Pre-Tax Income up 29.1%
Year-over-Year
Dividend Increased 40%
HopFed Bancorp, Inc. (NASDAQ: HFBC) (the “Company”), the holding
company for Heritage Bank USA, Inc. (the “Bank”), today reported
operating results for the three and six month periods ended June
30, 2018. For the three month period ended June 30, 2018, net
income was $1.7 million, or $0.28 per share, compared to $1.1
million, or $0.18 per share, for the three month periods ended June
30, 2017 and March 31, 2018. For the six month period ended June
30, 2018, net income was $2.8 million, or $0.46 per share, compared
to $2.1 million, or $0.33 per share, for the six month period ended
June 30, 2017.
Commenting on the results for the six month period ended June
30, 2018, John E. Peck, President and Chief Executive Officer,
said, “We are excited to report earnings growth of $0.13 per share,
representing an increase of 39.4% in the six month period ended
June 30, 2018 compared to the six month period ended June 30, 2017.
For the six month period ended June 30, 2018, net interest income
was $14.5 million, an increase of $747,000 compared to the six
month period ended June 30, 2017.”
“At June 30, 2018, non-accrual loans were $1.6 million compared
to $8.6 million at June 30, 2017. At June 30, 2018, loans
classified as substandard were $11.5 million compared to $24.8
million at June 30, 2017. The Company’s current levels of
substandard and non-accrual loans are strong indicators that our
near term credit quality outlook remains positive. The Company’s
local economy remains strong with most of our communities at or
near full employment. Our loan pipeline remains robust, and we are
optimistic about the Company’s future. Our improving financial
performance and future prospects provided the Board of Directors
with the opportunity to increase our common dividend by 40%, to
$0.07 per share.”
Financial Highlights
- In the six month period ended June 30,
2018, total loans increased $35.0 million, representing an annual
growth rate of 10.9%. At June 30, 2018, total loans originated and
outstanding in the Nashville, Tennessee, loan production offices
were $88.8 million, compared to $80.5 million at March 31, 2018 and
$61.5 million at June 30, 2017.
- The Company’s net interest margin for
the three and six month periods ended June 30, 2018 was 3.45%
compared to 3.39% and 3.35% for the three and six month periods
ended June 30, 2017.
Results of Operations
In the three month periods ended June 30, 2018 and June 30,
2017, interest income was $9.1 million and $8.4 million. The
improvements in interest income are the result of a $43.7 million
increase in the average balance of loans for the three month period
ended June 30, 2018 compared to the three month period ended June
30, 2017. Improvements in the level of net interest income has been
partially offset by higher funding cost. The Company’s interest
expense has increased by $381,000 for the three month period ended
June 30, 2018 compared to the three month period ended
June 30, 2017 despite a modest $30,000 increase in average
interest bearing liabilities. For the three month period ended June
30, 2018, net interest income was $7.3 million compared to $7.0
million for the three month period ended June 30, 2017. On a linked
quarter basis, the Company’s net interest income increased by
$94,000. We anticipate that deposit pricing pressures will continue
into the foreseeable future and eventually place pressures on the
Company’s net interest margin and profitability.
For the three month period ended June 30, 2018, non-interest
income was $2.4 million, an increase of $528,000 compared to the
three month period ended June 30, 2017. The largest contributor to
the increase in non-interest income for the three month period
ended June 30, 2018 was a $467,000 increase on gains on the sale of
securities compared to the three month period ended June 30, 2017.
At June 15, 2018, the Company’s investment in a trust preferred
security was called by the sponsor, resulting in a $340,000 gain.
The remaining gains on the sale of securities resulted from the
sale of pre-refunded municipal bonds. For the three month period
ended June 30, 2018, mortgage origination income was $488,000
compared to $278,000 for the three month period ended June 30,
2017. The growth in mortgage origination income is the result of a
robust Nashville housing market and our improving penetration in
that market. On a linked quarter basis, non-interest income
increased by $620,000, largely due to a $454,000 increase in gains
on the sale of securities and a $170,000 increase in mortgage
origination income.
For the three month period ended June 30, 2018, non-interest
expenses were $7.6 million, an increase of $341,000, or 4.7%,
compared to June 30, 2017. For the three month period ended June
30, 2017, the Company received a one-time reimbursement of $225,000
for data processing expenses that reduced non-interest expenses in
June 2017. For the three month period ended June 30, 2018, salaries
and benefits expense were $4.1 million, an increase of $139,000, or
3.5%, compared to June 30, 2017. The increase in salaries and
benefits expense were largely the result of staff payroll increases
that occurred at the beginning of year. On a linked quarter basis,
non-interest expenses increased by $34,000.
For the six month period ended June 30, 2018, net interest
income was $14.5 million, an increase of $747,000 compared to June
30, 2017. The increase in net interest income was largely the
result of a $39.5 million increase in the average balance of loans.
For the six month period ended June 30, 2018, the Company’s
provision for loan loss expense was $130,000 compared to $350,000
for the six month period ended June 30, 2017. At June 30, 2018, the
Company’s reduced levels of loans classified as non-accrual and
substandard required a reduced amount of provision expenses.
Total non-interest income declined by $24,000 in the six month
period ended June 30, 2018 compared to the six month period ended
June 30, 2017. The table below outlines the most significant
changes in non-interest income for the six month period ended June
30, 2018 and June 30, 2017:
Six month periods ended
6/30/2018
6/30/2017
$ Change
% Change
(Dollars in Thousands, Except Percentages) Service charges $
1,433 $ 1,604 ($171 ) -10.66 % Mortgage origination income
808 612 196 32.03 % Gain on the sale of securities 508 16 492
3075.00 % Income from bank owned life insurance 144 307 (163 )
-53.09 % Other operating income 262 691 (429 ) -62.08 %
The majority of changes in non-interest income for the six month
periods ended June 30, 2018 and June 30, 2017 are similar to those
outlined for the three month period comparisons above. Income from
bank owned life insurance was $163,000 higher in the six month
period ended June 30, 2017 compared to the same period in 2018 due
to the payment of a death benefit. For the six month period ended
June 30, 2018, other operating income was $262,000, a reduction of
$429,000 for the six month period ended June 30, 2017. A
significant portion of this variance is the result of a one-time
payment from a vendor on the renewal of a contract of $225,000 in
2017.
For the six month periods ended June 30, 2018, total
non-interest expenses were $15.1 million, an increase of $192,000,
or 1.3%, compared to the six month period ended June 30, 2017. For
the six month period ended June 30, 2018, data processing and
professional services expense increased by $239,000 and $153,000
compared to the six month period ended June 30, 2017.
This information is preliminary and based on
company data available at the time of the presentation.
Balance Sheet
At June 30, 2018, total assets were $912.7 million, compared to
$917.5 million at December 31, 2017. For the six month period ended
June 30, 2018, the Company reduced cash and cash equivalent
balances by $25.7 million and securities classified as available
for sale by $15.8 million. The Company has used this liquidity to
fund loan growth of $35.0 million and a $20.8 million decline in
total deposits. The competition for deposits is becoming
increasingly aggressive and expensive, resulting in a higher cost
of deposit ratio for the Company. In several rural markets in which
the Company participates, the increase in pricing power for new
commercial loans has not increased at the same pace as our funding
cost. A summary of loans outstanding by type at June 30, 2018 and
December 31, 2017 is as follows:
June 30,
2018
December 31,
2017
(Dollars in
Thousands)
One-to-four family first mortgages $ 171,725 $ 163,565 Home
equity lines of credit 34,262 35,697 Second mortgages (closed end)
1,109 1,184 Multi-family 37,742 37,445 Construction 40,759 30,246
Land 9,033 14,873 Non-residential real estate 244,769 224,952
Farmland 33,271 36,851 Consumer loans 8,525 8,620 Commercial loans
96,214 88,938
Total loans, gross 677,409 642,371 Unearned income, net of
fees (518 ) (443 ) Less allowance for loan losses
(4,637 ) (4,826
) Total loans
$
672,254 $ 637,102
Asset Quality
The table below provides a history of the Company’s significant
credit quality metrics for the dates listed below:
6/30/2018
(unaudited)
3/31/2018
(unaudited)
12/31/2017
(audited)
9/30/2017
(unaudited)
6/30/2017
(unaudited)
(Dollars in
Thousands, Except Percentages)
Loans past due 30-89 days 1,605 432 393 754 2,910 Loans past
due 90 + days
accruing interest
--- --- 88 --- --- Total non-accrual loans 1,602 2,004 1,285 1,739
8,579 Total loans classified as substandard 11,491 14,082 10,780
11,217 24,808 Total performing TDR loans 3,253 3,255 3,163 3,371
3,388 Total foreclosed assets 3,427 3,329 3,369 4,975 1,408
Quarterly net charge offs 79 240 (336 ) 2,451 (956 )
Non-accrual loans / Total loans 0.24 % 0.30 % 0.20 % 0.28 % 1.34 %
Non-performing assets / Total assets 0.55 % 0.58 % 0.52 % 0.74 %
1.09 % Allowance / Total loans 0.69 % 0.70 % 0.75 % 0.76 % 1.12 %
Allowance / Non-accrual loans 289.48 % 232.24 % 375.74 % 275.96 %
83.69 % Substandard loans / Risk based capital 11.24 % 13.94 %
10.72 % 11.08 % 24.28 %
Quarterly net charge off ratio
(annualized)
0.05 % 0.15 % -0.21 % 1.54 % -0.61 % Total risk based capital
102,211 100,997 100,535 101,228 102,173 FTE Employees 226 227 229
227 230
This information is preliminary and based
on company data available at the time of the presentation.
The Company
HopFed Bancorp, Inc. is the holding company for Heritage Bank
USA, Inc. (“Heritage Bank”), a Kentucky state chartered commercial
bank. Heritage Bank has eighteen offices in western Kentucky
and middle Tennessee and loan production offices in Nashville,
Murfreesboro and Brentwood, Tennessee. The Company offers a broad
line of financial services and products with the personalized focus
of a community banking organization. More information about HopFed
Bancorp and Heritage Bank is located 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 risks, 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
Condensed Balance Sheets(Dollars in Thousands)
Assets
6/30/2018
3/31/2018
12/31/2017
09/30/17
06/30/17
(unaudited) (unaudited) (unaudited) (unaudited) Cash and due
from banks 16,399 18,472 37,965 23,469 20,208 Interest-earning
deposits in banks
2,955 3,149
7,111 9,842
4,801 Cash and cash equivalents 19,354 21,621
45,076 33,311 25,009 Federal Home Loan Bank stock, at cost 4,428
4,428 4,428 4,428 4,428 Securities available for sale 168,983
180,212 184,791 192,287 205,363 Loans held for sale 1,126 2,706
1,539 1,749 2,386 Loans receivable 676,891 665,178 641,928 630,202
638,422 Allowance for loan losses (4,637 ) (4,654 ) (4,826 ) (4,799
) (7,180 ) Accrued interest receivable 3,253 3,212 3,589 3,414
3,332 Foreclosed assets 3,427 3,329 3,369 4,975 1,408 Bank owned
life insurance 10,512 10,439 10,368 10,287 10,192 Premises and
equipment, net 22,365 22,619 22,700 22,945 23,097 Deferred tax
assets 2,320 2,127 1,764 2,292 3,025 Other assets
4,640 2,748
2,784 2,973
2,645 Total assets
912,662
913,965 917,510
904,064 912,127
Liabilities:
Deposits: Non-interest-bearing accounts 136,004 139,093
136,197 128,184 132,305 Interest-bearing accounts NOW accounts
198,691 219,483 208,496 196,315 216,256 Savings and money market
accounts 97,552 101,153 104,347 97,929 98,270 Other time deposits
300,941 287,077
304,969 308,801
299,113 Total deposits 733,188 746,806 754,009
731,229 745,944 Advances from Federal Home Loan Bank 38,000
25,000 23,000 31,000 21,000 Repurchase agreements 39,648 41,792
38,353 37,829 41,820 Subordinated debentures 10,310 10,310 10,310
10,310 10,310 Advances from borrowers for taxes and insurance 1,256
780 808 1,188 984 Accrued expenses and other liabilities
3,091 2,524
3,618 3,273
3,278 Total liabilities
825,493
827,212 830,098
814,829 823,336
This information is preliminary and based
on company data available at the time of the presentation.
HOPFED BANCORP, INC.Consolidated
Condensed Balance Sheets, Continued(Dollars in Thousands,
Except Percentages, Share and Per Share Data)
6/30/2018
3/31/2018
12/31/2017
09/30/17
06/30/17
(unaudited) (unaudited) (unaudited) (unaudited) Stockholders'
equity: Common stock, par value $.01 80 80 80 80 80 Additional
paid-in-capital 58,948 58,875 58,825 58,777 58,750 Retained
earnings 53,179 51,957 51,162 51,646 50,552 Treasury stock- common,
at cost (16,706 ) (16,684 ) (16,655 ) (15,931 ) (15,361 ) Unearned
ESOP Shares, at cost (5,606 ) (5,758 ) (5,901 ) (6,125 ) (6,269 )
Accumulated other comprehensive income, net of taxes
(2,726 ) (1,717
) (99 )
788 1,039
Total stockholders' equity
87,169
86,753 87,412
89,235 88,791
Total liabilities and stockholders' equity
912,662 913,965
917,510 904,064
912,127
Additional Capital Information
6/30/2018
3/31/2018
12/31/2017
09/30/17
06/30/17
(unaudited) (unaudited) (unaudited) (unaudited) Preferred
stock authorized 500,000 500,000 500,000 500,000 500,000 Preferred
stock outstanding --- --- --- --- --- Common shares authorized
15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 Common
shares issued 7,989,655 7,988,983 7,976,131 7,976,131 7,964,076
Common shares outstanding 6,647,675 6,648,589 6,637,771 6,688,674
6,716,809 Treasury shares 1,341,980 1,340,394 1,338,360 1,287,457
1,247,267 Unearned ESOP shares 412,091 423,679 434,548 465,861
476,862 Book value per share (excludes unearned ESOP shares) $
13.98 $ 13.94 $ 14.09 $ 14.34 $ 14.23 Tier 1 leverage ratio
10.7 % 10.6 % 10.6 % 10.9 % 10.4 % Total risk based capital ratio
15.6 % 15.5 % 16.0 % 16.3 % 16.1 % Common equity tier 1 ratio 14.9
% 14.8 % 15.2 % 15.6 % 15.0 %
This information is preliminary and based
on company data available at the time of the presentation.
HOPFED BANCORP, INC.Consolidated
Condensed Quarterly Statement of Income(Dollars in
Thousands)(Unaudited)
For the three month
periods ended
For the six month
period ended
6/30/2018
3/31/2018
12/31/2017
09/30/17
06/30/17
6/30/2018
6/30/2017
Interest and dividend income: (Unaudited) (Unaudited) (Unaudited)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) Loans
receivable 7,858 7,477 7,208 7,260 6,963 15,335 13,699 Investment
in securities, taxable 1,033 1,079 1,081 1,124 1,155 2,112 2,273
Nontaxable securities available for sale 208 213 218 233 280 421
563 Interest-earning deposits
16 29
34 18 21
45 44 Total interest and dividend income
9,115 8,798 8,541
8,635 8,419 17,913
16,579 Interest expense: Deposits 1,392 1,244
1,240 1,206 1,197 2,636 2,364 Advances from Federal Home Loan Bank
134 92 97 89 30 226 62 Repurchase agreements 171 154 117 130 119
325 222 Subordinated debentures
138 122
112 112 108
260 212 Total interest expense
1,835 1,612 1,566
1,537 1,454 3,447
2,860 Net interest income 7,280 7,186 6,975
7,098 6,965 14,466 13,719 Provision for loan losses
62
68 56 71
59 130 350
Net interest income after provision for
loan losses
7,218 7,118 6,919
7,027 6,906 14,336
13,369 Non-interest income: Service charges 727
706 801 819 800 1,433 1,604 Merchant card income 330 308 306 299
315 638 617 Mortgage origination revenue 489 319 374 335 278 808
612 Gain (loss) on sale of securities 481 27 (9 ) 162 14 508 16
Income from bank owned life insurance 73 71 81 95 72 144 307
Financial services commission 177 138 117 134 145 315 285 Other
operating income
87 175 198
186 212 262
691 Total non-interest income
2,364
1,744 1,868 2,030
1,836 4,108 4,132
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 Per Share Data)(Unaudited)
For the three month
periods ended
For the six month
period ended
6/30/2018
3/31/2018
12/31/2017
9/30/2017
6/30/2017
6/30/2018
6/30/2017
Non-interest expenses: (Unaudited) (Unaudited) (Unaudited)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) Salaries and
benefits 4,116 4,117 3,917 3,919 3,977 8,233 8,213 Occupancy 747
782 700 716 729 1,529 1,504 Data processing 765 784 779 795 546
1,549 1,310 State deposit tax 160 169 170 169 200 329 431
Professional services 499 466 1,095 409 464 965 812 Advertising 338
308 365 240 368 646 749 Foreclosure, net 21 (6 ) (80 ) (25 ) 6 15
114 Loss on sale of asset 9 --- (1 ) --- 3 9 3 Other operating
expenses
919 920
861 945
940 1,839
1,786 Total non-interest expense
7,574 7,540
7,806 7,168
7,233 15,114
14,922 Income before income tax expense 2,008
1,322 981 1,889 1,509 3,330 2,579 Income tax expense
323 196
1,159 486
368 519 503
Net income
1,685 1,126
(178 )
1,403 1,141
2,811 2,076 Net income per share
Basic
$ 0.28 $
0.18 ($0.03 )
$ 0.22 $
0.18 $ 0.46 $
0.33 Diluted
$ 0.28
$ 0.18 ($0.03
) $ 0.22
$ 0.18 $ 0.46
$ 0.33 Dividend per share
$
0.07 $ 0.05
$ 0.05 $
0.05 $ 0.05
$ 0.12 $ 0.09
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
Percentages)
Three month periods
ended
Six month periods
ended
6/30/2018
3/31/2018
12/31/2017
9/30/2017
6/30/2017
6/30/2018
6/30/2017
Average Balance Sheet Data (Unaudited) (Unaudited) (Unaudited)
(Unaudited) (Unaudited) (Unaudited) Loans, net of allowance
666,301 647,204 631,463 636,955 622,606 657,973 618,430 Available
for sale taxable securities 153,723 160,582 164,667 173,624 177,260
157,134 177,044 Available for sale tax free securities 25,670
26,856 27,361 29,090 32,919 26,254 33,391 Interest bearing deposits
held in banks 3,735 6,030 8,418 4,351 5,888 4,041 7,565 Average
earning assets 849,429 840,672 831,909 844,020 838,673 845,402
836,430 Average non-earning assets 63,565 69,290 74,856 64,913
70,359 65,555 73,072 Average assets 912,994 909,962 906,765 908,933
909,032 910,957 909,502 Average interest bearing deposits 608,312
612,019 611,371 612,655 628,583 610,156 626,853 Repurchase
agreements 38,604 39,072 34,677 37,978 39,138 38,837 40,482 FHLB
borrowings 32,011 23,656 25,174 26,909 11,176 27,856 12,298
Subordinated debentures 10,310 10,310 10,310 10,310 10,310 10,310
10,310 Total average interest bearing liabilities 689,237 685,057
681,532 687,852 689,207 687,159 689,943 Average non-interest
bearing deposits 133,075 133,412 132,624 126,039 128,078 133,244
127,447 Average other non-interest bearing liabilities 4,099 3,887
3,365 5,628 3,915 4,059 3,987 Average total equity 86,583 87,336
89,244 89,214 87,832 86,495 88,125
Three month periods
ended
Six month periods
ended
Tax equivalent yield / Cost of:
6/30/2018
3/31/2018
12/31/2017
9/30/2017
6/30/2017
6/30/2018
6/30/2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Unaudited) Loans, fully tax equivalent 4.72 % 4.62 % 4.58 %
4.57 % 4.48 % 4.66 % 4.44 % Available for sale taxable securities
2.69 % 2.69 % 2.63 % 2.37 % 2.61 % 2.69 % 2.57 %
Available for sale tax free securities,
fully tax equivalent
4.04 % 3.96 % 4.76 % 5.07 % 5.09 % 4.01 % 5.04 % Average yield of
interest bearing deposits 1.71 % 1.92 % 1.62 % 1.65 % 1.43 % 2.23 %
1.16 % Yield on total interest earning assets 4.32 % 4.21 % 4.17 %
4.15 % 4.09 % 4.26 % 4.04 % Cost of total average deposits 0.75 %
0.67 % 0.67 % 0.65 % 0.63 % 0.72 % 0.65 %
Cost of average total interest bearing
liabilities
1.06 % 0.94 % 0.92 % 0.89 % 0.84 % 1.00 % 0.83 % Fully tax
equivalent interest rate spread 3.25 % 3.27 % 3.25 % 3.26 % 3.25 %
3.26 % 3.21 % Fully tax equivalent net interest margin 3.45 % 3.45
% 3.41 % 3.43 % 3.39 % 3.45 % 3.35 % Net income 1,685 1,126 (178 )
1,403 1,141 2,811 2,076 ROA 0.74 % 0.49 % 0.10 % 0.62 % 0.50 % 0.62
% 0.46 % Annualized return on equity 7.78 % 5.16 % 1.01 % 6.29 %
5.20 % 6.50 % 4.71 % Efficiency ratio - fully tax equivalent 82.17
% 83.89 % 80.25 % 77.41 % 80.80 % 83.14 % 86.72 %
This information is preliminary and based
on company data available at the time of the presentation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180727005093/en/
HopFed Bancorp, Inc.John E. Peck, 270-885-1171President and
CEO
HopFed Bancorp (NASDAQ:HFBC)
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