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

Exhibit 99.1

NEWS

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

HOPFED BANCORP, INC. REPORTS FIRST QUARTER RESULTS

HOPKINSVILLE, Ky. (April 26, 2017) – HopFed Bancorp, Inc. (NASDAQ: HFBC) (the “Company”), the holding company for Heritage Bank USA, Inc. (the “Bank”), today reported results for the three month period ended March 31, 2017. For the three month period ended March 31, 2017, the Company’s net income was $935,000, or $0.15 per share basic and diluted, compared to $509,000, or $0.08 per share basic and diluted, for the three month period ended March 31, 2016.

Commenting on the first quarter results, John E. Peck, President and Chief Executive Officer, said, “During the three month period ended March 31, 2017, net loan balances increased by $11.2 million, an annualized growth rate of 7.4%. The Company’s loan pipeline remains encouraging as we continue to strive to improve our profitability through disciplined loan growth.”

Mr. Peck continued, “The Company’s recently implemented changes to our consumer transaction account product line has been a success. At March 31, 2017, the Company’s transaction accounts balances have increased by $14.1 million despite an overall reduction in the number of accounts due to the elimination of free checking. The Company’s core operating results continue to improve and we are excited about the future of the Company,” Mr. Peck concluded.

Financial Highlights

• The Company purchased 693 shares of its common stock in the quarter at a weighted average price of $12.58 per share. At March 31, 2017, the Company holds 1,246,829 shares in treasury stock with a weighted average cost of $12.32 per share.

• At March 31, 2017, the Company’s tangible book value was $14.04 per share and tangible common equity ratio was 9.47%. The Company’s tangible book value and common equity ratio computations do not include 488,161 unallocated shares of common stock held by the Company’s ESOP.

• The Bank’s Tier 1 Leverage Ratio, Common Equity Tier 1 Capital Ratio and Total Risk Based Capital Ratio at March 31, 2017 were 10.47%, 15.01% and 16.00%, respectively. The Company’s Tier 1 Leverage Ratio, Common Equity Tier 1 Capital Ratio and Total Risk Based Capital Ratio at March 31, 2017 were 10.55%, 15.14% and 16.13%, respectively.

• For the three month period ended March 31, 2017, net loan charge offs were $238,000, or 0.15% of average loan balances.

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HFBC Reports First Quarter Results

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April 26, 2017

Asset Quality

A summary of non-accrual loans at March 31, 2017 and December 31, 2016 is as follows:

	March 31, 2017		December 31, 2016
	(Dollars in Thousands)
One-to-four family mortgages	$	248		270
Home equity line of credit		402		402
Land		7,234		7,675
Farmland		454		—
Non-residential real estate		210		208
Consumer loans		3		3
Commercial loans		393		516
Total non-accrual loans		8,944		9,074

A summary of the activity in foreclosed assets for the three month period ended March 31, 2017 is as follows:

	Activity During 2017
	Balance 12/31/2016		Foreclosure		Sales			Reduction in Values		Gain (Loss) on Sale		Balance 3/31/2017
	(Dollars in Thousands)
One-to-four family mortgages	$	135		—		—			—		—	$	135
HELOC		28		—		—			—		—		28
Multi-family		1,775		—		—			—		—		1,775
Non-residential real estate		459		43		(329	)		—		—		173
Total	$	2,397		43		(329	)		—		—	$	2,111

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HFBC Reports First Quarter Results

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Asset Quality (continued)

At March 31, 2017, the Company’s level of loans classified as substandard was $26.3 million as compared to $29.3 million at December 31, 2016. At March 31, 2017, the Company’s classified loan to risk based capital ratio was 26.2%. The Company’s specific reserve for impaired loans was $492,000 at March 31, 2017 and $1,148,000 at December 31, 2016. A summary of the level of classified loans at March 31, 2017, is as follows:

March 31, 2017					Impaired Loans
	Pass		Special Mention		Substandard		Doubtful		Total		Specific Allowanc for Impairment		Allowance For Loans Not Impaired
	(Dollars in Thousands)
One-to-four family mortgages	$	154,341		55		3,230		—		157,626		—		1,097
Home equity line of credit		36,132		—		562		—		36,694		—		328
Junior liens		1,324		29		12		—		1,365		—		9
Multi-family		37,668		—		815		—		38,483		—		593
Construction		17,386		—		—		—		17,386		—		141
Land		12,020		431		7,691		—		20,142		105		328
Farmland		40,588		693		1,531		—		42,812		35		631
Non-residential real estate		202,168		1,518		10,247		—		213,933		53		1,288
Consumer loans		8,261		—		413		—		8,674		98		142
Commercial loans		82,857		254		1,844		—		84,955		201		1,115
Total	$	592,745		2,980		26,345		—	$	622,070		492		5,672

Net Interest Income

For the three month period ended March 31, 2017, the Company’s net interest income was $6.8 million, compared to $6.7 million for the three month period ended March 31, 2016, and $6.6 million for the three month period ended December 31, 2016, respectively. For the three month period ended March 31, 2017, the improved levels of net interest income as compared to March 31, 2016 is directly attributable to a $54.8 million increase in the average balance of loans outstanding during the three month period ended March 31, 2017 as compared to the three month period ended March 31, 2016. The growth in loan balances for the three month period ended March 31, 2017 as compared to the three month period ended March 31, 2016 helped to offset a reduction in the average yield on loans. For the three month periods ended March 31, 2017 and March 31, 2016, the average yield on loans was 4.38% and 4.62%, respectively. For the three month period ended March 31, 2017, the Company’s net interest margin was 3.31%, as compared to 3.39% for the three month period ended March 31, 2016.

For the three month periods March 31, 2017 and March 31, 2016, interest expense was $1.4 million, respectively. For the three month period ending March 31, 2017, the average cost of interest bearing liabilities was 0.81%, as compared to 0.83% for the three month period ended March 31, 2016. The average balance of interest bearing liabilities for the three month periods ended March 31, 2017 and March 31, 2016 was $690.7 million and $678.7 million, respectively.

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HFBC Reports First Quarter Results

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April 26, 2017

Non-interest Income

Non-interest income for the three month period ended March 31, 2017 was $2.3 million, as compared to $2.0 million for the three month periods ended March 31, 2016 and December 31, 2016. The most significant reasons for the increase in non-interest income were increases of income from bank owned life insurance and other operating income. For the three month period ended March 31, 2017, income from bank owned life insurance was $235,000, as compared to $84,000 for the three month period ended March 31, 2016. The increase in income from bank owned life insurance was the result of death benefit paid during the three month period ended March 31, 2017. For the three month period ended March 31, 2017, other operating income was $479,000, as compared to $176,000 for the three month period ended March 31, 2016. In the three month period ended March 31, 2017, the Company received approximately $250,000 from one time licensing fees.

For the three month period ended March 31, 2017, service charge income increased by $127,000 and $110,000, respectively, as compared to the three month periods ended March 31, 2016 and December 31, 2016. For the three month period ended March 31, 2017, the Company’s income on the origination of mortgage loans was $334,000, as compared to $368,000 and $367,000 for the three month periods ended March 31, 2016 and December 31, 2016.

The Company recognized net gains on the sale of securities of $2,000, $291,000 and $190,000 for the three month periods ended March 31, 2017, March 31, 2016 and December 31, 2016, respectively. The decline in security gains is the result of a growing deposit base, making it unnecessary for the Company to sell securities to fund loan growth and increases in short term interest rates.

Non-interest Expense

For the three month period ended March 31, 2017, non-interest expenses increased by $6,000 as compared to the three month period ended March 31, 2016. For the three month period ended March 31, 2017, the Company’s salaries and benefits expense increased by $248,000 as compared to the three month period ended March 31, 2016. The increase in compensation expense for the three month period ended March 31, 2017 as compared to the three month period ended March 31, 2016 is largely the result of a $67,000 increase in health insurance benefits due to an increase in medical insurance cost and a $146,000 increase in overall compensation. For the three month period ended March 31, 2017, other operating expenses totaled $846,000, as compared to $1.2 million for the three month period ended March 31, 2016.

On a linked quarter basis, the Company’s other operating expenses declined by $143,000. On a linked quarter basis, salaries and benefits increased by $482,000 due to end of year salary increases, additional payroll taxes resulting from the beginning of a new year, increases in health insurance benefits and seasonal vacation accruals. On a linked quarter basis, seasonal changes in vacation accruals accounted for $231,000 of the increase in salary and benefits expense and health insurance benefits accounted for $71,000 of the increase in salary and benefits expense. On a linked quarter basis, foreclosed assets expense increased by $159,000.

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HFBC Reports First Quarter Results

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April 26, 2017

Balance Sheet

At March 31, 2017, consolidated assets were $923.3 million, an increase of $31.8 million as compared to December 31, 2016. For the three month period ended March 31, 2017, the Company experienced an $18.8 million increase in time deposits, a $24.3 million increase in cash balances, and an $11.2 million increase in net loan balances. For the three month period ended March 31, 2017, the Company’s non-interest bearing and interest bearing checking accounts increased by $5.2 million and $8.2 million, respectively.

The Company

Heritage Bank USA, Inc. (“Heritage Bank”) is a Kentucky state chartered commercial bank with the Kentucky Department of Financial Institutions and the Federal Deposit Insurance Corporation as its regulators. HopFed Bancorp, Inc., the holding company for Heritage Bank, is a non-member federally chartered commercial bank holding company regulated by the Federal Reserve Board. Heritage Bank has eighteen offices in western Kentucky and middle Tennessee and loan production offices in Nashville, Tennessee and Brentwood, Tennessee. The Company offers a broad line of financial services through Heritage Wealth Management of Murray, Kentucky, Hopkinsville, Kentucky, and Pleasant View, Tennessee. Heritage Mortgage Services of Clarksville, Tennessee, offers long term fixed rate 1-4 family mortgage loans that are originated for the secondary market in all communities in the Company’s general market area. Heritage 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 is located on its websitewww.bankwithheritage.com.

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 First Quarter Results

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April 26, 2017

HOPFED BANCORP, INC.

Consolidated Balance Sheets

(Dollars in thousands)

Assets	March 31, 2017		December 31, 2016
	(Unaudited)
Cash and due from banks	$	30,663		21,779
Interest bearing deposits in banks		19,408		3,970
Cash and cash equivalents		50,071		25,749
Federal Home Loan Bank stock, at cost		4,428		4,428
Securities available for sale		207,580		209,480
Loans held for sale		1,091		1,094
Loans receivable, net of allowance for loan losses of $6,164 at March 31, 2017 and $6,112 at December 31, 2016		615,480		604,286
Accrued interest receivable		3,121		3,799
Foreclosed assets, net		2,111		2,397
Bank owned life insurance		10,120		10,662
Premises and equipment, net		23,225		23,461
Deferred tax assets		2,918		3,052
Other assets		3,162		3,078
Total assets		923,307		891,486
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing accounts	$	136,333		131,145
Interest-bearing accounts
NOW accounts		217,562		209,347
Savings and money market accounts		100,009		99,312
Other time deposits		311,839		293,078
Total deposits		765,743		732,882
Advances from Federal Home Loan Bank		11,000		11,000
Repurchase agreements		45,492		47,655
Subordinated debentures		10,310		10,310
Advances from borrowers for taxes and insurance		867		766
Accrued expenses and other liabilities		2,434		2,445
Total liabilities		835,846		805,058

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

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HFBC Reports First Quarter Results

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April 26, 2017

HOPFED BANCORP, INC.

Consolidated Balance Sheets, Continued

(Dollars in thousands)

	March 31, 2017			December 31, 2016
	(Unaudited)
Stockholders’ equity
Preferred stock, par value $0.01 per share; authorized—500,000 shares; no shares issued or outstanding at March 31, 2017 and December 31, 2016		—			—
Common stock, par value $.01 per share; authorized 15,000,000 shares; 7,963,378 issued and 6,716,549 outstanding at March 31, 2017 and 7,963,378 issued and 6,717,242 outstanding at December 31, 2016		80			80
Additional paid-in-capital		58,705			58,660
Retained earnings		49,721			49,035
Treasury stock, at cost (1,246,829 shares at March 31, 2017 and 1,246,136 shares at December 31, 2016)		(15,356	)		(15,347	)
Unearned ESOP Shares, at cost (488,161 at March 31, 2017 and 498,346 shares at December 31, 2016)		(6,414	)		(6,548	)
Accumulated other comprehensive income		725			548
Total stockholders’ equity		87,461			86,428
Total liabilities and stockholders’ equity	$	923,307			891,486

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

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HFBC Reports First Quarter Results

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April 26, 2017

HOPFED BANCORP, INC.

Consolidated Condensed Statements of Income

(Dollars in thousands)

(Unaudited)

	For the Three Month Periods
	Ended March 31,
	2017		2016
Interest and dividend income:
Loans	$	6,736		6,465
Investment in securities, taxable		1,118		1,247
Nontaxable securities available for sale		283		353
Interest-bearing deposits		23		16
Total interest and dividend income		8,160		8,081
Interest expense:
Deposits		1,167		1,095
FHLB borrowings		32		73
Repurchase agreements		103		143
Subordinated debentures		104		94
Total interest expense		1,406		1,405
Net interest income		6,754		6,676
Provision for loan losses		291		458
Net interest income after provision for loan losses		6,463		6,218
Non-interest income:
Service charges		804		677
Merchant card		302		291
Mortgage origination income		334		368
Gain on sale of investments		2		291
Income from bank owned life insurance		235		84
Income from financial services		140		133
Other operating income		479		176
Total non-interest income		2,296		2,020

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

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HFBC Reports First Quarter Results

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April 26, 2017

HOPFED BANCORP, INC.

Consolidated Condensed Statements of Income, Continued

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

(Unaudited)

	For the Three Month Periods
	Ended March 31,
	2017		2016
Non-interest expenses:
Salaries and benefits	$	4,236		3,988
Occupancy expense		775		787
Data processing		764		727
State deposit tax		231		248
Professional services		348		335
Advertising		381		320
Foreclosure, net		108		68
Other operating expenses		846		1,210
Total non-interest expense		7,689		7,683
Income before income tax expense		1,070		555
Income tax expense		135		46
Net income		935		509
Net income per share:
Basic	$	0.15	$	0.08
Fully diluted	$	0.15	$	0.08
Dividend per share	$	0.04	$	0.04
Weighted average shares outstanding – basic		6,218,706		6,297,755
Weighted average shares outstanding – diluted		6,218,706		6,297,755

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

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HFBC Reports First Quarter Results

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April 26, 2017

HOPFED BANCORP, INC.

Selected Financial Data

(Dollars in thousands)

(Unaudited)

	For the three-months ended
	03/31/17		12/31/16		Change from Prior Quarter
Interest and dividend income:
Loans	$	6,736		6,603		133
Investment in securities, taxable		1,118		1,051		67
Nontaxable securities available for sale		283		289		(6	)
Interest-bearing deposits		23		8		15
Total interest and dividend income		8,160		7,951		209
Interest expense:
Deposits		1,167		1,094		73
FHLB borrowings		32		29		3
Repurchase agreements		103		87		16
Subordinated debentures		104		101		3
Total interest expense		1,406		1,311		95
Net interest income		6,754		6,640		114
Provision for loan losses		291		63		228
Net interest income after provision for loan losses		6,463		6,577		(114	)
Non-interest income:
Service charges		804		694		110
Merchant card		302		311		(9	)
Mortgage origination income		334		367		(33	)
Gain on sale of investments		2		190		(188	)
Income from bank owned life insurance		235		78		157
Income from financial services		140		159		(19	)
Other operating income		479		201		278
Total non-interest income		2,296		2,000		296

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

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HOPFED BANCORP, INC.

Selected Financial Data

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

(Unaudited)

	For the three-months ended
	3/31/17		12/31/16			Change from Prior Quarter
Non-interest expenses:
Salaries and benefits	$	4,236		3,754			482
Occupancy expense		775		775			—
Data processing		764		767			(3	)
State deposit tax		231		247			(16	)
Professional services		348		396			(48	)
Advertising		381		334			47
Foreclosure, net		108		(51	)		159
Other operating expenses		846		989			(143	)
Total non-interest expense		7,689		7,211			478
Income before income tax expense		1,070		1,366			(296	)
Income tax expense		135		260			(125	)
Net income	$	935		1,106			(171	)
Net income per share
Basic	$	0.15	$	0.18			(0.03	)
Fully diluted	$	0.15	$	0.18			(0.03	)
Dividend per share	$	0.04	$	0.04
Weighted average shares outstanding—basic		6,218,706		6,193,278
Weighted average shares outstanding—diluted		6,218,706		6,193,278

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

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HFBC Reports First Quarter Results

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April 26, 2017

HOPFED BANCORP, INC.

Selected Financial Data

The table below adjusts tax-free investment income for the three month periods ended March 31, 2017 and March 31, 2016, by $141,000 and $174,000, respectively; for a tax equivalent rate using a cost of funds rate of 0.81% for the three month period ended March 31, 2017 and 0.83% for the three month period ended March 31, 2016. The table adjusts tax-free loan income by $9,000 for the three month period ended March 31, 2017, and $5,000 for the three month period ended March 31, 2016, for a tax equivalent rate using the same cost of funds rate:

	Average Balance 3/31/2017		Income and Expense 3/31/2017		Average Rates 3/31/2017			Average Balance 3/31/2016		Income and Expense 3/31/2016		Average Rates 3/31/2016
	(Table Amounts in Thousands, Except Percentages)
Loans receivable, net	$	615,382		6,745		4.38	%	$	560,544		6,470		4.62	%
Taxable securities AFS		176,824		1,118		2.53	%		197,761		1,247		2.52	%
Non-taxable securities AFS		33,868		424		5.00	%		42,098		527		5.01	%
Other interest bearing deposits		9,260		23		0.99	%		9,491		16		0.67	%
Total interest earning assets		835,334		8,310		3.98	%		809,894		8,260		4.08	%
Other assets		73,527							85,874
Total assets	$	908,861						$	895,768
Retail time deposits	$	259,086		664		1.03	%	$	264,308		640		0.97	%
Brokered deposits		46,040		135		1.17	%		35,986		99		1.10	%
Interest bearing checking		219,696		326		0.59	%		213,336		311		0.58	%
Saving / MMDA		100,282		42		0.17	%		97,391		45		0.18	%
FHLB borrowings		13,433		32		0.95	%		13,593		73		2.15	%
Repurchase agreements		41,840		103		0.98	%		43,744		143		1.31	%
Subordinated debentures		10,310		104		4.03	%		10,310		94		3.65	%
Total interest bearing liabilities		690,687		1,406		0.81	%		678,668		1,405		0.83	%
Non-interest bearing deposits		126,809							122,926
Other liabilities		3,993							4,706
Stockholders’ equity		87,372							89,468
Total liabilities and stockholders’ equity	$	908,861						$	895,768
Net interest income			$	6,904						$	6,855
Net interest spread						3.17	%						3.25	%
Net interest margin						3.31	%						3.39	%

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

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