SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-23667
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HOPFED BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 61-1322555
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2700 Fort Campbell Boulevard, Hopkinsville, Kentucky 42240
---------------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (270) 885-1171
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past ninety days. Yes x No
As of November 13, 2000, 3,932,649 shares of Common Stock were issued and
outstanding.
<PAGE>
CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of September 30, 2000
and December 31, 1999....................................... 1
Consolidated Statements of Income for the Three-Month and Nine-Month
Periods Ended September 30, 2000 and 1999................... 2
Consolidated Statements of Comprehensive Income for the Three-Month
and Nine-Month Periods Ended September 30, 2000 and 1999.... 3
Consolidated Statements of Cash Flows for the Nine-Month
Periods Ended September 30, 2000 and 1999................... 4
Notes to Unaudited Condensed Financial Statements.................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 5
Item 3. Quantitative and Qualitative Disclosures About
Market Risk.........................................................11
PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K.....................................11
SIGNATURES....................................................................12
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HOPFED BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 2000 1999
---- ----
(Unaudited)
(In thousands)
<S> <C> <C>
Cash and due from banks ................................. $ 2,060 $ 4,537
Interest-bearing deposits in Federal
Home Loan Bank ("FHLB") ............................... 60 251
Federal funds sold ...................................... 65 4,100
Investment securities available for sale ................ 90,145 71,423
Investment securities held to maturity
(Estimated market values of $8,427 and
$10,078 at September 30, 2000 and
December 31, 1999, respectively) ..................... 8,296 9,958
Loans receivable, net ................................... 125,667 113,532
Accrued interest receivable ............................. 2,015 1,095
Real estate owned ....................................... 141 --
Premises and equipment, net ............................. 2,438 2,472
Deferred tax assets ..................................... 931 515
Other assets ............................................ 88 23
--------- ---------
Total assets ................................... $ 231,906 $ 207,906
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits .............................................. $ 162,884 160,905
Advances from FHLB .................................... 20,650 --
Federal income taxes .................................. 749 369
Advance payments from borrowers for taxes and insurance 314 156
Other liabilities ..................................... 1,329 2,130
--------- ---------
Total liabilities .............................. 185,926 163,560
--------- ---------
Shareholders' equity:
Common stock .......................................... 40 39
Additional paid in capital ............................ 25,188 24,214
Treasury stock, at cost ............................... (96) --
Retained earnings, substantially restricted ........... 21,689 20,991
Accumulated other comprehensive income (loss) ........... (841) (898)
--------- ---------
Total shareholders' equity ..................... 45,980 44,346
--------- ---------
Total liabilities and shareholders' equity .. $ 231,906 $ 207,906
========= =========
</TABLE>
See accompanying Notes to Unaudited Condensed Financial Statements.
1
<PAGE>
HOPFED BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
--------------------- ------------------------
2000 1999 2000 1999
---- ---- ---- ----
(Dollars in thousands, except per share data)
Interest income:
<S> <C> <C> <C> <C>
Interest on loans ..................... $ 2,446 $ 2,072 $ 6,751 $ 6,244
Interest and dividends on investments . 1,811 1,308 5,367 3,611
Time deposit interest income .......... 7 115 28 646
---------- ---------- ---------- ----------
Total interest income .................... 4,264 3,495 12,146 10,501
---------- ---------- ---------- ----------
Interest expense:
Interest on deposits .................. 2,003 1,762 5,826 5,299
Interest on advances .................. 356 -- 833 --
---------- ---------- ---------- ----------
Total interest expense ................... 2,359 1,762 6,659 5,299
---------- ---------- ---------- ----------
Net interest income ........................ 1,905 1,733 5,487 5,202
Provision for loan losses .................. 311 5 331 15
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses ....................... 1,594 1,728 5,156 5187
---------- ---------- ---------- ----------
Other income:
Loan and other service fees ........... 113 123 348 342
Securities gains ...................... -- 6,524 -- 6,524
Other, net ............................ 14 13 45 43
---------- ---------- ---------- ----------
Total other income .................... 127 6,660 393 6,909
---------- ---------- ---------- ----------
Noninterest expense:
Salaries and benefits ................. 502 1,127 1,663 4,087
Federal insurance premium ............. 9 22 27 68
Occupancy expense, net ................ 55 48 151 142
Data processing ....................... 39 41 121 106
Other operating expenses .............. 162 199 537 577
---------- ---------- ---------- ----------
Total other expenses .................. 767 1,437 2,499 4,980
---------- ---------- ---------- ----------
Income before income taxes ................. 954 6,951 3,050 7,116
Income tax expense ......................... 302 2,404 1,032 2,553
---------- ---------- ---------- ----------
Net income ................................. $ 652 $ 4,547 $ 2,018 $ 4,563
========== ========== ========== ==========
Basic net income per share ................. $ 0.16 $ 1.19 $ 0.50 $ 1.21
Diluted net income per share ............... $ 0.16 $ 1.19 $ 0.50 $ 1.21
Dividends per share ........................ $ 0.11 $ 0.075 $ 0.295 $ 0.225
Weighted average:
Common shares ......................... 4,004,138 4,098,162 3,999,215 4,066,957
Less: unallocated ESOP Shares ......... -- 286,447 -- 288,896
---------- ---------- ---------- ----------
4,004,138 3,811,715 3,999,215 3,778,061
========== ========== ========== ==========
</TABLE>
See accompanying Notes to Unaudited Condensed Financial Statements.
2
<PAGE>
HOPFED BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C>
Net income $ 652 $ 4,547 $ 2,018 $ 4,563
Other comprehensive income, net of tax
Unrealized holding gains (losses) arising
during period net of tax effect of $372
and ($219) for the three months ended
September 30, 2000 and 1999,
respectively,
and $30 and ($807) for the nine months
ended September 30, 2000 and 1999, 722 (425) 57 (1,566)
respectively
Less:reclassification adjustment for gains
included in net income net of tax
effect of $2,218 for each of the
three months and nine months ended 0 (4,306) 0 (4,306)
September 30, 1999 ------- ------- ------- -------
Comprehensive income (loss) $ 1,374 $ (184) $ 2,075 $(1,309)
======= ======= ======= =======
</TABLE>
See Accompanying Notes to Unaudited Condensed Financial Statements
3
<PAGE>
HOPFED BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
------------------------
2000 1999
---- ----
(In thousands)
Cash flows from operating activities:
<S> <C> <C>
Net income ............................................ $ 2,018 $ 4,563
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses ............................. 331 15
Provision for depreciation ............................ 89 84
FHLB stock dividend ................................... (110) (100)
Amortization of investment security premiums .......... 31 27
Accretion of investment security discounts ............ (13) (260)
Gain on sale of investments ........................... -- (6,524)
Unallocated ESOP shares ............................... -- 87
MRP shares ............................................ 454 1,291
(Increase) decrease in:
Accrued interest receivable ........................... (920) 197
Other assets .......................................... (65) 131
Increase (decrease) in:
Current income taxes payable .......................... (223) 1,786
Deferred income taxes ................................. 156 34
Accrued expenses and other liabilities ................ (414) 1,483
-------- --------
Net cash provided by operating activities ............. 1,334 2,814
-------- --------
Cash flows from investing activities:
Net decrease in interest earning deposits in FHLB ..... 191 140
Net decrease in federal funds sold .................... 4,035 1,099
Proceeds from maturities of held-to-maturity securities 1,668 16,986
Proceeds from sale of available-for-sale securities ... 6,502 37,200
Purchases of available-for-sale securities ............ (25,049) (50,998)
Net increase in loans ................................. (12,465) (4,738)
Real estate acquired in settlement of loans ........... (141) --
Purchases of premises/equipment ....................... (56) (43)
-------- --------
Net cash (used) provided by investing activities ...... (25,315) (354)
-------- --------
Cash flows from financing activities:
Net increase (decrease) in demand deposits ............ (3,665) 1,739
Net increase (decrease) in time deposits .............. 5,644 (2,863)
Advances from FHLB .................................... 20,650 --
Increase in advance payments by
borrowers for taxes and insurance ................... 158 153
Net dividends paid .................................... (1,187) (845)
Payment on loan to ESOP ............................... -- 73
Purchases of treasury stock ........................... (96) --
-------- --------
Net cash provided (used) in financing activities ...... 21,504 (1,743)
-------- --------
Increase (decrease) in cash and cash equivalents ........... (2,477) 717
Cash and cash equivalents, beginning of period ............. 4,537 1,905
-------- --------
Cash and cash equivalents, end of period ................... 2,060 2,622
======== ========
Supplemental disclosures of cash flow information
Cash paid for income taxes ............................ $ 1,107 $ 600
-------- --------
Cash paid for interest ................................ $ 6,712 $ 5,298
======== ========
</TABLE>
See accompanying Notes to Unaudited Condensed Financial Statements.
4
<PAGE>
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
HopFed Bancorp, Inc. (the "Company") was formed at the direction of
Hopkinsville Federal Savings Bank (the "Bank") to become the holding
company of the Bank upon the conversion of the Bank from a federally
chartered mutual savings bank to a federally chartered stock savings
bank. The conversion was consummated on February 6, 1998. The Company's
primary assets are the outstanding capital stock of the converted Bank,
a portion of the net proceeds of the conversion, and a note receivable
from the Company's Employee Stock Ownership Plan, and its sole business
is that of the converted Bank and the investment of funds held by it.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
("GAAP") for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by GAAP for
complete financial statements. In the opinion of management, all
adjustments (consisting of only normal recurring accruals) necessary
for fair presentation have been included. The results of operations and
other data for the nine month period ended September 30, 2000, are not
necessarily indicative of results that may be expected for the entire
fiscal year ending December 31, 2000.
The accompanying unaudited financial statements should be read in
conjunction with the Consolidated Financial Statements and the Notes
thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999. The accounting policies followed by the
Company are set forth in the Summary of Significant Accounting Policies
in the Company's December 31, 1999 Consolidated Financial Statements.
The Consolidated Statement of Financial Condition at December 31, 1999,
has been derived from the audited financial statements at that date but
does not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
Total assets increased by $24.0 million, from $207.9 million at December
31, 1999 to $231.9 million at September 30, 2000. Investment securities
available for sale increased from $71.4 million at December 31, 1999 to $90.1
million at September 30, 2000. Federal funds sold decreased from $4.1 million at
December 31, 1999, to $65,000 at September 30, 2000.
5
<PAGE>
At September 30, 2000, investments classified as "held to maturity" were
carried at amortized cost of $8.3 million and had an estimated fair market value
of $8.4 million.
The loan portfolio increased $12.2 million during the nine months ended
September 30, 2000, including an increase of $3.6 million in commercial loans.
During the three months ended September 30, 2000, a total of $1.3 million in
commercial loans was originated, compared to $782,000 in the three months ended
September 30, 1999. Net loans totaled $125.7 million and $113.5 million at
September 30, 2000 and December 31, 1999, respectively. For the nine months
ended September 30, 2000, the average yield on loans was 7.63%, compared to
7.57% for the year ended December 31, 1999.
The allowance for loan losses totaled $609,000 at September 30, 2000, an
increase of $331,000 from the allowance of $278,000 December 31, 1999. The ratio
of the allowance for loan losses to loans was .48% and .24% at September 30,
2000 and December 31, 1999, respectively. Also at September 30, 2000,
non-performing loans were $327,000, or .26% of total loans, compared to $58,000,
or .05% of total loans, at December 31, 1999, and the ratio of allowance for
loan losses to non-performing loans at September 30, 2000 and December 31, 1999
was 186.2% and 479.3%, respectively. The determination of the allowance for loan
losses is based on management's analysis, performed on a quarterly basis.
Various factors are considered, including the market value of the underlying
collateral, growth and composition of the loan portfolio, the relationship of
the allowance for loan losses to outstanding loans, historical loss experience,
delinquency trends and prevailing economic conditions. Although management
believes its allowance for loan losses is adequate, there can be no assurance
that additional allowances will not be required or that losses on loans will not
be incurred. Minimal losses on loans have been incurred in prior years.
Real estate owned of $141,000 at September 30, 2000 represents one parcel
of residential property on which the Bank held a first mortgage and which was
acquired by the Bank in a sale initiated by the second mortgagee.
In 1999, the Company determined to retain its deposit base through an
increase in overall deposit rates. At September 30, 2000, deposits increased to
$162.9 million from $160.9 million at December 31, 1999, a net increase of $2.0
million. The average cost of deposits during the nine months ended September 30,
2000 and the year ended December 31, 1999 was 4.89% and 4.62%, respectively.
Management continually evaluates the investment alternatives available to
customers and adjusts the pricing on its deposit products to more actively
manage its funding costs while remaining competitive in its market area.
COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND
1999
NET INCOME. Net income for the nine months ended September 30, 2000 was
$2.0 million, compared to net income of $4.6 million for the nine months ended
September 30, 1999. Excluding the gain on sale of FHLMC stock, net income for
the nine months ended September 30, 1999, would have been approximately
$257,000. During the nine months ended September 30, 1999, the Company incurred
additional compensation expense of $2.1 million attributable to additional
employee benefits which were approved at the 1999 Annual Meeting of
Stockholders.
6
<PAGE>
NET INTEREST INCOME. Net interest income for the nine months ended
September 30, 2000 was $5.5 million, compared to $5.2 million for the nine
months ended September 30, 1999. The increase in net interest income for the
nine months ended September 30, 2000 was primarily due to enhanced yields as a
result of a more diversified loan portfolio and increased investment in
securities available for sale. For the nine months ended September 30, 2000, the
average yield on total interest-earning assets was 7.42%, compared to 6.54% for
the nine months ended September 30, 1999, and the average cost of
interest-bearing liabilities was 5.05% for the nine months ended September 30,
2000, compared to 4.65% for the nine months ended September 30, 1999. As a
result, the Bank's interest rate spread for the nine months ended September 30,
2000 was 2.37%, compared to 1.89% for the nine months ended September 30, 1999,
and its net yield on interest-earning assets was 3.35% for the nine months ended
September 30, 2000, compared to 3.24% for the nine months ended September 30,
1999.
INTEREST INCOME. Interest income increased by $1.6 million, from $10.5
million to $12.1 million, or by 15.2%, during the nine months ended September
30, 2000 compared to the same period in 1999. This increase primarily resulted
from strategically increasing loans outstanding and investment securities. The
average balance of securities available for sale increased $16.0 million, from
$74.4 million during the nine months ended September 30, 1999, to $90.4 million
during the nine months ended September 30, 2000, while the average balance of
securities held to maturity decreased $6.1 million, from $15.3 million during
the nine months ended September 30, 1999 to $9.2 million during the nine months
ended September 30, 2000. In addition, average time deposits and other
interest-earning cash deposits decreased $12.6 million, from $13.3 million
during the nine months ended September 30, 1999 to $693,000 during the nine
months ended September 30, 2000. Overall, average total interest-earning assets
increased $4.2 million, or 1.9%, from $214.0 million during the nine months
ended September 30, 1999 to $218.2 million during the nine months ended
September 30, 2000. The ratio of average interest-earning assets to average
interest-bearing liabilities decreased from 140.76% for the nine months ended
September 30, 1999 to 124.02% for the nine months ended September 30, 2000.
INTEREST EXPENSE. Interest expense increased $1.4 million, or 25.7%, to
$6.7 million for the nine months ended September 30, 2000, compared to $5.3
million for the same period in 1999. The increase was attributable to an
increase of $527,000 in interest on deposits and interest on FHLB advances of
$833,000. During the nine months ended September 30, 2000, the Bank borrowed
approximately $20.7 million from the FHLB of Cincinnati in order to fund
increases in loans and investments. The average cost of interest-bearing
deposits increased from 4.65% during the nine months ended September 30, 1999 to
5.05% during the nine months ended September 30, 2000. Over the same period, the
average balance of interest-bearing deposits increased $6.8 million, from $152.1
million at September 30, 1999 to $158.9 million at September 30, 2000, or 4.5%.
OTHER INCOME. Other income decreased $6.5 million to $393,000 for the nine
months ended September 30, 2000, compared to $6.9 million for the nine months
ended September 30,1999. The decrease was attributable to a $6.5 million gain on
the sale of FHLMC stock in the nine months ended September 30, 1999.
7
<PAGE>
PROVISION FOR LOAN LOSSES. The allowance for loan losses is established
through a provision for loan losses based on management's evaluation of the risk
inherent in its loan portfolio and the general economy. Such evaluation
considers numerous factors including, general economic conditions, loan
portfolio composition, prior loss experience, the estimated fair value of the
underlying collateral and other factors that warrant recognition in providing
for an adequate loan loss allowance. The Bank determined that an additional
$330,600 provision for loan loss was required for the nine months ended
September 30, 2000, compared to an additional $15,000 provision for the nine
months ended September 30, 1999. The higher provision for loan losses was based
on the Bank's increased emphasis on commercial lending and a general weakening
of the economy in the Bank's market area during the third quarter of 2000.
NON-INTEREST EXPENSE. There was a $2.5 million decrease in total
non-interest expense in the nine months ended September 30, 2000 compared to the
same period in 1999, primarily due to a $2.4 million decrease in salaries and
benefits.
INCOME TAXES. The effective tax rate for the nine months ended September
30, 2000 was 33.8%, compared to 35.9% for the same period in 1999. The high
effective tax rate for the nine months ended September 30, 1999, was
attributable to $398,000 of expenses being non-deductible for tax purposes. The
decrease in income tax expense of $1.5 million in the nine months ended
September 30, 2000, compared to the same period in 1999 was primarily due to a
decrease of $4.1 million in income before income taxes.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
AND 1999
NET INCOME. Net income for the three months ended September 30, 2000 was
$652,000, compared to net income of $4.5 million for the three months ended
September 30, 1999. Excluding the gain on sale of FHLMC stock, net income for
the three months ended September 30, 1999, would have been approximately
$241,000. During the three months ended September 30, 1999, the Company incurred
additional compensation expense resulting from additional employee benefits
which were approved at the 1999 Annual Meeting of Stockholders.
NET INTEREST INCOME. Net interest income was $1.9 million for the three
months ended September 30, 2000, compared to net interest income of $1.7 million
for the three months ended September 30, 1999. For the three months ended
September 30, 2000, the average yield on total interest-earning assets was
7.66%, compared to 6.55% for the three months ended September 30, 1999, and the
average cost of interest-bearing liabilities was 5.27% for the three months
ended September 30, 2000, compared to 4.65% for the three months ended September
30, 1999. As a result, the Bank's interest rate spread for the three months
ended September 30, 2000 was 2.39%, compared to 1.90% for the three months ended
September 30, 1999, and its net yield on interest-earning assets was 3.42% for
the three months ended September 30, 2000, compared to 3.25% for the three
months ended September 30, 1999.
INTEREST INCOME. Interest income increased by $769,000, from $3.5 million
to $4.3 million, during the three months ended September 30, 2000, compared to
the same period in 1999. The average balance of securities held to maturity
declined $2.2 million, from $10.8 million during the three months ended
September 30, 1999 to $8.6 million during the three months ended
8
<PAGE>
September 30, 2000. In addition, average time deposits and other
interest-earning cash deposits decreased $9.1 million, from $9.6 million at
September 30, 1999 to $499,000 at September 30, 2000. Overall, average total
interest-earning assets increased $9.2 million, or 4.3%, from September 30, 1999
to September 30, 2000. The ratio of average interest-earning assets to average
interest-bearing liabilities decreased from 140.66% for the three months ended
September 30, 1999 to 124.28% for the three months ended September 30, 2000.
INTEREST EXPENSE. Interest expense increased $597,000, or 33.9%, to $2.4
million for the three months ended September 30, 2000, compared to $1.8 million
for the same period in 1999. The increase was attributable to an increase of
$241,000 in interest on deposits and interest on FHLB advances of $356,000. The
average cost of interest-bearing deposits increased from 4.65% during the three
months ended September 30, 1999 to 5.27% during the three months ended September
30, 2000. Over the same period, the average balance of interest-bearing deposits
increased $6.6 million, from $151.7 million during the three months ended
September 30, 1999 to $158.3 million during the three months ended September 30,
2000, or 4.3%. The average balance of advances from the FHLB was $20.8 million
during the nine months ended September 30, 2000, compared to none during the
same period in 1999.
PROVISION FOR LOAN LOSSES. The Bank determined that an additional $310,200
provision for loan loss was required for the three months ended September 30,
2000, compared to an additional $5,000 provision for the three months ended
September 30, 1999. The higher provision for loan losses was based on the Bank's
increased emphasis on commercial lending and a general weakening of the economy
in the Bank's market area during the third quarter of 2000.
OTHER INCOME. Other income decreased $6.6 million to $127,000 for the three
months ended September 30, 2000, compared to $6.7 million for the three months
ended September 30, 1999. The decrease was attributable to a $6.5 million gain
on the sale of FHLMC stock in the three months ended September 30, 1999.
NON-INTEREST EXPENSE. There was a $670,000 decrease in total non-interest
expense in the three months ended September 30, 2000 compared to the same period
in 1999, primarily due to a $625,000 decrease in salaries and benefits.
INCOME TAXES. The effective tax rate for the three months ended September
30, 2000 was 31.7%, compared to 34.6% for the same period in 1999. The decrease
in income tax expense of $2.1 million in the three months ended September 30,
2000 compared to the same period in 1999 was primarily due to a $6.0 million
decrease in income before income taxes.
LIQUIDITY AND CAPITAL RESOURCES.
The Company has no business other than that of the Bank and investing funds
held by it. Management of the Company believes that dividends that may be paid
by the Bank to the Company will provide sufficient funds for its operations and
liquidity needs . However, no assurance can be given that the Company will not
have a need for additional funds in the future. The Bank is subject to certain
regulatory limitations with respect to the payment of dividends to the Company.
9
<PAGE>
The Bank's principal sources of funds for operations are deposits from its
primary market areas, principal and interest payments on loans, earnings on
investment securities, and proceeds from maturing investment securities. The
principal uses of funds by the Bank include the origination of loans and the
purchase of investment securities.
The Bank is required by current federal regulations to maintain specified
liquid assets of at least 5% of its net withdrawable accounts plus short-term
borrowings. Short-term liquid assets (those maturing in one year or less) may
not be less than 1% of the Bank's liquidity base. At September 30, 2000, the
Bank met all regulatory liquidity requirements, and management believes that the
liquidity levels maintained are adequate to meet potential deposit outflows,
loan demand and normal operations.
The Bank must satisfy three capital standards: a ratio of core capital to
adjusted total assets of 3.0%, a tangible capital standard expressed as 1.5% of
total adjusted assets, and a combination of core and "supplementary" capital
equal to 8.0% of risk-weighted assets. At September 30, 2000, the Bank exceeded
all regulatory capital requirements. The table below presents certain
information relating to the Bank's capital compliance at September 30, 2000.
Amount Percent
------ -------
(Dollars in thousands)
Tangible Capital . . . . . . . . . . $44,158 18.93 %
Core Capital . . . . . . . . . . . . 44,158 18.93%
Risk-Based Capital . . . . . . . . . 44,767 48.20%
At September 30, 2000, the Bank had outstanding commitments to originate
loans totaling $1.4 million. Management believes that the Bank's sources of
funds are sufficient to fund all of its outstanding commitments. Certificates of
deposits which are scheduled to mature in one year or less from September 30,
2000 totaled $66.5 million. Management believes that a significant percentage of
such deposits will remain with the Bank.
During the three month period ended September 30, 2000, the Company paid a
dividend of $0.11 per share of Common Stock, or a total dividend of $440,000,
and the Company declared a dividend of $0.11 per share of Common Stock, or a
total dividend of $440,000 to be paid in October 2000.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements.
Additional written or oral forward-looking statements may be made by the Company
from time to time in filings with the Securities and Exchange Commission or
otherwise. The words "believe," "expect," "seek," and "intend" and similar
expressions identify forward-looking statements, which speak only as of the date
the statement is made. Such forward-looking statements are within the meaning of
that term in Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements may
include, but are not limited to, projections of income or loss, expenditures,
acquisitions, plans for future operations, financing
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needs or plans relating to services of the Company, as well as assumptions
relating to the foregoing. Forward-looking statements are inherently subject to
risks and uncertainties, some of which cannot be predicted or quantified. Future
events and actual results could differ materially from those set forth in,
contemplated by or underlying the forward-looking statements.
The Company does not undertake, and specifically disclaims, any obligation
to publicly release the results of revisions which may be made to
forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company monitors whether material changes in market risk have occurred
since year-end. The Company does not believe that material changes in market
risk exposures occurred during the nine months ended September 30, 2000.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule (SEC use only)
Exhibit 10.1 - Employment Agreement by and between
Hopkinsville Federal Savings Bank and Michael L.
Woolfolk
(b) Current Report on Form 8-K dated September 20, 2000 reporting
under Item 4 thereof a change in the Company's certifying
accountant and under Item 5 thereof the approval of the
repurchase of up to 200,000 shares of the Company's common
stock.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOPFED BANCORP, INC.
Date: November 14, 2000 /s/ John E. Peck
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John E. Peck
President and Chief Executive Officer
Date: November 14, 2000 /s/ Peggy R. Noel
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Peggy R. Noel
Executive Vice President and Chief Financial
Officer
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