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

Exhibit 99.1

NEWS

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

HOPFED BANCORP, INC. REPORTS THIRD QUARTER RESULTS

HOPKINSVILLE, Ky. (October 31, 2016) – HopFed Bancorp, Inc. (NASDAQ: HFBC) (the “Company”), the holding company for Heritage Bank USA, Inc. (the “Bank”), today reported results for the three and nine month periods ended September 30, 2016. For the three month period ended September 30, 2016, the Company reported net income of $985,000, or $0.16 per share, basic and diluted, compared to net income of $510,000, or $0.08 per share basic and diluted, for the three month period ended September 30, 2015. For the nine month periods ended September 30, 2016, the Company’s net income was $1.8 million, or $0.29 per share basic and diluted. For the nine month period ended September 30, 2015, the company’s net income was $1.7 million, or $0.27 per share, basic and diluted.

Commenting on the third quarter results, John E. Peck, President and Chief Executive Officer, said, “The Company experienced net loan growth of $18.3 million during the three month period ended September 30, 2016. The Company’s Nashville loan production office has originated loans with balances totaling $39.5 million at September 30, 2016, as compared to $23.3 million at June 30, 2016, and $7.8 million at September 30, 2015. Our loan pipeline remains robust. In addition to commercial loan growth, our secondary market loan operation continues to find success. In October 2016, we opened a loan production office in Brentwood, Tennessee, that enhances both our secondary market and portfolio lending in the attractive Williamson County, Tennessee market.” Mr. Peck concluded.

Financial Highlights

• At September 30, 2016, the Company’s tangible book value was $14.31 per share and tangible common equity ratio was 10.18%. The Company’s tangible book value and common equity ratio computations do not include 514,187 shares of common stock held by the Company’s ESOP that the Company has currently not committed to release.

• The Company purchased 16,029 shares of its common stock in the three month period ended September 30, 2016, at a weighted average price of $11.44 per share. For the nine month period ended September 30, 2016, the Company purchased 154,247 shares of its common stock at a weighted average price of $11.72 per share. At September 30, 2016, the Company owns 1,240,135 shares of treasury stock at a weighted average cost of $12.32 per share.

• The Company’s estimated Tier 1 Leverage Ratio and Total Risk Based Capital Ratio at September 30, 2016, were 10.87% and 16.92%, respectively. The Bank’s Tier 1 Leverage Ratio and Total Risk Based Capital Ratio at September 30, 2016, were 10.75% and 16.76%, respectively.

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HFBC Reports Third Quarter Results

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October 31, 2016

Asset Quality

At September 30, 2016, the Company’s level of non-accrual loans totaled $11.7 million, as compared to $7.4 million at December 31, 2015. A summary of non-accrual loans at September 30, 2016, and December 31, 2015, is as follows:

	September 30, 2016		December 31, 2015
	(Dollars in Thousands)
One-to-four family mortgages	$	700	$	2,234
Home equity line of credit		124		48
Multi-family		1,772		1,968
Land		7,842		1,553
Non-residential real estate		248		247
Farmland		—		166
Consumer loans		31		8
Commercial loans		947		1,198
Total non-accrual loans	$	11,664	$	7,422

The increase in non-accrual loans at September 30, 2016, as compared to December 31, 2015, is largely the result of one land development relationship that has been classified as substandard since July of 2013. The collateral for the loan consists of undeveloped land that is being held for future commercial development and a single family residence.

At September 30, 2016, non-performing assets totaled $12.4 million, or 1.43% of total assets. At September 30, 2016, the Company had no loans past due 90 days or more and still accruing interest. A summary of the activity in other real estate owned for the nine month period ended September 30, 2016, is as follows:

			Activity During 2016
	Balance							Reduction		Gain (Loss)			Balance
	12/31/2015		Foreclosures		Proceeds			in Values		on Sale			9/30/2016
	(Dollars in Thousands)
One-to-four family mortgages	$	55		—		(43	)		—		(12	)	$	—
Home equity line of credit		—		68		—			—		—			68
Multi-family real estate		—		141		—			—		—			141
Land		943		130		(987	)		—		(13	)		73
Non-residential real estate		738		—		(270	)		—		(9	)		459
Consumer		—		15		(19	)		—		4			—
Total	$	1,736		354		(1,319	)		—		(30	)	$	741

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HFBC Reports Third Quarter Results

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October 31, 2016

Asset Quality (continued)

For the nine month period ended September 30, 2016, the Company’s balance of loans classified as Troubled Debt Restructurings (“TDRs”) increased from $5.5 million to $6.5 million. The increase is the result of one lending relationship in which the customer’s payment terms were revised to provide for interest only payments while the customer attempts to sell the collateral. A summary of the activity in loans classified as TDRs for the nine month period ended September 30, 2016, is as follows:

	Balance at		New		Loss or		Loan			Removed from (Taken to)		Balance at
	12/31/15		TDR		Foreclosure		Amortization			Non-accrual		09/30/16
	(Dollars in Thousands)
Multi-family real estate		—		816		—		—			—		816
Non-residential real estate	$	5,536		228		—		(77	)		—		5,687
Total performing TDR	$	5,536		1,044		—		(77	)		—	$	6,503

At September 30, 2016, the Company’s level of loans classified as substandard was $31.9 million as compared to $28.1 million at December 31, 2015. The $3.8 million increase in classified assets at September 30, 2016, as compared to December 31, 2015, is largely the result of one large commercial agri-business loan that has been negatively affected by the decline in commodity prices and one unrelated multi-family loan. At September 30, 2016, the Company’s classified loan to total risk-based capital ratio was 31.8%. The Company’s specific reserve for impaired loans was $605,000 at September 30, 2016, and $630,000 at December 31, 2015. A summary of the level of classified loans and the Company’s allocation of its allowance for loan loss by loan type at September 30, 2016, is as follows:

											Specific		Allowance
											Allowance		for
			Special		Impaired Loans						for		Performing
	Pass		Mention		Substandard		Doubtful		Total		Impairment		Loans
	(Dollars in Thousands)
One-to-four family mortgages	$	144,587		753		1,404		—		146,744		—		1,132
Home equity line of credit		34,023		25		515		—		34,563		—		335
Junior liens		1,557		32		12		—		1,601		—		11
Multi-family		27,623		—		4,795		—		32,418		351		157
Construction		37,775		—		—		—		37,775		—		806
Land		14,562		37		8,400		—		22,999		—		1,044
Non-residential real estate		160,096		5		10,658		—		170,759		101		1,143
Farmland		44,066		505		2,306		—		46,877		—		1,015
Consumer loans		8,605		—		303		—		8,908		70		143
Commercial loans		79,484		666		3,534		—		83,684		83		421
Total	$	552,378		2,023		31,927		—		586,328		605		6,207

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HFBC Reports Third Quarter Results

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October 31, 2016

Net Interest Income

For the three month period ended September 30, 2016, total interest income was $8.0 million, as compared to $7.7 million for the three month period ended June 30, 2016, and $8.0 million for the three month period ended September 30, 2015. For the three month period ended September 30, 2016, total interest expense was $1.3 million, representing a linked quarter increase of $47,000 and a decline of $318,000 as compared to the three month period ended September 30, 2015. The decline of interest expense for the three month period ended September 30, 2016, as compared to the three month period ended September 30, 2015, is largely attributable to maturities of higher costing time deposits, reducing the Company’s interest expense on deposits by $202,000 as compared to the three month period ended September 30, 2015. On a linked quarter basis, the slight increase in interest expense is largely the result of $12.7 million increase in total deposit balances and a 0.03% increase in the total cost interest bearing liabilities. For the three month period ended September 30, 2016, the Company’s interest expense on subordinated debentures declined by $87,000 as compared to the three month period ended September 30, 2015, due to the maturing of an interest rate swap on the debenture.

For the three month period ended September 30, 2016, the Company’s net interest income was $6.7 million, compared to $6.4 million for the three month periods ended June 30, 2016, and September 30, 2015, respectively. For the three month period ended September 30, 2016, the Company’s net interest margin was 3.41%, as compared to 3.28% for the three month period ended June 30, 2016, and 3.25% for the three month period ended September 30, 2015. The net interest margin for the three month period ended June 30, 2016, was negatively influenced by a large loan being classified as non-accrual, resulting in a $200,000 reduction of interest income on loans.

For the nine month period ended September 30, 2016, the Company’s total interest income was $23.8 million, as compared to $25.1 million for the nine month period ended September 30, 2015. The $1.3 million decline in total interest income for the nine month period ended September 30, 2016, as compared to September 30, 2015, was largely the result of a $1.7 million decline in investment income. For the nine month period ended September 30, 2015, the Company experienced an $830,000 recovery on a previously non-accrual investment. In addition to the investment income recovery, the combined average balance of taxable and tax free investments for the nine month period ended September 30, 2016, declined by $27.6 million as compared to the nine month period ended September 30, 2015.

For the nine month period ended September 30, 2016, the Company’s interest expense was $4.0 million, as compared to $4.9 million for the nine month period ended September 30, 2015. The decline of interest expense is the result of both lower interest rates and reduced average balances of time deposits. For the nine month period ended September 30, 2016, the average balance of retail time deposits were $257.8 million and their average cost was 0.95%. For the nine month period ended September 30, 2015, the average balance of retail time deposits were $289.2 million and their average cost was 1.16%. For the nine month period ended September 30, 2016, the Company’s interest expense on subordinated debentures was $287,000, or 3.71%, as compared to $553,000, or 7.15%, for the nine month period ended September 30, 2015. The decline in subordinated debentures interest expense is the result of the maturity of the Company’s interest rate swap on its debenture.

For the nine month period ended September 30, 2016, the Company’s net interest income was $19.8 million, as compared to $20.2 million for the nine month period ended September 30, 2015. For the nine month period ended September 30, 2016, the Company’s net interest margin was 3.36%, as compared to 3.40% for the nine month period ended September 30, 2015. For the nine month period ended September 30, 2015, the recovery of non-accrual investment interest added 0.16% to the Company’s net interest margin.

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HFBC Reports Third Quarter Results

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October 31, 2016

Non-interest Income

On a linked quarter basis, total non-interest income declined by $25,000 largely due to a $60,000 decline in financial services income. On a linked quarter basis, mortgage origination revenue declined by $20,000 while gains on the sale of securities and income from bank owned life insurance both increased by $27,000. For the three month period ended September 30, 2016, total non-interest income was $9,000 higher as compared to the three month period ended September 30, 2015. For the three month period ended September 30, 2016, service charge income was $719,000, representing a $31,000 decline as compared to the three month period ended September 30, 2015. For the three month period ended September 30, 2016, merchant card income was $308,000, as compared to $286,000 for the three month period ended September 30, 2015. The Company’s mortgage origination revenue for the three month period ended September 30, 2016, was $415,000, as compared to $345,000 for the three month period ended September 30, 2015. For the three month period ended September 30, 2016, financial services income was $131,000, as compared to $186,000 for the three month period ended September 30, 2015.

For the nine month period ended September 30, 2016, non-interest income was $5.9 million, as compared to $5.7 million for the nine month period ended September 30, 2015. The increase in non-interest income for the nine month period ended September 30, 2016, as compared to the nine month period ended September 30, 2015, is largely the result of a $353,000 increase in mortgage origination revenue. For the nine month period ended September 30, 2016, other operating income was $568,000, as compared to $483,000 for the nine month period ended September 30, 2015. For the nine month period ended September 30, 2016, gains on the sale of securities were $422,000, a decline of $130,000 as compared to the nine month period ended September 30, 2016.

Non-interest Expense

On a linked quarter basis, the Company’s non-interest expenses declined by $256,000. On a linked quarter basis, the most significant increases in operating expenses was a $40,000 increase in data processing expenses and a $63,000 increase in professional services expenses. For the three month period ended September 30, 2016, the Company’s salaries and benefits expenses declined by $144,000 and other operating expense declined by $140,000, respectively, as compared to the three month period ended June 30, 2016. During the three month period ended September 30, 2016, the Company sold real estate accounted for a fixed asset for a gain of $72,000.

For the three month period ended September 30, 2016, non-interest expenses declined by $200,000 as compared to the three month period ended September 30, 2015. For the three month period ended September 30, 2016, salaries and benefits expense declined by $203,000 as compared to the three month period ended September 30, 2015. For the three month period ended September 30, 2016, other non-interest expense declined by $67,000 as compared to the three month period ended September 30, 2015. For the three month period ended September 30, 2016, no other non-interest expense items increased or decreased by more than $50,000 as compared to the three month period ended September 30, 2015.

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HFBC Reports Third Quarter Results

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October 31, 2016

Non-interest Expense (continued)

For the nine month period ended September 30, 2016, non-interest expenses were $22.7 million, a decline of $612,000 as compared to the nine month period ended September 30, 2015. For the nine month period ended September 30, 2016, expense items changing by more than $100,000 as compared to the nine month period ended September 30, 2015, include:

	Nine Month Period Ended				Dollar			Percentage
	09/30/16		09/30/15		Change			Change
Salaries and benefits	$	11,646	$	12,148	($	502	)		-4.13	%
Occupancy	$	2,398	$	2,278	$	120			5.27	%
Professional services	$	1,008	$	1,177	($	169	)		-14.36	%
Loss on sale of other real estate owned	$	30	$	716	($	686	)		-95.81	%
Other expenses	$	1,771	$	1,446	$	325			22.48	%

Balance Sheet

At September 30, 2016, consolidated assets were $871.9 million, a decline of $31.2 million as compared to December 31, 2015. For the nine month period ended September 30, 2016, the Company experienced a $14.0 million decrease in time deposits, a $4.0 million decrease in FHLB borrowings, a $25.3 million decrease in cash balances and a $22.7 million increase in net loan balances. To fund the growth in loan balances and reduction in FHLB borrowings and time deposits, the Company has reduced its balance in available for sale securities by $23.9 million, to $213.3 million at September 30, 2016, as compared to December 31, 2015.

The Company

Prior to June 5, 2013, HopFed Bancorp, Inc. was a federally chartered savings and loan holding company with Heritage Bank as its wholly owned thrift subsidiary. On June 5, 2013, Heritage Bank’s legal name was changed to Heritage Bank USA, Inc., and its charter was converted to a Kentucky state chartered commercial bank with the Kentucky Department of Financial Institutions and the Federal Deposit Insurance Corporation as its regulators. Also on June 5, 2013, HopFed Bancorp, Inc. became a non-member federally chartered commercial bank holding company regulated by the Federal Reserve Board. HopFed Bancorp, Inc. is the holding company for Heritage Bank USA, Inc. headquartered in Hopkinsville, Kentucky. The Bank has eighteen offices in western Kentucky and middle Tennessee and two loan production offices in Nashville, Tennessee, and Brentwood Tennessee. The Company has two additional operating divisions including Heritage Wealth Management of Murray, Kentucky, Hopkinsville, Kentucky, and Pleasant View, Tennessee, which offers a broad line of financial services. Heritage Mortgage Services of Clarksville, Tennessee, offers long term fixed rate 1- 4 family mortgages loans that are originated for the secondary market in all communities in the Company’s general market area. 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 USA, Inc. may be found on its websitewww.bankwithheritage.com.

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HFBC Reports Third Quarter Results

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October 31, 2016

Forward-Looking Information

Information contained in this press release, other than historical information, may be consideredforward-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. 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.

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HFBC Reports Third Quarter Results

Page 8

October 31, 2016

HOPFED BANCORP, INC.

Consolidated Condensed Balance Sheets

(Dollars in thousands)

	September 30, 2016		December 31, 2015
	(unaudited)
Assets
Cash and due from banks	$	24,741		46,926
Interest-earning deposits		4,695		7,772
Cash and cash equivalents		29,436		54,698
Federal Home Loan Bank stock, at cost		4,428		4,428
Securities available for sale		213,289		237,177
Loans held for sale		1,547		2,792
Loans receivable, net of allowance for loan losses of $6,812 at September 30, 2016, and $5,700 at December 31, 2015		579,063		556,349
Accrued interest receivable		3,603		4,139
Real estate and other assets owned		741		1,736
Bank owned life insurance		10,581		10,319
Premises and equipment, net		23,579		24,034
Deferred tax assets		2,144		2,642
Other assets		3,495		4,840
Total assets	$	871,906		903,154
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing accounts	$	130,327		125,070
Interest-bearing accounts
Interest-bearing checking accounts		182,360		203,779
Savings and money market accounts		98,929		95,893
Other time deposits		300,701		314,664
Total deposits		712,317		739,406
Advances from Federal Home Loan Bank		11,000		15,000
Repurchase agreements		44,465		45,770
Subordinated debentures		10,310		10,310
Advances from borrowers for taxes and insurance		1,111		614
Dividends payable		287		287
Accrued expenses and other liabilities		3,554		4,137
Total liabilities		783,044		815,524

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

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HFBC Reports Third Quarter Results

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October 31, 2016

HOPFED BANCORP, INC.

Consolidated Condensed Balance Sheets, Continued

(Dollars in thousands)

	September 30, 2016			December 31, 2015
	(unaudited)
Stockholders’ equity:
Preferred stock, par value $0.01 per share; authorized - 500,000 shares; no shares issued and outstanding at September 30, 2016, and December 31, 2015		—			—
Common stock, par value $.01 per share; authorized 15,000,000 shares; 7,963,378 issued and 6,723,243 outstanding at September 30, 2016, and 7,951,699 issued and 6,865,811 outstanding at December 31, 2015		80			79
Additional paid-in-capital		58,658			58,604
Retained earnings		48,176			47,124
Treasury stock- common (at cost, 1,240,135 shares at September 30, 2016, and 1,085,888 shares at December 31, 2015)		(15,279	)		(13,471	)
Unallocated ESOP shares (at cost 514,187 shares at September 30, 2016, and 546,413 shares at December 31, 2015)		(6,756	)		(7,180	)
Accumulated other comprehensive income, net of taxes		3,983			2,474
Total stockholders’ equity		88,862			87,630
Total liabilities and stockholders’ equity	$	871,906			903,154

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

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HFBC Reports Third Quarter Results

Page 10

October 31, 2016

HOPFED BANCORP, INC.

Consolidated Condensed Statements of Income

(Dollars in thousands)

Unaudited

	For the Three Month Periods				For the Nine Month Periods
	Ended September 30,				Ended September 30,
	2016		2015		2016		2015
Interest income:
Loans receivable		6,569		6,374		19,175		18,895
Securities available for sale - taxable		1,099		1,237		3,544		4,953
Securities available for sale - nontaxable		326		398		1,019		1,267
Interest-earning deposits		10		3		38		11
Total interest income		8,004		8,012		23,776		25,126
Interest expense:
Deposits		1,044		1,246		3,146		3,751
Advances from Federal Home Loan Bank		33		71		134		206
Repurchase agreements		139		130		421		368
Subordinated debentures		99		186		287		553
Total interest expense		1,315		1,633		3,988		4,878
Net interest income		6,689		6,379		19,788		20,248
Provision for loan losses		255		275		1,178		760
Net interest income after provision for loan losses		6,434		6,104		18,610		19,488
Non-interest income:
Service charges		719		750		2,094		2,184
Merchant card income		308		286		913		842
Mortgage origination revenue		415		345		1,218		865
Gain on sale of securities		79		103		422		552
Income from bank owned life insurance		104		108		265		252
Financial services commission		131		186		455		539
Other operating income		189		158		568		483
Total non-interest income		1,945		1,936		5,935		5,717

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

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HFBC Reports Third Quarter Results

Page 11

October 31, 2016

HOPFED BANCORP, INC.

Consolidated Condensed Statements of Income, Continued

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

(Unaudited)

	For the Three Month Periods						For the Nine Month Periods
	Ended September 30,						Ended September 30,
	2016			2015			2016			2015
Non-interest expenses:
Salaries and benefits		3,757			3,960			11,646			12,148
Occupancy		810			788			2,398			2,278
Data processing		744			724			2,175			2,117
State deposit tax		248			260			743			759
Intangible amortization		—			—			—			32
Professional services		368			380			1,008			1,177
Deposit insurance and examination		164			135			496			403
Advertising		376			337			1,067			983
Postage and communications		157			162			484			428
Supplies		148			107			456			364
Loss (gain) on real estate owned		22			(18	)		30			716
Loss (gain) on sale of fixed assets		(72	)		—			(72	)		—
Real estate owned		182			202			443			406
Other operating		449			516			1,771			1,446
Total non-interest expense		7,353			7,553			22,645			23,257
Income before income tax		1,026			487			1,900			1,948
Income tax expense (benefit)		41			(23	)		102			200
Net income		985			510			1,798			1,748
Net income per share:
Basic	$	0.16		$	0.08		$	0.29		$	0.27
Diluted	$	0.16		$	0.08		$	0.29		$	0.27
Dividend per share	$	0.04		$	0.04		$	0.12		$	0.12
Weighted average shares outstanding - basic		6,212,231			6,359,556			6,247,536			6,493,449
Weighted average shares outstanding - diluted		6,212,231			6,359,556			6,247,536			6,493,449

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

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HFBC Reports Third Quarter Results

Page 12

October 31, 2016

HOPFED BANCORP, INC.

Selected Financial Data

(Dollars in thousands)

	For the Three
	Months Ended
					Change from
	September 30, 2016		June 30, 2016		Prior Quarter
Interest and dividend income:
Loans receivable		6,569		6,141		428
Securities available for sale - taxable		1,099		1,198		(99	)
Securities available for sale - nontaxable		326		340		(14	)
Interest-earning deposits		10		12		(2	)
Total interest and dividend income		8,004		7,691		313
Interest expense:
Deposits		1,044		1,007		37
Advances from Federal Home Loan Bank		33		28		5
Repurchase agreements		139		139		—
Subordinated debentures		99		94		5
Total interest expense		1,315		1,268		47
Net interest income		6,689		6,423		266
Provision for loan losses		255		465		(210	)
Net interest income after provision for loan losses		6,434		5,958		476
Non-interest income:
Service charges		719		698		21
Merchant card income		308		314		(6	)
Mortgage orgination revenue		415		435		(20	)
Gain on sale of securities		79		52		27
Income from bank owned life insurance		104		77		27
Financial services commission		131		191		(60	)
Other operating income		189		203		(14	)
Total non-interest income		1,945		1,970		(25	)

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

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HFBC Reports Third Quarter Results

Page 13

October 31, 2016

HOPFED BANCORP, INC.

Selected Financial Data

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

	For the Three
	Months Ended
							Change from
	September 30, 2016			June 30, 2016			Prior Quarter
Non-interest expenses:
Salaries and benefits	$	3,757			3,901			(144	)
Occupancy		810			801			9
Data processing		744			704			40
State deposit tax		248			247			1
Professional services		368			305			63
Deposit insurance and examination		164			159			5
Advertising		376			371			5
Postage and communications		157			172			(15	)
Supplies expense		148			159			(11	)
Loss (gain) on real estate owned		22			(1	)		23
Loss (gain) on sale of fixed assets		(72	)		—			(72	)
Real estate owned		182			202			(20	)
Other operating		449			589			(140	)
Total non-interest expense		7,353			7,609			(256	)
Income before income tax expense		1,026			319			707
Income tax expense		41			15			26
Net income		985			304			681
Net income per share
Basic	$	0.16		$	0.05		$	0.11
Fully diluted	$	0.16		$	0.05		$	0.11
Dividend per share	$	0.04		$	0.04
Weighted average shares outstanding - basic		6,212,231			6,232,457
Weighted average shares outstanding - diluted		6,212,231			6,232,457

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

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HFBC Reports Third Quarter Results

Page 14

October 31, 2016

HOPFED BANCORP, INC.

Selected Financial Data

The table below adjusts tax-free investment income for the nine month periods ended September 30, 2016, and September 30, 2015, by $506,000 and $625,000, respectively, for a tax equivalent rate using a cost of funds rate of 0.80% for the nine month period ended September 30, 2016, and 0.95% for the nine month period ended September 30, 2015. The table adjusts tax-free loan income by $20,000 and $5,000, respectively, for nine month periods ended September 30, 2016, and September 30, 2015, respectively, for a tax equivalent rate using the same cost of funds rate:

	Balance		Expense			Rates			Balance		Expense			Rates
	9/30/2016		9/30/2016			9/30/2016			9/30/2015		9/30/2015			9/30/2015
	(Table Amounts in Thousands, Except Percentages)
Loans	$	562,870		19,195			4.55	%		550,047		18,900			4.58	%
Investments AFS taxable		194,657		3,544			2.43	%		208,721		4,953			3.16	%
Investment AFS tax free		40,283		1,525			5.05	%		53,859		1,892			4.68	%
Interest bearing deposits		8,168		38			0.62	%		5,096		11			0.29	%
Total interest earning assets		805,978		24,302			4.02	%		817,723		25,756			4.20	%
Other assets		74,212								74,136
Total assets	$	880,190								891,859
Retail time deposits		257,790		1,835			0.95	%		289,157		2,516			1.16	%
Brokered deposits		35,853		294			1.09	%		32,706		279			1.14	%
Saving & MMDA		98,510		129			0.17	%		95,016		146			0.20	%
Interest bearing checking		203,736		888			0.58	%		195,929		810			0.55	%
FHLB borrowings		12,876		134			1.39	%		17,315		206			1.59	%
Repurchase agreements		44,186		421			1.27	%		43,726		368			1.12	%
Subordinated debentures		10,310		287			3.71	%		10,310		553			7.15	%
Total interest bearing liabilities		663,261		3,988			0.80	%		684,159		4,878			0.95	%
Non-interest bearing deposits		124,788								112,198
Other liabilities		3,501								4,363
Stockholders’ equity		88,640								91,139
Total liabilities and stockholders’ equity	$	880,190							$	891,859
Net interest income				20,314								20,878
Net interest spread							3.22	%							3.25	%
Net interest margin				3.36	%							3.40	%

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

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HFBC Reports Third Quarter Results

Page 15

October 31, 2016

HOPFED BANCORP, INC.

Selected Financial Data

The table below adjusts tax-free investment income for the three month periods ended September 30, 2016, and September 30, 2015, by $162,000 and $197,000, respectively, for a tax equivalent rate using a cost of funds rate of 0.80% for the three month period ended September 30, 2016, and 0.97% for the three month period ended September 30, 2015. The table adjusts tax-free loan income by $6,000 for three month periods ended September 30, 2016, and $3,000 for the three month period ended September 30, 2015, respectively, for a tax equivalent rate using the same cost of funds rate:

	Average		Income and			Average			Average		Income and			Average
	Balance		Expense			Rates			Balance		Expense			Rates
	9/30/2016		9/30/2016			9/30/2016			9/30/2015		9/30/2015			9/30/2015
	(Table Amounts in Thousands, Except Percentages)
Loans	$	575,083		6,575			4.57	%	$	555,792		6,377			4.59	%
Investments AFS taxable		185,812		1,099			2.37	%		196,524		1,237			2.52	%
Investment AFS tax free		38,467		488			5.07	%		51,063		595			4.66	%
Interest bearing deposit		5,517		10			0.73	%		6,305		3			0.19	%
Total interest earning assets		804,879		8,172			4.06	%		809,684		8,212			4.06	%
Other assets		69,248								67,860
Total assets	$	874,127							$	877,544
Retail time deposits		255,840		617			0.96	%		286,516		840			1.17	%
Brokered deposits		38,574		107			1.11	%		30,149		89			1.18	%
Savings & MMDA		99,077		42			0.17	%		94,679		45			0.19	%
Interest bearing checking		191,721		278			0.58	%		191,903		272			0.57	%
FHLB borrowings		14,022		33			0.94	%		10,685		71			2.66	%
Repurchase agreements		46,282		139			1.20	%		47,124		130			1.10	%
Subordinated debentures		10,310		99			3.84	%		10,310		186			7.22	%
Total interest bearing liabilities		655,826		1,315			0.80	%		671,366		1,633			0.97	%
Non-interest bearing deposits		125,598								114,319
Other liabilities		3,781								4,574
Stockholders’ equity		88,922								87,285
Total liabilities and stockholders’ equity	$	874,127							$	877,544
Net interest income				6,857								6,579
Interest rate spread							3.26	%							3.09	%
Net interest margin				3.41	%							3.25	%

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

-END-