HopFed Bancorp Inc. (HFBC, Financial) filed Quarterly Report for the period ended 2009-03-31.
HopFed Bancorp Inc. was incorporated for the purpose of serving as a savings and loan holding company for Hopkinsville Federal Savings Bank. The business of the bank primarily consists of attracting depositsfrom the general public and investing such deposits in loans secured by single family residential real estate and investment securities including U.S. Government and agency securities and mortgage-backed securities. The bank also originates single-family residential/construction loans and multi-family and commercial real estate loans. HopFed Bancorp Inc. has a market cap of $32.3 million; its shares were traded at around $9 with a P/E ratio of 8 and P/S ratio of 0.5. The dividend yield of HopFed Bancorp Inc. stocks is 5.3%. HopFed Bancorp Inc. had an annual average earning growth of 19.8% over the past 5 years.
At March 31, 2009 and December 31, 2008, investments classified as held to maturity were carried at an amortized cost of $431,000 and $454,000, respectively and had an estimated fair market value of $437,000 and $455,000, respectively. At March 31, 2009 and December 31, 2008, securities classified as available for sale had an amortized book value of $290.7 million and $244.2 million, respectively.
A loan is considered to be impaired when management determines that it is possible that the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. The value of individually impaired loans is measured based on the present value of expected payments using the fair value of the collateral if the loan is collateral dependent. At March 31, 2009 and December 31, 2008, the Companys impaired loans totaled $19.6 million and $11.3 million, respectively. At March 31, 2009 and December 31, 2008, the Companys reserve for impaired loans totaled $1,029,000 and $731,000, respectively.
Net Income. Net income available for common shareholders for the three months ended March 31, 2009 was $1,012,000, compared to net income of $1,492,000 for the three months ended March 31, 2008. The decline in the Companys net income available for common shareholders for the three month period ended March 31, 2009 is largely the result of the Companys dividend accrual and accretion of warrant cost associated with the Companys sale of $18.4 million in preferred stock to the United States Treasury under the Treasurys Capital Purchase Plan. In the three months ended March 31, 2009, the Company paid $161,000 related to the payment of a 5% preferred dividend and $27,000 related to the accretion on the value of the stock warrants issued.
Net Interest Income. Net interest income for the three month period ended March 31, 2009 was $6.4 million, compared to $5.6 million for the three month period ended March 31, 2008. The increase in net interest income for the three months ended March 31, 2009 as compared to March 31, 2008 was largely due to a $123.9 million increase in the average balance of available for sale investments. The growth of the investment portfolio is the result of a strategy to increase interest earning assets through a mixture of Federal Home Loan Bank borrowings and increased deposit activity. This strategy was implemented to partially leverage the Companys preferred stock issuance while providing additional income to offset the cost of the preferred stock and warrant issuance. As a result of this strategy, interest income on taxable investments increased by $1.6 million in the three month period ended March 31, 2009 as compared to the same period in 2008, an increase of 96%. For the three month period ended March 31, 2009, income on tax exempt securities increased to $272,000 from $164,000 for the three month period ended March 31, 2008. At the same time, the average yield on taxable securities and tax exempt securities have increased by 0.52% and 0.98%, respectively for the three month period ended March 31, 2009 as compared to the three month period ended March 31, 2008.
Average Balances, Yields and Interest Expenses. The table below summarizes the overall effect of changes to both interest rates and changes in the average balances of interest earning assets and liabilities for the three month periods ended March 31, 2009 and March 31, 2008. Yields on assets and cost of liabilities are derived by dividing income or expense by the average daily balances of interest earning assets and liabilities for the appropriate three-month periods. Average balances for loans include loans classified as non-accrual, net of the allowance for loan losses. The table adjusts tax-free investment income by $122,000 for March 31, 2009, and $70,000 for March 31, 2008, for a tax equivalent rate using a cost of funds rate of 3.24% for March 31, 2009 and 4.00% for March 31, 2008. The table adjusts tax-free loan income by $42,000 for March 31, 2009 and $80,000 for March 31, 2008 for a tax equivalent rate using the same cost of funds rate:
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HopFed Bancorp Inc. was incorporated for the purpose of serving as a savings and loan holding company for Hopkinsville Federal Savings Bank. The business of the bank primarily consists of attracting depositsfrom the general public and investing such deposits in loans secured by single family residential real estate and investment securities including U.S. Government and agency securities and mortgage-backed securities. The bank also originates single-family residential/construction loans and multi-family and commercial real estate loans. HopFed Bancorp Inc. has a market cap of $32.3 million; its shares were traded at around $9 with a P/E ratio of 8 and P/S ratio of 0.5. The dividend yield of HopFed Bancorp Inc. stocks is 5.3%. HopFed Bancorp Inc. had an annual average earning growth of 19.8% over the past 5 years.
Highlight of Business Operations:
Total assets increased by $23.5 million, from $967.6 million at December 31, 2008 to $991.1 million at March 31, 2009. Securities available for sale increased from $247.0 million at December 31, 2008 to $295.2 million at March 31, 2009. The Company does not have any federal funds sold at March 31, 2009 as compared to $16.1 million at December 31, 2008. The Company has chosen to maintain additional cash balances in non-interest bearing demand deposit accounts due to both the very low earnings rate on overnight funds as well as the unlimited FDIC coverage available on non-interest demand deposit accounts. The Companys holdings of Federal Home Loan Bank (FHLB) stock, at cost, increased from $4.1 million at December 31, 2008 to $4.3 million at March 31, 2009. Total FHLB borrowings declined $7.0 million, from $130.0 million at December 31, 2008 to $123.0 million at March 31, 2009. Total repurchase balances increased from $28.7 million at December 31, 2008 to $31.8 million at March 31, 2009.At March 31, 2009 and December 31, 2008, investments classified as held to maturity were carried at an amortized cost of $431,000 and $454,000, respectively and had an estimated fair market value of $437,000 and $455,000, respectively. At March 31, 2009 and December 31, 2008, securities classified as available for sale had an amortized book value of $290.7 million and $244.2 million, respectively.
A loan is considered to be impaired when management determines that it is possible that the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. The value of individually impaired loans is measured based on the present value of expected payments using the fair value of the collateral if the loan is collateral dependent. At March 31, 2009 and December 31, 2008, the Companys impaired loans totaled $19.6 million and $11.3 million, respectively. At March 31, 2009 and December 31, 2008, the Companys reserve for impaired loans totaled $1,029,000 and $731,000, respectively.
Net Income. Net income available for common shareholders for the three months ended March 31, 2009 was $1,012,000, compared to net income of $1,492,000 for the three months ended March 31, 2008. The decline in the Companys net income available for common shareholders for the three month period ended March 31, 2009 is largely the result of the Companys dividend accrual and accretion of warrant cost associated with the Companys sale of $18.4 million in preferred stock to the United States Treasury under the Treasurys Capital Purchase Plan. In the three months ended March 31, 2009, the Company paid $161,000 related to the payment of a 5% preferred dividend and $27,000 related to the accretion on the value of the stock warrants issued.
Net Interest Income. Net interest income for the three month period ended March 31, 2009 was $6.4 million, compared to $5.6 million for the three month period ended March 31, 2008. The increase in net interest income for the three months ended March 31, 2009 as compared to March 31, 2008 was largely due to a $123.9 million increase in the average balance of available for sale investments. The growth of the investment portfolio is the result of a strategy to increase interest earning assets through a mixture of Federal Home Loan Bank borrowings and increased deposit activity. This strategy was implemented to partially leverage the Companys preferred stock issuance while providing additional income to offset the cost of the preferred stock and warrant issuance. As a result of this strategy, interest income on taxable investments increased by $1.6 million in the three month period ended March 31, 2009 as compared to the same period in 2008, an increase of 96%. For the three month period ended March 31, 2009, income on tax exempt securities increased to $272,000 from $164,000 for the three month period ended March 31, 2008. At the same time, the average yield on taxable securities and tax exempt securities have increased by 0.52% and 0.98%, respectively for the three month period ended March 31, 2009 as compared to the three month period ended March 31, 2008.
Average Balances, Yields and Interest Expenses. The table below summarizes the overall effect of changes to both interest rates and changes in the average balances of interest earning assets and liabilities for the three month periods ended March 31, 2009 and March 31, 2008. Yields on assets and cost of liabilities are derived by dividing income or expense by the average daily balances of interest earning assets and liabilities for the appropriate three-month periods. Average balances for loans include loans classified as non-accrual, net of the allowance for loan losses. The table adjusts tax-free investment income by $122,000 for March 31, 2009, and $70,000 for March 31, 2008, for a tax equivalent rate using a cost of funds rate of 3.24% for March 31, 2009 and 4.00% for March 31, 2008. The table adjusts tax-free loan income by $42,000 for March 31, 2009 and $80,000 for March 31, 2008 for a tax equivalent rate using the same cost of funds rate:
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