includes loans to established borrowers that are reasonably margined by collateral, but where potential for improvement in financial capacity appears limited.

61

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(3) Loans Receivable, Net (Continued)

Risk Grade Classifications (Continued)

Special Mention—Loans in this category have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deteriorating prospects for the asset or in the institution’s credit position at some future date. Borrowers may be experiencing adverse operating trends or market conditions. Non-financial reasons for rating a credit exposure Special Mention include, but are not limited to: management problems, pending litigations, ineffective loan agreement and/or inadequate loan documentation, structural weaknesses and/or lack of control over collateral.

Substandard—A substandard asset is inadequately protected by the current sound worth or paying capacity of the debtor or the collateral pledged. There exists one or more well defined weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility the Bank will experience some loss if the deficiencies are not corrected.

Doubtful—A loan classified as doubtful has all the weaknesses inherent in a loan classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. These are poor quality loans in which neither the collateral, if any, nor the financial condition of the borrower presently ensure collectability in full in a reasonable period of time; in fact, there is permanent impairment in the collateral securing the Bank’s loan. These loans are in a work-out status and have a defined work-out strategy.

Loss—Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. The Bank takes losses in the period in which they become uncollectible.

The following credit risk standards are assigned to consumer loans:

Satisfactory—All consumer open-end and closed-end retail loans shall have an initial risk grade assigned of 3—Satisfactory.

Substandard—All consumer open-end and closed-end retail loans past due 90 cumulative days from the contractual date will be classified as 7—Substandard. If a consumer/retail loan customer files bankruptcy, the loan will be classified as 7—Substandard regardless of payment history.

Loss—All closed-end retail loans that become past due 120 cumulative days and open-end retail loans that become past due 180 cumulative days from the contractual due date will be charged off as loss assets. The charge-off will be taken by the end of the month in which the 120-day or 180-day time period elapses. All losses in retail credit will be recognized when the affiliate becomes aware of the loss, but in no case should the charge off exceed the time frames stated within this policy.

62

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(3) Loans Receivable, Net: (Continued)

Loans by classification type and credit risk indicator at December 31, 2017 were as follows:

	Pass		Special Mention		Substandard		Doubtful		Total
One-to-four family mortgages	$	162,993		—		572		—		163,565
Home equity line of credit		35,285		—		412		—		35,697
Junior liens		1,184		—		—		—		1,184
Multi-family		37,445		—		—		—		37,445
Construction		30,246		—		—		—		30,246
Land		14,318		—		555		—		14,873
Non-residential real estate		216,901		979		7,072		—		224,952
Farmland		35,253		1,147		451		—		36,851
Consumer loans		8,376		—		244		—		8,620
Commercial loans		83,892		3,572		1,474		—		88,938
Total	$	625,893		5,698		10,780		—		642,371

Loans by classification type and credit risk indicator at December 31, 2016 were as follows:

	Pass		Special Mention		Substandard		Doubtful		Total
One-to-four family mortgages	$	145,965		744		1,253		—		147,962
Home equity line of credit		35,109		25		550		—		35,684
Junior liens		1,411		30		11		—		1,452
Multi-family		31,280		—		3,004		—		34,284
Construction		39,255		—		—		—		39,255
Land		15,581		35		8,224		—		23,840
Non-residential real estate		172,395		3		10,542		—		182,940
Farmland		44,832		674		2,290		—		47,796
Consumer loans		8,382		—		335		—		8,717
Commercial loans		85,174		603		3,130		—		88,907
Total	$	579,384		2,114		29,339		—		610,837

63

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(3) Loans Receivable, Net: (Continued)

Impaired loans by classification type and the related valuation allowance amounts at December 31, 2017 were as follows:

	At December 31, 2017						For the year ended December 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no specific allowance
One-to-four family mortgages	$	257		257		—		1,235		35
Home equity line of credit		—		—		—		447		26
Junior liens		—		—		—		6		—
Multi-family		—		—		—		1,135		—
Construction		—		—		—		—		—
Land		515		515		—		837		44
Non-residential real estate		7,086		7,086		—		8,979		395
Farmland		444		444		—		1,094		35
Consumer loans		—		—		—		8		2
Commercial loans		875		875		—		1,571		46
Total		9,177		9,177		—		15,312		583
Impaired loans with a specific allowance
One-to-four family mortgages	$	—		—		—		—		—
Home equity line of credit		—		—		—		—		—
Junior liens		—		—		—		—		—
Multi-family		—		—		—		—		—
Construction		—		—		—		—		—
Land		—		—		—		4,006		—
Non-residential real estate		2		2		2		88		2
Farmland		—		—		—		195		—
Consumer loans		217		217		54		248		—
Commercial loans		541		541		233		479		13
Total		760		760		289		5,016		15
Total impaired loans	$	9,937		9,937		289		20,328		598

64

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(3) Loans Receivable, Net: (Continued)

Impaired loans by classification type and the related valuation allowance amounts at December 31, 2016 were as follows:

	At December 31, 2016						For the year ended December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no specific allowance
One-to-four family mortgages	$	1,253		1,253		—		1,470		67
Home equity line of credit		550		550		—		390		24
Junior liens		11		11		—		13		1
Multi-family		3,004		3,004		—		3,005		172
Construction		—		—		—		—		—
Land		1,553		2,513		—		7,868		38
Non-residential real estate		10,542		10,542		—		9,363		485
Farmland		2,290		2,290		—		1,563		120
Consumer loans		—		—		—		21		1
Commercial loans		2,865		2,865		—		3,168		112
Total		22,068		23,028		—		26,861		1,020
Impaired loans with a specific allowance
One-to-four family mortgages	$	—		—		—		452		—
Home equity line of credit		—		—		—		—		—
Junior liens		—		—		—		—		—
Multi-family		—		—		—		910		—
Construction		—		—		—		—		—
Land		6,671		6,671		1,036		1,811		485
Non-residential real estate		—		—		—		—		—
Farmland		—		—		—		533		—
Consumer loans		335		335		84		273		—
Commercial loans		265		265		28		754		24
Total		7,271		7,271		1,148		4,733		509
Total impaired loans	$	29,339		30,299		1,148		31,594		1,529

65

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(3) Loans Receivable, Net (Continued)

Allowance for Loan Losses

A loan is considered to be impaired 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 impaired loans is measured based on the present value of expected payments or using the fair value of the collateral if the loan is collateral dependent.

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A management reporting system supplements the review process by providing the Company with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

66

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(3) Loans Receivable, Net (Continued)

Allowance for Loan Losses (Continued)

Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. The Company also utilizes third-party experts to provide insight and guidance about economic conditions and trends affecting market areas it serves. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans. At December 31, 2017, approximately $95.6 million of the outstanding principal balance of the Company’s non-residential real estate loans were secured by owner-occupied properties, approximately $129.4 million was secured by non-owner occupied properties. At December 31, 2016, approximately $78.7 million of the outstanding principal balance of the Company’s non-residential real estate loans were secured by owner-occupied properties, approximately $104.2 million was secured by non-owner occupied properties.

67

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(3) Loans Receivable, Net: (Continued)

The following table presents the balance in the allowance for loan losses and the recorded investment in loans as of December 31, 2017 and December 31, 2016 by portfolio segment and based on the impairment method as of December 31, 2017 and December 31, 2016.

	Commercial		Land Development / Construction		Commercial Real Estate		Residential Real Estate		Consumer		Total
December 31, 2017:
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	233		—		2		—		54		289
Collectively evaluated for impairment		614		1,384		1,468		941		130		4,537
Total ending allowance balance	$	847		1,384		1,470		941		184		4,826
Loans:
Loans individually evaluated for impairment	$	1,416		515		7,532		257		217		9,937
Loans collectively evaluated for impairment		87,522		44,604		291,716		200,189		8,403		632,434
Total ending loans balance	$	88,938		45,119		299,248		200,446		8,620		642,371
	Commercial		Land Development / Construction		Commercial Real Estate		Residential Real Estate		Consumer		Total
December 31, 2016:
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	28		1,036		—		—		84		1,148
Collectively evaluated for impairment		565		1,001		2,154		1,120		124		4,964
Total ending allowance balance	$	593		2,037		2,154		1,120		208		6,112
Loans:
Loans individually evaluated for impairment	$	3,130		8,224		15,836		1,814		335		29,339
Loans collectively evaluated for impairment		85,777		54,871		249,184		183,284		8,382		581,498
Total ending loans balance	$	88,907		63,095		265,020		185,098		8,717		610,837

68

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(3) Loans Receivable, Net: (Continued)

The average recorded investment in impaired loans for the years ended December 31, 2017 and 2016 was $20.3 million and $31.6 million, respectively. For the year ended December 31, 2017, the Company recognized $598,000 of interest income on impaired loans as compared to $1.5 million of interest income on impaired loans for the years ended December 31, 2016. The following table provides a detail of the Company’s activity in the allowance for loan loss account allocated by loan type for the years ended December 31, 2017, December 31, 2016 and December 31, 2015:

December 31, 2017	Balance 12/31/2016		Charge off			Recovery		Provision for Loan Loss			Ending Balance 12/31/2017
One-to-four family mortgages	$	852		(66	)		13		(52	)		747
Home equity line of credit		260		—			12		(83	)		189
Junior liens		8		—			4		(7	)		5
Multi-family		412		—			417		(515	)		314
Construction		277		—			—		(116	)		161
Land		1,760		(2,608	)		559		1,512			1,223
Non-residential real estate		964		—			16		(191	)		789
Farmland		778		—			10		(421	)		367
Consumer loans		208		(261	)		87		150			184
Commercial loans		593		(224	)		278		200			847
	$	6,112		(3,159	)		1,396		477			4,826
December 31, 2016	Balance 12/31/2015		Charge off			Recovery		Provision for Loan Loss			Ending Balance 12/31/2016
One-to-four family mortgages	$	1,030		—			167		(345	)		852
Home equity line of credit		201		(30	)		14		75			260
Junior liens		8		—			14		(14	)		8
Multi-family		227		(421	)		—		606			412
Construction		377		—			—		(100	)		277
Land		1,379		—			—		381			1,760
Non-residential real estate		1,139		—			10		(185	)		964
Farmland		358		—			—		420			778
Consumer loans		358		(422	)		293		(21	)		208
Commercial loans		623		(595	)		141		424			593
	$	5,700		(1,468	)		639		1,241			6,112

69

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(3) Loans Receivable, Net: (Continued)

December 31, 2015	Balance 12/31/2014		Charge off			Recovery		Provision for Loan Loss			Ending Balance 12/31/2015
One-to-four family mortgages	$	1,198		(143	)		39		(64	)		1,030
Home equity line of credit		181		(92	)		10		102			201
Junior liens		14		—			4		(10	)		8
Multi-family		85		—			—		142			227
Construction		146		—			—		231			377
Land		1,123		(911	)		—		1,167			1,379
Non-residential real estate		2,083		(222	)		2		(724	)		1,139
Farmland		461		—			—		(103	)		358
Consumer loans		494		(298	)		118		44			358
Commercial loans		504		(201	)		54		266			623
	$	6,289		(1,867	)		227		1,051			5,700

Non-accrual loans totaled $1.3 million and $9.1 million at December 31, 2017 and December 31, 2016, respectively. All non-accrual loans noted below are classified as substandard. Interest income foregone on such loans totaled $100,000 at December 31, 2017, $108,000 at December 31, 2016, and $337,000 at December 31, 2015, respectively. The Company is not committed to lend additional funds to borrowers whose loans have been placed on a non-accrual basis. At December 31, 2017, there was one loan with a balance $88,000 that was past due more than ninety days and still accruing interest. There were no loans past due more than three months and still accruing interest as of December 31, 2016 and December 31, 2015, respectively. At December 31, 2017 and December 31, 2016, the Company’s balances of non-accrual loans by loan type are as follows:

	12/31/2017		12/31/2016
One-to-four family first mortgages	$	266	$	270
Home equity lines of credit		402		402
Junior lien		4		—
Land		40		7,675
Non-residential real estate		—		208
Farmland		111		—
Consumer loans		3		3
Commercial loans		459		516
Total non-accrual loans	$	1,285	$	9,074

70

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(3) Loans Receivable, Net: (Continued)

The table below presents gross loan balances excluding deferred loan fees of $443,000 at December 31, 2017 by loan classification allocated between past due, performing and non-accrual:

	Currently Performing		30 – 89 Days Past Due		More than 90 days past Due and still Accruing		Non-accrual Loans		Total
One-to-four family mortgages	$	163,030		181		88		266	$	163,565
Home equity line of credit		35,295		—		—		402		35,697
Junior liens		1,180		—		—		4		1,184
Multi-family		37,445		—		—		—		37,445
Construction		30,246		—		—		—		30,246
Land		14,833		—		—		40		14,873
Non-residential real estate		224,743		209		—		—		224,952
Farmland		36,740		—		—		111		36,851
Consumer loans		8,614		3		—		3		8,620
Commercial loans		88,479		—		—		459		88,938
Total	$	640,605		393		88		1,285		642,371

The table below presents gross loan balances excluding deferred loan fees of $439,000 at December 31, 2016 by loan classification allocated between past due, performing and non-accrual:

	Currently Performing		30 – 89 Days Past Due		Non-accrual Loans		Total
One-to-four family mortgages	$	146,796		896		270	$	147,962
Home equity line of credit		35,260		22		402		35,684
Junior liens		1,448		4		—		1,452
Multi-family		34,284		—		—		34,284
Construction		39,255		—		—		39,255
Land		16,165		—		7,675		23,840
Non-residential real estate		182,732		—		208		182,940
Farmland		47,796		—		—		47,796
Consumer loans		8,686		28		3		8,717
Commercial loans		88,130		261		516		88,907
Total	$	600,552		1,211		9,074		610,837

71

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(3) Loans Receivable, Net: (Continued)

Troubled Debt Restructuring

On a periodic basis, the Company may modify the terms of certain loans. In evaluating whether a restructuring constitutes a TDR, ASC 310; A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring, is determinative. In evaluating whether a restructuring constitutes a TDR, the Company must separately conclude that both of the following exist:

a.) The restructuring constitutes a concession

b.) The debtor is experiencing financial difficulties

ASC 310 provides the following guidance for the Company’s evaluation of whether it has granted a concession.

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 Company may have granted a concession. In that circumstance, the Company 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 Company must consider a variety of factors in assessing whether a restructuring resulting in a delay in payment is insignificant.

There were no loans as of December 31, 2017, December 31, 2016 and December 31, 2015 that were been modified as TDRs and within twelve months of the modification subsequently defaulted on their modified terms. At December 31, 2017 and December 31, 2016, there were no commitments to lend additional funds to any borrower whose loan terms have been modified in a TDR.

72

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(3) Loans Receivable, Net: (Continued)

Troubled Debt Restructurings (Continued)

A summary of the activity in loans classified as TDRs for the year ended December 31, 2017 is as follows:

	Balance at 12/31/16		New TDR		Loss on Foreclosure		Transferred to Non-accrual		Loan Amortization			Balance at 12/31/17
Multi-family real estate	$	815		—		—		—		(815	)		—
Non-residential real estate		5,646		—		—		—		(2,483	)		3,163
Total performing TDR	$	6,461		—		—		—		(3,298	)		3,163

During the year ended December 31, 2017, there were no new loans modified as TDR.

A summary of the activity in loans classified as TDRs for the year ended December 31, 2016 is as follows:

	Balance at 12/31/15		New TDR		Loss on Foreclosure		Transferred to Non-accrual		Loan Amortization			Balance at 12/31/16
Multi-family real estate	$	—		816		—		—		(1	)		815
Non-residential real estate		5,536		228		—		—		(118	)		5,646
Total performing TDR	$	5,536		1,044		—		—		(119	)		6,461

During the year ended December 31, 2016, the Company made financial concessions to one borrower having four loans totaling $1.04 million that resulted in in a TDR classification. The loans were secured by three multi-family real estate properties and one parcel of non-residential real estate. The borrower had financial problems and made a request of the Bank to make interest only payments for a period not to exceed one year. During the interest only period, the borrower committed to attempt to sell the collateral. During 2017, the borrower successfully sold the collateral and the Company received all funds due.

73

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(3) Loans Receivable, Net: (Continued)

Troubled Debt Restructurings (Continued)

A summary of the activity in loans classified as TDRs for the year ended December 31, 2015 is as follows:

	Balance at 12/31/14		New TDR		Loss on Foreclosure		Transferred to Non-accrual		Loan Amortization			Balance at 12/31/15
Non-residential real estate	$	3,284		2,265		—		—		(13	)		5,536
Total performing TDR	$	3,284		2,265		—		—		(13	)		5,536

During the year ended December 31, 2015 there were six new loans to one borrower modified as TDR. The loans included one commercial vehicle, two parcels of non-residential real estate and three loans for commercial equipment used in conjunction with the non-residential real estate. The customer had financial difficulties related to personal legal issues. The customer received a concession from the Bank of one year of interest only payments due to his inability to materially participate in the business. The customer listed the properties for sale. The properties remained in TDR status until they were sold to a third party in 2017.

The Company originates loans to officers and directors and their affiliates at terms substantially equivalent to those available to other borrowers. Loans to officers and directors at December 31, 2017 and December 31, 2016, were approximately $5.9 million and $4.9 million, respectively. At December 31, 2017 and December 31, 2016, funds committed that were undisbursed to officers and directors approximated $1.5 million and $380,000, respectively.

The following summarizes activity of loans to officers and directors and their affiliates for the years ended December 31, 2017 and December 31, 2016:

	2017			2016
Balance at beginning of period	$	4,894			3,844
New loans		3,043			1,651
Principal repayments		(2,004	)		(601	)
Balance at end of period	$	5,933			4,894

74

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(4) Premises and Equipment:

Components of premises and equipment included in the consolidated balance sheets as of December 31, 2017 and December 31, 2016 consisted of the following:

	2017		2016
Land	$	6,555		6,555
Land improvements		1,153		1,132
Buildings		22,467		22,397
Furniture and equipment		6,957		6,932
		37,132		37,016
Less accumulated depreciation		14,432		13,555
Premises and equipment, net	$	22,700		23,461

Depreciation expense was approximately $1,225,000, $1,320,000 and $1,266,000 for the years ended December 31, 2017, 2016 and 2015, respectively.

75

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(5) Deposits:

At December 31, 2017, the scheduled maturities of other time deposits were as follows:

Years Ending December 31,
2018	$	190,955
2019		68,714
2020		30,079
2021		10,649
2022		4,572
	$	304,969

The amount of other time deposits with a minimum denomination of $250,000 or more was approximately $97.8 million and $79.7 million at December 31, 2017, and December 31, 2016, respectively. At December 31, 2017 and December 31, 2016, directors, members of senior management and their affiliates had deposits in the Bank of approximately $2.1 million. At December 31, 2017 and December 31, 2016, the Company had deposits classified as brokered deposits totaling $60.1 million and $33.4 million, respectively.

Interest expense on deposits for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, is summarized as follows:

	2017		2016		2015
Interest bearing checking accounts	$	1,262		1,183		1,105
Money market accounts		71		76		88
Savings		94		95		103
Other time deposits		3,383		2,886		3,735
	$	4,810		4,240		5,031

The Bank maintains clearing arrangements for its demand, interest bearing checking accounts and money market accounts with BBVA Compass Bank. The Bank is required to maintain certain cash reserves in its account to cover average daily clearings. For the month ended December 31, 2017, average daily clearings were approximately $5.3 million.

At December 31, 2017 and December 31, 2016, the Company had deposit accounts in overdraft status that were reclassified to loans on the accompanying consolidated balance sheet of approximately $0.2 million and $0.3 million, respectively.

76

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands, Except Percentages)

(6) Advances from Federal Home Loan Bank:

Federal Home Loan Bank advances are summarized as follows:

	December 31,
	2017					2016
Types of Advances	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Fixed-rate	$	23,000		1.57	%	$	11,000		1.04	%

Scheduled maturities of FHLB advances as of December 31, 2017, are as follows:

Years Ending December 31,	Fixed Rate		Average Cost
2018	$	6,000		1.18	%
2019 2020		7,000 10,000		1.55 1.83	%  %
Total	$	23,000		1.57	%

The Bank has an approved line of credit of $30 million at the FHLB of Cincinnati, which is secured by a blanket agreement to maintain residential first mortgage loans and non-residential real estate loans with a principal value of 125% of the outstanding advances and has a variable interest rate. At December 31, 2017, the Bank could borrow an additional $49.1 million from the FHLB of Cincinnati without pledging additional collateral. At December 31, 2017, the Bank has an additional $9.9 million in additional collateral that could be pledged to the FHLB to secure additional advance requirements. The Bank has a $12.0 million unsecured line of credit with BBVA Compass Bank of Birmingham, Alabama. The Company’s overnight lines of credit with both the Federal Home Loan Bank of Cincinnati and Compass Bank had no balance at December 31, 2017.

77

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands, Except Percentages)

(7) Repurchase Agreements:

At December 31, 2017, the Company provided investment securities with a market value of $38.4 million as collateral for repurchase agreements. The maximum repurchase balance outstanding during the year ended December 31, 2017 and December 31, 2016 was $46.8 million and $54.8 million, respectively.

At December 31, 2017 and December 31, 2016, the respective cost and maturities of the Company’s repurchase agreements are as follows:

2017	Balance		Average Rate			Maturity
Various customers	$	38,353		1.24	%		Overnight
Total	$	38,353		1.24	%

2016	Balance		Average Rate			Maturity
Various customers	$	47,655		0.91	%		Overnight
Total	$	47,655		0.91	%

78

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(8) Fair Value Measurement:

ASC Topic 820, Fair Value Measurements and Disclosures, 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. Although ASC 820 provides for fair value accounting, the Company did not elect the fair value option for any financial instrument not presently required to be accounted for at fair value.

Management has developed a process for determining fair values. Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon internally developed models or processes that use primarily market based or based on third party market data, including interest rate yield curves, option volatilities and other third party information. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financials instruments could result in a different estimate of fair value at the reporting date.

ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurement. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

• Level 1 is for assets and liabilities that management has obtained quoted prices 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 value of securities available for sale are determined by a matrix pricing, which is a mathematical technique what is widely used in the industry to value debt securities without relying exclusively on quoted prices for the individual securities in the Company’s portfolio but relying on the securities relationship to other benchmark quoted securities. Impaired loans are valued at the net present value of expected payments and considering the fair value of any assigned collateral. The fair value of these liabilities is based on information obtained from a third party bank and is reflected within level 2 of the valuation hierarchy.

79

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(8) Fair Value Measurement: (Continued)

Assets and Liabilities Measured on a Recurring Basis

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

	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	12/31/2017		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Securities available for sale
U.S. Agency securities	$	84,093		—		84,093		—
Taxable municipals		1,283		—		1,283		—
Tax-free municipals		26,966		—		26,966		—
Trust preferred securities		1,685		—		—		1,685
Mortgage backed securities		70,764		—		70,764		—
Total	$	184,791		—		183,106		1,685

	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	12/31/2016		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Securities available for sale
U.S. Treasury securities	$	2,001		2,001		—		—
U.S. Agency securities		84,012		—		84,012		—
Taxable municipals		2,727		—		2,727		—
Tax-free municipals		33,911		—		33,911		—
Trust preferred securities		1,817		—		—		1,817
Mortgage backed securities		85,012		—		85,012		—
Total	$	209,480		2,001		205,662		1,817

80

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(8) Fair Value Measurement: (Continued)

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

December 31, 2017	Total carrying value in the		Quoted Prices In Active		Significant Other		Significant
Description	consolidated balance sheet At 12/31/2017		Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Foreclosed assets	$	3,369		—		—		3,369
Impaired loans, net of allowance of $289	$	473		—		—		473

December 31, 2016	Total carrying value in the		Quoted Prices In Active		Significant Other		Significant
Description	consolidated balance sheet At 12/31/2016		Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Foreclosed assets	$	2,397		—		—		2,397
Impaired loans, net of allowance of $1,148	$	6,123		—		—		6,123

81

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(8) Fair Value Measurement: (Continued)

The following table presents quantitative information about level 3 fair value measurements for assets measured at fair value on a recurring and non-recurring basis at December 31, 2017 and December 31, 2016:

Level 3 Significant Unobservable Input Assumptions
	Fair Value	Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs
December 31, 2017
Assets measured on a non-recurring basis
Foreclosed assets	3,369	Discount to either actual sales price or appraised value of collateral	Appraisal and sales comparability adjustments	30% to 55%
Impaired loans	760	Discount to appraised value of collateral	Appraisal comparability adjustments	10% to 25%
Asset measured on a recurring basis
Trust preferred securities	1,685	Discounted cash flow Spread to Libor swap curve	Compare to quotes for sale when available	One month libor plus 4% to 6%
December 31, 2016
Assets measured on a non-recurring basis
Foreclosed assets	2,397	Discount to either actual sales price or appraised value of collateral	Appraisal comparability adjustments	30% to 55%
Impaired loans	7,271	Discount to appraised value of collateral	Appraisal comparability adjustments	10% to 15%
Asset measured on a recurring basis
Trust preferred securities	1,817	Discounted cash flow Spread to Libor swap curve	Compare to quotes for sale when available	One month libor plus 4% to 6%

Foreclosed assets and impaired loans are valued at fair value, less cost to sell. Fair value of a foreclosed asset is determined by an appraised value of the underlying collateral to which a discount is applied. Management establishes the discount or adjustments based on recent sales and any unique features the collateral may possess. Management also considers the anticipated selling cost associated with the collateral when establishing the discounted percentage. Management may adjust the discounts based on the most recent sales of comparable collateral.

82

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(8) Fair Value Measurement: (Continued)

The Company bases the value of its trust preferred security on a quarterly review of SEC filings by the issuer to ascertain overall financial strength. Based on our analysis, the Company then reviews Libor swap curve to analyze the overall yield of our investment as compared to long-term swap rates. On rare occasions, the Company may receive an offer from a broker to purchase similar type instruments and the Company will analyze these offerings as compared to our investment.

Change in Level 3 fair value measurements:

The table below includes a roll-forward of the balance sheet items for the years ended December 31, 2017 and 2016, (including the change in fair value) for assets and liabilities classified by the Company 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 a financial instrument 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 financial instruments 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.

	Year ended December 31,
	2017			2016
	Other Assets			Other Assets
Fair value, December 31,	$	1,817		$	1,865
Change in unrealized gains included in other comprehensive income for assets and liabilities still held at December 31,		(149	)		(65	)
Recovery of prior impairment charge		17			17
Fair value, December 31,	$	1,685		$	1,817

83

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(8) Fair Value Measurement: (Continued)

The estimated fair values of financial instruments were as follows at December 31, 2017:

	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Using Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Financial Assets:
Cash and due from banks	$	37,965		37,965		37,965		—		—
Interest-bearing deposits in banks		7,111		7,111		7,111		—		—
Securities available for sale		184,791		184,791		—		183,106		1,685
Federal Home Loan Bank stock		4,428		4,428		—		—		4,428
Loans held for sale		1,539		1,539		—		1,539		—
Loans receivable		637,102		615,265		—		—		615,265
Accrued interest receivable		3,589		3,589		—		—		3,589
Financial Liabilities:
Deposits		754,009		754,510		—		754,510		—
Advances from borrowers for taxes and insurance		808		808		—		808		—
Advances from Federal Home Loan Bank		23,000		22,849		—		22,849		—
Repurchase agreements		38,353		38,353		—		38,353		—
Subordinated debentures		10,310		10,099		—		—		10,099

84

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(8) Fair Value Measurement: (Continued)

The estimated fair values of financial instruments were as follows at December 31, 2016:

	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Using Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Financial Assets:
Cash and due from banks	$	21,779		21,779		21,779		—		—
Interest-bearing deposits in banks		3,970		3,970		3,970		—		—
Securities available for sale		209,480		209,480		2,001		205,662		1,817
Federal Home Loan Bank stock		4,428		4,428		—		—		4,428
Loans held for sale		1,094		1,094		—		1,094		—
Loans receivable		604,286		593,257		—		—		593,257
Accrued interest receivable		3,799		3,799		—		—		3,799
Financial Liabilities:
Deposits		732,882		732,942		—		732,942		—
Advances from borrowers for taxes and insurance		766		766		—		766		—
Advances from Federal Home Loan Bank		11,000		10,979		—		10,979		—
Repurchase agreements		47,655		47,655		—		47,655		—
Subordinated debentures		10,310		10,099		—		—		10,099

85

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(8) Fair Value Measurement: (Continued)

Non-Financial Assets and Non-Financial Liabilities:

The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets measured at fair value on a non-recurring basis include foreclosed assets (upon initial recognition or subsequent impairment), non-financial assets and other non-financial long-lived assets measured at fair value for impairment assessment. Non-financial assets measured at fair value on a non-recurring basis during the reported periods include certain foreclosed assets which, upon initial recognition, were re-measured and reported at fair value through a charge-off to the allowance for loan losses and certain foreclosed assets which, subsequent to their initial recognition, were re-measured at fair value through a write-down included in other non-interest expense. The fair value of a foreclosed asset is estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria.

The following table presents foreclosed assets that were re-measured and reported at fair value:

	Years Ended December 31,
	2017			2016			2015
Beginning balance	$	2,397			1,736			1,927
Foreclosed assets measured at initial recognition:
Carrying value of foreclosed assets acquired		4,312			2,263			869
Proceeds from sale of foreclosed assets		(3,498	)		(1,623	)		(344	)
Gains (losses) included in non-interest expense		158			21			(716	)
Fair value	$	3,369		$	2,397			1,736

Changes in economic conditions of model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. There were no transfers between levels for the years ended December 31, 2017, 2016 and 2015.

86

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(9) Subordinated Debentures:

On September 25, 2003, the Company formed HopFed Capital Trust I (the “Trust”). The Trust is a statutory trust formed under the laws of the state of Delaware. In September 2003, the Trust issued variable rate capital securities with an aggregate liquidation amount of $10,000,000 ($1,000 per preferred security) to a third-party investor. The Company then issued floating rate junior subordinated debentures aggregating $10,310,000 to the Trust. The junior subordinated debentures are the sole assets of the Trust. The junior subordinated debentures and the capital securities pay interest and dividends, respectively, on a quarterly basis. The variable interest rate is the three-month LIBOR plus 3.10% adjusted quarterly. The most recent interest rate adjustment for the trust was effective January 12, 2018, which adjusted the total coupon rate to 4.82%. These junior subordinated debentures mature in 2033, at which time the capital securities must be redeemed. The junior subordinated debentures and capital securities became redeemable contemporaneously, in whole or in part, beginning October 8, 2008 at a redemption price of $1,000 per capital security.

The Company has provided a full-irrevocable and unconditional guarantee on a subordinated basis of the obligations of the Trust under the capital securities in the event of the occurrence of an event of default, as defined in such guarantee.

(10) Concentrations of Credit Risk:

Most of the Bank’s business activity is with customers located within the western part of the Commonwealth of Kentucky and middle and western Tennessee. One-to-four family residential and non residential real estate collateralize the majority of the loans. The Bank requires collateral for the majority of loans.

The distribution of commitments to extend credit approximates the distribution of loans outstanding. The contractual amounts of credit-related financial instruments such as commitments to extend credit and commercial letters of credit represent the amounts of potential accounting loss should the contract be fully drawn upon, the customer default, and the value of any existing collateral become worthless.

At December 31, 2017 and December 31, 2016, all cash and cash equivalents are deposited with BBVA Compass Bank, the Federal Reserve Bank or the Federal Home Loan Bank of Cincinnati (FHLB). Deposits at Compass BBVA Bank are insured to $250,000. All deposits at the FHLB are liabilities of the individual bank and were not federally insured. The FHLB is a government sponsored enterprise (GSE) and has the second highest rating available by all rating agencies. At December 31, 2017, total FHLB deposits were approximately $5.6 million and total deposits at the Federal Reserve were $7.1 million, none of which is insured by the FDIC. At December 31, 2017, total deposits at BBVA were $26.3 million, of which $250,000 were insured by the FDIC. At December 31, 2016, total FHLB deposits were approximately $0.8 million and total deposits at the Federal Reserve were $4.7 million, none of which is insured by the FDIC. At December 31, 2016, total deposits at BBVA were $9.7 million, of which $250,000 were insured by the FDIC.

87

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(11) Employee Benefit Plans:

HopFed Bancorp Long Term Incentive Plans

On March 20, 2013, the Board of Directors of the Company adopted the HopFed Bancorp, Inc. 2013 Long Term Incentive Plan (the “Plan”), which was subsequently approved at the 2013 Annual Meeting of Stockholders. Under the Plan, the Compensation Committee has discretionary authority to grant up to 300,000 shares in the form of restricted stock grants and options to such employees, directors and advisory directors as the committee shall designate. The grants vest in equal installments over three or four year periods. Grants may vest immediately upon specific events, including a change of control of the Company, death or disability of award recipient, and termination of employment of the recipient by the Company without cause.

Awards are recognized as an expense to the Company in accordance with the vesting schedule. Awards in which the vesting is accelerated must be recognized as an expense immediately. Awards are valued at the closing stock price on the day the award is granted. For the year ended December 31, 2017, the Compensation Committee granted 12,753 shares of restricted stock with a market value of $178,000. For the year ended December 31, 2016, the Compensation Committee granted 12,342 shares of restricted stock with a market value of $145,000. For the year ended December 31, 2015, the Compensation Committee granted 2,034 shares of restricted stock with a market value of $25,000. The Company recognized $106,000, $135,000 and $190,000 in compensation expense in 2017, 2016 and 2015, respectively. The remaining compensation expense to be recognized at December 31, 2017, is as follows:

Year Ending December 31,	Approximate Future Compensation Expense
2018	$	111
2019		67
2020		45
2021		3
Total	$	226

The Compensation Committee may make additional awards of restricted stock, thereby increasing the future expense related to this plan. The early vesting of restricted stock awards due to factors outlined in the award agreement may accelerate future compensation expenses related to the plan. However, the total amount of future compensation expense would not change as a result of an accelerated vesting of shares. At December 31, 2017, the Company has 229,824 restricted shares available from the Plan that may be awarded.

88

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(11) Employee Benefit Plans: (Continued)

401(K) Plan

The Company has a 401(K) retirement program that is available to all employees who meet minimum eligibility requirements. In 2015, the Company discontinued all employer 401(K) contributions on behalf of employees while allowing employees to continue contributions to the 401(K) plan.

HopFed Bancorp, Inc. 2015 Employee Stock Ownership Plan

On March 2, 2015, the Company implemented the HopFed Bancorp, Inc. 2015 Employee Stock Ownership Plan which covers substantially all employees who are at least 21 years old with at least one year of employment with the Company and Heritage Bank USA, Inc., the Company’s commercial bank subsidiary. The ESOP has three individuals who have been selected by the Company to serve as trustees. A directed corporate trustee has also been appointed. The ESOP will be administered by a committee (the “Committee”) currently composed of eleven employees selected by the Company or its designee.

On March 2, 2015, the ESOP purchased 600,000 shares from the Corporation at a cost of $7,884,000 using the proceeds of a loan granted to the ESOP from the Company. In accordance with the ESOP Loan documents, the common stock purchased by the ESOP serves as collateral for the ESOP Loan. The ESOP Loan will be repaid principally from discretionary contributions by the Bank to the ESOP. The ESOP Loan requires annual payments and has a final maturity of December 9, 2026. The interest rate on the ESOP Loan is 3.0%. Shares purchased by the ESOP are be held in a trust account for allocation among participants as the ESOP Loan is repaid. The ESOP shares receive dividends. Dividends on unearned shares will be used to repay the ESOP Loan.

89

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(11) Employee Benefit Plans: (Continued)

HopFed Bancorp, Inc. 2015 Employee Stock Ownership Plan, (Continued)

For the year ended December 31, 2017, the Company recognized an expense of $706,000 related to the ESOP loan payment and the Company released 64,032 shares from the ESOP trust to individual participants of the ESOP as a result of the 2017 loan payment. For the year ended December 31, 2016, the Company recognized an expense of $553,000 related to the ESOP loan payment and released 48,067 shares from the ESOP trust to individual participants as a result of the 2016 loan payment. For the year ended December 31, 2015, the Company recognized an expense of $652,000 related to the ESOP loan payment and released 53,587 shares from the ESOP trust to individual participants of the plan as a result of a 2015 loan payment. At December 31, 2017, shares held by the ESOP were as follows:

	December 31, 2017		December 31, 2016
Earned ESOP shares		165,686		101,654
Unearned ESOP shares		434,548		498,346
Total ESOP shares		600,234		600,000
Share price at December 31,	$	14.10	$	13.46
Fair value of ESOP shares	$	6,127,127	$	6,707,737

90

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(12) Income Taxes:

The provision for income tax expense for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, consisted of the following:

	2017		2016		2015
Current
Federal	$	468		—		—
State		95		95		97
		563		95		97
Deferred
Federal		1,585		267		177
State		—		—		—
		1,585		267		177
	$	2,148	$	362		274

Total income tax expense for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, differed from the amounts computed by applying the federal income tax rate of 34 percent to income before income taxes as follows:

	2017			2016			2015
Expected federal income tax expense at statutory tax rate	$	1,853			1,110			911
Effect of nontaxable interest income		(345	)		(452	)		(458	)
Effect of nontaxable bank owned life insurance income		(164	)		(117	)		(114	)
Effect of Qualified Zone Academy Bond (QZAB)		—			(114	)		(109	)
State taxes on income, net of federal benefit		59			59			59
Other tax credits		(243	)		(128	)		(80	)
Deferred tax asset revaluation		980			—			—
Non-deductible expenses		8			4			65
Total income tax expense	$	2,148			362			274
Income tax rate		39.4	%		11.1	%		10.2	%

91

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(12) Income Taxes: (Continued)

The components of deferred taxes as of December 31, 2017 and December 31, 2016 are summarized as follows:

	2017			2016
Deferred tax assets:
Allowance for loan loss	$	1,014			2,078
Accrued expenses		77			294
Net operating loss carry forward		192			454
Tax credit carry forward		651			568
Unrealized loss on securities available for sale		57			—
Intangible amortization		192			548
Other		77			242
		2,260			4,184
Deferred tax liabilities:
FHLB stock dividends		(486	)		(787	)
Unrealized gain on securities available for sale		—			(240	)
Depreciation and amortization		(10	)		(105	)
		(496	)		(1,132	)
Net deferred tax asset	$	1,764			3,052

At December 31, 2017, the Company has operating loss carry forwards of approximately $3.1 million, which begin to expire in 2034.

92

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(12) Income Taxes: (Continued)

No valuation allowance for deferred tax assets was recorded at December 31, 2017 and December 31, 2016, as management believes it is more likely than not that all of the deferred tax assets will be realized because they were supported by recoverable taxes paid in prior years and expected future taxable income. There were no unrecognized tax benefits during any of the reported periods. The Corporation files income tax returns in the U.S. federal jurisdiction. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2013. The Company recognizes interest and penalties on income taxes, if any, as a component of income tax expense.

(13) Foreclosed Asset:

The Company’s foreclosed asset balances at December 31, 2017 and December 31, 2016 represent properties and personal collateral acquired by the Bank through customer loan defaults. The property is recorded at fair value less selling cost at the date acquired with any loss recognized as a charge off through the allowance for loan loss account. Additional real estate and other asset losses may be determined on individual properties at specific intervals or at the time of disposal. Additional losses are recognized as a non-interest expense. As of December 31, 2017 and December 31, 2016, the composition of the Company’s balance in foreclosed assets are as follows:

	December 31,
	2017		2016
One-to-four family mortgages	$	169		135
Home equity line of credit		—		28
Multi-family		—		1,775
Land		3,200		—
Non-residential real estate		—		459
Total foreclosed assets	$	3,369		2,397

93

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(14) Commitments and Contingencies:

In the ordinary course of business, the Bank has various outstanding commitments and contingent liabilities that are not reflected in the accompanying consolidated financial statements. The table below outlines the Company’s open loan commitments at December 31, 2017 and December 31, 2016:

	December 31,
	2017		2016
Commitments to extend credit	$	54,458	$	43,365
Standby letters of credit		143		228
Unused commercial lines of credit		62,910		59,790
Unused home equity lines of credit		32,701		31,818
Unused personal lines of credit		17,048		18,559

The Company and the Bank have agreed to enter into employment agreements with certain officers, which provide certain benefits in the event of their termination following a change in control of the Company or the Bank. The employment agreements provide for an initial term of three years. On each anniversary of the commencement date of the employment agreements, the term of each agreement may be extended for an additional year at the discretion of the Board. In the event of a change in control of the Company or the Bank, as defined in the agreement, the officers shall be paid an amount equal to 2.9 times the officer’s base salary as defined in the employment agreement.

The Company and the Bank have entered into commitments to rent facilities, purchase services and lease operating equipment that are non-cancelable. At December 31, 2017, future minimal purchase, lease and rental commitments were as follows:

Years Ending December 31,
2018	$	2,286
2019		1,953
2002		202
2021		169
2022		110
Total	$	4,720

The Company incurred rental expenses of approximately $130,000, $127,000 and $61,000 for the years ended December 31, 2017 December 31, 2016 and December 31, 2015, respectively. In the normal course of business, the Bank and Corporation have entered into operating contracts necessary to conduct the Company’s daily business. The most significant operating contract is for the Bank’s data processing services, ACH item processing and ATM / Debit card processing which is variable based on the number of accounts and usage but has an expected annual cost of approximately $2.8 million annually.

94

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(14) Commitments and Contingencies: (Continued)

The Company is partially self-insured for medical benefits provided to employees. Heritage Bank is named as the plan administrator for this plan and has retained Anthem Blue Cross Blue Shield (“Anthem”) to process claims and handle other duties of the plan. Anthem does not assume any liabilities as a third-party administrator. The Bank purchased two stop-loss insurance policies to limit total medical claims from Anthem. The first specific stop-loss policy limits the Company’s annual cost per covered individual in 2015, 2016 and 2017 to $90,000, $90,000 and $100,000, respectively. The Company has purchased a second stop-loss policy that limits the aggregate claims for the Company in 2017, 2016 and 2015 at $1.7 million, $1.8 million and $1.7 million, respectively, based upon the Company’s enrollment during those years. The Company has established a liability for outstanding claims as well as incurred but unreported claims. While management uses what it believes are pertinent factors in estimating the plan liability, the actual liability is subject to change based upon unexpected claims experience and fluctuations in enrollment during the plan year. At December 31, 2017 and December 31, 2016, the Company recognized a liability for self-insured medical expenses of approximately $172,000 and $256,000, respectively.

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit, standby letters of credit, and financial guarantees. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance 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.    

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counter-party. Collateral held varies but may include property, plant, and equipment and income-producing commercial properties.

95

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(14) Commitments and Contingencies: (Continued)

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Most guarantees extend from one to two years. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

The Bank, in the normal course of business, originates fixed rate mortgages that are sold to Freddie Mac. Upon tentative underwriting approval by Freddie Mac, the Bank issues a best effort commitment to originate a fixed rate first mortgage under specific terms and conditions that the Bank intends to sell to Freddie Mac. The Bank no longer assumes a firm commitment to originate fixed rate loans, thus eliminating the risk of having to deliver loans they did not close or pay commitment fees to make Freddie Mac whole.

The Company is subject to various claims and legal actions that have arisen in the course of conducting business. The Company records these as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not expect the ultimate disposition of these matters to have a material adverse impact of the Company’s consolidated financial statements.

On May 4, 2017, the Company, its directors, and a former director, were named as defendants in a lawsuit filed in the Court of Chancery in the State of Delaware by Company stockholders, Stilwell Associates, L.P., Stilwell Activist Fund, L.P. and Stilwell Activist Investments, L.P. (collectively, the “Plaintiffs”), concerning the adoption of Article III, Section 13 of the Company’s Amended and Restated Bylaws.

On October 3, 2017, upon the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors adopted amendments to Article III, Section 13 of the Bylaws. See the Company’s Current Report on Form 8-K filed on October 4, 2017.

On October 25, 2017, the Court of Chancery granted the parties’ stipulation regarding dismissal of the lawsuit and dismissed the lawsuit without prejudice, subject to possible consideration of a Fee and Expense Application by the Plaintiffs. On October 26, 2017, the Company disclosed the dismissal in a press release on the Company’s Current Report on Form 8-K filed on October 26, 2017. See subsequent event note related to this lawsuit.

(15) Regulatory Matters:

The Company is a commercial bank holding company and, as such, is subject to regulation, examination and supervision by the Board of Governors of the Federal Reserve System. The Company’s wholly owned bank subsidiary is a state chartered commercial bank supervised by the KDFI and the FDIC. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements.

Under regulatory capital regulations 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.

96

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(15) Regulatory Matters: (Continued)

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of tangible and core capital (as defined in the regulations) to adjusted total assets (as defined), and of total capital (as defined) and Tier 1 to risk weighted assets (as defined). The minimum required capital amounts presented include the minimum required capital levels as of December 31, 2017 and December 31, 2016. Management believes, as of December 31, 2017 and December 31, 2016, that the Bank meets all capital adequacy requirements to which it is subject, including the phase-in requirements of Basel III. The Company’s consolidated capital ratios and the Bank’s actual capital amounts and ratios as of December 31, 2017 and December 31, 2016 are presented below:

											To be Well
											Capitalized for
						Minimum Capital					Prompt Corrective
	Actual					Required					Action Provisions
As of December 31, 2017	Amount		Ratio			Amount		Ratio			Amount		Ratio
Tier 1 leverage capital to adjusted total assets
Company	$	95,709		10.6	%	$	36,137		4.0	%	$	45,171		5.0	%
Bank	$	95,123		10.5	%	$	36,090		4.0	%	$	45,112		5.0	%
Total capital to risk weighted assets
Company	$	100,535		16.0	%	$	50,352		8.0	%	$	62,940		10.0	%
Bank	$	99,949		15.9	%	$	50,314		8.0	%	$	62,892		10.0	%
Tier 1 capital to risk weighted assets
Company	$	95,709		15.2	%	$	37,764		6.0	%	$	50,352		8.0	%
Bank	$	95,123		15.1	%	$	37,735		6.0	%	$	50,314		8.0	%
Common equity tier 1 capital to risk weighted assets
Company	$	95,709		15.2	%	$	28,323		4.5	%		n/a		n/a
Bank	$	95,123		15.1	%	$	28,301		4.5	%	$	40,880		6.5	%
As of December 31, 2016
Tier 1 leverage capital to adjusted total assets
Company	$	92,803		10.8	%	$	34,392		4.0	%	$	42,990		5.0	%
Bank	$	91,617		10.7	%	$	34,315		4.0	%	$	42,894		5.0	%
Total capital to risk weighted assets
Company	$	98,915		16.2	%	$	48,864		8.0	%	$	61,080		10.0	%
Bank	$	97,729		16.0	%	$	48,753		8.0	%	$	60,941		10.0	%
Tier 1 capital to risk weighted assets
Company	$	92,803		15.2	%	$	36,648		6.0	%	$	48,864		8.0	%
Bank	$	91,617		15.0	%	$	36,764		6.0	%	$	48,753		8.0	%
Common equity tier 1 capital to risk weighted assets
Company	$	92,803		15.2	%	$	27,486		4.5	%		n/a		n/a
Bank	$	91,617		15.0	%	$	27,423		4.5	%	$	39,611		6.5	%

97

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(15) Regulatory Matters: (Continued)

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial status. At December 31, 2017 and 2016, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. Management is not aware of any conditions or events that have changed the Bank’s status as a well-capitalized bank.

(16) Stockholders’ Equity:

The Company’s sources of income and funds for dividends to its stockholders are earnings on its investments and dividends from the Bank. The Bank’s primary regulator, the KDFI, has regulations that impose certain restrictions on payment of dividends to the Corporation. Current regulations of the KDFI allow the Bank (based upon its current capital level and supervisory status assigned by the KDFI) to pay a dividend as long as the Bank subsidiary maintains an appropriate Tier 1 Capital ratio. Furthermore, for the Bank to pay a dividend to the Corporation without regulatory approval, the dividend is limited to the total amount of the Bank’s current year net income plus the Bank’s net income of the prior two years less any previous dividends paid by the Bank to the Corporation during that time.

At December 31, 2017, the Company holds a total of 1,338,360 shares of treasury stock at an average price of $12.44 per share. At December 31, 2017, the Company may purchase 300,000 shares of treasury stock under a new stock repurchase plan announced on November 11, 2017 that expires December 31, 2019. The Company conducts repurchases through open market transactions or in privately negotiated transactions that may be made from time to time depending on market conditions and other factors.

The Company has paid all interest payments due on HopFed Capital Trust I. If interest payments to HopFed Capital Trust I are not made in a timely manner, the Company is prohibited from making cash dividend payments to its common shareholders.

98

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(16) Stockholders’ Equity: (Continued)

In July 2013, the Federal Reserve Board and the FDIC approved final rules that substantially amend the regulatory risk-based capital rules applicable to Heritage Bank USA, Inc. and HopFed Bancorp, Inc. The final rules implement the regulatory capital reforms of the Basel Committee on Banking Supervision reflected in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” (Basel III) and changes required by the Dodd-Frank Act.

Under these rules, the leverage capital and risk-based capital ratios of bank holding companies may not be lower than the leverage and risk-based capital ratios for insured depository institutions. The final rules implementing the Basel III regulatory capital reforms became effective on January 1, 2015, and include new minimum risk-based capital and leverage ratios. Moreover, these rules refine the definition of what constitutes “capital” for purposes of calculating those ratios, including the definitions of Tier 1 capital and Tier 2 capital.

The new minimum capital level requirements applicable to bank holding companies and banks subject to the rules are:

• a new common equity Tier 1 capital ratio of 4.5%;

• a Tier 1 risk-based capital ratio of 6% (increased from 4%);

• a total risk-based capital ratio of 8% (unchanged from current rules); and

• a Tier 1 leverage ratio of 4% for all institutions.

The rules also establish a “capital conservation buffer” of 2.5% (to be phased by 2019) above the new regulatory minimum risk-based capital ratios, and result in the following minimum ratios once the capital conservation buffer is fully phased in:

• a common equity Tier 1 risk-based capital ratio of 7.0%;

• a Tier 1 risk-based capital ratio of 8.5%; and

• a total risk-based capital ratio of 10.5%.

At December 31, 2017, the Bank and Corporation met all fully phased capital requirements of Basel III, including the capital conservation buffer of 2.5% to be fully phased in by January 1, 2019. The Capital conservation buffer for 2017 is 1.25% and 1.875% for 2018. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital.

99

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(17) Earnings Per Share:

Earnings per share of common stock are based on the weighted average number of basic shares and dilutive shares outstanding during the year. Common stock warrants outstanding are not included in the dilutive earnings per share computations because they would be anti-dilutive.

The following is a reconciliation of weighted average common shares for the basic and dilutive earnings per share computations:

	Years Ended December 31,
	2017			2016			2015
Basic earnings per share:
Weighted average common shares		6,695,721			6,757,345			6,919,190
Less: Average unallocated ESOP shares		(474,089	)		(523,485	)		(546,913	)
Weighted average common shares		6,221,632			6,233,860			6,372,277
Weighted average common and incremental shares		6,221,632			6,233,860			6,372,277

100

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(18) Condensed Parent Company Only Financial Statements:

The following condensed balance sheets as of December 31, 2017 and December 31, 2016 and condensed statements of income and cash flows for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, of the parent company only should be read in conjunction with the consolidated financial statements and the notes thereto.

Condensed Balance Sheets:
	2017			2016
Assets:
Cash	$	862			1,084
Investment in subsidiary		96,826			95,242
Prepaid expenses and other assets		1,109			804
Total assets		98,797			97,130
Liabilities and equity
Liabilities
Dividend payable - common		353			288
Interest payable		112			101
Other liabilities		610			3
Subordinated debentures		10,310			10,310
Total liabilities		11,385			10,702
Equity:
Preferred stock		—			—
Common stock		80			80
Additional paid-capital		58,825			58,660
Retained earnings		51,162			49,035
Treasury stock - common stock		(16,655	)		(15,347	)
Unearned ESOP shares		(5,901	)		(6,548	)
Accumulated other comprehensive income		(99	)		548
Total equity		87,412			86,428
Total liabilities and equity	$	98,797			97,130

101

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(18) Condensed Parent Company Only Financial Statements: (Continued)

Condensed Statements of Income:

	2017			2016			2015
Interest and dividend income:
Dividend income from subsidiary Bank	$	2,500			2,000			12,100
Total interest and dividend income		2,500			2,000			12,100
Interest expense		436			388			740
Non-interest expenses		1,538			391			541
Total expenses		1,974			779			1,281
Income before income taxes and equity in undistributed earnings of subsidiary		526			1,221			10,819
Income tax benefits		(545	)		(319	)		(529	)
Income before equity in undistributed earnings of subsidiary		1,071			1,540			11,348
Equity in (distribution in excess of) earnings of subsidiary		2,230			1,364			(8,944	)
Income available to common shareholders	$	3,301			2,904			2,404

102

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(18) Condensed Parent Company Only Financial Statements: (Continued)

Condensed Statements of Cash Flows:

	2017			2016			2015
Cash flows from operating activities
Net income	$	3,301			2,904			2,404
Adjustments to reconcile net income to net cash provided by operating activities
Equity in undistributed earnings of subsidiary		(2,230	)		(1,364	)		8,943
Amortization of restricted stock		106			135			190
Increase (decrease) in:
Current income taxes payable		330			(49	)		11
Accrued expenses		106			(392	)		(149	)
Net cash provided by operating activities		1,613			1,234			11,399
Cash flows from financing activities:
Purchase of treasury stock		(1,308	)		(1,876	)		(11,926	)
Proceeds on ESOP loan		647			632			704
Dividends paid on common stock		(1,174	)		(993	)		(1,022	)
Net cash used in financing activities		(1,835	)		(2,237	)		(12,244	)
Net decrease in cash		(222	)		(1,003	)		(845	)
Cash and due from banks at beginning of year		1,084			2,087			2,932
Cash and due from banks at end of year	$	862			1,084			2,087

103

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(19) Investments in Affiliated Companies (Unaudited):

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

Summary Balance Sheets

	December 31,		December 31,
	2017		2016
Asset – investment in subordinated debentures issued by HopFed Bancorp, Inc.	$	10,310		10,310
Liabilities	$	—		—
Stockholders’ equity:
Trust preferred securities		10,000		10,000
Common stock (100% owned by HopFed Bancorp, Inc.)		310		310
Total stockholder’s equity		10,310		10,310
Total liabilities and stockholder’s equity	$	10,310		10,310

Summary Statements of Income

	Years Ended December. 31,
	2017		2016
Income – interest income from subordinated debentures issued by HopFed Bancorp, Inc.	$	449		400
Net income	$	449		400

Summary Statements of Stockholder’s Equity

	Trust							Total
	Preferred		Common		Retained			Stockholder’s
	Securities		Stock		Earnings			Equity
Beginning balances, January 1, 2017	$	10,000		310		—			10,310
Retained earnings:
Net income		—		—		449			449
Dividends:
Trust preferred securities		—		—		(436	)		(436	)
Common dividends paid to HopFed Bancorp, Inc.		—		—		(13	)		(13	)
Total retained earnings		—		—		—			—
Ending balances, December 31, 2017	$	10,000		310		—			10,310

104

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(20) Quarterly Results of Operations: (Unaudited)

Summarized unaudited quarterly operating results for the year ended December 31, 2017:

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
December 31, 2017:
Interest and dividend income	$	8,160		8,419		8,635		8,541
Interest expense		1,406		1,454		1,537		1,566
Net interest income		6,754		6,965		7,098		6,975
Provision for loan losses		291		59		71		56
Net interest income after provision for loan losses		6,463		6,906		7,027		6,919
Noninterest income		2,296		1,836		2,030		1,868
Noninterest expense		7,689		7,233		7,168		7,806
Income before income taxes		1,070		1,509		1,889		981
Income taxes		135		368		486		1,159
Net income (loss)	$	935		1,141		1,403		(178	)
Basic earnings (loss) per share	$	0.15		0.18		0.22		(0.03	)
Diluted earnings (loss) per share	$	0.15		0.18		0.22		(0.03	)
Weighted average shares outstanding:
Basic		6,218,706		6,228,994		6,236,075		6,202,635
Diluted		6,218,706		6,228,994		6,236,075		6,202,635

105

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(20) Quarterly Results of Operations: (Unaudited)

Summarized unaudited quarterly operating results for the year ended December 31, 2016:

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
December 31, 2016:
Interest and dividend income	$	8,081		7,691		8,004		7,951
Interest expense		1,405		1,268		1,315		1,311
Net interest income		6,676		6,423		6,689		6,640
Provision for loan losses		458		465		255		63
Net interest income after provision for loan losses		6,218		5,958		6,434		6,577
Noninterest income		2,020		1,970		1,945		2,000
Noninterest expense		7,683		7,609		7,353		7,211
Income before income taxes		555		319		1,026		1,366
Income taxes		46		15		41		260
Net income	$	509		304		985		1,106
Basic earnings per share	$	0.08		0.05		0.16		0.18
Diluted earnings per share	$	0.08		0.05		0.16		0.18
Weighted average shares outstanding:
Basic		6,297,755		6,232,457		6,212,231		6,193,278
Diluted		6,297,755		6,232,457		6,212,231		6,193,278

106

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(Table Amounts in Thousands)

(21) Comprehensive Income:

FASB ASC 220, Comprehensive Income, established standards for reporting comprehensive income. Comprehensive income includes net income and other comprehensive net income which is defined as non-owner related transactions in equity. The following table sets forth the amounts of other comprehensive income (loss) included in stockholders’ equity along with the related tax effect for the years ended December 31, 2017, 2016 and 2015.

	Pre-Tax			Tax Benefit			Net of Tax
	Amount			(Expense)			Amount
December 31, 2017:
Unrealized holding gains (losses) on:
Available for sale securities	($	585	)		198			(387	)
Available for sale securities – OTTI		(224	)		76			(148	)
Reclassification adjustments for gains on:
Available for sale securities		(169	)		57			(112	)
	($	978	)		331			(647	)
	Pre-Tax			Tax Benefit			Net of Tax
	Amount			(Expense)			Amount
December 31, 2016:
Unrealized holding gains (losses) on:
Available for sale securities	($	2,048	)		697			(1,351	)
Available for sale securities – OTTI		(258	)		88			(170	)
Reclassification adjustments for gains on:
Available for sale securities		(612	)		207			(405	)
	($	2,918	)		992			(1,926	)
December 31, 2015:
Unrealized holding gains on:
Available for sale securities	($	1,698	)		577			(1,121	)
Available for sale securities—OTTI		359			(122	)		237
Derivatives		389			(132	)		257
Reclassification adjustments for gains on:
Available for sale securities		(691	)		235			(456	)
	($	1,641	)		558			(1,083	)

107

HopFed Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements, Continued

December 31, 2017, 2016 and 2015

(22) Subsequent Event

On February 7, 2018, the Court of Chancery granted Plaintiffs motion requesting that the Company reimburse the Plaintiff for Attorneys’ Fees and Expenses. The Company was ordered to reimburse the Plaintiff a sum of $610,312.40 within five business days of the order. For the year ended December 31, 2017, the Company recognized the reimbursement of fees to the Plaintiff as an expense. Any subsequent recover of fees from the Company’s insurance company will be recognized in the period it is received.

On February 23, 2018, Joseph Stilwell, the managing member of and owner of Stilwell Value LLC, filed a shareholder demand letter to demand that the Company’s Board of Directors take action against the issuers attorney’s, Edward B. Crosland of Jones Walker LLP and George M. Carter of Carter & Carter for legal malpractice and seek damages in excess of $1.0 million to the issue. As of the date of this filing, the Company has taken no action to address the demand letter.

108

EX-21.1

EXHIBIT 21.1

SUBSIDIARIES OF THE REGISTRANT

	Percentage Owned	Jurisdiction of Incorporation
Heritage Bank USA	100%	United States
HopFed Capital Trust I	100%	Delaware

SUBSIDIARIES OF HERITAGE BANK

	Percentage Owned	Jurisdiction of Incorporation
Fort Webb LLC	100%	Kentucky
Heritage Interim Corporation	100%	Tennessee
JBMM LLC	100%	Kentucky
Heritage USA Title, LLC	100%	Kentucky

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference of our reports dated March 15, 2018, related to our audit of the HopFed Bancorp, Inc. and subsidiaries’ (the “Company”) consolidated financial statements and internal control over financial reporting as of and for the year ended December 31, 2017, which appears in this Annual Report on Form 10-K, in the Company’s following Registration Statements:

• Registration Statement (No. 333-156652) on Form S-3,

• Registration Statement (No. 333-189670) on Form S-8,

• Registration Statement (No. 333-117956) on Form S-8, and

• Registration Statement (No. 333-79391) on Form S-8.

/s/ Carr, Riggs & Ingram, LLC

Nashville, Tennessee

March 15, 2018

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in registration statements Nos. 333-189670, 333-117956 and 333-79391 on Form S-8 and No. 333-156652 on Form S-3 of HopFed Bancorp, Inc. and subsidiaries of our report dated March 3, 2016, relating to the consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows of HopFed Bancorp, Inc. and subsidiaries for the year ended December 31, 2015, which report appears in the December 31, 2017 annual report on Form 10-K of HopFed Bancorp, Inc. and subsidiaries.

/s/ Rayburn | Fitzgerald PC

Nashville, Tennessee

March 15, 2018

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, John E. Peck, certify that:

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

(2) Based on my knowledge, this annual 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 report;

(3) Based on my knowledge, the financial statements, and other financial information included in this annual 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 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 by Exchange Act Rules 13a-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 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; and

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 (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and

(5) The registrant’s other certifying officer 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 role in the registrant’s internal control over financial reporting.

Date: March 15, 2018	(signed) 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 annual report on Form 10-K of HopFed Bancorp, Inc.;

(2) Based on my knowledge, this annual 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 report;

(3) Based on my knowledge, the financial statement, and other financial information included in this annual 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 officers 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 by Exchange Act Rules 13a-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 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; and

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 (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and

(5) The registrant’s other certifying officer 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 reasonable 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 role in the registrant’s internal control over financial reporting.

Date: March 15, 2018	(signed) 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 Annual Report of HopFed Bancorp, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2017 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 results of operations of the Company.

Date: March 15, 2018

(signed) 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 Annual Report of HopFed Bancorp, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2017 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 results of operations of the Company.

Date: March 15, 2018

(signed) 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

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Mar. 06, 2018	Jun. 30, 2017
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Trading Symbol	HFBC
Entity Registrant Name	HOPFED BANCORP INC
Entity Central Index Key	0001041550
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		6,635,945
Entity Public Float			$ 92,177,023

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Assets
Cash and due from banks	$ 37,965	$ 21,779
Interest-bearing deposits in banks	7,111	3,970
Cash and cash equivalents	45,076	25,749
Federal Home Loan Bank stock, at cost	4,428	4,428
Securities available for sale	184,791	209,480
Loans held for sale	1,539	1,094
Loans receivable, net of allowance for loan losses of $4,826 at December 31, 2017 and $6,112 at December 31, 2016	637,102	604,286
Accrued interest receivable	3,589	3,799
Foreclosed assets, net	3,369	2,397
Bank owned life insurance	10,368	10,662
Premises and equipment, net	22,700	23,461
Deferred tax assets	1,764	3,052
Other assets	2,784	3,078
Total assets	917,510	891,486
Deposits:
Non-interest-bearing accounts	136,197	131,145
Interest-bearing accounts:
Interest bearing checking accounts	208,496	209,347
Savings and money market accounts	104,347	99,312
Other time deposits	304,969	293,078
Total deposits	754,009	732,882
Advances from Federal Home Loan Bank	23,000	11,000
Repurchase agreements	38,353	47,655
Subordinated debentures	10,310	10,310
Advances from borrowers for taxes and insurance	808	766
Accrued expenses and other liabilities	3,618	2,445
Total liabilities	830,098	805,058
Stockholders' equity
Preferred stock, par value $0.01 per share; authorized 500,000 shares; no shares issued or outstanding at December 31, 2017 and December 31, 2016
Common stock, par value $.01 per share; authorized 15,000,000 shares; 7,976,131 issued and 6,637,771 outstanding at December 31, 2017 and 7,963,378 issued and 6,717,242 outstanding at December 31, 2016	80	80
Additional paid-in-capital	58,825	58,660
Retained earnings	51,162	49,035
Treasury stock, at cost (1,338,360 shares at December 31, 2017 and 1,246,136 shares at December 31, 2016)	(16,655)	(15,347)
Unearned ESOP shares (at cost 434,548 shares at December 31, 2017 and 498,346 at December 31, 2016)	(5,901)	(6,548)
Accumulated other comprehensive income (loss)	(99)	548
Total stockholders' equity	87,412	86,428
Total liabilities and stockholders' equity	$ 917,510	$ 891,486

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Loans receivable, allowance for loan losses	$ 4,826	$ 6,112
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	7,976,131	7,963,378
Common stock, shares outstanding	6,637,771	6,717,242
Treasury stock, shares	1,338,360	1,246,136
Unearned ESOP shares	434,548	498,346

XML

Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Interest and dividend income
Loans	$ 28,167	$ 25,778	$ 25,300
Taxable securities available for sale	4,478	4,595	6,149
Nontaxable securities available for sale	1,014	1,308	1,651
Interest bearing deposits in banks	96	46	22
Total interest and dividend income	33,755	31,727	33,122
Interest expense:
Deposits	4,810	4,240	5,031
Advances from Federal Home Loan Bank	248	163	289
Repurchase agreements	469	508	491
Subordinated debentures	436	388	739
Total interest expense	5,963	5,299	6,550
Net interest income	27,792	26,428	26,572
Provision for loan losses	477	1,241	1,051
Net interest income after provision for loan losses	27,315	25,187	25,521
Non-interest income:
Service charges	3,224	2,788	2,925
Merchant card	1,222	1,224	1,130
Mortgage origination	1,321	1,585	1,175
Realized gains from sale of securities available for sale, net	169	612	691
Income from bank owned life insurance	483	343	335
Financial services commission	536	614	685
Other operating	1,075	769	661
Total non-interest income	8,030	7,935	7,602
Non-interest expenses:
Salaries and employee benefits	16,049	15,400	15,810
Occupancy	2,920	3,173	3,077
Data processing	2,884	2,942	2,827
State deposit tax	770	990	1,018
Professional services	2,316	1,404	1,506
Advertising	1,354	1,401	1,302
Foreclosed assets, net	9	448	1,227
(Gain) loss on sale of premises and equipment	2	(72)	1
Other operating	3,592	4,170	3,677
Total non-interest expense	29,896	29,856	30,445
Income before income tax expense	5,449	3,266	2,678
Income tax expense	2,148	362	274
Net income	$ 3,301	$ 2,904	$ 2,404
Earnings per share available to common stockholders:
Basic	$ 0.53	$ 0.47	$ 0.38
Diluted	$ 0.53	$ 0.47	$ 0.38
Weighted average shares outstanding-basic	6,221,632	6,233,860	6,372,277
Weighted average shares outstanding-diluted	6,221,632	6,233,860	6,372,277

XML

Interim Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 3,301	$ 2,904	$ 2,404
Other comprehensive income, net of tax:
Unrealized loss on non - other than temporary impaired ("OTTI") investment securities available for sale, net of taxes	(387)	(1,351)	(1,121)
Unrealized gain (loss) on OTTI securities, net of taxes	(148)	(170)	237
Unrealized gain on derivatives, net of taxes			257
Reclassification adjustment for gains and accretion included in net income, net of taxes	(112)	(405)	(456)
Total other comprehensive income (loss)	(647)	(1,926)	(1,083)
Comprehensive income	$ 2,654	$ 978	$ 1,321

XML

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock, Common [Member]	Unearned ESOP Shares [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning balance at Dec. 31, 2014	$ 98,402	$ 79	$ 58,466	$ 45,729	$ (9,429)		$ 3,557
Beginning balance, Shares at Dec. 31, 2014		7,171,282
Net income	2,404			2,404
Restricted stock awards, shares		2,034
Net change in unrealized gain (losses) on securities available for sale, net of taxes	(1,340)						(1,340)
Net change in unrealized losses on derivatives, net of taxes	257						257
Cash dividend to common stockholders	(1,009)			(1,009)
Common stock repurchase	(11,926)				(11,926)
Common stock repurchase, shares		(907,505)
Common stock issued					7,884	$ (7,884)
Common stock issued, shares		600,000
ESOP shares earned	652		(52)
ESOP Shares Earned, shares						704
Compensation expense, restricted stock awards	190		190
Ending balance at Dec. 31, 2015	87,630	$ 79	58,604	47,124	(13,471)	$ (7,180)	2,474
Ending balance, Shares at Dec. 31, 2015		6,865,811
Net income	2,904			2,904
Restricted stock awards	1	$ 1
Restricted stock awards, shares		11,679
Net change in unrealized gain (losses) on securities available for sale, net of taxes	(1,926)						(1,926)
Cash dividend to common stockholders	(993)			(993)
Common stock repurchase	(1,876)				(1,876)
Common stock repurchase, shares		(160,248)
ESOP shares earned	$ 553		(79)
ESOP Shares Earned, shares	600,000					632
Compensation expense, restricted stock awards	$ 135		135
Ending balance at Dec. 31, 2016	86,428	$ 80	58,660	49,035	(15,347)	$ (6,548)	548
Ending balance, Shares at Dec. 31, 2016		6,717,242
Net income	3,301			3,301
Restricted stock awards, shares		12,753
Net change in unrealized gain (losses) on securities available for sale, net of taxes	(647)						(647)
Cash dividend to common stockholders	(1,174)			(1,174)
Common stock repurchase	$ (1,308)				(1,308)
Common stock repurchase, shares	(300,000)	(92,224)
ESOP shares earned	$ 706		59
ESOP Shares Earned, shares	600,234					647
Compensation expense, restricted stock awards	$ 106		106
Ending balance at Dec. 31, 2017	$ 87,412	$ 80	$ 58,825	$ 51,162	$ (16,655)	$ (5,901)	$ (99)
Ending balance, Shares at Dec. 31, 2017		6,637,771

XML

Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Net change in unrealized gain (losses) on securities available for sale, taxes	$ 172	$ 992	$ 690
Net change in unrealized losses on derivatives, income tax benefit			$ (132)
Cash dividend to common stockholders, per share	$ 0.19	$ 0.16	$ 0.16
Common stock repurchase, shares	(300,000)
Common Stock [Member]
Common stock repurchase, shares	(92,224)	(160,248)	(907,505)
Retained Earnings [Member]
Cash dividend to common stockholders, per share	$ 0.19	$ 0.16	$ 0.16
Accumulated Other Comprehensive Income (Loss) [Member]
Net change in unrealized gain (losses) on securities available for sale, taxes	$ 172	$ 992	$ 690
Net change in unrealized losses on derivatives, income tax benefit			$ (132)

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities:
Net income	$ 3,301	$ 2,904	$ 2,404
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	477	1,241	1,051
Depreciation	1,225	1,320	1,266
Amortization of intangible assets			33
Amortization of investment premiums and discounts, net	1,073	1,515	1,650
OTTI recovery on available for sale securities	(17)	(17)	(17)
Expense for deferred income taxes	1,585	267	177
Stock compensation expense	106	135	138
Income from bank owned life insurance	(483)	(343)	(335)
Gain on sale of securities available for sale	(169)	(612)	(691)
Gain on sale of mortgage loans	(1,321)	(1,585)	(1,175)
(Gain) loss on sale of premises and equipment	2	(72)	1
Proceeds from sale of mortgage loans	51,494	56,309	43,847
(Gain) loss on sale of foreclosed assets	(158)	(21)	716
Originations of mortgage loans sold	(50,618)	(53,026)	(44,020)
Decrease in:
Accrued interest receivable	210	340	437
Other assets	389	145	21
Increase (decrease) in accrued expenses and other liabilities	1,173	(1,980)	933
Net cash provided by operating activities	8,269	6,520	6,436
Cash flows from investing activities:
Proceeds from sales, calls and maturities of securities available for sale	54,416	67,671	120,354
Purchase of securities available for sale	(31,594)	(43,778)	(56,875)
Net increase in loans	(37,605)	(49,586)	(19,005)
Proceeds from sale of foreclosed assets	3,498	1,623	344
Proceeds from death benefit of bank owned life insurance policy	777
Proceeds from sale of premises and equipment		100
Purchase of premises and equipment	(466)	(775)	(2,361)
Net cash provided by (used in) investing activities	(10,974)	(24,745)	42,457
Cash flows from financing activities:
Net increase (decrease) in deposits	21,127	(6,524)	8,098
Increase in advance payments by borrowers for taxes and insurance	42	152	101
Advances from Federal Home Loan Bank	80,000	26,000	41,000
Repayment of advances from Federal Home Loan Bank	(68,000)	(30,000)	(60,000)
Increase (decrease) in repurchase agreements	(9,302)	1,885	(11,588)
Acquisition of treasury stock	(1,308)	(1,876)	(11,926)
Proceeds from repayment of ESOP loan	647	632	704
Dividends paid on common stock	(1,174)	(993)	(1,023)
Net cash provided by (used in) financing activities	22,032	(10,724)	(34,634)
Increase (decrease) in cash and cash equivalents	19,327	(28,949)	14,259
Cash and cash equivalents, beginning of period	25,749	54,698	40,439
Cash and cash equivalents, end of period	45,076	25,749	54,698
Supplemental disclosures of cash flow information:
Interest paid	5,920	5,354	6,587
Income taxes (refund) paid	1,044	(564)	(900)
Supplemental disclosures of non-cash investing and financing activities:
Loans charged off	3,159	1,468	1,867
Foreclosures and in substance foreclosures of loans during year	4,312	2,263	869
Net unrealized losses on investment securities classified as available for sale	(978)	(2,918)	(2,030)
Increase in deferred tax asset related to unrealized gains on investments	331	992	691
Dividends declared and payable	355	288	287
Sale and financing of stock to ESOP			7,884
Issue of unearned restricted stock	$ 178	$ 145	$ 25

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

(1) Summary of Significant Accounting Policies:

Nature of Operations and Customer Concentration

HopFed Bancorp, Inc. (the “Corporation”) is a bank holding company which incorporated in the state of Delaware and headquartered in Hopkinsville, Kentucky. The Corporation’s principal business activities are conducted through its wholly-owned subsidiary, Heritage Bank USA, Inc. (the “Bank”), a Kentucky state chartered commercial bank engaged in the business of accepting deposits and providing mortgage, consumer, construction and commercial loans to the general public through its retail banking offices. The Bank’s business activities are primarily limited to western Kentucky and middle and western Tennessee. The Bank is subject to competition from other financial institutions. Deposits at the Bank are insured up to the applicable limits by the Federal Deposit Insurance Corporation (FDIC).

The Bank is a Kentucky commercial chartered bank and is supervised by the Kentucky Department of Financial Institutions (“KDFI”) and the FDIC. Supervision of the Corporation is conducted by the Federal Reserve Bank of Saint Louis (“FED”).

The Bank owns JBMM, LLC, a wholly owned limited liability company which owns and manages the Bank’s foreclosed assets. The Bank owns Heritage Interim Corporation, a Tennessee corporation established to facilitate the acquisition of a bank in Tennessee. The proposed acquisition was terminated in August of 2013. The Bank owns Heritage USA Title, LLC, which sells title insurance to the Bank’s real estate loan customers.

The Bank owns Fort Webb LP, LLC, which owns a limited partnership interest in Fort Webb Elderly Housing LP, LLC, a low income senior citizen housing facility in Bowling Green, Kentucky. The facility offers apartments for rent for those senior citizens who qualify and is managed by the Bowling Green, Kentucky Housing Authority.

A substantial portion of the Bank’s loans are secured by real estate in the western Kentucky and middle and west Tennessee markets. In addition, foreclosed real estate is located in this same market. Accordingly, the ultimate ability to collect on a substantial portion of the Bank’s loan portfolio and the recovery of a substantial portion of the carrying amount of foreclosed real estate is susceptible to changes in local market conditions.

Principles of Consolidation

The consolidated financial statements include the accounts of the Corporation, the Bank and its subsidiaries (collectively the “Company”) for all periods. Significant inter-company balances and transactions have been eliminated in consolidation.

Accounting

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and conform to general practices in the banking industry. U.S. GAAP is generally defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), as amended by Accounting Standards Updates (“ASUs”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) are also sources of authoritative U.S. GAAP for SEC registrants.

The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (VIE) under U.S. GAAP. Voting interest entities in which the total equity investment is a risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decision about the entity’s activities. The Company consolidates voting interest entities in which it has all, or at least a majority of, the voting interest. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The subsidiaries, HopFed Capital Trust I and Fort Webb LP, LLC are VIEs for which the Company is not the primary beneficiary. Accordingly, these accounts are not included in the Company’s consolidated financial statements.

Subsequent Events

The Company has evaluated subsequent events for potential impact and disclosure through the issue date of these consolidated financial statements.

Estimates

In preparing the consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheets and revenues and expenses for each year. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowances for loan losses and foreclosed real estate, management obtains independent appraisals for significant collateral.

Cash and Cash Equivalents

Cash and cash equivalents are defined as cash on hand, amounts due on demand from commercial banks, interest-bearing deposits in other financial institutions and federal funds sold with maturities of three months or less. The Company is required to maintain reserve funds in either cash on hand or on deposit with the Federal Reserve Bank. At December 31, 2017, the Company’s reserve requirement was met with available cash on hand.

Securities

The Company reports debt, readily-marketable equity, mortgage-backed and mortgage related securities in one of the following categories: (i) “trading” (held for current resale) which are to be reported at fair value, with unrealized gains and losses included in earnings; and (ii) “available for sale” (all other debt, equity, mortgage-backed and mortgage related securities) which are to be reported at fair value, with unrealized gains and losses reported net of tax as a separate component of stockholders’ equity. At the time of new security purchases, a determination is made as to the appropriate classification. Realized and unrealized gains and losses on trading securities are included in net income. Unrealized gains and losses on securities available for sale are recognized as direct increases or decreases in stockholders’ equity, net of any tax effect. Cost of securities sold is recognized using the specific identification method. Interest income on securities is recognized as earned. The Company purchases many agency bonds at either a premium or discount to its par value. Premiums and discounts on agency bonds are amortized using the net interest method. For callable bonds purchased at a premium, the premium is amortized to the first call date. If the bond is not called on that date, the premium is fully amortized and the Company recognizes an increase in the net yield of the investment. For agency bonds purchased at a discount, the discount is accreted to the final maturity date. For callable bonds purchased at discount and called before maturity, the Company recognizes a gain on the sale of securities. The Company amortizes premiums and accretes discounts on mortgage back securities and collateralized mortgage obligations based on the securities three-month average prepayment speed. Gains and losses on sales are recorded on the trade date.

Other Than Temporary Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic conditions warrant such evaluation. A decline in the fair value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in the carrying amount to fair value. To determine whether impairment is other-than-temporary, management considers whether the entity expects to recover the entire amortized cost basis of the security by reviewing the present value of the future cash flows associated with the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cost basis is referred to as a credit loss. If a credit loss is identified, management then considers whether it is more-likely-than-not that the Company will be required to sell the security prior to recovery. If management concludes that it is not more-likely-than-not that it will be required to sell the security, then the security is not other-than-temporarily impaired and the shortfall is recorded as a component of equity. If the security is determined to be other-than-temporarily impaired, the credit loss is recognized as a charge to earnings and a new cost basis for the security is established.

Other Securities

Other securities which are not actively traded and may be restricted, such as Federal Home Loan Bank (FHLB) stock are recognized at cost. FHLB stock is periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Loans Receivable and Allowance for Loan Losses

Loans receivable are stated at unpaid principal balances, less the allowance for loan losses and deferred loan cost. ASC 310-20, Nonrefundable Fees and Other Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases, requires the recognition of loan origination fee income over the life of the loan and the recognition of certain direct loan origination costs over the life of the loan. Uncollectible interest on loans that are contractually past due is charged off, or an allowance is established based on management’s periodic evaluation. The Company charges off loans after, in management’s opinion, the collection of all or a large portion of the principal or interest is not probable. The allowance is established by a charge to interest income equal to all interest previously accrued, and income is subsequently recognized only to the extent that cash payments are received while the loan is classified as non-accrual, when the loan is ninety days past due. Loans may be returned to accrual status when all principal and interest amounts contractually due (including arrearages) are reasonably assured of repayment within an acceptable period of time, and there is a sustained period of repayment performance by the borrower in accordance with the contractual terms of interest and principal.

The Company provides an allowance for loan losses and includes a provision for loan losses determined by management. Subsequent recoveries, if any, are credited to the allowance. Management’s periodic evaluation of the adequacy of the allowance is based on the Company’s loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, and current economic conditions. The loss experience is determined by portfolio segment and is based on the actual losses experienced by the Company over the most recent three years.

Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments in accordance with the contractual terms of the loan agreement. Impaired loans and loans classified as Troubled Debt Restructurings (“TDRs”) may be classified as either substandard or doubtful and reserved for based on individual loans risk for loss. Loans not considered impaired may be classified as either special mention or watch and may have an allowance established for it. Typically, unimpaired classified loans exhibit some form of weakness in either industry trends, collateral, or cash flow that result in a default risk greater than that of the Company’s typical loan. All classified amounts include all unpaid interest and fees as well as the principal balance outstanding.

The measurement of impaired loans may be based on the present value of future cash flows discounted at the historical effective interest rate. However, the majority of the Company’s problem loans become collateral dependent at the time they are judged to be impaired. Therefore, the measurement of impairment requires the Company to obtain a new appraisal to obtain the fair value of the collateral. The appraised value is then discounted to an estimate of the Company’s net realizable value, reducing the appraised value. When the measured amount of an impaired loan is less than the recorded investment in the loan, the impairment is recorded as a charge to income and a valuation allowance, which is included as a component of the allowance for loan losses. For loans not individually evaluated, management considers the Company’s recent charge off history, the Company’s current past due and non-accrual trends, banking industry trends and both local and national economic conditions when making an estimate as to the amount to reserve for losses. Management believes it has established the allowance in accordance with U.S. GAAP and has taken into account the views of its regulators and the current economic environment.

If an asset or portion thereof is classified as a loss, we establish a specific reserve for such amount. If the Company determines that a loan relationship is collateral dependent, the Company will charge off the portion of that loan that is deemed to be impaired against the allowance for loan loss account. The Company defines collateral dependent as any loan in that the customer will be unable to reduce the principal balance of the loan without the complete or partial sale of the collateral. The Company will charge off a portion or all of a loan balance once it deems the collection of any remaining interest and principal due to be unlikely.

Loans Held For Sale

Mortgage loans originated and intended for sale are carried at the lower of cost or estimated fair value as determined on a loan-by-loan basis. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Realized gains and losses are recognized when legal title to the loans has been transferred to the purchaser and sales proceeds have been received and are reflected in the accompanying consolidated statement of operations in gains on mortgage loans sold, net of related costs such as compensation expenses. The Company does not securitize mortgage loans.

Fixed Rate Mortgage Originations

The Company operates a mortgage division that originates mortgage loans in the name of assorted investors, including Federal Home Loan Mortgage Corporation (Freddie Mac). Originations for Freddie Mac are sold through the Bank while originations to other investors are processed for a fee. On a limited basis, loans sold to Freddie Mac may result in the Bank retaining loan servicing rights. In recent years, customers have chosen lower origination rates over having their loan locally serviced; thereby limiting the amount of new loans sold with servicing retained. At December 31, 2017, the Bank maintained a servicing portfolio of one to four family real estate loans of approximately $16.9 million.

Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosure or repossession are initially recorded at fair value less selling cost when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated cost to sell. Costs of improving the assets are capitalized if the Company determines that it is likely to recover the cost. Other improvement cost and all cost relating to holding the property are expensed. Management conducts periodic valuations and any adjustments to value are recognized in the current period’s operations.

Repurchase Agreements

The Company sells investments from its portfolio to business and municipal customers with a written agreement to repurchase those investments on the next business day. The repurchase product gives business customers the opportunity to earn income on liquid cash reserves. These funds are overnight borrowings of the Company secured by Company assets and are not FDIC insured.

Treasury Stock

The Company may purchase its own common stock either in open market transactions or privately negotiated transactions. The value of the Company’s common stock held in treasury is listed at cost.

Unearned ESOP Shares

The Company offers an Employee Stock Ownership Plan (“ESOP”) to the employees of the Company. The unearned portion of common stock of the Company held in the ESOP Trust is recorded on the balance sheet at cost. Common stock is released from the ESOP Trust to the participants as the Bank makes payments on the loan to the Corporation on behalf of the ESOP Trust.

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income, net of applicable income taxes. Other comprehensive income includes unrealized appreciation (depreciation) on available-for-sale securities, unrealized appreciation (depreciation) on available-for-sale securities for which a portion of an other-than-temporary impairment has been recognized in income, and unrealized appreciation (depreciation) on derivatives.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales, when control over the assets have been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Revenue Recognition

Mortgage loans held for sale are generally delivered to secondary market investors under best efforts sales commitments entered into prior to the closing of the individual loan. Loan sales and related gains or losses are recognized at settlement. Loan fees earned for the servicing of secondary market loans are recognized as earned. Interest income on loans receivable is reported on the interest method. Interest income is not reported when full loan repayment is in doubt, typically when the loan is impaired, placed in non-accrual status, or payments are past due more than 90 days. Interest is reversed on any loans classified as non-accrual or past due more than 90 days. Interest may continue to accrue on loans over 90 days past due if they are well secured and in the process of collection.

Income Taxes

Income taxes are accounted for through the use of the asset and liability method. Under the asset and liability method, deferred taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in tax rates would be recognized in income in the period that includes the enactment date. Accordingly, deferred tax assets that will be realized after December 31, 2017 were revalued using the tax rates enacted as a result of the 2017 Tax Cuts and Jobs Act resulting in a revaluation charge of $980,000. The Company files its federal and Kentucky income tax returns as well as its Kentucky and Tennessee franchise and excise tax returns on a consolidated basis with its subsidiaries. All taxes are accrued on a separate entity basis.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being recognized on examination. For tax positions not meeting the “more likely than not test”, no benefit is recorded.

Operating Segments

The Company’s continuing operations include one primary segment, retail banking. The retail banking segment involves the origination of commercial, residential and consumer loans as well as the collections of deposits in eighteen branch offices.

Premises and Equipment

Land, land improvements, buildings, and furniture and equipment are carried at cost, less accumulated depreciation and amortization. Buildings and land improvements are depreciated generally by the straight-line method, and furniture and equipment are depreciated under various methods over the estimated useful lives of the assets. The Company capitalizes interest expense on construction in process at a rate equal to the Company’s cost of funds. The estimated useful lives used to compute depreciation are as follows:

Land improvements	5-15 years
Buildings	40 years
Furniture and equipment	5-15 years

Bank Owned Life Insurance

Bank owned life insurance policies (BOLI) are recorded at the cash surrender value or the amount to be realized upon current redemption. The realization of the redemption value is evaluated for each insuring entity that holds insurance contracts annually by management.

Advertising

The Company expenses the production cost of advertising as incurred.

Financial Instruments

The Company has entered into off-balance-sheet financial instruments consisting of commitments to extend credit and commercial letters of credit. Such financial instruments are recorded in the consolidated financial statements when they are funded or related fees are incurred or received.

Fair Values of Financial Instruments (ASC 825) requires disclosure of fair value information about financial instruments, whether or not recognized in the consolidated balance sheets for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Fair value estimates are made at a point in time, based on relevant market information and information about the financial instrument. Accordingly, such estimates involve uncertainties and matters of judgment and therefore cannot be determined with precision. ASC 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The following are the more significant methods and assumptions used by the Company in estimating its fair value disclosures for financial instruments:

Cash and due from banks

The carrying amounts reported in the consolidated balance sheets for cash and due from banks approximate those assets’ fair values because they mature within 90 days or less and do not present credit risk concerns.

Interest-bearing deposits in banks

The carrying amounts reported in the consolidated balance sheets for interest bearing deposits in banks approximate those assets’ fair values because they are considered overnight deposits and may be withdrawn at any time without penalty and do not present credit risk concerns.

FHLB stock

The fair value of FHLB stock is recognized at cost.

Available-for-sale securities

Fair values for investment securities available-for-sale are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments provided by a third party pricing service. The Company reviews all securities in which the book value is greater than the market value for impairment that is other than temporary. For securities deemed to be other than temporarily impaired, the Company reduces the book value of the security to its market value by recognizing an impairment charge on its income statement.

Loans held for sale

Mortgage loans originated and intended to be sold are carried at the lower of cost or estimated fair value as determined on a loan by loan basis. Gains or losses are recognized at the time of ownership transfer. Net unrealized losses, if any, are recognized through a valuation allowance and charged to income.

Loans receivable

The fair values for of fixed-rate loans and variable rate loans that re-price on an infrequent basis is estimated using discounted cash flow analysis which considers future re-pricing dates and estimated repayment dates, and further using interest rates currently being offered for loans of similar type, terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics. The estimated fair value of variable-rate loans that re-price frequently and have no significant change in credit risk is approximately the carrying value of the loan.

Accrued interest receivable

Fair value is estimated to approximate the carrying amount because such amounts are expected to be received within 90 days or less and any credit concerns have been previously considered in the carrying value.

Deposits

The fair values disclosed for deposits with no stated maturity such as demand deposits, interest-bearing checking accounts and savings accounts are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The fair values for certificates of deposit and other fixed maturity time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on such type accounts or similar accounts to a schedule of aggregated contractual maturities or similar maturities on such time deposits.

Repurchase agreements

Overnight repurchase agreements have a fair value at book, given that they mature overnight.

Advances from the Federal Home Loan Bank (FHLB)

The fair value of these advances is estimated by discounting the future cash flows of these advances using the current rates at which similar advances or similar financial instruments could be obtained.

Subordinated debentures

The book value of subordinated debentures is cost. The subordinated debentures re-price quarterly at a rate equal to three month libor plus 3.10%.

Dividend Restrictions

The Company is not permitted to pay a dividend to common shareholders if it fails to make a quarterly interest payment to the holders of the Company’s subordinated debentures. Furthermore, the Bank may be restricted in the payment of dividends to the Corporation by the KDFI or FDIC. Any restrictions imposed by either regulator would effectively limit the Company’s ability to pay a dividend to its common stockholders as discussed in Note 16. At December 31, 2017, there were no such restrictions. At December 31, 2017 and December 31, 2016, the Corporation had cash balances on hand to pay common dividends and repurchase treasury stock as outlined in Note 19 of approximately $860,000 and $1.1 million, respectively.

Earnings Per Share

Earnings per share (EPS) consists of two separate components, basic EPS and diluted EPS. Basic EPS is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for each period presented. Diluted EPS is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding plus dilutive common stock equivalents (CSE). CSE consists of dilutive stock options granted through the Company’s stock option plan. Restricted stock awards represent future compensation expense and are dilutive. Anti-dilutive common stock equivalents are not included for the purposes of this calculation. At December 31, 2017 and December 31, 2016, the Company has no warrants or stock options outstanding.

Stock Compensation

Compensation cost is recognized for restricted stock awards issued to employees based on the fair value of these awards at the date of grant. The cost is recognized over the required service period, generally defined as the vesting period.

Effect of New Accounting Pronouncements

In May 2014, the FASB issued new guidance related to “Revenue from Contracts with Customers.” This guidance supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the ASC. The guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016; however, the FASB has agreed to a one-year deferral of the effective date to annual reporting periods beginning after December 15, 2017. The implementation of ASC Topic 605 is not expected to have a material impact on the Company’s Consolidated Financial Statements.

ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (vii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale. ASU 2016-01 will be effective on January 1, 2018, and is not expected to have a material effect on the Company’s Consolidated Financial Statements.

ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, “Revenue from Contracts with Customers.” ASU 2016-02 will be effective for us on January 1, 2019, and will require transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We are currently evaluating the potential impact of ASU 2016-02 on the Company’s Consolidated Financial Statements.

ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Under ASU 2016-09 all excess tax benefits and tax deficiencies related to share-based payment awards should be recognized as income tax expense or benefit in the income statement during the period in which they occur. Previously, such amounts were recorded in the pool of excess tax benefits included in additional paid-in capital, if such pool was available. Because excess tax benefits are no longer recognized in additional paid-in capital, the assumed proceeds from applying the treasury stock method when computing earnings per share should exclude the amount of excess tax benefits that would have previously been recognized in additional paid-in capital. Additionally, excess tax benefits should be classified along with other income tax cash flows as an operating activity rather than a financing activity, as was previously the case. ASU 2016-09 also provides that an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. ASU 2016-09 changes the threshold to qualify for equity classification (rather than as a liability) to permit withholding up to the maximum statutory tax rates (rather than the minimum as was previously the case) in the applicable jurisdictions. ASU 2016-09 was effective on January 1, 2017. The implementation of ASU 2016-09 did not have a material effect on the Company’s Consolidated Financial Statements.

On June 16, 2016, the FASB released its finalized ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The amendments to U.S. GAAP require businesses and other organization to measure the expected credit losses on financial assets, such as loans, securities, bond insurance, and many receivables, the FASB said. The accounting changes apply to instruments recorded on balance sheets at their historical cost, although there are some limited changes to the accounting for debt instruments classified as available-for-sale. Write-downs will be based on historical information, current business conditions, and forecasts, and FASB expects the forecasts to improve the loss estimates on financial assets that are losing value. FASB also said the techniques that are employed today to write down loans and other instruments can still be used, although FASB expects the variables for calculating the losses to change. ASU 2016-13 will become effective on January 1, 2020. Companies are permitted to adopt ASU 2016-13 in fiscal years beginning after December 15, 2018. The Company is currently evaluating the potential impact of ASU 2016-13.

ASU 2016-15 “Statement of Cash Flows” (Topic 230) is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. ASU 2016-15 is effective for public companies for annual periods beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted with retrospective application. The application of ASU 2016-15 did not have a material impact on the Company’s Consolidated Financial Statements.

ASU 2017-08, “Receivables – Nonrefundable Fees and Other Cost” (Topic 310) – amends the amortization period for certain purchased callable debt securities held at a premium. Prior to the issuance of this guidance, premiums were amortized as an adjustment of yield over the contractual life of instrument. ASU 2017-08 premiums on purchased callable debt securities that have an explicit, non-contingent call features that are callable at fixed prices to be amortized to the earliest call date. There are no accounting changes for securities held at a discount. This ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018 and early adoption is permitted. The adoption of ASU 2017-08 is not expected to have a material impact on the Company’s Consolidated Financial Statements.

ASU 2017-09 “Compensation – Stock Compensation” (Topic 718) – clarifies when changes to the terms or conditions of a share-based payment must be accounted for as modifications. Under AUS 2017-09, an entity should account for changes to the terms or conditions of a share-based payment unless all of the following are met:

• The fair value of the modified award is the same as the fair value of the original award immediately before modification,

• The vesting conditions of the modified award is the same as the vesting conditions value of the original award immediately before modification, and

• The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before modification.

ASU 2017-09 will be effective for the Company on January 1, 2018 and is not expected to have a material impact on our consolidated financial statements.

ASU 2017-12 “Derivatives and Hedging (Topic 815) amends the hedge accounting recognition and presentation requirements in ASC 815 to improve the transparency and understandability of information convey to financial statement users about an entity’s risk management activities to better align the entity’s financial reporting for hedging relationships with those risk management activities and to reduce the complexity of and simplify the application of hedge accounting. ASU 2017-12 will be effective for the Company on January 1, 2019 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

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

Reclassifications

Certain items in prior financial statements have been reclassified to conform to the current presentation. Reclassifications had no effect on prior year’s net income or shareholders’ equity.

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Securities

12 Months Ended

Dec. 31, 2017

Cash and Cash Equivalents [Abstract]

Securities

(2) Securities:

Securities, which consist of debt and equity investments, have been classified in the consolidated balance sheets according to management’s intent. The carrying amount of securities and their estimated fair values follow:

	December 31, 2017
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Restricted:
FHLB stock	$	4,428		—		—			4,428
Available for Sale:
U.S. Agency securities	$	84,210		536		(653	)		84,093
Tax free municipal bonds		26,412		637		(83	)		26,966
Taxable municipal bonds		1,279		5		(1	)		1,283
Trust preferred securities		1,650		35		—			1,685
Mortgage-backed securities		71,389		201		(826	)		70,764
	$	184,940		1,414		(1,563	)		184,791

	December 31, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Restricted:
FHLB stock	$	4,428		—		—			4,428
Available for Sale:
U.S. Treasury securities	$	2,000		1		—			2,001
U.S. Agency securities		83,667		983		(638	)		84,012
Tax free municipal bonds		33,004		1,081		(174	)		33,911
Taxable municipal bonds		2,720		17		(10	)		2,727
Trust preferred securities		1,634		183		—			1,817
Mortgage-backed securities		85,626		437		(1,051	)		85,012
	$	208,651		2,702		(1,873	)		209,480

The scheduled maturities of debt securities available for sale at December 31, 2017 and December 31, 2016 were as follows:

December 31, 2017	Amortized Cost		Estimated Fair Value
Due within one year	$	2,078		2,095
Due in one to five years		28,692		28,624
Due in five to ten years		18,161		18,287
Due after ten years		7,218		7,443
		56,149		56,449
Amortizing agency bonds		57,402		57,578
Mortgage-backed securities		71,389		70,764
Total unrestricted securities available for sale	$	184,940		184,791

December 31, 2016	Amortized Cost		Estimated Fair Value
Due within one year	$	6,605		6,615
Due in one to five years		13,913		14,067
Due in five to ten years		32,611		32,744
Due after ten years		13,022		13,603
		66,151		67,029
Amortizing agency bonds		56,874		57,439
Mortgage-backed securities		85,626		85,012
Total unrestricted securities available for sale	$	208,651		209,480

The estimated fair value and unrealized loss amounts of temporarily impaired investments as of December 31, 2017 and December 31, 2016 are as follows:

	Less than 12 months					12 months or longer					Total
December 31, 2017	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Available for sale
U.S. Agency securities	$	41,501		(431	)		9,846		(222	)		51,347		(653	)
Taxable municipals		521		(1	)		—		—			521		(1	)
Tax free municipals		4,860		(51	)		913		(32	)		5,773		(83	)
Mortgage-backed securities		40,441		(289	)		21,566		(537	)		62,007		(826	)
Total Available for Sale	$	87,323		(772	)		32,325		(791	)		119,648		(1,563	)

	Less than 12 months					12 months or longer					Total
December 31, 2016	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Available for sale
U.S. Agency securities	$	41,963		(597	)		3,459		(41	)		45,422		(638	)
Taxable municipals		1,347		(10	)		—		—			1,347		(10	)
Tax free municipals		7,369		(174	)		—		—			7,369		(174	)
Mortgage-backed securities		48,462		(796	)		7,439		(255	)		55,901		(1,051	)
Total Available for Sale	$	99,141		(1,577	)		10,898		(296	)		110,039		(1,873	)

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. Management gives consideration 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 December 31, 2017, the Company has 83 securities with unrealized losses. Management believes these unrealized losses relate to changes in interest rates and not credit quality. Management also believes the Company has the ability to hold these securities until maturity and, therefore, no declines are deemed to be other than temporary. The carrying value of the Company’s investment securities may decline in the future if the financial condition of issuers deteriorates and management determines it is probable that the Company will not recover the entire amortized cost bases of the securities. As a result, there is a risk that other-than-temporary impairment charges may occur in the future.

In June of 2008, the Company purchased $2.0 million par value of a private placement subordinated debenture issued by First Financial Services Corporation (“FFKY”), the holding Company for First Federal Savings Bank (“First Fed”). The debenture is a thirty-year security with a coupon rate of 8.00%. FFKY is a NASDAQ listed commercial bank holding company located in Elizabethtown, Kentucky. In October of 2010, FFKY informed the owners of its subordinated trust, including the Company, that it was deferring the dividend payments for up to five years as prescribed by the trust agreement.

At September 30, 2013, the Company recognized a $400,000 impairment charge related to management’s financial analysis of the issuing institution, and our opinion that it would be unable to make dividend payments after the five-year extension expired. In January 2015, Your Community Bancshares (“YCB”) purchased FFKY. In September of 2016, Wesbanco (“WSBC”) closed on its purchase of YCB. WSBC is a $9.9 billion institution headquartered in West Virginia. WSBC has assumed the debt originally issued by FFKY, and all interest is now current. The Company is currently accreting the $400,000 impairment charge back into income ratably.

During 2017, the Company sold investment securities classified as available for sale for proceeds of $18.0 million resulting in gross gains of $272,000 and gross losses of $103,000. During 2016, the Company sold investment securities classified as available for sale for proceeds of $19.0 million resulting in gross gains of $690,000 and gross losses of $78,000. During 2015, the Company sold investment securities classified as available for sale for proceeds of $84.9 million resulting in gross gains of $1,274,000 and gross losses of $583,000.

As part of its normal course of business, the Bank holds significant balances of municipal and other deposits that require the Bank to pledge investment instruments as collateral. At December 31, 2017, the Bank pledged investments with a book value of $118.0 million and a market value of approximately $119.8 million to various municipal entities as required by law. In addition, the Bank has provided $47.6 million of letters of credit issued by the Federal Home Loan Bank of Cincinnati to collateralize municipal deposits. At December 31, 2016, the Bank pledged investments with a book value of $125.6 million and a market value of approximately $128.4 million to various municipal entities as required by law. In addition, the Bank provided $45.6 million of letters of credit issued by the Federal Home Loan Bank of Cincinnati to collateralize municipal deposits. At December 31, 2017 and December 31, 2016, the collateral for the letters of credit issued are the Bank’s one to four family loan portfolio.

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Loans Receivable, Net

12 Months Ended

Dec. 31, 2017

Receivables [Abstract]

Loans Receivable, Net

(3) Loans Receivable, Net:

The Company uses the following loan segments as described below:

• One-to-four family first mortgages are closed-end loans secured by residential housing. Loans may be either owner or non-owner occupied properties. If the loan is owner-occupied, the loan is analyzed and under-written as a consumer loan. Loan terms may be up to 30 years.

• Home equity lines of credit may be first or second mortgages secured by one-to-four family properties. Home equity loans carry a variable rate and typically are open ended for a period not to exceed ten years with a fifteen year final maturity. Loans secured by home equity lines of credit are under-written under the Company’s consumer loan guidelines.

• Junior liens are closed-end loans secured by one-to-four family residences with a fixed or variable rate. Typically, the collateral for these loans are owner occupied units with a subordinate lien. Loans secured by junior liens are under-written under the Company’s consumer loan guidelines.

• Multi-family loans are closed-end loans secured by residential housing with five or more units in a single building. Multi-family loans may carry a variable rate of interest or the interest rate on the loan is a fixed rate (usually five years). After the initial fixed rate period, the loan reverts to a variable rate or has balloon maturity. Multi-family loans have amortization terms of up to twenty years and are under-written under the Company’s commercial loan underwriting guidelines.

• Constructions loans may consist of residential or commercial properties and carry a fixed or variable rate for the term of the construction period. Construction loans have a maturity of between twelve and twenty-four months depending on the type of property. After the construction period, loans are amortized over a twenty-year period. All construction loans are under written under the Company’s commercial loan underwriting guidelines for the type of property being constructed.

• Land loans consist of properties currently under development, land held for future development and land held for recreational purposes. Land loans used for recreational purposes are amortized for twenty years and typically carry a fixed rate of interest for one-to-five years with a balloon maturity or floating rate period to follow and are under-written under the Company’s commercial loan underwriting guidelines.

• Loans classified as farmland by the Company include properties that are used exclusively for the production of grain, livestock, poultry or swine. Loans secured by farmland have a maturity of up to twenty years and carry a fixed rate of interest for five to ten years. Loans secured by farmland are under-written under the Company’s commercial loan underwriting guidelines.

• Non-residential real estate loans are secured by commercial real estate properties and may be either owner or non-owner occupied. The loans typically have a twenty year maturity and may be fixed for a period of five to ten years. After the initial fixed rate period, the note will either revert to a one year adjustable rate loan or have a balloon maturity. Loans secured by non-residential real estate are under-written under the Company’s commercial loan underwriting standards.

• The Company originates secured and unsecured consumer loans. Collateral for consumer loans may include deposits, brokerage accounts, automobiles and other personal items. Consumer loans are typically fixed for a term of one to five years and are under-written using the Company’s consumer loan policy.

• The Company originates unsecured and secured commercial loans. Secured commercial loans may have business inventory, accounts receivable and equipment as collateral. The typical customer may include all forms of manufacturing, retail and wholesale sales, professional services and various forms of agri-business interest. Commercial loans may be fixed or variable rate and typically have terms between one and five years.

Set forth below is selected data relating to the composition of the loan portfolio by type of loan at December 31, 2017 and December 31, 2016:

	December 31, 2017			December 31, 2016
Real estate loans:
One-to-four family (closed end) first mortgages	$	163,565			147,962
Home equity lines of credit		35,697			35,684
Junior liens (closed end)		1,184			1,452
Multi-family		37,445			34,284
Construction		30,246			39,255
Land		14,873			23,840
Non-residential real estate		224,952			182,940
Farmland		36,851			47,796
Total mortgage loans		544,813			513,213
Consumer loans		8,620			8,717
Commercial loans		88,938			88,907
Total other loans		97,558			97,624
Total loans, gross		642,371			610,837
Deferred loan cost, net of fees		(443	)		(439	)
Less allowance for loan losses		(4,826	)		(6,112	)
Total loans	$	637,102		$	604,286

Although the Company has a diversified loan portfolio, 84.8% and 84.0% of the portfolio was concentrated in loans secured by real estate at December 31, 2017 and December 31, 2016, respectively. At December 31, 2017 and December 31, 2016, the majority of these loans are located within the Company’s general operating areas of Western Kentucky and Middle and Western Tennessee.

Risk Grade Classifications

The Company uses the following risk definitions for commercial loan risk grades:

Excellent—Loans in this category are to persons or entities of unquestioned financial strength, a highly liquid financial position, with collateral that is liquid and well margined. These borrowers have performed without question on past obligations, and the Bank expects their performance to continue. Internally generated cash flow covers current maturities of long-term debt by a substantial margin. Loans secured by Bank certificates of deposit and savings accounts, with appropriate holds placed on the accounts, are to be rated in this category.

Very Good—These are loans to persons or entities with strong financial condition and above-average liquidity who have previously satisfactorily handled their obligations with the Bank. Collateral securing the Bank’s debt is margined in accordance with policy guidelines. Internally generated cash flow covers current maturities of long-term debt more than adequately. Unsecured loans to individuals supported by strong financial statements and on which repayment is satisfactory may be included in this classification.

Satisfactory—Assets of this grade conform to substantially all the Bank’s underwriting criteria and evidence an average level of credit risk; however, such assets display more susceptibility to economic, technological or political changes since they lack the above average financial strength of credits rated Very Good. Borrower’s repayment capacity is considered to be adequate. Credit is appropriately structured and serviced; payment history is satisfactory.

Acceptable—Assets of this grade conform to most of the Bank’s underwriting criteria and evidence an acceptable, though higher than average, level of credit risk; however, these loans have certain risk characteristics which could adversely affect the borrower’s ability to repay given material adverse trends. Loans in this category require an above average level of servicing and show more reliance on collateral and guaranties to preclude a loss to the Bank should material adverse trends develop. If the borrower is a company, its earnings, liquidity and capitalization are slightly below average when compared to its peers.

Watch—These loans are characterized by borrowers who have marginal cash flow, marginal profitability, or have experienced an unprofitable year and a declining financial condition. The borrower has in the past satisfactorily handled debts with the Bank, but in recent months has either been late, delinquent in making payments, or made sporadic payments. While the Bank continues to be adequately secured, margins have decreased or are decreasing, despite the borrower’s continued satisfactory condition. Other characteristics of borrowers in this class include inadequate credit information, weakness of financial statement and repayment capacity, but with collateral that appears to limit exposure. This classification includes loans to established borrowers that are reasonably margined by collateral, but where potential for improvement in financial capacity appears limited.

Special Mention—Loans in this category have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deteriorating prospects for the asset or in the institution’s credit position at some future date. Borrowers may be experiencing adverse operating trends or market conditions. Non-financial reasons for rating a credit exposure Special Mention include, but are not limited to: management problems, pending litigations, ineffective loan agreement and/or inadequate loan documentation, structural weaknesses and/or lack of control over collateral.

Substandard—A substandard asset is inadequately protected by the current sound worth or paying capacity of the debtor or the collateral pledged. There exists one or more well defined weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility the Bank will experience some loss if the deficiencies are not corrected.

Doubtful—A loan classified as doubtful has all the weaknesses inherent in a loan classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. These are poor quality loans in which neither the collateral, if any, nor the financial condition of the borrower presently ensure collectability in full in a reasonable period of time; in fact, there is permanent impairment in the collateral securing the Bank’s loan. These loans are in a work-out status and have a defined work-out strategy.

Loss—Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. The Bank takes losses in the period in which they become uncollectible.

The following credit risk standards are assigned to consumer loans:

Satisfactory—All consumer open-end and closed-end retail loans shall have an initial risk grade assigned of 3—Satisfactory.

Substandard—All consumer open-end and closed-end retail loans past due 90 cumulative days from the contractual date will be classified as 7—Substandard. If a consumer/retail loan customer files bankruptcy, the loan will be classified as 7—Substandard regardless of payment history.

Loss—All closed-end retail loans that become past due 120 cumulative days and open-end retail loans that become past due 180 cumulative days from the contractual due date will be charged off as loss assets. The charge-off will be taken by the end of the month in which the 120-day or 180-day time period elapses. All losses in retail credit will be recognized when the affiliate becomes aware of the loss, but in no case should the charge off exceed the time frames stated within this policy.

Loans by classification type and credit risk indicator at December 31, 2017 were as follows:

	Pass		Special Mention		Substandard		Doubtful		Total
One-to-four family mortgages	$	162,993		—		572		—		163,565
Home equity line of credit		35,285		—		412		—		35,697
Junior liens		1,184		—		—		—		1,184
Multi-family		37,445		—		—		—		37,445
Construction		30,246		—		—		—		30,246
Land		14,318		—		555		—		14,873
Non-residential real estate		216,901		979		7,072		—		224,952
Farmland		35,253		1,147		451		—		36,851
Consumer loans		8,376		—		244		—		8,620
Commercial loans		83,892		3,572		1,474		—		88,938
Total	$	625,893		5,698		10,780		—		642,371

Loans by classification type and credit risk indicator at December 31, 2016 were as follows:

	Pass		Special Mention		Substandard		Doubtful		Total
One-to-four family mortgages	$	145,965		744		1,253		—		147,962
Home equity line of credit		35,109		25		550		—		35,684
Junior liens		1,411		30		11		—		1,452
Multi-family		31,280		—		3,004		—		34,284
Construction		39,255		—		—		—		39,255
Land		15,581		35		8,224		—		23,840
Non-residential real estate		172,395		3		10,542		—		182,940
Farmland		44,832		674		2,290		—		47,796
Consumer loans		8,382		—		335		—		8,717
Commercial loans		85,174		603		3,130		—		88,907
Total	$	579,384		2,114		29,339		—		610,837

Impaired loans by classification type and the related valuation allowance amounts at December 31, 2017 were as follows:

	At December 31, 2017						For the year ended December 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no specific allowance
One-to-four family mortgages	$	257		257		—		1,235		35
Home equity line of credit		—		—		—		447		26
Junior liens		—		—		—		6		—
Multi-family		—		—		—		1,135		—
Construction		—		—		—		—		—
Land		515		515		—		837		44
Non-residential real estate		7,086		7,086		—		8,979		395
Farmland		444		444		—		1,094		35
Consumer loans		—		—		—		8		2
Commercial loans		875		875		—		1,571		46
Total		9,177		9,177		—		15,312		583
Impaired loans with a specific allowance
One-to-four family mortgages	$	—		—		—		—		—
Home equity line of credit		—		—		—		—		—
Junior liens		—		—		—		—		—
Multi-family		—		—		—		—		—
Construction		—		—		—		—		—
Land		—		—		—		4,006		—
Non-residential real estate		2		2		2		88		2
Farmland		—		—		—		195		—
Consumer loans		217		217		54		248		—
Commercial loans		541		541		233		479		13
Total		760		760		289		5,016		15
Total impaired loans	$	9,937		9,937		289		20,328		598

Impaired loans by classification type and the related valuation allowance amounts at December 31, 2016 were as follows:

	At December 31, 2016						For the year ended December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no specific allowance
One-to-four family mortgages	$	1,253		1,253		—		1,470		67
Home equity line of credit		550		550		—		390		24
Junior liens		11		11		—		13		1
Multi-family		3,004		3,004		—		3,005		172
Construction		—		—		—		—		—
Land		1,553		2,513		—		7,868		38
Non-residential real estate		10,542		10,542		—		9,363		485
Farmland		2,290		2,290		—		1,563		120
Consumer loans		—		—		—		21		1
Commercial loans		2,865		2,865		—		3,168		112
Total		22,068		23,028		—		26,861		1,020
Impaired loans with a specific allowance
One-to-four family mortgages	$	—		—		—		452		—
Home equity line of credit		—		—		—		—		—
Junior liens		—		—		—		—		—
Multi-family		—		—		—		910		—
Construction		—		—		—		—		—
Land		6,671		6,671		1,036		1,811		485
Non-residential real estate		—		—		—		—		—
Farmland		—		—		—		533		—
Consumer loans		335		335		84		273		—
Commercial loans		265		265		28		754		24
Total		7,271		7,271		1,148		4,733		509
Total impaired loans	$	29,339		30,299		1,148		31,594		1,529

Allowance for Loan Losses

A loan is considered to be impaired 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 impaired loans is measured based on the present value of expected payments or using the fair value of the collateral if the loan is collateral dependent.

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A management reporting system supplements the review process by providing the Company with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. The Company also utilizes third-party experts to provide insight and guidance about economic conditions and trends affecting market areas it serves. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans. At December 31, 2017, approximately $95.6 million of the outstanding principal balance of the Company’s non-residential real estate loans were secured by owner-occupied properties, approximately $129.4 million was secured by non-owner occupied properties. At December 31, 2016, approximately $78.7 million of the outstanding principal balance of the Company’s non-residential real estate loans were secured by owner-occupied properties, approximately $104.2 million was secured by non-owner occupied properties.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans as of December 31, 2017 and December 31, 2016 by portfolio segment and based on the impairment method as of December 31, 2017 and December 31, 2016.

	Commercial		Land Development / Construction		Commercial Real Estate		Residential Real Estate		Consumer		Total
December 31, 2017:
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	233		—		2		—		54		289
Collectively evaluated for impairment		614		1,384		1,468		941		130		4,537
Total ending allowance balance	$	847		1,384		1,470		941		184		4,826
Loans:
Loans individually evaluated for impairment	$	1,416		515		7,532		257		217		9,937
Loans collectively evaluated for impairment		87,522		44,604		291,716		200,189		8,403		632,434
Total ending loans balance	$	88,938		45,119		299,248		200,446		8,620		642,371
	Commercial		Land Development / Construction		Commercial Real Estate		Residential Real Estate		Consumer		Total
December 31, 2016:
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	28		1,036		—		—		84		1,148
Collectively evaluated for impairment		565		1,001		2,154		1,120		124		4,964
Total ending allowance balance	$	593		2,037		2,154		1,120		208		6,112
Loans:
Loans individually evaluated for impairment	$	3,130		8,224		15,836		1,814		335		29,339
Loans collectively evaluated for impairment		85,777		54,871		249,184		183,284		8,382		581,498
Total ending loans balance	$	88,907		63,095		265,020		185,098		8,717		610,837

The average recorded investment in impaired loans for the years ended December 31, 2017 and 2016 was $20.3 million and $31.6 million, respectively. For the year ended December 31, 2017, the Company recognized $598,000 of interest income on impaired loans as compared to $1.5 million of interest income on impaired loans for the years ended December 31, 2016. The following table provides a detail of the Company’s activity in the allowance for loan loss account allocated by loan type for the years ended December 31, 2017, December 31, 2016 and December 31, 2015:

December 31, 2017	Balance 12/31/2016		Charge off			Recovery		Provision for Loan Loss			Ending Balance 12/31/2017
One-to-four family mortgages	$	852		(66	)		13		(52	)		747
Home equity line of credit		260		—			12		(83	)		189
Junior liens		8		—			4		(7	)		5
Multi-family		412		—			417		(515	)		314
Construction		277		—			—		(116	)		161
Land		1,760		(2,608	)		559		1,512			1,223
Non-residential real estate		964		—			16		(191	)		789
Farmland		778		—			10		(421	)		367
Consumer loans		208		(261	)		87		150			184
Commercial loans		593		(224	)		278		200			847
	$	6,112		(3,159	)		1,396		477			4,826
December 31, 2016	Balance 12/31/2015		Charge off			Recovery		Provision for Loan Loss			Ending Balance 12/31/2016
One-to-four family mortgages	$	1,030		—			167		(345	)		852
Home equity line of credit		201		(30	)		14		75			260
Junior liens		8		—			14		(14	)		8
Multi-family		227		(421	)		—		606			412
Construction		377		—			—		(100	)		277
Land		1,379		—			—		381			1,760
Non-residential real estate		1,139		—			10		(185	)		964
Farmland		358		—			—		420			778
Consumer loans		358		(422	)		293		(21	)		208
Commercial loans		623		(595	)		141		424			593
	$	5,700		(1,468	)		639		1,241			6,112

December 31, 2015	Balance 12/31/2014		Charge off			Recovery		Provision for Loan Loss			Ending Balance 12/31/2015
One-to-four family mortgages	$	1,198		(143	)		39		(64	)		1,030
Home equity line of credit		181		(92	)		10		102			201
Junior liens		14		—			4		(10	)		8
Multi-family		85		—			—		142			227
Construction		146		—			—		231			377
Land		1,123		(911	)		—		1,167			1,379
Non-residential real estate		2,083		(222	)		2		(724	)		1,139
Farmland		461		—			—		(103	)		358
Consumer loans		494		(298	)		118		44			358
Commercial loans		504		(201	)		54		266			623
	$	6,289		(1,867	)		227		1,051			5,700

Non-accrual loans totaled $1.3 million and $9.1 million at December 31, 2017 and December 31, 2016, respectively. All non-accrual loans noted below are classified as substandard. Interest income foregone on such loans totaled $100,000 at December 31, 2017, $108,000 at December 31, 2016, and $337,000 at December 31, 2015, respectively. The Company is not committed to lend additional funds to borrowers whose loans have been placed on a non-accrual basis. At December 31, 2017, there was one loan with a balance $88,000 that was past due more than ninety days and still accruing interest. There were no loans past due more than three months and still accruing interest as of December 31, 2016 and December 31, 2015, respectively. At December 31, 2017 and December 31, 2016, the Company’s balances of non-accrual loans by loan type are as follows:

	12/31/2017		12/31/2016
One-to-four family first mortgages	$	266	$	270
Home equity lines of credit		402		402
Junior lien		4		—
Land		40		7,675
Non-residential real estate		—		208
Farmland		111		—
Consumer loans		3		3
Commercial loans		459		516
Total non-accrual loans	$	1,285	$	9,074

The table below presents gross loan balances excluding deferred loan fees of $443,000 at December 31, 2017 by loan classification allocated between past due, performing and non-accrual:

	Currently Performing		30 – 89 Days Past Due		More than 90 days past Due and still Accruing		Non-accrual Loans		Total
One-to-four family mortgages	$	163,030		181		88		266	$	163,565
Home equity line of credit		35,295		—		—		402		35,697
Junior liens		1,180		—		—		4		1,184
Multi-family		37,445		—		—		—		37,445
Construction		30,246		—		—		—		30,246
Land		14,833		—		—		40		14,873
Non-residential real estate		224,743		209		—		—		224,952
Farmland		36,740		—		—		111		36,851
Consumer loans		8,614		3		—		3		8,620
Commercial loans		88,479		—		—		459		88,938
Total	$	640,605		393		88		1,285		642,371

The table below presents gross loan balances excluding deferred loan fees of $439,000 at December 31, 2016 by loan classification allocated between past due, performing and non-accrual:

	Currently Performing		30 – 89 Days Past Due		Non-accrual Loans		Total
One-to-four family mortgages	$	146,796		896		270	$	147,962
Home equity line of credit		35,260		22		402		35,684
Junior liens		1,448		4		—		1,452
Multi-family		34,284		—		—		34,284
Construction		39,255		—		—		39,255
Land		16,165		—		7,675		23,840
Non-residential real estate		182,732		—		208		182,940
Farmland		47,796		—		—		47,796
Consumer loans		8,686		28		3		8,717
Commercial loans		88,130		261		516		88,907
Total	$	600,552		1,211		9,074		610,837

Troubled Debt Restructuring

On a periodic basis, the Company may modify the terms of certain loans. In evaluating whether a restructuring constitutes a TDR, ASC 310; A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring, is determinative. In evaluating whether a restructuring constitutes a TDR, the Company must separately conclude that both of the following exist:

a.) The restructuring constitutes a concession

b.) The debtor is experiencing financial difficulties

ASC 310 provides the following guidance for the Company’s evaluation of whether it has granted a concession.

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 Company may have granted a concession. In that circumstance, the Company 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 Company must consider a variety of factors in assessing whether a restructuring resulting in a delay in payment is insignificant.

There were no loans as of December 31, 2017, December 31, 2016 and December 31, 2015 that were been modified as TDRs and within twelve months of the modification subsequently defaulted on their modified terms. At December 31, 2017 and December 31, 2016, there were no commitments to lend additional funds to any borrower whose loan terms have been modified in a TDR.

A summary of the activity in loans classified as TDRs for the year ended December 31, 2017 is as follows:

	Balance at 12/31/16		New TDR		Loss on Foreclosure		Transferred to Non-accrual		Loan Amortization			Balance at 12/31/17
Multi-family real estate	$	815		—		—		—		(815	)		—
Non-residential real estate		5,646		—		—		—		(2,483	)		3,163
Total performing TDR	$	6,461		—		—		—		(3,298	)		3,163

During the year ended December 31, 2017, there were no new loans modified as TDR.

A summary of the activity in loans classified as TDRs for the year ended December 31, 2016 is as follows:

	Balance at 12/31/15		New TDR		Loss on Foreclosure		Transferred to Non-accrual		Loan Amortization			Balance at 12/31/16
Multi-family real estate	$	—		816		—		—		(1	)		815
Non-residential real estate		5,536		228		—		—		(118	)		5,646
Total performing TDR	$	5,536		1,044		—		—		(119	)		6,461

During the year ended December 31, 2016, the Company made financial concessions to one borrower having four loans totaling $1.04 million that resulted in in a TDR classification. The loans were secured by three multi-family real estate properties and one parcel of non-residential real estate. The borrower had financial problems and made a request of the Bank to make interest only payments for a period not to exceed one year. During the interest only period, the borrower committed to attempt to sell the collateral. During 2017, the borrower successfully sold the collateral and the Company received all funds due.

A summary of the activity in loans classified as TDRs for the year ended December 31, 2015 is as follows:

	Balance at 12/31/14		New TDR		Loss on Foreclosure		Transferred to Non-accrual		Loan Amortization			Balance at 12/31/15
Non-residential real estate	$	3,284		2,265		—		—		(13	)		5,536
Total performing TDR	$	3,284		2,265		—		—		(13	)		5,536

During the year ended December 31, 2015 there were six new loans to one borrower modified as TDR. The loans included one commercial vehicle, two parcels of non-residential real estate and three loans for commercial equipment used in conjunction with the non-residential real estate. The customer had financial difficulties related to personal legal issues. The customer received a concession from the Bank of one year of interest only payments due to his inability to materially participate in the business. The customer listed the properties for sale. The properties remained in TDR status until they were sold to a third party in 2017.

The Company originates loans to officers and directors and their affiliates at terms substantially equivalent to those available to other borrowers. Loans to officers and directors at December 31, 2017 and December 31, 2016, were approximately $5.9 million and $4.9 million, respectively. At December 31, 2017 and December 31, 2016, funds committed that were undisbursed to officers and directors approximated $1.5 million and $380,000, respectively.

The following summarizes activity of loans to officers and directors and their affiliates for the years ended December 31, 2017 and December 31, 2016:

	2017			2016
Balance at beginning of period	$	4,894			3,844
New loans		3,043			1,651
Principal repayments		(2,004	)		(601	)
Balance at end of period	$	5,933			4,894

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Premises and Equipment

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Premises and Equipment

(4) Premises and Equipment:

Components of premises and equipment included in the consolidated balance sheets as of December 31, 2017 and December 31, 2016 consisted of the following:

	2017		2016
Land	$	6,555		6,555
Land improvements		1,153		1,132
Buildings		22,467		22,397
Furniture and equipment		6,957		6,932
		37,132		37,016
Less accumulated depreciation		14,432		13,555
Premises and equipment, net	$	22,700		23,461

Depreciation expense was approximately $1,225,000, $1,320,000 and $1,266,000 for the years ended December 31, 2017, 2016 and 2015, respectively.

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Deposits

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Deposits

(5) Deposits:

At December 31, 2017, the scheduled maturities of other time deposits were as follows:

Years Ending December 31,
2018	$	190,955
2019		68,714
2020		30,079
2021		10,649
2022		4,572
	$	304,969

The amount of other time deposits with a minimum denomination of $250,000 or more was approximately $97.8 million and $79.7 million at December 31, 2017, and December 31, 2016, respectively. At December 31, 2017 and December 31, 2016, directors, members of senior management and their affiliates had deposits in the Bank of approximately $2.1 million. At December 31, 2017 and December 31, 2016, the Company had deposits classified as brokered deposits totaling $60.1 million and $33.4 million, respectively.

Interest expense on deposits for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, is summarized as follows:

	2017		2016		2015
Interest bearing checking accounts	$	1,262		1,183		1,105
Money market accounts		71		76		88
Savings		94		95		103
Other time deposits		3,383		2,886		3,735
	$	4,810		4,240		5,031

The Bank maintains clearing arrangements for its demand, interest bearing checking accounts and money market accounts with BBVA Compass Bank. The Bank is required to maintain certain cash reserves in its account to cover average daily clearings. For the month ended December 31, 2017, average daily clearings were approximately $5.3 million.

At December 31, 2017 and December 31, 2016, the Company had deposit accounts in overdraft status that were reclassified to loans on the accompanying consolidated balance sheet of approximately $0.2 million and $0.3 million,

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Advances from Federal Home Loan Bank

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

Advances from Federal Home Loan Bank

(6) Advances from Federal Home Loan Bank:

Federal Home Loan Bank advances are summarized as follows:

	December 31,
	2017					2016
Types of Advances	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Fixed-rate	$	23,000		1.57	%	$	11,000		1.04	%

Scheduled maturities of FHLB advances as of December 31, 2017, are as follows:

Years Ending December 31,	Fixed Rate		Average Cost
2018	$	6,000		1.18	%
2019 2020		7,000 10,000		1.55 1.83	%  %
Total	$	23,000		1.57	%

The Bank has an approved line of credit of $30 million at the FHLB of Cincinnati, which is secured by a blanket agreement to maintain residential first mortgage loans and non-residential real estate loans with a principal value of 125% of the outstanding advances and has a variable interest rate. At December 31, 2017, the Bank could borrow an additional $49.1 million from the FHLB of Cincinnati without pledging additional collateral. At December 31, 2017, the Bank has an additional $9.9 million in additional collateral that could be pledged to the FHLB to secure additional advance requirements. The Bank has a $12.0 million unsecured line of credit with BBVA Compass Bank of Birmingham, Alabama. The Company’s overnight lines of credit with both the Federal Home Loan Bank of Cincinnati and Compass Bank had no balance at December 31, 2017.

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Repurchase Agreements

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Repurchase Agreements

(7) Repurchase Agreements:

At December 31, 2017, the Company provided investment securities with a market value of $38.4 million as collateral for repurchase agreements. The maximum repurchase balance outstanding during the year ended December 31, 2017 and December 31, 2016 was $46.8 million and $54.8 million, respectively.

At December 31, 2017 and December 31, 2016, the respective cost and maturities of the Company’s repurchase agreements are as follows:

2017	Balance		Average Rate			Maturity
Various customers	$	38,353		1.24	%		Overnight
Total	$	38,353		1.24	%

2016	Balance		Average Rate			Maturity
Various customers	$	47,655		0.91	%		Overnight
Total	$	47,655		0.91	%

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Fair Value Measurement

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurement

(8) Fair Value Measurement:

ASC Topic 820, Fair Value Measurements and Disclosures, 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. Although ASC 820 provides for fair value accounting, the Company did not elect the fair value option for any financial instrument not presently required to be accounted for at fair value.

Management has developed a process for determining fair values. Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon internally developed models or processes that use primarily market based or based on third party market data, including interest rate yield curves, option volatilities and other third party information. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financials instruments could result in a different estimate of fair value at the reporting date.

ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurement. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

• Level 1 is for assets and liabilities that management has obtained quoted prices 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 value of securities available for sale are determined by a matrix pricing, which is a mathematical technique what is widely used in the industry to value debt securities without relying exclusively on quoted prices for the individual securities in the Company’s portfolio but relying on the securities relationship to other benchmark quoted securities. Impaired loans are valued at the net present value of expected payments and considering the fair value of any assigned collateral. The fair value of these liabilities is based on information obtained from a third party bank and is reflected within level 2 of the valuation hierarchy.

Assets and Liabilities Measured on a Recurring Basis

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

	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	12/31/2017		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Securities available for sale
U.S. Agency securities	$	84,093		—		84,093		—
Taxable municipals		1,283		—		1,283		—
Tax-free municipals		26,966		—		26,966		—
Trust preferred securities		1,685		—		—		1,685
Mortgage backed securities		70,764		—		70,764		—
Total	$	184,791		—		183,106		1,685

	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	12/31/2016		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Securities available for sale
U.S. Treasury securities	$	2,001		2,001		—		—
U.S. Agency securities		84,012		—		84,012		—
Taxable municipals		2,727		—		2,727		—
Tax-free municipals		33,911		—		33,911		—
Trust preferred securities		1,817		—		—		1,817
Mortgage backed securities		85,012		—		85,012		—
Total	$	209,480		2,001		205,662		1,817

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

December 31, 2017	Total carrying value in the		Quoted Prices In Active		Significant Other		Significant
Description	consolidated balance sheet At 12/31/2017		Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Foreclosed assets	$	3,369		—		—		3,369
Impaired loans, net of allowance of $289	$	473		—		—		473

December 31, 2016	Total carrying value in the		Quoted Prices In Active		Significant Other		Significant
Description	consolidated balance sheet At 12/31/2016		Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Foreclosed assets	$	2,397		—		—		2,397
Impaired loans, net of allowance of $1,148	$	6,123		—		—		6,123

The following table presents quantitative information about level 3 fair value measurements for assets measured at fair value on a recurring and non-recurring basis at December 31, 2017 and December 31, 2016:

Level 3 Significant Unobservable Input Assumptions
	Fair Value	Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs
December 31, 2017
Assets measured on a non-recurring basis
Foreclosed assets	3,369	Discount to either actual sales price or appraised value of collateral	Appraisal and sales comparability adjustments	30% to 55%
Impaired loans	760	Discount to appraised value of collateral	Appraisal comparability adjustments	10% to 25%
Asset measured on a recurring basis
Trust preferred securities	1,685	Discounted cash flow Spread to Libor swap curve	Compare to quotes for sale when available	One month libor plus 4% to 6%
December 31, 2016
Assets measured on a non-recurring basis
Foreclosed assets	2,397	Discount to either actual sales price or appraised value of collateral	Appraisal comparability adjustments	30% to 55%
Impaired loans	7,271	Discount to appraised value of collateral	Appraisal comparability adjustments	10% to 15%
Asset measured on a recurring basis
Trust preferred securities	1,817	Discounted cash flow Spread to Libor swap curve	Compare to quotes for sale when available	One month libor plus 4% to 6%

Foreclosed assets and impaired loans are valued at fair value, less cost to sell. Fair value of a foreclosed asset is determined by an appraised value of the underlying collateral to which a discount is applied. Management establishes the discount or adjustments based on recent sales and any unique features the collateral may possess. Management also considers the anticipated selling cost associated with the collateral when establishing the discounted percentage. Management may adjust the discounts based on the most recent sales of comparable collateral.

The Company bases the value of its trust preferred security on a quarterly review of SEC filings by the issuer to ascertain overall financial strength. Based on our analysis, the Company then reviews Libor swap curve to analyze the overall yield of our investment as compared to long-term swap rates. On rare occasions, the Company may receive an offer from a broker to purchase similar type instruments and the Company will analyze these offerings as compared to our investment.

Change in Level 3 fair value measurements:

The table below includes a roll-forward of the balance sheet items for the years ended December 31, 2017 and 2016, (including the change in fair value) for assets and liabilities classified by the Company 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 a financial instrument 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 financial instruments 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.

	Year ended December 31,
	2017			2016
	Other Assets			Other Assets
Fair value, December 31,	$	1,817		$	1,865
Change in unrealized gains included in other comprehensive income for assets and liabilities still held at December 31,		(149	)		(65	)
Recovery of prior impairment charge		17			17
Fair value, December 31,	$	1,685		$	1,817

The estimated fair values of financial instruments were as follows at December 31, 2017:

	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Using Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Financial Assets:
Cash and due from banks	$	37,965		37,965		37,965		—		—
Interest-bearing deposits in banks		7,111		7,111		7,111		—		—
Securities available for sale		184,791		184,791		—		183,106		1,685
Federal Home Loan Bank stock		4,428		4,428		—		—		4,428
Loans held for sale		1,539		1,539		—		1,539		—
Loans receivable		637,102		615,265		—		—		615,265
Accrued interest receivable		3,589		3,589		—		—		3,589
Financial Liabilities:
Deposits		754,009		754,510		—		754,510		—
Advances from borrowers for taxes and insurance		808		808		—		808		—
Advances from Federal Home Loan Bank		23,000		22,849		—		22,849		—
Repurchase agreements		38,353		38,353		—		38,353		—
Subordinated debentures		10,310		10,099		—		—		10,099

The estimated fair values of financial instruments were as follows at December 31, 2016:

	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Using Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Financial Assets:
Cash and due from banks	$	21,779		21,779		21,779		—		—
Interest-bearing deposits in banks		3,970		3,970		3,970		—		—
Securities available for sale		209,480		209,480		2,001		205,662		1,817
Federal Home Loan Bank stock		4,428		4,428		—		—		4,428
Loans held for sale		1,094		1,094		—		1,094		—
Loans receivable		604,286		593,257		—		—		593,257
Accrued interest receivable		3,799		3,799		—		—		3,799
Financial Liabilities:
Deposits		732,882		732,942		—		732,942		—
Advances from borrowers for taxes and insurance		766		766		—		766		—
Advances from Federal Home Loan Bank		11,000		10,979		—		10,979		—
Repurchase agreements		47,655		47,655		—		47,655		—
Subordinated debentures		10,310		10,099		—		—		10,099

Non-Financial Assets and Non-Financial Liabilities:

The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets measured at fair value on a non-recurring basis include foreclosed assets (upon initial recognition or subsequent impairment), non-financial assets and other non-financial long-lived assets measured at fair value for impairment assessment. Non-financial assets measured at fair value on a non-recurring basis during the reported periods include certain foreclosed assets which, upon initial recognition, were re-measured and reported at fair value through a charge-off to the allowance for loan losses and certain foreclosed assets which, subsequent to their initial recognition, were re-measured at fair value through a write-down included in other non-interest expense. The fair value of a foreclosed asset is estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria.

The following table presents foreclosed assets that were re-measured and reported at fair value:

	Years Ended December 31,
	2017			2016			2015
Beginning balance	$	2,397			1,736			1,927
Foreclosed assets measured at initial recognition:
Carrying value of foreclosed assets acquired		4,312			2,263			869
Proceeds from sale of foreclosed assets		(3,498	)		(1,623	)		(344	)
Gains (losses) included in non-interest expense		158			21			(716	)
Fair value	$	3,369		$	2,397			1,736

Changes in economic conditions of model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. There were no transfers between levels for the years ended December 31, 2017, 2016 and 2015.

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Subordinated Debentures

12 Months Ended

Dec. 31, 2017

Brokers and Dealers [Abstract]

Subordinated Debentures

(9) Subordinated Debentures:

On September 25, 2003, the Company formed HopFed Capital Trust I (the “Trust”). The Trust is a statutory trust formed under the laws of the state of Delaware. In September 2003, the Trust issued variable rate capital securities with an aggregate liquidation amount of $10,000,000 ($1,000 per preferred security) to a third-party investor. The Company then issued floating rate junior subordinated debentures aggregating $10,310,000 to the Trust. The junior subordinated debentures are the sole assets of the Trust. The junior subordinated debentures and the capital securities pay interest and dividends, respectively, on a quarterly basis. The variable interest rate is the three-month LIBOR plus 3.10% adjusted quarterly. The most recent interest rate adjustment for the trust was effective January 12, 2018, which adjusted the total coupon rate to 4.82%. These junior subordinated debentures mature in 2033, at which time the capital securities must be redeemed. The junior subordinated debentures and capital securities became redeemable contemporaneously, in whole or in part, beginning October 8, 2008 at a redemption price of $1,000 per capital security.

The Company has provided a full-irrevocable and unconditional guarantee on a subordinated basis of the obligations of the Trust under the capital securities in the event of the occurrence of an event of default, as defined in such guarantee.

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Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2017

Risks and Uncertainties [Abstract]

Concentrations of Credit Risk

(10) Concentrations of Credit Risk:

Most of the Bank’s business activity is with customers located within the western part of the Commonwealth of Kentucky and middle and western Tennessee. One-to-four family residential and non residential real estate collateralize the majority of the loans. The Bank requires collateral for the majority of loans.

The distribution of commitments to extend credit approximates the distribution of loans outstanding. The contractual amounts of credit-related financial instruments such as commitments to extend credit and commercial letters of credit represent the amounts of potential accounting loss should the contract be fully drawn upon, the customer default, and the value of any existing collateral become worthless.

At December 31, 2017 and December 31, 2016, all cash and cash equivalents are deposited with BBVA Compass Bank, the Federal Reserve Bank or the Federal Home Loan Bank of Cincinnati (FHLB). Deposits at Compass BBVA Bank are insured to $250,000. All deposits at the FHLB are liabilities of the individual bank and were not federally insured. The FHLB is a government sponsored enterprise (GSE) and has the second highest rating available by all rating agencies. At December 31, 2017, total FHLB deposits were approximately $5.6 million and total deposits at the Federal Reserve were $7.1 million, none of which is insured by the FDIC. At December 31, 2017, total deposits at BBVA were $26.3 million, of which $250,000 were insured by the FDIC. At December 31, 2016, total FHLB deposits were approximately $0.8 million and total deposits at the Federal Reserve were $4.7 million, none of which is insured by the FDIC. At December 31, 2016, total deposits at BBVA were $9.7 million, of which $250,000 were insured by the FDIC.

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2017

Retirement Benefits [Abstract]

Employee Benefit Plans

(11) Employee Benefit Plans:

HopFed Bancorp Long Term Incentive Plans

On March 20, 2013, the Board of Directors of the Company adopted the HopFed Bancorp, Inc. 2013 Long Term Incentive Plan (the “Plan”), which was subsequently approved at the 2013 Annual Meeting of Stockholders. Under the Plan, the Compensation Committee has discretionary authority to grant up to 300,000 shares in the form of restricted stock grants and options to such employees, directors and advisory directors as the committee shall designate. The grants vest in equal installments over three or four year periods. Grants may vest immediately upon specific events, including a change of control of the Company, death or disability of award recipient, and termination of employment of the recipient by the Company without cause.

Awards are recognized as an expense to the Company in accordance with the vesting schedule. Awards in which the vesting is accelerated must be recognized as an expense immediately. Awards are valued at the closing stock price on the day the award is granted. For the year ended December 31, 2017, the Compensation Committee granted 12,753 shares of restricted stock with a market value of $178,000. For the year ended December 31, 2016, the Compensation Committee granted 12,342 shares of restricted stock with a market value of $145,000. For the year ended December 31, 2015, the Compensation Committee granted 2,034 shares of restricted stock with a market value of $25,000. The Company recognized $106,000, $135,000 and $190,000 in compensation expense in 2017, 2016 and 2015, respectively. The remaining compensation expense to be recognized at December 31, 2017, is as follows:

Year Ending December 31,	Approximate Future Compensation Expense
2018	$	111
2019		67
2020		45
2021		3
Total	$	226

The Compensation Committee may make additional awards of restricted stock, thereby increasing the future expense related to this plan. The early vesting of restricted stock awards due to factors outlined in the award agreement may accelerate future compensation expenses related to the plan. However, the total amount of future compensation expense would not change as a result of an accelerated vesting of shares. At December 31, 2017, the Company has 229,824 restricted shares available from the Plan that may be awarded.

401(K) Plan

The Company has a 401(K) retirement program that is available to all employees who meet minimum eligibility requirements. In 2015, the Company discontinued all employer 401(K) contributions on behalf of employees while allowing employees to continue contributions to the 401(K) plan.

HopFed Bancorp, Inc. 2015 Employee Stock Ownership Plan

On March 2, 2015, the Company implemented the HopFed Bancorp, Inc. 2015 Employee Stock Ownership Plan which covers substantially all employees who are at least 21 years old with at least one year of employment with the Company and Heritage Bank USA, Inc., the Company’s commercial bank subsidiary. The ESOP has three individuals who have been selected by the Company to serve as trustees. A directed corporate trustee has also been appointed. The ESOP will be administered by a committee (the “Committee”) currently composed of eleven employees selected by the Company or its designee.

On March 2, 2015, the ESOP purchased 600,000 shares from the Corporation at a cost of $7,884,000 using the proceeds of a loan granted to the ESOP from the Company. In accordance with the ESOP Loan documents, the common stock purchased by the ESOP serves as collateral for the ESOP Loan. The ESOP Loan will be repaid principally from discretionary contributions by the Bank to the ESOP. The ESOP Loan requires annual payments and has a final maturity of December 9, 2026. The interest rate on the ESOP Loan is 3.0%. Shares purchased by the ESOP are be held in a trust account for allocation among participants as the ESOP Loan is repaid. The ESOP shares receive dividends. Dividends on unearned shares will be used to repay the ESOP Loan.

For the year ended December 31, 2017, the Company recognized an expense of $706,000 related to the ESOP loan payment and the Company released 64,032 shares from the ESOP trust to individual participants of the ESOP as a result of the 2017 loan payment. For the year ended December 31, 2016, the Company recognized an expense of $553,000 related to the ESOP loan payment and released 48,067 shares from the ESOP trust to individual participants as a result of the 2016 loan payment. For the year ended December 31, 2015, the Company recognized an expense of $652,000 related to the ESOP loan payment and released 53,587 shares from the ESOP trust to individual participants of the plan as a result of a 2015 loan payment. At December 31, 2017, shares held by the ESOP were as follows:

	December 31, 2017		December 31, 2016
Earned ESOP shares		165,686		101,654
Unearned ESOP shares		434,548		498,346
Total ESOP shares		600,234		600,000
Share price at December 31,	$	14.10	$	13.46
Fair value of ESOP shares	$	6,127,127	$	6,707,737

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Income Taxes

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

(12) Income Taxes:

The provision for income tax expense for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, consisted of the following:

	2017		2016		2015
Current
Federal	$	468		—		—
State		95		95		97
		563		95		97
Deferred
Federal		1,585		267		177
State		—		—		—
		1,585		267		177
	$	2,148	$	362		274

Total income tax expense for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, differed from the amounts computed by applying the federal income tax rate of 34 percent to income before income taxes as follows:

	2017			2016			2015
Expected federal income tax expense at statutory tax rate	$	1,853			1,110			911
Effect of nontaxable interest income		(345	)		(452	)		(458	)
Effect of nontaxable bank owned life insurance income		(164	)		(117	)		(114	)
Effect of Qualified Zone Academy Bond (QZAB)		—			(114	)		(109	)
State taxes on income, net of federal benefit		59			59			59
Other tax credits		(243	)		(128	)		(80	)
Deferred tax asset revaluation		980			—			—
Non-deductible expenses		8			4			65
Total income tax expense	$	2,148			362			274
Income tax rate		39.4	%		11.1	%		10.2	%

The components of deferred taxes as of December 31, 2017 and December 31, 2016 are summarized as follows:

	2017			2016
Deferred tax assets:
Allowance for loan loss	$	1,014			2,078
Accrued expenses		77			294
Net operating loss carry forward		192			454
Tax credit carry forward		651			568
Unrealized loss on securities available for sale		57			—
Intangible amortization		192			548
Other		77			242
		2,260			4,184
Deferred tax liabilities:
FHLB stock dividends		(486	)		(787	)
Unrealized gain on securities available for sale		—			(240	)
Depreciation and amortization		(10	)		(105	)
		(496	)		(1,132	)
Net deferred tax asset	$	1,764			3,052

At December 31, 2017, the Company has operating loss carry forwards of approximately $3.1 million, which begin to expire in 2034.

No valuation allowance for deferred tax assets was recorded at December 31, 2017 and December 31, 2016, as management believes it is more likely than not that all of the deferred tax assets will be realized because they were supported by recoverable taxes paid in prior years and expected future taxable income. There were no unrecognized tax benefits during any of the reported periods. The Corporation files income tax returns in the U.S. federal jurisdiction. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2013. The Company recognizes interest and penalties on income taxes, if any, as a component of income tax expense.

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Foreclosed Asset

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

Foreclosed Asset

(13) Foreclosed Asset:

The Company’s foreclosed asset balances at December 31, 2017 and December 31, 2016 represent properties and personal collateral acquired by the Bank through customer loan defaults. The property is recorded at fair value less selling cost at the date acquired with any loss recognized as a charge off through the allowance for loan loss account. Additional real estate and other asset losses may be determined on individual properties at specific intervals or at the time of disposal. Additional losses are recognized as a non-interest expense. As of December 31, 2017 and December 31, 2016, the composition of the Company’s balance in foreclosed assets are as follows:

	December 31,
	2017		2016
One-to-four family mortgages	$	169		135
Home equity line of credit		—		28
Multi-family		—		1,775
Land		3,200		—
Non-residential real estate		—		459
Total foreclosed assets	$	3,369		2,397

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

(14) Commitments and Contingencies:

In the ordinary course of business, the Bank has various outstanding commitments and contingent liabilities that are not reflected in the accompanying consolidated financial statements. The table below outlines the Company’s open loan commitments at December 31, 2017 and December 31, 2016:

	December 31,
	2017		2016
Commitments to extend credit	$	54,458	$	43,365
Standby letters of credit		143		228
Unused commercial lines of credit		62,910		59,790
Unused home equity lines of credit		32,701		31,818
Unused personal lines of credit		17,048		18,559

The Company and the Bank have agreed to enter into employment agreements with certain officers, which provide certain benefits in the event of their termination following a change in control of the Company or the Bank. The employment agreements provide for an initial term of three years. On each anniversary of the commencement date of the employment agreements, the term of each agreement may be extended for an additional year at the discretion of the Board. In the event of a change in control of the Company or the Bank, as defined in the agreement, the officers shall be paid an amount equal to 2.9 times the officer’s base salary as defined in the employment agreement.

The Company and the Bank have entered into commitments to rent facilities, purchase services and lease operating equipment that are non-cancelable. At December 31, 2017, future minimal purchase, lease and rental commitments were as follows:

Years Ending December 31,
2018	$	2,286
2019		1,953
2002		202
2021		169
2022		110
Total	$	4,720

The Company incurred rental expenses of approximately $130,000, $127,000 and $61,000 for the years ended December 31, 2017 December 31, 2016 and December 31, 2015, respectively. In the normal course of business, the Bank and Corporation have entered into operating contracts necessary to conduct the Company’s daily business. The most significant operating contract is for the Bank’s data processing services, ACH item processing and ATM / Debit card processing which is variable based on the number of accounts and usage but has an expected annual cost of approximately $2.8 million annually.

The Company is partially self-insured for medical benefits provided to employees. Heritage Bank is named as the plan administrator for this plan and has retained Anthem Blue Cross Blue Shield (“Anthem”) to process claims and handle other duties of the plan. Anthem does not assume any liabilities as a third-party administrator. The Bank purchased two stop-loss insurance policies to limit total medical claims from Anthem. The first specific stop-loss policy limits the Company’s annual cost per covered individual in 2015, 2016 and 2017 to $90,000, $90,000 and $100,000, respectively. The Company has purchased a second stop-loss policy that limits the aggregate claims for the Company in 2017, 2016 and 2015 at $1.7 million, $1.8 million and $1.7 million, respectively, based upon the Company’s enrollment during those years. The Company has established a liability for outstanding claims as well as incurred but unreported claims. While management uses what it believes are pertinent factors in estimating the plan liability, the actual liability is subject to change based upon unexpected claims experience and fluctuations in enrollment during the plan year. At December 31, 2017 and December 31, 2016, the Company recognized a liability for self-insured medical expenses of approximately $172,000 and $256,000, respectively.

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit, standby letters of credit, and financial guarantees. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance 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.    

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counter-party. Collateral held varies but may include property, plant, and equipment and income-producing commercial properties.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Most guarantees extend from one to two years. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

The Bank, in the normal course of business, originates fixed rate mortgages that are sold to Freddie Mac. Upon tentative underwriting approval by Freddie Mac, the Bank issues a best effort commitment to originate a fixed rate first mortgage under specific terms and conditions that the Bank intends to sell to Freddie Mac. The Bank no longer assumes a firm commitment to originate fixed rate loans, thus eliminating the risk of having to deliver loans they did not close or pay commitment fees to make Freddie Mac whole.

The Company is subject to various claims and legal actions that have arisen in the course of conducting business. The Company records these as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not expect the ultimate disposition of these matters to have a material adverse impact of the Company’s consolidated financial statements.

On May 4, 2017, the Company, its directors, and a former director, were named as defendants in a lawsuit filed in the Court of Chancery in the State of Delaware by Company stockholders, Stilwell Associates, L.P., Stilwell Activist Fund, L.P. and Stilwell Activist Investments, L.P. (collectively, the “Plaintiffs”), concerning the adoption of Article III, Section 13 of the Company’s Amended and Restated Bylaws.

On October 3, 2017, upon the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors adopted amendments to Article III, Section 13 of the Bylaws. See the Company’s Current Report on Form 8-K filed on October 4, 2017.

On October 25, 2017, the Court of Chancery granted the parties’ stipulation regarding dismissal of the lawsuit and dismissed the lawsuit without prejudice, subject to possible consideration of a Fee and Expense Application by the Plaintiffs. On October 26, 2017, the Company disclosed the dismissal in a press release on the Company’s Current Report on Form 8-K filed on October 26, 2017. See subsequent event note related to this lawsuit.

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Regulatory Matters

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

Regulatory Matters

(15) Regulatory Matters:

The Company is a commercial bank holding company and, as such, is subject to regulation, examination and supervision by the Board of Governors of the Federal Reserve System. The Company’s wholly owned bank subsidiary is a state chartered commercial bank supervised by the KDFI and the FDIC. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements.

Under regulatory capital regulations 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.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of tangible and core capital (as defined in the regulations) to adjusted total assets (as defined), and of total capital (as defined) and Tier 1 to risk weighted assets (as defined). The minimum required capital amounts presented include the minimum required capital levels as of December 31, 2017 and December 31, 2016. Management believes, as of December 31, 2017 and December 31, 2016, that the Bank meets all capital adequacy requirements to which it is subject, including the phase-in requirements of Basel III. The Company’s consolidated capital ratios and the Bank’s actual capital amounts and ratios as of December 31, 2017 and December 31, 2016 are presented below:

											To be Well
											Capitalized for
						Minimum Capital					Prompt Corrective
	Actual					Required					Action Provisions
As of December 31, 2017	Amount		Ratio			Amount		Ratio			Amount		Ratio
Tier 1 leverage capital to adjusted total assets
Company	$	95,709		10.6	%	$	36,137		4.0	%	$	45,171		5.0	%
Bank	$	95,123		10.5	%	$	36,090		4.0	%	$	45,112		5.0	%
Total capital to risk weighted assets
Company	$	100,535		16.0	%	$	50,352		8.0	%	$	62,940		10.0	%
Bank	$	99,949		15.9	%	$	50,314		8.0	%	$	62,892		10.0	%
Tier 1 capital to risk weighted assets
Company	$	95,709		15.2	%	$	37,764		6.0	%	$	50,352		8.0	%
Bank	$	95,123		15.1	%	$	37,735		6.0	%	$	50,314		8.0	%
Common equity tier 1 capital to risk weighted assets
Company	$	95,709		15.2	%	$	28,323		4.5	%		n/a		n/a
Bank	$	95,123		15.1	%	$	28,301		4.5	%	$	40,880		6.5	%
As of December 31, 2016
Tier 1 leverage capital to adjusted total assets
Company	$	92,803		10.8	%	$	34,392		4.0	%	$	42,990		5.0	%
Bank	$	91,617		10.7	%	$	34,315		4.0	%	$	42,894		5.0	%
Total capital to risk weighted assets
Company	$	98,915		16.2	%	$	48,864		8.0	%	$	61,080		10.0	%
Bank	$	97,729		16.0	%	$	48,753		8.0	%	$	60,941		10.0	%
Tier 1 capital to risk weighted assets
Company	$	92,803		15.2	%	$	36,648		6.0	%	$	48,864		8.0	%
Bank	$	91,617		15.0	%	$	36,764		6.0	%	$	48,753		8.0	%
Common equity tier 1 capital to risk weighted assets
Company	$	92,803		15.2	%	$	27,486		4.5	%		n/a		n/a
Bank	$	91,617		15.0	%	$	27,423		4.5	%	$	39,611		6.5	%

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial status. At December 31, 2017 and 2016, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. Management is not aware of any conditions or events that have changed the Bank’s status as a well-capitalized bank.

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Stockholders' Equity

12 Months Ended

Dec. 31, 2017

Equity [Abstract]

Stockholders' Equity

(16) Stockholders’ Equity:

The Company’s sources of income and funds for dividends to its stockholders are earnings on its investments and dividends from the Bank. The Bank’s primary regulator, the KDFI, has regulations that impose certain restrictions on payment of dividends to the Corporation. Current regulations of the KDFI allow the Bank (based upon its current capital level and supervisory status assigned by the KDFI) to pay a dividend as long as the Bank subsidiary maintains an appropriate Tier 1 Capital ratio. Furthermore, for the Bank to pay a dividend to the Corporation without regulatory approval, the dividend is limited to the total amount of the Bank’s current year net income plus the Bank’s net income of the prior two years less any previous dividends paid by the Bank to the Corporation during that time.

At December 31, 2017, the Company holds a total of 1,338,360 shares of treasury stock at an average price of $12.44 per share. At December 31, 2017, the Company may purchase 300,000 shares of treasury stock under a new stock repurchase plan announced on November 11, 2017 that expires December 31, 2019. The Company conducts repurchases through open market transactions or in privately negotiated transactions that may be made from time to time depending on market conditions and other factors.

The Company has paid all interest payments due on HopFed Capital Trust I. If interest payments to HopFed Capital Trust I are not made in a timely manner, the Company is prohibited from making cash dividend payments to its common shareholders.

In July 2013, the Federal Reserve Board and the FDIC approved final rules that substantially amend the regulatory risk-based capital rules applicable to Heritage Bank USA, Inc. and HopFed Bancorp, Inc. The final rules implement the regulatory capital reforms of the Basel Committee on Banking Supervision reflected in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” (Basel III) and changes required by the Dodd-Frank Act.

Under these rules, the leverage capital and risk-based capital ratios of bank holding companies may not be lower than the leverage and risk-based capital ratios for insured depository institutions. The final rules implementing the Basel III regulatory capital reforms became effective on January 1, 2015, and include new minimum risk-based capital and leverage ratios. Moreover, these rules refine the definition of what constitutes “capital” for purposes of calculating those ratios, including the definitions of Tier 1 capital and Tier 2 capital.

The new minimum capital level requirements applicable to bank holding companies and banks subject to the rules are:

• a new common equity Tier 1 capital ratio of 4.5%;

• a Tier 1 risk-based capital ratio of 6% (increased from 4%);

• a total risk-based capital ratio of 8% (unchanged from current rules); and

• a Tier 1 leverage ratio of 4% for all institutions.

The rules also establish a “capital conservation buffer” of 2.5% (to be phased by 2019) above the new regulatory minimum risk-based capital ratios, and result in the following minimum ratios once the capital conservation buffer is fully phased in:

• a common equity Tier 1 risk-based capital ratio of 7.0%;

• a Tier 1 risk-based capital ratio of 8.5%; and

• a total risk-based capital ratio of 10.5%.

At December 31, 2017, the Bank and Corporation met all fully phased capital requirements of Basel III, including the capital conservation buffer of 2.5% to be fully phased in by January 1, 2019. The Capital conservation buffer for 2017 is 1.25% and 1.875% for 2018. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital.

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Earnings Per Share

12 Months Ended

Dec. 31, 2017

Earnings Per Share [Abstract]

Earnings Per Share

(17) Earnings Per Share:

Earnings per share of common stock are based on the weighted average number of basic shares and dilutive shares outstanding during the year. Common stock warrants outstanding are not included in the dilutive earnings per share computations because they would be anti-dilutive.

The following is a reconciliation of weighted average common shares for the basic and dilutive earnings per share computations:

	Years Ended December 31,
	2017			2016			2015
Basic earnings per share:
Weighted average common shares		6,695,721			6,757,345			6,919,190
Less: Average unallocated ESOP shares		(474,089	)		(523,485	)		(546,913	)
Weighted average common shares		6,221,632			6,233,860			6,372,277
Weighted average common and incremental shares		6,221,632			6,233,860			6,372,277

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Condensed Parent Company Only Financial Statements

12 Months Ended

Dec. 31, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Parent Company Only Financial Statements

(18) Condensed Parent Company Only Financial Statements:

The following condensed balance sheets as of December 31, 2017 and December 31, 2016 and condensed statements of income and cash flows for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, of the parent company only should be read in conjunction with the consolidated financial statements and the notes thereto.

Condensed Balance Sheets:
	2017			2016
Assets:
Cash	$	862			1,084
Investment in subsidiary		96,826			95,242
Prepaid expenses and other assets		1,109			804
Total assets		98,797			97,130
Liabilities and equity
Liabilities
Dividend payable - common		353			288
Interest payable		112			101
Other liabilities		610			3
Subordinated debentures		10,310			10,310
Total liabilities		11,385			10,702
Equity:
Preferred stock		—			—
Common stock		80			80
Additional paid-capital		58,825			58,660
Retained earnings		51,162			49,035
Treasury stock - common stock		(16,655	)		(15,347	)
Unearned ESOP shares		(5,901	)		(6,548	)
Accumulated other comprehensive income		(99	)		548
Total equity		87,412			86,428
Total liabilities and equity	$	98,797			97,130

Condensed Statements of Income:

	2017			2016			2015
Interest and dividend income:
Dividend income from subsidiary Bank	$	2,500			2,000			12,100
Total interest and dividend income		2,500			2,000			12,100
Interest expense		436			388			740
Non-interest expenses		1,538			391			541
Total expenses		1,974			779			1,281
Income before income taxes and equity in undistributed earnings of subsidiary		526			1,221			10,819
Income tax benefits		(545	)		(319	)		(529	)
Income before equity in undistributed earnings of subsidiary		1,071			1,540			11,348
Equity in (distribution in excess of) earnings of subsidiary		2,230			1,364			(8,944	)
Income available to common shareholders	$	3,301			2,904			2,404

Condensed Statements of Cash Flows:

	2017			2016			2015
Cash flows from operating activities
Net income	$	3,301			2,904			2,404
Adjustments to reconcile net income to net cash provided by operating activities
Equity in undistributed earnings of subsidiary		(2,230	)		(1,364	)		8,943
Amortization of restricted stock		106			135			190
Increase (decrease) in:
Current income taxes payable		330			(49	)		11
Accrued expenses		106			(392	)		(149	)
Net cash provided by operating activities		1,613			1,234			11,399
Cash flows from financing activities:
Purchase of treasury stock		(1,308	)		(1,876	)		(11,926	)
Proceeds on ESOP loan		647			632			704
Dividends paid on common stock		(1,174	)		(993	)		(1,022	)
Net cash used in financing activities		(1,835	)		(2,237	)		(12,244	)
Net decrease in cash		(222	)		(1,003	)		(845	)
Cash and due from banks at beginning of year		1,084			2,087			2,932
Cash and due from banks at end of year	$	862			1,084			2,087

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Investments in Affiliated Companies

12 Months Ended

Dec. 31, 2017

Investments in and Advances to Affiliates [Abstract]

Investments in Affiliated Companies

(19) Investments in Affiliated Companies (Unaudited):

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

Summary Balance Sheets

	December 31,		December 31,
	2017		2016
Asset – investment in subordinated debentures issued by HopFed Bancorp, Inc.	$	10,310		10,310
Liabilities	$	—		—
Stockholders’ equity:
Trust preferred securities		10,000		10,000
Common stock (100% owned by HopFed Bancorp, Inc.)		310		310
Total stockholder’s equity		10,310		10,310
Total liabilities and stockholder’s equity	$	10,310		10,310

Summary Statements of Income

	Years Ended December. 31,
	2017		2016
Income – interest income from subordinated debentures issued by HopFed Bancorp, Inc.	$	449		400
Net income	$	449		400

Summary Statements of Stockholder’s Equity

	Trust							Total
	Preferred		Common		Retained			Stockholder’s
	Securities		Stock		Earnings			Equity
Beginning balances, January 1, 2017	$	10,000		310		—			10,310
Retained earnings:
Net income		—		—		449			449
Dividends:
Trust preferred securities		—		—		(436	)		(436	)
Common dividends paid to HopFed Bancorp, Inc.		—		—		(13	)		(13	)
Total retained earnings		—		—		—			—
Ending balances, December 31, 2017	$	10,000		310		—			10,310

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Quarterly Results of Operations

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results of Operations

(20) Quarterly Results of Operations: (Unaudited)

Summarized unaudited quarterly operating results for the year ended December 31, 2017:

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
December 31, 2017:
Interest and dividend income	$	8,160		8,419		8,635		8,541
Interest expense		1,406		1,454		1,537		1,566
Net interest income		6,754		6,965		7,098		6,975
Provision for loan losses		291		59		71		56
Net interest income after provision for loan losses		6,463		6,906		7,027		6,919
Noninterest income		2,296		1,836		2,030		1,868
Noninterest expense		7,689		7,233		7,168		7,806
Income before income taxes		1,070		1,509		1,889		981
Income taxes		135		368		486		1,159
Net income (loss)	$	935		1,141		1,403		(178	)
Basic earnings (loss) per share	$	0.15		0.18		0.22		(0.03	)
Diluted earnings (loss) per share	$	0.15		0.18		0.22		(0.03	)
Weighted average shares outstanding:
Basic		6,218,706		6,228,994		6,236,075		6,202,635
Diluted		6,218,706		6,228,994		6,236,075		6,202,635

Summarized unaudited quarterly operating results for the year ended December 31, 2016:

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
December 31, 2016:
Interest and dividend income	$	8,081		7,691		8,004		7,951
Interest expense		1,405		1,268		1,315		1,311
Net interest income		6,676		6,423		6,689		6,640
Provision for loan losses		458		465		255		63
Net interest income after provision for loan losses		6,218		5,958		6,434		6,577
Noninterest income		2,020		1,970		1,945		2,000
Noninterest expense		7,683		7,609		7,353		7,211
Income before income taxes		555		319		1,026		1,366
Income taxes		46		15		41		260
Net income	$	509		304		985		1,106
Basic earnings per share	$	0.08		0.05		0.16		0.18
Diluted earnings per share	$	0.08		0.05		0.16		0.18
Weighted average shares outstanding:
Basic		6,297,755		6,232,457		6,212,231		6,193,278
Diluted		6,297,755		6,232,457		6,212,231		6,193,278

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Comprehensive Income

12 Months Ended

Dec. 31, 2017

Equity [Abstract]

Comprehensive Income

(21) Comprehensive Income:

FASB ASC 220, Comprehensive Income, established standards for reporting comprehensive income. Comprehensive income includes net income and other comprehensive net income which is defined as non-owner related transactions in equity. The following table sets forth the amounts of other comprehensive income (loss) included in stockholders’ equity along with the related tax effect for the years ended December 31, 2017, 2016 and 2015.

	Pre-Tax			Tax Benefit			Net of Tax
	Amount			(Expense)			Amount
December 31, 2017:
Unrealized holding gains (losses) on:
Available for sale securities	($	585	)		198			(387	)
Available for sale securities – OTTI		(224	)		76			(148	)
Reclassification adjustments for gains on:
Available for sale securities		(169	)		57			(112	)
	($	978	)		331			(647	)
	Pre-Tax			Tax Benefit			Net of Tax
	Amount			(Expense)			Amount
December 31, 2016:
Unrealized holding gains (losses) on:
Available for sale securities	($	2,048	)		697			(1,351	)
Available for sale securities – OTTI		(258	)		88			(170	)
Reclassification adjustments for gains on:
Available for sale securities		(612	)		207			(405	)
	($	2,918	)		992			(1,926	)
December 31, 2015:
Unrealized holding gains on:
Available for sale securities	($	1,698	)		577			(1,121	)
Available for sale securities—OTTI		359			(122	)		237
Derivatives		389			(132	)		257
Reclassification adjustments for gains on:
Available for sale securities		(691	)		235			(456	)
	($	1,641	)		558			(1,083	)

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Subsequent Event

12 Months Ended

Dec. 31, 2017

Subsequent Events [Abstract]

Subsequent Event

(22) Subsequent Event

On February 7, 2018, the Court of Chancery granted Plaintiffs motion requesting that the Company reimburse the Plaintiff for Attorneys’ Fees and Expenses. The Company was ordered to reimburse the Plaintiff a sum of $610,312.40 within five business days of the order. For the year ended December 31, 2017, the Company recognized the reimbursement of fees to the Plaintiff as an expense. Any subsequent recover of fees from the Company’s insurance company will be recognized in the period it is received.

On February 23, 2018, Joseph Stilwell, the managing member of and owner of Stilwell Value LLC, filed a shareholder demand letter to demand that the Company’s Board of Directors take action against the issuers attorney’s, Edward B. Crosland of Jones Walker LLP and George M. Carter of Carter & Carter for legal malpractice and seek damages in excess of $1.0 million to the issue. As of the date of this filing, the Company has taken no action to address the demand letter.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Nature of Operations and Customer Concentration

Nature of Operations and Customer Concentration

HopFed Bancorp, Inc. (the “Corporation”) is a bank holding company which incorporated in the state of Delaware and headquartered in Hopkinsville, Kentucky. The Corporation’s principal business activities are conducted through its wholly-owned subsidiary, Heritage Bank USA, Inc. (the “Bank”), a Kentucky state chartered commercial bank engaged in the business of accepting deposits and providing mortgage, consumer, construction and commercial loans to the general public through its retail banking offices. The Bank’s business activities are primarily limited to western Kentucky and middle and western Tennessee. The Bank is subject to competition from other financial institutions. Deposits at the Bank are insured up to the applicable limits by the Federal Deposit Insurance Corporation (FDIC).

The Bank is a Kentucky commercial chartered bank and is supervised by the Kentucky Department of Financial Institutions (“KDFI”) and the FDIC. Supervision of the Corporation is conducted by the Federal Reserve Bank of Saint Louis (“FED”).

The Bank owns JBMM, LLC, a wholly owned limited liability company which owns and manages the Bank’s foreclosed assets. The Bank owns Heritage Interim Corporation, a Tennessee corporation established to facilitate the acquisition of a bank in Tennessee. The proposed acquisition was terminated in August of 2013. The Bank owns Heritage USA Title, LLC, which sells title insurance to the Bank’s real estate loan customers.

The Bank owns Fort Webb LP, LLC, which owns a limited partnership interest in Fort Webb Elderly Housing LP, LLC, a low income senior citizen housing facility in Bowling Green, Kentucky. The facility offers apartments for rent for those senior citizens who qualify and is managed by the Bowling Green, Kentucky Housing Authority.

A substantial portion of the Bank’s loans are secured by real estate in the western Kentucky and middle and west Tennessee markets. In addition, foreclosed real estate is located in this same market. Accordingly, the ultimate ability to collect on a substantial portion of the Bank’s loan portfolio and the recovery of a substantial portion of the carrying amount of foreclosed real estate is susceptible to changes in local market conditions.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Corporation, the Bank and its subsidiaries (collectively the “Company”) for all periods. Significant inter-company balances and transactions have been eliminated in consolidation.

Accounting

Accounting

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and conform to general practices in the banking industry. U.S. GAAP is generally defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), as amended by Accounting Standards Updates (“ASUs”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) are also sources of authoritative U.S. GAAP for SEC registrants.

The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (VIE) under U.S. GAAP. Voting interest entities in which the total equity investment is a risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decision about the entity’s activities. The Company consolidates voting interest entities in which it has all, or at least a majority of, the voting interest. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The subsidiaries, HopFed Capital Trust I and Fort Webb LP, LLC are VIEs for which the Company is not the primary beneficiary. Accordingly, these accounts are not included in the Company’s consolidated financial statements.

Subsequent Events

Subsequent Events

The Company has evaluated subsequent events for potential impact and disclosure through the issue date of these consolidated financial statements.

Estimates

Estimates

In preparing the consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheets and revenues and expenses for each year. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowances for loan losses and foreclosed real estate, management obtains independent appraisals for significant collateral.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents are defined as cash on hand, amounts due on demand from commercial banks, interest-bearing deposits in other financial institutions and federal funds sold with maturities of three months or less. The Company is required to maintain reserve funds in either cash on hand or on deposit with the Federal Reserve Bank. At December 31, 2017, the Company’s reserve requirement was met with available cash on hand.

Securities

Securities

The Company reports debt, readily-marketable equity, mortgage-backed and mortgage related securities in one of the following categories: (i) “trading” (held for current resale) which are to be reported at fair value, with unrealized gains and losses included in earnings; and (ii) “available for sale” (all other debt, equity, mortgage-backed and mortgage related securities) which are to be reported at fair value, with unrealized gains and losses reported net of tax as a separate component of stockholders’ equity. At the time of new security purchases, a determination is made as to the appropriate classification. Realized and unrealized gains and losses on trading securities are included in net income. Unrealized gains and losses on securities available for sale are recognized as direct increases or decreases in stockholders’ equity, net of any tax effect. Cost of securities sold is recognized using the specific identification method. Interest income on securities is recognized as earned. The Company purchases many agency bonds at either a premium or discount to its par value. Premiums and discounts on agency bonds are amortized using the net interest method. For callable bonds purchased at a premium, the premium is amortized to the first call date. If the bond is not called on that date, the premium is fully amortized and the Company recognizes an increase in the net yield of the investment. For agency bonds purchased at a discount, the discount is accreted to the final maturity date. For callable bonds purchased at discount and called before maturity, the Company recognizes a gain on the sale of securities. The Company amortizes premiums and accretes discounts on mortgage back securities and collateralized mortgage obligations based on the securities three-month average prepayment speed. Gains and losses on sales are recorded on the trade date.

Other Than Temporary Impairment

Other Than Temporary Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic conditions warrant such evaluation. A decline in the fair value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in the carrying amount to fair value. To determine whether impairment is other-than-temporary, management considers whether the entity expects to recover the entire amortized cost basis of the security by reviewing the present value of the future cash flows associated with the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cost basis is referred to as a credit loss. If a credit loss is identified, management then considers whether it is more-likely-than-not that the Company will be required to sell the security prior to recovery. If management concludes that it is not more-likely-than-not that it will be required to sell the security, then the security is not other-than-temporarily impaired and the shortfall is recorded as a component of equity. If the security is determined to be other-than-temporarily impaired, the credit loss is recognized as a charge to earnings and a new cost basis for the security is established.

Other Securities

Other Securities

Other securities which are not actively traded and may be restricted, such as Federal Home Loan Bank (FHLB) stock are recognized at cost. FHLB stock is periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Loans Receivable and Allowance for Loan Losses

Loans Receivable and Allowance for Loan Losses

Loans receivable are stated at unpaid principal balances, less the allowance for loan losses and deferred loan cost. ASC 310-20, Nonrefundable Fees and Other Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases, requires the recognition of loan origination fee income over the life of the loan and the recognition of certain direct loan origination costs over the life of the loan. Uncollectible interest on loans that are contractually past due is charged off, or an allowance is established based on management’s periodic evaluation. The Company charges off loans after, in management’s opinion, the collection of all or a large portion of the principal or interest is not probable. The allowance is established by a charge to interest income equal to all interest previously accrued, and income is subsequently recognized only to the extent that cash payments are received while the loan is classified as non-accrual, when the loan is ninety days past due. Loans may be returned to accrual status when all principal and interest amounts contractually due (including arrearages) are reasonably assured of repayment within an acceptable period of time, and there is a sustained period of repayment performance by the borrower in accordance with the contractual terms of interest and principal.

The Company provides an allowance for loan losses and includes a provision for loan losses determined by management. Subsequent recoveries, if any, are credited to the allowance. Management’s periodic evaluation of the adequacy of the allowance is based on the Company’s loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, and current economic conditions. The loss experience is determined by portfolio segment and is based on the actual losses experienced by the Company over the most recent three years.

Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments in accordance with the contractual terms of the loan agreement. Impaired loans and loans classified as Troubled Debt Restructurings (“TDRs”) may be classified as either substandard or doubtful and reserved for based on individual loans risk for loss. Loans not considered impaired may be classified as either special mention or watch and may have an allowance established for it. Typically, unimpaired classified loans exhibit some form of weakness in either industry trends, collateral, or cash flow that result in a default risk greater than that of the Company’s typical loan. All classified amounts include all unpaid interest and fees as well as the principal balance outstanding.

The measurement of impaired loans may be based on the present value of future cash flows discounted at the historical effective interest rate. However, the majority of the Company’s problem loans become collateral dependent at the time they are judged to be impaired. Therefore, the measurement of impairment requires the Company to obtain a new appraisal to obtain the fair value of the collateral. The appraised value is then discounted to an estimate of the Company’s net realizable value, reducing the appraised value. When the measured amount of an impaired loan is less than the recorded investment in the loan, the impairment is recorded as a charge to income and a valuation allowance, which is included as a component of the allowance for loan losses. For loans not individually evaluated, management considers the Company’s recent charge off history, the Company’s current past due and non-accrual trends, banking industry trends and both local and national economic conditions when making an estimate as to the amount to reserve for losses. Management believes it has established the allowance in accordance with U.S. GAAP and has taken into account the views of its regulators and the current economic environment.

If an asset or portion thereof is classified as a loss, we establish a specific reserve for such amount. If the Company determines that a loan relationship is collateral dependent, the Company will charge off the portion of that loan that is deemed to be impaired against the allowance for loan loss account. The Company defines collateral dependent as any loan in that the customer will be unable to reduce the principal balance of the loan without the complete or partial sale of the collateral. The Company will charge off a portion or all of a loan balance once it deems the collection of any remaining interest and principal due to be unlikely.

Loans held for sale

Loans Held For Sale

Mortgage loans originated and intended for sale are carried at the lower of cost or estimated fair value as determined on a loan-by-loan basis. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Realized gains and losses are recognized when legal title to the loans has been transferred to the purchaser and sales proceeds have been received and are reflected in the accompanying consolidated statement of operations in gains on mortgage loans sold, net of related costs such as compensation expenses. The Company does not securitize mortgage loans.

Fixed Rate Mortgage Originations

Fixed Rate Mortgage Originations

The Company operates a mortgage division that originates mortgage loans in the name of assorted investors, including Federal Home Loan Mortgage Corporation (Freddie Mac). Originations for Freddie Mac are sold through the Bank while originations to other investors are processed for a fee. On a limited basis, loans sold to Freddie Mac may result in the Bank retaining loan servicing rights. In recent years, customers have chosen lower origination rates over having their loan locally serviced; thereby limiting the amount of new loans sold with servicing retained. At December 31, 2017, the Bank maintained a servicing portfolio of one to four family real estate loans of approximately $16.9 million.

Foreclosed Assets

Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosure or repossession are initially recorded at fair value less selling cost when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated cost to sell. Costs of improving the assets are capitalized if the Company determines that it is likely to recover the cost. Other improvement cost and all cost relating to holding the property are expensed. Management conducts periodic valuations and any adjustments to value are recognized in the current period’s operations.

Repurchase Agreements

Repurchase Agreements

The Company sells investments from its portfolio to business and municipal customers with a written agreement to repurchase those investments on the next business day. The repurchase product gives business customers the opportunity to earn income on liquid cash reserves. These funds are overnight borrowings of the Company secured by Company assets and are not FDIC insured.

Treasury Stock

Treasury Stock

The Company may purchase its own common stock either in open market transactions or privately negotiated transactions. The value of the Company’s common stock held in treasury is listed at cost.

Unearned ESOP Shares

Unearned ESOP Shares

The Company offers an Employee Stock Ownership Plan (“ESOP”) to the employees of the Company. The unearned portion of common stock of the Company held in the ESOP Trust is recorded on the balance sheet at cost. Common stock is released from the ESOP Trust to the participants as the Bank makes payments on the loan to the Corporation on behalf of the ESOP Trust.

Comprehensive Income

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income, net of applicable income taxes. Other comprehensive income includes unrealized appreciation (depreciation) on available-for-sale securities, unrealized appreciation (depreciation) on available-for-sale securities for which a portion of an other-than-temporary impairment has been recognized in income, and unrealized appreciation (depreciation) on derivatives.

Transfers of Financial Assets

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales, when control over the assets have been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Revenue Recognition

Revenue Recognition

Mortgage loans held for sale are generally delivered to secondary market investors under best efforts sales commitments entered into prior to the closing of the individual loan. Loan sales and related gains or losses are recognized at settlement. Loan fees earned for the servicing of secondary market loans are recognized as earned. Interest income on loans receivable is reported on the interest method. Interest income is not reported when full loan repayment is in doubt, typically when the loan is impaired, placed in non-accrual status, or payments are past due more than 90 days. Interest is reversed on any loans classified as non-accrual or past due more than 90 days. Interest may continue to accrue on loans over 90 days past due if they are well secured and in the process of collection.

Income Taxes

Income Taxes

Income taxes are accounted for through the use of the asset and liability method. Under the asset and liability method, deferred taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in tax rates would be recognized in income in the period that includes the enactment date. Accordingly, deferred tax assets that will be realized after December 31, 2017 were revalued using the tax rates enacted as a result of the 2017 Tax Cuts and Jobs Act resulting in a revaluation charge of $980,000. The Company files its federal and Kentucky income tax returns as well as its Kentucky and Tennessee franchise and excise tax returns on a consolidated basis with its subsidiaries. All taxes are accrued on a separate entity basis.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being recognized on examination. For tax positions not meeting the “more likely than not test”, no benefit is recorded.

Operating Segments

Operating Segments

The Company’s continuing operations include one primary segment, retail banking. The retail banking segment involves the origination of commercial, residential and consumer loans as well as the collections of deposits in eighteen branch offices.

Premises and Equipment

Premises and Equipment

Land, land improvements, buildings, and furniture and equipment are carried at cost, less accumulated depreciation and amortization. Buildings and land improvements are depreciated generally by the straight-line method, and furniture and equipment are depreciated under various methods over the estimated useful lives of the assets. The Company capitalizes interest expense on construction in process at a rate equal to the Company’s cost of funds. The estimated useful lives used to compute depreciation are as follows:

Land improvements	5-15 years
Buildings	40 years
Furniture and equipment	5-15 years

Bank Owned Life Insurance

Bank Owned Life Insurance

Bank owned life insurance policies (BOLI) are recorded at the cash surrender value or the amount to be realized upon current redemption. The realization of the redemption value is evaluated for each insuring entity that holds insurance contracts annually by management.

Advertising

Advertising

The Company expenses the production cost of advertising as incurred.

Financial Instruments

Financial Instruments

The Company has entered into off-balance-sheet financial instruments consisting of commitments to extend credit and commercial letters of credit. Such financial instruments are recorded in the consolidated financial statements when they are funded or related fees are incurred or received.

Fair Values of Financial Instruments

Fair Values of Financial Instruments (ASC 825) requires disclosure of fair value information about financial instruments, whether or not recognized in the consolidated balance sheets for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Fair value estimates are made at a point in time, based on relevant market information and information about the financial instrument. Accordingly, such estimates involve uncertainties and matters of judgment and therefore cannot be determined with precision. ASC 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The following are the more significant methods and assumptions used by the Company in estimating its fair value disclosures for financial instruments:

Cash and due from banks

The carrying amounts reported in the consolidated balance sheets for cash and due from banks approximate those assets’ fair values because they mature within 90 days or less and do not present credit risk concerns.

Interest-bearing deposits in banks

The carrying amounts reported in the consolidated balance sheets for interest bearing deposits in banks approximate those assets’ fair values because they are considered overnight deposits and may be withdrawn at any time without penalty and do not present credit risk concerns.

FHLB stock

The fair value of FHLB stock is recognized at cost.

Available-for-sale securities

Fair values for investment securities available-for-sale are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments provided by a third party pricing service. The Company reviews all securities in which the book value is greater than the market value for impairment that is other than temporary. For securities deemed to be other than temporarily impaired, the Company reduces the book value of the security to its market value by recognizing an impairment charge on its income statement.

Loans held for sale

Mortgage loans originated and intended to be sold are carried at the lower of cost or estimated fair value as determined on a loan by loan basis. Gains or losses are recognized at the time of ownership transfer. Net unrealized losses, if any, are recognized through a valuation allowance and charged to income.

Loans receivable

The fair values for of fixed-rate loans and variable rate loans that re-price on an infrequent basis is estimated using discounted cash flow analysis which considers future re-pricing dates and estimated repayment dates, and further using interest rates currently being offered for loans of similar type, terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics. The estimated fair value of variable-rate loans that re-price frequently and have no significant change in credit risk is approximately the carrying value of the loan.

Accrued interest receivable

Fair value is estimated to approximate the carrying amount because such amounts are expected to be received within 90 days or less and any credit concerns have been previously considered in the carrying value.

Deposits

The fair values disclosed for deposits with no stated maturity such as demand deposits, interest-bearing checking accounts and savings accounts are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The fair values for certificates of deposit and other fixed maturity time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on such type accounts or similar accounts to a schedule of aggregated contractual maturities or similar maturities on such time deposits.

Repurchase agreements

Overnight repurchase agreements have a fair value at book, given that they mature overnight.

Advances from the Federal Home Loan Bank (FHLB)

The fair value of these advances is estimated by discounting the future cash flows of these advances using the current rates at which similar advances or similar financial instruments could be obtained.

Subordinated debentures

The book value of subordinated debentures is cost. The subordinated debentures re-price quarterly at a rate equal to three month libor plus 3.10%.

Troubled Debt Restructuring

Troubled Debt Restructuring

On a periodic basis, the Company may modify the terms of certain loans. In evaluating whether a restructuring constitutes a TDR, ASC 310; A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring, is determinative. In evaluating whether a restructuring constitutes a TDR, the Company must separately conclude that both of the following exist:

a.) The restructuring constitutes a concession

b.) The debtor is experiencing financial difficulties

ASC 310 provides the following guidance for the Company’s evaluation of whether it has granted a concession.

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 Company may have granted a concession. In that circumstance, the Company 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 Company must consider a variety of factors in assessing whether a restructuring resulting in a delay in payment is insignificant.

Dividend Restrictions

Dividend Restrictions

The Company is not permitted to pay a dividend to common shareholders if it fails to make a quarterly interest payment to the holders of the Company’s subordinated debentures. Furthermore, the Bank may be restricted in the payment of dividends to the Corporation by the KDFI or FDIC. Any restrictions imposed by either regulator would effectively limit the Company’s ability to pay a dividend to its common stockholders as discussed in Note 16. At December 31, 2017, there were no such restrictions. At December 31, 2017 and December 31, 2016, the Corporation had cash balances on hand to pay common dividends and repurchase treasury stock as outlined in Note 19 of approximately $860,000 and $1.1 million, respectively.

Earnings Per Share

Earnings Per Share

Earnings per share (EPS) consists of two separate components, basic EPS and diluted EPS. Basic EPS is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for each period presented. Diluted EPS is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding plus dilutive common stock equivalents (CSE). CSE consists of dilutive stock options granted through the Company’s stock option plan. Restricted stock awards represent future compensation expense and are dilutive. Anti-dilutive common stock equivalents are not included for the purposes of this calculation. At December 31, 2017 and December 31, 2016, the Company has no warrants or stock options outstanding.

Stock Compensation

Stock Compensation

Compensation cost is recognized for restricted stock awards issued to employees based on the fair value of these awards at the date of grant. The cost is recognized over the required service period, generally defined as the vesting period.

Effect of New Accounting Pronouncements

Effect of New Accounting Pronouncements

In May 2014, the FASB issued new guidance related to “Revenue from Contracts with Customers.” This guidance supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the ASC. The guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016; however, the FASB has agreed to a one-year deferral of the effective date to annual reporting periods beginning after December 15, 2017. The implementation of ASC Topic 605 is not expected to have a material impact on the Company’s Consolidated Financial Statements.

ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (vii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale. ASU 2016-01 will be effective on January 1, 2018, and is not expected to have a material effect on the Company’s Consolidated Financial Statements.

ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, “Revenue from Contracts with Customers.” ASU 2016-02 will be effective for us on January 1, 2019, and will require transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We are currently evaluating the potential impact of ASU 2016-02 on the Company’s Consolidated Financial Statements.

ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Under ASU 2016-09 all excess tax benefits and tax deficiencies related to share-based payment awards should be recognized as income tax expense or benefit in the income statement during the period in which they occur. Previously, such amounts were recorded in the pool of excess tax benefits included in additional paid-in capital, if such pool was available. Because excess tax benefits are no longer recognized in additional paid-in capital, the assumed proceeds from applying the treasury stock method when computing earnings per share should exclude the amount of excess tax benefits that would have previously been recognized in additional paid-in capital. Additionally, excess tax benefits should be classified along with other income tax cash flows as an operating activity rather than a financing activity, as was previously the case. ASU 2016-09 also provides that an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. ASU 2016-09 changes the threshold to qualify for equity classification (rather than as a liability) to permit withholding up to the maximum statutory tax rates (rather than the minimum as was previously the case) in the applicable jurisdictions. ASU 2016-09 was effective on January 1, 2017. The implementation of ASU 2016-09 did not have a material effect on the Company’s Consolidated Financial Statements.

On June 16, 2016, the FASB released its finalized ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The amendments to U.S. GAAP require businesses and other organization to measure the expected credit losses on financial assets, such as loans, securities, bond insurance, and many receivables, the FASB said. The accounting changes apply to instruments recorded on balance sheets at their historical cost, although there are some limited changes to the accounting for debt instruments classified as available-for-sale. Write-downs will be based on historical information, current business conditions, and forecasts, and FASB expects the forecasts to improve the loss estimates on financial assets that are losing value. FASB also said the techniques that are employed today to write down loans and other instruments can still be used, although FASB expects the variables for calculating the losses to change. ASU 2016-13 will become effective on January 1, 2020. Companies are permitted to adopt ASU 2016-13 in fiscal years beginning after December 15, 2018. The Company is currently evaluating the potential impact of ASU 2016-13.

ASU 2016-15 “Statement of Cash Flows” (Topic 230) is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. ASU 2016-15 is effective for public companies for annual periods beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted with retrospective application. The application of ASU 2016-15 did not have a material impact on the Company’s Consolidated Financial Statements.

ASU 2017-08, “Receivables – Nonrefundable Fees and Other Cost” (Topic 310) – amends the amortization period for certain purchased callable debt securities held at a premium. Prior to the issuance of this guidance, premiums were amortized as an adjustment of yield over the contractual life of instrument. ASU 2017-08 premiums on purchased callable debt securities that have an explicit, non-contingent call features that are callable at fixed prices to be amortized to the earliest call date. There are no accounting changes for securities held at a discount. This ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018 and early adoption is permitted. The adoption of ASU 2017-08 is not expected to have a material impact on the Company’s Consolidated Financial Statements.

ASU 2017-09 “Compensation – Stock Compensation” (Topic 718) – clarifies when changes to the terms or conditions of a share-based payment must be accounted for as modifications. Under AUS 2017-09, an entity should account for changes to the terms or conditions of a share-based payment unless all of the following are met:

• The fair value of the modified award is the same as the fair value of the original award immediately before modification,

• The vesting conditions of the modified award is the same as the vesting conditions value of the original award immediately before modification, and

• The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before modification.

ASU 2017-09 will be effective for the Company on January 1, 2018 and is not expected to have a material impact on our consolidated financial statements.

ASU 2017-12 “Derivatives and Hedging (Topic 815) amends the hedge accounting recognition and presentation requirements in ASC 815 to improve the transparency and understandability of information convey to financial statement users about an entity’s risk management activities to better align the entity’s financial reporting for hedging relationships with those risk management activities and to reduce the complexity of and simplify the application of hedge accounting. ASU 2017-12 will be effective for the Company on January 1, 2019 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

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

Reclassifications

Reclassifications

Certain items in prior financial statements have been reclassified to conform to the current presentation. Reclassifications had no effect on prior year’s net income or shareholders’ equity.

Fair Value Measurement

ASC Topic 820, Fair Value Measurements and Disclosures, 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. Although ASC 820 provides for fair value accounting, the Company did not elect the fair value option for any financial instrument not presently required to be accounted for at fair value.

Management has developed a process for determining fair values. Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon internally developed models or processes that use primarily market based or based on third party market data, including interest rate yield curves, option volatilities and other third party information. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financials instruments could result in a different estimate of fair value at the reporting date.

ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurement. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

• Level 1 is for assets and liabilities that management has obtained quoted prices 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 value of securities available for sale are determined by a matrix pricing, which is a mathematical technique what is widely used in the industry to value debt securities without relying exclusively on quoted prices for the individual securities in the Company’s portfolio but relying on the securities relationship to other benchmark quoted securities. Impaired loans are valued at the net present value of expected payments and considering the fair value of any assigned collateral. The fair value of these liabilities is based on information obtained from a third party bank and is reflected within level 2 of the valuation hierarchy.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Schedule of Useful Life of Property, Plant, and Equipment

The estimated useful lives used to compute depreciation are as follows:

Land improvements	5-15 years
Buildings	40 years
Furniture and equipment	5-15 years

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Securities (Tables)

12 Months Ended

Dec. 31, 2017

Cash and Cash Equivalents [Abstract]

Amortized Cost of Securities and their Estimated Fair Values

The carrying amount of securities and their estimated fair values follow:

	December 31, 2017
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Restricted:
FHLB stock	$	4,428		—		—			4,428
Available for Sale:
U.S. Agency securities	$	84,210		536		(653	)		84,093
Tax free municipal bonds		26,412		637		(83	)		26,966
Taxable municipal bonds		1,279		5		(1	)		1,283
Trust preferred securities		1,650		35		—			1,685
Mortgage-backed securities		71,389		201		(826	)		70,764
	$	184,940		1,414		(1,563	)		184,791

	December 31, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Restricted:
FHLB stock	$	4,428		—		—			4,428
Available for Sale:
U.S. Treasury securities	$	2,000		1		—			2,001
U.S. Agency securities		83,667		983		(638	)		84,012
Tax free municipal bonds		33,004		1,081		(174	)		33,911
Taxable municipal bonds		2,720		17		(10	)		2,727
Trust preferred securities		1,634		183		—			1,817
Mortgage-backed securities		85,626		437		(1,051	)		85,012
	$	208,651		2,702		(1,873	)		209,480

Maturities of Debt Securities Available for Sale

The scheduled maturities of debt securities available for sale at December 31, 2017 and December 31, 2016 were as follows:

December 31, 2017	Amortized Cost		Estimated Fair Value
Due within one year	$	2,078		2,095
Due in one to five years		28,692		28,624
Due in five to ten years		18,161		18,287
Due after ten years		7,218		7,443
		56,149		56,449
Amortizing agency bonds		57,402		57,578
Mortgage-backed securities		71,389		70,764
Total unrestricted securities available for sale	$	184,940		184,791

December 31, 2016	Amortized Cost		Estimated Fair Value
Due within one year	$	6,605		6,615
Due in one to five years		13,913		14,067
Due in five to ten years		32,611		32,744
Due after ten years		13,022		13,603
		66,151		67,029
Amortizing agency bonds		56,874		57,439
Mortgage-backed securities		85,626		85,012
Total unrestricted securities available for sale	$	208,651		209,480

Estimated Fair Value and Unrealized Loss Amounts of Impaired Investments

The estimated fair value and unrealized loss amounts of temporarily impaired investments as of December 31, 2017 and December 31, 2016 are as follows:

	Less than 12 months					12 months or longer					Total
December 31, 2017	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Available for sale
U.S. Agency securities	$	41,501		(431	)		9,846		(222	)		51,347		(653	)
Taxable municipals		521		(1	)		—		—			521		(1	)
Tax free municipals		4,860		(51	)		913		(32	)		5,773		(83	)
Mortgage-backed securities		40,441		(289	)		21,566		(537	)		62,007		(826	)
Total Available for Sale	$	87,323		(772	)		32,325		(791	)		119,648		(1,563	)

	Less than 12 months					12 months or longer					Total
December 31, 2016	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Available for sale
U.S. Agency securities	$	41,963		(597	)		3,459		(41	)		45,422		(638	)
Taxable municipals		1,347		(10	)		—		—			1,347		(10	)
Tax free municipals		7,369		(174	)		—		—			7,369		(174	)
Mortgage-backed securities		48,462		(796	)		7,439		(255	)		55,901		(1,051	)
Total Available for Sale	$	99,141		(1,577	)		10,898		(296	)		110,039		(1,873	)

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Loans Receivable, Net (Tables)

12 Months Ended

Dec. 31, 2017

Receivables [Abstract]

Composition of Loan Portfolio By Type of Loan

Set forth below is selected data relating to the composition of the loan portfolio by type of loan at December 31, 2017 and December 31, 2016:

	December 31, 2017			December 31, 2016
Real estate loans:
One-to-four family (closed end) first mortgages	$	163,565			147,962
Home equity lines of credit		35,697			35,684
Junior liens (closed end)		1,184			1,452
Multi-family		37,445			34,284
Construction		30,246			39,255
Land		14,873			23,840
Non-residential real estate		224,952			182,940
Farmland		36,851			47,796
Total mortgage loans		544,813			513,213
Consumer loans		8,620			8,717
Commercial loans		88,938			88,907
Total other loans		97,558			97,624
Total loans, gross		642,371			610,837
Deferred loan cost, net of fees		(443	)		(439	)
Less allowance for loan losses		(4,826	)		(6,112	)
Total loans	$	637,102		$	604,286

Loans by Classification Type and Credit Risk Indicator

Loans by classification type and credit risk indicator at December 31, 2017 were as follows:

	Pass		Special Mention		Substandard		Doubtful		Total
One-to-four family mortgages	$	162,993		—		572		—		163,565
Home equity line of credit		35,285		—		412		—		35,697
Junior liens		1,184		—		—		—		1,184
Multi-family		37,445		—		—		—		37,445
Construction		30,246		—		—		—		30,246
Land		14,318		—		555		—		14,873
Non-residential real estate		216,901		979		7,072		—		224,952
Farmland		35,253		1,147		451		—		36,851
Consumer loans		8,376		—		244		—		8,620
Commercial loans		83,892		3,572		1,474		—		88,938
Total	$	625,893		5,698		10,780		—		642,371

Loans by classification type and credit risk indicator at December 31, 2016 were as follows:

	Pass		Special Mention		Substandard		Doubtful		Total
One-to-four family mortgages	$	145,965		744		1,253		—		147,962
Home equity line of credit		35,109		25		550		—		35,684
Junior liens		1,411		30		11		—		1,452
Multi-family		31,280		—		3,004		—		34,284
Construction		39,255		—		—		—		39,255
Land		15,581		35		8,224		—		23,840
Non-residential real estate		172,395		3		10,542		—		182,940
Farmland		44,832		674		2,290		—		47,796
Consumer loans		8,382		—		335		—		8,717
Commercial loans		85,174		603		3,130		—		88,907
Total	$	579,384		2,114		29,339		—		610,837

Impaired Loans by Classification Type

Impaired loans by classification type and the related valuation allowance amounts at December 31, 2017 were as follows:

	At December 31, 2017						For the year ended December 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no specific allowance
One-to-four family mortgages	$	257		257		—		1,235		35
Home equity line of credit		—		—		—		447		26
Junior liens		—		—		—		6		—
Multi-family		—		—		—		1,135		—
Construction		—		—		—		—		—
Land		515		515		—		837		44
Non-residential real estate		7,086		7,086		—		8,979		395
Farmland		444		444		—		1,094		35
Consumer loans		—		—		—		8		2
Commercial loans		875		875		—		1,571		46
Total		9,177		9,177		—		15,312		583
Impaired loans with a specific allowance
One-to-four family mortgages	$	—		—		—		—		—
Home equity line of credit		—		—		—		—		—
Junior liens		—		—		—		—		—
Multi-family		—		—		—		—		—
Construction		—		—		—		—		—
Land		—		—		—		4,006		—
Non-residential real estate		2		2		2		88		2
Farmland		—		—		—		195		—
Consumer loans		217		217		54		248		—
Commercial loans		541		541		233		479		13
Total		760		760		289		5,016		15
Total impaired loans	$	9,937		9,937		289		20,328		598

Impaired loans by classification type and the related valuation allowance amounts at December 31, 2016 were as follows:

	At December 31, 2016						For the year ended December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no specific allowance
One-to-four family mortgages	$	1,253		1,253		—		1,470		67
Home equity line of credit		550		550		—		390		24
Junior liens		11		11		—		13		1
Multi-family		3,004		3,004		—		3,005		172
Construction		—		—		—		—		—
Land		1,553		2,513		—		7,868		38
Non-residential real estate		10,542		10,542		—		9,363		485
Farmland		2,290		2,290		—		1,563		120
Consumer loans		—		—		—		21		1
Commercial loans		2,865		2,865		—		3,168		112
Total		22,068		23,028		—		26,861		1,020
Impaired loans with a specific allowance
One-to-four family mortgages	$	—		—		—		452		—
Home equity line of credit		—		—		—		—		—
Junior liens		—		—		—		—		—
Multi-family		—		—		—		910		—
Construction		—		—		—		—		—
Land		6,671		6,671		1,036		1,811		485
Non-residential real estate		—		—		—		—		—
Farmland		—		—		—		533		—
Consumer loans		335		335		84		273		—
Commercial loans		265		265		28		754		24
Total		7,271		7,271		1,148		4,733		509
Total impaired loans	$	29,339		30,299		1,148		31,594		1,529

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Impairment Method

The following table presents the balance in the allowance for loan losses and the recorded investment in loans as of December 31, 2017 and December 31, 2016 by portfolio segment and based on the impairment method as of December 31, 2017 and December 31, 2016.

	Commercial		Land Development / Construction		Commercial Real Estate		Residential Real Estate		Consumer		Total
December 31, 2017:
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	233		—		2		—		54		289
Collectively evaluated for impairment		614		1,384		1,468		941		130		4,537
Total ending allowance balance	$	847		1,384		1,470		941		184		4,826
Loans:
Loans individually evaluated for impairment	$	1,416		515		7,532		257		217		9,937
Loans collectively evaluated for impairment		87,522		44,604		291,716		200,189		8,403		632,434
Total ending loans balance	$	88,938		45,119		299,248		200,446		8,620		642,371
	Commercial		Land Development / Construction		Commercial Real Estate		Residential Real Estate		Consumer		Total
December 31, 2016:
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	28		1,036		—		—		84		1,148
Collectively evaluated for impairment		565		1,001		2,154		1,120		124		4,964
Total ending allowance balance	$	593		2,037		2,154		1,120		208		6,112
Loans:
Loans individually evaluated for impairment	$	3,130		8,224		15,836		1,814		335		29,339
Loans collectively evaluated for impairment		85,777		54,871		249,184		183,284		8,382		581,498
Total ending loans balance	$	88,907		63,095		265,020		185,098		8,717		610,837

Allowance for Loan Loss Account by Loan

The following table provides a detail of the Company’s activity in the allowance for loan loss account allocated by loan type for the years ended December 31, 2017, December 31, 2016 and December 31, 2015:

December 31, 2017	Balance 12/31/2016		Charge off			Recovery		Provision for Loan Loss			Ending Balance 12/31/2017
One-to-four family mortgages	$	852		(66	)		13		(52	)		747
Home equity line of credit		260		—			12		(83	)		189
Junior liens		8		—			4		(7	)		5
Multi-family		412		—			417		(515	)		314
Construction		277		—			—		(116	)		161
Land		1,760		(2,608	)		559		1,512			1,223
Non-residential real estate		964		—			16		(191	)		789
Farmland		778		—			10		(421	)		367
Consumer loans		208		(261	)		87		150			184
Commercial loans		593		(224	)		278		200			847
	$	6,112		(3,159	)		1,396		477			4,826
December 31, 2016	Balance 12/31/2015		Charge off			Recovery		Provision for Loan Loss			Ending Balance 12/31/2016
One-to-four family mortgages	$	1,030		—			167		(345	)		852
Home equity line of credit		201		(30	)		14		75			260
Junior liens		8		—			14		(14	)		8
Multi-family		227		(421	)		—		606			412
Construction		377		—			—		(100	)		277
Land		1,379		—			—		381			1,760
Non-residential real estate		1,139		—			10		(185	)		964
Farmland		358		—			—		420			778
Consumer loans		358		(422	)		293		(21	)		208
Commercial loans		623		(595	)		141		424			593
	$	5,700		(1,468	)		639		1,241			6,112

December 31, 2015	Balance 12/31/2014		Charge off			Recovery		Provision for Loan Loss			Ending Balance 12/31/2015
One-to-four family mortgages	$	1,198		(143	)		39		(64	)		1,030
Home equity line of credit		181		(92	)		10		102			201
Junior liens		14		—			4		(10	)		8
Multi-family		85		—			—		142			227
Construction		146		—			—		231			377
Land		1,123		(911	)		—		1,167			1,379
Non-residential real estate		2,083		(222	)		2		(724	)		1,139
Farmland		461		—			—		(103	)		358
Consumer loans		494		(298	)		118		44			358
Commercial loans		504		(201	)		54		266			623
	$	6,289		(1,867	)		227		1,051			5,700

Non-accrual Loans

At December 31, 2017 and December 31, 2016, the Company’s balances of non-accrual loans by loan type are as follows:

	12/31/2017		12/31/2016
One-to-four family first mortgages	$	266	$	270
Home equity lines of credit		402		402
Junior lien		4		—
Land		40		7,675
Non-residential real estate		—		208
Farmland		111		—
Consumer loans		3		3
Commercial loans		459		516
Total non-accrual loans	$	1,285	$	9,074

Gross Loan Balances Excluding Deferred Loan Fees by Loan Classification Allocated Between Past Due Performing and Non-accrual

The table below presents gross loan balances excluding deferred loan fees of $443,000 at December 31, 2017 by loan classification allocated between past due, performing and non-accrual:

	Currently Performing		30 – 89 Days Past Due		More than 90 days past Due and still Accruing		Non-accrual Loans		Total
One-to-four family mortgages	$	163,030		181		88		266	$	163,565
Home equity line of credit		35,295		—		—		402		35,697
Junior liens		1,180		—		—		4		1,184
Multi-family		37,445		—		—		—		37,445
Construction		30,246		—		—		—		30,246
Land		14,833		—		—		40		14,873
Non-residential real estate		224,743		209		—		—		224,952
Farmland		36,740		—		—		111		36,851
Consumer loans		8,614		3		—		3		8,620
Commercial loans		88,479		—		—		459		88,938
Total	$	640,605		393		88		1,285		642,371

The table below presents gross loan balances excluding deferred loan fees of $439,000 at December 31, 2016 by loan classification allocated between past due, performing and non-accrual:

	Currently Performing		30 – 89 Days Past Due		Non-accrual Loans		Total
One-to-four family mortgages	$	146,796		896		270	$	147,962
Home equity line of credit		35,260		22		402		35,684
Junior liens		1,448		4		—		1,452
Multi-family		34,284		—		—		34,284
Construction		39,255		—		—		39,255
Land		16,165		—		7,675		23,840
Non-residential real estate		182,732		—		208		182,940
Farmland		47,796		—		—		47,796
Consumer loans		8,686		28		3		8,717
Commercial loans		88,130		261		516		88,907
Total	$	600,552		1,211		9,074		610,837

Summary of the Activity in Loans Classified as TDRs

A summary of the activity in loans classified as TDRs for the year ended December 31, 2017 is as follows:

	Balance at 12/31/16		New TDR		Loss on Foreclosure		Transferred to Non-accrual		Loan Amortization			Balance at 12/31/17
Multi-family real estate	$	815		—		—		—		(815	)		—
Non-residential real estate		5,646		—		—		—		(2,483	)		3,163
Total performing TDR	$	6,461		—		—		—		(3,298	)		3,163

A summary of the activity in loans classified as TDRs for the year ended December 31, 2016 is as follows:

	Balance at 12/31/15		New TDR		Loss on Foreclosure		Transferred to Non-accrual		Loan Amortization			Balance at 12/31/16
Multi-family real estate	$	—		816		—		—		(1	)		815
Non-residential real estate		5,536		228		—		—		(118	)		5,646
Total performing TDR	$	5,536		1,044		—		—		(119	)		6,461

A summary of the activity in loans classified as TDRs for the year ended December 31, 2015 is as follows:

	Balance at 12/31/14		New TDR		Loss on Foreclosure		Transferred to Non-accrual		Loan Amortization			Balance at 12/31/15
Non-residential real estate	$	3,284		2,265		—		—		(13	)		5,536
Total performing TDR	$	3,284		2,265		—		—		(13	)		5,536

Summary of Loans to Officers, Directors and Their Affiliates

The following summarizes activity of loans to officers and directors and their affiliates for the years ended December 31, 2017 and December 31, 2016:

	2017			2016
Balance at beginning of period	$	4,894			3,844
New loans		3,043			1,651
Principal repayments		(2,004	)		(601	)
Balance at end of period	$	5,933			4,894

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Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Components of Premises and Equipment Included in Consolidated Balance Sheets

Components of premises and equipment included in the consolidated balance sheets as of December 31, 2017 and December 31, 2016 consisted of the following:

	2017		2016
Land	$	6,555		6,555
Land improvements		1,153		1,132
Buildings		22,467		22,397
Furniture and equipment		6,957		6,932
		37,132		37,016
Less accumulated depreciation		14,432		13,555
Premises and equipment, net	$	22,700		23,461

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Deposits (Tables)

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Scheduled Maturities of Other Time Deposits

At December 31, 2017, the scheduled maturities of other time deposits were as follows:

Years Ending December 31,
2018	$	190,955
2019		68,714
2020		30,079
2021		10,649
2022		4,572
	$	304,969

Interest Expense on Deposits

Interest expense on deposits for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, is summarized as follows:

	2017		2016		2015
Interest bearing checking accounts	$	1,262		1,183		1,105
Money market accounts		71		76		88
Savings		94		95		103
Other time deposits		3,383		2,886		3,735
	$	4,810		4,240		5,031

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Advances from Federal Home Loan Bank (Tables)

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

Summarized Federal Home Loan Bank Advances

Federal Home Loan Bank advances are summarized as follows:

	December 31,
	2017					2016
Types of Advances	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Fixed-rate	$	23,000		1.57	%	$	11,000		1.04	%

Scheduled Maturities of FHLB Advances

Scheduled maturities of FHLB advances as of December 31, 2017, are as follows:

Years Ending December 31,	Fixed Rate		Average Cost
2018	$	6,000		1.18	%
2019 2020		7,000 10,000		1.55 1.83	%  %
Total	$	23,000		1.57	%

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Repurchase Agreements (Tables)

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Cost and Maturities of the Company's Repurchase Agreements

At December 31, 2017 and December 31, 2016, the respective cost and maturities of the Company’s repurchase agreements are as follows:

2017	Balance		Average Rate			Maturity
Various customers	$	38,353		1.24	%		Overnight
Total	$	38,353		1.24	%

2016	Balance		Average Rate			Maturity
Various customers	$	47,655		0.91	%		Overnight
Total	$	47,655		0.91	%

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Fair Value Measurement (Tables)

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and Liabilities Measured on a Recurring Basis

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

	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	12/31/2017		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Securities available for sale
U.S. Agency securities	$	84,093		—		84,093		—
Taxable municipals		1,283		—		1,283		—
Tax-free municipals		26,966		—		26,966		—
Trust preferred securities		1,685		—		—		1,685
Mortgage backed securities		70,764		—		70,764		—
Total	$	184,791		—		183,106		1,685

	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	12/31/2016		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Securities available for sale
U.S. Treasury securities	$	2,001		2,001		—		—
U.S. Agency securities		84,012		—		84,012		—
Taxable municipals		2,727		—		2,727		—
Tax-free municipals		33,911		—		33,911		—
Trust preferred securities		1,817		—		—		1,817
Mortgage backed securities		85,012		—		85,012		—
Total	$	209,480		2,001		205,662		1,817

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

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

December 31, 2017	Total carrying value in the		Quoted Prices In Active		Significant Other		Significant
Description	consolidated balance sheet At 12/31/2017		Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Foreclosed assets	$	3,369		—		—		3,369
Impaired loans, net of allowance of $289	$	473		—		—		473

December 31, 2016	Total carrying value in the		Quoted Prices In Active		Significant Other		Significant
Description	consolidated balance sheet At 12/31/2016		Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Foreclosed assets	$	2,397		—		—		2,397
Impaired loans, net of allowance of $1,148	$	6,123		—		—		6,123

Quantitative Information about Level 3 Fair Value Measurements for Assets Measured at Fair Value on Recurring and Non-recurring Basis

The following table presents quantitative information about level 3 fair value measurements for assets measured at fair value on a recurring and non-recurring basis at December 31, 2017 and December 31, 2016:

Level 3 Significant Unobservable Input Assumptions
	Fair Value	Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs
December 31, 2017
Assets measured on a non-recurring basis
Foreclosed assets	3,369	Discount to either actual sales price or appraised value of collateral	Appraisal and sales comparability adjustments	30% to 55%
Impaired loans	760	Discount to appraised value of collateral	Appraisal comparability adjustments	10% to 25%
Asset measured on a recurring basis
Trust preferred securities	1,685	Discounted cash flow Spread to Libor swap curve	Compare to quotes for sale when available	One month libor plus 4% to 6%
December 31, 2016
Assets measured on a non-recurring basis
Foreclosed assets	2,397	Discount to either actual sales price or appraised value of collateral	Appraisal comparability adjustments	30% to 55%
Impaired loans	7,271	Discount to appraised value of collateral	Appraisal comparability adjustments	10% to 15%
Asset measured on a recurring basis
Trust preferred securities	1,817	Discounted cash flow Spread to Libor swap curve	Compare to quotes for sale when available	One month libor plus 4% to 6%

Roll-Forward of the Consolidated Condensed Statement of Financial Condition Items

The table below includes a roll-forward of the balance sheet items for the years ended December 31, 2017 and 2016, (including the change in fair value) for assets and liabilities classified by the Company 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 a financial instrument 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 financial instruments 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.

	Year ended December 31,
	2017			2016
	Other Assets			Other Assets
Fair value, December 31,	$	1,817		$	1,865
Change in unrealized gains included in other comprehensive income for assets and liabilities still held at December 31,		(149	)		(65	)
Recovery of prior impairment charge		17			17
Fair value, December 31,	$	1,685		$	1,817

Estimated Fair Values of Financial Instruments

The estimated fair values of financial instruments were as follows at December 31, 2017:

	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Using Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Financial Assets:
Cash and due from banks	$	37,965		37,965		37,965		—		—
Interest-bearing deposits in banks		7,111		7,111		7,111		—		—
Securities available for sale		184,791		184,791		—		183,106		1,685
Federal Home Loan Bank stock		4,428		4,428		—		—		4,428
Loans held for sale		1,539		1,539		—		1,539		—
Loans receivable		637,102		615,265		—		—		615,265
Accrued interest receivable		3,589		3,589		—		—		3,589
Financial Liabilities:
Deposits		754,009		754,510		—		754,510		—
Advances from borrowers for taxes and insurance		808		808		—		808		—
Advances from Federal Home Loan Bank		23,000		22,849		—		22,849		—
Repurchase agreements		38,353		38,353		—		38,353		—
Subordinated debentures		10,310		10,099		—		—		10,099

The estimated fair values of financial instruments were as follows at December 31, 2016:

	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Using Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Financial Assets:
Cash and due from banks	$	21,779		21,779		21,779		—		—
Interest-bearing deposits in banks		3,970		3,970		3,970		—		—
Securities available for sale		209,480		209,480		2,001		205,662		1,817
Federal Home Loan Bank stock		4,428		4,428		—		—		4,428
Loans held for sale		1,094		1,094		—		1,094		—
Loans receivable		604,286		593,257		—		—		593,257
Accrued interest receivable		3,799		3,799		—		—		3,799
Financial Liabilities:
Deposits		732,882		732,942		—		732,942		—
Advances from borrowers for taxes and insurance		766		766		—		766		—
Advances from Federal Home Loan Bank		11,000		10,979		—		10,979		—
Repurchase agreements		47,655		47,655		—		47,655		—
Subordinated debentures		10,310		10,099		—		—		10,099

Foreclosed Assets that were Re-measured and Reported at Fair Value

The following table presents foreclosed assets that were re-measured and reported at fair value:

	Years Ended December 31,
	2017			2016			2015
Beginning balance	$	2,397			1,736			1,927
Foreclosed assets measured at initial recognition:
Carrying value of foreclosed assets acquired		4,312			2,263			869
Proceeds from sale of foreclosed assets		(3,498	)		(1,623	)		(344	)
Gains (losses) included in non-interest expense		158			21			(716	)
Fair value	$	3,369		$	2,397			1,736

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Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2017

Retirement Benefits [Abstract]

Compensation Expense to be Recognized

The remaining compensation expense to be recognized at December 31, 2017, is as follows:

Year Ending December 31,	Approximate Future Compensation Expense
2018	$	111
2019		67
2020		45
2021		3
Total	$	226

Summary of Shares Held by Employee Stock Ownership Plan (ESOP)

At December 31, 2017, shares held by the ESOP were as follows:

	December 31, 2017		December 31, 2016
Earned ESOP shares		165,686		101,654
Unearned ESOP shares		434,548		498,346
Total ESOP shares		600,234		600,000
Share price at December 31,	$	14.10	$	13.46
Fair value of ESOP shares	$	6,127,127	$	6,707,737

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Provision for Income Tax Expense

The provision for income tax expense for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, consisted of the following:

	2017		2016		2015
Current
Federal	$	468		—		—
State		95		95		97
		563		95		97
Deferred
Federal		1,585		267		177
State		—		—		—
		1,585		267		177
	$	2,148	$	362		274

Reconciliation of Federal Income Tax Rate

Total income tax expense for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, differed from the amounts computed by applying the federal income tax rate of 34 percent to income before income taxes as follows:

	2017			2016			2015
Expected federal income tax expense at statutory tax rate	$	1,853			1,110			911
Effect of nontaxable interest income		(345	)		(452	)		(458	)
Effect of nontaxable bank owned life insurance income		(164	)		(117	)		(114	)
Effect of Qualified Zone Academy Bond (QZAB)		—			(114	)		(109	)
State taxes on income, net of federal benefit		59			59			59
Other tax credits		(243	)		(128	)		(80	)
Deferred tax asset revaluation		980			—			—
Non-deductible expenses		8			4			65
Total income tax expense	$	2,148			362			274
Income tax rate		39.4	%		11.1	%		10.2	%

Components of Deferred Taxes

The components of deferred taxes as of December 31, 2017 and December 31, 2016 are summarized as follows:

	2017			2016
Deferred tax assets:
Allowance for loan loss	$	1,014			2,078
Accrued expenses		77			294
Net operating loss carry forward		192			454
Tax credit carry forward		651			568
Unrealized loss on securities available for sale		57			—
Intangible amortization		192			548
Other		77			242
		2,260			4,184
Deferred tax liabilities:
FHLB stock dividends		(486	)		(787	)
Unrealized gain on securities available for sale		—			(240	)
Depreciation and amortization		(10	)		(105	)
		(496	)		(1,132	)
Net deferred tax asset	$	1,764			3,052

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Foreclosed Asset (Tables)

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

Presentation of Balances in Foreclosed Assets

As of December 31, 2017 and December 31, 2016, the composition of the Company’s balance in foreclosed assets are as follows:

	December 31,
	2017		2016
One-to-four family mortgages	$	169		135
Home equity line of credit		—		28
Multi-family		—		1,775
Land		3,200		—
Non-residential real estate		—		459
Total foreclosed assets	$	3,369		2,397

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Summary of Open Loan Commitments

The table below outlines the Company’s open loan commitments at December 31, 2017 and December 31, 2016:

	December 31,
	2017		2016
Commitments to extend credit	$	54,458	$	43,365
Standby letters of credit		143		228
Unused commercial lines of credit		62,910		59,790
Unused home equity lines of credit		32,701		31,818
Unused personal lines of credit		17,048		18,559

Future Minimal Purchase, Lease and Rental Commitments

At December 31, 2017, future minimal purchase, lease and rental commitments were as follows:

Years Ending December 31,
2018	$	2,286
2019		1,953
2002		202
2021		169
2022		110
Total	$	4,720

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Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

The Company's Consolidated Capital Ratios and the Bank's Actual Capital Amounts and Ratios

The Company’s consolidated capital ratios and the Bank’s actual capital amounts and ratios as of December 31, 2017 and December 31, 2016 are presented below:

											To be Well
											Capitalized for
						Minimum Capital					Prompt Corrective
	Actual					Required					Action Provisions
As of December 31, 2017	Amount		Ratio			Amount		Ratio			Amount		Ratio
Tier 1 leverage capital to adjusted total assets
Company	$	95,709		10.6	%	$	36,137		4.0	%	$	45,171		5.0	%
Bank	$	95,123		10.5	%	$	36,090		4.0	%	$	45,112		5.0	%
Total capital to risk weighted assets
Company	$	100,535		16.0	%	$	50,352		8.0	%	$	62,940		10.0	%
Bank	$	99,949		15.9	%	$	50,314		8.0	%	$	62,892		10.0	%
Tier 1 capital to risk weighted assets
Company	$	95,709		15.2	%	$	37,764		6.0	%	$	50,352		8.0	%
Bank	$	95,123		15.1	%	$	37,735		6.0	%	$	50,314		8.0	%
Common equity tier 1 capital to risk weighted assets
Company	$	95,709		15.2	%	$	28,323		4.5	%		n/a		n/a
Bank	$	95,123		15.1	%	$	28,301		4.5	%	$	40,880		6.5	%
As of December 31, 2016
Tier 1 leverage capital to adjusted total assets
Company	$	92,803		10.8	%	$	34,392		4.0	%	$	42,990		5.0	%
Bank	$	91,617		10.7	%	$	34,315		4.0	%	$	42,894		5.0	%
Total capital to risk weighted assets
Company	$	98,915		16.2	%	$	48,864		8.0	%	$	61,080		10.0	%
Bank	$	97,729		16.0	%	$	48,753		8.0	%	$	60,941		10.0	%
Tier 1 capital to risk weighted assets
Company	$	92,803		15.2	%	$	36,648		6.0	%	$	48,864		8.0	%
Bank	$	91,617		15.0	%	$	36,764		6.0	%	$	48,753		8.0	%
Common equity tier 1 capital to risk weighted assets
Company	$	92,803		15.2	%	$	27,486		4.5	%		n/a		n/a
Bank	$	91,617		15.0	%	$	27,423		4.5	%	$	39,611		6.5	%

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2017

Earnings Per Share [Abstract]

Summary of Reconciliation of Weighted Average Common Shares

The following is a reconciliation of weighted average common shares for the basic and dilutive earnings per share computations:

	Years Ended December 31,
	2017			2016			2015
Basic earnings per share:
Weighted average common shares		6,695,721			6,757,345			6,919,190
Less: Average unallocated ESOP shares		(474,089	)		(523,485	)		(546,913	)
Weighted average common shares		6,221,632			6,233,860			6,372,277
Weighted average common and incremental shares		6,221,632			6,233,860			6,372,277

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Investments in Affiliated Companies (Tables)

12 Months Ended

Dec. 31, 2017

Equity Method Investments [Member]

Summary of Balance Sheets

Summary Balance Sheets

	December 31,		December 31,
	2017		2016
Asset – investment in subordinated debentures issued by HopFed Bancorp, Inc.	$	10,310		10,310
Liabilities	$	—		—
Stockholders’ equity:
Trust preferred securities		10,000		10,000
Common stock (100% owned by HopFed Bancorp, Inc.)		310		310
Total stockholder’s equity		10,310		10,310
Total liabilities and stockholder’s equity	$	10,310		10,310

Summary of Condensed Statements of Income

Summary Statements of Income

	Years Ended December. 31,
	2017		2016
Income – interest income from subordinated debentures issued by HopFed Bancorp, Inc.	$	449		400
Net income	$	449		400

Summary Statement of Stockholders' Equity

Summary Statements of Stockholder’s Equity

	Trust							Total
	Preferred		Common		Retained			Stockholder’s
	Securities		Stock		Earnings			Equity
Beginning balances, January 1, 2017	$	10,000		310		—			10,310
Retained earnings:
Net income		—		—		449			449
Dividends:
Trust preferred securities		—		—		(436	)		(436	)
Common dividends paid to HopFed Bancorp, Inc.		—		—		(13	)		(13	)
Total retained earnings		—		—		—			—
Ending balances, December 31, 2017	$	10,000		310		—			10,310

HopFed [Member]

Summary of Balance Sheets

Condensed Balance Sheets:
	2017			2016
Assets:
Cash	$	862			1,084
Investment in subsidiary		96,826			95,242
Prepaid expenses and other assets		1,109			804
Total assets		98,797			97,130
Liabilities and equity
Liabilities
Dividend payable - common		353			288
Interest payable		112			101
Other liabilities		610			3
Subordinated debentures		10,310			10,310
Total liabilities		11,385			10,702
Equity:
Preferred stock		—			—
Common stock		80			80
Additional paid-capital		58,825			58,660
Retained earnings		51,162			49,035
Treasury stock - common stock		(16,655	)		(15,347	)
Unearned ESOP shares		(5,901	)		(6,548	)
Accumulated other comprehensive income		(99	)		548
Total equity		87,412			86,428
Total liabilities and equity	$	98,797			97,130

Summary of Condensed Statements of Income

Condensed Statements of Income:

	2017			2016			2015
Interest and dividend income:
Dividend income from subsidiary Bank	$	2,500			2,000			12,100
Total interest and dividend income		2,500			2,000			12,100
Interest expense		436			388			740
Non-interest expenses		1,538			391			541
Total expenses		1,974			779			1,281
Income before income taxes and equity in undistributed earnings of subsidiary		526			1,221			10,819
Income tax benefits		(545	)		(319	)		(529	)
Income before equity in undistributed earnings of subsidiary		1,071			1,540			11,348
Equity in (distribution in excess of) earnings of subsidiary		2,230			1,364			(8,944	)
Income available to common shareholders	$	3,301			2,904			2,404

XML

Condensed Parent Company Only Financial Statements (Tables)

12 Months Ended

Dec. 31, 2017

HopFed [Member]

Summary of Condensed Statements of Cash Flows

Condensed Statements of Cash Flows:

	2017			2016			2015
Cash flows from operating activities
Net income	$	3,301			2,904			2,404
Adjustments to reconcile net income to net cash provided by operating activities
Equity in undistributed earnings of subsidiary		(2,230	)		(1,364	)		8,943
Amortization of restricted stock		106			135			190
Increase (decrease) in:
Current income taxes payable		330			(49	)		11
Accrued expenses		106			(392	)		(149	)
Net cash provided by operating activities		1,613			1,234			11,399
Cash flows from financing activities:
Purchase of treasury stock		(1,308	)		(1,876	)		(11,926	)
Proceeds on ESOP loan		647			632			704
Dividends paid on common stock		(1,174	)		(993	)		(1,022	)
Net cash used in financing activities		(1,835	)		(2,237	)		(12,244	)
Net decrease in cash		(222	)		(1,003	)		(845	)
Cash and due from banks at beginning of year		1,084			2,087			2,932
Cash and due from banks at end of year	$	862			1,084			2,087

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Quarterly Results of Operations (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Summarized Unaudited Quarterly Operating Results

Summarized unaudited quarterly operating results for the year ended December 31, 2017:

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
December 31, 2017:
Interest and dividend income	$	8,160		8,419		8,635		8,541
Interest expense		1,406		1,454		1,537		1,566
Net interest income		6,754		6,965		7,098		6,975
Provision for loan losses		291		59		71		56
Net interest income after provision for loan losses		6,463		6,906		7,027		6,919
Noninterest income		2,296		1,836		2,030		1,868
Noninterest expense		7,689		7,233		7,168		7,806
Income before income taxes		1,070		1,509		1,889		981
Income taxes		135		368		486		1,159
Net income (loss)	$	935		1,141		1,403		(178	)
Basic earnings (loss) per share	$	0.15		0.18		0.22		(0.03	)
Diluted earnings (loss) per share	$	0.15		0.18		0.22		(0.03	)
Weighted average shares outstanding:
Basic		6,218,706		6,228,994		6,236,075		6,202,635
Diluted		6,218,706		6,228,994		6,236,075		6,202,635

Summarized unaudited quarterly operating results for the year ended December 31, 2016:

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
December 31, 2016:
Interest and dividend income	$	8,081		7,691		8,004		7,951
Interest expense		1,405		1,268		1,315		1,311
Net interest income		6,676		6,423		6,689		6,640
Provision for loan losses		458		465		255		63
Net interest income after provision for loan losses		6,218		5,958		6,434		6,577
Noninterest income		2,020		1,970		1,945		2,000
Noninterest expense		7,683		7,609		7,353		7,211
Income before income taxes		555		319		1,026		1,366
Income taxes		46		15		41		260
Net income	$	509		304		985		1,106
Basic earnings per share	$	0.08		0.05		0.16		0.18
Diluted earnings per share	$	0.08		0.05		0.16		0.18
Weighted average shares outstanding:
Basic		6,297,755		6,232,457		6,212,231		6,193,278
Diluted		6,297,755		6,232,457		6,212,231		6,193,278

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Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2017

Equity [Abstract]

Other Comprehensive (Loss) Income Included in Stockholders' Equity

The following table sets forth the amounts of other comprehensive income (loss) included in stockholders’ equity along with the related tax effect for the years ended December 31, 2017, 2016 and 2015.

	Pre-Tax			Tax Benefit			Net of Tax
	Amount			(Expense)			Amount
December 31, 2017:
Unrealized holding gains (losses) on:
Available for sale securities	($	585	)		198			(387	)
Available for sale securities – OTTI		(224	)		76			(148	)
Reclassification adjustments for gains on:
Available for sale securities		(169	)		57			(112	)
	($	978	)		331			(647	)
	Pre-Tax			Tax Benefit			Net of Tax
	Amount			(Expense)			Amount
December 31, 2016:
Unrealized holding gains (losses) on:
Available for sale securities	($	2,048	)		697			(1,351	)
Available for sale securities – OTTI		(258	)		88			(170	)
Reclassification adjustments for gains on:
Available for sale securities		(612	)		207			(405	)
	($	2,918	)		992			(1,926	)
December 31, 2015:
Unrealized holding gains on:
Available for sale securities	($	1,698	)		577			(1,121	)
Available for sale securities—OTTI		359			(122	)		237
Derivatives		389			(132	)		257
Reclassification adjustments for gains on:
Available for sale securities		(691	)		235			(456	)
	($	1,641	)		558			(1,083	)

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Summary of Significant Accounting Policies - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 USD ($) Branch shares	Dec. 31, 2016 USD ($) shares
Accounting Policies [Line Items]
Maturity period of federal funds	3 months
Average prepayment speed period of securities to amortize premiums and accretes discount	3 months
Servicing portfolio of real estate loan	$ 16,900,000
Accrued interest receivable maximum recovery period	90 days
Revaluation of deferred tax assets due to change in tax rate	$ 980,000
Number of branch offices involved in origination of loans and collection of deposits | Branch	18
Maturity period of cash and cash equivalents	90 days
Interest rate to be received under swap agreement adjusted quarterly	Three-month London Interbank Lending Rate (Libor) plus 3.10%
Percentage above LIBOR	3.10%
Cash available for dividend	$ 860,000.0	$ 1,100,000
Warrants outstanding	$ 0	$ 0
Stock options outstanding | shares	0	0
Minimum [Member]
Accounting Policies [Line Items]
Amount of tax benefit that is greater than likely being recognized on examination	50.00%

XML

Summary of Significant Accounting Policies - Schedule of Useful Life of Property, Plant and Equipment (Detail)	12 Months Ended
	Dec. 31, 2017
Buildings [Member]
Property, Plant and Equipment [Line Items]
Useful lives of property, plant and equipment	40 years
Minimum [Member] | Land Improvements [Member]
Property, Plant and Equipment [Line Items]
Useful lives of property, plant and equipment	5 years
Minimum [Member] | Furniture and Equipment [Member]
Property, Plant and Equipment [Line Items]
Useful lives of property, plant and equipment	5 years
Maximum [Member] | Land Improvements [Member]
Property, Plant and Equipment [Line Items]
Useful lives of property, plant and equipment	15 years
Maximum [Member] | Furniture and Equipment [Member]
Property, Plant and Equipment [Line Items]
Useful lives of property, plant and equipment	15 years

XML

Securities - Amortized Cost of Securities and their Estimated Fair Values (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
FHLB stock	$ 4,428	$ 4,428
FHLB stock	4,428	4,428
Amortized Cost	184,940	208,651
Gross Unrealized Gains	1,414	2,702
Gross Unrealized Losses	(1,563)	(1,873)
Estimated Fair Value	184,791	209,480
Estimated Fair Value, Less than 12 months	87,323	99,141
Unrealized Losses, Less than 12 months	(772)	(1,577)
Estimated Fair Value, 12 months or longer	32,325	10,898
Unrealized Losses, 12 months or longer	(791)	(296)
Estimated Fair Value	119,648	110,039
Unrealized Losses	(1,563)	(1,873)
U.S. Agency Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	84,210	83,667
Gross Unrealized Gains	536	983
Gross Unrealized Losses	(653)	(638)
Estimated Fair Value	84,093	84,012
U.S. Agency Securities [Member] | Temporarily Impaired Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Estimated Fair Value, Less than 12 months	41,501	41,963
Unrealized Losses, Less than 12 months	(431)	(597)
Estimated Fair Value, 12 months or longer	9,846	3,459
Unrealized Losses, 12 months or longer	(222)	(41)
Estimated Fair Value	51,347	45,422
Unrealized Losses	(653)	(638)
Taxable Municipals Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,279	2,720
Gross Unrealized Gains	5	17
Gross Unrealized Losses	(1)	(10)
Estimated Fair Value	1,283	2,727
Taxable Municipals Bonds [Member] | Temporarily Impaired Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Estimated Fair Value, Less than 12 months	521	1,347
Unrealized Losses, Less than 12 months	(1)	(10)
Estimated Fair Value	521	1,347
Unrealized Losses	(1)	(10)
Tax Free Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	26,412	33,004
Gross Unrealized Gains	637	1,081
Gross Unrealized Losses	(83)	(174)
Estimated Fair Value	26,966	33,911
Tax Free Municipal Bonds [Member] | Temporarily Impaired Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Estimated Fair Value, Less than 12 months	4,860	7,369
Unrealized Losses, Less than 12 months	(51)	(174)
Estimated Fair Value, 12 months or longer	913
Unrealized Losses, 12 months or longer	(32)
Estimated Fair Value	5,773	7,369
Unrealized Losses	(83)	(174)
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	71,389	85,626
Gross Unrealized Gains	201	437
Gross Unrealized Losses	(826)	(1,051)
Estimated Fair Value	70,764	85,012
Mortgage-Backed Securities [Member] | Temporarily Impaired Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Estimated Fair Value, Less than 12 months	40,441	48,462
Unrealized Losses, Less than 12 months	(289)	(796)
Estimated Fair Value, 12 months or longer	21,566	7,439
Unrealized Losses, 12 months or longer	(537)	(255)
Estimated Fair Value	62,007	55,901
Unrealized Losses	(826)	(1,051)
U.S. Treasury Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		2,000
Gross Unrealized Gains		1
Estimated Fair Value		2,001
Trust Preferred Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,650	1,634
Gross Unrealized Gains	35	183
Estimated Fair Value	$ 1,685	$ 1,817

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Securities - Maturities of Debt Securities Available for Sale (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of debt securities available for sale, due within one year	$ 2,078	$ 6,605
Amortized cost of debt securities available for sale, due in one to five years	28,692	13,913
Amortized cost of debt securities available for sale, due in five to ten years	18,161	32,611
Amortized cost of debt securities available for sale, due after ten years	7,218	13,022
Total amortized cost debt securities available for sale with specific maturities	56,149	66,151
Total unrestricted securities available-for-sale at amortized cost	184,940	208,651
Estimated fair value of debt securities available for sale, due within one year	2,095	6,615
Estimated fair value of debt securities available for sale, due in one to five years	28,624	14,067
Estimated fair value of debt securities available for sale, due in five to ten years	18,287	32,744
Estimated fair value of debt securities available for sale, due after ten years	7,443	13,603
Total estimated fair value of debt securities available for sale with specific maturities	56,449	67,029
Total unrestricted securities available for sale at estimated fair value	184,791	209,480
Amortizing Agency Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Total amortized cost of debt securities available for sale without specific maturities	57,402	56,874
Total estimated fair value of debt securities available for sale without specific maturities	57,578	57,439
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total amortized cost of debt securities available for sale without specific maturities	71,389	85,626
Total unrestricted securities available-for-sale at amortized cost	71,389	85,626
Total estimated fair value of debt securities available for sale without specific maturities	70,764	85,012
Total unrestricted securities available for sale at estimated fair value	$ 70,764	$ 85,012

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Securities - Additional Information (Detail)	1 Months Ended				12 Months Ended
	Jan. 31, 2015 USD ($)	Sep. 30, 2013 USD ($)	Oct. 31, 2010	Jun. 30, 2008 USD ($)	Dec. 31, 2017 USD ($) Securities	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2016 USD ($)
Schedule of Available-for-sale Securities [Line Items]
Number of securities with unrealized losses | Securities					83
Investment par value				$ 2,000,000
Investment interest percentage				8.00%
Dividend payment period		5 years
Impairment charges	$ 400,000	$ 400,000
Net worth					$ 100,535,000	$ 98,915,000
Available for sale for proceeds					18,000,000	19,000,000	$ 84,900,000
Gross gains in available for sale for proceeds					272,000	690,000	1,274,000
Gross loss in available for sale for proceeds					103,000	78,000	$ 583,000
Securities pledged to municipalities for deposits in excess of FDIC limits, book value					118,000,000	125,600,000
Securities pledged to municipalities for deposits in excess of FDIC limits, market value					119,800,000	128,400,000
Letter of credit issued by FHLB					$ 47,600,000	$ 45,600,000
FFKY [Member]
Schedule of Available-for-sale Securities [Line Items]
Period of deferring dividend payments			5 years
Wesbanco ("WSBC")
Schedule of Available-for-sale Securities [Line Items]
Net worth								$ 9,900,000,000
Subordinated Debt [Member]
Schedule of Available-for-sale Securities [Line Items]
Total risk based capital ratio				30 years

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Loans Receivable, Net - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 USD ($) SecurityLoan	Dec. 31, 2016 USD ($) SecurityLoan Borrower	Dec. 31, 2015 USD ($) SecurityLoan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment in impaired loans	$ 20,328,000	$ 31,594,000
Interest income recognized on impaired loans	598,000	1,529,000
Non-accrual Loans	1,285,000	9,074,000
Interest income foregone on non accrual loans	100,000	108,000	$ 337,000
Total loans past due more than 90 days and still accruing interest	88,000	0	0
Deferred loan fees	443,000	439,000
Loans that have been modified as TDRs, subsequently defaulted	0	0	$ 0
Commitments to lend additional funds to borrower	$ 0	$ 0
Number of loans modified as TDR | SecurityLoan	0	4	6
Number of borrowers received financial concessions | Borrower		1
Troubled debt restructurings outstanding balance of four loans		$ 1,040,000
Loans to officers and directors	$ 5,933,000	4,894,000	$ 3,844,000
Funds undisbursed to officers and directors	1,500,000	380,000
Officers and Directors [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans to officers and directors	5,900,000	4,900,000
Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual Loans	$ 3,000	3,000
Consumer Loans [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate of interest period	1 year
Consumer Loans [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate of interest period	5 years
Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual Loans	$ 459,000	$ 516,000
Commercial Loans [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate of interest period	1 year
Commercial Loans [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate of interest period	5 years
Multi-Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loans modified as TDR | SecurityLoan		3
Multi-Family [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate of interest period	5 years
Multi-Family [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans amortization period	20 years
Owner Occupied Properties [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Secured non-residential real estate loans	$ 95,600,000	$ 78,700,000
Non Owner Occupied Properties [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Secured non-residential real estate loans	129,400,000	104,200,000
One-to-Four Family Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual Loans	266,000	270,000
Total loans past due more than 90 days and still accruing interest	$ 88,000
One-to-Four Family Mortgages [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable maturity period	30 years
Home Equity Line of Credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual Loans	$ 402,000	402,000
Home Equity Line of Credit [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable maturity period	10 years
Home Equity Line of Credit [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable maturity period	15 years
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans amortization period	20 years
Construction [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable maturity period	12 months
Construction [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable maturity period	24 months
Recreational Land Development Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans amortization period	20 years
Recreational Land Development Loans [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate of interest period	1 year
Recreational Land Development Loans [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate of interest period	5 years
Farmland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual Loans	$ 111,000
Farmland [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate of interest period	5 years
Farmland [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable maturity period	20 years
Fixed rate of interest period	10 years
Non-Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable maturity period	20 years
Non-accrual Loans		$ 208,000
Number of loans modified as TDR | SecurityLoan		1	2
Non-Residential Real Estate [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate of interest period	5 years
Non-Residential Real Estate [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate of interest period	10 years
Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases receivable in percentage	84.80%	84.00%
Automobile Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loans modified as TDR | SecurityLoan			1
commercial Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loans modified as TDR | SecurityLoan			3

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Loans Receivable, Net - Composition of Loan Portfolio By Type of Loan (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Real estate loans:
Total loans, gross	$ 642,371	$ 610,837
Deferred loan cost, net of fees	(443)	(439)
Less allowance for loan losses	(4,826)	(6,112)
Total loans	637,102	604,286
Multi-Family [Member]
Real estate loans:
Total loans, gross	37,445	34,284
Consumer Loans [Member]
Real estate loans:
Total loans, gross	8,620	8,717
Less allowance for loan losses	(184)	(208)
Commercial Loans [Member]
Real estate loans:
Total loans, gross	88,938	88,907
Less allowance for loan losses	(847)	(593)
Junior Liens [Member]
Real estate loans:
Total loans, gross	1,184	1,452
Real Estate Loans [Member]
Real estate loans:
Total loans, gross	544,813	513,213
Real Estate Loans [Member] | Multi-Family [Member]
Real estate loans:
Total loans, gross	37,445	34,284
Real Estate Loans [Member] | One-to-Four Family Mortgages [Member]
Real estate loans:
Total loans, gross	163,565	147,962
Real Estate Loans [Member] | Home Equity Line of Credit [Member]
Real estate loans:
Total loans, gross	35,697	35,684
Real Estate Loans [Member] | Construction [Member]
Real estate loans:
Total loans, gross	30,246	39,255
Real Estate Loans [Member] | Land [Member]
Real estate loans:
Total loans, gross	14,873	23,840
Real Estate Loans [Member] | Farmland [Member]
Real estate loans:
Total loans, gross	36,851	47,796
Real Estate Loans [Member] | Non-Residential Real Estate [Member]
Real estate loans:
Total loans, gross	224,952	182,940
Real Estate Loans [Member] | Junior Liens [Member]
Real estate loans:
Total loans, gross	1,184	1,452
Total Other Loans [Member]
Real estate loans:
Total loans, gross	97,558	97,624
Total Other Loans [Member] | Consumer Loans [Member]
Real estate loans:
Total loans, gross	8,620	8,717
Total Other Loans [Member] | Commercial Loans [Member]
Real estate loans:
Total loans, gross	$ 88,938	$ 88,907

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Loans Receivable, Net - Loans by Classification Type and Credit Risk Indicator (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	$ 642,371	$ 610,837
Multi-Family [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	37,445	34,284
One-to-Four Family Mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	163,565	147,962
Home Equity Line of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	35,697	35,684
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	30,246	39,255
Land [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	14,873	23,840
Non-Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	224,952	182,940
Farmland [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	36,851	47,796
Junior Liens [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	1,184	1,452
Consumer Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	8,620	8,717
Commercial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	88,938	88,907
Pass [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	625,893	579,384
Pass [Member] | Multi-Family [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	37,445	31,280
Pass [Member] | One-to-Four Family Mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	162,993	145,965
Pass [Member] | Home Equity Line of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	35,285	35,109
Pass [Member] | Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	30,246	39,255
Pass [Member] | Land [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	14,318	15,581
Pass [Member] | Non-Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	216,901	172,395
Pass [Member] | Farmland [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	35,253	44,832
Pass [Member] | Junior Liens [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	1,184	1,411
Pass [Member] | Consumer Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	8,376	8,382
Pass [Member] | Commercial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	83,892	85,174
Special Mention [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	5,698	2,114
Special Mention [Member] | One-to-Four Family Mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total		744
Special Mention [Member] | Home Equity Line of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total		25
Special Mention [Member] | Land [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total		35
Special Mention [Member] | Non-Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	979	3
Special Mention [Member] | Farmland [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	1,147	674
Special Mention [Member] | Junior Liens [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total		30
Special Mention [Member] | Commercial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	3,572	603
Impaired Loans Substandard [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	10,780	29,339
Impaired Loans Substandard [Member] | Multi-Family [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total		3,004
Impaired Loans Substandard [Member] | One-to-Four Family Mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	572	1,253
Impaired Loans Substandard [Member] | Home Equity Line of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	412	550
Impaired Loans Substandard [Member] | Land [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	555	8,224
Impaired Loans Substandard [Member] | Non-Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	7,072	10,542
Impaired Loans Substandard [Member] | Farmland [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	451	2,290
Impaired Loans Substandard [Member] | Junior Liens [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total		11
Impaired Loans Substandard [Member] | Consumer Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	244	335
Impaired Loans Substandard [Member] | Commercial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	$ 1,474	$ 3,130

XML

Loans Receivable, Net - Impaired Loans by Classification Type (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable, Impaired [Line Items]
Recorded Investment	$ 9,177	$ 22,068
Total Recorded Investment	9,937	29,339
Unpaid Principal Balance	9,177	23,028
Total Unpaid Principal Balance	9,937	30,299
Related Allowance	0	0
Average Recorded Investment	15,312	26,861
Interest Income Recognized	583	1,020
Recorded Investment	760	7,271
Unpaid Principal Balance	760	7,271
Related Allowance	289	1,148
Average Recorded Investment	5,016	4,733
Total Average Recorded Investment	20,328	31,594
Interest Income Recognized	15	509
Total Interest Income Recognized	598	1,529
Multi-Family [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment		3,004
Unpaid Principal Balance		3,004
Related Allowance	0	0
Average Recorded Investment	1,135	3,005
Interest Income Recognized		172
Average Recorded Investment		910
One-to-Four Family Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	257	1,253
Unpaid Principal Balance	257	1,253
Related Allowance	0	0
Average Recorded Investment	1,235	1,470
Interest Income Recognized	35	67
Average Recorded Investment		452
Home Equity Line of Credit [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment		550
Unpaid Principal Balance		550
Related Allowance	0	0
Average Recorded Investment	447	390
Interest Income Recognized	26	24
Construction [Member]
Financing Receivable, Impaired [Line Items]
Related Allowance	0	0
Land [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	515	1,553
Unpaid Principal Balance	515	2,513
Related Allowance	0	0
Average Recorded Investment	837	7,868
Interest Income Recognized	44	38
Recorded Investment		6,671
Unpaid Principal Balance		6,671
Related Allowance		1,036
Average Recorded Investment	4,006	1,811
Interest Income Recognized		485
Non-Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	7,086	10,542
Unpaid Principal Balance	7,086	10,542
Related Allowance	0	0
Average Recorded Investment	8,979	9,363
Interest Income Recognized	395	485
Recorded Investment	2
Unpaid Principal Balance	2
Related Allowance	2
Average Recorded Investment	88
Interest Income Recognized	2
Farmland [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	444	2,290
Unpaid Principal Balance	444	2,290
Related Allowance	0	0
Average Recorded Investment	1,094	1,563
Interest Income Recognized	35	120
Average Recorded Investment	195	533
Junior Liens [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment		11
Unpaid Principal Balance		11
Related Allowance	0	0
Average Recorded Investment	6	13
Interest Income Recognized		1
Consumer Loans [Member]
Financing Receivable, Impaired [Line Items]
Related Allowance	0	0
Average Recorded Investment	8	21
Interest Income Recognized	2	1
Recorded Investment	217	335
Unpaid Principal Balance	217	335
Related Allowance	54	84
Average Recorded Investment	248	273
Commercial Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	875	2,865
Unpaid Principal Balance	875	2,865
Related Allowance	0	0
Average Recorded Investment	1,571	3,168
Interest Income Recognized	46	112
Recorded Investment	541	265
Unpaid Principal Balance	541	265
Related Allowance	233	28
Average Recorded Investment	479	754
Interest Income Recognized	$ 13	$ 24

XML

Loans Receivable, Net - Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Impairment Method (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	$ 289	$ 1,148
Collectively evaluated for impairment	4,537	4,964
Total ending allowance balance	4,826	6,112
Loans individually evaluated for impairment	9,937	29,339
Loans collectively evaluated for impairment	632,434	581,498
Total ending loans balance	642,371	610,837
Commercial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	233	28
Collectively evaluated for impairment	614	565
Total ending allowance balance	847	593
Loans individually evaluated for impairment	1,416	3,130
Loans collectively evaluated for impairment	87,522	85,777
Total ending loans balance	88,938	88,907
Land Development/Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment		1,036
Collectively evaluated for impairment	1,384	1,001
Total ending allowance balance	1,384	2,037
Loans individually evaluated for impairment	515	8,224
Loans collectively evaluated for impairment	44,604	54,871
Total ending loans balance	45,119	63,095
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	2
Collectively evaluated for impairment	1,468	2,154
Total ending allowance balance	1,470	2,154
Loans individually evaluated for impairment	7,532	15,836
Loans collectively evaluated for impairment	291,716	249,184
Total ending loans balance	299,248	265,020
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment	941	1,120
Total ending allowance balance	941	1,120
Loans individually evaluated for impairment	257	1,814
Loans collectively evaluated for impairment	200,189	183,284
Total ending loans balance	200,446	185,098
Consumer Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	54	84
Collectively evaluated for impairment	130	124
Total ending allowance balance	184	208
Loans individually evaluated for impairment	217	335
Loans collectively evaluated for impairment	8,403	8,382
Total ending loans balance	$ 8,620	$ 8,717

XML

Loans Receivable, Net - Allowance for Loan Loss Account by Loan (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance				$ 6,112				$ 5,700	$ 6,112	$ 5,700	$ 6,289
Charge off									(3,159)	(1,468)	(1,867)
Recovery									1,396	639	227
Provision for Loan Loss	$ 56	$ 71	$ 59	291	$ 63	$ 255	$ 465	458	477	1,241	1,051
Ending balance	4,826				6,112				4,826	6,112	5,700
Multi-Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance				412				227	412	227	85
Charge off										(421)
Recovery									417
Provision for Loan Loss									(515)	606	142
Ending balance	314				412				314	412	227
One-to-Four Family Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance				852				1,030	852	1,030	1,198
Charge off									(66)		(143)
Recovery									13	167	39
Provision for Loan Loss									(52)	(345)	(64)
Ending balance	747				852				747	852	1,030
Home Equity Line of Credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance				260				201	260	201	181
Charge off										(30)	(92)
Recovery									12	14	10
Provision for Loan Loss									(83)	75	102
Ending balance	189				260				189	260	201
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance				277				377	277	377	146
Provision for Loan Loss									(116)	(100)	231
Ending balance	161				277				161	277	377
Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance				1,760				1,379	1,760	1,379	1,123
Charge off									(2,608)		(911)
Recovery									559
Provision for Loan Loss									1,512	381	1,167
Ending balance	1,223				1,760				1,223	1,760	1,379
Non-Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance				964				1,139	964	1,139	2,083
Charge off											(222)
Recovery									16	10	2
Provision for Loan Loss									(191)	(185)	(724)
Ending balance	789				964				789	964	1,139
Farmland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance				778				358	778	358	461
Recovery									10
Provision for Loan Loss									(421)	420	(103)
Ending balance	367				778				367	778	358
Junior Liens [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance				8				8	8	8	14
Recovery									4	14	4
Provision for Loan Loss									(7)	(14)	(10)
Ending balance	5				8				5	8	8
Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance				208				358	208	358	494
Charge off									(261)	(422)	(298)
Recovery									87	293	118
Provision for Loan Loss									150	(21)	44
Ending balance	184				208				184	208	358
Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance				$ 593				$ 623	593	623	504
Charge off									(224)	(595)	(201)
Recovery									278	141	54
Provision for Loan Loss									200	424	266
Ending balance	$ 847				$ 593				$ 847	$ 593	$ 623

XML

Loans Receivable, Net - Non-Accrual Loans (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total non-accrual loans	$ 1,285	$ 9,074
Junior Liens [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total non-accrual loans	4
One-to-Four Family Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total non-accrual loans	266	270
Home Equity Line of Credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total non-accrual loans	402	402
Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total non-accrual loans	40	7,675
Non-Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total non-accrual loans		208
Farmland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total non-accrual loans	111
Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total non-accrual loans	3	3
Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total non-accrual loans	$ 459	$ 516

XML

Loans Receivable, Net - Gross Loan Balances Excluding Deferred Loan Fees by Loan Classification Allocated Between Past Due Performing and Non-accrual (Detail) - USD ($)	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Currently Performing	$ 640,605,000	$ 600,552,000
30 - 89 Days Past Due	393,000	1,211,000
More than 90 days past Due and still Accruing	88,000	0	$ 0
Non-accrual Loans	1,285,000	9,074,000
Total loans, gross	642,371,000	610,837,000
Multi-Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Currently Performing	37,445,000	34,284,000
Total loans, gross	37,445,000	34,284,000
One-to-Four Family Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Currently Performing	163,030,000	146,796,000
30 - 89 Days Past Due	181,000	896,000
More than 90 days past Due and still Accruing	88,000
Non-accrual Loans	266,000	270,000
Total loans, gross	163,565,000	147,962,000
Home Equity Line of Credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Currently Performing	35,295,000	35,260,000
30 - 89 Days Past Due		22,000
Non-accrual Loans	402,000	402,000
Total loans, gross	35,697,000	35,684,000
Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Currently Performing	30,246,000	39,255,000
Total loans, gross	30,246,000	39,255,000
Land [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Currently Performing	14,833,000	16,165,000
Non-accrual Loans	40,000	7,675,000
Total loans, gross	14,873,000	23,840,000
Non-Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Currently Performing	224,743,000	182,732,000
30 - 89 Days Past Due	209,000
Non-accrual Loans		208,000
Total loans, gross	224,952,000	182,940,000
Farmland [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Currently Performing	36,740,000	47,796,000
Non-accrual Loans	111,000
Total loans, gross	36,851,000	47,796,000
Junior Liens [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Currently Performing	1,180,000	1,448,000
30 - 89 Days Past Due		4,000
Non-accrual Loans	4,000
Total loans, gross	1,184,000	1,452,000
Consumer Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Currently Performing	8,614,000	8,686,000
30 - 89 Days Past Due	3,000	28,000
Non-accrual Loans	3,000	3,000
Total loans, gross	8,620,000	8,717,000
Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Currently Performing	88,479,000	88,130,000
30 - 89 Days Past Due		261,000
Non-accrual Loans	459,000	516,000
Total loans, gross	$ 88,938,000	$ 88,907,000

XML

Loans Receivable, Net - Summary of the Activity in Loans Classified as TDRs (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Modifications [Line Items]
Beginning Balance	$ 6,461	$ 5,536	$ 3,284
New TDR		1,044	2,265
Loss on Foreclosure	0	0	0
Transferred to Non-accrual	0	0	0
Loan Paid off	(3,298)
Loan Amortization		(119)	(13)
Ending Balance	3,163	6,461	5,536
Multi-Family [Member]
Financing Receivable, Modifications [Line Items]
Beginning Balance	815
New TDR		816
Loss on Foreclosure	0	0
Transferred to Non-accrual	0	0
Loan Paid off	(815)
Loan Amortization		(1)
Ending Balance		815
Non-Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Beginning Balance	5,646	5,536	3,284
New TDR		228	2,265
Loss on Foreclosure	0	0	0
Transferred to Non-accrual	0	0	0
Loan Paid off	(2,483)
Loan Amortization		(118)	(13)
Ending Balance	$ 3,163	$ 5,646	$ 5,536

XML

Loans Receivable, Net - Summary of Loans to Officers, Directors and Their Affiliates (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Receivables [Abstract]
Balance at beginning of period	$ 4,894	$ 3,844
New loans	3,043	1,651
Principal repayments	(2,004)	(601)
Balance at end of period	$ 5,933	$ 4,894

XML

Premises and Equipment - Components of Premises and Equipment Included in the Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Premises and equipment, Gross	$ 37,132	$ 37,016
Less accumulated depreciation	14,432	13,555
Premises and equipment, net	22,700	23,461
Land [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, Gross	6,555	6,555
Land Improvements [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, Gross	1,153	1,132
Buildings [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, Gross	22,467	22,397
Furniture and Equipment [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, Gross	$ 6,957	$ 6,932

XML

Premises and Equipment - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Depreciation	$ 1,225	$ 1,320	$ 1,266

XML

Deposits - Scheduled Maturities of Other Time Deposits (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Banking and Thrift [Abstract]
2018	$ 190,955
2019	68,714
2020	30,079
2021	10,649
2022	4,572
Other time deposits	$ 304,969	$ 293,078

XML

Deposits - Additional Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Schedule Of Deposits Liabilities Balance Sheet Reported Amounts [Line Items]
Other time deposits	$ 97,800	$ 79,700
Deposits of directors, members of senior management and their affiliates	2,100	2,100
Brokered and CDARS Deposits	754,009	732,882
Average daily clearings	5,300
Deposit with overdraft status	200	300
Brokered Deposits [Member]
Schedule Of Deposits Liabilities Balance Sheet Reported Amounts [Line Items]
Brokered and CDARS Deposits	$ 60,100	$ 33,400

XML

Deposits - Interest Expenses on Deposits (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Banking and Thrift [Abstract]
Interest bearing checking accounts	$ 1,262	$ 1,183	$ 1,105
Money market accounts	71	76	88
Savings	94	95	103
Other time deposits	3,383	2,886	3,735
Total	$ 4,810	$ 4,240	$ 5,031

XML

Advances from Federal Home Loan Bank - Summarized Federal Home Loan Bank Advances (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Federal Home Loan Bank, Advances [Line Items]
Fixed-rate	$ 23,000	$ 11,000
Weighted Average [Member]
Federal Home Loan Bank, Advances [Line Items]
Weighted Average Rate	1.57%	1.04%

XML

Advances from Federal Home Loan Bank - Scheduled Maturities of FHLB Advances (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Federal Home Loan Bank, Advances [Line Items]
2018, Fixed rate	$ 6,000
2019, Fixed rate	7,000
2020, Fixed rate	10,000
Total, Fixed rate	$ 23,000
2018, Average cost	1.18%
2019, Average cost	1.55%
2020, Average cost	1.83%
Weighted Average [Member]
Federal Home Loan Bank, Advances [Line Items]
Average cost	1.57%	1.04%

XML

Advances from Federal Home Loan Bank - Additional Information (Detail)	Dec. 31, 2017 USD ($)
Federal Home Loan Bank, Advances [Line Items]
Agreement of first mortgage loan and non-residential real estate loan	125.00%
Additional borrowing capacity	$ 49,100,000
Additional collateral pledged that could be pledged to FHLB	9,900,000
Federal Home Loan Bank of Cincinnati [Member]
Federal Home Loan Bank, Advances [Line Items]
Approved line of credit	30,000,000
BBVA Compass Bank [Member]
Federal Home Loan Bank, Advances [Line Items]
Approved line of credit	12,000,000
Bbva Compass Bank and Cincinnati [Member] | Overnight Line of Credit [Member]
Federal Home Loan Bank, Advances [Line Items]
Overnight lines of credit outstanding amount	$ 0

XML

Repurchase Agreements - Additional Information (Detail) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Banking and Thrift [Abstract]
Investment securities for repurchase agreements	$ 38,400,000
Maximum repurchase balances outstanding	$ 46,800,000	$ 54,800,000

XML

Repurchase Agreements - Cost and Maturities of Company's Repurchase Agreements (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Assets Sold under Agreements to Repurchase [Line Items]
Balance of Third Party	$ 38,353	$ 47,655
Average Rate	1.24%	0.91%
Various Customers [Member] | Overnight [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Balance of Third Party	$ 38,353	$ 47,655
Average Rate	1.24%	0.91%

XML

Fair Value Measurement - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	$ 184,791	$ 209,480
U.S. Treasury Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale		2,001
U.S. Agency Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	84,093	84,012
Taxable Municipals Bonds [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	1,283	2,727
Tax Free Municipal Bonds [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	26,966	33,911
Trust Preferred Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	1,685	1,817
Mortgage-Backed Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	70,764	85,012
Fair Value, Measurements, Recurring [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	184,791	209,480
Fair Value, Measurements, Recurring [Member] | U.S. Treasury Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale		2,001
Fair Value, Measurements, Recurring [Member] | U.S. Agency Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	84,093	84,012
Fair Value, Measurements, Recurring [Member] | Taxable Municipals Bonds [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	1,283	2,727
Fair Value, Measurements, Recurring [Member] | Tax Free Municipal Bonds [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	26,966	33,911
Fair Value, Measurements, Recurring [Member] | Trust Preferred Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	1,685	1,817
Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	70,764	85,012
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale		2,001
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale		2,001
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Treasury Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale		2,001
Significant Other Observable Inputs (Level 2) [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	183,106	205,662
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	183,106	205,662
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	84,093	84,012
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Taxable Municipals Bonds [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	1,283	2,727
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Tax Free Municipal Bonds [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	26,966	33,911
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	70,764	85,012
Significant Unobservable Inputs (Level 3) [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	1,685	1,817
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	1,685	1,817
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Trust Preferred Securities [Member]
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items]
Securities available for sale	$ 1,685	$ 1,817

XML

Fair Value Measurement - Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Assets
Foreclosed assets	$ 3,369	$ 2,397
Fair Value, Measurements, Nonrecurring [Member]
Assets
Foreclosed assets	3,369	2,397
Impaired loans, net of allowance	473	6,123
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets
Foreclosed assets	3,369	2,397
Impaired loans, net of allowance	$ 473	$ 6,123

XML

Fair Value Measurement - Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis (Parenthetical) (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Allowance for impaired loans	$ 289	$ 1,148
Fair Value, Measurements, Nonrecurring [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Allowance for impaired loans	$ 289	$ 1,148

XML

Fair Value Measurement - Quantitative Information about Level 3 Fair Value Measurements for Assets Measured at Fair Value on Recurring and Non-recurring Basis (Detail) - Significant Unobservable Inputs (Level 3) [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Measurements, Nonrecurring [Member] | Foreclosed Assets [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 3,369	$ 2,397
Valuation Technique	Discount to either actual sales price or appraised value of collateral	Discount to either actual sales price or appraised value of collateral
Unobservable Input	Appraisal and sales comparability adjustments	Appraisal comparability adjustments
Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 760	$ 7,271
Valuation Technique	Discount to appraised value of collateral	Discount to appraised value of collateral
Unobservable Input	Appraisal comparability adjustments	Appraisal comparability adjustments
Fair Value, Measurements, Nonrecurring [Member] | Minimum [Member] | Foreclosed Assets [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Quantitative Range of Unobservable Inputs, Percentage	30.00%	30.00%
Fair Value, Measurements, Nonrecurring [Member] | Minimum [Member] | Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Quantitative Range of Unobservable Inputs, Percentage	10.00%	10.00%
Fair Value, Measurements, Nonrecurring [Member] | Maximum [Member] | Foreclosed Assets [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Quantitative Range of Unobservable Inputs, Percentage	55.00%	55.00%
Fair Value, Measurements, Nonrecurring [Member] | Maximum [Member] | Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Quantitative Range of Unobservable Inputs, Percentage	25.00%	15.00%
Fair Value, Measurements, Recurring [Member] | Trust Preferred Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 1,685	$ 1,817
Valuation Technique	Discounted cash flow Spread to Libor swap curve	Discounted cash flow Spread to Libor swap curve
Unobservable Input	Compare to quotes for sale when available	Compare to quotes for sale when available
Quantitative Range of Unobservable Inputs, Description	One month libor	One month libor
Fair Value, Measurements, Recurring [Member] | Minimum [Member] | Trust Preferred Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Quantitative Range of Unobservable Inputs, Percentage	4.00%	4.00%
Fair Value, Measurements, Recurring [Member] | Maximum [Member] | Trust Preferred Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Quantitative Range of Unobservable Inputs, Percentage	6.00%	6.00%

XML

Fair Value Measurement - Roll-Forward of the Consolidated Condensed Statement of Financial Condition Items (Detail) - Other Assets [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, Beginning balance	$ 1,817	$ 1,865
Change in unrealized gains included in other comprehensive income for assets and liabilities still held at December 31,	(149)	(65)
Recovery of prior impairment charge	17	17
Fair value, Ending balance	$ 1,685	$ 1,817

XML

Fair Value Measurement - Estimated Fair Values of Financial Instruments (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Financial Assets:
Securities available for sale	$ 184,791	$ 209,480
Amortized Cost [Member]
Financial Assets:
Cash and due from banks	37,965	21,779
Interest-bearing deposits in banks	7,111	3,970
Securities available for sale	184,791	209,480
Federal Home Loan Bank stock	4,428	4,428
Loans held for sale	1,539	1,094
Loans receivable	637,102	604,286
Accrued interest receivable	3,589	3,799
Financial Liabilities:
Deposits	754,009	732,882
Advances from borrowers for taxes and insurance	808	766
Advances from Federal Home Loan Bank	23,000	11,000
Repurchase agreements	38,353	47,655
Subordinated debentures	10,310	10,310
Estimated Fair Value [Member]
Financial Assets:
Cash and due from banks	37,965	21,779
Interest-bearing deposits in banks	7,111	3,970
Securities available for sale	184,791	209,480
Federal Home Loan Bank stock	4,428	4,428
Loans held for sale	1,539	1,094
Loans receivable	615,265	593,257
Accrued interest receivable	3,589	3,799
Financial Liabilities:
Deposits	754,510	732,942
Advances from borrowers for taxes and insurance	808	766
Advances from Federal Home Loan Bank	22,849	10,979
Repurchase agreements	38,353	47,655
Subordinated debentures	10,099	10,099
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Financial Assets:
Cash and due from banks	37,965	21,779
Interest-bearing deposits in banks	7,111	3,970
Securities available for sale		2,001
Significant Other Observable Inputs (Level 2) [Member]
Financial Assets:
Securities available for sale	183,106	205,662
Loans held for sale	1,539	1,094
Financial Liabilities:
Deposits	754,510	732,942
Advances from borrowers for taxes and insurance	808	766
Advances from Federal Home Loan Bank	22,849	10,979
Repurchase agreements	38,353	47,655
Significant Unobservable Inputs (Level 3) [Member]
Financial Assets:
Securities available for sale	1,685	1,817
Federal Home Loan Bank stock	4,428	4,428
Loans receivable	615,265	593,257
Accrued interest receivable	3,589	3,799
Financial Liabilities:
Subordinated debentures	$ 10,099	$ 10,099

XML

Fair Value Measurement - Additional information (Detail)	12 Months Ended
	Dec. 31, 2017 USD ($) Liabilities Assets	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Number of non-financial assets | Assets	0
Number of non-financial liabilities | Liabilities	0
Transfers between levels | $	$ 0	$ 0	$ 0

XML

Fair Value Measurement - Foreclosed Assets that were Re-measured and Reported at Fair Value (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Fair Value Disclosures [Abstract]
Beginning balance	$ 2,397	$ 1,736	$ 1,927
Carrying value of foreclosed assets acquired	4,312	2,263	869
Proceeds from sale of foreclosed assets	(3,498)	(1,623)	(344)
Gains (losses) included in non-interest expense	158	21	(716)
Fair value	$ 3,369	$ 2,397	$ 1,736

XML

Subordinated Debentures - Additional Information (Detail)	1 Months Ended	12 Months Ended
	Sep. 30, 2003 USD ($) $ / Security	Dec. 31, 2017 USD ($)	Dec. 31, 2003 USD ($)	Dec. 31, 2016 USD ($)	Oct. 08, 2008 USD ($)
Debt Disclosure [Abstract]
Variable rate capital securities with an aggregate liquidation amount	$ 10,000,000
Preferred security, Aggregate liquidation amount | $ / Security	1,000
Floating rate junior subordinated debentures		$ 10,310,000	$ 10,310,000	$ 10,310,000
Percentage above LIBOR		3.10%
Interest rate to be received under swap agreement, adjusted quarterly		Three-month London Interbank Lending Rate (Libor) plus 3.10%
Interest rate after adjustment		4.82%
Junior subordinated debentures maturity			2033
Junior subordinated debentures and capital securities redemption price					$ 1,000

XML

Concentrations of Credit Risk - Additional Information (Detail) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Risks and Uncertainties [Abstract]
Deposit with bank insured amount	$ 250,000	$ 250,000
Total FHLB deposits	5,600,000	800,000
Total deposits at federal reserve	7,100,000	4,700,000
Total deposits at BBVA	$ 26,300,000	$ 9,700,000

XML

Employee Benefit Plans - Additional Information (Detail) - USD ($)			12 Months Ended
	Mar. 02, 2015	Mar. 20, 2013	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Compensation Related Costs Disclosure [Line Items]
Shares purchased from the corporation			600,234	600,000
Cost of shares purchased from the corporation			$ 647,000	$ 632,000	$ 704,000
2015 Employee Stock Ownership Plan [Member]
Compensation Related Costs Disclosure [Line Items]
Employee stock ownership plan employee minimum service period	1 year
Employee stock ownership plan, description			2015 Employee Stock Ownership Plan which covers substantially all employees who are at least 21 years old with at least one year of employment with the Company and Heritage Bank USA, Inc., the Company’s commercial bank subsidiary. The ESOP has three individuals who have been selected by the Company to serve as trustees. A directed corporate trustee has also been appointed. The ESOP will be administered by a committee (the “Committee”) currently composed of eleven employees selected by the Company or its designee.
Employee stock ownership plan loan, shares released from the ESOP trust			64,032	48,067	53,587
Employee stock ownership plan loan, expenses recognized			$ 706,000	$ 553,000	$ 652,000
2015 Employee Stock Ownership Plan [Member] | Employee Stock Option Plan Loan [Member]
Compensation Related Costs Disclosure [Line Items]
Shares purchased from the corporation	600,000
Cost of shares purchased from the corporation	$ 7,884,000
Interest rate on ESOP loan	3.00%
Final maturity date	Dec. 09, 2026
ESOP Loan, frequency of periodic payment			Annual
HopFed [Member]
Compensation Related Costs Disclosure [Line Items]
Cost of shares purchased from the corporation			$ 647,000	632,000	704,000
2013 Long Term Incentive Plan [Member]
Compensation Related Costs Disclosure [Line Items]
Shares authorized to be granted under option or other stock incentive plans		300,000
Compensation expense			$ 106,000	$ 135,000	$ 190,000
2013 Long Term Incentive Plan [Member] | HopFed [Member]
Compensation Related Costs Disclosure [Line Items]
Restricted shares available from the HOPFED Bancorp			229,824
2013 Long Term Incentive Plan [Member] | Minimum [Member]
Compensation Related Costs Disclosure [Line Items]
Stock options vesting period		3 years
2013 Long Term Incentive Plan [Member] | Maximum [Member]
Compensation Related Costs Disclosure [Line Items]
Stock options vesting period		4 years
2013 Long Term Incentive Plan [Member] | Restricted Stock [Member]
Compensation Related Costs Disclosure [Line Items]
Shares authorized to be granted under option or other stock incentive plans			12,753	12,342	2,034
Restricted stock granted by Compensation Committee, market value			$ 178,000	$ 145,000	$ 25,000

XML

Employee Benefit Plans - Compensation Expense to be Recognized (Detail) $ in Thousands	Dec. 31, 2017 USD ($)
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
2018	$ 111
2019	67
2020	45
2021	3
Total	$ 226

XML

Employee Benefit Plans - Summary of Shares Held by Employee Stock Ownership Plan (ESOP) (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Earned ESOP shares	165,686	101,654
Unearned ESOP shares	434,548	498,346
Total ESOP shares	600,234	600,000
Share price at December 31,	$ 14.10	$ 13.46
Fair value of ESOP shares	$ 6,127,127	$ 6,707,737

XML

Income Taxes - Provision for Income Tax Expense (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Current
Federal									$ 468
State									95	$ 95	$ 97
Current income tax expenses									563	95	97
Deferred
Federal									1,585	267	177
State									0	0	0
Deferred income taxes expenses									1,585	267	177
Income tax expense (benefit)	$ 1,159	$ 486	$ 368	$ 135	$ 260	$ 41	$ 15	$ 46	$ 2,148	$ 362	$ 274

XML

Income Taxes - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Federal income tax rate	34.00%	34.00%	34.00%
Operating loss carry forwards	$ 3,100,000
Operating loss carryforwards expiration year	2034
Valuation allowance for deferred tax assets	$ 0	$ 0
Unrecognized tax benefits	$ 0	$ 0

XML

Income Taxes - Reconciliation of Federal Income Tax Rate (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Expected federal income tax expense at statutory tax rate									$ 1,853	$ 1,110	$ 911
Effect of nontaxable interest income									(345)	(452)	(458)
Effect of nontaxable bank owned life insurance income									(164)	(117)	(114)
Effect of Qualified Zone Academy Bond (QZAB)										(114)	(109)
State taxes on income, net of federal benefit									59	59	59
Other tax credits									(243)	(128)	(80)
Deferred tax asset revaluation									980
Non-deductible expenses									8	4	65
Income tax expense (benefit)	$ 1,159	$ 486	$ 368	$ 135	$ 260	$ 41	$ 15	$ 46	$ 2,148	$ 362	$ 274
Effective tax rate (benefit)									39.40%	11.10%	10.20%

XML

Income Taxes - Components of Deferred Taxes (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Deferred tax assets:
Allowance for loan loss	$ 1,014	$ 2,078
Accrued expenses	77	294
Net operating loss carry forward	192	454
Tax credit carry forward	651	568
Unrealized loss on securities available for sale	57
Intangible amortization	192	548
Other	77	242
Deferred tax assets Net	2,260	4,184
Deferred tax liabilities:
FHLB stock dividends	(486)	(787)
Unrealized gain on securities available for sale		(240)
Depreciation and amortization	(10)	(105)
Deferred tax liabilities, Gross, Total	(496)	(1,132)
Net deferred tax asset	$ 1,764	$ 3,052

XML

Foreclosed Assets - Presentation of Balances in Foreclosed Assets (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total foreclosed assets	$ 3,369	$ 2,397
Multi-Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total foreclosed assets		1,775
One-to-Four Family Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total foreclosed assets	169	135
Home Equity Line of Credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total foreclosed assets		28
Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total foreclosed assets	$ 3,200
Non-Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total foreclosed assets		$ 459

XML

Commitments and Contingencies - Summary of Open Loan Commitments (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Commitments to Extend Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual notional amount of instruments	$ 54,458	$ 43,365
Unused Commercial Lines of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual notional amount of instruments	62,910	59,790
Unused Home Equity Lines of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual notional amount of instruments	32,701	31,818
Unused Lines of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual notional amount of instruments	17,048	18,559
Standby Letters of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual notional amount of instruments	$ 143	$ 228

XML

Commitments and Contingencies - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Commitment and Contingencies [Line Items]
Initial term of employment agreements	3 years
Rental expenses	$ 130,000	$ 127,000	$ 61,000
Expense relates to data processing and related contracts	2,884,000	2,942,000	2,827,000
Amount of annual cost per covered individual under first specific stop loss policy limits	100,000	90,000	90,000
Amount of annual cost per covered individual under second specific stop loss policy limits	1,700,000	1,800,000	$ 1,700,000
Liability related to self insured medical expenses	$ 172,000	$ 256,000
Minimum [Member]
Commitment and Contingencies [Line Items]
Period of most guarantees	1 year
Maximum [Member]
Commitment and Contingencies [Line Items]
Period of most guarantees	2 years

XML

Commitments and Contingencies - Future Minimal Purchase, Lease and Rental Commitments (Detail) $ in Thousands	Dec. 31, 2017 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2018	$ 2,286
2019	1,953
2002	202
2021	169
2022	110
Total	$ 4,720

XML

Regulatory Matters - The Company's Consolidated Capital Ratios and the Bank's Actual Capital Amounts and Ratios (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier 1 leverage capital to adjusted total assets, Actual Amount	$ 95,709	$ 92,803
Tier 1 leverage capital to adjusted total assets, Minimum Capital Required - Basel III Phase-In Schedule, Amount	36,137	34,392
Tier 1 leverage capital to adjusted total assets, To be Well Capitalized for Prompt Corrective Action Provision, Amount	45,171	42,990
Total capital to risk weighted assets, Actual Amount	100,535	98,915
Total capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Amount	50,352	48,864
Total capital to risk weighted assets, To be Well Capitalized for Prompt Corrective Action Provision, Amount	62,940	61,080
Tier 1 capital to risk weighted assets, Actual Amount	95,709	92,803
Tier 1 capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Amount	37,764	36,648
Tier 1 capital to risk weighted assets, To be Well Capitalized for Prompt Corrective Action Provision, Amount	50,352	48,864
Common equity tier 1 capital to risk weighted assets, Actual Amount	95,709	92,803
Common equity tier 1 capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Amount	$ 28,323	$ 27,486
Tier 1 leverage capital to adjusted total assets, Actual Ratio	10.60%	10.80%
Tier 1 leverage capital to adjusted total assets, Minimum Capital Required - Basel III Phase-In Schedule, Ratio	4.00%	4.00%
Tier 1 leverage capital to adjusted total assets, To be Well Capitalized for Prompt Corrective Action Provision, Ratio	5.00%	5.00%
Total capital to risk weighted assets, Actual Ratio	16.00%	16.20%
Total capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Ratio	8.00%	8.00%
Total capital to risk weighted assets, To be Well Capitalized for Prompt Corrective Action Provision, Ratio	10.00%	10.00%
Tier 1 capital to risk weighted assets, Actual Ratio	15.20%	15.20%
Tier 1 capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Ratio	6.00%	6.00%
Tier 1 capital to risk weighted assets, To be Well Capitalized for Prompt Corrective Action Provision, Ratio	8.00%	8.00%
Common equity tier 1 capital to risk weighted assets, Actual Ratio	15.20%	15.20%
Common equity tier 1 capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Ratio	4.50%	4.50%
Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier 1 leverage capital to adjusted total assets, Actual Amount	$ 95,123	$ 91,617
Tier 1 leverage capital to adjusted total assets, Minimum Capital Required - Basel III Phase-In Schedule, Amount	36,090	34,315
Tier 1 leverage capital to adjusted total assets, To be Well Capitalized for Prompt Corrective Action Provision, Amount	45,112	42,894
Total capital to risk weighted assets, Actual Amount	99,949	97,729
Total capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Amount	50,314	48,753
Total capital to risk weighted assets, To be Well Capitalized for Prompt Corrective Action Provision, Amount	62,892	60,941
Tier 1 capital to risk weighted assets, Actual Amount	95,123	91,617
Tier 1 capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Amount	37,735	36,764
Tier 1 capital to risk weighted assets, To be Well Capitalized for Prompt Corrective Action Provision, Amount	50,314	48,753
Common equity tier 1 capital to risk weighted assets, Actual Amount	95,123	91,617
Common equity tier 1 capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Amount	28,301	27,423
Common equity tier 1 capital to risk weighted assets, To be Well Capitalized for Prompt Corrective Action Provision, Amount	$ 40,880	$ 39,611
Tier 1 leverage capital to adjusted total assets, Actual Ratio	10.50%	10.70%
Tier 1 leverage capital to adjusted total assets, Minimum Capital Required - Basel III Phase-In Schedule, Ratio	4.00%	4.00%
Tier 1 leverage capital to adjusted total assets, To be Well Capitalized for Prompt Corrective Action Provision, Ratio	5.00%	5.00%
Total capital to risk weighted assets, Actual Ratio	15.90%	16.00%
Total capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Ratio	8.00%	8.00%
Total capital to risk weighted assets, To be Well Capitalized for Prompt Corrective Action Provision, Ratio	10.00%	10.00%
Tier 1 capital to risk weighted assets, Actual Ratio	15.10%	15.00%
Tier 1 capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Ratio	6.00%	6.00%
Tier 1 capital to risk weighted assets, To be Well Capitalized for Prompt Corrective Action Provision, Ratio	8.00%	8.00%
Common equity tier 1 capital to risk weighted assets, Actual Ratio	15.10%	15.00%
Common equity tier 1 capital to risk weighted assets, Minimum Capital Required - Basel III Phase-In Schedule, Ratio	4.50%	4.50%
Common equity tier 1 capital to risk weighted assets, To be Well Capitalized for Prompt Corrective Action Provision, Ratio	6.50%	6.50%

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Stockholders' Equity - Additional Information (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2018
Stockholders Equity [Line Items]
Treasury stock, shares	1,338,360	1,246,136
Treasury stock shares purchased	300,000
Repurchase program expiration date	Dec. 31, 2019
Common equity Tier 1 capital ratio	15.20%	15.20%
Tier 1 risk-based capital ratio	15.20%	15.20%
Total risk-based capital ratio	16.00%	16.20%
Capital conservation buffer	1.25%
Basel Three Requirements [Member]
Stockholders Equity [Line Items]
Common equity Tier 1 capital ratio	4.50%
Tier 1 risk-based capital ratio	6.00%
Total risk-based capital ratio	8.00%
Tier 1 leverage ratio	4.00%
Post Capital Conservation Buffer [Member]
Stockholders Equity [Line Items]
Common equity Tier 1 capital ratio	7.00%
Tier 1 risk-based capital ratio	8.50%
Total risk-based capital ratio	10.50%
Capital conservation buffer	2.50%
Scenario, Forecast [Member]
Stockholders Equity [Line Items]
Capital conservation buffer				1.875%
Common Stock [Member]
Stockholders Equity [Line Items]
Treasury stock, shares	1,338,360
Average price of treasury stock	$ 12.44
Treasury stock shares purchased	92,224	160,248	907,505

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Earnings Per Share - Summary of Reconciliation of Weighted Average Common Shares (Detail) - shares	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Basic earnings per share:
Weighted average common shares									6,695,721	6,757,345	6,919,190
Less: Average unallocated ESOP shares									(474,089)	(523,485)	(546,913)
Weighted average common shares	6,202,635	6,236,075	6,228,994	6,218,706	6,193,278	6,212,231	6,232,457	6,297,755	6,221,632	6,233,860	6,372,277
Weighted average common and incremental shares	6,202,635	6,236,075	6,228,994	6,218,706	6,193,278	6,212,231	6,232,457	6,297,755	6,221,632	6,233,860	6,372,277

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Condensed Parent Company Only Financial Statements - Summary of Condensed Balance Sheets (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2003
Assets:
Cash	$ 37,965	$ 21,779
Total assets	917,510	891,486
Liabilities and equity Liabilities
Subordinated debentures	10,310	10,310			$ 10,310
Total liabilities	830,098	805,058
Equity:
Preferred stock
Common stock	80	80
Additional paid-capital	58,825	58,660
Retained earnings	51,162	49,035
Treasury stock - common stock	(16,655)	(15,347)
Unearned ESOP shares	(5,901)	(6,548)
Accumulated other comprehensive income	(99)	548
Total stockholders' equity	87,412	86,428	$ 87,630	$ 98,402
Total liabilities and equity	917,510	891,486
HopFed [Member]
Assets:
Cash	862	1,084
Investment in subsidiary	96,826	95,242
Prepaid expenses and other assets	1,109	804
Total assets	98,797	97,130
Liabilities and equity Liabilities
Dividend payable - common	353	288
Interest payable	112	101
Other liabilities	610	3
Subordinated debentures	10,310	10,310
Total liabilities	11,385	10,702
Equity:
Preferred stock
Common stock	80	80
Additional paid-capital	58,825	58,660
Retained earnings	51,162	49,035
Treasury stock - common stock	(16,655)	(15,347)
Unearned ESOP shares	(5,901)	(6,548)
Accumulated other comprehensive income	(99)	548
Total stockholders' equity	87,412	86,428
Total liabilities and equity	$ 98,797	$ 97,130

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Condensed Parent Company Only Financial Statements - Summary of Condensed Statements of Income (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Interest and dividend income:
Total interest and dividend income	$ 8,541	$ 8,635	$ 8,419	$ 8,160	$ 7,951	$ 8,004	$ 7,691	$ 8,081	$ 33,755	$ 31,727	$ 33,122
Interest expense	1,566	1,537	1,454	1,406	1,311	1,315	1,268	1,405	5,963	5,299	6,550
Non-interest expenses	7,806	7,168	7,233	7,689	7,211	7,353	7,609	7,683	29,896	29,856	30,445
Income tax benefits	$ 1,159	$ 486	$ 368	$ 135	$ 260	$ 41	$ 15	$ 46	2,148	362	274
HopFed [Member]
Interest and dividend income:
Dividend income from subsidiary Bank									2,500	2,000	12,100
Total interest and dividend income									2,500	2,000	12,100
Interest expense									436	388	740
Non-interest expenses									1,538	391	541
Total expenses									1,974	779	1,281
Income before income taxes and equity in undistributed earnings of subsidiary									526	1,221	10,819
Income tax benefits									(545)	(319)	(529)
Income before equity in undistributed earnings of subsidiary									1,071	1,540	11,348
Equity in (distribution in excess of) earnings of subsidiary									2,230	1,364	(8,944)
Income available to common shareholders									$ 3,301	$ 2,904	$ 2,404

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Condensed Parent Company Only Financial Statements - Summary of Condensed Statements of Cash Flows (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities
Net income	$ (178)	$ 1,403	$ 1,141	$ 935	$ 1,106	$ 985	$ 304	$ 509	$ 3,301	$ 2,904	$ 2,404
Increase (decrease) in:
Net cash provided by operating activities									8,269	6,520	6,436
Cash flows from financing activities:
Purchase of treasury stock									(1,308)	(1,876)	(11,926)
Proceeds on ESOP loan									647	632	704
Dividends paid on common stock									(1,174)	(993)	(1,023)
Net cash provided by (used in) financing activities									22,032	(10,724)	(34,634)
Increase (decrease) in cash and cash equivalents									19,327	(28,949)	14,259
Cash and cash equivalents, beginning of period				25,749				54,698	25,749	54,698	40,439
Cash and cash equivalents, end of period	45,076				25,749				45,076	25,749	54,698
HopFed [Member]
Cash flows from operating activities
Net income									3,301	2,904	2,404
Adjustments to reconcile net income to net cash provided by operating activities
Equity in undistributed earnings of subsidiary									(2,230)	(1,364)	8,943
Amortization of restricted stock									106	135	190
Increase (decrease) in:
Current income taxes payable									330	(49)	11
Accrued expenses									106	(392)	(149)
Net cash provided by operating activities									1,613	1,234	11,399
Cash flows from financing activities:
Purchase of treasury stock									(1,308)	(1,876)	(11,926)
Proceeds on ESOP loan									647	632	704
Dividends paid on common stock									(1,174)	(993)	(1,022)
Net cash provided by (used in) financing activities									(1,835)	(2,237)	(12,244)
Increase (decrease) in cash and cash equivalents									(222)	(1,003)	(845)
Cash and cash equivalents, beginning of period				$ 1,084				$ 2,087	1,084	2,087	2,932
Cash and cash equivalents, end of period	$ 862				$ 1,084				$ 862	$ 1,084	$ 2,087

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Investments in Affiliated Companies - Additional Information (Detail)	Dec. 31, 2017
HopFed Capital Trust [Member] | Majority-Owned Subsidiary, Unconsolidated [Member]
Percent of common stock of HopFed Bancorp, Inc.	100.00%

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Investments in Affiliated Companies - Summary Balance Sheets (Detail) - Majority-Owned Subsidiary, Unconsolidated [Member] - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Asset - investment in subordinated debentures issued by HopFed Bancorp, Inc.	$ 10,310	$ 10,310
Liabilities	0	0
Stockholders' equity:
Total stockholder's equity	10,310	10,310
Total liabilities and stockholder's equity	10,310	10,310
Trust Preferred Securities [Member]
Stockholders' equity:
Total stockholder's equity	10,000	10,000
Common Stock [Member]
Stockholders' equity:
Total stockholder's equity	$ 310	$ 310

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Investments in Affiliated Companies - Summary Balance Sheets (Parenthetical) (Detail)	Dec. 31, 2017	Dec. 31, 2016
Majority-Owned Subsidiary, Unconsolidated [Member] | Common Stock [Member]
Percent of common stock of HopFed Bancorp, Inc.	100.00%	100.00%

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Investments in Affiliated Companies - Summary Statement of Income (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule of Equity Method Investments [Line Items]
Income - interest income from subordinated debentures issued by HopFed Bancorp, Inc.	$ 8,541	$ 8,635	$ 8,419	$ 8,160	$ 7,951	$ 8,004	$ 7,691	$ 8,081	$ 33,755	$ 31,727	$ 33,122
Majority-Owned Subsidiary, Unconsolidated [Member]
Schedule of Equity Method Investments [Line Items]
Income - interest income from subordinated debentures issued by HopFed Bancorp, Inc.									449	400
Net income									$ 449	$ 400

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Investments in Affiliated Companies - Summary Statements of Stockholders' Equity (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Dividends:
Total retained earnings	$ 51,162	$ 49,035
Majority-Owned Subsidiary, Unconsolidated [Member]
Schedule of Equity Method Investments [Line Items]
Beginning balances	10,310
Retained earnings:
Net income	449	400
Dividends:
Trust preferred securities	(436)
Common dividends paid to HopFed Bancorp, Inc.	(13)
Total retained earnings	0
Ending balances	10,310	10,310
Majority-Owned Subsidiary, Unconsolidated [Member] | Trust Preferred Securities [Member]
Schedule of Equity Method Investments [Line Items]
Beginning balances	10,000
Dividends:
Total retained earnings	0
Ending balances	10,000	10,000
Majority-Owned Subsidiary, Unconsolidated [Member] | Common Stock [Member]
Schedule of Equity Method Investments [Line Items]
Beginning balances	310
Dividends:
Total retained earnings	0
Ending balances	310	$ 310
Majority-Owned Subsidiary, Unconsolidated [Member] | Retained Earnings [Member]
Retained earnings:
Net income	449
Dividends:
Trust preferred securities	(436)
Common dividends paid to HopFed Bancorp, Inc.	(13)
Total retained earnings	$ 0

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Quarterly Results of Operations - Summarized Unaudited Quarterly Operating Results (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
Interest and dividend income	$ 8,541	$ 8,635	$ 8,419	$ 8,160	$ 7,951	$ 8,004	$ 7,691	$ 8,081	$ 33,755	$ 31,727	$ 33,122
Interest expense	1,566	1,537	1,454	1,406	1,311	1,315	1,268	1,405	5,963	5,299	6,550
Net interest income	6,975	7,098	6,965	6,754	6,640	6,689	6,423	6,676	27,792	26,428	26,572
Provision for loan losses	56	71	59	291	63	255	465	458	477	1,241	1,051
Net interest income after provision for loan losses	6,919	7,027	6,906	6,463	6,577	6,434	5,958	6,218	27,315	25,187	25,521
Noninterest income	1,868	2,030	1,836	2,296	2,000	1,945	1,970	2,020	8,030	7,935	7,602
Noninterest expense	7,806	7,168	7,233	7,689	7,211	7,353	7,609	7,683	29,896	29,856	30,445
Income before income taxes	981	1,889	1,509	1,070	1,366	1,026	319	555	5,449	3,266	2,678
Income taxes	1,159	486	368	135	260	41	15	46	2,148	362	274
Net income (loss)	$ (178)	$ 1,403	$ 1,141	$ 935	$ 1,106	$ 985	$ 304	$ 509	$ 3,301	$ 2,904	$ 2,404
Basic earnings (loss) per share	$ (0.03)	$ 0.22	$ 0.18	$ 0.15	$ 0.18	$ 0.16	$ 0.05	$ 0.08	$ 0.53	$ 0.47	$ 0.38
Diluted earnings (loss) per share	$ (0.03)	$ 0.22	$ 0.18	$ 0.15	$ 0.18	$ 0.16	$ 0.05	$ 0.08	$ 0.53	$ 0.47	$ 0.38
Weighted average shares outstanding:
Basic	6,202,635	6,236,075	6,228,994	6,218,706	6,193,278	6,212,231	6,232,457	6,297,755	6,221,632	6,233,860	6,372,277
Diluted	6,202,635	6,236,075	6,228,994	6,218,706	6,193,278	6,212,231	6,232,457	6,297,755	6,221,632	6,233,860	6,372,277

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Comprehensive Income - Other Comprehensive (Loss) Income Included in Stockholders' Equity (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Unrealized holding gains (losses) on:
Available for sale securities, Pre-Tax	$ (585)	$ (2,048)	$ (1,698)
Available for sale securities - OTTI, Pre-Tax	(224)	(258)	359
Derivatives, Pre-Tax			389
Reclassification adjustments for gains on available for sale securities, Pre-Tax	(169)	(612)	(691)
Other comprehensive income, Pre-Tax	(978)	(2,918)	(1,641)
Available for sale securities, tax benefit (expense)	198	697	577
Available for sale securities - OTTI, tax benefit (expense)	76	88	(122)
Derivatives, tax benefit (expense)			(132)
Reclassification adjustments for gains on available for sale securities, tax benefit (expense)	57	207	235
Other comprehensive income, tax benefit (expense)	331	992	558
Available for sale securities, net of tax	(387)	(1,351)	(1,121)
Available for sale securities - OTTI, net of tax	(148)	(170)	237
Derivatives, net of tax			257
Reclassification adjustments for gains on available for sale securities, net of tax	(112)	(405)	(456)
Total other comprehensive income (loss)	$ (647)	$ (1,926)	$ (1,083)

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Subsequent Event - Additional Information (Detail) - Subsequent Event [Member] - USD ($)	Feb. 23, 2018	Feb. 07, 2018
Subsequent Event [Line Items]
Reimbursement amount to Plaintiff		$ 610,312.40
Minimum [Member]
Subsequent Event [Line Items]
Loss contingency, damages sought value	$ 1,000,000