HopFed Bancorp, Inc. Reports Fourth Quarter Results

HOPKINSVILLE, Ky.--(BUSINESS WIRE)--

HopFed Bancorp, Inc. HFBC (the “Company”), the holding company for Heritage Bank USA, Inc. (the “Bank”), today reported results for the three and twelve month periods ended December 31, 2013. For the three month period ended December 31, 2013, the Company's net income available to common shareholders was $1.1 million, or $0.14 per share, basic and diluted, compared to net income available to common shareholders of $648,000, or $0.09 per share basic and diluted, for the three month period ended December 31, 2012. For the twelve month period ended December 31, 2013, the Company's net income available to common shareholders was $3.8 million, or $0.50 per share, basic and diluted, compared to a net income attributable to common shareholders of $2.8 million, or $0.38 per share basic and diluted, for the twelve month period ended December 31, 2012.

Commenting on the fourth quarter results, John E. Peck, President and Chief Executive Officer, said, “The Company's net interest income for the three month period ended December 31, 2013, increased by $87,000 as compared to the three month period ended September 30, 2013. The linked quarter improvement is the result of a decline of $119,000 in total interest expense. In the three month period ended December 31, 2013, total interest expense declined by approximately $792,000 as compared to the same period last year.”

Mr. Peck continued, “The Company's non-interest expenses for the twelve month period ending December 31, 2013, increased by less than 1.00% as compared to the twelve month period ended December 31, 2012. For the three month period ended December 31, 2013, non-interest expenses were $7.3 million, an increase of $324,000, as compared to the three month period ended December 31, 2012. The increase in non-interest expense for the three month period ended December 31, 2013, as compared to the three month period ended December 31, 2012, was largely the result of $100,000 in legal expenses associated with the termination of a merger agreement, a $183,000 increase in expenses incurred on other real estate owned and a $168,000 increase in losses incurred on the sale of other real estate owned.”

Mr. Peck concluded, “Net loans grew by $11.6 million in the fourth quarter of 2013, much of that growth occurring very late in the quarter. We continue to aggressively seek quality loan growth and are currently looking to establish at least one loan production office in the Nashville, Tennessee market.”

Financial Highlights

• At December 31, 2013, the Company's tangible book value was $12.83 per share and tangible common equity ratio was 9.82%. The Bank's Tier 1 Capital and Total Risk Based Capital Ratios at December 31, 2013, were 10.76% and 17.81%, respectively. The Company's Tier 1 Capital and Total Risk Based Capital Ratios were 11.23% and 18.61%, respectively.
• The Company purchased 26,364 shares of its common stock in the quarter at a weighted average price of $11.15 per share. The Company has purchased a total of 76,468 shares since September 16, 2013.
• At December 31, 2013, the Company's allowance for loan loss totaled $8.7 million, or 1.57% of total loans and 86.25% of non-accrual loans. In the twelve month period ended December 31, 2013, the Company's net charge offs totaled $3.6 million, or an annualized rate of 0.66% of average loans.
• For the three month period ended December 31, 2013, the Company's net interest margin was 3.10%, as compared to 3.04% for the three month period ended September 30, 2013, and 3.01% for the three month period ended December 31, 2012.

Asset Quality

At December 31, 2013, the Company's level of non-accrual loans totaled $10.1 million, as compared to $7.7 million at December 31, 2012, and $12.1 million at September 30, 2013. A summary of non-accrual loans at December 31, 2013, and December 31, 2012, is as follows:

			December 31, 2013				December 31, 2012
			(Dollars in Thousands)
One-to-four family mortgages			946				2,243
Home equity line of credit			1				66
Junior lien			2				4
Multi-family			---				38
Construction			174				---
Land			1,218				2,768
Non-residential real estate			6,546				1,134
Farmland			703				648
Consumer loans			13				145
Commercial loans			463				617
Total non-accrual loans			10,066				7,663

A summary of the level of classified loans at December 31, 2013, is as follows:

																			Specific			Allowance
										Impaired Loans									Allowance			for
December 31, 2013							Special												for			Performing
			Pass				Mention			Substandard			Doubtful			Total			Impairment			Loans
										(Dollars in Thousands)
One-to-four family mortgages			$	149,351			814			5,087			---			155,252			597			1,451
Home equity line of credit				33,462			---			641			---			34,103			---			218
Junior liens				3,126			43			79			---			3,248			---			39
Multi-family				29,736			---			---			---			29,736			---			466
Construction				10,443			---			175			---			10,618			---			88
Land				19,899			52			14,730			---			34,681			771			534
Non-residential real estate				143,044			515			14,133			---			157,692			465			2,254
Farmland				46,042			480			5,346			---			51,868			---			510
Consumer loans				10,711			---			440			---			11,151			96			445
Commercial loans				61,502			526			2,013			---			64,041			---			748
Total			$	507,316			2,430			42,644			---			552,390			1,929			6,753

At December 31, 2013, non-accrual loans plus other real estate owned totaled $11.7 million, or 1.21% of assets, as compared to $13.6 million, or 1.45% of total assets, at September 30, 2013 and $9.2 million, or 0.95% of total assets, at December 31, 2012. A summary of the activity in other real estate owned for the twelve month period ended December 31, 2013, is as follows:

			Activity During 2013
			Balance										Reduction				Gain (Loss)				Balance
			12/31/12			Foreclosures			Proceeds				in Values				on Sale				12/31/13
			(Dollars in Thousands)
One-to-four family Mortgages			$258			1,052			(938	)			(26	)			4				350
Multi-family			---			---			---				---				---				---
Construction			130			---			(110	)			(110	)			90				---
Land			1,112			80			---				(68	)			---				1,124
Non-residential real estate			44			240			(60	)			(11	)			(13	)			200
Consumer assets			4			7			(5	)			(4	)			(2	)			---
Total			$1,548			1,379			(1,113	)			(219	)			79				1,674

At December 31, 2013, the Company's level of loans classified as substandard was $42.6 million as compared to $66.6 million at December 31, 2012. At December 31, 2013, the Company's classified loan to risk based capital ratio was 37.1%. The Company's specific reserve for impaired loans was $1.9 million at December 31, 2013, and $3.8 million at December 31, 2012, respectively.

At December 31, 2013, the Company has no loans classified as performing Troubled Debt Restructurings (“TDRs”) as compared to $11.0 million at December 31, 2012. A summary of the activity in loans classified as TDRs for the twelve month period ended December 31, 2013, is as follows:

																	Removed
													Removed due to				from
			Balance at			New			Loss or				Payment or				(Taken to)				Balance at
			12/31/12			TDR			Foreclosure				Performance				Non-accrual				12/31/13
			(Dollars in Thousands)
One-to-four family mortgages			$1,888			242			---				(1,863	)			(267	)			---
Home equity line of credit			---			---			---				---				---				---
Junior Lien			96			---			---				(10	)			(86	)			---
Multi-family			234			---			---				(234	)			---				---
Construction			4,112			---			---				---				(4,112	)			---
Land			656			2,649			(393	)			(656	)			(2,256	)			---
Non-residential real estate			3,173			266			(864	)							(2,575	)			---
Farmland			865			---			---				(865	)			---				---
Consumer loans			5			---			---				(5	)			---				---
Commercial loans			9			222			---				(231	)			---				---
Total performing TDR			$11,038			3,379			(1,257	)			(3,864	)			(9,296	)			---

A summary of TDRs and non-performing TDRs at December 31, 2013, and December 31, 2012, is stated below:

		December 31, 2013		December 31, 2012
		(Dollars in Thousands)
One-to-four family mortgages		---		1,888
Home equity line of credit		---		---
Junior lien		---		196
Multi-family		---		234
Construction		---		4,112
Land		---		3,424
Non-residential real estate		---		3,173
Farmland		---		909
Consumer loans		---		5
Commercial loans		---		128
Total TDR		---		14,069
Less:
TDR in non-accrual status
One-to-four family mortgages		---		---
Home equity line of credit		---		---
Junior lien		---		(100)
Multi-family		---		---
Construction		---		---
Land		---		(2,768)
Non-residential real estate		---		(44)
Consumer loans		---		---
Commercial loans		---		(119)
Total performing TDR		---		$11,038

Net Interest Income

For the three month period ended December 31, 2013, the Company's net interest income was $6.4 million, compared to $6.5 million for the three month period ended December 31, 2012, and $6.3 million for the three month period ended September 30, 2013. For the three month period ended September 30, 2013, the Company's net interest margin was 3.10%, as compared to 3.01% for the three month period ended December 31, 2012, and 3.04% for the three month period ended September 30, 2013.

For the twelve month period ended December 31, 2013, the Company's net interest income was $25.3 million, as compared to $26.0 million for the twelve month period ended December 31, 2012. For the twelve month period ended December 31, 2013, the Company's net interest margin was 3.01%, as compared to 2.86% for the twelve month period ended December 31, 2012.

The increase in the Company's net interest income and net interest margin are largely the result of significant balances of time deposits that matured in the second and third quarters of 2013. The Company does not anticipate that it can make material reductions in its deposit pricing structure for the next few quarters as the weighted average cost of upcoming maturities are generally below 1.00%.

Non-interest Income

Non-interest income for the three month period ended December 31, 2013, was $2.3 million, as compared to $2.2 million for the three month period ended December 31, 2012, and $1.8 million for the three month period ended September 30, 2013. Non-interest income for the twelve month periods ended December 31, 2013, and December 31, 2012, was $9.4 million and $9.6 million, respectively.

The increase in non-interest income for the three month period ended December 31, 2013, as compared to the three month periods ended December 31, 2012, and September 30, 2013, was primarily the result of a $412,000 gain on the sale of the Company's insurance assets of Fall and Fall Insurance.

For the three month period ended December 31, 2013, the Company's income on the origination of mortgage loans was $75,000, a decline from the $272,000 of income earned during the three month period ended December 31, 2012, and $147,000 of income for the three month period ended September 30, 2013. For the twelve month period ended December 31, 2013, mortgage origination revenue was $634,000, as compared to $956,000 for the twelve month period ended December 31, 2012. The decline in mortgage origination income was largely the result of higher long term interest rates, reducing the secondary market refinancing activity.

The Company recognized net gains on the sale of securities of $44,000, $53,000, and $201,000 for the three month periods ended December 31, 2013, December 31, 2012, and September 30, 2013, respectively. The Company recognized net gains on the sales of securities of $1.7 million, for the twelve month periods ended December 31, 2013, and December 31, 2012, respectively.

The Company earned $1.25 million and $1.1 million in commission from our financial services production during the twelve month periods ended December 31, 2013, and December 31, 2012, respectively. The Company's wealth management employees report increased interest in non-FDIC insured products as interest rates remain low and the United States equity markets continue to improve.

Non-interest Expense

Non-interest expenses were $7.1 million, $6.9 million and $7.0 million for the three month periods ended December 31, 2013, December 31, 2012, and September 30, 2013, respectively. For the twelve months ended December 31, 2013, and December 31, 2012, non-interest expenses were $28.5 million and $28.4 million, respectively. The table below identifies changes of non-interest expenses of more than 5% for the periods December 31, 2013, as compared to December 31, 2012:

			Dollar			Percent
			Change			Change
			(In thousands)
Salaries and benefits			$754			5.39%
Data processing			$201			8.06%
State bank tax			($66)			-10.20%
Intangible amortization			($65)			-28.63%
Professional services			$168			10.47%
Deposit insurance and examination			($812)			-52.76%
Advertising expense			($121)			-8.92%
Supplies expense			$140			39.44%
Loss on disposal of equipment			($1)			-7.69%
Gain (loss) on real estate owned			($126)			-47.37%
Real estate owned expenses			$279			226.83%
Other operating expenses			($103)			-5.91%

On a linked quarter basis, the Company's non-interest expenses increased by $272,000. The most significant increases in operating expenses related to losses on real estate owned and expenses related to those assets for a combined increase of $339,000. On a linked quarter basis, salaries and benefits expense declined by $299,000, and professional services expenses declined by $155,000, respectively. Income tax expense was negative for the quarter due to end of year tax adjustments related to investment related tax credits.

Balance Sheet

At December 31, 2013, consolidated assets were $973.6 million, an increase of $5.9 million as compared to December 31, 2012, and an increase of $38.1 million as compared to September 30, 2013. Balance sheet growth was largely concentrated in a $36.7 million increase in now accounts and $9.3 million increase in customer repurchase accounts. The increase in these balances was largely the result of customer based agricultural and small business activity occurring in the last month of the year and are considered temporary increases to the balance sheet. This temporary activity necessitated an increase in cash balances, as the Company held $55.9 million in cash at December 31, 2013, as compared to $37.2 million at December 31, 2012.

For the twelve month period ended December 31, 2013, gross loans increased by approximately $16.7 million, to $552.3 million as compared to $535.6 million at December 31, 2012. Loan growth included more than $10.9 million in loan growth during the three month period ended December 31, 2013.

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. 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 website www.bankwithheritage.com.

Forward-Looking Information

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. 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.

HOPFED BANCORP, INC. Consolidated Balance Sheets (Dollars in thousands)
Assets			December 31, 2013			December 31, 2012
			(unaudited)
Cash and due from banks			$37,229			31,563
Interest-earning deposits			18,619			5,613
Cash and cash equivalents			55,848			37,176
Federal Home Loan Bank stock, at cost			4,428			4,428
Securities available for sale			318,910			356,345
Loans receivable, net of allowance for loan losses of $8,682 at December 31, 2013, and $10,648 at December 31, 2012			543,632			524,985
Accrued interest receivable			5,233			5,398
Real estate and other assets owned			1,674			1,548
Bank owned life insurance			9,677			9,323
Premises and equipment, net			22,526			22,557
Deferred tax assets			4,610			---
Intangible asset			130			292
Other assets			6,981			5,637
Total assets			$973,649			967,689
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest-bearing accounts			$105,252			94,083
Interest-bearing accounts
NOW accounts			183,643			147,047
Savings and money market accounts			92,106			81,643
Other time deposits			381,996			437,092
Total deposits			762,997			759,865
Advances from Federal Home Loan Bank			46,780			43,741
Repurchase agreements			52,759			43,508
Subordinated debentures			10,310			10,310
Advances from borrowers for taxes and insurance			522			396
Dividends payable			325			180
Deferred tax liability			---			568
Accrued expenses and other liabilities			4,239			4,122
Total liabilities			877,932			862,690

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

HOPFED BANCORP, INC. Consolidated Balance Sheets, Continued (Dollars in thousands)
			December 31, 2013			December 31, 2012
			(unaudited)
Stockholders' equity
Preferred stock, par value $0.01 per share; authorized - 500,000 shares; 18,400 shares issued and no shares outstanding at December 31, 2013, and December 31, 2012.			---			---
Common stock, par value $.01 per share; authorized 15,000,000 shares; 7,927,287 issued and 7,447,903 outstanding at December 31, 2013, and 7,905,728 issued and 7,502,812 outstanding at December 31, 2012			79			79
Common stock warrant			---			556
Additional paid-in-capital			58,302			76,288
Retained earnings-substantially restricted			44,694			41,829
Treasury stock- preferred (at cost, none at December 31, 2013, and 18,400 shares at December 31, 2012)			---			(18,400)
Treasury stock- common (at cost, 479,384 shares at December 31, 2013, and 402,916 shares at December 31, 2012)			(5,929)			(5,076)
Accumulated other comprehensive income, net of taxes			(1,429)			9,723
Total stockholders' equity			95,717			104,999
Total liabilities and stockholders' equity			$973,649			967,689

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

HOPFED BANCORP, INC. Consolidated Condensed Statements of Income (Dollars in thousands) Unaudited
			For the Three Month Periods				For the Twelve Month Periods
			Ended December 31,				Ended December 31,
			2013		2012			2013			2012
Interest and dividend income:
Loans receivable			6,578		7,211			26,741			29,828
Investment in securities, taxable			1,636		1,899			6,873			8,722
Nontaxable securities available for sale			543		571			2,219			2,266
Interest-earning deposits			6		4			24			24
Total interest and dividend income			8,763		9,685			35,857			40,840
Interest expense:
Deposits			1,510		2,292			7,114			10,571
Advances from Federal Home Loan Bank			445		454			1,780			2,609
Repurchase agreements			237		242			954			963
Subordinated debentures			185		181			733			734
Total interest expense			2,377		3,169			10,581			14,877
Net interest income			6,386		6,516			25,276			25,963
Provision for loan losses			396		500			1,604			2,275
Net interest income after provision for loan losses			5,990		6,016			23,672			23,688
Non-interest income:
Service charges			931		966			3,670			3,840
Merchant card income			256		222			983			842
Mortgage origination revenue			75		272			634			956
Gain on sale of securities			44		53			1,661			1,671
Other than temporary impairment					---			(400)			---
Income from bank owned life insurance			103		161			353			399
Financial services commission			292		293			1,250			1,071
Gain on sale of assets			412		---			412			---
Other operating income			179		219			809			860
Total non-interest income			2,292		2,186			9,372			9,639

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

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 Twelve Month Periods
			Ended December 31,									Ended December 31,
			2013			2012		2013				2012
Non-interest expenses:
Salaries and benefits			3,436			3,464		14,733				13,979
Occupancy			870			917		3,475				3,531
Data processing			747			631		2,695				2,494
State bank tax			149			162		581				647
Intangible amortization			32			49		162				227
Professional services			338			285		1,773				1,605
Deposit insurance and examination			179			267		727				1,539
Advertising expense			303			405		1,236				1,357
Postage and communications			140			118		567				562
Supplies expense			107			75		495				355
Loss on disposal of equipment			12			---		12				13
Gain (loss) on real estate owned			147			(21)		140				266
Real estate owned expenses			216			33		402				123
Other operating expenses			580			547		1,640				1,743
Total non-interest expense			7,256			6,932		28,638				28,441
Income before income tax expense			1,026			1,270		4,406				4,886
Income tax expense			(50)			165		644				817
Net income			1,076			1,105		3,762				4,069
Less:
Dividend on preferred shares			---			318		---				1,007
Accretion dividend on preferred shares			---			139		---				222
Net income available to common shareholders			$1,076			$648		$3,762				$2,840
Net income available to common shareholders
Per share, basic			$0.14			$0.09		$0.50				$0.38
Per share, diluted			$0.14			$0.09		$0.50				$0.38
Dividend per share			$0.04			$0.02		$0.12				$0.08
Weighted average shares outstanding - basic			7,430,970			7,487,726		7,463,003				7,486,445
Weighted average shares outstanding - diluted			7,430,970			7,487,726		7,463,003				7,486,445

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

HOPFED BANCORP, INC. Selected Financial Data (Dollars in thousands)
			For the Three
			Months Ended
									Change from
			12/31/2013			9/30/2013			Prior Quarter
Interest and dividend income:
Loans receivable			6,578			6,605			(27)
Investment in securities, taxable			1,636			1,641			(5)
Nontaxable securities available for sale			543			544			(1)
Interest-earning deposits			6			5			1
Total interest and dividend income			8,763			8,795			(32)
Interest expense:
Deposits			1,510			1,622			(112)
Advances from Federal Home Loan Bank			445			445			---
Repurchase agreements			237			245			(8)
Subordinated debentures			185			184			1
Total interest expense			2,377			2,496			(119)
Net interest income			6,386			6,299			87
Provision for loan losses			396			426			(30)
Net interest income after provision for loan losses			5,990			5,873			117
Non-interest income:
Service charges			931			949			(18)
Merchant card income			256			245			11
Mortgage orgination revenue			75			147			(72)
Gain on sale of securities			44			201			(157)
Other than temporary impairment			---			(400)			400
Income from bank owned life insurance			103			88			15
Financial services commission			292			314			(22)
Other operating income			591			225			366
Total non-interest income			2,292			1,769			523

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

HOPFED BANCORP, INC. Selected Financial Data (Dollars in thousands, except share and per share data)
			For the Three
			Months Ended
									Change from
			12/31/2013			9/30/2013			Prior Quarter
Non-interest expenses:
Salaries and benefits			$3,436			3,735			(299)
Occupancy expense			870			878			(8)
Data processing expense			747			652			95
State deposit tax			149			143			6
Intangible amortization expense			32			33			(1)
Professional services expense			338			493			(155)
Deposit insurance and examination expense			179			137			42
Advertising expense			303			292			11
Postage and communications expense			140			149			(9)
Supplies expense			107			159			(52)
Loss on sale of other assets			12			---			12
(Gain) Loss on sale of real estate owned			147			(54)			201
Real estate owned expenses			216			78			138
Other operating expenses			580			289			291
Total non-interest expense			7,256			6,984			272
Income before income tax expense			1,026			658			368
Income tax expense			(50)			122			(172)
Net income			1,076			536			540
Net income (loss) available (attributable) to common stockholders
Per share, basic			$0.14			$0.07			0.07
Per share, diluted			$0.14			$0.07			0.07
Dividend per share			$0.04			$0.04

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

HOPFED BANCORP, INC.
Selected Financial Data

The table below adjusts tax-free investment income for the twelve month periods ended December 31, 2013, and December 31, 2012, by $1,073,000 and $716,000, respectively; for a tax equivalent rate using a cost of funds rate of 1.40% for the twelve month period ended December 31, 2013, and 1.80% for the twelve month period ended December 31, 2012. The table adjusts tax-free loan income by $9,000 for twelve month periods ended December 31, 2013, and December 31, 2012, respectively, for a tax equivalent rate using the same cost of funds rate:

				Average				Income &				Average				Average				Income &				Average
				Balance				Expense				Rates				Balance				Expense				Rates
				12/31/2013				12/31/2013				12/31/2013				12/31/2012				12/31/2012				12/31/2012
Loans				$528,074				$26,750				5.07%				$542,292				$29,837				5.50%
Investments AFS taxable				269,304				6,873				2.55%				313,347				8,722				2.78%
Investments AFS tax free				70,178				3,292				4.69%				68,428				2,982				4.36%
Federal funds				9,060				24				0.26%				9,850				24				0.24%
Total interest earning assets				876,616				36,939				4.21%				933,917				41,565				4.45%
Other assets				80,609												85,560
Total assets				$957,225												$1,019,477
Retail time deposits				$362,651				5,046				1.39%				$435,454				8,316				1.91%
Brokered deposits				44,349				673				1.52%				51,193				946				1.85%
Now accounts				164,669				1,243				0.75%				145,173				1,180				0.81%
MMDA and savings accounts				86,226				152				0.18%				74,574				129				0.17%
FHLB borrowings				44,898				1,780				3.96%				56,990				2,609				4.58%
Repurchase agreements				41,615				954				2.29%				40,915				963				2.35%
Subordinated debentures				10,310				733				7.11%				10,310				734				7.12%
Total interest bearing liabilities				754,718				10,581				1.40%				814,609				14,877				1.83%
Non-interest bearing deposits				92,428												84,304
Other non-interest bearing liabilities				5,332												6,559
Stockholders' equity				101,747												114,005
Total liabilities and stockholders' equity				$954,225												$1,019,477
Net change in interest earning assets and interest bearing liabilities								$26,358												$26,688
Interest rate spread												2.81%												2.62%
Net yield on interest earning assets								3.01%												2.86%

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

HOPFED BANCORP, INC.
Selected Financial Data

The table below adjusts tax-free investment income for the three month periods ended December 31, 2013, and December 31, 2012, by $264,000 and $274,000, respectively; for a tax equivalent rate using a cost of funds rate of 1.35% for the three month period ended September 30, 2013, and 2.00% for the three month period ended September 30, 2012. The table adjusts tax-free loan income by $2,000 for three month periods ended December 31, 2013, and $1 for the three month period ended December 31, 2012, respectively, for a tax equivalent rate using the same cost of funds rate:

			Average			Income &			Average				Average				Income &				Average
			Balance			Expense			Rates				Balance				Expense				Rates
			12/31/2013			12/31/2013			12/31/2013				12/31/2012				12/31/2012				12/31/2012
Loans			$531,102			$6,580			4.96%				$532,847				$7,212				5.41%
Investments AFS taxable			249,629			1,636			2.62%				285,565				1,899				2.66%
Investments AFS tax free			66,942			807			4.82%				70,554				845				4.79%
Federal funds			9,682			6			0.25%				14,003				4				0.11%
Total interest earning assets			857,355			9,029			4.21%				902,969				9,960				4.41%
Other assets			86,175										79,807
Total assets			$943,530										$982,776
Retail time deposits			$338,123			1,028			1.22%				$408,353				1,777				1.74%
Brokered deposits			45,379			148			1.30%				47,127				193				1.64%
Now accounts			168,425			291			0.69%				145,644				290				0.80%
MMDA and savings accounts			90,382			43			0.19%				76,335				32				0.17%
FHLB borrowings			48,743			445			3.65%				44,044				454				4.12%
Repurchase agreements			41,788			237			2.27%				40,758				242				2.37%
Subordinated debentures			10,310			185			7.18%				10,310				181				7.02%
Total interest bearing liabilities			743,150			2,377			1.28%				772,571				3,169				1.64%
Non-interest bearing deposits			97,602										88,783
Other non-interest bearing liabilities			5,491										6,753
Stockholders' equity			97,287										114,669
Total liabilities and stockholders' equity			$943,530										$982,776
Net change in interest earning assets and interest bearing liabilities						$6,652											$6,791
Interest rate spread									2.93%												2.77%
Net yield on interest earning assets						3.10%											3.01%

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