HOPFED BANCORP, INC.







                                     [LOGO]





                                  ANNUAL REPORT











                                      2000


<PAGE>

                               [HopFed Letterhead]


Dear Stockholder:


     I am pleased to report that HopFed Bancorp,  Inc. achieved steady growth in
2000. At December 31, 2000, total assets increased to $230.0 million from $207.9
million at December 31, 1999;  deposits  grew to $165.6  million  compared  with
$160.9 million at December 31, 1999;  and net loans  increased to $129.2 million
compared  with  $113.5  million at  December  31,1999.  HopFed  remains in sound
financial  condition  with a ratio of  stockholders'  equity to total  assets of
19.7%.

     Net interest  income for the year ended  December  31,  2000,  increased to
$7,231,000  compared  with  $7,127,000  in 1999.  Net  income for the year ended
December 31, 2000, was $2,666,000, or $0.67 per share, compared with $2,475,000,
or $0.65 per share,  earned in 1999.  During last year,  the Board of  Directors
decided it was prudent to increase the  provision  for  possible  loan losses by
$431,000 to a total of $708,000.  This increase is consistent  with our strategy
to shift the composition of HopFed's  balance sheet toward more commercial loans
rather than investment securities.

     In February  2001,  HopFed  completed its  repurchase of 200,000  shares of
common stock. The Board of Directors believes the repurchase of shares is a good
deployment  of available  capital and is a sound  investment  in the future.  An
additional  300,000 shares to be repurchased was recently approved by the Board.
HopFed  also  declared a total of $0.41 per share in cash  dividends  during the
year ended December 31, 2000,

     In March 2001,  we opened our new office in Benton,  Kentucky.  We are very
excited about the opening as we have strong ties to Marshall County and are glad
to serve the  people  of this  county.  We are a  full-service  banking  office,
offering all types of personal and business checking accounts, loans and savings
plans.

     Our  subsidiary's  name change to  Hopkinsville  Federal Bank  reflects the
Bank's  authority  to  engage in a broader  range of  activities.  Our new theme
--YESTERDAY.   TODAY.   TOMORROW.--emphasizes   the  Bank's   long-standing  and
successful history in providing financial services to the communities in western
Kentucky. It also supports our commitment to improving and expanding our ability
to develop  new and  innovative  ways to meet the future  needs of the people we
serve.

     As we look toward the future,  our focus is on achieving  controlled growth
while  maintaining  a  strong  credit  culture  in our  lending  activities  and
increasing the long-term value of HopFed for our stockholders.

     We appreciate your interest and continued support of HopFed.

                                          Sincerely,


                                          John E. Peck,
                                          President and Chief Executive Officer


<PAGE>

                          QUESTIONS TO AND ANSWERS FROM
                                  JOHN E. PECK
                      PRESIDENT AND CHIEF EXECUTIVE OFFICER
                              HOPFED BANCORP, INC.
                            HOPKINSVILLE FEDERAL BANK

WOULD YOU COMMENT ON THE NEW  ADDITIONS TO HOPFED'S  MANAGEMENT  TEAM DURING THE
LAST YEAR?

Sure.  My  background  spans  over 19 years of  thrift  and  commercial  banking
experience. For the last nine years before becoming President and CEO of HopFed,
I was  President and CEO of another bank in western  Kentucky.  One of the first
things  I did  after  joining  HopFed  was to meet  with a large  number  of our
customers to better understand how we can best achieve continued  success.  I am
pleased to report that the responses I received were very insightful, and I have
incorporated the feedback into our plans for the future.

After  my  initial  review  of  HopFed,  one of the  areas  I felt  needed  some
additional  support  was in our  operations.  HopFed  was  fortunate  to attract
Michael L. Woolfolk as Chief  Operating  Officer during the past year.  Prior to
joining HopFed,  Mike was Market Area President for a bank in Benton,  Kentucky,
where he was  responsible for the growth and development of a $150 million asset
community  bank.  Mike's 28 years of experience  within the banking  industry is
helping HopFed capitalize on its many opportunities.

We also added Richard  Vanover as the Market Manager for our new office location
in Calloway County.  Richard has worked in banking for over 20 years as a branch
manager and retail/mortgage  lender in Calloway County,  Kentucky, and brings an
in-depth  understanding  of the needs of the  customers  in this  county and his
contributions are helping us to achieve future growth.


WHAT WERE THE SOME OF THE MAJOR  FACTORS  THAT  CONTRIBUTED  TO ANOTHER  YEAR OF
GROWTH IN ASSETS, DEPOSITS AND LOANS?

Probably the  foremost  reason for our  continued  success in 2000 lies with our
experienced employees. They bring a local knowledge and dedication to the job of
providing customers with the best choices in financial products and services.  I
also think the fact that HopFed is able to provide  local  decision-making  that
emphasizes  ease and quick  response  time leads to our ability to offer  better
service than that of our competitors. Lastly, we are located in good markets. We
know our markets well and have stayed  clearly  focused on serving  customers in
these markets.

<PAGE>

WHAT ARE SOME OF THE THINGS HOPFED IS DOING TO ACHIEVE GROWTH IN THE FUTURE?

A couple of things that we are doing are particularly noteworthy. We continue to
work to make obtaining a loan an easy  administrative  process. We are reviewing
our loan  underwriting  techniques to reduce the paperwork and increase approval
response  time.  Also,  we are  expanding  our products and services in order to
provide  customers  with the right lending  product to meet their specific needs
and shifting our focus to more commercial bank type services.

ARE THERE ANY IMMEDIATE PLANS TO EXPAND INTO NEW MARKETS OR OPEN ADDITIONAL BANK
OFFICES?

During the past year, we completed the renovation and expansion of our office in
Elkton.  This  added  space for more  consumer  and  mortgage  lenders.  We will
consider  other  office  locations  based  on  the  growth  and  demands  of our
customers.


AS YOU LOOK TO THE FUTURE, WHAT IS YOUR VISION FOR HOPFED IN THE YEARS AHEAD?

In the future I see much  opportunity  for our  community-oriented  approach  to
banking.  Our  plan  is to  continue  to grow in a  controlled  and  financially
responsible  manner.  We will do so by maintaining  high credit quality  through
prudent underwriting  standards,  following a conservative approach to business,
and expanding our financial  products and services to meet the changing needs of
our customers. Our local markets are diverse, offer stable growth, and have some
very desirable economic characteristics. We also plan to continue to upgrade our
services, utilize technology where feasible to improve service, and increase our
overall efficiency to even better serve our customers.


HOPFED  HAS  COMPLETED  ONE STOCK  REPURCHASE  PLAN FOR  200,000  SHARES AND HAS
AUTHORIZATION TO PURCHASE UP TO ANOTHER 300,000 SHARES. HOW DO THESE REPURCHASES
FIT WITH THE LONG-TERM STRATEGY FOR GROWTH?

The effective  deployment of capital is a high priority for HopFed. The Board of
Directors and management believe that the repurchase of HopFed's common stock is
a good use of a portion of available  funds as is paying a steady cash dividend.
We will continue to work hard to provide our stockholders, many of whom are also
our customers,  with a competitive,  long-term return on their investment in our
company and remain optimistic about the future of HopFed.

                                       2
<PAGE>


HOPFED BANCORP, INC.
--------------------------------------------------------------------------------

HopFed Bancorp,  Inc., a Delaware corporation (the "Company"),  was organized by
Hopkinsville Federal Savings Bank (the "Bank") for the purpose of serving as the
holding company of the Bank. On February 6, 1998, the Bank converted from mutual
to stock form as a wholly owned  subsidiary of the Company.  In conjunction with
the conversion, the Company issued and sold 4,033,625 shares of its common stock
(the "Common Stock") at a price of $10.00 per share (the "Purchase Price").  The
Bank recently changed its name to Hopkinsville Federal Bank.

The Company is classified as a unitary  savings and loan holding company subject
to regulation by the Office of Thrift  Supervision  ("OTS") of the Department of
the Treasury.  The primary activity of the Company is overseeing the business of
the Bank and investing  the portion of the net proceeds  retained by it from the
sale of Common Stock.

The  Bank  is a  federal  stock  savings  bank  headquartered  in  Hopkinsville,
Kentucky, with branch offices in Hopkinsville, Murray, Cadiz, Elkton and Benton,
Kentucky. The Bank was incorporated in 1879 as a Kentucky chartered building and
loan association.  In 1940, the Bank converted to a federal charter and obtained
federal insurance of accounts. In 1983, the Bank became a federal mutual savings
bank and adopted its current corporate title. The business of the Bank primarily
consists of  attracting  deposits  from the general  public and  investing  such
deposits in loans secured by one-to-four residential properties.

The  executive  offices  of the  Company  and the Bank are  located at 2700 Fort
Campbell Boulevard, Hopkinsville,  Kentucky 42240. The telephone number is (270)
885-1171.

MARKET AND DIVIDEND INFORMATION
--------------------------------------------------------------------------------

Since February 1998, the Common Stock has been quoted on the Nasdaq Stock Market
under the symbol "HFBC." As of February 22, 2001, there were approximately 1,500
stockholders of record, excluding beneficial owners in nominee or street name.

Following  are the high and low stock prices of the Common Stock for the periods
indicated.

                                   Price Range of Common Stock
                  --------------------------------------------------------------
                  Year Ended December 31, 1999      Year Ended December 31, 2000
                  ----------------------------      ----------------------------
                        High           Low               High           Low
                        ----           ---               ----           ---
  First Quarter      $  23.50      $   17.00       $    15.875      $  10.750
  Second Quarter        22.00          19.00            12.375          9.375
  Third Quarter         22.875         19.00            10.250          8.375
  Fourth Quarter        21.9375        15.50            12.125          8.813

Dividends  of $0.075 per share were  declared  in each of the four  quarters  of
1999,  and dividends of $0.08 per share in the first quarter and $0.11 per share
in each of the remaining three quarters were declared in 2000. In December 1999,
the Company  declared a $4.00 per share  special cash  dividend in the form of a
nontaxable return of capital.

Dividends, when and if paid, are subject to determination and declaration by the
Board of Directors in its discretion, which will take into account the Company's
consolidated   financial  condition  and  results  of  operations,   the  Bank's
regulatory  capital  requirements,  tax  considerations,   economic  conditions,
regulatory  restrictions,  other  factors,  and there can be no  assurance  that
dividends will be paid, or if paid, will continue to be paid in the future.  The
payment of future  dividends  by the Company  will depend in large part upon the
receipt  of  dividends  from the  Bank,  which is  subject  to  various  tax and
regulatory restrictions on the payment of dividends.

TABLE OF CONTENTS
--------------------------------------------------------------------------------

HopFed Bancorp, Inc. ..........................................................3
Market and Dividend Information................................................3
Selected Financial Information and Other Data..................................4
Management's Discussion and Analysis of Financial Condition
  and Results of Operations....................................................7
Financial Statements..........................................................19
Corporate Information..........................................Inside Back Cover

                                       3
<PAGE>

                  SELECTED FINANCIAL INFORMATION AND OTHER DATA
--------------------------------------------------------------------------------

     The following summary of selected financial information and other data does
not purport to be complete  and is qualified in its entirety by reference to the
detailed  information and Financial  Statements and accompanying Notes appearing
elsewhere in this Report.
<TABLE>
<CAPTION>
FINANCIAL CONDITION AND
  OTHER DATA
                                                                        At December 31,
                                                           -----------------------------------------------------------------------
                                                             2000            1999             1998            1997            1996
                                                             ----            ----             ----            ----            ----
Total amount of:                                                                     (Dollars in thousands)
<S>                                                         <C>             <C>             <C>             <C>             <C>
 Assets ............................................        $229,958        $207,906        $220,032        $343,995        $204,398
 Loans receivable, net .............................         129,154         113,532         108,807         103,470          95,496
 Cash and due from banks ...........................           2,227           4,537           1,905           1,264           1,452
Time deposits and
   interest-bearing deposits
   in FHLB .........................................              50             251             214           5,945           2,000
 Federal funds sold ................................           1,530           4,100           9,685         151,095             500
 Securities available for sale .....................          84,269          71,423          68,139          26,699           5,125
Securities held to maturity:
    FHLB securities ................................              --              --          13,998          31,988          77,962
    Mortgage-backed
        Securities .................................           7,796           9,958          13,356          19,578          17,984
 Deposits ..........................................         165,604         160,905         154,816         320,633         183,827
 FHLB advances .....................................          17,040              --              --              --           1,317
 Total equity ......................................          45,362          44,344          61,134          19,936          16,824

------------------------------------------------------------------------------------------------------------------------------------
Number of:
     Real estate loans
        outstanding.................................          2,075            2,143           2,150           2,198           2,151
     Deposit accounts...............................         18,778           18,667          19,251          21,277          23,778
     Offices open...................................              5                5               5               5               5
</TABLE>
<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                             ----------------------------------------------------------------------------
OPERATING DATA
                                                 2000            1999           1998            1997            1996
                                                 ----            ----           ----            ----            ----
<S>                                            <C>             <C>             <C>             <C>             <C>
Interest income ........................       $16,343         $14,205         $15,052         $14,311         $13,220
Interest expense .......................         9,112           7,078           8,004           9,350           9,757
                                               -------         -------         -------         -------         -------
Net interest income before
     provision for loan losses .........         7,231           7,127           7,048           4,961           3,463
Provision for loan losses ..............           431              21              21              20             100
                                               -------         -------         -------         -------         -------
Net interest income ....................         6,800           7,106           7,027           4,941           3,363
Non-interest income ....................           509           7,028             547             528             590
Non-interest expense ...................         3,270           8,893           2,982           2,408           3,674(1)
                                               -------         -------         -------         -------         -------
Income before income taxes .............         4,039           5,241           4,592           3,061             279
Provision for income taxes .............         1,373           2,766           1,641           1,038              84
                                               -------         -------         -------         -------         -------
Net income .............................       $ 2,666         $ 2,475         $ 2,951         $ 2,023         $   195(1)
                                               =======         =======         =======         =======         =======
</TABLE>
-------------------------
(1)  Includes  payment  to the  SAIF of a  one-time  deposit  insurance  special
     assessment of $1.2 million  ($812,000  net of tax) pursuant to  legislation
     enacted to recapitalize the Savings Association Insurance Fund ("SAIF").

                                       4
<PAGE>
<TABLE>
<CAPTION>
SELECTED QUARTERLY INFORMATION (UNAUDITED)
                                                                         First        Second          Third         Fourth
                                                                        Quarter       Quarter        Quarter       Quarter
                                                                        -------       -------        -------       -------
                                                                                           (In thousands)
YEAR ENDED DECEMBER 31, 2000:
<S>                                                                      <C>           <C>            <C>           <C>
       Interest income .............................................     $ 3,901       $ 3,981        $ 4,264       $ 4,197
       Net interest income after provision for losses on loans
                                                                           1,813         1,749          1,594         1,644
       Noninterest income ..........................................         127           139            127           116
       Noninterest expense .........................................         838           894            767           771
       Net income ..................................................         727           639            652           648


YEAR ENDED DECEMBER 31, 1999:
       Interest income .............................................     $ 3,500       $ 3,505        $ 3,495       $ 3,705
       Net interest income after provision for losses on loans
                                                                           1,722         1,737          1,728         1,919
       Noninterest income ..........................................         112           136          6,660           120
       Noninterest expense .........................................         880         2,662          1,437         3,914
       Net income (loss) ...........................................         592          (577)         4,547        (2,087)
</TABLE>

                                       5
<PAGE>
<TABLE>
<CAPTION>
KEY OPERATING RATIOS
                                                                      At or for the Year Ended December 31,
                                                                    ------------------------------------------
                                                                         2000            1999           1998
                                                                         ----            ----           ----
<S>                                                                      <C>             <C>             <C>
PERFORMANCE RATIOS
    Return on average assets (net income divided by average
        total assets) .............................................      1.18%           1.14%           1.29%
    Return on average equity (net income divided by
        average total equity) .....................................      5.92%           4.30%           5.76%
    Interest rate spread (combined weighted average interest
        rate earned less combined weighted average interest
        rate cost) ................................................      2.28%           2.11%           2.07%
    Ratio of average interest-earning assets to average
        interest-bearing liabilities ..............................    124.25%         137.75%         130.08%
    Ratio of non-interest expense to average total assets .........      1.44%           4.09%           1.30%
    Ratio of net interest income after provision
        for loan losses to non-interest expense ...................    207.95%          79.91%         235.65%
    Efficiency ratio (noninterest expense divided by sum of net
        interest income plus noninterest income) ..................     44.74%          62.92%          39.37%

ASSET QUALITY RATIOS
    Nonperforming assets to total assets at end of period .........       .19%            .03%           0.13%
    Nonperforming loans to total loans at end of period ...........       .34%            .05%           0.26%
    Allowance for loan losses to total loans at end of period .....       .55%            .25%           0.24%
    Allowance for loan losses to nonperforming loans at
        end of period .............................................    163.13%         479.31%          89.90%
    Provision for loan losses to total loans receivable, net ......       .33%            .02%           0.02%
    Net charge-offs to average loans outstanding ..................       .001%           N/A(1)          N/A(1)

CAPITAL RATIOS
    Total equity to total assets at end of period .................     19.73%          21.33%          27.78%
    Average total equity to average assets ........................     19.86%          26.46%          22.40%

</TABLE>
-----------------------
(1)  Ratio is not  applicable  because  there were no net  charge-offs  for this
     period.


REGULATORY CAPITAL RATIOS                             December 31, 2000
                                                 ---------------------------
                                                    (Dollars in thousands)

    Tangible capital............................ $    44,594          19.49%
     Less:  Tangible capital requirement........       3,433           1.50
                                                 -----------     ----------
        Excess.................................. $    41,161          17.99%
                                                 ===========     ==========

    Core capital................................ $    44,594          19.49%
    Less:   Core capital requirement............       9,152           4.00
                                                 -----------     ----------
        Excess.................................. $    35,442          15.49%
                                                 ===========     ==========

    Total risk-based capital.................... $    45,302          48.05%
    Less:  Risk-based capital requirement.......       7,542           8.00
                                                 -----------     ----------
        Excess.................................. $    37,760          40.05%
                                                 ===========     ==========

                                       6
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

GENERAL

     This  discussion  relates  to  the  financial   condition  and  results  of
operations  of the  Company,  which  became the holding  company for the Bank in
February 1998. The principal business of the Bank consists of accepting deposits
from the general  public and  investing  these funds  primarily  in loans and in
investment securities and mortgage-backed  securities. The Bank's loan portfolio
consists  primarily of loans secured by  residential  real estate located in its
market area.

     For the year ended  December 31, 2000,  the Company  recorded net income of
$2.7 million, a return on average assets of 1.18% and a return on average equity
of 5.92%.  For the year ended December 31, 1999, the Company recorded net income
of $2.5  million,  a return on  average  assets of 1.14% and a return on average
equity of 4.30%.  For the year ended December 31, 1998 the Company  recorded net
income  of $3.0  million,  a return on  average  assets of 1.29% and a return on
average equity of 5.76%.

     The Company's net income is dependent primarily on its net interest income,
which is the difference  between interest income earned on its loan,  investment
securities  and  mortgage-backed  securities  portfolios  and  interest  paid on
interest-bearing  liabilities.  Net  interest  income is  determined  by (i) the
difference  between yields earned on  interest-earning  assets and rates paid on
interest-bearing  liabilities  ("interest  rate  spread")  and (ii) the relative
amounts  of  interest-earning  assets  and  interest-bearing   liabilities.  The
Company's  interest  rate  spread  is  affected  by  regulatory,   economic  and
competitive  factors  that  influence  interest  rates,  loan demand and deposit
flows.  To a lesser  extent,  the  Company's  net income also is affected by the
level of non-interest  expenses such as compensation  and employee  benefits and
FDIC insurance premiums.

     The  operations  of  the  Company  and  the  entire  thrift   industry  are
significantly  affected by prevailing economic  conditions,  competition and the
monetary,  fiscal and  regulatory  policies of  governmental  agencies.  Lending
activities are  influenced by the demand for and supply of housing,  competition
among  lenders,  the  level of  interest  rates and the  availability  of funds.
Deposit flows and costs of funds are  influenced  by prevailing  market rates of
interest, primarily on competing investments,  account maturities and the levels
of personal income and savings in the Company's market area.

CURRENT BUSINESS STRATEGY

     In 2000, following a change in senior management and a reexamination of its
business  plan,  the  Company  revised  its  strategy  to  emphasize   long-term
profitability.

     o    The Company is  expanding  its  products and services and shifting its
          focus to commercial  bank  services.  At December 31, 2000,  net loans
          totaled $129.2  million,  an increase of 13.8% over total net loans at
          December 31, 1999. At December 31, 2000,  commercial  loans receivable
          were  $946,000,  compared to $314,000 at December 31, 1999 and none at
          December 31, 1998. In 2001, the Company  expects to retain  additional
          qualified  commercial  loan  personnel  to  assist in  increasing  its
          commercial loan portfolio.
     o    The Company is  expanding  its market area.  During 2000,  the Company
          completed  the  renovation  and  expansion  of its  office in  Elkton,
          Kentucky,  and in March 2001,  the Company added an additional  branch
          office in Benton,  Kentucky.  The Company will  consider  other office
          locations based on the growth and demands of its customers.
     o    In 2000,  the Company  announced that it was offering to repurchase up
          to 200,000 shares of outstanding  common stock, which was completed in
          February  2001.  The  Company  recently  announced  that the  Board of
          Directors had authorized the purchase of an additional 300,000 shares.
          The  Company  believes  that  the  repurchase  of  common  stock is an
          effective deployment of excess capital.
     o    The Company is seeking to reduce non-interest  expenses.  For example,
          in  2000,  the net  periodic  pension  cost of the  Company's  defined
          benefit pension plan was $152,000. See Note 9 of Notes to Consolidated
          Financial Statements.  The Company will consider whether adoption of a
          Section  401(k)  benefit plan in lieu of the defined  benefit  pension
          plan would  provide  both a  significant  reduction of expenses and an
          appropriate benefit to employees.

                                       7

<PAGE>

ASSET/LIABILITY MANAGEMENT

     Key components of a successful  asset/liability strategy are the monitoring
and managing of interest rate sensitivity of both the interest-earning asset and
interest-bearing   liability  portfolios.   The  Company  has  employed  various
strategies  intended to minimize  the  adverse  affect of interest  rate risk on
future  operations  by  providing  a better  match  between  the  interest  rate
sensitivity  between its assets and  liabilities.  In particular,  the Company's
strategies  are intended to stabilize  net interest  income for the long-term by
protecting its interest rate spread against  increases in interest  rates.  Such
strategies include the origination of adjustable-rate  mortgage loans secured by
one-to-four   family   residential  real  estate,   and,  to  a  lesser  extent,
multi-family  real estate loans and the origination of other loans with interest
rates that are more sensitive to adjustment  based upon market  conditions  than
long-term,  fixed-rate  residential  mortgage loans. For the year ended December
31, 2000, approximately $15.6 million of the $16.8 million of one-to-four family
residential loans originated by the Company (comprising 93.0% of such loans) had
adjustable rates.

     The  Company  used  excess  funds to invest in U.S.  government  and agency
securities and  mortgage-backed  securities.  Such investments have been made in
order to manage  interest  rate  risk,  as well as to  diversify  the  Company's
assets,  manage cash flow,  obtain  yields and  maintain  the minimum  levels of
qualified and liquid assets required by regulatory authorities.

     The U.S.  government and agency  securities  consist of notes issued by the
FHLB  System and other  government  agencies.  These  securities  generally  are
purchased  for a term of five  years or less,  and are  fixed-term,  fixed  rate
securities,  callable  securities or securities which provide for interest rates
to increase at specified  intervals to  pre-established  rates, and thus improve
the spread between the cost of funds and yield on  investments.  At December 31,
2000,  approximately $2.0 million were due within one year,  approximately $17.0
million were due in one to five years and  approximately  $33.0 million were due
after ten years. However, at December 31, 2000, all of these securities had call
provisions  which  authorize the issuing agency to prepay the securities at face
value at certain  pre-established  dates.  If,  prior to their  maturity  dates,
market  interest  rates  decline  below the rates  paid on the  securities,  the
issuing  agency may elect to  exercise  its right to prepay the  securities.  At
December  31, 2000,  all of these  securities  are callable  and/or due prior to
December 31, 2004. It is currently  anticipated  that any funds available from a
prepayment would be reinvested into those U.S.  government and agency securities
or  mortgage-backed  securities  which  the  Company  believes  to be  the  most
appropriate  investments at that time,  assuming lending  opportunities  are not
then  available.  Notwithstanding  their  call  feature,  it  is  believed  that
investments in callable securities, which have improved the portfolio yield over
alternative fixed yield, fixed maturity investments, have been beneficial.

     Mortgage-backed  securities  entitle  the  Company  to  receive  a pro rata
portion  of the  cash  flow  from  an  identified  pool of  mortgages.  Although
mortgage-backed  securities  generally  offer  lesser  yields than the loans for
which they are exchanged,  mortgage-backed  securities present lower credit risk
by virtue of the  guarantees  that back them,  are more liquid  than  individual
mortgage loans, and may be used to collateralize borrowings or other obligations
of  the  Company.   Further,   since  they  are   primarily   adjustable   rate,
mortgage-backed  securities are helpful in limiting the Company's  interest rate
risk. For more information regarding investment securities,  see Note 2 of Notes
to Consolidated Financial Statements.

INTEREST RATE SENSITIVITY ANALYSIS

     The Company's  profitability is affected by fluctuations in interest rates.
A sudden and  substantial  increase in interest  rates may adversely  impact the
Company's  earnings to the extent that the  interest  rates on interest  earning
assets and interest bearing  liabilities do not change at the same speed, to the
same extent or on the same basis.  As part of its effort to manage interest rate
risk, the Bank monitors its net portfolio value ("NPV"),  a methodology  adopted
by the OTS to assist the Bank in assessing interest rate risk.

     Generally,  NPV is the discounted  present value of the difference  between
incoming  cash flows on  interest-earning  assets and other  assets and outgoing
cash  flows  on   interest-bearing   liabilities  and  other  liabilities.   The
application of the  methodology  attempts to quantify  interest rate risk as the
change in the NPV which would result from a theoretical 200 basis point (1 basis
point equals .01%) change in market  rates.  Both a 200 basis point  increase in
market  interest rates and a 200 basis point  decrease in market  interest rates
are  considered.

                                       8
<PAGE>

     The  following  table  presents  the Bank's NPV at December  31,  2000,  as
calculated by the OTS, based on information provided to the OTS by the Bank.


  Change               Net Portfolio Value             NPV as % of PV of Assets
             -------------------------------------     ------------------------
 In Rates     $ Amount     $ Change      % Change      NPV Ratio    Change
 --------     --------     --------      --------      ---------    ------
                     (Dollars in thousands)
  +400 bp    $      0      $      0          0%          0.00%         0 bp
  +300 bp       39,588      -14,430        -27%         17.89%      -470 bp
  +200 bp       44,580       -9,438        -17%         19.61%      -298 bp
  +100 bp       49,348       -4,670         -9%         21.16%      -144 bp
     0 bp       54,018                                  22.59%
  -100 bp       58,849        4,831         +9%         24.01%      +141 bp
  -200 bp       64,780       10,761        +20%         25.68%      +308 bp
  -300 bp       71,685       17,667        +33%         27.52%      +493 bp
  -400 bp            0            0          0%          0.00%         0 bp

          Interest Rate Risk Measures: 200 Basis Point (bp) Rate Shock

      Pre-Shock NPV Ratio:  NPV as % of PV of Assets............     22.59%
      Exposure Measure:  Post-Shock NPV Ratio...................     19.61%
      Sensitivity Measure:  Change in NPV Ratio.................     298 bp

     The  computation  of  prospective  effects of  hypothetical  interest  rate
changes are based on numerous  assumptions,  including relative levels of market
interest  rates,  loan  prepayments  and deposit decay rates,  and should not be
relied upon as indicative of actual results. The computations do not contemplate
any actions the Bank could undertake in response to changes in interest rates.

     The matching of assets and  liabilities  may be analyzed by  examining  the
extent to which such assets and liabilities are "interest rate sensitive" and by
monitoring  an  institution's  interest  rate  sensitivity  "gap."  An  asset or
liability is said to be interest rate sensitive  within a specific  period if it
will mature or reprice within that period.  The interest rate sensitivity gap is
defined as the difference between the amount of interest-earning assets maturing
or repricing  within a specific  time period and the amount of  interest-bearing
liabilities  maturing or repricing  within that time period. A gap is considered
positive when the amount of interest rate sensitive assets exceeds the amount of
interest rate sensitive liabilities,  and is considered negative when the amount
of interest  rate  sensitive  liabilities  exceeds  the amount of interest  rate
sensitive  assets.  At December 31, 2000, the Company had a negative one-year or
less interest rate  sensitivity gap of 3.41% of total  interest-earning  assets.
Generally,  during a period of rising  interest  rates,  a negative gap position
would be expected to adversely  affect net interest  income while a positive gap
position  would be expected to result in an  increase  in net  interest  income.
Conversely  during a period of falling  interest  rates, a negative gap would be
expected  to result in an  increase in net  interest  income and a positive  gap
would be expected to adversely affect net interest income.

                                       9
<PAGE>

     The following table sets forth the amounts of  interest-earning  assets and
interest-bearing liabilities outstanding at December 31, 2000 which are expected
to mature or reprice in each of the time periods shown.
<TABLE>
<CAPTION>
                                                                 Over One      Over Five       Over Ten
                                                 One Year        Through        Through        Through      Over Fifteen
                                                 or Less        Five Years     Ten Years    Fifteen Years       Years        Total
                                                 -------        ----------     ---------    -------------       -----        -----
                                                                               (Dollars in thousands)
Interest-earning assets:
   Loans:
<S>                                              <C>            <C>            <C>            <C>           <C>           <C>
        One-to-four family ..................    $  73,503      $   5,971      $   1,659      $  11,619     $     301     $  93,053
        Multi-family residential ............        2,735             --             --             --            --         2,735
        Construction ........................        4,965             --             --             --            --         4,965
        Non-residential .....................       11,753            443          2,050          4,015         2,749        21,010
        Secured by deposits .................        2,720             --             --             --            --         2,720
        Other consumer ......................          229          4,442             --             --            --         4,671
   Time deposits and interest-
       bearing deposits in FHLB .............           50             --             --             --            --            50
   Federal funds sold .......................        1,530             --             --             --            --         1,530
     Securities .............................        4,144         16,947          4,168         33,059            --        58,318
     Mortgage-backed securities .............       27,745          5,634            368             --            --        33,747
                                                 ---------      ---------      ---------      ---------     ---------     ---------
         Total ..............................    $ 129,374      $  33,437      $   8,245      $  48,693     $   3,050     $ 222,799
                                                 ---------      ---------      ---------      ---------     ---------     ---------

Interest-bearing liabilities:
     Deposits ...............................    $ 119,928      $  38,502          3,346             --            --     $ 161,776
     Borrowed Funds .........................       17,040             --             --             --            --        17,040
                                                 ---------      ---------      ---------      ---------     ---------     ---------
         Total ..............................    $ 136,968         38,502          3,346             --            --       178,816
                                                                               ---------      ---------     ---------     ---------
Interest sensitivity gap ....................    $  (7,594)     $  (5,065)     $   4,899      $  48,693     $   3,050     $  43,983
                                                 =========      =========      =========      =========     =========     =========
Cumulative interest sensitivity
     gap ....................................    $  (7,594)     $ (12,659)     $  (7,760)     $  40,933     $  43,983     $  43,983
                                                 =========      =========      =========      =========     =========     =========
Ratio of interest-earning assets to
     interest-bearing liabilities ...........        94.46%         86.84%        246.41            N/A           N/A        124.60%
                                                 =========      =========      =========      =========     =========     =========
Ratio of cumulative gap to
     total interest-earning assets ..........        (3.41)%        (5.68)%        (3.48)%        18.37%        19.74%        19.74%
                                                 =========      =========      =========      =========     =========     =========
</TABLE>

     The preceding  table was prepared based upon the assumption that loans will
not be  repaid  before  their  respective  contractual  maturities,  except  for
adjustable rate loans which are classified based upon their next repricing date.
Further,  it is assumed that fixed maturity  deposits are not withdrawn prior to
maturity  and that other  deposits are  withdrawn  or repriced  within one year.
Management  of the  Company  does not  believe  that these  assumptions  will be
materially  different from the Company's actual experience.  However, the actual
interest rate  sensitivity of the Company's  assets and  liabilities  could vary
significantly  from the  information  set forth in the  table due to market  and
other factors.

     The retention of adjustable-rate  mortgage loans in the Company's portfolio
helps reduce the Company's exposure to changes in interest rates. However, there
are  unquantifiable  credit risks  resulting from potential  increased  costs to
borrowers  as a  result  of  repricing  adjustable-rate  mortgage  loans.  It is
possible that during periods of rising  interest  rates,  the risk of default on
adjustable-rate  mortgage  loans may  increase due to the upward  adjustment  of
interest costs to the borrowers.

                                       10
<PAGE>

AVERAGE BALANCE, INTEREST AND AVERAGE YIELDS AND RATES

     The  following  table  sets  forth  certain  information  relating  to  the
Company's average  interest-earning assets and interest-bearing  liabilities and
reflects  the average  yield on assets and average cost of  liabilities  for the
periods and at the date indicated. Such yields and costs are derived by dividing
income or  expense by the  average  monthly  balance  of assets or  liabilities,
respectively,  for the periods  presented.  Average  balances  are derived  from
month-end  balances.  Management  does not  believe  that  the use of  month-end
balances  instead of daily  balances has caused any material  difference  in the
information presented.

     The  table  also  presents  information  for the  periods  and at the  date
indicated  with respect to the  difference  between the average  yield earned on
interest-earning  assets and average rate paid on interest-bearing  liabilities,
or "interest rate spread," which savings institutions have traditionally used as
an  indicator  of  profitability.  Another  indicator  of an  institution's  net
interest income is its "net yield on interest-earning  assets," which is its net
interest income divided by the average balance of  interest-earning  assets. Net
interest  income is affected  by the  interest  rate spread and by the  relative
amounts  of  interest-earning  assets  and  interest-bearing  liabilities.  When
interest-earning assets approximate or exceed interest-bearing  liabilities, any
positive interest rate spread will generate net interest income.

                                                         At December 31, 2000
                                                      -------------------------
                                                                       Weighted
                                                                       Average
                                                          Balance     Yield/Cost
                                                          -------     ----------
                                                         (Dollars in thousands)
Interest-earning assets:
     Loans receivable, net ......................       $ 129,154         7.98%
     Securities available for sale ..............          84,269         7.21%
     Securities held to maturity ................           7,796         7.21%
     Time deposits and other interest-
          bearing cash deposits .................           1,580         6.13%
                                                        ---------        ------
         Total interest-earning assets ..........         222,799         7.65%
Non-interest-earning assets .....................           7,159
                                                        ---------
     Total assets ...............................       $ 229,958
                                                        =========

Interest-bearing liabilities:
     Deposits ...................................       $ 161,776         5.13%
     FHLB borrowings ............................          17,040         6.90%
                                                        ---------
     Total interest-bearing liabilities .........         178,816         5.30%
Non-interest-bearing liabilities ................           5,780
                                                        ---------
         Total liabilities ......................         184,596
Common stock ....................................              40
Additional paid-in capital ......................          25.228
Retained earnings ...............................          21,896
Treasury stock ..................................          (1,643)
Accumulated other comprehensive
     loss .......................................            (159)
                                                        ---------
         Total liabilities and equity ...........       $ 229,958
                                                        =========

Interest rate spread.............................                         2.35%
                                                                        -------
Ratio of interest-earning assets to
     interest-bearing liabilities................                       124.60%
                                                                        =======

                                                   (Continued on following page)

                                       11
<PAGE>
<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                      ----------------------------------------------------------------------------------------------
                                                 2000                              1999                           1998
                                      -------------------------------  --------------------------------- ---------------------------
                                       Average             Average      Average                Average   Average            Average
                                       Balance  Interest   Yield/Cost   Balance   Interest   Yield/Cost  Balance Interest Yield/Cost
                                       -------  --------   ----------   -------   --------   ----------  ------- -------- ----------
Interest-earning assets:
<S>                                   <C>       <C>          <C>       <C>        <C>           <C>      <C>        <C>        <C>
Loans receivable, net ..............  $120,308  $  9,299     7.73%     $111,469   $  8,436      7.57%    $105,837   $  8,280   7.82%
Securities available for sale ......    89,935     6,349     7.06%       73,863      4,204      5.69%      48,539      2,418   4.98%
Securities held to maturity ........     8,894       637     7.16%       14,220        814      5.72%      36,777      2,360   6.42%
Time deposits and other
    interest-bearing cash
    deposits .......................     1,007        58     5.76%       11,536        751      6.51%      32,480      1,994   6.14%
                                      --------  --------               --------   --------               --------   --------
    Total interest-earning
         assets ....................   220,144    16,343     7.42%      211,088     14,205      6.73%     223,633     15,052   6.73%
                                                --------     ----                 --------      ----                --------   ----
Non-interest-earning assets              6,622                            6,324                             5,143
                                      --------                         --------                          --------
     Total assets...................   226,766                         $217,412                          $228,776
                                      ========                         ========                          ========

Interest-bearing liabilities:
     Deposits....................... $159,268      7,931     4.98%     $153,245      7,078      4.62%    $171,922      8,004   4.66%
     Borrowings.....................   17,905      1,181     6.60%           --         --        --%          --         --     --%
                                      --------  --------               --------   --------               --------   --------
         Total interest-bearing
              liabilities...........  177,173      9,112     5.14%      153,245      7,078      4.62%     171,922      8,004   4.66%
                                                --------    -----                 --------      ----                --------   ----
Non-interest-bearing liabilities        4,549                             6,641                             5,629
                                      --------                         --------                          --------
         Total liabilities..........  181,722                           159,886                           177,551
Common stock........................       40                                40                                32
Additional paid-in capital..........   24,586                            40,442                            31,492
Retained earnings...................   21,738                            16,670                            18,174
Unallocated ESOP shares.............       --                            (2,318)                           (2,582)
Treasury stock......................     (210)                               --                                --
Accumulated other
     comprehensive income (loss)....   (1,110)                            2,692                             4,109
                                      --------                         --------                          --------
         Total liabilities and
              equity................ $226,766                          $217,412                          $228,776
                                      ========                         ========                          ========

Net interest income.................             $ 7,231                           $ 7,127                          $  7,048
                                                ========                          ========                          ========
Interest rate spread................                         2.28%                              2.11%                          2.07%
                                                           ======                             ======                         ======
Net yield on interest-
    earning assets..................                         3.28%                              3.38%                          3.15%
                                                           ======                             ======                         ======
Ratio of average interest-earning
    assets to average interest-
    bearing liabilities.............                       124.25%                            137.75%                        130.08%
                                                           ======                             ======                         ======
</TABLE>
                                       12
<PAGE>
RATE VOLUME ANALYSIS

     The following  table sets forth certain  information  regarding  changes in
interest income and interest  expense of the Company for the periods  indicated.
For each  category of  interest-earning  asset and  interest-bearing  liability,
information  is  provided  on changes  attributable  to:  (i)  changes in volume
(changes in volume  from year to year  multiplied  by the  average  rate for the
prior  year) and (ii) change in rate  (changes in the average  rate from year to
year multiplied by the prior year's volume).
<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                          -------------------------------------------------------------------------------------
                                                      2000 vs. 1999                                 1999 vs. 1998
                                          ------------------------------------          ---------------------------------------
                                               Increase                                       Increase
                                            (Decrease) due to                              (Decrease) due to
                                          ----------------------                        ----------------------
                                                                        Total                                           Total
                                                                       Increase                                        Increase
                                            Rate          Volume      (Decrease)          Rate          Volume        (Decrease)
                                            ----          ------      ----------          ----          ------        ----------
                                                                         (Dollars in thousands)
Interest-earning assets:
<S>                                        <C>            <C>            <C>            <C>           <C>             <C>
     Loans receivable..................    $   194        $   669        $   863        $  (284)      $    440        $   156
     Securities available
    for sale ..........................      1,230            915          2,145            525          1,261          1,786
     Securities held to
     maturity .........................        128           (305)          (177)           (98)        (1,448)        (1,546)
     Other interest-
    earning assets ....................         (8)          (685)          (693)            41         (1,284)        (1,243)
                                           -------        -------        -------        -------        -------        -------
         Total interest-
         earning assets ...............    $ 1,544        $   594        $ 2,138        $   184        $(1,031)       $  (847)
                                           -------        -------        -------        -------        -------        -------

Interest-bearing liabilities:
     Deposits .........................    $   575        $   278        $   853        $   (58)       $  (868)       $  (926)
     Borrowings .......................      1,181             --          1,181             --             --             --
                                           -------        -------        -------        -------        -------        -------
         Total interest-
         bearing liabilities ..........    $ 1,756        $   278        $ 2,034        $   (58)       $  (868)       $  (926)
                                           -------        -------        -------        -------        -------        -------

Increase (decrease) in
   net interest income ................    $  (212)       $   316        $   104        $   242        $  (163)       $    79
                                           =======        =======        =======        =======        =======        =======
</TABLE>

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2000 AND DECEMBER 31, 1999

     The Company's total assets increased by $22.1 million,  from $207.9 million
at December 31, 1999 to $230.0 million at December 31, 2000.  Federal funds sold
decreased from $4.1 million at December 31, 1999 to $1.5 million at December 31,
2000.  Securities  held to maturity  declined $2.2 million due to various issues
maturing.  A portion of such funds was  reinvested in  securities  available for
sale, which increased $12.9 million.

     The Company's net loan portfolio increased by $15.7 million during the year
ended  December 31, 2000. Net loans totaled $129.2 million and $113.5 million at
December 31, 2000 and December 31, 1999, respectively.  The increase in the loan
activity  during  the year  ended  December  31,  2000 was due to the  Company's
efforts  to  increase  its  loan  originations  using  funds  currently  held in
investment  securities.  For the year ended  December  31, 2000,  the  Company's
average yield on loans was 7.73%,  compared to 7.57% for the year ended December
31, 1999.

     At December 31, 2000,  the  Company's  investments  classified  as "held to
maturity"  were carried at  amortized  cost of $7.8 million and had an estimated
fair market value of $7.9 million,  and its securities  classified as "available
for sale" had an  estimated  fair market value of $84.3  million.  See Note 2 of
Notes to Consolidated Financial Statements.

                                       13
<PAGE>

     The  allowance  for loan losses  totaled  $708,000 at December 31, 2000, an
increase of $430,000  from the  allowance of $278,000 at December 31, 1999.  The
ratio of the  allowance  for loan  losses to loans was .55% and .25% at December
31,  2000 and 1999,  respectively.  Also at December  31,  2000,  the  Company's
non-performing loans were $434,000 or .34% of total loans,  compared to $58,000,
or .05% of total  loans,  at  December  31,  1999,  and the  Company's  ratio of
allowance  for loan  losses to  non-performing  loans at  December  31, 2000 and
December 31, 1999 was 163.1% and 479.3%, respectively.

     In 1999,  the Company  declared a special cash dividend of $4.00 per share,
which totaled  approximately $16.4 million.  The special dividend  represented a
return to stockholders of a portion of the proceeds raised when the Company went
public in February 1998. As a nontaxable return of capital, the special dividend
reduced the tax cost basis of each  outstanding  share.  The Board of  Directors
took this action because it believed that the Company's  equity-to-assets  ratio
was excessive and would prove to be a deterrent to generating acceptable returns
on equity over the long term.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

     NET INCOME.  The Company's net income for the year ended  December 31, 2000
was $2.7 million, compared to $2.5 million for the year ended December 31, 1999.
The increase in net income for the year resulted  primarily  from a reduction in
non-interest expense and reduced income tax expense.

     NET INTEREST  INCOME.  Net interest  income for the year ended December 31,
2000 was $7.2 million,  compared to $7.1 million for the year ended December 31,
1999.  The increase in net interest  income for the year ended December 31, 2000
was primarily  due to a higher yield on  interest-earning  assets.  For the year
ended December 31, 2000, the average yield on total interest-earning  assets was
7.42%,  compared to 6.73% for the year ended  December 31, 1999, and the average
cost of interest-bearing  liabilities was 5.14%,  compared to 4.62% for the year
ended  December 31,  1999.  As a result,  the interest  rate spread for the year
ended December 31, 2000 was 2.28%, compared to 2.11% for the year ended December
31, 1999,  and the net yield on  interest-earning  assets was 3.28% for the year
ended December 31, 2000, compared to 3.38% for the year ended December 31, 1999.

     INTEREST  INCOME.  Interest  income  increased  by $2.1  million from $14.2
million to $16.3  million,  or by 14.8%,  during  2000  compared  to 1999.  This
increase  primarily resulted from an increase in the average yield on securities
available for sale, which was 7.06% for 2000 compared to 5.69% for 1999, as well
as an increase in the average  investments  in securities  available for sale to
$89.9 million in 2000,  compared to $73.9 million in 1999. Also  contributing to
the increase in interest income was an increase in the average yield on the loan
portfolio  which was 7.73% for 2000  compared  to 7.57% for 1999,  as well as an
increase in the average balance of loans to $120.3 million in 2000,  compared to
$111.5 million in 1999.

     INTEREST  EXPENSE.  Interest expense  increased $2.0 million,  or 28.2%, to
$9.1 million for the year ended December 31, 2000 from $7.1 million for the year
ended  December  31,  1999.  The  Company  priced  its  deposit   products  more
aggressively  which  resulted  in an increase in its cost of funds as well as an
increase in the level of interest-bearing liabilities due to an inflow of higher
cost deposits. At December 31, 2000, total interest expense on deposits was $7.9
million,  compared to $7.1 million at December  31, 1999,  an increase of 11.3%.
Also during 2000, the Company utilized funds borrowed from the Federal Home Loan
Bank to increase its investments in securities.  The average balance of borrowed
funds was $17.9  million  at an  average  interest  rate of 6.60%  resulting  in
interest expense of $1.2 million. There were no borrowings in 1999.

     PROVISION FOR LOAN LOSSES.  The  allowance  for loan losses is  established
through a provision for loan losses based on management's evaluation of the risk
inherent  in its  loan  portfolio  and  the  general  economy.  Such  evaluation
considers  numerous  factors,   including  general  economic  conditions,   loan
portfolio  composition,  prior loss experience,  the estimated fair value of the
underlying  collateral and other factors that warrant  recognition.  The Company
determined  that a provision for loan loss of $431,000 was  appropriate  for the
year ended  December 31, 2000.  The Company  determined to increase the level of
the  provision  for loan  losses,  which was $21,000 in 1999,  primarily  due to
changes in the composition of the loan portfolio.

     NON-INTEREST  INCOME.  Total non-interest income in the year ended December
31, 2000 was  $509,000,  compared to $7.0  million in 1999.  This  decrease  was
attributable  to a $6.5  million  realized  gain  from  the  sale of

                                       14
<PAGE>

securities available for sale during 1999.

     In  August  1999,  the Bank  sold 100% of its  Federal  Home Loan  Mortgage
Corporation   ("FHLMC")  stock  portfolio   (123,072   shares)  in  open  market
transactions and realized an after-tax gain on such sales of approximately  $4.3
million.  The FHLMC stock had been  recorded  at its fair market  value with the
associated  unrealized  gains recorded in the Company's  consolidated net worth.
The sales were  undertaken in recognition  that the FHLMC stock had  appreciated
significantly  over the prior  several  years.  Although the FHLMC had benefited
from higher levels of mortgage  loans fostered by lower interest rates in recent
years, as a result of an uncertainty over the direction of interest rates and an
apparent slowing of mortgage loan originations in general,  the Company believed
that the FHLMC  stock  would be  subject  to future  adverse  market  pressures.
Additionally,  the FHLMC was under  increasing  pressure  to expand  its role in
promoting low income  housing,  which the Company  believed may also depress the
market value of the FHLMC stock. From December 31, 1998 to the date of sale, the
Bank's FHLMC stock portfolio  declined in value  approximately  17%. Proceeds of
these sales were invested in higher yielding investments. See Note 2 of Notes to
Consolidated Financial Statements.

     NON-INTEREST EXPENSE. Total non-interest expense in the year ended December
31, 2000 was $3.3 million,  compared to $8.9 million in 1999.  This decrease was
primarily  attributable to a decrease of approximately  $5.5 million in salaries
and benefits.

     In  December  1999,  the  Board  of  Directors   approved  a  benefit  plan
restructuring  on the  basis of its  belief  that a  reduction  of the  expenses
associated  with the Company's  Employee  Stock  Ownership  Plan ("ESOP")  would
improve the Company's  profitability.  For the year ended December 31, 1999, the
maintenance expenses for the ESOP were approximately $408,000, and the Company's
one-time  termination  expense  was  approximately  $2.5  million.  The  Company
subsequently  received an Internal Revenue Service  determination  that the ESOP
would be tax-qualified upon its termination.

     In 2000 and 1999, the net periodic  pension costs of the Company's  defined
benefit  pension plan were  $152,000 and $174,000,  respectively.  See Note 9 of
Notes to Consolidated Financial Statements.

     INCOME TAXES. The Company's  effective tax rate for the year ended December
31, 2000 was 34.0%,  compared to 52.8% for 1999. The income tax expense was $1.4
million in 2000 compared to $2.8 million in 1999.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

     NET INCOME.  The Company's net income for the year ended  December 31, 1999
was $2.5 million compared to $3.0 million for the year ended December 31, 1998.

     NET INTEREST  INCOME.  Net interest  income for the year ended December 31,
1999 was $7.1 million,  compared to $7.0 million for the year ended December 31,
1998.  The increase in net interest  income for the year ended December 31, 1999
was primarily due to a slightly lower cost of funds. For the year ended December
31, 1999,  the  Company's  average  yield on total  interest-earning  assets was
6.73%,  compared to 6.73% for the year ended  December 31, 1998, and its average
cost of interest-bearing  liabilities was 4.62%,  compared to 4.66% for the year
ended December 31, 1998. As a result, the Company's interest rate spread for the
year ended  December  31,  1999 was 2.11%,  compared to 2.07% for the year ended
December 31, 1998,  and its net yield on  interest-earning  assets was 3.38% for
the year ended December 31, 1999,  compared to 3.15% for the year ended December
31, 1998.

     INTEREST  INCOME.  Interest income decreased by $847,000 from $15.1 million
to $14.2 million, or by 5.96%, during the year ended December,  1999 compared to
1998. This decrease was due to a decline in interest earning assets. The average
balance of  securities  held to  maturity  declined  $22.6  million,  from $36.8
million at December 31,  1998,  to $14.2  million at December 31, 1999.  Average
time deposits and other  interest-bearing cash deposits decreased $21.0 million,
from $32.5  million at December 31, 1998 to $11.5  million at December 31, 1999.
Overall,  average total  interest-earning  assets  decreased  $12.5 million from
December 31, 1998 to December 31, 1999. The ratio of interest-earning  assets to
interest-bearing  liabilities  increased from 130.1% for the year ended December
31, 1998 to 137.8% for the year ended December 31, 1999.

                                       15
<PAGE>

     INTEREST  EXPENSE.  Interest expense decreased to $7.1 million for the year
ended  December  31, 1999,  compared to $8.0 million for 1998.  The decrease was
primarily  attributable  to a decrease in deposits.  The average cost of average
interest bearing liabilities declined from 4.66% for the year ended December 31,
1998 to 4.62% for the year ended  December 31, 1999.  Over the same period,  the
average  balance of deposits  decreased  from $171.9  million for the year ended
December 31, 1998 to $153.2 million at December 31, 1999.

     PROVISION  FOR LOAN  LOSSES.  The  Company  determined  that an  additional
$21,000  provision  for loan loss was required  for the year ended  December 31,
1999.  For the year ended  December  31,  1998,  the Company  determined  that a
$21,000 provision was warranted.

     NON-INTEREST EXPENSE. Total non-interest expense in the year ended December
31, 1999 was $8.9 million,  compared to $3.0 million in 1998.  This increase was
primarily  attributable to approximately $5.5 million of employee benefits.  See
Note 9 of Notes to Consolidated Financial Statements.

     INCOME TAXES.  The effective tax rate for the year ended  December 31, 1999
was 52.8%,  compared to 35.7% for 1998.  This increase in the effective tax rate
resulted from $2.9 million of employee  benefits  which were not  deductible for
income tax purposes.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company  has no  business  other  than  that of the  Bank.  Management
believes  dividends  that may be paid from the Bank to the Company  will provide
sufficient funds for the Company's current and anticipated  needs;  however,  no
assurance  can be given  that the  Company  will not have a need for  additional
funds in the future. The Bank is subject to certain regulatory  limitations with
respect to the payment of dividends to the Company.

     CAPITAL  RESOURCES.  At December 31, 2000, the Bank exceeded all regulatory
minimum capital  requirements.  For a detailed discussion of the OTS' regulatory
capital  requirements,  and for a tabular  presentation of the Bank's compliance
with  such  requirements,  see  Note  13  of  Notes  to  Consolidated  Financial
Statements.

     LIQUIDITY.  Liquidity  management is both a daily and long-term function of
business  management.  If the Bank requires funds beyond its ability to generate
them internally,  the Bank believes that it could borrow funds from the FHLB. At
December 31, 2000, the Bank had  outstanding  advances of $17.0 million from the
FHLB. See Note 6 of Notes to Consolidated Financial Statements.

     The Bank's primary sources of funds consist of deposits, repayment of loans
and mortgage-backed  securities,  maturities of investments and interest-bearing
deposits,  and funds provided from  operations.  While  scheduled  repayments of
loans and mortgage-backed securities and maturities of investment securities are
predictable  sources of funds,  deposit flows and loan  prepayments  are greatly
influenced  by the general  level of interest  rates,  economic  conditions  and
competition.  The Bank uses its liquidity resources principally to fund existing
and future loan commitments, to fund maturing certificates of deposit and demand
deposit  withdrawals,  to invest in other  interest-earning  assets, to maintain
liquidity,  and to  meet  operating  expenses.  Management  believes  that  loan
repayments  and other  sources  of funds  will be  adequate  to meet the  Bank's
liquidity needs for the immediate future.

     In  addition,  the Bank is required to  maintain  minimum  levels of liquid
assets as defined by OTS regulations.  This requirement,  which may be varied at
the direction of the OTS depending  upon economic  conditions and deposit flows,
is based upon a percentage of deposits and short-term  borrowings.  The required
minimum ratio is currently 4%. The Bank has  historically  maintained a level of
liquid assets in excess of regulatory requirements.  The Bank's liquidity ratios
at December 31, 2000, 1999 and 1998 were 58.8%, 58.02% and 53.87%, respectively.

     A portion of the Bank's liquidity consists of cash and cash equivalents. At
December 31, 2000, cash and cash equivalents totaled $3.8 million.  The level of
these  assets  depends  upon  the  Bank's  operating,  investing  and  financing
activities during any given period.

                                       16
<PAGE>

     Although  operating  activities  have  historically  generated  a declining
amount of cash flows, cash flows from operating  activities increased during the
year ended  December 31, 2000 and decreased  during the year ended  December 31,
1999. For the years ended December 31, 1998,  1999 and 2000 such cash flows were
$2.9 million, $1.1 million and $1.9 million, respectively.

     Cash  flows  from  investing  activities  were a net use of  funds of $25.5
million and $19.5 million in 2000 and 1998, respectively,  and were a net source
of funds of $6.7 million in 1999. A principal  source of cash flows in this area
has been proceeds from the maturities of held-to-maturity securities, the volume
of which  reflects the prior emphasis on  investments  in such  securities  over
loans.  These  proceeds  were a source of cash flows of $24.2  million for 1998,
$17.4  million  for  1999 and $2.2  million  for  2000.  At the same  time,  the
investment of cash in loans was $16.2 million in 2000,  $4.7 million in 1999 and
$5.4 million in 1998. There were no purchases of held-to-maturity  securities in
1998,  1999 and  2000.  Purchases  of  securities  available  for sale  exceeded
maturities of such securities by $11.4 million,  $12.6 million and $38.0 million
in 2000, 1999 and 1998,  respectively.  The Bank continues to acquire securities
using funds from loan repayments,  proceeds from maturities of other securities,
and borrowed funds. At December 31, 2000, additional advances available from the
FHLB of Cincinnati amounted to $3.0 million.

     Beginning in 1996,  the Bank permitted the run-off of  higher-costing  time
deposits by offering only market rates of interest on maturing  deposits  rather
than above-market  rates under its previous pricing strategy.  Cash was required
to fund net withdrawals of time deposits in the amount of $16.5 million in 1998.
The Bank modified  this  strategy in 1999,  and had net increases in deposits of
$6.1  million and $4.7  million in 1999 and 2000,  respectively.  Because of the
Bank's  ability to generate  cash flows from its  financing  activities  and the
availability  of its  other  liquid  assets,  the Bank does not  anticipate  any
difficulty in funding future withdrawals of such time deposits as they come due.

     At December 31, 2000, the Bank had $1.7 million in outstanding  commitments
to  originate  loans  and  unused  lines of  credit  of $1.8  million.  The Bank
anticipates  that it will have  sufficient  funds  available to meet its current
loan origination and lines of credit commitments.  Certificates of deposit which
are  scheduled to mature in one year or less totaled  $76.0  million at December
31, 2000. Based on historical experience, management believes that a significant
portion of such deposits will remain with the Bank.

IMPACT OF INFLATION AND CHANGING PRICES

     The  financial  statements  and notes  thereto  presented  herein have been
prepared in accordance  with generally  accepted  accounting  principles,  which
require the measurement of financial  position and operating results in terms of
historical  dollars without  considering  the change in the relative  purchasing
power of money  over  time and due to  inflation.  The  impact of  inflation  is
reflected in the increased cost of the Bank's operations.

     Unlike most industrial companies,  nearly all the assets and liabilities of
the Company are monetary in nature. As a result,  changes in interest rates have
a greater  impact on the  Company's  performance  than do the effects of general
levels  of  inflation.  Interest  rates  do not  necessarily  move  in the  same
direction or to the same extent as the price of goods and services.

CHANGE IN CERTIFYING ACCOUNTANT

     York, Neel & Co. - Hopkinsville,  LLP ("York,  Neel"), the Company's former
independent certified public accountants, resigned effective September 20, 2000.
During the Company's  two most recent  fiscal years ended  December 31, 1999 and
the interim  quarters  preceding such  resignation,  there were no disagreements
with York, Neel on any matter of accounting  principles or practices,  financial
statement  disclosure or auditing scope or procedure.  The report of York,  Neel
for the two fiscal  years  ended  December  31,  1999 did not contain an adverse
opinion or a  disclaimer  of opinion,  and was not  qualified  or modified as to
uncertainty,  audit scope or accounting principles. The decision to accept York,
Neel's  resignation  and change  accountants was recommended and approved by the
Audit  Committee  of the  Board  of  Directors  and  approved  by the  Board  of
Directors.  On September 20, 2000,  Rayburn,  Betts & Bates, P.C. was engaged as
the principal  accountant to audit the Company's  financial  statements  for the
fiscal year ended December 31, 2000.

                                       17
<PAGE>

FORWARD-LOOKING STATEMENTS

     Management's  discussion  and  analysis  includes  certain  forward-looking
statements  addressing,  among other things,  the Bank's prospects for earnings,
asset growth and net interest margin. Forward-looking statements are accompanied
by, and identified  with, such terms as  "anticipates,"  "believes,"  "expects,"
"intends," and similar phrases.  Management's expectations for the Bank's future
involve a number of assumptions  and estimates.  Factors that could cause actual
results to differ from the expectations  expressed  herein include:  substantial
changes in interest rates,  and changes in the general  economy;  changes in the
Bank's strategies for credit-risk management,  interest-rate risk management and
investment  activities.  Accordingly,  any  forward-looking  statements included
herein do not purport to be  predictions of future events or  circumstances  and
may not be realized.

                                       18
<PAGE>

                          Independent Auditors' Report
                          ----------------------------




The Board of Directors
HOPFED BANCORP, INC.
Hopkinsville, Kentucky


We have audited the accompanying  consolidated  balance sheet of HOPFED BANCORP,
INC. AND  SUBSIDIARY  (the  "Company") as of December 31, 2000,  and the related
consolidated  statements  of income,  comprehensive  income  (loss),  changes in
stockholders' equity, and cash flows for the year then ended. These consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements  based on our audit.  The  consolidated  financial  statements of the
Company as of and for the years ending  December 31, 1999 and 1998, were audited
by other auditors whose report dated February 4, 2000,  expressed an unqualified
opinion on those statements.

We conducted our audit in accordance with generally  accepted auditing standards
of the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of the Company as of
December 31, 2000,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted  accounting  principles of
the United States of America.


                                                /s/ Rayburn, Betts & Bates, P.C.

Nashville, Tennessee
February 7, 2001


<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2000 AND 1999
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
     Assets                                                          2000      1999
     ------                                                          ----      ----

<S>                                                                <C>         <C>
Cash and due from banks (note 8) ...............................   $  2,227      4,537
Interest-earning deposits in Federal Home Loan Bank ............         50        251
Federal funds sold .............................................      1,530      4,100
                                                                   --------   --------
Cash and cash equivalents ......................................      3,807      8,888
Securities available for sale (note 2) .........................     84,269     71,423
Securities held to maturity, market value of
     $7,930 for 2000 and $10,078 for 1999, respectively (note 2)      7,796      9,958
Loans receivable, net of allowance for loan losses of
     $708 for 2000 and $278 for 1999, respectively (note 3) ....    129,154    113,532
Accrued interest receivable ....................................      2,285      1,095
Premises and equipment, net (note 4) ...........................      2,442      2,472
Deferred tax assets  (note 10) .................................         44        515
Other assets ...................................................        161         23
                                                                   --------   --------

                        Total assets ...........................   $229,958    207,906
                                                                   ========   ========

     Liabilities and Stockholders' Equity
     ------------------------------------

Liabilities:
Deposits:  (note 5)
    Non-interest-bearing accounts ..............................   $  3,828      2,944
    Interest-bearing accounts:
          Demand/NOW accounts ..................................      9,527      9,017
          Money market accounts ................................     24,715     30,063
          Passbook savings .....................................      9,656      9,802
          Other time deposits ..................................    117,878    109,079
                                                                   --------   --------
                      Total deposits ...........................    165,604    160,905

Advances from borrowers for taxes and insurance ................        158        156
Advances from Federal Home Loan Bank (note 6) ..................     17,040         --
Federal income taxes payable (note 10) .........................         --        369
Dividends payable ..............................................        441        307
Accrued expenses and other liabilities .........................      1,353      1,825
                                                                   --------   --------

                      Total liabilities ........................    184,596    163,562
                                                                   --------   --------
</TABLE>
See notes to consolidated financial statements.

                                       20

<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

                     CONSOLIDATED BALANCE SHEETS, CONTINUED

                           DECEMBER 31, 2000 AND 1999
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                   2000        1999
                                                                                   ----        ----
<S>                                                                      <C>                    <C>
Stockholders' equity (notes 9, 13 and 14):
     Common stock, par value $.01 per share;
       authorized - 7,500,000 shares; 4,004,349 issued and
       3,854,995 outstanding at December 31, 2000 and
       3,942,500 issued and outstanding at December 31, 1999             $            40             39
     Additional paid-in capital                                                   25,228         24,214
     Retained earnings-substantially restricted                                   21,896         20,990
     Treasury stock (at cost, 149,354 shares at December 31, 2000
       and none at December 31, 1999)                                             (1,643)            -
     Accumulated other comprehensive loss, net of taxes                             (159)          (899)
                                                                         ---------------   ------------

               Total stockholders' equity                                         45,362         44,344
                                                                         ---------------   ------------


               Total liabilities and stockholders' equity                $       229,958        207,906
                                                                         ===============   ============
</TABLE>
     Commitments and contingencies (notes 8, 9 and 12)

See notes to consolidated financial statements.

                                       21


<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME

                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                2000        1999        1998
                                                ----        ----        ----
Interest income:
Loans receivable ...........................  $ 9,299       8,436       8,280
Securities available for sale ..............    6,349       4,204       2,418
Securities held to maturity ................      637         814       2,360
Interest-earning deposits in Federal
  Home Loan Bank ...........................       58         751       1,994
                                            ---------   ---------   ---------

          Total interest income ............   16,343      14,205      15,052
                                            ---------   ---------   ---------

Interest expense:
     Deposits (note 5) .....................    7,931       7,078       8,004
     Advances from Federal Home Loan Bank ..    1,181          --          --
                                            ---------   ---------   ---------

               Total interest expense ......    9,112       7,078       8,004
                                            ---------   ---------   ---------
Net interest income ........................    7,231       7,127       7,048

Provision for loan losses (note 3) .........      431          21          21
                                            ---------   ---------   ---------

               Net interest income after
                   provision for loan losses    6,800       7,106       7,027
                                            ---------   ---------   ---------

Non-interest income:
     NOW account fees ......................      213         196         168
     Loan fees .............................      171         177         229
     Service charges .......................       55          67          85
     Realized gain from sale of securities
       available for sale (note 2) .........       --       6,523          --
     Other operating income ................       70          65          65
                                            ---------   ---------   ---------

               Total non-interest income ...      509       7,028         547
                                            ---------   ---------   ---------
Non-interest expenses:
     Salaries and benefits (note 9) ........    2,089       7,626       1,959
     Deposit insurance premium .............       35          91         152
     Occupancy expense .....................      205         197         188
     Data processing .......................      163         143         117
     Other operating expenses ..............      778         836         566
                                            ---------   ---------   ---------

               Total non-interest expense ..    3,270       8,893       2,982
                                            ---------   ---------   ---------

Income before income tax expense ...........    4,039       5,241       4,592
Income tax expense (note 10) ...............    1,373       2,766       1,641
                                            ---------   ---------   ---------

Net income .................................   $2,666       2,475       2,951
                                            =========   =========   =========
Earnings per share:
     Basic                                     $ 0.67        0.65        0.80
                                            =========   =========   =========
     Fully diluted                             $ 0.67        0.65        0.80
                                            =========   =========   =========

Weighted average shares outstanding         3,979,664   3,800,971   3,711,025
                                            =========   =========   =========

See notes to consolidated financial statements.

                                       22
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                       2000        1999       1998
                                                       ----        ----       ----
<S>                                                   <C>          <C>        <C>
Net income                                            $ 2,666      2,475      2,951

Other comprehensive income, net of tax (note 17) -

Unrealized gain (loss) on investment securities
     available for sale                                   962     (2,089)     2,173

Minimum pension liability adjustment (note 9)            (222)        --         --

Less reclassification adjustment for gains included
     in net income                                         --     (4,306)        --
                                                      -------    -------    -------

Comprehensive income (loss)                           $ 3,406     (3,920)     5,124
                                                      =======    =======    =======
</TABLE>

See notes to consolidated financial statements.

                                       23
<PAGE>


                       HOPFED BANCORP, INC. AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

                                                                                       Additional                 Unallocated
                                                           Common         Common        Paid-in       Retained        ESOP
                                                           Shares         Stock         Capital       Earnings       Shares
                                                           ------         -----         -------       --------       ------

<S>                                                       <C>           <C>            <C>             <C>        <C>
Balance, January 1, 1998                                         --     $      --            --        16,613            --
Net income                                                       --            --            --         2,951            --
Net change in unrealized gains (losses)
  on securities available for sale, net of
  income taxes of $1,119                                         --            --            --            --            --
Issuance of common stock                                  4,033,625            40        39,335            --            --
Purchase of common stock by ESOP                                 --            --            --            --        (3,227)
Release and allocation of common stock
  held by ESOP                                                   --            --           211            --           294
Dividends ($0.15 per share)                                      --            --            --          (581)           --
                                                         ----------    ----------    ----------    ----------    ----------
Balance, December 31, 1998                                4,033,625            40        39,546        18,983        (2,933)
Net income                                                       --            --            --         2,475            --

Net change in unrealized gains (losses) on
  securities available for sale, net of
  income taxes of $3,294                                         --            --            --            --            --
Issuance of common stock- MRP                                64,537             1         1,290            --            --
Retirement of common stock (from ESOP)                     (155,662)           (2)       (1,555)           --         1,557
Release and allocation of common stock
  held by ESOP                                                   --            --           994            --         1,376
Dividends (includes special dividend of $4.00 per
  share in fourth quarter and four quarterly dividends
  totaling $0.30 per share)                                      --            --       (16,061)         (468)           --
                                                         ----------    ----------    ----------    ----------    ----------
Balance, December 31, 1999                                3,942,500            39        24,214        20,990            --
Net income                                                       --            --            --         2,666            --

Minimum pension liability adjustment, net of
  income taxes of $114                                           --            --            --            --            --
Net change in unrealized gains (losses)
  on securities available for sale, net of
  income taxes of $496                                           --            --            --            --            --
Issuance of common stock - MRP                               61,849             1           974            --            --
Recovery of proceeds on issuance of common stock                 --            --            40            --            --

Repurchase of common stock                                 (149,354)           --            --            --            --
Dividends ($0.41 per share)                                      --            --            --        (1,760)           --
                                                         ----------    ----------    ----------    ----------    ----------
Balance, December 31, 2000                                3,854,995    $       40        25,228        21,896            --
                                                         ==========    ==========    ==========    ==========    ==========
</TABLE>
<TABLE>
<CAPTION>
(continued)
                                                                         Accumulated
                                                                           Other
                                                           Treasury    Comprehensive      Total
                                                            Stock      Income (Loss)     Equity
                                                            -----      -------------     ------

<S>                                                       <C>               <C>          <C>
Balance, January 1, 1998                                         --         3,323        19,936
Net income                                                       --            --         2,951
Net change in unrealized gains (losses)
  on securities available for sale, net of
  income taxes of $1,119                                         --         2,173         2,173
Issuance of common stock                                         --            --        39,375
Purchase of common stock by ESOP                                 --            --        (3,227)
Release and allocation of common stock
  held by ESOP                                                   --            --           505
Dividends ($0.15 per share)                                      --            --          (581)
                                                         ----------    ----------    ----------
Balance, December 31, 1998                                       --         5,496        61,132
Net income
                                                                 --            --         2,475
Net change in unrealized gains (losses) on
  securities available for sale, net of
  income taxes of $3,294                                         --        (6,395)       (6,395)
Issuance of common stock- MRP                                    --            --         1,291
Retirement of common stock (from ESOP)                           --            --            --
Release and allocation of common stock
  held by ESOP                                                   --            --         2,370
Dividends (includes special dividend of $4.00 per
  share in fourth quarter and four quarterly dividends
  totaling $0.30 per share)                                      --            --       (16,529)
                                                         ----------    ----------    ----------
Balance, December 31, 1999                                       --          (899)       44,344
Net income
                                                                 --            --         2,666
Minimum pension liability adjustment, net of
  income taxes of $114                                           --          (222)         (222)
Net change in unrealized gains (losses)
  on securities available for sale, net of
  income taxes of $496                                           --           962           962
Issuance of common stock - MRP                                   --            --           975
Recovery of proceeds on issuance of common stock
                                                                 --            --            40
Repurchase of common stock                                   (1,643)           --        (1,643)
Dividends ($0.41 per share)                                      --            --        (1,760)
                                                         ----------    ----------    ----------
Balance, December 31, 2000                                   (1,643)         (159)       45,362
                                                         ==========    ==========    ==========

</TABLE>

See notes to consolidated financial statements.

                                       24
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                      2000         1999        1998
                                                                      ----         ----        ----

Cash flows from operating activities:
<S>                                                                 <C>            <C>         <C>
     Net income                                                     $  2,666       2,475       2,951
     Adjustments to reconcile net income to net
         cash provided by operating activities:
              Provision for loan losses                                  431          21          21
              Depreciation                                               119         121         111
              Amortization (accretion) of investment premiums            144        (387)        (40)
                 and discounts, net
              Provision (benefit) for deferred income taxes               91        (491)        183
              Stock dividends on Federal Home Loan Bank stock           (150)       (134)       (127)
              (Gain) loss on sale of premises and equipment               (9)          1          (7)
              Earned ESOP shares                                          --       2,900         211
              Compensation expense recognized on MRP shares              549       1,291          --
              Gain on sale of FHLMC stock                                 --      (6,523)         --
              (Increase) decrease in:
                  Accrued interest receivable                         (1,190)         62          27
                  Other assets                                          (233)        202         214
              Increase (decrease) in:
                  Federal income taxes payable                          (369)        369        (360)
                  ESOP contribution payable                               --        (294)        294
                  Accrued expenses and other liabilities                (146)      1,479        (556)
                                                                    --------    --------    --------

              Net cash provided by operating activities                1,903       1,092       2,922
                                                                    --------    --------    --------

Cash flows from investing activities:
     Proceeds from maturities of securities held to maturity           2,170      17,407      24,230
     Proceeds from maturities of securities available for sale        12,507      56,226      12,565
     Purchase of securities available for sale                       (23,898)    (68,810)    (50,590)
     Proceeds from sale of FHLMC stock                                    --       6,644          --
     Net increase in loans                                           (16,195)     (4,746)     (5,357)
     Purchases of premises and equipment                                 (96)        (48)       (328)
     Proceeds from sale of premises and equipment                         16          --          11
                                                                    --------    --------    --------

              Net cash provided by (used in) investing activities    (25,496)      6,673     (19,469)
                                                                    --------    --------    --------
</TABLE>
See notes to consolidated financial statements.

                                       25
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                       2000        1999        1998
                                                                       ----        ----        ----
<S>                                                                 <C>             <C>     <C>
Cash flows from financing activities:
     Net decrease in demand deposits,
       savings, money market and NOW deposits                       $ (4,100)       (495)   (149,270)
     Net increase (decrease) in time deposits                          8,799       6,584     (16,546)
     Increase (decrease) in advance payments
       by borrowers for taxes and insurance                                2         (10)         (6)
     Net increase in other borrowed funds                             17,040          --          --
     Issuance of common stock                                             --          --      36,148
     Purchase of treasury stock                                       (1,643)         --          --
     Dividends paid                                                   (1,626)    (17,516)       (278)
     Recovery of proceeds from issuance of common stock                   40          --          --
     Payments on loan to ESOP                                             --         756          --
                                                                    --------    --------    --------

              Net cash provided by (used in) financing activities     18,512     (10,681)   (129,952)
                                                                    --------    --------    --------

Decrease in cash and cash equivalents                                 (5,081)     (2,916)   (146,499)

Cash and cash equivalents, beginning of period                         8,888      11,804     158,303
                                                                    --------    --------    --------
Cash and cash equivalents, end of period                            $  3,807       8,888      11,804
                                                                    ========    ========    ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Interest paid                                                  $  9,112       7,068       8,503
                                                                    ========    ========    ========
     Income taxes paid                                              $  1,600       2,735       1,969
                                                                    ========    ========    ========
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING
   AND FINANCING ACTIVITIES:
     Non-cash transaction - ESOP loan redeemed with stock           $     --       2,471          --
                                                                    ========    ========    ========
     Foreclosures and in substance foreclosures
         of loans during year                                       $    142          --          --
                                                                    ========    ========    ========
     Net unrealized gains (losses) on investment securities
         classified as available for sale                           $  1,458      (9,689)      3,292
                                                                    ========    ========    ========
     Increase (decrease) in deferred tax asset (liability)
         related to unrealized gain (loss) on investments           $   (496)      3,294      (1,119)
                                                                    ========    ========    ========
     Dividends declared and payable                                 $    441         307          --
                                                                    ========    ========    ========
     Issue of common stock to ESOP                                  $     --          --       3,227
                                                                    ========    ========    ========
     Issue of common stock to MRP                                   $    975       1,291          --
                                                                    ========    ========    ========
</TABLE>
See notes to consolidated financial statements.

                                       26
<PAGE>


                       HOPFED BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2000, 1999 AND 1998


(1)  Summary of Significant Accounting Policies:
     ------------------------------------------
     The  accounting  and  reporting  policies  of  HOPFED  BANCORP,  INC.  (the
          "Company") and subsidiary conform with generally  accepted  accounting
          principles  of the United  States of America  and to general  practice
          within the banking  industry.  The following is a  description  of the
          more  significant  accounting  policies  which the Company  follows in
          preparing and presenting its consolidated financial statements.

     Basis of Presentation
     ---------------------
     The  accompanying  consolidated financial statements include the amounts of
          the Company and its wholly-owned subsidiary, Hopkinsville Federal Bank
          (the "Bank"). All significant  intercompany  transactions and balances
          are eliminated in consolidation.

     As   more fully discussed below, the Company, a Delaware  corporation,  was
          organized by the Bank for the purpose of acquiring  all of the capital
          stock of the  Bank  pursuant  to the  conversion  of the  Bank  from a
          federally chartered mutual savings bank to a federally chartered stock
          savings  bank.  The  Company  is subject  to the  financial  reporting
          requirements of the Securities and Exchange Act of 1934, as amended.

     Organization and Form of Ownership
     ----------------------------------
     The  Bank  was  originally  founded  as a  mutual  savings  bank  in  1879.
          Effective  February  6,  1998,  the Bank  converted  from a  federally
          chartered  mutual savings bank to a federally  chartered stock savings
          bank,  as a  wholly-owned  subsidiary of a holding  company  chartered
          under  Delaware law for the purpose of  acquiring  control of the Bank
          following consummation of the Bank's conversion. The Company completed
          its  initial  public  offering  (IPO) on  February  6, 1998 and issued
          4,033,625   shares  of  common   stock   resulting   in   proceeds  of
          approximately  $39,375,000  net  of  expenses  totaling  approximately
          $961,000.  The Company  loaned  approximately  $3,227,000  to the ESOP
          which  purchased  322,690 shares of the Company's  common stock in the
          initial public offering.

     The  Bank established, in accordance with the requirements of the Office of
          Thrift  Supervision  (OTS),  a liquidation  account for  approximately
          $18,733,000,  the amount of the Bank's net worth as of the date of the
          latest statement of financial condition, September 30, 1997, appearing
          in the IPO  prospectus  supplement.  The  liquidation  account will be
          maintained  for the benefit of eligible  deposit  account  holders who
          maintain their deposit accounts in the Bank after conversion.

     In   the event of a  complete  liquidation  (and only in such an event) and
          prior to any payment to  stockholders,  each eligible  deposit account
          holder will be entitled to receive a liquidation distribution from the
          liquidation  account  in an amount  proportionate  to the  depositor's
          current   adjusted  balance  for  deposit  accounts  held  before  any
          liquidation.  Except  for the  repurchase  of  stock  and  payment  of
          dividends by the Bank, the existence of the  liquidation  account will
          not restrict the use or application of such net worth.


                                       27
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998


(1)  Summary of Significant Accounting Policies: (Continued)
     -------------------------------------------
     Estimates
     ---------
     In   preparing  the  consolidated   financial  statements,   management  is
          required to make  estimates and  assumptions  that affect the reported
          amount of assets and  liabilities  as of the date of the  consolidated
          balance sheet and revenues and expenses for the year.  Actual  results
          could differ  significantly  from those estimates.  Material estimates
          that are particularly  susceptible to significant change relate to the
          determination  of the  allowance  for loan losses and the valuation of
          real  estate   acquired  in  connection   with   foreclosures   or  in
          satisfaction  of loans. In connection  with the  determination  of the
          allowances  for loan losses and  foreclosed  real  estate,  management
          obtains appraisals for significant properties.

     Cash and Cash Equivalents
     -------------------------
     For  the purpose of  presentation  in the  consolidated  statements of cash
          flows,  cash and  cash  equivalents  are  defined  as cash on  demand,
          interest-earning  deposits in the  Federal  Home Loan Bank and federal
          funds sold with maturities of three months or less.

     Securities
     ----------
     In   accordance with Statement of Financial  Accounting Standards No (SFAS)
          115, Accounting for Certain Investments in Debt and Equity Securities,
          the  Company is required to report  debt,  readily-marketable  equity,
          mortgage-backed   and  mortgage  related  securities  in  one  of  the
          following  categories:  (i)  "held  to  maturity"  (management  has  a
          positive  intent  and  ability  to hold to  maturity)  which are to be
          reported  at  cost,  adjusted  for  premiums  and  discounts  that are
          recognized  in  interest  income;  (ii)  "trading"  (held for  current
          resale) which are to be reported at fair value,  with unrealized gains
          and losses included in earnings;  and (iii)  "available for sale" (all
          other debt, equity,  mortgage-backed  and mortgage related securities)
          which are to be  reported  at fair value,  with  unrealized  gains and
          losses  reported net of tax as a separate  component of  stockholders'
          equity. At the time of new security purchases, a determination is made
          as to the appropriate  classification.  Realized and unrealized  gains
          and  losses  on  trading   securities  are  included  in  net  income.
          Unrealized  gains and  losses  on  securities  available  for sale are
          recognized as direct increases or decreases in  stockholders'  equity,
          net of any tax effect. Cost of securities sold is recognized using the
          specific identification method.

     Loans Receivable
     ----------------
     Loans receivable are  stated  at  unpaid  principal   balances,   less  the
          allowance for loan losses and discounts.

     Discounts on home  improvement  and consumer loans are recognized  over the
          lives of the loans using the interest  method.  Loan  origination  fee
          income is recognized as received and direct loan origination costs are
          expensed  as  incurred.  SFAS  91  requires  the  recognition  of loan
          origination  fee income over the life of the loan and the  recognition
          of certain  direct loan  origination  costs over the life of the loan.
          However,  deferral  of such fees and costs  would not have a  material
          effect on the consolidated financial statements.

                                       28
<PAGE>

                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998


(1)  Summary of Significant Accounting Policies: (Continued)
     ------------------------------------------
     Loans Receivable (Continued)
     ----------------
     Uncollectible interest on loans that are contractually  past due is charged
          off, or an allowance is  established  based on  management's  periodic
          evaluation.  The  allowance  is  established  by a charge to  interest
          income  equal  to all  interest  previously  accrued,  and  income  is
          subsequently  recognized  only to the extent  that cash  payments  are
          received  while the loan is  classified  as  nonaccrual.  Loans may be
          returned to accrual  status when all  principal  and interest  amounts
          contractually  due (including  arrearages)  are reasonably  assured of
          repayment  within  an  acceptable  period  of  time,  and  there  is a
          sustained   period  of  repayment   performance  by  the  borrower  in
          accordance with the contractual terms of interest and principal.

     The  Bank  provides an allowance  for loan losses and includes in operating
          expenses  a  provision  for  loan  losses  determined  by  management.
          Management's  periodic  evaluation of the adequacy of the allowance is
          based on the  Bank's  past loan loss  experience,  known and  inherent
          risks  in the  portfolio,  adverse  situations  that  may  affect  the
          borrower's  ability to repay,  the estimated  value of any  underlying
          collateral,  and current economic  conditions.  Management believes it
          has established  the allowance in accordance  with generally  accepted
          accounting  principles  of the United  States of America and has taken
          into  account the views of its  regulators  and the  current  economic
          environment.

     Loans are considered  to  be  impaired  when,  in  management's  judgement,
          principal or interest is not collectible  according to the contractual
          terms  of  the  loan  agreement.  When  conducting  loan  evaluations,
          management   considers   various   factors  such  as  historical  loan
          performance,  the financial  condition of the borrower and adequacy of
          collateral to determine if a loan is impaired.

     The  measurement of impaired loans  generally is based on the present value
          of future cash flows discounted at the historical  effective  interest
          rate,  except that  collateral-dependent  loans generally are measured
          for  impairment  based on the fair value of the  collateral.  When the
          measured  amount  of an  impaired  loan  is  less  than  the  recorded
          investment  in the loan,  the  impairment  is  recorded as a charge to
          income and a valuation  allowance  which is included as a component of
          the allowance for loan losses.

     Foreclosed Real Estate
     ----------------------
     Real estate properties  acquired  through,  or in lieu of, loan foreclosure
          are carried at the lower of cost or fair value less selling  expenses.
          Costs of developing  such real estate are  capitalized,  whereas costs
          relating  to  holding  the  property  are  expensed.   Valuations  are
          periodically performed by management, and any adjustments to value are
          made through an allowance for losses.

     Income Taxes
     ------------
     Income taxes are  accounted  for through the use of the asset and liability
          method.  Under the  asset and  liability  method,  deferred  taxes are
          recognized  for the  tax  consequences  of  temporary  differences  by
          applying  enacted  statutory  rates  applicable  to  future  years  to
          differences  between the financial  statement carrying amounts and the
          tax bases of existing assets and  liabilities.  The effect on deferred
          taxes of a change in tax rates  would be  recognized  in income in the
          period that includes the enactment date.

                                       29
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998


(1)  Summary of Significant Accounting Policies: (Continued)
     ------------------------------------------
     Premises and Equipment
     ----------------------
     Land is carried at cost. Land  improvements,  buildings,  and furniture and
          equipment  are  carried at cost,  less  accumulated  depreciation  and
          amortization.   Buildings  and  land   improvements   are  depreciated
          generally by the straight-line method, and furniture and equipment are
          depreciated under accelerated  methods over the estimated useful lives
          of the assets. The estimated useful lives used to compute depreciation
          are as follows:

                     Land improvements                    5-15 years
                     Buildings                              40 years
                     Furniture and equipment              5-15 years

     Financial Instruments
     ---------------------
     In   the  ordinary   course  of   business,   the  Bank  has  entered  into
          off-balance-sheet  financial instruments  consisting of commitments to
          extend  credit  and  commercial  letters  of  credit.  Such  financial
          instruments are recorded in the consolidated financial statements when
          they are funded or related fees are incurred or received.

     Fair Values of Financial Instruments
     ------------------------------------
     The  following  methods  and  assumptions  were  used  by  the  Company  in
          estimating fair values of financial instruments as disclosed herein:

     Cash and cash equivalents
     -------------------------
     The carrying amounts of cash and cash equivalents  approximates  their fair
     value.

     Available for sale and held to maturity securities
     --------------------------------------------------
     Fair  values  for  securities  are based on  quoted  market  prices,  where
     available. If quoted market prices are not available, fair values are based
     on quoted market prices of comparable instruments.

     Loans receivable
     ----------------
     For  variable  rate loans that  reprice  annually  and have no  significant
     change in credit  risk,  fair  values are based on  carrying  values.  Fair
     values for fixed rate mortgage  loans and fixed rate  commercial  loans are
     estimated  using  discounted  cash  flow  analyses,  using  interest  rates
     currently  being  offered  for loans with  similar  terms to  borrowers  of
     similar credit quality.

     Deposits
     --------
     The fair values disclosed for demand deposits are, by definition,  equal to
     the amount payable on demand at the reporting date (that is, their carrying
     amounts).  The carrying  amounts of variable rate,  fixed-term money market
     accounts  approximate  their fair values at the reporting date. Fair values
     for fixed rate  certificates  of deposits are estimated  using a discounted
     cash flow  calculation  that applies interest rates currently being offered
     on  certificates  of deposit to a schedule of  aggregated  expected  annual
     maturities on time deposits.

     Advances from borrowers for taxes and insurance
     -----------------------------------------------
     The carrying  amounts of advances  from  borrowers  for taxes and insurance
     approximate their fair value.

                                       30
<PAGE>

                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998


(1)  Summary of Significant Accounting Policies: (Continued)
     ------------------------------------------
          Advances from the Federal Home Loan Bank
          ----------------------------------------
               The carrying  amounts of other borrowed funds  approximate  their
               fair values since such borrowings mature within 90 days.

          Accrued interest
          ----------------
               The carrying amounts of accrued interest  approximate  their fair
               values.

          Off-balance-sheet instruments
          -----------------------------
               Off-balance-sheet  lending  commitments  approximate  their  fair
               values  due to the short  period of time  before  the  commitment
               expires.

     Earnings Per Share
     ------------------
     Earnings per share is  computed  by  dividing  net  income by the  weighted
          average  number of shares of common  stock and  dilutive  common stock
          equivalents outstanding.

     Effect of New Accounting Pronouncements
     ---------------------------------------
     SFAS 133, Accounting for Derivative Instruments and Hedging Activities,  as
          amended by SFAS 137, Accounting for Derivative Instruments and Hedging
          Activities - Deferral of the Effective Date of FASB Statement No. 133,
          and SFAS  138,  Accounting  for  Certain  Derivative  Instruments  and
          Certain  Hedging  Activities - An Amendment of FASB Statement No. 133,
          requires that  derivative  instruments be carried at fair value on the
          balance sheet. The statements continue to allow derivative instruments
          to be used to hedge various risks and set forth  specific  criteria to
          be used to determine when hedge accounting can be used. The statements
          also  provide  for  offsetting  changes in fair value or cash flows of
          both the derivative and the hedged asset or liability to be recognized
          in earnings in the same period;  however, any changes in fair value or
          cash  flow  that  represent  the  ineffective  portion  of a hedge are
          required to be  recognized  in earnings  and cannot be  deferred.  For
          derivative  instruments  not accounted for as hedges,  changes in fair
          value are required to be  recognized  in earnings.  The  provisions of
          these statements, as amended, are effective for all fiscal quarters of
          fiscal  years  beginning  after June 15,  2000.  The Company  does not
          anticipate any material  impact on the Company's  financial  position,
          results of operations  and cash flow  subsequent to the effective date
          of these statements as no such instruments are used by the Company.

     In   September 2000, the FASB issued SFAS 140, Accounting for Transfers and
          Servicing of Financial Assets and  Extinguishments  of Liabilities,  a
          replacement  of FASB  Statement  No. 125. This  statement  revises the
          standards for accounting for  securitizations  and other  transfers of
          financial assets and collateral and requires certain disclosures,  but
          it  carries  over  most  of  the   provisions   of  SFAS  125  without
          reconsideration.   This  statement  is  effective  for  transfers  and
          servicing  of  financial  assets and  extinguishments  of  liabilities
          occurring  after March 31,  2001.  This  statement  is  effective  for
          recognition  and  reclassification  of collateral and for  disclosures
          relating to  securitization  transactions  and  collateral  for fiscal
          years ending after December 5, 2000.  Disclosures about securitization
          and collateral  accepted need not be reported for periods ending on or
          before December 15, 2000, for which financial statements are presented
          for   comparative   purposes.   This   statement   is  to  be  applied
          prospectively with certain exceptions.


                                       31
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(1)  Summary of Significant Accounting Policies: (Continued)
     ------------------------------------------
     Effect of New Accounting Pronouncements, (Continued)
     ---------------------------------------
          Other than those exceptions, earlier or retroactive application of its
          accounting  provisions  are  not  permitted.   The  Company  does  not
          anticipate any material  impact on the Company's  financial  position,
          results of operations  and cash flow  subsequent to the effective date
          of this statement.

     Reclassification
     ----------------
     Certain 1999 and 1998  amounts  have been  reclassified  to  conform to the
          December 31, 2000 presentation.

(2)  Securities:
     ----------
     Securities,  which  consist  of debt  and  equity  investments,  have  been
          classified   in  the   consolidated   balance   sheets   according  to
          management's  intent.  The  carrying  amount of  securities  and their
          approximate fair values follow:

                                          December 31, 2000
                             --------------------------------------------
                                          Gross       Gross     Estimated
                              Amortized Unrealized  Unrealized    Fair
                                Cost      Gains       Losses      Value
                                ----      -----       ------      -----

Available for sale securities
 Restricted:
  FHLB stock                  $ 2,137        --           --        2,137
  Intrieve stock                   15        --           --           15
                              -------   -------      -------      -------

                                2,152        --           --        2,152
                              -------   -------      -------      -------
Unrestricted:
U.S. government and
  agency securities:
  FHLB debt securities         54,244        35          (80)      54,199
  FFCB                          2,000        --          (33)       1,967
Mortgage-backed securities:
  GNMA                         10,482        85           --       10,567
  FNMA                          8,109        68          (19)       8,158
  FHLMC                         7,186        59          (19)       7,226
                              -------   -------      -------      -------

                               82,021       247         (151)      82,117
                              -------   -------      -------      -------

                              $84,173       247         (151)      84,269
                              =======   =======      =======      =======

                                       32

<PAGE>

                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)

(2)  Securities: (Continued)
     ----------
                                             December 31, 1999
                              -------------------------------------------------
                                              Gross       Gross      Estimated
                               Amortized   Unrealized  Unrealized      Fair
                                  Cost       Gains        Losses       Value
                                  ----       -----        ------       -----

Available for sale securities
 Restricted:
  FHLB stock                    $ 1,987          --           --        1,987
  Intrieve stock                     15          --           --           15
                                -------     -------      -------      -------

                                  2,002          --           --        2,002
                                -------     -------      -------      -------
Unrestricted:
U.S. government and
  agency securities:
  FHLB debt securities           33,412          --       (1,104)      32,308
  FFCB                            4,000          --         (187)       3,813
Mortgage-backed securities:
  GNMA                           13,634         141           --       13,775
  FNMA                            9,944          30         (116)       9,858
  FHLMC                           9,793          40         (166)       9,667
                                -------     -------      -------      -------

                                 70,783         211       (1,573)      69,421
                                -------     -------      -------      -------

                                $72,785         211       (1,573)      71,423
                                =======     =======      =======      =======

     The  scheduled maturities of debt securities available for sale at December
          31, 2000 and 1999 were as follows:

                                         Amortized    Fair
                                           Cost       Value
                                           ----       -----
  2000
  ----
Due within one year                       $ 2,000     1,992
Due in one to five years                   16,998    16,947
Due in five to ten years                    4,418     4,168
Due after ten years                        32,828    33,059
                                          -------   -------
                                           56,244    56,166
Mortgage-backed securities                 25,777    25,951
                                          -------   -------

    Total securities available for sale   $82,021    82,117
                                          =======   =======

  1999
  ----
Due in one to five years                  $15,997    15,539
Due in five to ten years                    7,206     6,985
Due after ten years                        14,209    13,597
                                          -------   -------
                                           37,412    36,121
Mortgage-backed securities                 33,371    33,300
                                          -------   -------

    Total securities available for sale   $70,783    69,421
                                          =======   =======

                                       33
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(2)  Securities: (Continued)
     ----------
     During 2000, there were no sales of securities  classified as available for
          sale  by  the  Company.  During  1999,  the  Company  sold  securities
          classified as available for sale for total  proceeds of  approximately
          $6,644,000,  resulting  in a  gross  realized  gain  of  approximately
          $6,523,000.  During 1998, there were no sales of securities classified
          as available for sale by the Company.

     At   December 31, 2000 and 1999,  investment securities with amortized cost
          values of approximately $32,608,000 and $9,204,000 respectively,  were
          pledged as collateral as permitted or required by law.

     FHLB stock is an equity  interest in the Federal  Home Loan Bank.  Intrieve
          stock is an equity interest in Intrieve, Incorporated, the Bank's data
          processing   service   center.   These  stocks  do  not  have  readily
          determinable  fair values because ownership is restricted and a market
          is lacking. FHLB stock and Intrieve stock are classified as restricted
          investment securities, carried at cost and evaluated for impairment.

                                           December 31, 2000
                            -------------------------------------------------
                                           Gross        Gross     Estimated
                              Amortized  Unrealized   Unrealized    Fair
                                Cost        Gains       Losses      Value
                                ----        -----       ------      -----

Held to maturity securities

Mortgage-backed securities:
  GNMA                        $7,036          134          --       7,170
  FNMA                           760            5          (5)        760
                              ------       ------      ------      ------

                              $7,796          139          (5)      7,930
                              ======       ======      ======      ======


                                            December 31, 1999
                            --------------------------------------------------
                                           Gross        Gross     Estimated
                              Amortized  Unrealized   Unrealized    Fair
                                Cost        Gains       Losses      Value
                                ----        -----       ------      -----

Mortgage-backed securities:
  GNMA                        $ 8,898         137           (2)       9,033
  FNMA                          1,060          --          (15)       1,045
                              -------     -------      -------      -------

                              $ 9,958         137          (17)      10,078
                              =======     =======      =======      =======


                                       34
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(3)  Loans Receivable:
     ----------------
     The  components of loans receivable in the  consolidated  balance sheets as
          of December 31, 2000 and 1999 were as follows:

                                           2000       1999
                                           ----       ----
Real estate loans:
  One-to-four family                    $ 93,147     88,248
  Multi-family                             2,841      2,165
  Construction                             5,729      5,706
  Non-residential                         21,695     12,399
                                        --------   --------
             Total mortgage loans        123,412    108,518

Loans secured by deposits                  2,720      2,525
Other consumer loans                       3,971      4,356
Commercial loans                             946        314
                                        --------   --------
                                         131,049    115,713
Less:
Undisbursed portion of mortgage loans      1,187      1,903
                                        --------   --------
Total loans                              129,862    113,810
Less allowance for loan losses               708        278
                                        --------   --------

                                        $129,154    113,532
                                        ========   ========

     Impaired loans and related valuation allowance amounts at December 31, 2000
          and 1999 were as follows:

                                                   2000             1999
                                                   ----             ----

                       Recorded investment        $  434         $   58
                       Valuation allowance        $   65         $    8

     The  average  recorded  investment  in  impaired  loans for the years ended
          December 31, 2000, 1999 and 1998 was $253,000,  $451,000 and $262,000,
          respectively.  Interest  income  recognized on impaired  loans was not
          significant during the years ended December 31, 2000, 1999 and 1998.

     An   analysis of the change in the  allowance for loan losses for the years
          ended December 31, 2000, 1999 and 1998 follows:

                                           2000     1999     1998
                                           ----     ----     ----

          Balance at beginning of year     $278      257      236
          Loans charged off                   1       --       --
          Recoveries                         --       --       --
          Provision for loan losses         431       21       21
                                           ----     ----     ----
          Balance at end of year           $708      278      257
                                           ====     ====     ====

     There were no nonaccrual loans as of December 31, 2000 and 1999.

     Loans three months  or  more  past  due  still  accruing  interest  totaled
          approximately  $434,000  and $58,000 as of December 31, 2000 and 1999,
          respectively.

                                       35
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(4)  Premises and Equipment:
     ----------------------
     Components of premises and equipment  included in the consolidated  balance
          sheets as of December 31, 2000 and 1999 consisted of the following:

                                         2000     1999
                                         ----     ----

        Land                            $  548      543
        Land improvements                   75       75
        Buildings                        2,099    2,070
        Furniture and equipment            542      507
                                        ------   ------
                                         3,264    3,195

        Less accumulated depreciation      822      723
                                        ------   ------

                                        $2,442    2,472
                                        ======   ======

     Depreciation expense was approximately $119,000,  $121,000 and $111,000 for
          the years ended December 31, 2000, 1999 and 1998, respectively.

(5)  Deposits:
     ---------
     At   December 31, 2000,  the  scheduled  maturities  of other time deposits
          were as follows:

                         2001              $        76,030
                         2002                       26,536
                         2003                        4,403
                         2004                        7,563
                         2005                        3,346
                                            --------------
                                           $       117,878
                                            ==============

     The  amount of other time deposits with a minimum  denomination of $100,000
          was approximately $14,432,000 and $10,379,000 at December 31, 2000 and
          1999, respectively.

     Interest expense on deposits for the years ended  December  31, 2000,  1999
          and 1998 is summarized as follows:

                                     2000          1999          1998
                                     ----          ----          ----
Demand and NOW accounts             $  222           216           223
Money market accounts                1,051         1,320         1,347
Passbook savings                       194           274           673
Other time deposits                  6,464         5,268         5,761
                                    ------        ------        ------

                                    $7,931         7,078         8,004
                                    ======        ======        ======

                                       36
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998


(5)  Deposits: (Continued)
     --------
     The  Bank maintains  clearing  arrangements  for its demand,  NOW and money
          market  accounts  with  the  Compass  Bank.  The Bank is  required  to
          maintain  certain cash  reserves in its account to cover average daily
          clearings.   At  December  31,  2000,  average  daily  clearings  were
          approximately $542,000.

(6)  Advances from Federal Home Loan Bank:
     ------------------------------------
     During 1996, the Bank entered into a Cash Management  Advance (CMA) program
          with the Federal Home Loan Bank. This program is a source of overnight
          liquidity to address  day-to-day cash needs. The program has a term of
          up to 90 days and bears  interest at a variable rate equal to the FHLB
          cost of funds  (approximately 6.90% at December 31, 2000). At December
          31,  2000,  the Bank  could  borrow  up to  $20,000,000  under the CMA
          program and the amount would be  collateralized by $32,625,000 of FHLB
          investment  securities.  The  balance  owed at  December  31, 2000 was
          $17,040,000.  No amount  was due to the  Federal  Home Loan Bank as of
          December 31, 1999.

(7)  Financial Instruments:
     ---------------------
     The  Bank is a party to financial instruments with  off-balance-sheet  risk
          in the normal  course of business to meet the  financing  needs of its
          customers and to reduce its own exposure to  fluctuations  in interest
          rates.  These  financial  instruments  include  commitments  to extend
          credit and commercial letters of credit. Those instruments involve, to
          varying  degrees,  elements of credit and interest rate risk in excess
          of the amount  recognized  in the  consolidated  balance  sheets.  The
          contract or notional amounts of those  instruments  reflect the extent
          of  the  Bank's   involvement  in  particular   classes  of  financial
          instruments.

     The  Bank's exposure to credit loss in the event of  nonperformance  by the
          other party to the  financial  instrument  for  commitments  to extend
          credit  and  commercial  letters  of  credit  is  represented  by  the
          contractual  notional amount of those  instruments.  The Bank uses the
          same credit policies in making commitments and conditional obligations
          as it does for on-balance-sheet-instruments.

     Unless noted  otherwise,  the Bank  does not  require  collateral  or other
          security to support financial instruments with credit risk.

     Commitments to extend  credit are  agreements to lend to a customer as long
          as there is no violation of any condition established in the contract.
          Commitments generally have fixed expiration dates or other termination
          clauses  and  may  require  payment  of  a  fee.  Since  some  of  the
          commitments are expected to expire without being drawn upon, the total
          commitment   amounts  do  not   necessarily   represent   future  cash
          requirements.   The  Bank's   experience   has  been  that  most  loan
          commitments are drawn upon by customers.  The Bank has offered standby
          letters of credit on a limited  basis.  As of December 31,  2000,  the
          Bank has not been  requested  to advance  funds on any of the  standby
          letters of credit.


                                       37
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(7)  Financial Instruments: (Continued)
     ---------------------
     The  estimated  fair  values of  financial  instruments  were as follows at
          December 31, 2000:


                                                                 Estimated
                                                    Carrying        Fair
                                                     Amount        Value
                                                     ------        -----
Financial assets:
         Cash and due from banks                    $  2,227         2,227
         Interest-earning deposits in FHLB                50            50
         Federal funds sold                            1,530         1,530
         Securities available for sale                84,269        84,269
         Securities held to maturity                   7,796         7,930
         Loans receivable                            129,154       129,493
         Accrued interest receivable                   2,285         2,285
Financial liabilities:
         Deposits                                    165,604       167,737
         Advances from borrowers for
           taxes and insurance                           158           158
Advances from Federal Home Loan Bank                  17,040        17,040
Off-balance-sheet liabilities:
         Commitments to extend credit                                1,683
         Commercial letters of credit                                   --

     The  estimated  fair  values of  financial  instruments  were as follows at
          December 31, 1999:

                                                                   Estimated
                                                      Carrying        Fair
                                                       Amount        Value
                                                       ------        -----
Financial assets:
         Cash and due from banks                      $  4,537         4,537
         Interest-earning deposits in FHLB                 251           251
         Federal funds sold                              4,100         4,100
         Securities available for sale                  71,423        71,423
         Securities held to maturity                     9,958        10,078
         Loans receivable                              113,532       113,825
         Accrued interest receivable                     1,095         1,095
Financial liabilities:
         Deposits                                      160,905       160,803
         Advances from borrowers for
           taxes and insurance                             156           156
Off-balance-sheet liabilities:
         Commitments to extend credit                                  1,209
         Commercial letters of credit                                    382

                                       38

<PAGE>

                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(8)  Concentrations of Credit Risk:
     -----------------------------
     Most of the Bank's business  activity is with customers  located within the
          western  part of the  Commonwealth  of  Kentucky.  The majority of the
          loans are collateralized by a one-to-four  family residence.  The Bank
          requires collateral for all loans.

     The  distribution  of  commitments  to  extend  credit   approximates   the
          distribution  of  loans  outstanding.   The  contractual   amounts  of
          credit-related  financial  instruments  such as  commitments to extend
          credit and  commercial  letters  of credit  represent  the  amounts of
          potential accounting loss should the contract be fully drawn upon, the
          customer  default,  and the value of any  existing  collateral  become
          worthless.

     Cash on deposit with financial institutions exceeded the insurance coverage
          as of December 31,  1999.  There was no such excess as of December 31,
          2000.  The  carrying  amount  and  bank  balance  of such  items as of
          December 31, 1999 was as follows:

                                                                1999

                       Carrying amount                   $          5,795
                                                          ===============

                       Bank balance                      $          4,811
                       Insurance coverage                            (446)
                                                           --------------

                       Amount not insured                $          4,365
                                                          ===============

(9)  Employee Benefit Plans:
     ----------------------
     Pension Plan
     ------------
     The  Bank maintains a  contributory,  defined benefit pension plan covering
          substantially all of its employees who satisfy certain age and service
          requirements.  The  benefits  are  based on years of  service  and the
          employee's   average  earnings  which  are  computed  using  the  five
          consecutive  years prior to retirement that yield the highest average.
          The  Bank's  funding  policy is to  contribute  annually,  actuarially
          determined amounts to finance the plan benefits.

                                       39
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(9)  Employee Benefit Plans: (Continued)
     ----------------------
     Pension Plan (Continued)
     ------------
     The  following  table  sets  forth the plan's  funded  status  and  amounts
          recognized in the consolidated balance sheets at December 31:

                                                               2000       1999
                                                               ----       ----

Change in benefit obligation
         Benefit obligation at beginning of year             $ 2,383      2,489
         Service cost                                            101         81
         Interest costs                                          184        171
         Actuarial loss                                        1,106       (253)
         Benefits paid                                          (144)      (105)
                                                             -------    -------

         Benefit obligation at end of year                     3,630      2,383
                                                             -------    -------

Change in plan assets
         Fair value of plan assets at beginning of year        1,941      1,666
         Actual return on plan assets                             32        212
         Employers contributions                                 182        168
         Benefits paid                                          (144)      (105)
                                                             -------    -------

         Fair value of plan assets at end of year              2,011      1,941
                                                             -------    -------

Funded status                                                 (1,619)      (442)
Unrecognized net asset                                           (34)       (42)
Unrecognized prior service cost                                   65         84
Unrecognized net loss                                          1,487        268
                                                             -------    -------

         Accrued pension cost                                $  (101)      (132)
                                                             =======    =======

     Weighted average  assumptions used to develop the net periodic pension cost
          were:

                                                   2000       1999       1998
                                                  ------     ------     -----

 Discount rate                                     7.75%      7.75%     7.00%
 Expected long-term rate of return on assets       7.00%      7.00%     7.25%
 Rate of increase in compensation levels           4.50%      4.50%     4.50%

                                       40
<PAGE>

                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(9)  Employee Benefit Plans: (Continued)
     ----------------------
     Pension Plan (Continued)
     ------------
     The  components of net periodic  pension cost for the years ended  December
          31, were as follows

                                                       2000      1999      1998
                                                       ----      ----      ----

Service cost                                          $ 101        81        75
Interest cost on projected benefit obligation           184       171       152
Expected return on plan assets                         (147)     (125)     (112)
Amortization of transitional asset                       (7)       (7)       (7)
Amortization of prior service cost                       18        18        18
Amortization of net loss                                  3        36        33
                                                      -----     -----     -----
Net periodic pension cost                             $ 152       174       159
                                                      =====     =====     =====

     Employee Stock Ownership Plan
     -----------------------------
     The  Company had a noncontributory employee stock ownership plan (ESOP) for
          those  employees  who met the  eligibility  requirements  of the plan.
          Eligible  employees  were  those  who had  attained  the age of 21 and
          completed  one year of  service.  This plan was  terminated  effective
          December 31, 1999.

     The  ESOP trust  borrowed  approximately  $3,227,000 in 1998 through a loan
          from the Company and used the proceeds to purchase  322,690  shares of
          the common stock at a price of $10.00 per share. Shares purchased were
          held in a suspense  account for allocation  among the  participants as
          the loan was paid.  Contributions to the ESOP and shares released from
          the loan collateral  were in amounts  proportional to repayment of the
          ESOP loan.

     The  ESOP was funded by  contributions  made by the  Company or the Bank in
          cash  or  shares  of  common  stock  with  no  cost  to  participants.
          Contributions  to the  ESOP and  shares  released  from  the  suspense
          account were allocated among participants on the basis of their annual
          wages  subject to federal  income tax  withholding,  plus any  amounts
          withheld  under a plan  qualified  under Sections 125 or 401(k) of the
          Code and sponsored by the Company or the Bank.  Participants had to be
          employed at least 500 hours in a calendar  year in order to receive an
          allocation.  A  participant  became vested in his or her right to ESOP
          benefits  upon  his or her  completion  of  three  years  of  service.
          Dividends  paid  on  allocated  shares  were  expected  to be  paid to
          participants  or used  to  repay  the  ESOP  loan,  and  dividends  on
          unallocated  shares  were  expected to be used to repay the ESOP loan.
          With the  exception  of a special  dividend of $4.00 per share paid on
          December 17, 1999,  all dividends paid on ESOP shares in 1999 and 1998
          were applied to the ESOP loan.

     In   order to  terminate  the plan and to  repay  the ESOP  loan,  the ESOP
          surrendered  155,662  shares  valued at  approximately  $2,471,000  on
          December 31, 1999. This released all remaining shares from encumbrance
          for allocation to participants.

     At   December 31, 1999 and 1998, shares allocated,  and shares remaining in
          suspense were as follows:

                                       41
<PAGE>

                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(9)  Employee Benefit Plans: (Continued)
     ----------------------
     Employee Stock Ownership Plan (Continued)
     -----------------------------

                                                  1999                1998
                                                  ----                ----

         Number of Shares
                  Released and allocated                  167               29
                                                =============      ===========
                  Suspense                                 -               293
                                                =============      ===========
         Fair Value
                  Released and allocated      $         2,652              506
                                               ==============      ===========
                  Suspense                    $            -             5,041
                                               ==============      ===========

     The  expenses recorded by the Company during 1999 and 1998 were as follows:

                                                      1999              1998
                                                      ----              ----

Contributions                                  $            363              270
Dividends applied to ESOP debt                               97               42
Excess of fair value of shares released
  and allocated over ESOP's cost                          1,900              194
Special dividend paid December 17, 1999 on
  unallocated and uncommitted shares                      1,001               -
                                                 --------------      -----------

         Total ESOP compensation costs         $          3,361              506
                                                ===============      ===========

     The  Company's ESOP compensation costs exclude interest which is eliminated
          in consolidation.

     Management Recognition Plan
     ---------------------------
     On   February 24, 1999,  the Board of Directors of the Company  adopted the
          HopFed  Bancorp,  Inc.  Management  Recognition  Plan (MRP)  which was
          subsequently  approved  at the 1999  Annual  Meeting of  Stockholders.
          Under the MRP, up to 161,345  shares of common stock may be awarded to
          selected  directors and employees.  On the effective date the Board of
          Directors awarded 161,342 shares of common stock which were subject to
          automatic  plan share  awards as provided in the MRP  document.  Under
          applicable standards, the Company recognizes compensation expense over
          the expected  vesting period for the awards.  The MRP provides for the
          following  vesting  schedule:  33 1/3% at date of  awards;  33 1/3% on
          January 1, 2000 and 33 1/3% on January 1, 2001  (subject to  immediate
          vesting upon certain events,  including death or normal  retirement of
          recipient).  The  compensation  expense  of the MRP was  $549,000  and
          $2,678,000 in 2000 and 1999, respectively.

                                       42

<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998


(9)  Employee Benefit Plans: (Continued)
     ----------------------
     Stock Option Plan
     -----------------
     On   February 24, 1999,  the Board of Directors of the Company  adopted the
          HopFed  Bancorp,  Inc.  1999 Stock Option Plan (Option Plan) which was
          subsequently  approved  at the 1999  Annual  Meeting of  Stockholders.
          Under  the  Option  Plan,  the  Option  Committee  has   discretionary
          authority to grant stock options and stock appreciation rights to such
          employees,  directors and advisory  directors as the  committee  shall
          designate. The Option Plan reserves 403,362 shares of common stock for
          issuance  upon the exercise of options or stock  appreciation  rights.
          The Company will receive the exercise price for shares of common stock
          issued to Option Plan  participants upon the exercise of their option,
          and will receive no monetary  consideration upon the exercise of stock
          appreciation  rights.  The Board of Directors  has granted  options to
          purchase  403,360  shares of common  stock under the Option Plan at an
          exercise price of $20.75 per share, which was the fair market value on
          the date of the grant.  As a result of the  special  dividend of $4.00
          per  share  paid  in  December,  1999,  and in  accordance  with  plan
          provisions,  the number of options  and the  exercise  price have been
          adjusted to 480,475 and $17.42  respectively.  The options  granted to
          participants became vested and exercisable as follows:  50% on date of
          grant and 50% on January 1, 2000  (subject to  immediate  vesting upon
          certain events, including death or normal retirement of participant).

     On   May 31, 2000, the Board of Directors of the Company adopted the HopFed
          Bancorp,  Inc. 2000 Stock Option Plan (the "2000 Option Plan").  Under
          the 2000 Option Plan, the option committee has discretionary authority
          to grant  stock  options  to such  employees  as the  committee  shall
          designate. The 2000 Option Plan reserves 40,000 shares of common stock
          for issuance  upon the  exercise of options.  The Company will receive
          the  exercise  price for shares of common  stock issued to 2000 Option
          Plan  participants  upon the  exercise of their  option.  The Board of
          Directors  has  granted  options to purchase  40,000  shares of common
          stock under the 2000  Option  Plan at an exercise  price of $10.00 per
          share,  which was the fair market value on the date of the grant.  The
          options  granted to  participants  become  vested and  exercisable  as
          follows: 25% on May 31, 2001, 25% on May 31, 2002, 25% on May 31, 2003
          and 25% on May 31, 2004  (subject to  immediate  vesting  upon certain
          events, including death or normal retirement of participant).


                                       43
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
             (TABLE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(9)  Employee Benefit Plans: (Continued)
     ----------------------
     Stock Option Plan
     -----------------
     The  following  summary  represents  the  activity  under the stock  option
          plans:

                                                                     Exercise
                                            Number of                Price Per
                                             Shares                    Share
                                             ------                    -----

Options outstanding, January 1, 1999              --                      --

Granted                                      403,360                  $   20.75
Adjustment due to special dividend            77,115                      (3.33)
Exercised                                         --
Forfeited                                         --
                                            --------                  ---------

Options outstanding, December 31, 1999       480,475                  $   17.42
                                                                      =========

Granted                                       40,000                  $   10.00
                                                                      =========
Exercised                                         --
Forfeited                                         --
                                             -------

Options outstanding, December 31, 2001       520,475               $10.00-17.42
                                             =======

Weighted average exercise price of options
  outstanding                                                         $   16.85
                                                                      =========

     The  weighted  average fair value of options  granted  during  December 31,
          2000 and 1999 was $8.13  per  share and $8.51 per share  respectively.
          The weighted average  remaining  contractual  life, in years, was 7.35
          and 9.15 at December 31, 2000 and 1999, respectively.

     The  Company has chosen to account for stock-based  compensation  using the
          intrinsic  value method  prescribed  in  Accounting  Principles  Board
          Opinion 25. Since each option was granted at a price equal to the fair
          market value of one share of the Company's common stock on the date of
          the grant, no  compensation  cost has been  recognized.  The following
          table  compares  reported  net  income and  earnings  per share to net
          income and earnings per share on a pro forma basis  assuming  that the
          Company  accounted  for  stock-based   compensation  under  SFAS  123,
          Accounting for Stock-Based Compensation.  The effects of applying SFAS
          123 in this pro forma disclosure are not indicative of future amounts.

                                                    2000             1999
                                                    ----             ----
           Net income
                    As reported              $      2,666            2,475
                    Pro forma                       2,652              211
           Earnings per share
                    As reported
                      Basic                  $       0.67             0.65
                      Diluted                        0.67             0.65
                    Pro forma
                      Basic                  $       0.67             0.06
                      Diluted                        0.67             0.06

                                       44
<PAGE>

                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                (TABLE AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)


(9)  Employee Benefit Plans: (Continued)
     ----------------------
     The  fair  value of each  option  grant is  estimated  on the date of grant
          using the  Black-Scholes  option  pricing  model  using the  following
          weighted  average  assumptions:  risk free  interest rate of 6.28% and
          6.70%,  volatility of 35.00% and 37.06%,  expected  dividend  yield of
          3.96%  and 1.50% and  expected  life of six years for the years  ended
          December 31, 2000 and 1999, respectively.

(10) Income Taxes:
     ------------
     The  provision for income taxes for the years ended December 31, 2000, 1999
          and 1998 consisted of the following:

                                2000          1999            1998
                                ----          ----            ----
           Current
                  Federal   $     1,282          3,247          1,421
                  State              -              10             37
                             ----------    -----------    -----------
                                  1,282          3,257          1,458
           Deferred                  91           (491)           183
                             ----------    -----------    -----------
                            $     1,373          2,766          1,641
                             ==========    ===========    ===========

     Total income tax expense for the years ended December  31,  2000,  1999 and
          1998 differed from the amounts  computed by applying the U.S.  federal
          income  tax  rate of 34  percent  to  income  before  income  taxes as
          follows:

                                               2000        1999          1998
                                               ----        ----          ----
Expected federal income tax
  expense at statutory tax rate              $1,373        1,782         1,561
State income taxes                               --            7            25
Dividends received                               --           (9)          (14)
Fair market value difference
  of allocated ESOP shares                       --          986            72
Other                                            --           --            (3)
                                             ------       ------        ------

Total federal income tax expense             $1,373        2,766         1,641
                                             ======       ======        ======

Effective rate                                 34.0%        52.8%         35.7%
                                             ======       ======        ======


                                       45
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(10) Income Taxes: (Continued)
     ------------
     The  components  of  deferred  taxes as of  December  31, 2000 and 1999 are
          summarized as follows:

                                                        2000           1999
                                                        ----           ----
       Deferred tax liabilities:
                FHLB stock dividends                 $  (454)          (403)
                Post 1987 bad debt reserves             (149)          (199)
                Unrealized appreciation
                  on securities available for sale       (33)            -
                                                      ------         ------

                                                        (636)          (602)
                                                      ------         ------
       Deferred tax assets:
                Bad debt reserves                        241             94
                Pension cost                             159             45
                Accrued interest expense                  26             26
                Accrued professional fees                 18             17
                Unrealized depreciation on
                  securities available for sale           -             463
                Provision for MRP                        236            472
                                                      ------         ------

                                                         680          1,117
                                                      ------         ------

       Net deferred tax asset                        $    44            515
                                                      ======         ======

     Thrift institutions, in determining taxable income, were previously allowed
          special bad debt deductions based on specified  experience formulae or
          on a percentage of taxable  income before such  deductions.  The Small
          Business Protection Act of 1996, among other things,  repealed the tax
          bad debt  reserve  method for  thrifts  effective  for  taxable  years
          beginning after December 31, 1995. As a result, thrifts must recapture
          into  taxable  income  the  amount  of  their  post-1987  tax bad debt
          reserves over a six-year  period  beginning after 1995. This recapture
          could be  deferred  for up to two  years  if the  thrift  satisfied  a
          residential  loan  portfolio  test,  and the Bank  qualified  for that
          deferral.  For each of the years ended December 31, 2000 and 1999, the
          Bank recaptured approximately $146,000 of the $878,000 total recapture
          of tax bad debt reserves into taxable income. A similar amount will be
          recaptured in each of the years 2001 through 2003.  The recapture does
          not have any effect on the Bank's  financial  statements  because  the
          related tax expense has already been accrued.

     Thrifts such as the Bank  may now  only  use the same tax bad debt  reserve
          method that is allowed for  commercial  banks.  Accordingly,  a thrift
          with  assets of $500  million or less may only add to its tax bad debt
          reserves based upon its moving six-year  average  experience of actual
          loan  losses  (i.e.,  the  experience  method).  A thrift  with assets
          greater than $500 million can no longer use the reserve method and may
          only deduct loan losses as they  actually  arise  (i.e.,  the specific
          charge-off  method).  The Bank  expects to continue to use the reserve
          method.


                                       46
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998


(10) Income Taxes: (Continued)
     ------------
     The  portion  of a thrift's  tax bad debt  reserve  that is not  recaptured
          (generally  pre-1988  bad debt  reserves)  under  the 1996 law is only
          subject to  recapture  at a later date  under  certain  circumstances.
          These include  stock  repurchase  redemptions  by the thrift or if the
          thrift converts to a type of institution (such as a credit union) that
          is not  considered  a bank  for  tax  purposes.  However,  no  further
          recapture  would be required if the thrift  converted  to a commercial
          bank charter or was acquired by a bank.  The Bank does not  anticipate
          engaging  in any  transactions  at this time that  would  require  the
          recapture of its remaining tax bad debt reserves.  Therefore, retained
          earnings  at  December  31,  2000  and  1999  includes   approximately
          $4,027,000  which  represents  such bad debt  deductions  for which no
          deferred income taxes have been provided.

(11) Related Parties
     ---------------
     The  Bank has  entered  into  transactions  with its  directors  and  their
          affiliates  (related  parties).  The aggregate amount of loans to such
          related  parties at December  31, 2000 and 1999,  was  $2,851,000  and
          $1,718,000,  respectively.  During  2000,  new  loans to such  related
          parties amounted to $2,502,000 and repayments  amounted to $1,369,000.
          During 1999, new loans to such related parties amounted to $12,000 and
          repayments amounted to $31,000.

(12) Commitments and Contingencies
     -----------------------------
     In   the  ordinary  course of  business,  the Bank has various  outstanding
          commitments and contingent  liabilities  that are not reflected in the
          accompanying consolidated financial statements.

     The  Bank  had open  loan  commitments  at  December  31,  2000 and 1999 of
          approximately  $1,683,000  and  $1,209,000,   respectively.  Of  these
          amounts,  approximately  $108,000  and $72,000 as of December 31, 2000
          and 1999, respectively,  were for fixed rate loans. The interest rates
          for the fixed  rate loan  commitments  ranged  from 8.50% to 9.75% and
          7.875% to 9.00% for December 31, 2000 and 1999,  respectively.  Unused
          lines of credit were approximately $1,757,000 as of December 31, 2000.
          There were no unused lines of credit as of December 31, 1999.

     The  Company and the Bank have agreed to enter into  Employment  Agreements
          with certain officers,  which provide certain benefits in the event of
          their termination  following a change in control of the Company or the
          Bank. The employment  agreements  provide for an initial term of three
          years. On each anniversary of the commencement  date of the Employment
          Agreements,  the  term  of  each  agreement  may  be  extended  for an
          additional  year at the  discretion  of the  Board.  In the event of a
          change in  control  of the  Company  or the Bank,  as  defined  in the
          agreement, the officers shall be paid an amount equal to two times the
          officers base salary as defined in the employment agreement.

     In   addition,  the Bank is a  defendant  in legal  proceedings  arising in
          connection  with its  business.  It is the best judgment of management
          that neither the  financial  position nor results of operations of the
          Bank will be  materially  affected by the final outcome of these legal
          proceedings.

                                       47
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998


(13) Regulatory Matters
     ------------------
     The  Financial  Institutions  Reform  Recovery and  Enforcement Act of 1989
          (FIRREA),   which  instituted  major  reforms  in  the  operation  and
          supervision of the savings and loan industry,  contains provisions for
          capital  standards.  These standards  require savings  institutions to
          have  a  minimum  regulatory  tangible  capital  (as  defined  in  the
          regulation  ) equal to 1.50% of  adjusted  total  assets and a minimum
          4.00%  core   capital  (as   defined)  of   adjusted   total   assets.
          Additionally,  savings  institutions  are  required  to  meet a  total
          risk-based capital requirement of 8.00%.

     The  Bank  is  also  subject  to  the  provisions  of the  Federal  Deposit
          Insurance  Corporation  Improvement  Act  of  1991  (FDICIA).   FDICIA
          includes  significant changes to the legal and regulatory  environment
          for insured depository institutions, including reductions in insurance
          coverage for certain kinds of deposits,  increased  supervision by the
          Federal  regulatory  agencies,  increased  reporting  requirements for
          insured  institutions,  and new  regulations  concerning  reporting on
          internal controls, accounting and operations.

     FDICIA's prompt  corrective  action  regulations  define  specific  capital
          categories  based on an  institution's  capital  ratios.  The  capital
          categories,  in declining order, are "well  capitalized",  "adequately
          capitalized",  "undercapitalized",  "significantly  undercapitalized",
          and  "critically   undercapitalized."   Institutions   categorized  as
          "undercapitalized"  or worse  are  subject  to  certain  restrictions,
          including  the  requirement  to file a  capital  plan  with  OTS,  and
          increased   supervisory   monitoring,   among  other   things.   Other
          restrictions may be imposed on the institution either by the OTS or by
          the FDIC,  including  requirements to raise additional  capital,  sell
          assets, or sell the entire institution.

     The  following  chart  delineates  the  categories as defined in the FDICIA
          legislation:
<TABLE>
<CAPTION>
                                                                Tied I Risk-        Total Risk-
                                            Core Capital        Based Capital      Based Capital
                                            ------------        -------------      -------------

       <S>                                 <C>                 <C>                <C>
       "Well capitalized"                       5.0%                6.0%               10.0%
       "Adequately capitalized"                 4.0%                4.0%               8.0%
       "Undercapitalized"                  Less than 4.0%      Less than 4.0%     Less than 8.0%
       "Significantly undercapitalized"    Less than 3.0%      Less than 3.0%     Less than 6.0%
</TABLE>
                                       48

<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                (TABLE AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)


(13) Regulatory Matters: (Continued)
     ------------------
     At   December  31,  2000,  the Bank's core,  tier I  risk-based,  and total
          risk-based   capital   ratios  were   19.49%,   47.30%,   and  48.05%,
          respectively.  The following is a calculation of the Bank's regulatory
          capital at December 31, 2000:
<TABLE>
<CAPTION>
                                                             Tier I                                           Total
                                                             Risk-                                            Risk-
                                                GAAP         Based            Tangible        Core            Based
                                                Capital      Capital          Capital         Capital         Capital
                                                -------      -------          -------         -------         -------
<S>                                            <C>             <C>             <C>             <C>            <C>
GAAP capital, as reported                      $44,657         44,657          44,657          44,657         44,657
                                               =======
Unrealized gains on certain
            available for sale securities                          --             (63)            (63)           (63)

General valuation allowance                                        --              --              --            708
                                                              -------         -------         -------        -------

Regulatory capital                                            $44,657          44,594          44,594         45,302
                                                              =======

Minimum capital requirement %                                                    1.50%           4.00%          8.00%

Minimum capital requirement $                                                   3,433           9,152          7,542
                                                                              -------         -------        -------

Regulatory capital excess                                                     $41,161          35,442         37,760
                                                                              =======         =======        =======
</TABLE>

     At   December  31,  1999,  the Bank's core,  tier I  risk-based,  and total
          risk-based   capital   ratios  were   21.60%,   58.24%,   and  58.60%,
          respectively.  The following is a calculation of the Bank's regulatory
          capital at December 31, 1999:
<TABLE>
<CAPTION>
                                                                Tier I                                       Total
                                                                Risk-                                        Risk-
                                                GAAP            Based          Tangible          Core        Based
                                               Capital          Capital        Capital          Capital      Capital
                                               -------          -------        -------          -------      -------
<S>                                             <C>              <C>             <C>             <C>            <C>
GAAP capital, as reported                       $44,072          44,072          44,072          44,072         44,072
                                                =======

Unrealized losses on certain
            available for sale securities                            --             899             899            899

General valuation allowance                                          --              --              --            278
                                                                -------         -------         -------        -------

Regulatory capital                                              $44,072          44,971          44,971         45,249
                                                                =======

Minimum capital requirement %                                                      1.50%           4.00%          8.00%

Minimum capital requirement $                                                     3,123           8,327          6,177
                                                                                -------         -------        -------

Regulatory capital excess                                                       $41,848          36,644         39,072
                                                                                =======         =======        =======
</TABLE>
                                       49
<PAGE>

                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998


(13) Regulatory Matters: (Continued)
     ------------------
     The  OTS risk-based  capital regulation also includes an interest rate risk
          (IRR) component that requires savings  institutions  with greater than
          normal IRR, when  determining  compliance with the risk-based  capital
          requirements,  to  maintain  additional  total  capital.  The OTS has,
          however,  indefinitely  deferred  enforcement of its IRR requirements.
          Under the regulation, a savings institution's IRR is measured in terms
          of the sensitivity of its "net portfolio value" to changes in interest
          rates. A savings institution is considered to have a "normal" level of
          IRR  exposure  if the  decline  in its net  portfolio  value  after an
          immediate  200 basis point  increase  or  decrease in market  interest
          rates is less than 2% of the current  estimated  economic value of its
          assets.   If  the  OTS   determines  in  the  future  to  enforce  the
          regulation's IRR  requirements,  a savings  institution with a greater
          than normal IRR would be required  to deduct from total  capital,  for
          purposes of calculating its risk-based capital requirement,  an amount
          equal to one half the difference  between the  institution's  measured
          IRR and 2%,  multiplied  by the  economic  value of the  institution's
          total assets.  Management does not believe that this regulation,  when
          enforced, will have a material impact on the Bank.

(14) Stockholders' Equity
     --------------------
     The  Company's   sources  of  income  and  funds  for   dividends   to  its
          stockholders  are earnings on its  investments  and dividends from the
          Bank. The Bank's primary  regulator,  the Office of Thrift Supervision
          (OTS), has regulations that impose certain  restrictions on payment of
          dividends to the  Company.  Current  regulations  of the OTS allow the
          Bank (based  upon its current  capital  level and  supervisory  status
          assigned  by the OTS) to pay a dividend of up to 100% of net income to
          date  during  the  calendar  year  plus the  retained  income  for the
          preceding two years.

     Supervisory  approval is not required,  but 30 days prior notice to the OTS
          is required.  Any capital  distribution in excess of this amount would
          require  supervisory  approval.   Capital  distributions  are  further
          restricted  should  the  Bank's  capital  level  fall  below the fully
          phased-in capital requirements of the OTS. In no case will the Bank be
          allowed  to make a  capital  distribution  reducing  equity  below the
          required balance of the liquidation  account.  The Bank paid dividends
          to the Company totaling  $3,880,000 during the year ended December 31,
          2000.  The Bank did not declare or pay dividends to the Company during
          the year ended  December  31, 1999.  On December 1, 1999,  the Company
          paid a cash distribution of $4.00 per share to its stockholders in the
          form of a return of capital.

     OTS  regulations  also  place  restrictions  after  the  conversion  on the
          Company with respect to  repurchases  of its common stock.  With prior
          notice  to  the  OTS,  the  Company  is  allowed  to  repurchase   its
          outstanding  shares.  During 2000, the Company  requested and received
          regulatory  approval  to  acquire  200,000  shares of its  outstanding
          common  stock.  As of  December  31,  2000,  149,354  shares  had been
          repurchased at an average price of $11.00 per share.

                                       50
<PAGE>

                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                           (TABLE AMOUNT IN THOUSANDS)


(15) Condensed Parent Company Only Financial Statements
     --------------------------------------------------
     The  following  condensed  balance  sheets as of December 31, 2000 and 1999
          and condensed  statements of income and cash flows for the years ended
          December 31, 2000,  1999 and 1998 of the parent company only should be
          read in conjunction with the consolidated financial statements and the
          notes thereto. The Company was inactive from its inception through the
          conversion on February 6, 1998.

     Consolidated Balance Sheets:

                                                           2000           1999
                                                           ----           ----
Assets:
         Cash and due from banks                         $     30           430
         Federal funds sold                                 1,130           200
         Investment in subsidiary                          23,771        23,187
                                                         --------      --------

                   Total assets                          $ 24,931        23,817
                                                         ========      ========

Liabilities and equity
  Liabilities:
         Income taxes payable                            $     --            49
         Accrued expenses                                      13            --
         Dividends payable                                    441           307
                                                         --------      --------

                   Total liabilities                          454           356
                                                         --------      --------

Equity:
         Common stock                                          40            39
         Additional paid in capital                        20,956        19,943
         Retained earnings                                  5,283         4,378
         Treasury stock                                    (1,643)           --
         Accumulated other comprehensive loss                (159)         (899)
                                                         --------      --------

                   Total equity                            24,477        23,461
                                                         --------      --------

                   Total liabilities and equity          $ 24,931        23,817
                                                         ========      ========


                                       51
<PAGE>

                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(15) Condensed Parent Company Only Financial Statements (Continued)
     --------------------------------------------------

     Condensed Income Statements:

                                              2000       1999      1998
                                              ----       ----      ----
Interest income
         Dividend income                    $ 3,880         --        --
         Loans receivable                        --        230       246
         Securities available for sale           --        620       503
         Time deposits                           34        193       320
                                            -------    -------   -------

         Total interest income                3,914      1,043     1,069
                                            -------    -------   -------

Non-interest expenses
         Salaries and benefits                   --        179        42
         Other                                  160        159        46
                                            -------    -------   -------

         Total non-interest expenses            160        338        88
                                            -------    -------   -------

Income before income taxes and equity
  in undistributed earnings of Bank           3,754        705       981

Income tax expense (benefit)                    (42)       274       364
                                            -------    -------   -------

Net income before equity in undistributed
  earnings of Bank                            3,796        431       617
Equity in undistributed earnings of Bank     (1,130)     2,044     2,334
                                            -------    -------   -------

Net income                                  $ 2,666      2,475     2,951
                                            =======    =======   =======

                                       52
<PAGE>

                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
                          (TABLE AMOUNTS IN THOUSANDS)


(15) Condensed Parent Company Only Financial Statements (Continued)
     --------------------------------------------------

     Condensed Statement of Cash Flows:
<TABLE>
<CAPTION>
                                                                       2000        1999       1998
                                                                       ----        ----       ----
Cash flows from operating activities:
<S>                                                                   <C>          <C>        <C>
         Net income                                                   $ 2,666      2,475      2,951
         Adjustments to reconcile net income to
           net cash provided by operating activities:
         Equity in undistributed earnings of Bank                       1,130     (2,044)    (2,334)
         Accretion of investment security discounts                        --       (403)       (11)
         Earned ESOP shares                                                --         82         17
         (Increase) decrease in:
           Accrued interest receivable                                     --        221       (191)
           Other assets                                                    --         15        (15)
         Increase (decrease) in:
           Current income taxes payable                                   (50)        48         --
           Accrued expenses                                                13         --         --
                                                                      -------    -------    -------

                   Net cash provided by operating activities            3,759        394        417
                                                                      -------    -------    -------

Cash flows for investing activities:
         Investment in subsidiary                                          --         --    (19,708)
         Proceeds from sale of available for sale securities               --     32,899         --
         Purchase of available for sale securities                         --    (16,500)   (15,981)
         Net (increase) decrease in federal funds sold                   (930)       285       (485)
         Repayment of note receivable-ESOP                                 --        755         --
                                                                      -------    -------    -------

                   Net cash provided (used) by investing activities      (930)    17,439    (36,174)
                                                                      -------    -------    -------

 Cash flows from financing activities:
         Issuance of common stock                                          --         --     36,148
         Recovery of proceeds from issuance
           of common stock                                                 40         --         --
         Repurchase of common stock                                    (1,643)        --         --
         Dividends paid                                                (1,626)   (17,516)      (278)
                                                                      -------    -------    -------

                   Net cash provided (used) by financing
                     activities                                        (3,229)   (17,516)    35,870
                                                                      -------    -------    -------
                   Net increase (decrease) in cash                       (400)       317        113

 Cash at beginning of year                                                430        113         --
                                                                      -------    -------    -------

 Cash at end of year                                                  $    30        430        113
                                                                      =======    =======    =======
</TABLE>
                                       53

<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
             (TABLE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


(16) Quarterly Results of Operations: (Unaudited)
     -------------------------------
     Summarized  unaudited  quarterly  operating  results  for the  years  ended
          December 31, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
                                                     First            Second            Third            Fourth
                                                     Quarter          Quarter           Quarter          Quarter
                                                     -------          -------           -------          -------
       December 31, 2000:
<S>                                                 <C>                <C>               <C>               <C>
       Interest income                              $    3,901             3,981             4,264             4,197
       Interest expense                                  2,078             2,222             2,359             2,453
                                                    ----------        ----------        ----------        ----------

       Net interest income                               1,823             1,759             1,905             1,744
       Provision for loan losses                            10                10               311               100
                                                    ----------        ----------        ----------        ----------

       Net interest income after
                provision for loan losses                1,813             1,749             1,594             1,644

       Noninterest income                                  127               139               127               116
       Noninterest expense                                 838               894               767               771
                                                    ----------        ----------        ----------        ----------

       Income before income taxes                        1,102               994               954               989
       Income taxes                                        375               355               302               341
                                                    ----------        ----------        ----------        ----------

       Net income                                   $      727               639               652               648
                                                    ==========        ==========        ==========        ==========

       Basic earnings per share                     $     0.18              0.16              0.16              0.17
                                                    ==========        ==========        ==========        ==========

       Weighted average shares
                outstanding                          3,993,592         3,999,807         4,004,138         3,921,439
                                                    ==========        ==========        ==========        ==========

December 31, 1999:

       Interest income                              $    3,500             3,505             3,495             3,705
       Interest expense                                  1,773             1,763             1,762             1,780
                                                    ----------        ----------        ----------        ----------

       Net interest income                               1,727             1,742             1,733             1,925
       Provision for loan losses                             5                 5                 5                 6
                                                    ----------        ----------        ----------        ----------

       Net interest income after
         provision for loan losses                       1,722             1,737             1,728             1,919
</TABLE>
                                       54
<PAGE>
                       HOPFED BANCORP, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2000, 1999 AND 1998
             (TABLE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


(16) Quarterly Results of Operations: (Unaudited) (Continued)
     -------------------------------
<TABLE>
<CAPTION>
                                  First       Second         Third        Fourth
                                  Quarter     Quarter       Quarter       Quarter
                                  -------     -------       -------       -------
<S>                            <C>            <C>          <C>           <C>
Noninterest income             $        112         136          6,660          120
Noninterest expense                     880       2,662          1,437        3,914
                                 ----------  ----------     ----------   ----------

Income before income taxes              954        (789)         6,951       (1,875)
Income taxes                            362        (212)         2,404          212
                                 ----------  ----------     ----------   ----------

Net income                     $        592        (577)         4,547       (2,087)
                                 ==========  ==========     ==========   ==========

Basic earnings per share       $       0.16       (0.15)          1.19        (0.55)
                                 ==========  ==========     ==========   ==========

Weighted average shares
         outstanding              3,740,358   3,779,950      3,811,715    3,794,545
                                 ==========  ==========     ==========   ==========
</TABLE>

(17) Comprehensive Income:
     --------------------
     SFAS 130,  Reporting  Comprehensive  Income,  was adopted by the Company on
          January  1,  1998.  SFAS  130  established   standards  for  reporting
          comprehensive  income.  Comprehensive  income  includes net income and
          other  comprehensive  net income which is defined as non-owner related
          transactions in equity.  The following table sets forth the amounts of
          other  comprehensive  income included in equity along with the related
          tax effect for the years ended December 31, 2000, 1999 and 1998:
<TABLE>
<CAPTION>
                                                        Pre-Tax       (Expense)    Net of Tax
                                                        Amount         Benefit       Amount
                                                        ------         -------       ------
  December 31, 2000:
<S>                                                   <C>                    <C>        <C>
         Minimum pension liability adjustment         $      (336)           114        (222)
         Unrealized holding gains for the period            1,458           (496)        962
                                                       ----------      ---------    --------
                                                      $     1,122           (382)        740
                                                       ==========      =========    ========


  December 31, 1999:

         Unrealized holding losses for the period     $    (3,165)         1,076      (2,089)
         Reclassification adjustment for gains
           included in net income                          (6,524)         2,218      (4,306)
                                                       ----------      ---------      ------
                                                      $    (9,689)         3,294      (6,395)
                                                       ==========      =========    ========

  December 31, 1998:

         Unrealized holding gains for the period      $     3,292         (1,119)      2,173
                                                       ----------      ---------    --------
                                                      $     3,292         (1,119)      2,173
                                                       ==========      =========    ========
</TABLE>
                                       55
<PAGE>
                              CORPORATE INFORMATION
--------------------------------------------------------------------------------

                        DIRECTORS AND EXECUTIVE OFFICERS

                    WD KELLEY                           CLIFTON H. COCHRAN
             Chairman of the Board                         Retired
                    Retired

                 JOHN E. PECK                         HARRY J. DEMPSEY, MD
         President and Chief Executive                  Anesthesiologist
      Officer of the Company and the Bank

                 PEGGY R. NOEL                           WALTON G. EZELL
    Vice President, Chief Financial Officer and              Farmer
    Treasurer of the Company and Executive
     Vice President, Chief Financial Officer and         KERRY B. HARVEY
           Chief Operations Officer of the Bank             Attorney
                                                     Owen, Harvey and Carter

               BOYD M. CLARK                              GILBERT E. LEE
      Vice President and Secretary of the        Co-owner, Reliable Finance Inc.
    Company and Senior Vice President - Loan
        Administration of the Bank

--------------------------------------------------------------------------------

                                   MAIN OFFICE

                          2700 Fort Campbell Boulevard
                      Hopkinsville, KY 42240 (270/885-1171)

                                 BRANCH OFFICES

    Downtown Branch Office                            Murray Branch Office
   605 South Virginia Street                          7th and Main Streets
Hopkinsville, KY 42240 (270/885-1171)            Murray, KY 42071 (270/753-7921)

       Cadiz Branch Office                             Elkton Branch Office
         352 Main Street                                 West Main Street
 Cadiz, KY 42211 (270/522-6638)                 Elkton, KY 42220 (270/265-5628)

                              Benton Branch Office
                                 59 Main Street
                         Benton, KY 42025 (270/527-4353)

--------------------------------------------------------------------------------

                               GENERAL INFORMATION

<TABLE>
<CAPTION>
<S>                                 <C>                                       <C>
INDEPENDENT ACCOUNTANTS             ANNUAL MEETING                            ANNUAL REPORT ON FORM 10-K
Rayburn, Betts & Bates, P.C.        The 2001 Annual Meeting of Stockholders   A COPY OF THE COMPANY'S 2000 ANNUAL
3310 West End Avenue                will be held on May 15, 2001 at 3:00      REPORT ON FORM 10-K WILL BE FURNISHED
Nashville, Tennessee 37203          p.m. at Hopkinsville Federal Savings      WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
                                    Bank, 2700 Fort Campbell Boulevard,       RECORD DATE FOR THE 2001 ANNUAL MEETING
                                    Hopkinsville, KY                          UPON WRITTEN REQUEST TO THE SECRETARY,
                                                                              HOPFED BANCORP, INC., 2700  FORT
GENERAL COUNSEL                     TRANSFER AGENT                            CAMPBELL BOULEVARD, HOPKINSVILLE, KY
Deatherage, Myers, Self & Lackey    Registrar and Transfer Company            42240
701 South Main Street               10 Commerce Drive
Hopkinsville, KY 42241              Cranford, NJ  07016

</TABLE>

<PAGE>
                          INDEPENDENT AUDITOR'S REPORT



To the Board of Directors and Stockholders of
Hopfed Bancorp, Inc.


We have audited the accompanying  consolidated  balance sheet of HopFed Bancorp,
Inc. and  subsidiary  (the  "Company") as of December 31, 1999,  and the related
consolidated  statements  of income,  comprehensive  income  (loss),  changes in
stockholders'  equity and cash flows for the years ended  December  31, 1999 and
1998.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
of the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of the Company as of
December 31, 1999 and the results of its  operations  and its cash flows for the
years ended  December 31, 1999 and 1998 in conformity  with  generally  accepted
accounting principles of the United States of America.


/s/ York, Neel & Co., Hopkinsville, LLP


Hopkinsville, Kentucky
February 4, 2000