HopFed Bancorp, Inc. Reports First Quarter Results

HOPKINSVILLE, Ky., April 30, 2013

Commenting on the first quarter results, John E. Peck, President and Chief Executive Officer, said, "The Company experienced modest loan growth in the last few days of the quarter. Our loan pipeline continues to provide a reason for optimism for future loan growth. Loan demand appears to be slowly building with competitive pressures keeping overall yields lower."

Mr. Peck continued, "We continue to find success in reducing our level of criticized and classified assets.  At March 31, 2013, total loans classified as substandard or worse were $43.7 million, or 38.9% of the Company's risk based capital.  At December 31, 2012, loans classified as substandard or worse totaled $66.6 million, or 60.8% of the Company's risk based capital. For HopFed Bancorp, maintaining a level of classified loans to risk based capital ratio of less than 50% is an important asset quality measure."

Mr. Peck concluded, "On April 11, 2013, Heritage Bank was notified that it has received conditional approval from the Kentucky Department of Financial Institutions ("KDFI") for a state commercial bank charter. Upon conversion, Heritage Bank will be regulated by the KDFI and the Federal Deposit Insurance Corporation.  HopFed Bancorp, Inc. has applied to convert its thrift holding company charter to a bank holding company and will continue to be regulated by the Federal Reserve Bank of Saint Louis. We appreciate the long history of our Company as a federal savings and loan. However, the benefits once enjoyed by savings and loan chartered institutions have been marginalized by regulatory changes. Our charter conversions will free the Company from both the burden of duplicate reporting requirements and additional burdensome regulatory restrictions placed on savings and loans such as the qualified thrift lender test and the Home Owners Lending Act."

Financial Highlights

• The Company and Bank's capital ratios remain strong. At March 31, 2013, the Company's tangible book value was $13.84 per share and our tangible common equity ratio is 10.59%. The Bank's Tier 1 Leverage and Total Risk Based Capital Ratios at March 31, 2013, are 10.59% and 19.01%, respectively. The Company's Tier 1 Leverage and Total Risk Based Capital Ratios are 10.77% and 19.25%, respectively.
  
  
• At March 31, 2013, the Company's allowance for loan loss totaled $10.6 million, or 1.95% of total loans and 150.35% of non-accrual loans. In the three month period ended March 31, 2013, the Company's net charge offs totaled $445,000, or an annualized rate of 0.33% of average loans.
  
  
• For the three month period ended March 31, 2013, the Company's net interest margin was 2.99% as compared to 3.01% for the three month period ended December 31, 2012. In the six month period beginning April 1, 2013, and ending September 30, 2013, the Company has $138.6 million in time deposits that are scheduled to mature at a weighted average cost of 1.71%. The Company is focused on re-pricing these deposits at current market rates and reducing our interest expense.

Asset Quality

At March 31, 2013, the Company's level of non-accrual loans totaled $7.0 million, as compared to $7.6 million at December 31, 2012. At March 31, 2013, and December 31, 2012, non-accrual loans totaled 1.30% and 1.43% of total loans, respectively.