Hopkinsville, KY – HopFed Bancorp, Inc. (NASDAQ: HFBC) (the “Company”), the holding company for Heritage Bank (the “Bank”), today reported results for the three month period ended March 31st, 2013.
For the three month period ended March 31st, 2013, the Company’s net income available to common shareholders was $984,000, or $0.13 per common share, basic and diluted, compared to net income available to common shareholders of $470,000, or $0.06 per common share basic and diluted, for the three month period ended March 31st, 2012.The improved level of net income available to common shareholders was largely the result of an increase in gains on the sale of securities, a reduction in the Company’s provision for loan loss expense and the elimination of preferred stock dividends and warrant accretion associated with the Company’s Preferred stock.
The Preferred stock was repurchased on December 19th, 2012, and the Company’s warrant was repurchased on January 16th, 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 of 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 11th, 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 31st, 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 31st, 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 31st, 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 31st, 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 31st, 2013, the Company’s net interest margin was 2.99% as compared to 3.01% for the three month period ended December 31st, 2012. In the six month period beginning April 1st, 2013, and ending September 30th, 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.