Hopfed Bancorp DEF 14A Definitive proxy

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

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Filed by a Party other than the Registrant ¨

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¨	Preliminary Proxy Statement	¨	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x	Definitive Proxy Statement
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¨	Soliciting Material Pursuant to §240.14a-12

HOPFED BANCORP, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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(2)

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(3)

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(5)

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Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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Date Filed:

HOPFED BANCORP, INC.

2700 Fort Campbell Boulevard

Hopkinsville, Kentucky 42240

April 14, 2003

Dear Stockholder:

We invite you to attend the Annual Meeting of Stockholders (the “Annual Meeting”) of HopFed Bancorp, Inc. (the “Company”) to be held at the main office of Heritage Bank, 2700 Fort Campbell Boulevard, Hopkinsville, Kentucky on Wednesday, May 21, 2003 at 3:00 p.m., local time.

The attached Notice of Annual Meeting and Proxy Statement describe the formal business to be transacted at the Annual Meeting.

As an integral part of the Annual Meeting, we will report on the operations of the Company. Directors and officers of the Company as well as representatives of Rayburn, Betts & Bates, P.C., the Company’s independent auditors, will be present to respond to any questions that our stockholders may have. Detailed information concerning our activities and operating performance is contained in our Annual Report which also is enclosed.

YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. On behalf of the Board of Directors, we urge you to please sign, date and return the enclosed proxy card in the enclosed postage-prepaid envelope as soon as possible even if you currently plan to attend the Annual Meeting. This will not prevent you from voting in person, but will assure that your vote is counted if you are unable to attend the Annual Meeting.

Sincerely,

John E. Peck

President and Chief Executive Officer

HOPFED BANCORP, INC.

2700 Fort Campbell Boulevard

Hopkinsville, Kentucky 42240

(270) 885-1171

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held on May 21, 2003

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the “Annual Meeting”) of HopFed Bancorp, Inc. (the “Company”) will be held at the main office of Heritage Bank, 2700 Fort Campbell Boulevard, Hopkinsville, Kentucky on Wednesday, May 21, 2003 at 3:00 p.m., local time.

The Annual Meeting is for the following purposes, which are more completely described in the accompanying Proxy Statement:

The election of two directors of the Company.

The ratification of the appointment of Rayburn, Betts & Bates, P.C. as independent auditors of the Company for the fiscal year ending December 31, 2003.

Such other matters as may properly come before the Annual Meeting or any adjournment thereof.

The Board of Directors is not aware of any other business to come before the Annual Meeting.

Any action may be taken on any one of the foregoing proposals at the Annual Meeting or any adjournments thereof. Stockholders of record at the close of business on March 26, 2003, are the stockholders entitled to vote at the Annual Meeting and any adjournment thereof.

You are requested to fill in and sign the enclosed proxy which is solicited by the Board of Directors and to mail it promptly in the enclosed envelope. The proxy will not be used if you attend and vote at the Annual Meeting in person.

BY ORDER OF THE BOARD OF DIRECTORS

BOYD M. CLARK

SECRETARY

Hopkinsville, Kentucky

April 14, 2003

IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF A FURTHER REQUEST FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.

PROXY STATEMENT

HOPFED BANCORP, INC.

2700 Fort Campbell Boulevard

Hopkinsville, Kentucky 42240

(270) 885-1171

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD

May 21, 2003

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of HopFed Bancorp, Inc. (the “Company”) for the Annual Meeting of Stockholders (the “Annual Meeting”) to be held at the main office of Heritage Bank (the “Bank”), 2700 Fort Campbell Boulevard, Hopkinsville, Kentucky on Wednesday, May 21, 2003, at 3:00 p.m., local time. The accompanying Notice of Annual Meeting and this Proxy Statement, together with the enclosed form of proxy, are first being mailed to stockholders on or about April 14, 2003.

VOTING AND REVOCATION OF PROXIES

Proxies solicited by the Board of Directors of the Company will be voted in accordance with the directions given therein. Properly executed but unmarked proxies will be voted FOR Proposal I to elect two nominees of the Board of Directors as directors of the Company and FOR Proposal II to ratify the appointment of Rayburn, Betts & Bates, P.C. as the Company’s independent auditors. If any other matters are properly brought before the Annual Meeting as to which proxies in the accompanying form confer discretionary authority, the persons named in the accompanying proxies will vote the shares represented thereby on such matters as determined by a majority of the Board of Directors. The proxies solicited by the Board of Directors confer discretionary authority on the persons named therein to vote with respect to the election of any person as a director where the nominee is unable to serve or for good cause will not serve, with respect to matters incident to the conduct of the Annual Meeting and with respect to any other matter presented to the Annual Meeting if notice of such matter has not been delivered to the Company in accordance with the Certificate of Incorporation and Bylaws. Proxies marked as abstentions will not be counted as votes cast. In addition, shares held in street name which have been designated by brokers on proxy cards as not voted (“broker no votes”) will not be counted as votes cast. Proxies marked as abstentions or as broker no votes, however, will be treated as shares present for purposes of determining whether a quorum is present.

Stockholders who execute the form of proxy enclosed herewith retain the right to revoke such proxies at any time prior to exercise. Unless so revoked, the shares represented by properly executed proxies will be voted at the Annual Meeting and all adjournments thereof. Proxies may be revoked at any time prior to exercise by written notice to the Secretary of the Company or by the filing of a properly executed, later-dated proxy. A proxy will not be voted if a stockholder attends the Annual Meeting and votes in person. The presence of a stockholder at the Annual Meeting alone will not revoke such stockholder’s proxy.

VOTING SECURITIES

The securities which can be voted at the Annual Meeting consist of shares of the Company’s common stock, $.01 par value per share (the “Common Stock”). Stockholders of record as of the close of business on March 26, 2003 (the “Record Date”) are entitled to one vote for each share of Common Stock then held on all matters. As of the Record Date, 3,630,396 shares of the Common Stock were issued and outstanding. The presence, in person or by proxy, of at least one-third of the total number of shares of Common Stock outstanding and entitled to vote will be necessary to constitute a quorum at the Annual Meeting.

Persons and groups owning in excess of 5% of Common Stock are required to file certain reports regarding such ownership with the Company and the Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As of the Record Date, management was not aware of any person who beneficially owned more than 5% of the outstanding shares of Common Stock.

PROPOSAL I — ELECTION OF DIRECTORS

The Company’s Certificate of Incorporation requires that directors be divided into three classes, as nearly equal in number as possible, the members of each class to serve for a term of three years and until their successors are elected and qualified. The Board of Directors has nominated Kerry B. Harvey and John E. Peck to serve for a three-year term or until their successors are elected and qualified. Delaware law provides that directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy and entitled to vote on the election of directors.

It is intended that the persons named in the proxies solicited by the Board of Directors will vote for the election of the named nominee. Stockholders are not entitled to cumulate their votes for the election of directors. If the nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such substitute director as the Board of Directors may recommend, or the Board of Directors may reduce the number of directors to eliminate the vacancy.

The following table sets forth for the nominees and for each director, including the named current executive officer, such person’s name, age, the year such person first became a director and the number of shares and percentage of Common Stock beneficially owned.

The Board of Directors recommends a vote “FOR” the nominees named below as directors of the Company.

NAME	AGE (1)	YEAR FIRST ELECTED DIRECTOR (2)	PRESENT TERM TO EXPIRE	SHARES OF COMMON STOCK BENEFICIALLY OWNED (3)		PERCENT OF CLASS

BOARD NOMINEES FOR TERM TO EXPIRE IN 2006
Kerry B. Harvey	45	2001	2003	8,650		*

John E. Peck	38	2000	2003	25,690	(4)	*

DIRECTORS CONTINUING IN OFFICE
WD Kelley	82	1972	2004	52,464		1.4	%

Thomas I. Miller	58	2001	2004	1,736		*

Walton G. Ezell	67	1965	2004	55,507		1.5	%

Boyd M. Clark	57	1990	2005	84,078		2.0	%

Harry J. Dempsey	45	1999	2005	40,000		1.1	%

Gilbert E. Lee	59	1999	2005	39,019		1.1	%

All Executive Officers and Directors as a Group (10 persons)				322,182		8.5	%

Less than 1% of the outstanding Common Stock.

(1)

At December 31, 2002.

(2)

Includes term of office as director of the Bank prior to the conversion of the Bank to a stock savings bank as a wholly owned subsidiary of the Company on February 6, 1998 (the “Conversion”). Each director of the Company is also a director of the Bank.

(3)

At the Record Date. In accordance with Rule 13d-3 under the Exchange Act, a person is considered to “beneficially own” any shares of Common Stock (a) over which he has or shares voting or investment power, or (b) as to which he has the right to acquire beneficial ownership at any time within 60 days of the Record Date. As used herein, “voting power” is the power to vote or direct the vote of shares, and “investment power” is the power to dispose or direct the disposition of shares. Includes shares owned directly by the named individuals, shares held by their spouses, minor children and trusts over which they have or share voting or investment power. Does not include shares held or beneficially owned by other relatives as to which the named individuals disclaim beneficial ownership. Also includes options to purchase Common Stock which are exercisable within 60 days of the Record Date. See “— Directors’ Compensation — 1999 Stock Option Plan.”

(4)

Includes options to purchase 20,000 shares of Common Stock granted under the 2000 Stock Option Plan and 2,500 shares of Common Stock granted under the 1999 Stock Option Plan which are exercisable within 60 days of the Record Date. Excludes options to purchase 20,000 shares of Common Stock granted under the 2000 Stock Option Plan and options to purchase 7,500 shares of Common Stock granted under the 1999 Stock Option Plan which are not exercisable within 60 days of the Record Date Such options would become fully exercisable upon a change in control of the Company as defined in the option plans.

Listed below is certain information about the principal occupations of the Board nominees and the other directors of the Company. Unless otherwise noted, all such persons have held these positions for at least five years.

Kerry B. Harvey. Mr. Harvey is a partner in the law firm of Owen, Harvey and Carter.

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.

WD Kelley. Prior to his retirement in 1980, Mr. Kelley served as Superintendent of Schools for Christian County, Kentucky. Mr. Kelley currently serves as Chairman of the Board of Directors of the Bank, a position he has held since 1995. He also serves as Chairman of the Board of Directors of the Company.

Thomas I. Miller, PHD, CPA. Mr. Miller has served as a professor of accounting at Murray State University in Murray, Kentucky for 33 years. Since 1980, Mr. Miller has also been a partner in the independent accounting firm of Miller and Wilson in Murray, Kentucky.

Walton G. Ezell. Mr. Ezell is a self-employed farmer engaged in the production of grain in Christian County, Kentucky.

Boyd M. Clark. Mr. Clark has served as Senior Vice President — Loan Administrator of the Bank since 1995. Prior to his current position, Mr. Clark served as First Vice President of the Bank. He has been an employee of the Bank since 1973. Mr. Clark also serves as Vice President and Secretary of the Company. From May-July 2000, Mr. Clark served as Acting President of both the Company and the Bank.

Harry J. Dempsey. Dr. Dempsey has served as an anesthesiologist with Christian County Anesthesia in Hopkinsville, Kentucky, since 1985.

Gilbert E. Lee. Mr. Lee is co-owner of C&L Rentals, LLC, a residential and commercial real estate rental company.

Meetings and Committees of the Board of Directors

The Board of Directors of the Company held 12 meetings during the year ended December 31, 2002. The members of the Company’s Board of Directors are also members of the Bank’s Board of Directors, which held 12 meetings during the year ended December 31, 2002. All incumbent directors attended 75% or more of the total number of Board meetings held during the year ended December 31, 2002 and the total number of meetings held by committees on which such directors served during such period.

The Board of Directors of the Company serves as a nominating committee for selecting the management nominees for election as directors. While the Board of Directors will consider nominees recommended by stockholders, it has not actively solicited recommendations from stockholders for nominees, nor has it established any procedures for this purpose. The Board of Directors held one meeting during the year ended December 31, 2002 in its capacity as a nominating committee.

The Board of Directors’ Audit and Finance Committee consists of directors Dempsey (Chairman), Kelley and Miller. The Audit and Finance Committee met two times during the year ended December 31, 2002. The Audit and Finance Committee is authorized to examine and approve the audit report prepared by the independent auditors of the Company, to appoint, compensate, retain and oversee the independent auditors engaged by the Company and the Bank, to review the internal audit function and internal accounting controls, and to review and approve conflict of interest and audit policies. Each of the members of the Audit and Finance Committee is an “independent director” as defined in the listing standards of the National Association of Securities Dealers, Inc.

In the year ended December 31, 2002, there were no standing committees of the Board of Directors of the Company other than the Audit and Finance Committee. The Board of Directors of the Bank carries out many of its duties through committees.

The Bank’s Executive Committee consists of directors Kelley, Peck and Ezell and is authorized to take actions it deems necessary or appropriate between regular meetings of the Board. The Executive Committee met four times during the year ended December 31, 2002.

The Bank’s Personnel and Compensation Committee consists of directors Lee, Cochran and Ezell. The Personnel and Compensation Committee evaluates the compensation and benefits of the directors, officers and employees, recommends changes, and monitors and evaluates employee performance. All compensation decisions are made by the full Board of Directors. However, directors who are also employees of the Bank abstain from voting and are not present during discussions of the Board on matters relating to their employee compensation. The Personnel and Compensation Committee met one time during the year ended December 31, 2002.

Executive Compensation

Directors and officers do not receive separate compensation directly from the Company. All compensation is paid by the Bank. The following table sets forth a summary of certain information concerning the compensation paid for services rendered in all capacities during the years ended December 31, 2002, 2001 and 2000 to the President and Chief Executive Officer. No other executive officer of the Company earned salary and bonus in the year ended December 31, 2002 exceeding $100,000 for services rendered in all capacities to the Company and the Bank.

SUMMARY COMPENSATION TABLE

								Long-Term Compensation
			Annual Compensation					Awards		Payouts
Name and Principal Position	Year		Salary		Bonus		Other Annual Compensation (1)	Restricted Stock Award(s)	Securities Underlying Options/SARs(#)	LTIP Payouts	All Other Compensation
John E. Peck President and Chief Executive Officer of the Company and the Bank	2002 2001 2000	(3)	$	125,480 119,413 59,474	$	25,000 — —	$— — —	$— — —	— 10,000 40,000	$— — —	$11,638(2) — —

(1)

Executive officers of the Company receive indirect compensation in the form of certain perquisites and other personal benefits. The amount of such benefits received by the named executive officer in the year ended December 31, 2002 did not exceed 10% of the executive officer’s salary and bonus.

(2)

Represents the Bank’s contribution to the 401(k) plan on behalf of the named executive officer.

(3)

Mr. Peck was employed as President and Chief Executive Officer of the Company and the Bank effective July 3, 2000. See

“— Employment Agreements” and “— Report of the Personnel and Compensation Committee.”

Directors’ Compensation

Fees. The members of the Board of Directors of the Company currently do not receive fees in their capacity as such. The Bank’s non-employee directors receive a fee of $550 per meeting attended, plus all non-employee directors receive a retainer of $250 per month. The Chairman of the Board receives a fee of $650 per meeting attended. Non-employee directors of the Bank also receive a fee of $275 per committee meeting attended. During the year ended December 31, 2002, the Bank’s non-employee directors’ fees totaled $72,550.

1999 Stock Option Plan. Pursuant to the 1999 Stock Option Plan which was approved at the 1999 Annual Meeting of Stockholders, directors and employees of the Company and the Bank are eligible to receive options to acquire shares of Common Stock and stock appreciation rights. Upon stockholders’ approval, each director of the Company (other than Messrs. Dempsey, Lee, Harvey, Peck and Miller who were subsequently elected to the Board of Directors) received an option to acquire shares of Common Stock. As a result of the Company’s return of capital distribution in 1999, the exercise price and the number of shares subject to stock options were adjusted pursuant to the 1999 Stock Option Plan in a manner dictated under federal tax regulations applicable to the qualification of incentive stock options for continued tax-favored treatment and to preserve favorable accounting treatment under generally accepted accounting principles. As of the Record Date, no stock options granted under the 1999 Stock

Option Plan had been exercised and no stock appreciation rights had been granted. As of the Record Date, non-employee directors Kelley and Ezell each held an option under the 1999 Stock Option Plan for 24,023 shares of Common Stock, and Mr. Clark held an option under the 1999 Stock Option Plan for 57,656 shares. The exercise price of all such options is $17.42 per share. As of Record Date all such options were exercisable. In addition, as of the Record Date, Mr. Peck held options under the 1999 Stock Option Plan and the 2000 Stock Option Plan for 22,500 shares which were exercisable. As of the Record Date, the fair market value of the Common Stock was $14.10 per share.

Management Recognition Plan. Pursuant to the Management Recognition Plan (the “MRP”) which was approved at the 1999 Annual Meeting of Stockholders, directors, advisory directors and employees of the Company and the Bank are eligible to receive awards of Common Stock under the MRP. Upon stockholder approval, each non-employee directors Kelley and Ezell each received an MRP award of 8,067 shares, and Mr. Clark received an MRP award of 19,361 shares. The MRP awards became vested with respect to 33-1/3% of the awarded shares on each of the date of the award (February 24, 1999), January 1, 2000 and January 1, 2002.

Year

End Option Values

The following table sets forth information concerning the value of options held by the named executive officer at the end of fiscal year 2002. No options were granted to or exercised by the named executive officer during the fiscal year.

Number of Securities

Underlying Unexercised

Options at Fiscal Year End

Value of Unexercised

In-the-Money Options at

Fiscal Year End ($)

Name

Exercisable/Unexercisable

(Number of Shares)

Exercisable/Unexercisable

John E. Peck

22,500/ 27,500

$67,000/ $72,300(1)

(1)

Difference between the fair market value of underlying Common Stock ($13.27 per share) and the exercise price ($10.00 per share as to options for 40,000 shares and $12.33 per share as to options for 10,000 shares) at fiscal year end. An option is in-the-money if the fair market value of the underlying security exceeds the exercise price of the option.

Equity Compensation Plans

The following table provides information as of December 31, 2002 with respect to the shares of Common Stock that may be issued under the Company’s existing equity compensation plans.

Plan Category	Number of Securities to be issued upon Exercise of Outstanding Options, Warrants and Rights	Weighted Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (3)
Equity Compensation Plans Approved by Stockholders(1)	362,302	$	16.71	168,166

Equity Compensation Plans Not Approved by Stockholders(2)	40,000	$	10.00	—

Total	402,309	$	16.05	168,166

(1)

Consists of the 1999 Stock Option Plan.

(2)

Consists of the 2000 Stock Option Plan which was adopted by the Board of Directors in connection with the employment of John E. Peck as President and Chief Executive Officer of the Company and the Bank. Pursuant to such Plan and his employment agreement, Mr. Peck was granted options to purchase 40,000 shares of Common Stock at an exercise price of $10.00 per share.

(3)

Includes shares available for future issuance under the 1999 Stock Option Plan. In addition, any shares of Common Stock subject to an option which remains unissued after the cancellation, expiration or exchange of such option shall again become available for grant under the 1999 Stock Option Plan. There will be no further grants of options under the 2000 Stock Option Plan.

Certain Benefit Plans and Agreements

401(k) Plan. The Bank maintains the Heritage Bank 401(k) plan for the benefit of employees who are 21 years of age and have completed one year of service to the Bank. The benefits contributed by the Bank are discretionary and are determined by the Board of Directors annually. In 2002, the Bank contributed on behalf of each participating eligible employee a sum equal to 4% of the employee’s annual salary without regards to the employee’s level of personal contribution to the 401(k) plan. The Bank also contributed on behalf of each participating employee an additional amount equal to the employee’s annual 401(k) contribution. In 2002, the Bank’s total pension plan expense related to the 401(k) plan was $136,000.

Employment Agreements. The Company and the Bank have entered into separate employment agreements (the “Employment Agreements”) with John E. Peck, President and Chief Executive Officer of the Company and the Bank. The Board of Directors of each of the Company and the Bank believe that the Employment Agreements assure fair treatment of Mr. Peck in his career with the Company and the Bank by affording him some financial security.

The Employment Agreements became effective May 31, 2000, each for a term of three years and with an annual base salary of $116,500 from July 3, 2000 through July 3, 2001, $122,325 through July 3, 2002 and $128,442 through July 3, 2003. As of the anniversary date of each of the Employment Agreements, the term the Employment Agreement may be extended for as additional one-year period if the Board determines that Mr. Peck’s performance has met the Board’s requirements and standards. The Employment Agreements provide Mr. Peck with a salary review by the Board of Directors not less often than annually, as well as with inclusion in any discretionary bonus plans, retirement and medical plans, customary fringe benefits, vacation and sick leave. Each of the Employment Agreements shall terminate upon Mr. Peck’s death and may terminate upon the Mr. Peck’s disability. The

Employment Agreement with the Bank is terminable by the Bank for “just cause” (as defined in the Employment Agreement). In the event of termination for just cause, no severance benefits are available. If the Company or the Bank terminates Mr. Peck without just cause, Mr. Peck will be entitled to a continuation of his salary and benefits from the date of termination through the remaining term of the Employment Agreement and, at Mr. Peck’s election, either continued participation in benefit plans which Mr. Peck would have been eligible to participate in through the Employment Agreements’ expiration date or the cash equivalent thereof. If the Employment Agreements are terminated due to Mr. Peck’s “disability” (as defined in the Employment Agreements), Mr. Peck will be entitled to a continuation of his salary and benefits through the date of such termination, including any period prior to the establishment of Mr. Peck’s disability. In the event of Mr. Peck’s death during the term of the Employment Agreements, his estate will be entitled to receive his salary through the last day of the calendar month in which Mr. Peck’s death occurred. Mr. Peck is able to voluntarily terminate his Employment Agreements by providing 60 days’ prior written notice to the Boards of Directors of the Bank and the Company, in which case Mr. Peck is entitled to receive only his compensation, vested rights and benefits accrued up to the date of termination.

In the event of Mr. Peck’s involuntary termination of employment other than for “just cause” within 12 months after a change in control of the Company or the Bank which has not been approved in advance by a two-thirds vote of the full Board of Directors of each of the Company and the Bank, Mr. Peck will be paid, subject to any federal regulatory limitations, within 10 days of such termination an amount equal to the difference between (i) 2.99 times his “base amount,” as defined in Section 280G(b)(3) of the Internal Revenue Code, and (ii) the sum of any other parachute payments, as defined under Section 280G(b)(2) of the Internal Revenue Code, that Mr. Peck receives on account of the change in control. The term “change in control” is defined in the Employment Agreements to mean (i) a change in the ownership, holding or power to vote more than 25% of the Bank’s or Company’s voting stock, (ii) a change in the ownership or possession of the ability to control the election of a majority of the Bank’s or Company’s directors, or (iii) a change in the ownership or possession of the ability to exercise a controlling influence over the management or policies of the Bank or the Company by any person or by persons acting as a “group” within the meaning of Section 13(d) of the Exchange Act. The aggregate payment that would be made to Mr. Peck assuming his termination of employment under the foregoing circumstances at December 31, 2002 would have been approximately $366,000. These provisions may have an anti-takeover effect by making it more expensive for a potential acquiror to obtain control of the Company. In the event that the Mr. Peck prevails over the Company and the Bank, or obtains a written settlement, in a legal dispute as to the Employment Agreements, Mr. Peck will be reimbursed for his legal and other expenses.

Transactions with Management

The Bank offers loans to its directors and officers. These loans currently are made in the ordinary course of business with the same collateral, interest rates and underwriting criteria as those of comparable transactions prevailing at the time and do not involve more than the normal risk of collectibility or present other unfavorable features. Under current law, the Bank’s loans to directors and executive officers are required to be made on substantially the same terms, including interest rates, as those prevailing for comparable transactions and must not involve more than the normal risk of repayment or present other unfavorable features. No loans to directors and officers have terms more favorable than might be otherwise offered to customers.

Kerry B. Harvey, a director of the Company and the Bank, is a partner in the firm of Owen, Harvey and Carter, which renders legal services to the Company and the Bank.

Report of the Audit and Finance Committee

The following Report of the Audit and Finance Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein.

In accordance with its written charter, as adopted by the Board of Directors, the Audit and Finance Committee (the “Committee”) assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company. During the fiscal year ended December 31, 2002, the Committee met two times, and the Committee discussed the interim financial information contained in each quarterly earnings announcement with the Chief Financial Officer and independent auditors prior to the public release.

In discharging its oversight responsibility as to the audit process, the Committee obtained from the independent auditors a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors’ independence consistent with Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees,” discussed with the auditors any relationships that may impact their objectivity and independence and satisfied itself as to the auditors’ independence.The Committee also discussed with management and the independent auditors the quality and adequacy of the Company’s internal controls and the internal audit function’s organization, responsibilities, budget and staffing. The Committee reviewed with the independent auditors their audit plans, audit scope, and identification of audit risks.

The Committee reviewed and discussed with the independent auditors all communications required by generally accepted auditing standards, including those described in Statement on Auditing Standards No. 61, as amended, “Communication with Audit Committees,” and, with and without management present, discussed and reviewed the results of the independent auditors’ examination of the financial statements.

The Committee reviewed and discussed the audited financial statements of the Company as of and for the fiscal year ended December 31, 2002, with management and the independent auditors.Management has the responsibility for the preparation of the Company’s financial statements, and the independent auditors have the responsibility for the examination of those statements.

Based on the above-mentioned review and discussions with management and the independent auditors, the Committee recommended to the Board that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2002, for filing with the Securities and Exchange Commission. The Committee intends to reappointment the independent auditors, subject to stockholder ratification of such appointment at the 2003 Annual Meeting of Stockholders.

Harry J. Dempsey, Chairman

WD Kelley

Thomas I. Miller

Report of the Personnel and Compensation Committee

As members of the Personnel and Compensation Committee (the “Compensation Committee”) of the Bank, it is our duty to review compensation policies applicable to executive officers; to consider the relationship of corporate performance to that compensation; to recommend salary and bonus levels for executive officers for consideration by the Board of Directors of the Bank; and to administer various incentive plans of the Company and the Bank.

Overview. Under the compensation policies of the Bank, which are endorsed by the Compensation Committee, compensation is paid based both on the executive officer’s performance and the performance of the entire Company. In assessing the performance of the Company and the Bank for purposes of compensation decisions, the Compensation Committee considers a number of factors, including profits of the Company and the Bank during the past year relative to their profit plans, changes in the value of the Company’s stock, reports of federal regulatory examinations of the Company and the Bank, growth, business plans for future periods, and regulatory capital levels. The Compensation Committee assesses individual executive performance based upon its determination of the officer’s contributions to the performance of the Company and the Bank and the accomplishment of the Company’s and the Bank’s strategic goals, such as loan growth, deposit growth, expense control and net income. In assessing performance, the members of the Compensation Committee did not make use of a mechanical weighting formula or use specific performance targets, but instead weighed the described factors as they deemed appropriate in the total circumstances.

Base Salary. The 2002 salary levels of the Bank’s senior officers were established in 2001 consistent with this compensation policy. In its review of base compensation, the Compensation Committee determined that the performance of Mr. Peck in managing the Company and the Bank was satisfactory, based upon the 2001 financial performance of the Bank, including the growth in assets, income, and capitalization during 2001; the results of confidential regulatory examinations; his involvement in community affairs in the communities served by the Bank; the Company’s planned levels of financial performance for 2002; and a general level of satisfaction with the management of the Company and the Bank. Based upon the results of this review, the salary of Mr. Peck was established at $128,442 year for 2002, which represented a 4.8% increase over his 2001 base salary.

Mr. Peck was employed as President and Chief Executive Officer of each of the Company and the Bank effective May 5, 2000. Mr. Peck’s annual base salary was established at the rate of $116,500 through July 3, 2001, $122,325 through July 3, 2002 and $128,442 through July 3, 2003. The Board of Directors shall review, not less often than annually, the rate of Mr. Peck’s base salary, and in its sole discretion may decide to increase his base salary.

Bonus. For his performance in 2002, the Compensation Committee recommended, and the Board of Directors approved, a cash bonus award to Mr. Peck of $25,000. The award was in recognition of the Bank’s achievements during the year, including the successful acquisition of the Fulton, Kentucky division and growth in the Bank’s services to its customers and communities.

No member of the Compensation Committee is a former or current officer of the Company or the Bank.

Gilbert E. Lee, Chairman

Walton G. Ezell

Thomas I. Miller

Stock Performance Comparisons

The following graph, which was prepared by SNL Securities LC, Charlottesville, Virginia, shows the cumulative total return on the Common Stock of the Company since the Conversion, compared with (1) the NASDAQ Total Return Index, comprised of all U.S. Companies quoted on NASDAQ, (2) the SNL Midwest Thrift Index, comprised of publicly traded thrifts and thrift holding companies operating in the midwestern United States and (3) the SNL <$250 Million Thrift Index, comprised of publicly traded thrifts and thrift holding companies with total assets of less than $250 million. The SNL <$250 Million Thrift Index will be deleted subsequent hereto since the Company’s total assets exceed that amount. Cumulative total return on the Common Stock or the index equals the total increase in value since February 9, 1998 assuming reinvestment of all dividends paid into the Common Stock or the index, respectively. The graph was prepared assuming that $100 was invested on February 9, 1998 in the Common Stock, and the securities included in the indexes.

CUMULATIVE TOTAL STOCKHOLDER RETURN

COMPARED WITH PERFORMANCE OF SELECTED INDEXES

February 9, 1998 through December 31, 2002

LOGO

	Period Ending
Index	02/09/98	12/31/98	12/31/99	12/31/00	12/31/01	12/31/02
HopFed Bancorp, Inc.	100.00	103.15	119.51	87.34	96.74	112.23
NASDAQ—Total US	100.00	130.86	242.69	146.10	115.91	80.12
SNL Midwest Thrift Index	100.00	93.27	77.54	104.57	120.26	155.03
SNL <$250M Thrift Index	100.00	81.96	76.98	81.74	110.53	137.73

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% stockholders are required to furnish the Company with copies of all such reports. Based solely on its review of copies of such reports received by it, or written representations from certain reporting persons that no annual report of change in beneficial ownership is required, the Company believes that during the year ended December 31, 2002, all such filing requirements were complied with, except that reports of purchases of Common Stock were not filed on a timely basis for each of directors Kerry B. Harvey (one purchase), Gilbert E. Lee (one purchase) and Thomas I. Miller (six purchases), but all such reports were subsequently filed.

PROPOSAL II — RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

Rayburn, Betts & Bates, P.C. served as the Company’s independent auditors for the year ended December 31, 2002. The Audit Committee presently intends to renew the Company’s arrangement with Rayburn, Betts & Bates, P.C. to serve as the Company’s independent auditors for the fiscal year ending December 31, 2003, subject to ratification of such appointment by the Company’s stockholders at the Annual Meeting. Action by stockholders is not required by law in the selection of independent auditors, but the proposal is submitted by the Board of Directors in order to give stockholders an opportunity to ratify the selection. If stockholders do not ratify the selection of Rayburn, Betts & Bates, P.C., the Audit Committee will reconsider the selection of independent auditors.

A representative of Rayburn, Betts & Bates, P.C. is expected to be present at the Annual Meeting to respond to appropriate questions and will have the opportunity to make a statement if he so desires.

Fees billed to the Company and the Bank by Rayburn, Betts & Bates, P.C. during the fiscal year ended December 31, 2002 were as follows:

Audit Fees: The aggregate fees billed for professional services rendered in connection with the audit of the Company’s annual financial statements for the fiscal year ended December 31, 2002, audit of the financial statements for the Company’s Fulton, Kentucky acquisition and reviews of the financial statements included in the Company’s quarterly reports on Form 10-Q totaled $106,937.

Financial Information Systems Design and Implementation Fees: The Company and the Bank did not engage Rayburn, Betts & Bates, P.C. to provide advice regarding financial information systems design and implementation during the fiscal year ended December 31, 2002.

All Other Fees: The aggregate fees agreed upon for non-audit services by Rayburn, Betts & Bates, P.C. relating to the fiscal year ended December 31, 2002, including tax related services, totaled $10,000.

The Audit and Finance Committee has considered whether the provision of non-audit services is compatible with maintaining the independence of Rayburn, Betts & Bates, P.C. The Company retains its independent auditors to advise it on other matters in addition to its core auditing functions. These engagement decisions are made only when two conditions are satisfied. First is a determination that the firm’s particular expertise, coupled with its knowledge of the Company, provides substantial assurance of high-quality, focused, timely and useful results. Second is a determination that the engagement is consistent with the maintenance of auditor independence. Both of these determinations are reviewed regularly with the Audit and Finance Committee.

Ratification of the appointment of the independent auditors must be approved by a majority of the votes cast by the stockholders of the Company at the Annual Meeting. The Board of Directors recommends that the stockholders vote “FOR” the ratification of the appointment of the independent auditors.

OTHER MATTERS

The Board of Directors is not aware of any business to come before the Annual Meeting other than those matters described above in this Proxy Statement and matters incident to the conduct of the Annual Meeting. Properly executed proxies in the accompanying form that have not been revoked confer discretionary authority on the persons named therein to vote at the direction of a majority of the Board of Directors on any other matters presented at the Annual Meeting. Under SEC rules, if a stockholder notifies the Company after April 21, 2003 of such stockholder’s intent to present a proposal at the Annual Meeting, the persons named in the accompanying proxy may exercise such discretionary voting authority if the proposal is raised at the Annual Meeting, without any discussion of the matter in this Proxy Statement.

MISCELLANEOUS

The cost of solicitation of proxies will be borne by the Company. The Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy material to the beneficial owners of Common Stock. In addition to solicitations by mail, directors, officers and regular employees of the Company and the Bank may solicit proxies personally, by telegraph or telephone without additional compensation.

The Annual Report to Stockholders for the year ended December 31, 2002, including financial statements, is being mailed to all stockholders of record as of the close of business on the Record Date. Any stockholder who has not received a copy of such Annual Report may obtain a copy by writing to the Secretary of the Company. Such Annual Report is not to be treated as part of the proxy solicitation material nor as having been incorporated herein by reference.

STOCKHOLDER PROPOSALS

In order to be eligible for inclusion in the proxy statement and proxy relating to the 2004 annual meeting of stockholders of the Company, which will be held on or about May 19, 2004, any stockholder proposal to take action at such meeting must be received by the Secretary of the Company at 2700 Fort Campbell Boulevard, Hopkinsville, Kentucky no later than December 16, 2003. With respect to the 2004 annual meeting of stockholders of the Company, if notice of a stockholder proposal, which the stockholder has not previously sought to include in the Company’s proxy statement, is not received by April 19, 2003, management proxies will be allowed to use their discretionary authority to vote on such proposal without any discussion of the matter in the proxy statement. Nothing in this paragraph shall be deemed to require the Company to include in its proxy statement and proxy relating to the 2004 annual meeting, or to consider and vote upon at any such meeting, any stockholder proposal which does not meet all of the requirements established by the SEC or the Company’s Certificate of Incorporation or Bylaws in effect at the time such proposal is received.

ANNUAL REPORT ON FORM 10-K

A COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, HOPFED BANCORP, INC., 2700 FORT CAMPBELL BOULEVARD, HOPKINSVILLE, KENTUCKY 42240.

BY ORDER OF THE BOARD OF DIRECTORS

BOYD M. CLARK

SECRETARY

Hopkinsville, Kentucky

April 14, 2003

REVOCABLE PROXY

HOPFED BANCORP, INC.

ANNUAL MEETING OF STOCKHOLDERS

May 21, 2003

The undersigned stockholder of HopFed Bancorp, Inc. (the “Company”) hereby appoints Thomas I. Miller and Gilbert E. Lee, or either of them, with full powers of substitution, as attorneys and proxies for the undersigned, to vote all shares of Common Stock of the Company which the undersigned is entitled to vote at the Annual Meeting of Stockholders, to be held at the main office of Heritage Bank, 2700 Fort Campbell Boulevard, Hopkinsville, Kentucky on Wednesday, May 21, 2003 at 3:00 p.m., local time, and at any and all adjournments thereof, as indicated below and as determined by a majority of the Board of Directors with respect to such other matters as may come before the Annual Meeting.

				FOR		VOTE WITHHELD		FOR ALL EXCEPT
I.		Election as directors of all nominees listed below (except as marked to the contrary)		¨		¨		¨

Kerry B. Harvey

John E. Peck

INSTRUCTION: To withhold authority to

vote for any individual nominee, mark

“FOR ALL EXCEPT” and write that

nominee’s name in the space provided below.

II. Ratification of the appointment of Rayburn, Betts & Bates, P.C. as independent auditors of the Company for the fiscal year ending December 31, 2003.

FOR ¨

AGAINST ¨

ABSTAIN ¨

III. Such other matters as may properly come before the Annual Meeting or any adjournment thereof.

THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING AS TO WHICH THIS PROXY CONFERS DISCRETIONARY AUTHORITY, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY AS DETERMINED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

Should the undersigned be present and elect to vote at the Annual Meeting or at any adjournment thereof and after notification to the Secretary of the Company at the Annual Meeting of the stockholder’s decision to terminate this proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect. The undersigned hereby revokes any and all proxies heretofore given with respect to shares of Common Stock of the Company which the undersigned is entitled to vote at the Annual Meeting.

The undersigned stockholder acknowledges receipt from the Company, prior to the execution of this proxy, of Notice of the Annual Meeting, a Proxy Statement, and the Annual Report to Stockholders.

Dated: , 2003


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Hopfed Bancorp (HFBC) DEF 14ADefinitive proxy