Hopfed Bancorp (HFBC) Posts Surprise Q4 Loss

Hopfed Bancorp (NASDAQ: HFBC) reported Q4 EPS of ($0.14), $0.25 worse than the analyst estimate of $0.11.

Commenting on the fourth quarter results, John E. Peck, President and Chief Executive Officer, said, “The Company’s decision to prepay $35.9 million in Federal Home Loan Bank (“FHLB”) advances resulted in a $2.5 million prepayment penalty. The penalty reduced the Company’s net income for the three and twelve month period ending December 31, 2014, by $1.7 million, or $0.23 per share basic and diluted. By prepaying the FHLB advances, the Company will reduce its interest expense by $1.5 million in 2015 and $1.4 million in 2016. To fund the prepayment of FHLB borrowings, the Company utilized cash on hand as well as borrowing $15.0 million for one month and $15.0 million for six months. In January 2015, the Company has sold investments that will provide the liquidity necessary to pay off the $15.0 million maturity due in late January 2015.”

Mr. Peck continued, “In the fourth quarter of 2014, the Company completed a sale of a $6.9 million commercial real estate loan. The relationship was classified as substandard and as a Troubled Debt Restructuring, having spent approximately twelve months in bankruptcy. The loan was sold at a loss of $1,781,000. The Company previously had a specific reserve of $1.5 million against this relationship and reduced the allowance for loan loss account by that amount after the sale of the note. After the loan sale, the Company’s allowance for loan loss remains adequately funded.”

“The Company experienced loan growth of $6.7 million during the fourth quarter of 2014. The Company’s loan pipeline is active and we are beginning to see activity grow in our Nashville, Tennessee, loan production office. In 2015, the Company is confident that we will benefit from the reduction in interest expense and continued loan growth,” Mr. Peck concluded.

For earnings history and earnings-related data on Hopfed Bancorp (HFBC) click here.

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