Exhibit 99.1
NEWS
| FOR IMMEDIATE RELEASE | CONTACT: | John E. Peck | ||
| President and CEO | ||||
| (270) 885-1171 |
HOPFED BANCORP, INC. REPORTS THIRD QUARTER RESULTS
HOPKINSVILLE, Ky. (October 26, 2009) – HopFed Bancorp, Inc. (NASDAQ: HFBC) (the “Company”) today reported results for the three and nine-month periods ended September 30, 2009. For the three month period ended September 30, 2009, net income (loss) available for common shareholders was ($2,875,000), or ($0.80) per share (basic and diluted), compared to $1,149,000, or $0.32 per share (basic and diluted) for the three month period ended September 30, 2008, and $854,000, or $0.24 per share (basic and diluted) for the three month period ended June 30, 2009. For the nine-month period ended September 30, 2009, net income (loss) available for common shareholders was ($1,009,000), or ($0.28) per share (basic and diluted) as compared to $3.9 million, or $1.09 per share basic and $1.08 per share diluted for the nine month period ended September 30, 2008.
Commenting on the third quarter results, John E. Peck, president and chief executive officer, said, “The Company is disappointed to report the goodwill impairment charge. It is important to remember that the impairment charge is a non-cash adjustment that does not affect the Company’s capital ratios, statement of cash flows and liquidity. The Company’s actions in the third quarter strengthen its balance sheet and establish a strong foundation for future growth.”
Highlights from the Third Quarter
| • | As previously reported, the Company incurred a $5 million goodwill impairment charge that reduced after tax net income by $3.3 million, or $0.92 per share basic and diluted for the three and nine month periods ended September 30, 2009. The goodwill impairment charge eliminates all goodwill on the Company’s books. |
| • | Heritage Bank, the Company’s wholly owned subsidiary, remains well capitalized by regulatory standards with a Tier One Capital Ratio of 7.89% and a Total Risked Based Capital Ratio of 13.2%. |
| • | The Company’s provision for loan loss expense was $1.4 million and $3.3 million for the three and nine month periods ended September 30, 2009, as compared to $805,000 and $1.7 million for the three and nine month periods ended September 30, 2008. |
| • | The Company’s allowance for loan loss account has increased by $2.3 million since the end of 2008 while net charges off for the nine month period ended September 30, 2009, were approximately $1.0 million. |
| • | The Company’s tangible book value per share is $16.98 at September 30, 2009, compared to $14.77 at December 31, 2008. |
Asset Quality
The Company’s asset quality remains strong. At September 30, 2009, the Company’s non-performing loans total $7.3 million, or 1.12% of total loans. Non-performing assets total $8.8 million, or 0.86% of total assets. The Company’s ratios of non-performing loans and non-performing assets at June 30, 2009, were 1.26% and 0.91%, respectively. The Company’s allowance for loan loss balance is $8.4 million, or 1.28% to total loans and 115% of non-performing loans. The Company’s year to date net charge offs are $1.0 million, or 0.21% of average loans. During the three month period ended September 30, 2009, the Company’s balance of foreclosed real estate increase from $900,000 to $1.4 million. The increase in foreclosed property balances is due to an increased time for marketing properties.
HFBC Reports Third Quarter Results
Page 2
October 26, 2009
Net Interest Income
For the three and nine month periods ended September 30, 2009, the Company’s net interest income was $6.9 million and $19.8 million, respectively compared to $5.9 million and $17.4 million for the same periods in 2008. The Company’s net interest income for the three month period ended June 30, 2009, was $6.6 million. The Company’s improved level of net interest income is the result of higher balances in interest earning assets and lower rates paid on deposit accounts. For the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009, the Company’s net interest margin was 2.89%, 2.93% and 3.02%, respectively. The Company experienced a significant amount of time deposit renewals late in third quarter of 2009. Therefore, the Company anticipates that its cost to fund interest earning assets will continue to decline into the fourth quarter of 2009.
Non-interest Income
Non-interest income for the three month periods ended September 30, 2009, and September 30, 2008, was $2.1 million as compared to $2.7 million for the three month period ended June 30, 2009. The reduction in non-interest income for the three month period ended September 30, 2009, compared to June 30, 2009, related to a $700,000 reduction in security gains. Other non-interest income measurements are largely unchanged at September 30, 2009, as compared to June 30, 2009.
Non-interest Expense
For the nine month periods ended September 30, 2009, and September 30, 2008, non-interest expenses excluding goodwill impairment charges increased by $2.7 million. Other operating expenses with significant increases during the nine month period ended September 30, 2009, compared to September 30, 2008, includes a $1.4 million increase in deposit and examination fees, a $600,000 increase in compensation expense, a $200,000 increase in occupancy expenses and a $250,000 increase in data processing expenses. For the three month periods ended June 30, 2009, and September 30, 2009, operating expenses less goodwill declined approximately $100,000.
Balance Sheet
Total assets are $1.0 billion at September 30, 2009, an increase of $54.6 million from December 31, 2008. During the same period, the Company’s deposits have grown at a 9.8% annualized rate to $765.4 million while loans have grown at an annualized rate of 4.5% to $656.5 million. The Company’s total borrowing from the Federal Home Loan Bank of Cincinnati has declined to $125.3 million at September 30, 2009, from $130.0 million at December 31, 2008. In the nine month period ended September 30, 2009, the Company’s investment portfolio grew by $58.5 million to $305.5 million.
HopFed Bancorp, Inc. is the holding company for Heritage Bank headquartered in Hopkinsville, Kentucky. The Bank has eighteen offices in western Kentucky and middle Tennessee as well as Fall & Fall Insurance of Fulton, Kentucky, Heritage Solutions of Murray, Kentucky, Hopkinsville, Kentucky, Kingston Springs, Tennessee and Pleasant View, Tennessee, and Heritage Mortgage Services of Clarksville, Tennessee. The Bank offers a broad line of banking and financial products and services with the personalized focus of a community banking organization. More information about HopFed Bancorp and Heritage Bank may be found on its websitewww.bankwithheritage.com.
Information contained in this press release, other than historical information, may be considered forward-looking in nature and is subject to various risk, 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.
HFBC Reports Third Quarter Results
Page 3
October 26, 2009
HOPFED BANCORP, INC.
Selected Financial Data
(Dollars in thousands)
Selected Financial Indicators as of: | ||||||||||||
September 30, 2009 | June 30, 2009 | December 31, 2008 | ||||||||||
Total assets | $ | 1,022,123 | $ | 1,001,794 | $ | 967,560 | ||||||
Loans receivable, gross | 656,471 | 644,538 | 634,489 | |||||||||
Securities available for sale | 305,462 | 290,092 | 246,952 | |||||||||
Securities held to maturity | — | 413 | 454 | |||||||||
Required investment in FHLB stock, at cost | 4,281 | 4,281 | 4,050 | |||||||||
Allowance for loan loss | 8,429 | 7,427 | 6,133 | |||||||||
Total deposits | 765,381 | 743,547 | 713,005 | |||||||||
Total FHLB borrowings | 125,307 | 129,141 | 130,012 | |||||||||
Repurchase agreements | 32,926 | 31,438 | 28,680 | |||||||||
Stockholders’ equity | 80,694 | 79,809 | 78,284 | |||||||||
Book value per share, gross | $ | 17.33 | $ | 17.08 | $ | 16.67 | ||||||
Tangible book value per share | $ | 16.98 | $ | 15.30 | $ | 14.77 | ||||||
Allowance for loan loss / Gross loans | 1.28 | % | 1.15 | % | 0.97 | % | ||||||
Non-performing assets / Total asset | 0.86 | % | 0.91 | % | 0.86 | % | ||||||
Non-performing loans / Total loans | 1.12 | % | 1.26 | % | 1.16 | % | ||||||
Annualized net charge off ratio | 0.21 | % | 0.21 | % | 0.20 | % | ||||||
Tier 1 Capital - Bank | 7.89 | % | 7.80 | % | 7.77 | % | ||||||
Total Risk Based Capital - Bank | 13.23 | % | 13.01 | % | 12.62 | % | ||||||
Year to date tax equivalent net yield on interest earning assets | 2.95 | % | 2.91 | % | 3.04 | % | ||||||
HFBC Reports Third Quarter Results
Page 4
October 26, 2009
HOPFED BANCORP, INC.
Selected Financial Data
(Dollars in thousands)
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||
Interest and dividend income: | ||||||||||||
Loans receivable | $ | 9,898 | $ | 10,345 | $ | 29,238 | $ | 31,323 | ||||
Investment in securities, taxable | 3,179 | 1,750 | 9,670 | 5,068 | ||||||||
Nontaxable securities available for sale | 428 | 153 | 1,090 | 477 | ||||||||
Interest-earning deposits | — | 23 | 8 | 118 | ||||||||
Total interest and dividend income | 13,505 | 12,271 | 40,006 | 36,986 | ||||||||
Interest expense: | ||||||||||||
Deposits | 5,237 | 4,967 | 16,037 | 15,331 | ||||||||
Advances from Federal Home Loan Bank | 1,032 | 985 | 3,108 | 3,018 | ||||||||
Repurchase agreements | 198 | 256 | 588 | 856 | ||||||||
Subordinated debentures | 168 | 121 | 446 | 405 | ||||||||
Total interest expense | 6,635 | 6,329 | 20,179 | 19,610 | ||||||||
Net interest income | 6,870 | 5,942 | 19,827 | 17,376 | ||||||||
Provision for loan losses | 1,379 | 805 | 3,315 | 1,682 | ||||||||
Net interest income after provision for loan losses | 5,491 | 5,137 | 16,512 | 15,694 | ||||||||
Non-interest income: | ||||||||||||
Service charges | 1,118 | 1,250 | 3,140 | 3,420 | ||||||||
Merchant card income | 153 | 148 | 450 | 432 | ||||||||
Gain on sale of loans | 69 | 7 | 189 | 112 | ||||||||
Gain on sale of securities | 114 | 16 | 1,581 | 718 | ||||||||
Income from bank owned life insurance | 73 | 68 | 220 | 203 | ||||||||
Financial services commission | 262 | 321 | 738 | 840 | ||||||||
Other operating income | 296 | 240 | 867 | 826 | ||||||||
Total non-interest income | 2,085 | 2,050 | 7,185 | 6,551 | ||||||||
HFBC Reports Third Quarter Results
Page 5
October 26, 2009
HOPFED BANCORP, INC.
Selected Financial Data
(Dollars in thousands, except share and per share data)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||
Non-interest expenses: | ||||||||||||||
Salaries and benefits | $ | 3,086 | $ | 2,875 | $ | 9,304 | $ | 8,667 | ||||||
Occupancy expense | 814 | 726 | 2,312 | 2,112 | ||||||||||
Data processing expense | 666 | 582 | 1,936 | 1,685 | ||||||||||
State deposit tax | 154 | 128 | 465 | 384 | ||||||||||
Intangible amortization expense | 146 | 204 | 553 | 643 | ||||||||||
Impairment charge on goodwill | 4,989 | — | 4,989 | — | ||||||||||
Professional services expense | 242 | 265 | 777 | 815 | ||||||||||
Advertising expense | 333 | 313 | 976 | 910 | ||||||||||
Postage and communications expense | 157 | 162 | 480 | 476 | ||||||||||
Supplies expense | 91 | 86 | 262 | 253 | ||||||||||
Deposit insurance and examination expense | 798 | 146 | 1,683 | 319 | ||||||||||
Other operating expenses | 199 | 126 | 681 | 430 | ||||||||||
Total non-interest expense | 11,675 | 5,613 | 24,418 | 16,694 | ||||||||||
Income (loss) before income tax expense | (4,099 | ) | 1,574 | (721 | ) | 5,551 | ||||||||
Income tax expense (benefit) | (1,484 | ) | 425 | (483 | ) | 1,649 | ||||||||
Net income (loss) | $ | (2,615 | ) | $ | 1,149 | $ | (238 | ) | $ | 3,902 | ||||
Less: | ||||||||||||||
Dividend on preferred shares | $ | 232 | — | $ | 688 | — | ||||||||
Accretion dividend on preferred shares | $ | 28 | — | $ | 83 | — | ||||||||
Net income (loss) available to common stockholders | $ | (2,875 | ) | $ | 1,149 | $ | (1,009 | ) | $ | 3,902 | ||||
Net income (loss) available to common stockholders | ||||||||||||||
Per share, basic | $ | (0.80 | ) | $ | 0.32 | $ | (0.28 | ) | $ | 1.09 | ||||
Per share, diluted | $ | (0.80 | ) | $ | 0.32 | $ | (0.28 | ) | $ | 1.08 | ||||
Dividend per share | $ | 0.12 | $ | 0.12 | $ | 0.36 | $ | 0.36 | ||||||
Weighted average shares outstanding - basic | 3,571,716 | 3,578,924 | 3,565,827 | 3,592,525 | ||||||||||
Weighted average shares outstanding - diluted | 3,571,716 | 3,583,018 | 3,565,827 | 3,604,581 | ||||||||||
HFBC Reports Third Quarter Results
Page 6
October 26, 2009
HOPFED BANCORP, INC.
Reconciliation of Non-GAAP Measures Presented in Earnings Release
(Dollars in thousands, except per share data)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||
Total non-interest expense | 11,675 | 5,613 | 24,418 | 16,694 | ||||||||||
Goodwill impairment charge | 4,989 | — | 4,989 | — | ||||||||||
Operating expenses | 6,686 | 5613 | 19,429 | 16,694 | ||||||||||
Net income (loss) available to common shareholders as reported | $ | (2,875 | ) | $ | 1,149 | $ | (1,009 | ) | $ | 3,902 | ||||
Goodwill impairment, net of tax benefit | 3,293 | — | 3,293 | — | ||||||||||
Adjusted earnings | $ | 418 | $ | 1,149 | $ | 2,284 | $ | 3,902 | ||||||
Basic earnings (loss) per common share as reported | $ | (0.80 | ) | $ | 0.32 | $ | (0.28 | ) | $ | 1.09 | ||||
Goodwill impairment, net of tax benefit | 0.92 | — | 0.92 | — | ||||||||||
Adjusted basic common earnings per common share | $ | 0.12 | $ | 0.32 | $ | 0.64 | $ | 1.09 | ||||||
Diluted earnings (loss) per common share as reported | $ | (0.80 | ) | $ | 0.32 | $ | (0.28 | ) | $ | 1.08 | ||||
Goodwill impairment, net of tax benefit | 0.92 | — | 0.92 | — | ||||||||||
Adjusted basic common earnings per common share | $ | 0.12 | $ | 0.32 | $ | 0.64 | $ | 1.08 | ||||||
Use of Non-GAAP financial measures
The above table presents computations and other financial information excluding the goodwill impairment charge (non-GAAP). The goodwill impairment charge is included in the financial results presented in accordance with generally accepted accounting principles (GAAP). The Company believes that the exclusion of goodwill impairment in expressing net operating income (loss), operating expenses and earnings (loss) per share data provides a more meaningful basis for period to period comparisons which will assist investors in analyzing the operating performance and comparable periods in the prior years with the internally prepared projections. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited.
HFBC Reports Third Quarter Results
Page 7
October 26, 2009
HOPFED BANCORP, INC.
Selected Financial Data
(Dollars in thousands)
| For the Three Months Ended | ||||||||||
| 9/30/2009 | 6/30/2009 | Change from Prior Quarter | ||||||||
Interest and dividend income: | ||||||||||
Loans receivable | $ | 9,898 | $ | 9,712 | $ | 186 | ||||
Investment in securities, taxable | $ | 3,179 | 3,205 | (26 | ) | |||||
Nontaxable securities available for sale | $ | 428 | 390 | 38 | ||||||
Interest-earning deposits | — | — | — | |||||||
Total interest and dividend income | 13,505 | 13,307 | 198 | |||||||
Interest expense: | ||||||||||
Deposits | 5,237 | 5,334 | (97 | ) | ||||||
Advances from Federal Home Loan Bank | 1,032 | 1,039 | (7 | ) | ||||||
Repurchase agreements | 198 | 196 | 2 | |||||||
Subordinated debentures | 168 | 176 | (8 | ) | ||||||
Total interest expense | 6,635 | 6,745 | (110 | ) | ||||||
Net interest income | 6,870 | 6,562 | 308 | |||||||
Provision for loan losses | 1,379 | 962 | 417 | |||||||
Net interest income after provision for loan losses | 5,491 | 5,600 | (109 | ) | ||||||
Non-interest income: | ||||||||||
Service charges | 1,118 | 1,098 | 20 | |||||||
Merchant card income | 153 | 157 | (4 | ) | ||||||
Gain on sale of loans | 69 | 51 | 18 | |||||||
Gain on sale of securities | 114 | 809 | (695 | ) | ||||||
Income from bank owned life insurance | 73 | 74 | (1 | ) | ||||||
Financial services commission | 262 | 250 | 12 | |||||||
Other operating income | 296 | 302 | (6 | ) | ||||||
Total non-interest income | 2,085 | 2,741 | (656 | ) | ||||||
HFBC Reports Third Quarter Results
Page 8
October 26, 2009
HOPFED BANCORP, INC.
Selected Financial Data
(Dollars in thousands, except share and per share data)
| For the Three Months Ended | ||||||||||
| 9/30/2009 | 6/30/2009 | Change from Prior Quarter | ||||||||
Non-interest expenses: | ||||||||||
Salaries and benefits | 3,086 | 3,172 | (86 | ) | ||||||
Occupancy expense | 814 | 750 | 64 | |||||||
Data processing expense | 666 | 639 | 27 | |||||||
State deposit tax | 154 | 155 | (1 | ) | ||||||
Intangible amortization expense | 146 | 203 | (57 | ) | ||||||
Impairment charge on goodwill | 4,989 | — | 4,989 | |||||||
Professional services expense | 242 | 223 | 19 | |||||||
Advertising expense | 333 | 320 | 13 | |||||||
Postage and communications expense | 157 | 164 | (7 | ) | ||||||
Supplies expense | 91 | 91 | 0 | |||||||
Deposit insurance and examination expense | 798 | 722 | 76 | |||||||
Other operating expenses | 199 | 342 | (143 | ) | ||||||
Total non-interest expense | 11,675 | 6,781 | 4,894 | |||||||
Income (loss) before income tax expense | (4,099 | ) | 1,560 | (5,659 | ) | |||||
Income tax expense (benefit) | (1,484 | ) | 449 | (1,933 | ) | |||||
Net income (loss) available to common stockholders | $ | (2,615 | ) | $ | 1,111 | (3,726 | ) | |||
Less: | ||||||||||
Dividends on preferred shares | 232 | 229 | 3 | |||||||
Accretion dividend on preferred shares | 28 | 28 | — | |||||||
Net income (loss) available to common stockholders | $ | (2,875 | ) | $ | 854 | (3,729 | ) | |||
Net income (loss) available to common stockholders | ||||||||||
Per share, basic | $ | (0.80 | ) | $ | 0.24 | (1.04 | ) | |||
Per share, diluted | $ | (0.80 | ) | $ | 0.24 | (1.04 | ) | |||
Dividends per share | $ | 0.12 | $ | 0.12 | — | |||||
Weighted average shares outstanding - basic | 3,571,716 | 3,568,814 | ||||||||
Weighted average shares outstanding - diluted | 3,571,716 | 3,568,814 | ||||||||