EX-99.1

EX-99.1 2 d740046dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

NEWS


FOR IMMEDIATE RELEASE	CONTACT:	John E. Peck
		President and CEO
		(270) 885-1171

HOPFED BANCORP, INC. REPORTS OPERATING

RESULTS FOR THE FIRST QUARTER OF 2019

HOPKINSVILLE, KY (May 1, 2019) – HopFed Bancorp, Inc. (NASDAQ: HFBC) (the “Company”), the holding company for Heritage Bank USA, Inc. (the “Bank”), today reported operating results for the three-month period ended March 31, 2019. For the three-month period ended March 31, 2019, the Company’s net income was $623,000, or $0.10 per share basic and diluted, compared to $1.1 million, or $0.18 per share basic and diluted, for the three-month period ended March 31, 2018. The reduction in net income for the three-month period ended March 31, 2019 was largely the result of merger related expenses.

Commenting on the results for the three-month period ended March 31, 2019, John E. Peck, President and Chief Executive Officer, said, “For the three-month period ended March 31, 2019, net loans increased by $7.5 million, representing an annualized growth rate of 4.5%. In the three-month period ended March 31, 2019, retail deposits increased by $10.6 million, allowing the Company to reduce its level of brokered deposits by $9.0 million. In the three-month period ended March 31, 2019, higher short term interest rates drove a $6.0 million increase in retail repurchase accounts. Non-interest expenses (excluding merger related expenses) declined by $392,000 in the three-month period ended March 31, 2019, compared to the three-month period ended March 31, 2018.”

Financial Highlights

•

At March 31, 2019, total loans outstanding in the Company’s three loan production offices were $106.2 million compared to $95.5 million at December 31, 2018, and $80.5 million at March 31, 2018.

•

At March 31, 2019, non-accrual loans were $1.1 million compared to $1.4 million at December 31, 2018. At March 31, 2019, loans classified as substandard were $16.6 million compared to $14.3 million at December 31, 2018.

•

The Company’s net interest margin for the three-month period ended March 31, 2019, was 3.24% compared to 3.35% and 3.45% for the three-month periods ended December 31, 2018 and March 31, 2018, respectively.

•

The Company’s book value per share at March 31, 2019, was $14.80. The stated book value excludes 371,693 shares of unearned stock held in the Company’s Employee Stock Ownership Plan (“ESOP”).

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HFBC Reports First Quarter Results

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May 1, 2019

Results of Operations

In the three-month periods ended March 31, 2019, December 31, 2018 and March 31, 2018, interest income was $9.5 million, $9.5 million and $8.8 million, respectively. For the three-month period ended March 31, 2019, the average balance of interest bearing assets was $849.3 million, an increase of $8.7 million compared to the three-month period ended March 31, 2018. The improvements in interest income for the three-month period ended March 31, 2019, compared to the three-month period ended March 31, 2018, were more than offset by higher short term interest rates, increasing the Company’s interest expense.

On a linked quarter basis, the Company’s interest expense increased by $249,000. The increase in linked quarter interest expense was the result of an $8.4 million increase in interest bearing liabilities and a 0.12% increase in the total cost of average interest bearing liabilities. The Company’s interest expense increased by $1.1 million for the three-month period ended March 31, 2019, compared to the three-month period ended March 31, 2018. For the three-month period ended March 31, 2019, average interest bearing liabilities were $613.5 million compared to $612.0 million for the three-month period ended March 31, 2018. The total cost of average interest bearing liabilities was 1.57% for the three-month period ended March 31, 2019, compared to 0.94% for the three-month period ended March 31, 2018. For the three-month periods ended March 31, 2019, December 31, 2018 and March 31, 2018, net interest income was $6.8 million, $7.0 million and $7.2 million, respectively.

For the three-month period ended March 31, 2019, non-interest income was $1.6 million, representing declines of $180,000 and $108,000 compared to the three-month periods ended December 31, 2018 and March 31, 2018, respectively. On a linked quarter basis, the decline in non-interest income was broad based. Historically, the Company’s non-interest income is lower in the first quarter of each year and highest in the fourth quarter of each year due to factors such as the number of days in the reporting period and the differences in economic activity during the respective periods. For the three-month period ended March 31, 2019, mortgage origination revenue declined by $70,000 compared to the three-month period ended March 31, 2018, due to weaker loan demand in the Company’s market. For the three-month period ended March 31, 2019, the Company’s service charge and merchant card income declined by a combined $48,000 compared to the three-month period ended March 31, 2018.

For the three-month period ended March 31, 2019, total non-interest expenses were $7.7 million, an increase of $1.0 million on a linked quarter basis and an increase of $204,000 compared to the three-month period ended March 31, 2018. On a linked quarter basis, non-merger related non-interest expenses increased by $424,000 largely due to a $351,000 increase in salaries and benefits expense. The linked quarter increase in salaries and benefits is largely the result of a $57,000 increase in health insurance, a $52,000 increase in payroll taxes and a $210,000 increase in the amount of vacation accruals.

For the three-month period ended March 31, 2019, state deposit taxes increased by $46,000 and data processing expenses increased by $38,000 compared to the three-month period ended March 31, 2018. For the three-month period ended March 31, 2019, no other operating expense line items experienced an increase as compared to the three-month period ended March 31, 2018.

This information is preliminary and based on company data available at the time of the presentation.

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HFBC Reports First Quarter Results

Page 3

May 1, 2019

Balance Sheet

At March 31, 2019, total assets were $934.3 million compared to $931.4 million at December 31, 2018. At March 31, 2019, net loans totaled $666.3 million, an increase of $7.5 million compared to December 31, 2018. The Company continued to experience growth in retail repurchase agreements, which increased from $53.0 million at December 31, 2018, to $59.0 million at March 31, 2019.

A summary of loans outstanding by type at March 31, 2019 and December 31, 2018 is as follows:


	March 31, 2019			December 31, 2018
	(Dollars in Thousands)
One-to-four family first mortgages	$	174,274		$	175,638
Home equity lines of credit		31,407			32,781
Second mortgages (closed end)		995			1,037
Multi-family		26,377			26,067
Construction		36,723			38,700
Land		18,745			12,175
Non-residential real estate		248,285			242,390
Farmland		33,242			34,041
Consumer loans		8,060			8,442
Commercial loans		93,090			92,466

Total loans, gross		671,198			663,737
Unearned income, net of fees		(395	)		(419	)
Less allowance for loan losses		(4,553	)		(4,536	)

Total loans		666,250			658,782

This information is preliminary and based on company data available at the time of the presentation.

HFBC Reports First Quarter Results

Page 4

May 1, 2019

Asset Quality

The table below provides a history of the Company’s significant credit quality metrics for the dates listed below:


	3/31/2019			12/31/2018			9/30/2018			6/30/2018			3/31/2018
	(Unaudited)						(Unaudited)			(Unaudited)			(Unaudited)
	(Dollars in Thousands, Except Percentages)
Loans past due 30-89 days	$	1,939		$	809		$	1,780		$	1,605		$	432
Total non-accrual loans		1,064			1,430			1,841			1,602			2,004
Total loans classified as substandard		16,632			14,323			11,005			11,491			14,082
Total performing TDR loans		3,602			3,530			3,518			3,162			3,255
Total foreclosed assets		3,446			3,598			3,533			3,427			3,329
Quarterly net charge offs		43			102			158			78			240

Non-accrual loans / Total loans		0.16	%		0.22	%		0.28	%		0.24	%		0.30	%
Non-performing assets / Total assets		0.48	%		0.54	%		0.59	%		0.55	%		0.58	%
Allowance / Total loans		0.68	%		0.68	%		0.68	%		0.69	%		0.70	%
Allowance / Non-accrual loans		427.97			317.25	%		247.48	%		289.48	%		232.24	%
Substandard loans / Risk based capital		15.65	%		13.63	%		10.68	%		11.24	%		13.94	%
Quarterly net charge off ratio (annualized)		0.03	%		0.06	%		0.09	%		0.05	%		0.15	%
Risk Based Capital		105,604			105,055			103,085			102,211			100,997
FTE Employees		210			220			225			226			227

The Company

HopFed Bancorp, Inc. is the holding company for Heritage Bank USA, Inc. (“Heritage Bank”), a Kentucky state chartered commercial bank. Heritage Bank has eighteen offices in western Kentucky and middle Tennessee and loan production offices in the Tennessee communities of Nashville, Murfreesboro and Brentwood. The Company offers a broad line of financial services and products with the personalized focus of a community banking organization.

Forward-Looking Information

Information contained in this press release, other than historical information, may be considered forward-looking in nature and is subject to various risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. Among the key factors that may have a direct bearing on the Company’s operating results, performance or financial condition are competition and the demand for the Company’s products and services, and other factors as set forth in filings with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations. Certain tabular presentations may not reconcile because of rounding.

This information is preliminary and based on company data available at the time of the presentation.

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HFBC Reports First Quarter Results

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May 1, 2019

HOPFED BANCORP, INC.

Consolidated Condensed Balance Sheets

(Dollars in Thousands)

(Unaudited)


	3/31/2019			12/31/2018			9/30/2018			6/30/2018			3/31/2018
Assets
Cash and due from banks	$	35,052			36,339			21,987			16,399			18,472
Interest-earning deposits in banks		12,364			15,711			8,687			2,955			3,149

Cash and cash equivalents		47,416			52,050			30,674			19,354			21,621
Federal Home Loan Bank stock, at cost		4,428			4,428			4,428			4,428			4,428
Securities available for sale		172,168			170,804			159,282			168,983			180,212
Loans held for sale		742			1,248			1,873			1,126			2,706
Loans receivable		670,803			663,318			668,374			676,891			665,178
Allowance for loan losses		(4,553	)		(4,536	)		(4,553	)		(4,637	)		(4,654	)
Accrued interest receivable		3,666			3,503			3,390			3,253			3,212
Foreclosed assets, net		3,446			3,598			3,533			3,427			3,329
Bank owned life insurance		10,618			10,672			10,587			10,511			10,439
Premises and equipment, net		21,079			21,759			22,072			22,365			22,619
Deferred tax assets		2,165			1,825			2,399			2,320			2,127
Other assets		2,282			2,730			2,816			4,641			2,748

Total assets	$	934,260			931,399			904,875			912,662			913,965

Liabilities:
Deposits:
Non-interest-bearing accounts	$	125,674			129,476			134,297		$	136,004			139,093
Interest-bearing accounts
Checking accounts		205,420			196,972			185,380			198,691			219,483
Savings and money market accounts		96,504			97,232			97,347			99,552			101,153
Other time deposits		314,229			316,157			309,890			300,941			287,077

Total deposits		741,827			739,837			726,914			735,188			746,806
Advances from Federal Home Loan Bank		26,000			33,000			33,000			38,000			25,000
Repurchase agreements		59,046			53,011			42,043			39,648			41,792
Subordinated debentures		10,310			10,310			10,310			10,310			10,310
Accrued expenses and other liabilities		4,190			4,455			5,170			4,347			3,304

Total liabilities		841,373			840,613			817,437			827,493			827,212

This information is preliminary and based on company data available at the time of the presentation.

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HFBC Reports First Quarter Results

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May 1, 2019

HOPFED BANCORP, INC.

Consolidated Condensed Balance Sheets, Continued

(Dollars in Thousands, Except Percentages, Share and Per Share Data)

(Unaudited)


	3/31/2019			12/31/2018			9/30/2018			6/30/2018			3/31/2018
Stockholders’ equity:
Common stock, par value $.01		80			80			80			80			80
Additional paid-in-capital		59,210			59,105			59,035			58,948			58,875
Retained earnings		55,757			55,134			53,979			53,179			51,957
Treasury stock – common, at cost		(16,706	)		(16,706	)		(16,706	)		(16,706	)		(16,684	)
Unearned ESOP Shares, at cost		(5,124	)		(5,268	)		(5,457	)		(5,606	)		(5,759	)
Accumulated other comprehensive income, net of taxes		(330	)		(1,559	)		(3,493	)		(2,726	)		(1,716	)

Total stockholders’ equity		92,887			90,786			87,438			87,169			86,753

Total liabilities and stockholders’ equity	$	934,260			931,399			904,875			914,662			913,965

Additional Capital Information


	3/31/2019			12/31/2018			9/30/2018			6/30/2018			3/31/2018
Preferred stock authorized		500,000			500,000			500,000			500,000			500,000
Common shares authorized		15,000,000			15,000,000			15,000,000			15,000,000			15,000,000
Common shares issued		7,990,867			7,990,867			7,991,170			7,989,655			7,988,983
Common shares outstanding		6,648,887			6,648,887			6,649,190			6,647,675			6,648,589
Treasury shares		1,341,980			1,341,980			1,341,980			1,341,980			1,340,394
Unearned ESOP shares		371,693			382,691			400,768			412,091			423,679
Book value per share (excludes unearned ESOP shares)	$	14.80		$	14.49		$	13.99		$	14.01		$	13.97
Tier 1 leverage ratio		11.0	%		11.0	%		10.9	%		10.7	%		10.6	%
Total risk based capital ratio		15.3	%		16.2	%		15.9	%		15.6	%		15.5	%
Common equity tier 1 ratio		14.6	%		15.5	%		15.2	%		14.9	%		14.8	%

This information is preliminary and based on company data available at the time of the presentation.

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HFBC Reports First Quarter Results

Page 7

May 1, 2019

HOPFED BANCORP, INC.

Consolidated Condensed Quarterly Statement of Income

(Dollars in Thousands)

(Unaudited)


	For the three month periods ended
	3/31/2019		12/31/2018		9/30/2018		6/30/2018		3/31/2018
Interest and dividend income:
Loans		8,230		8,210		8,164		7,858		7,477
Investment in securities, taxable		1,035		998		970		1,033		1,079
Nontaxable securities available for sale		195		187		189		208		213
Interest-earning deposits		82		79		21		16		29

Total interest and dividend income		9,542		9,474		9,344		9,115		8,798

Interest expense:
Deposits		2,137		1,946		1,694		1,392		1,244
FHLB borrowings		159		187		210		134		92
Repurchase agreements		302		223		188		171		154
Subordinated debentures		147		140		139		138		122

Total interest expense		2,745		2,496		2,231		1,835		1,612

Net interest income		6,797		6,978		7,113		7,280		7,186
Provision for loan losses		60		84		74		62		68

Net interest income after provision for loan losses		6,737		6,894		7,039		7,218		7,118

Non-interest income:
Service charges		667		749		756		727		706
Merchant card income		299		325		316		330		308
Mortgage origination revenue		249		288		338		489		319
Gain on sale of securities		—		40		5		481		27
Income from bank owned life insurance		117		85		75		73		71
Financial services commission		173		178		184		177		138
Other operating income		131		151		219		87		175

Total non-interest income		1,636		1,816		1,893		2,364		1,744

This information is preliminary and based on company data available at the time of the presentation.

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HFBC Reports First Quarter Results

Page 8

May 1, 2019

HOPFED BANCORP, INC.

Consolidated Condensed Statements of Income, Continued

(Dollars in Thousands, Except Per Share Data)

(Unaudited)


	For the three month periods ended
	3/31/2019			12/31/2018		9/30/2018		6/30/2018		3/31/2018
Non-interest expenses:
Salaries and benefits		4,044			3,693		4,138		4,116		4,117
Occupancy		734			698		785		747		782
Data processing		822			812		807		765		784
State deposit tax		215			212		158		160		169
Professional services		332			257		489		499		466
Advertising		248			229		329		338		308
Foreclosure, net		20			37		20		21		(6	)
(Gain) loss on sale of asset		(27	)		—		1		9		—
Merger expenses		596			—		—		—		—
Other		760			786		785		919		920

Total non-interest expense		7,744			6,724		7,512		7,574		7,540

Income before income tax expense		629			1,986		1,420		2,008		1,322
Income tax expense		6			368		180		323		196

Net income		623			1,618		1,240		1,685		1,126

Net income per share
Basic	$	0.10		$	0.26	$	0.20	$	0.28	$	0.18

Diluted	$	0.10		$	0.26	$	0.20	$	0.28	$	0.18

Dividend per share		—		$	0.07	$	0.07	$	0.07	$	0.05

This information is preliminary and based on company data available at the time of the presentation.

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HFBC Reports First Quarter Results

Page 9

May 1, 2019

HOPFED BANCORP, INC.

Selected Financial Data

(Dollars in Thousands, Except Percentages)

(Unaudited)


	For the three month periods ended
	3/31/2019			12/31/2018			9/30/2018			6/30/2018			3/31/2018
Average Balance Sheet Data
Loans, net of allowance	$	661,735			659,174			670,314			666,301			647,204
Available for sale taxable securities		150,770			144,506			146,225			153,723			160,582
Available for sale tax free securities		25,358			24,195			24,533			25,670			26,856
Interest bearing deposits held in banks		11,474			14,062			3,825			3,735			6,030
Average earning assets		849,337			841,937			844,897			849,429			840,672
Average non-earning assets		69,384			67,813			63,618			63,565			69,290
Average assets		918,721			909,750			908,515			912,994			909,962
Average interest bearing deposits		613,505			605,121			596,666			608,312			612,019
Repurchase agreements		48,911			41,333			38,611			38,604			39,072
FHLB borrowings		26,778			33,000			37,989			32,011			23,656
Subordinated debentures		10,310			10,310			10,310			10,310			10,310
Total average interest bearing liabilities		699,504			689,764			683,576			689,237			685,057
Average non-interest bearing deposits		126,487			126,487			131,615			133,075			133,412
Average other non-interest bearing liabilities		4,104			5,399			5,572			4,099			3,887
Average total equity		91,893			88,100			87,752			86,583			87,336

	For the three month periods ended
	3/31/2019			12/31/2018			9/30/2018			6/30/2018			3/31/2018
Tax equivalent yield / Cost of:
Loans, fully tax equivalent		5.00	%		5.00	%		4.89	%		4.72	%		4.62	%
Available for sale taxable securities		2.75	%		2.76	%		0.27	%		2.69	%		2.69	%
Available for sale tax free securities, fully tax equivalent		3.82	%		3.84	%		3.86	%		4.04	%		3.96	%
Average yield of interest bearing deposits		2.86	%		2.25	%		1.88	%		1.71	%		1.92	%
Yield on total interest earning assets		4.53	%		4.52	%		4.46	%		4.32	%		4.21	%
Cost of total average deposits		1.16	%		1.06	%		0.93	%		0.89	%		0.67	%
Cost of average total interest bearing liabilities		1.57	%		1.45	%		1.30	%		1.06	%		0.94	%
Fully tax equivalent interest rate spread		2.97	%		3.09	%		3.16	%		3.25	%		3.30	%
Fully tax equivalent net interest margin		3.24	%		3.35	%		3.41	%		3.45	%		3.45	%
Net income		623			1,618			1,240			1,685			1,126
ROA		0.27	%		0.71	%		0.55	%		0.74	%		0.49	%
Annualized return on equity		2.71	%		7.35	%		6.23	%		7.78	%		5.16	%
Efficiency ratio		90.89	%		75.76	%		88.26	%		78.12	%		83.89	%

This information is preliminary and based on company data available at the time of the presentation.

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