Hopfed Bancorp (HFBC) 8-K Hopfed Bancorp, Inc. Reports Third Quarter Results

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. (November 1, 2010) – HopFed Bancorp, Inc. (NASDAQ: HFBC), (the “Company”) today reported results for the three and nine month periods ended September 30, 2010. For the three month period ended September 30, 2010, net income available to common shareholders was $1,508,000 or $0.21 per share basic and diluted compared to a net loss of $2,875,000, or $0.80 per share basic and diluted, for the three month period ended September 30, 2009. For the nine month period ended September 30, 2010, net income available to common shareholders was $4,928,000, or $1.01 per share basic and diluted as compared to a net loss of $1,009,000, or $0.28 per share basic and diluted for the nine month period ended September 30, 2009. Income results for the three and nine month periods ended September 30, 2009, were adversely affected by a $5.0 million goodwill impairment charge. The impairment charge reduced the Company’s 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.

Commenting on the three and nine month periods ended September 30, 2010, John E. Peck, President and Chief Executive Officer, said, “The Company’s profitability level for the first nine months of 2010 exceed that for the twelve month period ended December 31, 2008, which was the most profitable year in the Company’s twelve year history. The Company has made significant progress in addressing our credit issues. We anticipate gaining possession of approximately $9 million of non-accrual collateral in the fourth quarter of 2010, which will reduce the amount of time that these assets remain on Heritage Bank’s books. We remain focused on enhancing the strength of our balance sheet, reducing our cost of funds and improving our deposit mix as loan demand remains weak.”

Financial Highlights

• The Company continues to reduce its cost of deposits by focusing on relationship pricing within our core customer base. As a result, the Company’s quarter cost of deposits has declined from 2.27% for the three month period ended March 31, 2010, 2.14% for the three months ended June 30, 2010, and 2.04% for the three month period ended September 31, 2010.

• The Company’s growth in both non-interest bearing and interest bearing checking accounts remains impressive. For the nine months ended September 30, 2010, the balances in these deposit accounts increased by more than $31.4 million, or more than 18%.

• The Company’s provision for loan loss expense for the three and nine month periods ended September 30, 2010, was $1.3 million and $2.8 million, respectively, as compared to the provision for loan loss expense for the three and nine month periods ended September 30, 2009, of $1.4 million and $3.3 million, respectively. The Company’s allowance for loan loss account equaled approximately 75.4% of the Company’s non-performing loans at September 30, 2010.

• The Company and its wholly owned subsidiary, Heritage Bank, continue to maintain exceptional capital levels. At September 30, 2010, the Bank’s Tier 1 Capital and Total Risk Based Capital Ratios were 9.07% and 15.87%, respectively. At September 30, 2010, the Company’s Tier 1 Capital and total Risk Based Capital Ratios were 10.83% and 19.04%.

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HFBC Reports Third Quarter Results

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November 1, 2010

Asset Quality

At September 30, 2010, the Company’s non-performing loans totaled $12.0 million, or 1.90% of total loans, as compared to $11.2 million, or 1.72% of total loans at December 31, 2009. At September 30, 2010, non-performing assets totaled $14.6 million, or 1.30% of total assets, compared to $13.1 million, or 1.28% of total assets, at December 31, 2009. At September 30, 2010, the Company’s allowance for loan loss balance was $9.0 million, or 1.43% of total loans. For the nine month period ended September 30, 2010, the Company’s net charge-offs totaled $2.6 million, an annualized rate of 0.55% of average loans. Management continues to identify and resolve problem loans within the Bank’s loan portfolio and has provided adequate reserves for all known and probable loan losses.

Net Interest Income

For the nine month period ended September 30, 2010, the Company’s net interest income was $22.9 million, compared to $19.8 million for the nine month period ended September 30, 2009. For the three month period ended September 30, 2010, the Company’s net interest income was $7.7 million, compared to $6.9 million for the three month period ended September 30, 2009, and $7.9 million for the three month period ended June 30, 2010. Net interest income continues to be negatively affected by the low rate market. The Company’s investment portfolio yields are declining as agency bonds and mortgage backed securities experienced greater levels of prepayments. Management has chosen to reduce the balances of FHLB loans and brokered deposits due to the lack of attractive investment options.

For the three month period ended September 30, 2010, the Company’s interest expense declined by $175,000 and $1.1 million as compared to the three month periods ended June 30, 2010, and September 30, 2009, respectively. The decline of interest expense occurred despite a $53.2 million increase in average interest bearing liabilities during the three month period ended September 30, 2010, as compared to the three month period ended September 30, 2009. For the three month period ended September 30, 2010, interest bearing liabilities increased by $6.4 million as compared to the three month period ended June 30, 2010. For the three month periods ended June 30, 2010, and September 30, 2010, the Company’s quarterly cost of deposits declined from 2.14% to 2.04%, respectively.

Non-interest Income

Non-interest income for the three month period ended September 30, 2010, was $3.1 million, compared to $2.1 million for the three month period ended September 30, 2009. The increase in non-interest income for the period ended September 30, 2010, was the result of a $946,000 increase in gains on the sale of securities. For the nine month periods ended September 30, 2010 and September 30, 2009, gains on the sale of securities totaled $1.8 million and $1.6 million, respectively. The Company’s decision to sell securities for gains is based on many factors, including the level of prepayments on mortgage backed securities and our desire to reduce the Company’s dependency on higher cost deposit funding sources.

For the three and nine month periods ended September 30, 2010, service charge income was $953,000 and $3.0 million, respectively, as compared to $1.1 million and $3.1 million for the three and nine month periods ended September 30, 2009, respectively. For the three and nine month periods ended September 30, 2010, the decline in service charge income was only marginally affected by the new regulations that took effect August 1, 2010, but more significantly by a long term trend of lower levels of overdraft income. During the three month period ended September 30, 2010, lower long term interest rates resulted in an increase in mortgage refinancing activity. As a result, the Company earned $204,000 in gains on the sale of loans during the three month period ended September 30, 2010, as compared to $69,000 for the same three month period in 2009.

Non-interest Expense

As compared to the three and nine month periods ended September 30, 2009, non-interest expenses declined by $4.8 million and $4.6 million, respectively, due to the $5.0 million goodwill impairment charge taken in 2009. Excluding the goodwill impairment charge, non-interest expenses increased by approximately 2% in the nine month period ended September 30, 2010. For the nine month period ended September 30, 2010, salaries and benefits expense increased by approximately $320,000 and other expenses increased by $273,000 as compared to the nine month period ended September 30, 2009.

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HFBC Reports Third Quarter Results

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November 1, 2010

Balance Sheet

Total assets were $1.1 billion at September 30, 2010, an increase of $90.7 million from December 31, 2009. During the same period, the Company’s deposits grew by $37.6 million, while gross loans declined by approximately $20.6 million. Loan demand remains weak, and the Company anticipates that it will continue to reduce its balances on time deposits until loan demand improves. The Company continues to grow core deposit base and will continue to place a high emphasis on this strategy.

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 in addition to its subsidiaries, 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.

HOPFED BANCORP, INC.

Selected Financial Data

(Table amounts in thousands, except percentages and book value per share data)

	Selected Financial Indicators as of:
	September 30, 2010			December 31, 2009
Total assets	$	1,120,541		$	1,029,876
Loans receivable, gross		630,589			651,206
Securities available for sale		389,063			289,691
Required investment in FHLB stock, at cost		4,378			4,281
Allowance for loan loss		9,015			8,851
Total deposits		831,776			794,144
Total FHLB borrowings		97,764			102,465
Repurchase agreements		53,467			36,060
Stockholders' equity		119,236			79,949
Book value per share, gross	$	14.02		$	17.12
Tangible book value per share	$	13.90		$	16.80
Allowance for loan loss / Gross loans		1.43	%		1.36	%
Non-performing assets / Total asset		1.30	%		1.28	%
Non-performing loans / Total loans		1.90	%		1.72	%
Aggregate Troubled Debt Restructurings - Performing	$	9,879		$	10,890
Year to date net charge off ratio		0.55	%		0.23	%
Tier 1 Capital - Bank		9.07	%		8.05	%
Tier 1 Capital - Consolidated		10.83	%		8.05	%
Total Risk Based Capital - Bank		15.87	%		13.30	%
Total Risk Based Capital - Consolidated		19.04	%		13.75	%
Year to date tax equivalent net yield on interest earning assets		3.23	%		2.97	%

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HFBC Reports Third Quarter Results

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November 1, 2010

HOPFED BANCORP, INC.

Selected Financial Data

(Dollars in thousands)

	For the Three Month  Periods Ended September 30,				For the Nine Month  Periods Ended September 30,
	2010		2009		2010		2009
Interest and dividend income:
Loans receivable	$	9,396		9,898		29,027		29,238
Investment in securities, taxable		3,165		3,179		9,122		9,670
Nontaxable securities available for sale		635		428		1,809		1,090
Interest-earning deposits		—		—		—		8
Total interest and dividend income		13,196		13,505		39,958		40,006
Interest expense:
Deposits		4,313		5,237		13,405		16,037
Advances from Federal Home Loan Bank		818		1,032		2,500		3,108
Repurchase agreements		213		198		619		588
Subordinated debentures		193		168		557		446
Total interest expense		5,537		6,635		17,081		20,179
Net interest income		7,659		6,870		22,877		19,827
Provision for loan losses		1,332		1,379		2,801		3,315
Net interest income after provision for loan losses		6,327		5,491		20,076		16,512
Non-interest income:
Service charges		953		1,118		2,974		3,140
Merchant card income		180		153		519		450
Gain on sale of loans		204		69		391		189
Gain on sale of securities		1,060		114		1,786		1,581
Income from bank owned life insurance		85		73		263		220
Financial services commission		293		262		776		738
Gain on sale of other real estate owned		63		—		356		—
Other operating income		247		296		785		867
Total non-interest income		3,085		2,085		7,850		7,185

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HFBC Reports Third Quarter Results

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November 1, 2010

HOPFED BANCORP, INC.

Selected Financial Data

(Dollars in thousands, except share and per share data)

	For the Three Month  Periods Ended September 30,					For the Nine Month  Periods Ended September 30,
	2010		2009			2010		2009
Non-interest expenses:
Salaries and benefits	$	3,186		3,086			9,623		9,304
Occupancy expense		795		814			2,351		2,312
Data processing expense		705		666			2,101		1,936
State deposit tax		162		154			479		465
Intangible amortization expense		81		146			276		553
Impairment charge on goodwill		—		4,989			—		4,989
Professional services expense		335		242			932		777
Deposit insurance and examination expense		759		798			1,547		1,683
Advertising expense		262		333			774		976
Postage and communications expense		144		157			426		480
Supplies expense		95		91			287		262
Real estate owned expenses		36		12			218		96
Loss on sale of real estate		—		23			—		43
Other operating expenses		296		164			815		542
Total non-interest expense		6,856		11,675			19,829		24,418
Income before income tax expense		2,556		(4,099	)		8,097		(721	)
Income tax expense		788		(1,484	)		2,398		(483	)
Net income (loss)		1,768		(2,615	)		5,699		(238	)
Less:
Dividend on preferred shares		232		232		$	688	$	688
Accretion dividend on preferred shares		28		28		$	83	$	83
Net income (loss) available to common stockholders		1,508		(2,875	)		4,928		(1,009	)
Net income available to common stockholders
Per share, basic	$	0.21	($	0.80	)	$	1.01	($	0.28	)
Per share, diluted	$	0.21	($	0.80	)	$	1.01	($	0.28	)
Cash dividend per share	$	0.08	$	0.12		$	0.32	$	0.36
Weighted average shares outstanding - basic		7,128,548		3,571,716			4,890,786		3,565,827
Weighted average shares outstanding - diluted		7,128,548		3,571,716			4,890,786		3,565,827

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HFBC Reports Third Quarter Results

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November 1, 2010

HOPFED BANCORP, INC.

Selected Financial Data

(Dollars in thousands)

	For the Three Months Ended
	9/30/2010		6/30/2010		Change from Prior Quarter
Interest and dividend income:
Loans receivable		9,396		10,010		(614	)
Investment in securities, taxable		3,165		3,035		130
Nontaxable securities available for sale		635		611		24
Interest-earning deposits		—		—		—
Total interest and dividend income		13,196		13,656		(460	)
Interest expense:
Deposits		4,313		4,501		(188	)
Advances from Federal Home Loan Bank		818		826		(8	)
Repurchase agreements		213		204		9
Subordinated debentures		193		181		12
Total interest expense		5,537		5,712		(175	)
Net interest income		7,659		7,944		(285	)
Provision for loan losses		1,332		858		474
Net interest income after provision for loan losses		6,327		7,086		(759	)
Non-interest income:
Service charges		953		1,036		(83	)
Merchant card income		180		179		1
Gain on sale of loans		204		103		101
Gain on sale of securities		1,060		232		828
Income from bank owned life insurance		85		89		(4	)
Gain on sale of real estate owned		63		268		(205	)
Financial services commission		293		286		7
Other operating income		247		263		(16	)
Total non-interest income		3,085		2,456		629

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HFBC Reports Third Quarter Results

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November 1, 2010

HOPFED BANCORP, INC.

Selected Financial Data

(Dollars in thousands, except share and per share data)

	For the Three Months Ended
	9/30/2010		6/30/2010		Change from Prior Quarter
Non-interest expenses:
Salaries and benefits		3,186		3,207		(21	)
Occupancy expense		795		767		28
Data processing expense		705		707		(2	)
State deposit tax		162		160		2
Intangible amortization expense		81		98		(17	)
Professional services expense		335		345		(10	)
Deposit insurance and examination expense		759		407		352
Advertising expense		262		271		(9	)
Postage and communications expense		144		147		(3	)
Supplies expense		95		99		(4	)
Expenses related to real estate owned		36		87		(51	)
Other operating expenses		296		292		4
Total non-interest expense		6,856		6,587		269
Income before income tax expense		2,556		2,955		(399	)
Income tax expense		788		884		(96	)
Net income		1,768		2,071		(303	)
Less:
Dividend on preferred shares		232		229		3
Accretion dividend on preferred shares		28		28		0
Net income available to common stockholders	$	1,508	$	1,814		(306	)
Net income available to common stockholders
Per share, basic	$	0.21	$	0.46	($	0.25	)
Per share, diluted	$	0.21	$	0.46	($	0.25	)
Dividend per share	$	0.08	$	0.12	($	0.04	)
Weighted average shares outstanding - basic		7,128,548		3,937,542		3,191,006
Weighted average shares outstanding - diluted		7,128,548		3,939,369		3,189,179

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HFBC Reports Third Quarter Results

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November 1, 2010

HOPFED BANCORP, INC.

Selected Financial Data

The table below adjusts tax-free investment income for the nine month periods ended September 30, 2010 and September 30, 2009, by $832 and $488, respectively; for a tax equivalent rate using a cost of funds rate of 2.50% for September 30, 2010, and 3.00% for September 30, 2009. The table adjusts tax-free loan income by $42 for September 30, 2010, and $35 for September 30, 2009, for a tax equivalent rate using the same cost of funds rate:

	Average Balance 9/30/2010		Income and Expense 9/30/2010			Average Rates 9/30/2010			Average Balance 9/30/2009		Income and Expense 9/30/2009			Average Rates 9/30/2009
	(Table amounts in Thousands, Expect Percentages)
Loans	$	635,118	$	29,069			6.10	%	$	628,965	$	29,273			6.21	%
Investments AFS taxable		282,627		9,122			4.30	%		253,903		9,658			5.07	%
Investment AFS tax free		61,776		2,641			5.70	%		33,647		1,578			6.25	%
Investment held to maturity		—		—			—			375		12			4.27	%
Federal funds		—		—			—			4,156		8			0.26	%
Total interest earning assets		979,521		40,832			5.56	%		921,046		40,529			5.87	%
Other assets		99,898								81,383
Total assets	$	1,079,419							$	1,002,429
Retail time deposits	$	492,589		10,542			2.85	%		469,012		12,891			3.66	%
Brokered deposits		84,415		1,564			2.47	%		69,742		1,945			3.72	%
Now accounts		123,816		1,203			1.30	%		92,660		1,091			1.57	%
MMDA and savings accounts		62,745		96			0.20	%		59,241		110			0.25	%
FHLB borrowings		94,081		2,500			3.54	%		122,190		3,108			3.39	%
Repurchase agreements		41,652		619			1.98	%		30,473		588			2.57	%
Subordinated debentures		10,310		557			7.20	%		10,310		446			5.77	%
Total interest bearing liabilities		909,608		17,081			2.50	%		853,628		20,179			3.15	%
Non-interest bearing deposits		68,434								61,291
Other liabilities		5,032								6,281
Shareholders equity		96,345								81,229
Total liabilities and shareholder equity	$	1,079,419							$	1,002,429
Net interest income			$	23,751							$	20,350
Interest rate spread							3.06	%							2.72	%
Net yield on interest earning assets				3.23	%							2.95	%

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HFBC Reports Third Quarter Results

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November 1, 2010

HOPFED BANCORP, INC.

Selected Financial Data

The table below adjusts tax-free investment income for the three month periods ended September 30, 2010 and September 30, 2009, by $292 and $192, respectively; for a tax equivalent rate using a cost of funds rate of 2.50% for September 30, 2010, and 3.00% for September 30, 2009. The table adjusts tax-free loan income by $10 for September 30, 2010, and $9 for September 30, 2009, for a tax equivalent rate using the same cost of funds rate:

	Average Balance 9/30/2010		Income & Expense 9/30/2010			Average Rates 9/30/2010			Average Balance 9/30/2009		Income & Expense 9/30/2009			Average Rates 9/30/2009
	(Table amounts in Thousands, Except Percentages)
Loans	$	623,398	$	9,406			6.04	%	$	640,902	$	9,907			6.18	%
Investments AFS taxable		320,891		3,165			3.95	%		254,786		3,177			4.99	%
Investment AFS tax free		67,111		927			5.53	%		39,819		620			6.23	%
Investment Held to maturity		—		—			—			259		2			3.09	%
Federal funds		—		—			—			—		—			—
Total interest earning assets		1,011,400		13,498			5.34	%		935,766		13,706			5.86	%
Other assets		104,919								83,943
Total assets	$	1,116,319							$	1,019,709
Retail time deposits	$	487,998		3,337			2.74	%	$	475,652		4,155			3.49	%
Brokered deposits		83,632		488			2.33	%		74,140		656			3.54	%
Now accounts		140,826		431			1.22	%		100,344		396			1.58	%
MMDA and savings accounts		62,920		57			0.36	%		59,504		30			0.20	%
FHLB borrowings		89,874		818			3.64	%		119,373		1,032			3.46	%
Repurchase agreements		46,459		213			1.83	%		29,473		198			2.69	%
Subordinated debentures		10,310		193			7.49	%		10,310		168			6.52	%
Total interest bearing liabilities		922,019		5,537			2.40	%		868,796		6,635			3.05	%
Non-interest bearing deposits		69,962								63,090
Other liabilities		5,503								6,829
Stockholders’ equity		118,835								80,994
Total liabilities and stockholders’ equity	$	1,116,319							$	1,019,709
Net interest income			$	7,961							$	7,071
Interest rate spread							2.94	%							2.81	%
Net yield on interest earning assets				3.15	%							3.02	%

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