Interview with: John E. Peck, President and CEO - featuring: their Heritage Bank, which provides commercial banking services in southwestern Kentucky and northwestern Tennessee, with a loan portfolio comprises real estate loans, including one-to-four family residential, multifamily residential, construction, and nonresidential loans, as well as loans secured by deposits, other consumer loans, and commercial loans.

HopFed Bancorp, Inc. (HFBC-NASDAQ)

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HopFed Bancorp’s growth can be attributed to an enhanced product line and the acquisition of more branches from larger regional banks

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Community Banks

HopFed Bancorp, Inc.

2700 Fort Campbell Boulevard
Hopkinsville, FL 42240-4941

Phone: 270-885-1171

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John E. Peck
President & CEO

Interview conducted by:
Lynn Fosse, Senior Editor
Published - February 15, 2007

CEOCFO: Mr. Peck, will you tell us about your background with the bank?
Mr. Peck: “I have been with HopFed Bank Corp., and its lead bank, Heritage Bank, for six years. Prior to that, I was affiliated with US Bank World and had an opportunity to serve as a president of the community bank under that flagship.”

CEOCFO: Will you tell us about the bank today?
Mr. Peck: “HopFed Bancorp and its predecessors have been around for 127 years. We were a very traditional thrift when I had the opportunity to join with this institution. Our major focus over the last six years has been to establish this institution as a more competitive financial institution; not only in the markets have we served but also in the markets that we have moved into over the last six years. We have moved much more to a commercial bank culture environment and we are focused on growing our institution by additional products and services that enhance our institution.”

CEOCFO: Will you tell us about the territory that you cover?
Mr. Peck: “We currently serve in several different communities ranging from as far west as Fulton, Kentucky, and South Bolton, Tennessee. We are also in the western part of the state and several counties such as Marshal and Calloway counties, Trigg County, Kentucky and our banks also serve in Christian and Todd counties in Kentucky. Recently through acquisitions of AmSouth Bank (NYSE: ASO) branches, we now serve in Cheetum, and Houston counties, m Tennessee. We have three financial institutions that are under construction now and Montgomery County, which is the fastest growing community in Tennessee at this point.”

CEOCFO: What is the economy like in that area?
Mr. Peck: “The economy is very diversified depending on the communities. Some are very fast growing; Montgomery County, which the county seat in Clarksville, Tennessee has been identified as the fastest growing community in Tennessee. Whereas some of our other communities are much, more slow growing, but are still a good source of deposits for our institution. It is a good compliment because it lets the fastest growing communities to have the funds that we need to facilitate that growth, and shifts around and has accommodated our growth very well.”

CEOCFO: Is there a typical customer?
Mr. Peck: “Our typical customer has changed over the last five years. Five or six years ago, our traditional customer was someone who had a home loan with us but had chosen to go to a commercial bank if you will, for a checking account, consumer credit and even large commercial credit. Today, we find that we are able to accommodate all of those products very well and now our typical customer may have their commercial and business accounts with us in the form of lines of credit in commercial term loans. We also have continued to grow in our consumer, which would include residential home equity lines of credit and automobile and consumer loans. It is much different today than it was six years ago.”

CEOCFO: Are many of your customers taking advantage of the variety of services you offer or is there work to be done in that area?
Mr. Peck: “I think we have made a lot of headway over the last five or six years but there is a lot of work left to do. It is our intent and the intent of our board of directors that this institution move more towards the full service commercial bank environment, but that is not done overnight. Although we are pleased with where we are, we are not content and we continue to move multiply the number of services and products that our customers are using.”

CEOCFO: How do you reach new customers?
Mr. Peck: “Today we have reached out and grown to expand our market share in a couple of different ways; one of which is that we have enhanced our product line, we have more arrows in our quiver that allows us to reach out and take advantage of our existing relationships. A second way we have grown is through acquisition, primarily of branches of larger institutions. Because we are a thrift and we have been much more thrift-like in the past, and we did not have a lot of non-interest bearing checking accounts. We have been able to grow that through acquisition of branches at larger regional banks.”

CEOCFO: What is different when someone walks into a Heritage Bank?
Mr. Peck: “Today, what we see differently is that when you walk into our banks you will see a much more focused technology, based institution that allows those customers to have access to all types of electronic banking, whether it be telephone banking or online banking. That is something that we have seen our customers and prospective customers embrace. Today we conduct as many transactions electronically as we do through the traditional avenues in our bank lobbies. I think that is something that our customers are seeing differently and certainly embracing.”

CEOCFO: As you grow and expand, what steps do you take to ensure that you keep that because it is so important to you?
Mr. Peck: “It is extremely important to us as a neighborhood bank. We start that process by every new employee going through a full day of orientation because our institution truly is different. We focus heavily on our neighborhood banking philosophy, even to the point where in the different communities that we serve. We establish community boards, we have market presidents or managers depending on the size of the bank, and that is the impetus for us to establish in those communities that we do have a neighborhood community bank feel. That template can be carried out throughout our markets. However, we focus heavily with our employees, that they understand going in that they work for a neighborhood bank and that our customer service has to be paramount in comparison to our competition.”

CEOCFO: Is there plenty of local competition or is most of it from the larger banks?
Mr. Peck: “We have a very balanced mix between the larger regional institutions that have branches here in our market, but we also have a number of community banks that also serve the bank community, so there is diversified competition.”

CEOCFO: How is business?
Mr. Peck: “We have been very pleased. Our earnings seem to be established now and as we just recently included the transaction of a number of AmSouth branches, we are starting to settle down. Our loan volume and loan demand seems strong and we are also able to grow our core deposits so we feel good about where we are.”

CEOCFO: What should we expect over the next two or three years?
Mr. Peck: “We are constantly changing and adapting our business plan, but right now we are looking at digesting some of our recent acquisitions. We also have some building projects that we are de novo branching into, in Montgomery County in Clarksville, Tennessee. We are also expanding through additional branches in some of our other markets. We want to get some of those things done and then have an infrastructure physically so that we may continue to grow. We are going to take care and stick to our knitting over the next twelve to eighteen months, get those things done and make sure we are able to support the communities that we are in today.”

CEOCFO: You mentioned adding new products and services, will you tell us about the latest, and anything you would like to add?
Mr. Peck: “We have recently enhanced our online banking services to include all online bill-pay services free of charge to all customers. That is something that is important to us because we see a change in our consumer demands. As I shared earlier, we have as many transactions conducted electronically today as we do customers walking physically into our facilities. That is something that we recently enhanced to continue to provide those services. We are also expanding our ATM network and reaching out into the communities in which we serve and we are partnering with the existing businesses, such as convenience stores, gas stations and car washes, to put offsite our ATM facilities to make it more accommodating for our customers and even non-customers to use our facilities.”

CEOCFO: Will you tell us about community involvement?
Mr. Peck: “We are extremely involved in the community and our focus is that we are a neighborhood bank and we are proud of that. What we are most proud of is Heritage Bank has a Heritage Bank Scholar program that we roll out to every high school in every community in which we serve. We provide scholarships to students that are going on to further their education and we provide that with enthusiasm because we understand that those individuals will continue their education and we have hopes that they will return back into the neighborhood and communities in which they have served in the past and be a part of that community.”

CEOCFO: Why should potential investors be interested and what should they realize that might not jump off the page.
Mr. Peck: “Something that we have been doing over the last five years that may not have enhanced immediate increase in earnings is that we have been building this institution, but not necessarily being concerned about earnings quarter to quarter. We are putting together an infrastructure that will help generate future earnings and growth in a measured systematic way and not something, that is going to be a blip on the earnings chart and then us having to go back and reevaluate. We have a very strong five-year plan that we think is coming to fruition, and I think that is going to be reflected in our continued enhanced earnings.”

CEOCFO: As CEO, what is your focus day-to-day?
Mr. Peck: “Just about everyday I spend visiting with our market president or market managers, making sure that we are doing what we need to do in the areas of support to our market managers and president, so that they can go our and do the things that they want to do. I enjoy spending time with our customers and I am fortunate that I have had that opportunity. As we complete this interview, I will be visiting with a prospective customer along with our CEO and market president, trying to recruit that customer.”

CEOCFO: In closing, what should our readers remember about HopFed?
Mr. Peck: “After reading this article they will see that Heritage Bank and HopFed Bancorp is not ashamed of being a community bank and a bank in the neighborhood that retains the focus on a community, which results on a focus on our customer service. I think they will see the differentiation in the markets we serve.”


Any reproduction or further distribution of this article without the express written consent of is prohibited.

“HopFed Bancorp and its predecessors have been around for 127 years. We were a very traditional thrift when I had the opportunity to join with this institution. Our major focus over the last six years has been to establish this institution as a more competitive financial institution; not only in the markets have we served but also in the markets that we have moved into over the last six years. We have moved much more to a commercial bank culture environment and we are focused on growing our institution by additional products and services that enhance our institution.” - John E. Peck does not purchase or make
recommendation on stocks based on the interviews published.