<PAGE>


                                                                      EXHIBIT 13
                  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 Consolidated Financial Statements and accompanying
Notes appearing elsewhere in this Report.

FINANCIAL CONDITION AND
 OTHER DATA

<TABLE>
<CAPTION>
                                                            At December 31,
                                     --------------------------------------------------------------
                                        2002         2001         2000         1999         1998
                                     ----------   ----------   ----------   ----------   ----------
Total amount of:..................                       (Dollars in thousands)
<S>                                  <C>          <C>          <C>          <C>          <C>

   Assets.........................   $  427,502   $  285,639   $  229,958   $  207,906   $  220,032
   Loans receivable, net..........      292,095      170,016      129,154      113,532      108,807
   Loans held for sale............          ---          928          ---          ---          ---
   Cash and due from banks........        9,288        3,941        2,227        4,537        1,905
   Time deposits and
    interest-bearing deposits
    in FHLB.......................          905           39           50          251          214

   Federal funds sold.............        3,840          690        1,530        4,100        9,685
   Securities available for sale..      103,147      100,519       84,269       71,423       68,139
   Securities held to maturity:
     FHLB securities..............           --           --           --           --       13,998
     Mortgage-backed securities...        2,932        4,462        7,796        9,958       13,356
   Deposits.......................      353,655      200,316      165,604      160,905      154,816
   FHLB advances..................       23,623       38,747       17,040         --             --
   Total Stockholder's equity.....       46,878       43,589       45,362       44,344       61,134

---------------------------------------------------------------------------------------------------
Number of:
   Real estate loans
    outstanding ..................        3,216        2,248        2,075        2,143        2,150
   Deposit accounts ..............       36,868       18,178       18,778       18,667       19,251
   Offices open ..................            8            6            5            5            5
</TABLE>

<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                     --------------------------------------------------------------
Operating Data
                                        2002         2001         2000         1999         1998
                                     ----------   ----------   ----------   ----------   ----------
                                                         (Dollars In thousands)
<S>                                  <C>          <C>          <C>          <C>          <C>
Interest income...................   $   20,042   $   17,562   $   16,343   $   14,205   $   15,052
Interest expense..................        9,420        9,752        9,112        7,078        8,004
                                     ----------   ----------   ----------   ----------   ----------
Net interest income before
 provision for loan losses.. .....       10,622        7,810        7,231        7,127        7,048
Provision for loan losses ........          795          222          431           21           21
                                     ----------   ----------   ----------   ----------   ----------
Net interest income...............        9,827        7,588        6,800        7,106        7,027
Non-interest income...............        2,312          717          509        7,028          547
Non-interest expense..............        5,199        5,493        3,270        8,893        2,982
                                     ----------   ----------   ----------   ----------   ----------
Income before income taxes........        6,940        2,812        4,039        5,241        4,592
Provision for income taxes........        2,346          973        1,373        2,766        1,641
                                     ----------   ----------   ----------   ----------   ----------
Net income........................   $    4,594   $    1,839   $    2,666   $    2,475   $    2,951
                                     ==========   ==========   ==========   ==========   ==========
</TABLE>

                                        1

<PAGE>

SELECTED QUARTERLY INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                                        First       Second        Third       Fourth
                                                       Quarter      Quarter      Quarter      Quarter
                                                     ----------   ----------   ----------    ----------
                                                                  (Dollars In thousands)
<S>                                                  <C>          <C>          <C>           <C>
YEAR ENDED DECEMBER 31, 2002:
    Interest income...............................   $    4,587   $    4,679   $    4,950    $    5,826
    Net interest income after provision for
     losses on loans..............................        2,448        2,588        2,368         2,423
    Noninterest income............................          436          402          677           797
    Noninterest expense...........................        1,136        1,141        1,144         1,778
    Net income....................................        1,133        1,225        1,269           967

YEAR ENDED DECEMBER 31, 2001:
    Interest income...............................   $    4,302   $    4,380   $    4,445    $    4,435
    Net interest income after provision for
     losses on loans..............................        1,882        1,865        1,948         1,893
    Noninterest income............................           98          180          279           160
    Noninterest expense...........................          934        1,017        2,792           750
    Net income (loss).............................          669          661         (394)          903
</TABLE>

                                        2

<PAGE>

KEY OPERATING RATIOS

<TABLE>
<CAPTION>
                                                                         At or for the Year Ended December 31,
                                                                         --------------------------------------

                                                                             2002          2001          2000
                                                                         ----------     ---------     ---------
<S>                                                                          <C>           <C>           <C>
PERFORMANCE RATIOS
  Return on average assets (net income divided by average
   total assets) .....................................................         1.37%         0.72%         1.18%
  Return on average equity (net income divided by
   average total equity) .............................................         9.99%         4.26%         5.92%
  Interest rate spread (combined weighted average interest
   rate earned less combined weighted average interest
   rate cost) ........................................................         2.81%         2.29%         2.28%
  Ratio of average interest-earning assets to average
   interest-bearing liabilities ......................................       116.52%       121.63%       124.25%
  Ratio of non-interest expense to average total assets ..............         1.55%         2.15%         1.44%
  Ratio of net interest income after provision
   for loan losses to non-interest expense ...........................       189.02%       138.14%       207.95%
  Efficiency ratio  (noninterest  expense divided by sum of net
   interest income plus noninterest income) ..........................        40.20%        66.14%        44.74%

ASSET QUALITY RATIOS
  Nonperforming assets to total assets at end of period ..............         0.19%         0.19%          .19%
  Nonperforming loans to total loans at end of period ................         0.29%         0.32%          .34%
  Allowance for loan losses to total loans at end of period ..........         0.50%         0.54%          .55%
  Allowance for loan losses to nonperforming loans at
   end of period .....................................................       174.67%       167.21%       163.13%
  Provision for loan losses to total loans receivable, net ...........         0.27%          .13%          .33%
  Net charge-offs to average loans outstanding .......................         0.12%         .005%          .001%

CAPITAL RATIOS
  Total equity to total assets at end of period ......................        10.97%        15.26%        19.73%
  Average total equity to average assets .............................        13.68%        16.85%        19.86%
</TABLE>

----------

REGULATORY CAPITAL RATIOS
                                              December 31, 2002
                                            ----------------------
                                            (Dollars in thousands)

     Tangible capital ....................  $ 37,705          9.02%
     Less:  Tangible capital requirement       6,265          1.50%
                                             -------      --------
       Excess ............................  $ 31,440          7.52%
                                             =======      ========

     Core capital ........................  $ 37,705          9.02%
     Less:  Core capital requirement .....    16,708          4.00%
                                             -------      --------
       Excess ............................    20,997          5.02%
                                             =======      ========

     Total risk-based capital ............  $ 39,160         14.83%
     Less:  Risk-based capital requirement    21,128          8.00%
                                             -------      --------
       Excess ............................    18,032          6.83%
                                             =======      ========

                                        3

<PAGE>

MARKET AND DIVIDEND INFORMATION

Since February 9, 1998, the Common Stock has been quoted on the Nasdaq Stock
Market under the symbol "HFBC." As of March 20, 2003, there were approximately
3,200 stockholders of the Company's Common Stock. Following are the high and low
stock prices of the Common Stock for the periods indicated.

Dividends of $0.11 per share were declared in each of the four quarters of 2001
and 2002.

Dividends, when and if paid, are subject to determination and declaration by the
Board of Directors at 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, and 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>
<CAPTION>
                                                               Price Range of Common Stock
                                     ------------------------------------------------------------------------------
                                        Year Ended December 31, 2001                 Year Ended December 31, 2002
                                     ------------------------------------           -------------------------------
                                        High                     Low                   High                Low
                                     -----------             ------------           ----------         ------------
    <S>                              <C>                     <C>                    <C>                <C>
    First Quarter                    $     12.38             $      10.60           $    11.57         $       9.78
    Second Quarter                   $     12.48             $      11.39           $    12.42         $      10.46
    Third Quarter                    $     12.86             $      10.65           $    12.53         $      12.02
    Fourth Quarter                   $     12.75             $      11.25           $    13.37         $      11.82
</TABLE>

                                        4

<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, 2002, the Company recorded net income of
$4.6 million, a return on average assets of 1.37% and a return on average equity
of 9.99%. For the year ended December 31, 2001, the Company recorded net income
of $1.8 million, a return on average assets of 0.72% and a return on average
equity of 4.26%. 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%.

     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.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Quantitative Aspects of Market Risk. The principal market risk affecting the
Company is risk associated with interest rate volatility ("interest rate risk").
The Company does not maintain a trading account for any class of financial
instrument nor does it engage in hedging activities or purchase high-risk
derivative instruments. The Company is not subject to foreign currency exchange
rate risk or commodity price risk. Substantially all of the Company's interest
rate risk is derived from the Bank's lending and deposit taking activities. This
risk could result in reduced net income, loss in fair values of assets and/or
increases in fair values of liabilities due to upward changes in interest rates.

Qualitative Aspects of Market Risk. The Company's principal financial objective
is to achieve long-term profitability while reducing its exposure to fluctuating
market interest rates. The Company has sought to reduce the exposure of its
earnings to changes in market interest rates by attempting to manage the
mismatch between assets and liabilities maturities and interest rates. The
principal element in achieving this objective is to increase the interest-rate
sensitivity of the Company's interest-earning assets by retaining for its
portfolio loans with interest rates subject to periodic adjustment to market
conditions. The Company relies on retail deposits as its primary source of
funds. Management believes retail deposits, compared to brokered deposits,
reduce the effects of its interest rate fluctuations because they generally
represent a more stable source of funds. As part of its interest rate risk
management strategy, the Bank promotes demand accounts and certificates of
deposit with primarily terms of up to five years.

                                        5

<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, 2002, approximately $143.9 million of the $171.4 million of one-to-four
family residential loans originated by the Company (comprising 84.0% of such
loans) had adjustable rates.

     The U.S. agency securities consist of notes issued by government agencies.
These securities generally are purchased for a term of ten years or less, and
are fixed-term, fixed rate securities, non-callable securities or securities
with one time calls and thus improve the spread between the cost of funds and
yield on investments. At December 31, 2002, no securities were due within one
year, approximately $12.1 million were due in one to five years, approximately
$11.3 were due in five to ten years and approximately $1.1 million were due
after ten years. However, at December 31, 2002, $17.4 million 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, 2002, all of these securities are callable and/or
due prior to January 31, 2005.

     The municipal bond portfolio largely consists of local school district
bonds with the guarantee of the state of Kentucky or out of state bonds insured
by private companies. At December 31, 2002, the Company has $11.8 million in
municipal bonds. These bonds were purchased to provide long-term income
stability and higher tax equivalent yields to a small portion of the investment
portfolio. At December 31, 2002, approximately $7.8 million of the Company's
municipal bond portfolio is callable with call dates ranging from January 2006
to December 2012. The call dates are staggered to eliminate the excessive cash
flows within any one-year period. At December 31, 2002, $951,000 were due within
one to five years, $4.1 million were due in five to ten years and approximately
$6.8 million were due after ten years.

     At December 31, 2002, the Company held $5.9 million in corporate bonds. The
Company conducts a financial analysis similar to that of a loan customer for
each corporate bond purchased. All corporate bonds purchased by the Bank bonds
are investment grade and mature by October 31, 2004 while providing yields that
are attractive as compared to U.S. Government and Agency bonds of similar
maturities.

     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, mortgage-backed securities provide a monthly stream of
both interest and principal, thereby providing the Company with a cash flow to
reinvest at current market rates and limit the Company's interest rate risk. For
more information regarding investment securities, see Note 3 of Notes to
Consolidated Financial Statements.

                                        6

<PAGE>

INTEREST RATE SENSITIVITY ANALYSIS

     The Company's profitability is affected by fluctuations in interest rates.
A sudden and substantial increase or decrease 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.

The following table presents the Bank's NPV at December 31, 2002, as calculated
by the OTS, based on information provided to the OTS by the Bank.

<TABLE>
<CAPTION>
                           Net Portfolio Value                 NPV as % of PV of Assets
      Change     --------------------------------------------  ------------------------
     In Rates      $ Amount    $ Change          % Change      NPV Ratio        Change
     --------    ----------   ----------        ---------      ----------       -------
                             (Dollars in thousands)
      <S>        <C>          <C>                     <C>          <C>              <C>
                 $            $                           %              %              bp
      +300 bp        37,540       (7,328)             (16)%          8.98%          127 bp
      +200 bp        41,264       (3,604)              (8)%          9.69%          -56 bp
      +100 bp        42,686       (2,182)              (5)%          9.90%          -35 bp
         0 bp        44,868           --                --          10.25%           --
      -100 bp        44,237         (631)              (1)%         10.01%          -24 bp
</TABLE>

     Due to the low level of interest rates at December 31, 2002, the OTS did
not measure outputs associated with an interest rate decline of less than 100
basis points.

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

       Pre-Shock NPV Ratio:  NPV as % of PV of Assets...........      10.25 %
       Exposure Measure:  Post-Shock NPV Ratio..................       9.69 %
       Sensitivity Measure:  Change in NPV Ratio................         56 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, 2002, the Company had a negative one-year or
less interest rate sensitivity gap of 11.32% 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.

                                        7

<PAGE>

     The following table sets forth the amounts of interest-earning assets and
interest-bearing liabilities outstanding at December 31, 2002, 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)
     <S>                                   <C>         <C>          <C>          <C>             <C>              <C>
     Interest-earning assets:
        Loans:
           One-to-four family ..........   $  89,615   $   69,740   $   4,116    $       4,179   $       3,554    $ 171,204
           Multi-family residential ....       1,397        3,099                                                     4,496
           Construction ................         955          769                                                     1,724
           Non-residential .............      16,295       10,252       1,977            2,191           1,312       32,027
           Secured by deposits .........       2,545          458                                                     3,003
           Other loans .................      33,030       42,536       1,382            1,674           1,019       79,641
        Time deposits and interest-
         bearing deposits in FHLB ......         905                                                                    905
        Federal funds sold .............       3,840                                                                  3,840
        Securities .....................       3,419       17,908      15,402            4,056           3,873       44,658
        Mortgage-backed securities .....      18,750       27,159      11,244            3,106           1,162       61,421
                                           ---------   ----------   ---------    -------------   -------------    ---------
          Total ........................   $ 170,751   $  171,921   $  34,121    $      15,206   $      10,920    $ 402,919
                                           ---------   ----------   ---------    -------------   -------------    ---------

     Interest-bearing liabilities:
        Deposits .......................   $ 216,045   $  118,490          --               --              --    $ 334,535
        Borrowed funds .................         324        5,299      18,000               --              --       23,623
                                           ---------   ----------   ---------    -------------   -------------    ---------
          Total ........................   $ 216,369      123,789      18,000               --                --    358,158
                                           ---------   ----------   ---------    -------------   -------------    ---------
     Interest sensitivity gap ..........   $ (45,618)  $   48,132   $  16,121    $      15,206   $      10,920    $  44,761
                                           =========   ==========   =========    =============   =============    =========
     Cumulative interest sensitivity
      gap ..............................   $ (45,618)  $    2,514   $  18,635    $      33,841   $      44,761    $  44,761
                                           =========   ==========   =========    =============   =============    =========
     Ratio of interest-earning assets to
      Interest-bearing liabilities .....       78.92%      138.88%     189.56%             N/A             N/A       112.50%
                                           =========   ==========   =========    =============   =============    =========
     Ratio of cumulative gap to
      total interest-earning assets ....      (11.32)%       0.62%       4.62%            8.40%          11.11%       11.11%
                                           =========   ==========   =========    =============   =============    =========
</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 re-pricing
date. Further, it is assumed that fixed maturity deposits are not withdrawn
prior to maturity and other deposits are withdrawn or repriced within one year.
Mortgage-backed securities are classified based on their lifetime prepayment
speeds. Current prepayments speeds are much faster than lifetime averages and
short the maturity and yields of mortgage-backed securities. 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.

                                        8

<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 average 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, 2002
                                           ------------------------------------
                                                                  Weighted
                                                Balance      Average Yield/Cost
                                           ---------------   ------------------
                                                    (Dollars in thousands)
Interest-earning assets:
   Loans receivable, net................   $       292,095                 6.43%

   Securities available for sale........           103,147                 4.24%
   Securities held to maturity..........             2,932                 6.25%
   Time deposits and other interest-
    bearing cash deposits...............             4,745                 1.12%
                                           ---------------   ------------------
     Total interest-earning assets......           402,919                 5.76%
Non-interest-earning assets.............            24,583
                                           ---------------
   Total assets.........................   $       427,502
                                           ===============

Interest-bearing liabilities:
   Deposits.............................   $       334,535                 3.12%
   FHLB borrowings......................            23,623                 4.55%
                                           ---------------   ------------------
   Total interest-bearing liabilities...           358,158                 3.21%
Non-interest-bearing liabilities........            22,466
                                           ---------------
     Total liabilities..................           380,624
Common stock............................                40
Additional paid-in capital..............            25,714
Retained earnings.......................            25,106
Treasury stock..........................            (4,857)
Accumulated other comprehensive
 Income.................................               875
                                           ---------------
     Total liabilities and equity.......   $       427,502
                                           ===============

Interest rate spread....................                                   2.55%
                                                             ------------------
Ratio of interest-earning assets to
   interest-bearing liabilities.........                                 112.50%
                                                             ==================

                                                   (Continued on following page)

                                        9

<PAGE>

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                      --------------------------------------------------------------------------
                                                          2002                               2001
                                      --------------------------------------  ----------------------------------
                                         Average                  Average      Average                 Average
                                         Balance     Interest    Yield/Cost    Balance    Interest    Yield/Cost
                                        ---------   ----------   ----------   ---------   ---------   ----------

<S>                                     <C>         <C>                <C>    <C>         <C>               <C>
Interest-earning assets:
   Loans receivable, net .............  $ 223,733   $   15,200         6.79%  $ 149,804   $  11,531         7.69%
   Securities available for sale .....     87,141        4,424         5.08%     83,220       5,108         6.13%

   Securities held to maturity .......      3,641          291         7.99%      5,986         456         7.61%

   Time deposits and other
    interest-bearing cash
    deposits .........................      8,075          127         1.57%      9,998         467         4.67%
                                        ---------   ----------                ---------   ---------   ----------
     Total interest-earning
      assets .........................    322,590       20,042         6.21%    249,008      17,562         7.05%
                                                    ----------   ----------               ---------   ----------
Non-interest-earning assets ..........     13,595                                 7,099
                                        ---------                             ---------
   Total assets ......................  $ 336,185                             $ 256,107
                                        =========                             =========

Interest-bearing liabilities:
   Deposits ..........................    244,866        8,090         3.30%    180,180       8,706         4.83%
   Borrowings ........................     31,997        1,330         4.16%     24,541       1,046         4.26%
                                        ---------   ----------                ---------   ---------   ----------
     Total interest-bearing
      liabilities ....................    276,863        9,420         3.40%    204,721       9,752         4.76%
                                                    ----------   ----------               ---------   ----------
Non-interest-bearing liabilities .....     13,326                                 8,223
                                        ---------                             ---------
     Total liabilities ...............    290,188                               212,944
Common stock                                   40                                    40
Additional paid-in capital ...........     25,714                                24,586
Retained earnings ....................     24,552                                21,273

Treasury stock .......................     (4,854)                               (3,266)
Accumulated other
 comprehensive income (loss) .........        545                                   530
                                        ---------                             ---------
     Total liabilities and
      equity .........................  $ 336,185                             $ 256,107
                                        =========                             =========
Net interest income ..................              $  10,622                             $   7,810
                                                    ==========                            =========
Interest rate spread ................
                                                                       2.81%                                2.29%
                                                                 ==========                           ==========
Net interest margin .................
                                                                        3.29%                               3.13%
                                                                 ==========                           ==========
Ratio of average interest-earning
 assets to average interest-
 bearing liabilities .................                               116.52%                              121.63%
                                                                 ==========                           ==========
</TABLE>

                                               Year Ended December 31,
                                       --------------------------------------
                                          2000                2000
                                       ----------    -----------------------
                                         Average                   Average
                                         Balance      Interest    Yield/Cost
                                       ----------    ----------   ----------

Interest-earning assets:
   Loans receivable, net ............. $  120,308    $    9,299         7.73%
   Securities available for sale .....     89,935         6,349         7.06%
   Securities held to maturity .......      8,894           637         7.16%

   Time deposits and other
    interest-bearing cash
    deposits .........................                       58         5.76%
                                            1,007     ---------
                                       ----------
     Total interest-earning
      assets .........................    220,144        16,343         7.42%
                                                      ---------   ----------
Non-interest-earning assets ..........      6,622
                                       ----------
   Total assets ...................... $  226,766
                                       ==========

Interest-bearing liabilities:
   Deposits .......................... $  159,268         7,931         4.98%
   Borrowings ........................     17,905         1,181         6.60%
                                       ----------     ---------
     Total interest-bearing
      liabilities ....................    177,173         9,112         5.14%
                                                      ---------   ----------
                                            4,549
Non-interest-bearing liabilities ..... -----------
                                          181,722
     Total liabilities ...............         40
Common stock                               24,586
Additional paid-in capital ...........     21,738
Retained earnings ....................
                                             (210)
Treasury stock .......................
Accumulated other                          (1,110)
 comprehensive income (loss) ......... ----------

     Total liabilities and             $  226,766
      equity ......................... ==========

Net interest income ..................               $    7,231
                                                     ==========
Interest rate spread .................                                  2.28%
                                                                  ==========

Net interest margin ..................                                  3.28%
                                                                  ==========

Ratio of average interest-earning
 assets to average interest-
 bearing liabilities .................                                124.25%
                                                                  ==========

                                       10

<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,
                               --------------------------------------------------------------------
                                        2002 vs. 2001                        2001 vs. 2000
                               --------------------------------    --------------------------------
                                     Increase                          Increase
                                (Decrease) due to                  (Decrease) due to
                                -----------------                  ------------------
                                                        Total                              Total
                                                      Increase                            Increase
                                 Rate     Volume     (Decrease)      Rate     Volume     (Decrease)
                               -------    -------    ----------    -------    -------    ----------
                                                  (Dollars in thousands)
<S>                            <C>        <C>        <C>           <C>        <C>        <C>
Interest-earning assets:
   Loans receivable ........   $(2,017)   $ 5,685    $    3,668    $   (47)   $ 2,279    $    2,232
   Securities available
    for sale ...............      (924)       240          (684)      (767)      (474)       (1,241)
   Securities held to
   Maturity ................        13       (178)         (165)       (65)      (116)         (181)
   Other interest-
    earning assets .........      (249)       (90)         (339)       (11)       420           409
                               -------    -------    ----------    -------    -------    ----------
       Total interest-
       earning assets.......   $(3,177)   $ 5,657    $    2,480    $  (890)   $ 2,109    $    1,219
                               -------    -------    ----------    -------    -------    ----------

Interest-bearing
liabilities:
   Deposits ................    (3,740)     3,124    $     (616)   $  (235)   $ 1,010    $     (775)
   Borrowings ..............       (34)       318           284       (503)       368          (135)
                               -------    -------    ----------    -------    -------    ----------
     Total interest-
     bearing liabilities ...    (3,774)   $ 3,442    $     (332)   $  (738)   $ 1,378    $      640
                               -------    -------    ----------    -------    -------    ----------

Increase (decrease) in
 net interest income .......   $   597    $ 2,215    $    2,812    $  (152)   $   731    $      579
                               =======    =======    ==========    =======    =======    ==========
</TABLE>

CRITICAL ACCOUNTING POLICIES

     The Company's financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America. The
financial information contained within these statements is, to a significant
extent, financial information that is based on appropriate measures of the
financial effects of transactions and events that have already occurred. Based
on its consideration of accounting policies that involved the most complex and
subjective decisions and assessments, management has identified its most
critical accounting policy to be that related to the allowance for loan losses.
The Company's allowance for loan loss methodology incorporates a variety of risk
considerations, both quantitative and qualitative, in establishing an allowance
for loan loss that management believes is appropriate at each reporting date.
Quantitative factors included the Company's historical loss experience,
delinquency and charge-off trends, collateral values, changes in nonperforming
loans, and other factors. Quantitative factors also incorporate known
information about individual loans, including borrower's sensitivity to economic
conditions throughout the Southeast and particular, the state of certain
industries. Size and complexity of individual credits in relation to loan
structure, existing loan policies and pace of portfolio growth are other
qualitative factors that are considered in the methodology. As the Company adds
new products and increases the complexity of the loan portfolio, its methodology
accordingly may change. In addition, it may report materially different amount
for the provision for loan losses in the statement of operations if management's
assessment of the above factors change in future periods. This discussion and
analysis should be read in conjunction with the Company's financial statements
and the accompanying notes presented elsewhere herein. Although management
believes the levels of the allowance for loan losses as of both December 31,
2002 and 2001 were adequate to absorb inherent losses in the loan portfolio, a
decline in local economic conditions, or other factors, could result in
increasing losses that cannot be reasonable predicted at this time.

                                       11

<PAGE>

     The Company also considers it policy on non-accrual loans as a critical
accounting policy. Loan are placed on non-accrual when a loan is specifically
determined to be impaired or when principal or interest is delinquent for 91
days or more. Any unpaid interest previously accrued on these loans is reserved
for as part of management's evaluation of the allowance for loan loss account.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2002 AND DECEMBER 31, 2001

     The Company's total assets increased by $141.9 million, from $285.6 million
at December 31, 2001 to $427.5 million at December 31, 2002. Federal Funds sold
increased from $690,000 at December 31, 2001 to $3.8 million at December 31,
2002. Securities held to maturity declined $1.5 million due to accelerated
prepayments on mortgage-backed securities. Currently, all newly purchased
investments are classified as available for sale. The available for sale
portfolio increased $2.6 million.

     The Company's net loan portfolio increased by $122.1 million during the
year ended December 31, 2002. Net loans totaled $292.1 and $170.9 at December
31, 2002 and December 31, 2001, respectively. The increase in the loan activity
during the year ended December 31, 2002 was due to the Company's additions of
new staff in key market areas, a more aggressive marketing effort, and the
purchase of $41.6 million of loans as a result of the Fulton Division
acquisition. For the year ended December 31, 2002, the Company's average yield
on loans was 6.79%, compared with 7.69% for the year ended December 31, 2001.

     At December 31, 2002, the Company's investments classified as "held to
maturity" were carried at an amortized cost of $2.9 million and had an estimated
fair market value of $3.0 million, and its securities classified as "available
for sale" had an estimated fair market value of $103.1 million. See Note 3 of
Notes to Consolidated Financial Statements.

     The allowance for loan losses totaled $1.5 million at December 31, 2002, an
increase of $532,000 from the allowance for loan losses of $923,000 at December
31, 2001. The ratio of the allowance for loan losses to loans was 0.50% and
0.54% at December 31, 2002 and 2001, respectively. Also at December 31, 2002,
the Company's non-performing loans were $833,000, or 0.29% of total loans,
compared to $551,000, or 0.32% of total loans, at December 31, 2001. The
Company's ratio of allowance for loan losses to non-performing loans at December
31, 2002 and 2001 was 174.7% and 167.2%, respectively.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

     Net Income. The Company's net income for the year ended December 31, 2002
was $4.6 million compared to $1.8 million for the year ended December 31, 2001.

     Net Interest Income. Net interest income for the year ended December 31,
2002 was $10.6 million, compared to $7.8 million for the year ended December 31,
2001. The increase in net interest income for the year ended December 31, 2002
was the result of loan growth and a decline in the Company's cost of funds. For
the year ended December 31, 2002, the Company's average yield on total
interest-earning assets was 6.21%, compared to 7.05% for the year ended December
31, 2001, and its average cost of interest-bearing liabilities was 3.40%,
compared to 4.76% for the year ended December 31, 2001. As a result, the
Company's interest rate spread for the year ended December 31, 2002 was 2.81%,
compared to 2.29% for the year ended December 31, 2001 and its net interest
margin was 3.29% for the year ended December 31, 2002, compared to 3.13% for the
year ended December 31, 2001.

     Interest Income. Interest income increased $2.4 million from $17.6 million
to $20.0 million, or by 14.3% during the year ended December 31, 2002 compared
to 2001. The increase was attributable to an increase in loan volume which
offset a declining yield on interest-earning assets. The average balance on
securities held to maturity declined $2.4 million, from $6.0 million at December
31, 2001 to $3.6 million at December 31, 2002. Average time deposits and other
interest-bearing cash deposits declined $1.9 million, from $10.0 million at
December 31, 2001 to $8.1 million at December 31, 2002. Overall, average total
interest-earning assets increased $73.6 million from December 31, 2001 to
December 31, 2002.

     Interest Expense. Interest expense decreased to $9.4 million for the year
ended December 31, 2002 compared to $9.8 million for 2001. The decline in
interest expense was attributable to a sharp decline in the interest rates paid
on deposit accounts. The average cost of average interest-bearing liabilities
declined from 4.76% for the year ended December 31, 2001 to 3.40% for the year
ended December 31, 2002. Over the same period, the average

                                       12

<PAGE>

balance of deposits increased from $180.2 million for the year ended December
31, 2001 to $244.9 million at December 31, 2002.

Provision for Loan Losses. The Company determined that an additional $795,000 in
provision for loan losses was required for the year ended December 31, 2002. For
the year ended December 31, 2001, the Company determined that a provision for
loan losses of $222,000 was required.

     Non-Interest Expense. Total non-interest expense for the year ended
December 31, 2002 was $5.2 million, compared to $5.5 million in 2001. The
decline was the result of the Company incurring a $1.4 million curtailment
expense in 2001 to terminate its defined benefit pension plan. Other increases
in non-interest expense are the result of additional staffing and the
acquisition of two branches in Fulton, Kentucky. See Notes 2 and 9 of Notes to
Consolidated Financial Statements.

     Income Taxes. The effective tax rate for the year ended December 31, 2002
was 33.8%, compared to 34.6% for 2001.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

     Net Income. The Company's net income for the year ended December 31, 2001
was $1.8 million compared to $2.7 million for the year ended December 31, 2000.

     Net Interest Income. Net interest income for the year ended December 31,
2001 was $7.8 million, compared to $7.2 million for the year ended December 31,
2000. The increase in net interest income for the year ended December 31, 2001
was primarily due to loan growth. For the year ended December 31, 2001, the
Company's average yield on total interest-earning assets was 7.05%, compared to
7.42% for the year ended December 31, 2000, and its average cost of
interest-bearing liabilities was 4.76%, compared to 5.14% for the year ended
December 31, 2000. As a result, the Company's interest rate spread for the year
ended December 31, 2001 was 2.29%, compared to 2.28% for the year ended December
31, 2000, and its net interest margin was 3.13% for the year ended December 31,
2001, compared to 3.28% for the year ended December 31, 2000.

     Interest Income. Interest income increased by $1.2 million from $16.3
million to $17.5 million, or by 7.4%, during the year ended December, 2001
compared to 2000. This increase was due to an increase in loans outstanding
which offset declining investment yields that resulted from agency securities
being called. The average balance of securities held to maturity declined $2.9
million, from $8.9 million at December 31, 2000, to $6.0 million at December 31,
2001. Average time deposits and other interest-bearing cash deposits increased
$9.0 million, from $1.0 million at December 31, 2000 to $10.0 million at
December 31, 2001. Overall, average total interest-earning assets increased
$28.9 million from December 31, 2000 to December 31, 2001.

     Interest Expense. Interest expense increased to $9.8 million for the year
ended December 31, 2001, compared to $9.1 million for 2000. The increase was
attributable to an increase in deposits which offset lower interest rates paid
on deposits. The average cost of average interest bearing liabilities declined
from 5.14% for the year ended December 31, 2000 to 4.76% for the year ended
December 31, 2001. Over the same period, the average balance of deposits
increased from $159.3 million for the year ended December 31, 2000 to $180.2
million at December 31, 2001.

     Provision for Loan Losses. The Company determined that an additional
$222,000 provision for loan loss was required for the year ended December 31,
2001. For the year ended December 31, 2000, the Company determined that a
$431,000 provision for loan loss was warranted.

     Non-Interest Expense. Total non-interest expense in the year ended December
31, 2001 was $ 5.5 million, compared to $3.3 million in 2000. This increase was
primarily attributable to a curtailment expense of approximately $1.4 million
incurred in connection with termination of the Pension Plan. See " Current
Business Strategy." See Note 9 of Notes to Consolidated Financial Statements.

     Income Taxes. The effective tax rate for the year ended December 31, 2001
was 34.6%, compared to 34.0% for 2000.

                                       13

<PAGE>

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, 2002, 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 15 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, 2002, the Bank had outstanding advances of $23.6 million from the
FHLB. See Note 8 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.

     A portion of the Bank's liquidity consists of cash and cash equivalents. At
December 31, 2002, cash and cash equivalents totaled $14.0 million. The level of
these assets depends upon the Bank's operating, investing and financing
activities during any given period.

     Cash flows from operating activities for the years ended December 31, 2000,
2001 and 2002 were $1.9 million, $4.3 million, and $4.4 million, respectively.

     Cash flows from investing activities were a net use of funds of $34.9
million, $55.0 million and $25.5 million in 2002, 2001 and 2000, respectively. 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 $2.2 million for 2000, $3.3 million for 2001 and $1.6
million for 2002. At the same time, the investment of cash in loans was$80.1
million in 2002, $42.1 million in 2001 and $16.2 million in 2000. There were no
purchases of held-to-maturity securities in 2000, 2001 and 2002. Maturities and
sales of securities available for sale exceeded purchases of such securities by
$43.1 million in 2002. Purchases of securities available for sale exceeded
maturities and sales of securities available for such securities by $15.3
million and $11.4 million in 2001 and 2000 respectively. The Bank utilized
excess deposit funds acquired in the Fulton Division acquisition of
approximately $46 million to fund loan growth and to reduce the Company's debt
with the FHLB of Cincinnati. At December 31, 2002, the Company had liquidated
advances from the FHLB of Cincinnati totaling $15.1 million net.

                                       14

<PAGE>

     At December 31, 2002, the Bank had $6.3 million in outstanding commitments
to originate loans and unused lines of credit of $17.1 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 $126.3 million at December
31, 2002. 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 consolidated financial statements and notes thereto presented herein
have been prepared in accordance with accounting principles generally accepted
in the United States of America, 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.

IMPACT OF DEPLOYMENT OF UNITED STATES MILITARY

     The Company's corporate headquarters, Hopkinsville, Kentucky, is
approximately 15 miles north of Fort Campbell, Kentucky, home of the 101st Air
Assault Division of the U.S. Army. Approximately 26,000 military personal are
assigned to this facility. A large percentage of these troops have been or will
soon be deployed overseas. Management anticipates that this deployment will
result in a reduction of business activity in the community. While management
believes that the direct impact on the Company is limited, the reduction in
economic activity will adversely affect many of the Company's customers. The
Company anticipates a possible increase in the amounts of classified assets
during the military deployment. In particular, management is evaluating its
exposure to the rental real estate market that services the military community.
Management believes that the risk of loss is minimal and will fund the allowance
for loan losses as necessary.

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.

                                       15

<PAGE>

                          Independent Auditors' Report

The Board of Directors
HopFed Bancorp, Inc.
Hopkinsville, Kentucky

We have audited the accompanying consolidated balance sheets of HopFed Bancorp,
Inc. and subsidiaries (the "Company") as of December 31, 2002 and 2001, and the
related consolidated statements of income, comprehensive income, changes in
stockholders' equity, and cash flows for the years ended December 31, 2002, 2001
and 2000. 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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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, 2002 and 2001, and the results of its operations and its cash flows
for the years ended December 31, 2002, 2001 and 2000 in conformity with
accounting principles generally accepted in the United States of America.

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

Nashville, Tennessee
January 31, 2003

                                       F-1

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2002 AND 2001
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
         Assets                                                                   2002          2001
                                                                              ------------   ------------
<S>                                                                           <C>            <C>
Cash and due from banks (note 10)                                             $      9,288          3,941
Interest-earning deposits in Federal Home Loan Bank                                    905             39
Federal funds sold                                                                   3,840            690
                                                                              ------------   ------------
Cash and cash equivalents                                                           14,033          4,670
Securities available for sale (note 3)                                             103,147        100,519
Securities held to maturity, market value of
 $3,032 for 2002 and $4,664 for 2001, respectively (note 3)                          2,932          4,462
Loans held for sale at estimated fair value (note 4)                                     -            928
Loans receivable, net of allowance for loan losses of
 $1,455 for 2002 and $923 for 2001, respectively (note 4)                          292,095        170,016
Accrued interest receivable                                                          2,329          1,405
Premises and equipment, net (note 5)                                                 4,959          3,315
Deferred tax assets  (note 12)                                                           -             82
Intangible asset (notes 2 and 6)                                                     2,511              -
Goodwill (note 6)                                                                    3,689              -
Bank owned life insurance (note 2)                                                   1,547              -
Other assets                                                                           260            242
                                                                              ------------   ------------

            Total assets                                                      $    427,502        285,639
                                                                              ============   ============

         Liabilities and Stockholders' Equity

Liabilities:
   Deposits:  (note 7)
     Non-interest-bearing accounts                                            $     19,120          7,216
     Interest-bearing accounts:
        NOW accounts                                                                33,215         12,419
        Money market accounts                                                       47,360         32,173
        Savings                                                                      9,107          9,222
        Other time deposits                                                        244,853        139,286
                                                                              ------------   ------------
              Total deposits                                                       353,655        200,316

   Advances from borrowers for taxes and insurance                                     211            201
   Advances from Federal Home Loan Bank (note 8)                                    23,623         38,747
   Dividends payable                                                                   399            399
   Deferred tax liability (note 12)                                                     47              -
   Accrued expenses and other liabilities (note 11)                                  2,689          2,387
                                                                              ------------   ------------

              Total liabilities                                                    380,624        242,050
                                                                              ============   ============
</TABLE>

See notes to consolidated financial statements.

                                       F-2

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                           DECEMBER 31, 2002 AND 2001
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                  2002           2001
                                                                              ------------   ------------
<S>                                                                           <C>            <C>
Stockholders' equity (notes 11, 15 and 16):
   Common stock, par value $.01 per share;
    authorized - 7,500,000 shares; 4,039,305 issued and 3,630,396 outstanding
    at December 31, 2002 and 4,039,305 issued and 3,631,538 outstanding at
    December 31, 2001                                                         $         40             40
   Additional paid-in capital                                                       25,714         25,714
   Retained earnings-substantially restricted                                       25,106         22,110
   Treasury stock (at cost, 408,909 shares at December 31, 2002
    and 407,767 at December 31, 2001)                                               (4,857)        (4,845)
   Accumulated other comprehensive income, net of taxes                                875            570
                                                                              ------------   ------------

        Total stockholders' equity                                                  46,878         43,589
                                                                              ------------   ------------

        Total liabilities and stockholders' equity                            $    427,502        285,639
                                                                              ============   ============
</TABLE>

   Commitments and contingencies (notes 10, 11 and 14)

See notes to consolidated financial statements.

                                       F-3

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                    2002           2001           2000
                                                ------------   ------------   ------------
<S>                                             <C>            <C>            <C>
Interest income:
   Loans receivable                             $     15,200         11,531          9,299
   Securities available for sale                       4,424          5,108          6,349
   Securities held to maturity                           291            456            637
   Interest-earning deposits in Federal
     Home Loan Bank                                      127            467             58
                                                ------------   ------------   ------------

        Total interest income                         20,042         17,562         16,343
                                                ------------   ------------   ------------

Interest expense:
   Deposits (note 7)                                   8,090          8,706          7,931
   Advances from Federal Home Loan Bank                1,330          1,046          1,181
                                                ------------   ------------   ------------

        Total interest expense                         9,420          9,752          9,112
                                                ------------   ------------   ------------
Net interest income                                   10,622          7,810          7,231

Provision for loan losses (note 4)                       795            222            431
                                                ------------   ------------   ------------

        Net interest income after
            provision for loan losses                  9,827          7,588          6,800
                                                ------------   ------------   ------------

Non-interest income:
   Loan fees                                             681            238            171
   Service charges                                       711            280            268
   Realized gain on sale of premises
    and equipment, net                                   112              -              -
   Realized gain from sale of securities
    available for sale                                   568             88              -
   Other operating income                                240            111             70
                                                ------------   ------------   ------------

        Total non-interest income                      2,312            717            509
                                                ------------   ------------   ------------
Non-interest expenses:
   Salaries and benefits (note 11)                     2,806          3,344          2,089
   Deposit insurance premium                              36             32             35
   Occupancy expense                                     436            421            205
   Data processing                                       418            197            163
   Other operating expenses                            1,503          1,499            778
                                                ------------   ------------   ------------

        Total non-interest expense                     5,199          5,493          3,270
                                                ------------   ------------   ------------

Income before income tax expense                       6,940          2,812          4,039
Income tax expense (note 12)                           2,346            973          1,373
                                                ------------   ------------   ------------

Net income                                      $      4,594          1,839          2,666

Earnings per share (note 17):
   Basic                                        $       1.26           0.49           0.67
                                                ============   ============   ============
   Fully diluted                                $       1.26           0.49           0.67
                                                ============   ============   ============

Weighted average shares outstanding - basic        3,630,668      3,758,053      3,979,664
                                                ============   ============   ============
Weighted average shares outstanding - diluted      3,636,480      3,764,692      3,979,664
                                                ============   ============   ============
</TABLE>

See notes to consolidated financial statements.

                                       F-4

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                    2002           2001          2000
                                                ------------   ------------   ------------
<S>                                             <C>            <C>            <C>
Net income                                      $      4,594          1,839          2,666

Other comprehensive income, net of tax
 (note 20):

Unrealized gain on investment securities
 available for sale                                      680            565            962

Minimum pension liability adjustment                       -            222           (222)

Reclassification adjustment for gains included
 in net income                                          (375)           (58)             -
                                                ------------   ------------   ------------

Comprehensive income                            $      4,899          2,568          3,406
                                                ============   ============   ============
</TABLE>

See notes to consolidated financial statements.

                                       F-5

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                                                       Additional
                                                           Common         Common        Paid-in       Retained
                                                           Shares          Stock        Capital       Earnings
                                                         -----------    -----------   -----------   -----------
<S>                                                      <C>            <C>           <C>           <C>
Balance, January 1, 2000                                   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             -
Purchase of treasury stock                                  (149,354)             -             -             -
Dividends ($0.41 per share)                                        -              -             -        (1,760)
                                                         -----------    -----------   -----------   -----------
Balance, December 31, 2000                                 3,854,995             40        25,228        21,896
Net income                                                         -              -             -         1,839
Minimum pension liability adjustment, net of
 income tax of $114                                                -              -             -             -
Net change in unrealized gains (losses)
 on securities available for sale, net of
 income taxes of $261                                              -              -             -             -
Issuance of common stock - MRP                                34,956              -           486             -
Purchase of treasury stock                                  (258,413)             -             -             -
Dividends ($0.44 per share)                                        -              -             -        (1,625)
                                                         -----------    -----------   -----------   -----------
Balance, December 31, 2001                                 3,631,538             40        25,714        22,110
Net income                                                         -              -             -         4,594
Net change in unrealized gains (losses)
 on securities available for sale, net of
 income taxes of $157                                              -              -             -             -
Purchase of treasury stock                                    (1,142)             -             -             -
Dividends ($0.44 per share)                                        -              -             -        (1,598)
                                                         -----------    -----------   -----------   -----------
Balance, December 31, 2002                                 3,630,396    $        40        25,714        25,106
                                                         ===========    ===========   ===========   ===========

<CAPTION>
                                                                        Accumulated
                                                                            Other
                                                          Treasury     Comprehensive      Total
                                                            Stock      Income (Loss)      Equity
                                                         -----------   -------------   -----------
<S>                                                      <C>           <C>            <C>
Balance, January 1, 2000                                           -           (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
Purchase of treasury stock                                    (1,643)             -         (1,643)
Dividends ($0.41 per share)                                        -              -         (1,760)
                                                         -----------   -------------   -----------
Balance, December 31, 2000                                    (1,643)          (159)        45,362
Net income                                                         -              -          1,839
Minimum pension liability adjustment, net of
 income tax of $114                                                -            222            222
Net change in unrealized gains (losses)
 on securities available for sale, net of
 income taxes of $261                                              -            507            507
Issuance of common stock - MRP                                     -              -            486
Purchase of treasury stock                                    (3,202)             -         (3,202)
Dividends ($0.44 per share)                                        -              -         (1,625)
                                                         -----------   -------------   -----------
Balance, December 31, 2001                                    (4,845)           570         43,589
Net income                                                         -              -          4,594
Net change in unrealized gains (losses)
  on securities available for sale, net of
  income taxes of $157                                             -            305            305
Purchase of treasury stock                                       (12)             -            (12)
Dividends ($0.44 per share)                                        -              -         (1,598)
                                                         -----------   -------------   -----------
Balance, December 31, 2002                                    (4,857)           875         46,878
                                                         ===========   =============   ===========
</TABLE>

See notes to consolidated financial statements.

                                       F-6

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  2002             2001            2000
                                                               ------------    ------------    ------------
<S>                                                            <C>             <C>             <C>
Cash flows from operating activities:
   Net income                                                  $      4,594           1,839           2,666
   Adjustments to reconcile net income to net
    cash provided by operating activities:
       Provision for loan losses                                        795             222             431
       Depreciation                                                     236             157             119
       Amortization of intangible assets                                126               -               -
       Amortization (accretion) of investment premiums                  399              (7)            144
        and discounts, net
       Provision (benefit) for deferred income taxes                    129            (463)             91
       Stock dividends on Federal Home Loan Bank stock                 (107)           (148)           (150)
       Gain on sale of premises and equipment                             -               -              (9)
       Compensation expense recognized on MRP shares                      -               -             549
       Gain on sale of securities available for sale                   (568)            (88)              -
       Curtailment loss                                                   -           1,400               -
       (Increase) decrease in:
         Accrued interest receivable                                   (924)            880          (1,190)
         Other assets                                                   638             (81)           (233)
       Increase (decrease) in:
         Accrued expenses and other liabilities                        (904)            593            (515)
                                                               ------------    ------------    ------------

       Net cash provided by operating activities                      4,414           4,304           1,903
                                                               ------------    ------------    ------------

Cash flows from investing activities:

   Proceeds from maturities of securities held to maturity            1,585           3,341           2,170
   Proceeds from sales, calls and maturities of securities
    available for sale                                               78,533          82,751          12,507
   Purchase of securities available for sale                        (35,477)        (98,085)        (23,898)
   Net increase in loans                                            (80,109)        (42,012)        (16,195)
   Proceeds from sale of foreclosed asset                                42               -               -
   Purchases of premises and equipment                                 (795)         (1,030)            (96)
   Proceeds from sale of premises and equipment                           -               -              16
   Purchase of branch location, net of
    funds received                                                    1,304               -               -
                                                               ------------    ------------    ------------

       Net cash used in investing activities                        (34,917)        (55,035)        (25,496)
                                                               ------------    ------------    ------------
</TABLE>

See notes to consolidated financial statements.

                                       F-7

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   2002           2001             2000
                                                               ------------    ------------    ------------
<S>                                                            <C>             <C>             <C>
Cash flows from financing activities:

   Net increase in demand deposits,
    savings, money market, NOW accounts and
    time deposits                                              $     56,590          34,712           4,699
   Increase in advance payments
    by borrowers for taxes and insurance                                 10              43               2
   Advances from Federal Home Loan Bank                              21,000          21,707          17,040
   Repayment of advances from Federal Home
    Loan Bank                                                       (36,124)              -               -
   Purchase of treasury stock                                           (12)         (3,202)         (1,643)
   Dividends paid                                                    (1,598)         (1,666)         (1,626)
   Recovery of proceeds from issuance of common stock                     -               -              40
                                                               ------------    ------------    ------------

       Net cash provided by financing activities                     39,866          51,594          18,512
                                                               ------------    ------------    ------------

Increase (decrease) in cash and cash equivalents                      9,363             863          (5,081)

Cash and cash equivalents, beginning of period                        4,670           3,807           8,888
                                                               ------------    ------------    ------------

Cash and cash equivalents, end of period                       $     14,033           4,670           3,807
                                                               ============    ============    ============

Supplemental disclosures of Cash Flow Information:

   Interest paid                                               $      9,023           8,690           9,112
                                                               ============    ============    ============

   Income taxes paid                                           $      2,545           1,499           1,600
                                                               ============    ============    ============

Supplemental Disclosures of Non-cash Investing
   and Financing Activities:
   Foreclosures and in substance foreclosures
    of loans during year                                       $         42               -             142
                                                               ============    ============    ============

   Net unrealized gains on investment securities
    classified as available for sale                           $      1,325             768           1,458
                                                               ============    ============    ============

   Increase in deferred tax liability
    related to unrealized gains on investments                 $       (157)           (261)           (496)
                                                               ============    ============    ============

   Dividends declared and payable                              $        399             399             441
                                                               ============    ============    ============

   Issue of common stock to MRP                                $          -             486             975
                                                               ============    ============    ============
</TABLE>

See notes to consolidated financial statements.

                                       F-8

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000

(1)  Summary of Significant Accounting Policies:

     The accounting and reporting policies of HopFed Bancorp, Inc. (the
          "Company") and subsidiaries conform with accounting principles
          generally accepted in 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 consolidated financial statements include the accounts of Hopfed
          Bancorp, Inc. its wholly-owned subsidiary Heritage Bank (the "Bank")
          and its wholly-owned subsidiary, Fall and Fall Insurance, for the year
          ended December 31, 2002. The accompanying consolidated financial
          statements as of December 31, 2001 and prior include the amounts of
          the Company and the Bank. All significant intercompany transactions
          and balances are eliminated in consolidation.

     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 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 is 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.

                                       F-9

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000

(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. The fair value
          disclosure of financial instruments is an estimate that can be
          computed within a range.

     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 hand, amounts
          due on demand from banks, interest-earning deposits in the Federal
          Home Loan Bank and federal funds sold with maturities of three months
          or less. Securities

     The Company reports 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.

                                      F-10

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000

(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 accounting principles
          generally accepted in 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.

                                      F-11

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000

(1)  Summary of Significant Accounting Policies: (Continued)
     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. The Company files its federal
          income tax return on a consolidated basis with its subsidiaries.

     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

     Goodwill

     Beginning January 1, 2002 with the adoption of SFAS 142, Goodwill and Other
          Intangible Assets, goodwill is no longer amortized, but instead tested
          for impairment at least annually.

     Intangible Assets

     The intangible assets for insurance contracts and core deposits are
          amortized using the straight-line method over the estimated period of
          benefit of seven years. The Company periodically evaluates the
          recoverability of the intangible assets and takes into account events
          or circumstances that warrant a revised estimate of the useful lives
          or indicates that an impairment exists.

     Advertising

     The Company expenses the production cost of advertising as incurred.

     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.

                                      F-12

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000

(1)  Summary of Significant Accounting Policies: (Continued)
     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.

     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.

                                      F-13

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                          (TABLE AMOUNTS IN THOUSANDS)

(1)  Summary of Significant Accounting Policies: (Continued)
     Earnings Per Share
     Earnings per share (EPS) consists of two separate components, basic EPS and
          diluted EPS. Basic EPS is computed by dividing net income by the
          weighted average number of common shares outstanding for each period
          presented. Diluted EPS is calculated by dividing net income by the
          weighted average number of common shares outstanding plus dilutive
          common stock equivalents (CSE). CSE consists of dilutive stock options
          granted through the Company's stock option plan. Common stock
          equivalents which are considered antidilutive are not included for the
          purposes of this calculation. During 2002, 2001 and 2000, there were
          no antidilutive CSEs.

     Stock Options

     The Company accounts for its stock option plans in accordance with the
          provisions of Accounting Principles Board (APB) Opinion No. 25,
          Accounting for Stock Issued to Employees, and related interpretations,
          as permitted by SFAS 123, Accounting for Stock-Based Compensation. As
          such, compensation expense is recorded on the date of grant only if
          the current market price of the underlying stock exceeds the exercise
          price. SFAS 123 requires entities which continue to apply the
          provisions of APB Opinion No. 25 to provide pro-forma earnings per
          share disclosure for stock option grants made in 1995 and subsequent
          years as if the fair value based method defined in SFAS 123 had been
          applied. SFAS 148, Accounting for Stock-Based Compensation -
          Transition and Disclosure - an amendment of FASB No. 123, provides
          that an entity that has transitioned to the accounting treatment
          prescribed by SFAS 123 may use the intrinsic value method in lieu of
          the fair value based method for determining the fair value of stock
          options at the date of grant. SFAS 148 requires disclosure in addition
          to SFAS 123 if APB opinion No. 25 is currently being applied (see
          Effect of New Accounting Pronouncements).

     The Company applies Accounting Principles Board Opinion No. 25 (APB 25),
          Accounting for Stock Issued to Employees, and related interpretations
          in accounting for the plan. No compensation cost has been recognized
          for the plan because the stock option price is equal to or greater
          than the fair value at the grant date. Following is a reconciliation
          of reported and pro forma net income and earnings per share had
          compensation cost for the plan been determined based on the fair value
          of SFAS 123, Accounting for Stock-Based Compensation, as amended:

<TABLE>
<CAPTION>
                                                                                Year Ended
                                                                               December 31,
                                                               --------------------------------------------
                                                                   2002            2001            2000
                                                               ------------    ------------    ------------
          <S>                                                  <C>             <C>             <C>
          Net income:
            As reported                                        $      4,594           1,839           2,666

          Deduct:  Total stock-based employee
            compensation expense determined under
            fair value based method for
            all awards granted, net of related tax
            effects                                                     (62)            (46)            (14)
                                                               ------------    ------------    ------------
          Pro forma net income                                 $      4,532           1,793           2,652
                                                               ============    ============    ============
</TABLE>

                                      F-14

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
              (TABLE AMOUNT IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(1)  Summary of Significant Accounting Policies: (Continued)
     Stock Options (Continued)

<TABLE>
<CAPTION>
                                                                                  Year Ended
                                                                                 December 31,
                                                               --------------------------------------------
                                                                    2002            2001          2000
                                                               ------------    ------------    ------------
          <S>                                                  <C>             <C>             <C>
          Earnings per share:
             Basic - as reported                               $       1.26            0.49            0.67
                                                               ============    ============    ============
             Basic - pro forma                                         1.25            0.49            0.67
                                                               ============    ============    ============
             Diluted - as reported                             $       1.26            0.49            0.67
                                                               ============    ============    ============
             Diluted - pro forma                                       1.25            0.48            0.67
                                                               ============    ============    ============
</TABLE>

     Effect of New Accounting Pronouncements

     In June 2001, the FASB issued SFAS 143, Accounting for Asset Retirement
          Obligations. SFAS 143, establishes accounting standards for the
          recognition and measurement of legal obligations associated with the
          retirement of tangible long-lived assets. The provisions of this
          statement are effective for financial statements issued for fiscal
          years beginning after June 15, 2002, with earlier application
          encouraged. 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.

     In August 2001, the FASB issued SFAS 144, Accounting for the Impairment or
          Disposal of Long-Lived Assets. SFAS 144 addresses financial accounting
          and reporting for the impairment or disposal of long-lived assets. The
          provisions of this statement are effective for financial statements
          issued for fiscal years beginning after December 15, 2001, and interim
          periods within those fiscal years, with earlier application
          encouraged. The Company did not experience any material impact on its
          financial position, results of operations and cash flow subsequent to
          the effective date of this statement.

     In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No.
          4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
          Corrections. SFAS 145 rescinds SFAS 4 and 64, relative to debt
          extinguishments and provides that gains and losses from extinguishment
          of debt should be classified as extraordinary items only if they meet
          the criteria in APB Opinion No 30. Applying the provisions of APB
          Opinion No. 30 will distinguish transactions that are part of an
          entity's recurring operations from those that are unusual or
          infrequent or that meet the criteria for classification as an
          extraordinary item. The Statement amends SFAS 13, Accounting for
          Leases, to eliminate an inconsistency between the required accounting
          for sale-leaseback transactions and the required accounting for
          certain lease modifications that have economic effects that are
          similar to sale-leaseback transactions. Finally, the Statement
          rescinds SFAS 44, Accounting for Intangible Assets of Motor Carriers,
          and amends other existing authoritative pronouncements to make various
          technical corrections, clarify meanings, or describe their
          applicability under changed conditions. The provisions of the
          Statement relative to accounting for leases were effective for
          transactions occurring after May 15, 2002.

                                      F-15

<PAGE>

                      HopFed Bancorp, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, Continued

                        December 31, 2002, 2001 and 2000

(1)  Summary of Significant Accounting Policies: (Continued)
     Effect of New Accounting Pronouncements (Continued)
     Implementation of these provisions of the Statement had no impact on the
          Company's financial position, results of operations and cash flow
          subsequent to the effective date of this statement.

     In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated
          with Exit or Disposal Activities. SFAS 146 addresses financial
          accounting and reporting for costs associated with exit or disposal
          activities and nullifies Emerging Issues Task Force (EITF) Issue No.
          94-3, "Liability Recognition for Certain Employee Termination Benefits
          and Other Costs to Exit an Activity (including Certain Costs Incurred
          in a Restructuring)." The provisions of the Statement are effective
          for exit or disposal activities that are initiated after December 31,
          2002. 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 the statement.

     In October 2002, the FASB issued SFAS 147, Acquisitions of Certain
          Financial Institutions - an amendment of FASB Statements No. 72 and
          144 and FASB Interpretation No. 9. SFAS 72, Accounting for Certain
          Acquisitions of Banking or Thrift Institutions, and FASB
          Interpretation No. 9, Applying APB Opinions No. 16 and 17 When a
          Savings and Loan Association or a Similar Institution Is Acquired in a
          Business Combination Accounted for by the Purchase Method, providing
          interpretive guidance on the application of the purchase method to
          acquisitions of financial institutions. Except for transactions
          between two or more mutual enterprises, this Statement removes
          acquisitions of financial institutions from the scope of both SFAS 72
          and Interpretation No. 9 and requires that those transactions be
          accounted for in accordance with SFAS 141, Business Combinations, and
          SFAS 142, Goodwill and Other Intangible Assets. Thus, the requirement
          in paragraph 5 of SFAS 72 to recognize (and subsequently amortize) any
          excess of the fair value of liabilities assumed over the fair value of
          intangible and identifiable intangible assets acquired as an
          identifiable intangible asset no longer applies to acquisitions within
          the scope of this Statement. In addition, this Statement amends SFAS
          144, Accounting for Impairment or Disposal of Long-Lived Assets, to
          include in its scope long-term customer-relationship intangible assets
          of financial institutions such as depositor and borrower relationship
          intangible assets and credit cardholder intangible assets.
          Consequently, those intangible assets are subject to the same
          undiscounted cash flow recoverability test and impairment loss
          recognition and measurement provisions that SFAS 144 requires for
          other long-lived assets that are held and used. Provisions that relate
          to the application of the purchase method of accounting, are effective
          for acquisitions for which the date of acquisition is on or after
          October 1, 2002. The provisions that relate to accounting for the
          impairment or disposal of certain long-term customer relationship
          intangible assets are effective on October 1, 2002. 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.

                                      F-16

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000

(1)  Summary of Significant Accounting Policies: (Continued)
     Effect of New Accounting Pronouncements (Continued)
     In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based
          Compensation - Transition and Disclosure - an amendment of FASB
          Statement No. 123. SFAS 148 amends SFAS 123, Accounting for
          Stock-Based Compensation, to provide alternative methods of transition
          for a voluntary change to the fair value based method of accounting
          for stock-based employee compensation. In addition, this Statement
          amends the disclosure requirements of SFAS 123 to require prominent
          disclosures in both annual and interim financial statements about the
          method of accounting for stock-based employee compensation and the
          effect of the method used on reported results. The provisions of the
          Statement are effective for financial statements of fiscal years
          ending after December 15, 2002. Interim disclosures are required for
          reports containing condensed financial statements for periods
          beginning after December 15, 2002. 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 2001 and 2000 amounts have been reclassified to conform to the
          December 31, 2002 presentation.

(2)  Acquisition:
     The Company's wholly-owned subsidiary, Heritage Bank (the Bank), completed
          the purchase of the operating assets and assumed the deposits and
          certain liabilities of the Fulton, Kentucky division of Old National
          Bank (Fulton Division) and Fall and Fall Insurance (Fall and Fall), a
          full service insurance agency on September 5 and 6, 2002. The Company
          believes that this acquisition enhances its position in the markets of
          Northwestern Tennessee and Southwestern Kentucky.

     The consolidated statement of income of the Company for the year ended
          December 31, 2002, includes the results of operations for the Fulton
          Division and Fall and Fall from the September 5, 2002 acquisition
          date. The acquisition resulted in approximately $3.7 million of
          goodwill, $2.5 million of core deposit intangible assets and $128,000
          of other intangible assets, all of which are deductible for tax
          purposes. The amount allocated to the core deposit intangible was
          determined by an independent valuation and is being amortized over the
          estimated useful life of seven years using the straight-line method.
          The amount allocated to other intangibles represents the identified
          intangible asset for insurance contracts from Fall and Fall. This
          intangible asset is being amortized over the estimated useful life of
          seven years using the straight-line method.

                                      F-17

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
             (TABLE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(2)  Acquisition: (Continued)
     The following condensed balance sheet discloses amounts assigned to each
          major asset and liability caption at the date of acquisition:

          Assets:
                Cash and due from banks                  $     1,304
                Securities available for sale                 45,002
                Loans                                         41,879
                Premises and equipment                         1,085
                Goodwill                                       3,689
                Intangible assets                              2,637
                Bank owned life insurance                      1,547
                Other assets                                     657
                                                         -----------
                                     Total assets        $    97,800
                                                         ===========

          Liabilities:
                Deposits                                 $    96,750
                Accrued expenses and other liabilities         1,050
                                                         -----------
                                     Total liabilities   $    97,800
                                                         ===========

     The following represents supplemental pro forma disclosure required by
          SFAS 141 for the years ended December 31, 2002 and 2001, of interest
          income, non-interest income, net income and earnings per share as
          though the business combination had been completed as of January 1,
          2002 and 2001.

                                                  For the Year Ended
                                                      December 31,
                                             ---------------------------
                                                  2002          2001
                                             -------------  ------------
          Interest income                    $      22,877        22,930
          Non-interest income                        2,868         1,684
          Net income                                 4,615         2,289
          Earnings per share:
              Basic                                   1.27           .61
              Diluted                                 1.27           .61

                                      F-18

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                           (TABLE AMOUNTS IN THOUSANDS)

(3)  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
          estimated fair values follow:

<TABLE>
<CAPTION>
                                                           December 31, 2002
                                       -----------------------------------------------------------
                                                         Gross           Gross         Estimated
                                        Amortized      Unrealized      Unrealized         Fair
                                          Cost           Gains           Losses           Value
                                       ------------   ------------    ------------    ------------
       <S>                             <C>                   <C>              <C>          <C>
       Available for sale securities
       Restricted:
         FHLB stock                    $      2,391              -               -           2,391
         Intrieve stock                          15              -               -              15
                                       ------------   ------------    ------------    ------------

                                              2,406              -               -           2,406
                                       ------------   ------------    ------------    ------------
       Unrestricted:
         U.S. government and
          agency securities:
            FHLB debt securities             24,294            245               -          24,539
         Corporate bonds                      5,913             17             (20)          5,910
         Municipal bonds                     11,827             95            (119)         11,803
         Mortgage-backed securities:
            GNMA                             10,886            210               -          11,096
            FNMA                             14,764            309               -          15,073
            FHLMC                            16,592            391               -          16,983
            CMO                              15,140            197               -          15,337
                                       ------------   ------------    ------------    ------------

                                             99,416          1,464            (139)        100,741
                                       ------------   ------------    ------------    ------------

                                       $    101,822          1,464            (139)        103,147
                                       ============   ============    ============    ============
</TABLE>

                                      F-19

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                          (Table Amounts in Thousands)

(3)    Securities: (Continued)

<TABLE>
<CAPTION>
                                                          December 31, 2001
                                       -----------------------------------------------------------
                                                         Gross           Gross         Estimated
                                        Amortized      Unrealized      Unrealized         Fair
                                          Cost           Gains           Losses           Value
                                       ------------   ------------    ------------    ------------
       <S>                             <C>                   <C>              <C>          <C>
       Available for sale securities
       Restricted:
         FHLB stock                    $      2,284              -               -           2,284
         Intrieve stock                          15              -               -              15
                                       ------------   ------------    ------------    ------------

                                              2,299              -               -           2,299
                                       ------------   ------------    ------------    ------------
       Unrestricted:
         U.S. government and
          agency securities:
          FHLB debt securities         $     20,218            393             (24)         20,587
         FFCB                                   515              9               -             524
         Municipal bonds                      4,372              -            (210)          4,162
         Mortgage-backed securities:
            GNMA                             17,347             76               -          17,423
            FNMA                             19,353             90               -          19,443
            FHLMC                            21,523             44               -          21,567
            CMO                              14,029            485               -          14,514
                                       ------------   ------------    ------------    ------------

                                             97,357          1,097            (234)         98,220
                                       ------------   ------------    ------------    ------------

                                       $     99,656          1,097            (234)        100,519
                                       ============   ============    ============    ============
</TABLE>

     The scheduled maturities of debt securities available for sale at
          December 31, 2002 and 2001 were as follows:
                                                                     Estimated
                                                       Amortized        Fair
            2002                                          Cost          Value
           ------                                    ------------   ------------
       Due within one year                           $      1,004          1,013
       Due in one to five years                            17,850         17,908
       Due in five to ten years                            15,287         15,402
       Due after ten years                                  7,893          7,929
                                                     ------------   ------------
                                                           42,034         42,252
       Mortgage-backed securities                          57,382         58,489
                                                     ------------   ------------

          Total unrestricted securities
           available for sale                        $     99,416        100,741
                                                     ============   ============

                                      F-20

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                          (Table Amounts in Thousands)

(3)  Securities: (Continued)

                                                                     Estimated
                                                       Amortized       Fair
           2001                                          Cost          Value
           ----                                      ------------   ------------
       Due within one year                            $         -              -
       Due in one to five years                            14,685         14,952
       Due in five to ten years                             5,235          5,240
       Due after ten years                                  5,185          5,081
                                                     ------------   ------------
                                                           25,105         25,273

       Mortgage-backed securities                          72,252         72,947
                                                     ------------   ------------

          Total unrestricted securities
            available for sale                       $     97,357         98,220
                                                     ============   ============

     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.

     During 2002, the Company sold investment securities classified as
          available-for-sale for proceeds of $56.8 million resulting in gross
          gains of $584,000 and losses of $16,000.

<TABLE>
<CAPTION>
                                                          December 31, 2002
                                       -----------------------------------------------------------
                                                         Gross           Gross         Estimated
                                        Amortized      Unrealized      Unrealized         Fair
                                          Cost           Gains           Losses           Value
                                       ------------   ------------    ------------    ------------
       <S>                             <C>                     <C>             <C>           <C>
       Held to maturity securities

       Mortgage-backed securities:
         GNMA                          $      2,675             94             -             2,769
         FNMA                                   257              6             -               263
                                       ------------   ------------    ------------    ------------

                                       $      2,932            100             -             3,032
                                       ============   ============    ============    ============
</TABLE>

                                      F-21

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                          (TABLE AMOUNTS IN THOUSANDS)

(3)  Securities: (Continued)

<TABLE>
<CAPTION>
                                                          December 31, 2001
                                       -----------------------------------------------------------
                                                         Gross           Gross         Estimated
                                        Amortized      Unrealized      Unrealized         Fair
                                          Cost           Gains           Losses           Value
                                       ------------   ------------    ------------    ------------
<S>                                    <C>                     <C>               <C>         <C>
       Held to maturity securities

       Mortgage-backed securities:
         GNMA                          $      4,197            195               -           4,392
         FNMA                                   265              7               -             272
                                       ------------   ------------    ------------    ------------

                                       $      4,462            202               -           4,664
                                       ============   ============    ============    ============
</TABLE>

(4)  Loans Held for Sale, Net and Loans Receivable, Net:
     Loans held for sale, net are summarized as follows:

                                               2002           2001
                                           ------------   ------------

       One-to-four family loans            $          -            928
                                           ============   ============

     The Company originates most fixed rate loans for immediate sale to the
           Federal Home Loan Mortgage Corporation (FHLMC) or other investors.
           Generally, the sale of such loans is arranged at the time the loan
           application is received through commitments.

     The components of loans receivable in the consolidated balance sheets as
          of December 31, 2002 and 2001 were as follows:

                                                         2002           2001
                                                     ------------   ------------
       Real estate loans:
         One-to-four family                          $    171,453        111,768
         Multi-family                                       4,547          2,448
         Construction                                       1,757          5,617
         Non-residential                                   32,368         18,445
                                                     ------------   ------------
              Total mortgage loans                        210,125        138,278
       Loans secured by deposits                            3,003          2,191
       Other consumer loans                                44,238         16,455
       Commercial loans                                    36,184         14,943
                                                     ------------   ------------
                                                          293,550        171,867
       Less:
       Loans held for sale                                      -            928
       Less allowance for loan losses                       1,455            923
                                                     ------------   ------------
                                                     $    292,095        170,016
                                                     ============   ============

                                      F-22

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                           (TABLE AMOUNTS IN THOUSANDS)

(4)  Loans Held for Sale, Net and Loans Receivable, Net: (Continued)
     Impaired loans and related valuation allowance amounts at December 31, 2002
          and 2001 were as follows:

                                                         2002           2001
                                                     ------------   ------------
       Recorded investment                           $        833            766
                                                     ============   ============
       Valuation allowance                           $        177            163
                                                     ============   ============

     The average recorded investment in impaired loans for the years ended
          December 31, 2002, 2001 and 2000 was $869,000, $810,000 and $253,000,
          respectively. Interest income recognized on impaired loans was not
          significant during the years ended December 31, 2002, 2001 and 2000.

     An analysis of the change in the allowance for loan losses for the years
          ended December 31, 2002, 2001 and 2000 follows:

                                            2002          2001          2000
                                         ----------    ----------    ----------
       Balance at beginning of year      $      923           708           278
       Loans charged off                       (272)           (7)           (1)
       Recoveries                                 9             -             -
       Provision for loan losses                795           222           431
                                         ----------    ----------    ----------
       Balance at end of year            $    1,455           923           708
                                         ==========    ==========    ==========

     Nonaccrual loans totaled $833,000 and $149,000 at December 31, 2002 and
          2001, respectively.

     Loans three months or more past due still accruing interest totaled
          approximately $402,000 as of December 31, 2001. There were no loans
          three months or more past due still accruing interest as of December
          31, 2002.

(5)  Premises and Equipment:
     Components of premises and equipment included in the consolidated balance
          sheets as of December 31, 2002 and 2001 consisted of the following:

                                                         2002           2001
                                                     ------------   ------------
       Land                                          $        904            838
       Land improvements                                       84             87
       Buildings                                            3,852          2,478
       Furniture and equipment                              1,284            882
                                                     ------------   ------------
                                                            6,124          4,285
       Less accumulated depreciation                        1,165            970
                                                     ------------   ------------
                                                     $      4,959          3,315
                                                     ============   ============

     Depreciation expense was approximately $236,000, $157,000 and $119,000 for
          the years ended December 31, 2002, 2001 and 2000, respectively.

                                      F-23

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                           (TABLE AMOUNTS IN THOUSANDS

(6)  Intangible Assets:
     Under the provisions of SFAS No. 142, goodwill is tested for impairment on
          an annual basis and as events or circumstances change that would more
          likely than not reduce fair value below its carrying amount. The
          Company completed its review and determined there was no impairment of
          goodwill as of December 31, 2002.

     The changes in the carrying amounts of other intangible assets for the year
          ended December 31, 2002 is as follows:

                                                       Insurance
                                        Core Deposit   Contracts
                                         Intangible    Intangible      Total
                                         ----------    ----------    ----------
       Balance, January 1, 2002          $        -             -             -

       Fulton Division acquisition            2,509             -         2,509
       Fall and Fall acquisition                  -           128           128
       Amortization                            (120)           (6)         (126)
                                         ----------    ----------    ----------

       Balance, December 31 2002         $    2,389           122         2,511
                                         ==========    ==========    ==========

     The estimated amortization expense for intangible assets for the subsequent
          five years is as follows:

                                                        Insurance
                                         Core Deposit   Contracts
                                          Intangible    Intangible      Total
                                          ----------    ----------    ----------
       2003                               $      358            18           376
       2004                                      358            18           376
       2005                                      358            18           376
       2006                                      358            18           376
       2007                                      358            18           376
       Thereafter                                599            32           631
                                          ----------    ----------    ----------

                                          $    2,389           122         2,511
                                          ==========    ==========    ==========

(7)  Deposits:
     At December 31, 2002, the scheduled maturities of other time deposits were
          as follows:

                2003                                     $   126,417
                2004                                          44,645
                2005                                          18,965
                2006                                          39,274
                2007                                          15,552
                                                         -----------
                                                         $   244,853
                                                         -----------

     The amount of other time deposits with a minimum denomination of $100,000
          was approximately $61,740,000 and $25,350,000 at December 31, 2002 and
          2001, respectively.

                                      F-24

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                (TABLE AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)

(7)  Deposits: (Continued)
     Interest expense on deposits for the years ended December 31, 2002, 2001
          and 2000 are summarized as follows:

                                             2002          2001          2000
                                          ----------    ----------    ----------
       Demand and NOW accounts            $      385           213           222
       Money market accounts                     187           829         1,051
       Savings                                   920           141           194
       Other time deposits                     6,598         7,523         6,464
                                          ----------    ----------    ----------
                                          $    8,090         8,706         7,931
                                          ==========    ==========    ==========

     The Bank maintains clearing arrangements for its demand, NOW and money
          market accounts with Compass Bank. The Bank is required to maintain
          certain cash reserves in its account to cover average daily clearings.
          At December 31, 2002, average daily clearings were approximately
          $2,739,000.

(8)  Advances from Federal Home Loan Bank:
     FHLB advances are summarized as follows:

<TABLE>
<CAPTION>
                                                              December 31,
                                       -----------------------------------------------------------
                                                  2002                            2001
                                       ---------------------------    ----------------------------
                                                        Weighted                        Weighted
       Type of Advances                   Amount      Average Rate       Amount       Average Rate
       -----------------------------   ------------   ------------    ------------    ------------
<S>                                    <C>                    <C>     <C>                     <C>
       Fixed-rate                      $     23,623           4.57%   $     38,747            4.24%
                                       ============   ============    ============    ============
</TABLE>

     Scheduled maturities of FHLB advances as of December 31, 2002 are as
          follows:

                                                          Amount at
                Years Ended                                Stated
                December 31,                              Maturity
                ---------------------                    -----------
                2003                                     $       324
                2004-2008                                      5,299
                2009-2011                                     18,000
                                                         -----------
                                                         $    23,623
                                                         ===========

     The Bank has an approved line of credit of $20,000,000 at December 31, 2002
          which is secured by a blanket agreement to maintain residential first
          mortgage loans with a principal value of 125% of the outstanding
          advances and has a variable interest rate. The Company can increase
          its borrowings from the FHLB to $88,871,000 at December 31, 2002.

                                      F-25

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000

(9)  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, 2002, the
          Bank has not been requested to advance funds on any of the standby
          letters of credit.

                                      F-26

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000

(9)  Financial Instruments: (Continued)
     The estimated fair values of financial instruments were as follows at
          December 31, 2002:

<TABLE>
<CAPTION>
                                                                                    Estimated
                                                                      Carrying         Fair
                                                                       Amount         Value
                                                                    ------------   ------------
       <S>                                                          <C>            <C>
       Financial assets:
         Cash and due from banks                                    $      9,288          9,288
         Interest-earning deposits in Federal Home Loan Bank                 905            905
         Federal funds sold                                                3,840          3,840
         Securities available for sale                                   103,147        103,147
         Securities held to maturity                                       2,932          3,032
         Loans receivable                                                292,095        294,724
         Accrued interest receivable                                       2,329          2,329
         Bank owned life insurance                                         1,547          1,547
       Financial liabilities:
         Deposits                                                        353,655        365,710
         Advances from borrowers for taxes and insurance                     211            211
         Advances from Federal Home Loan Bank                             23,623         24,890
       Off-balance-sheet liabilities:
         Commitments to extend credit                                          -              -
         Commercial letters of credit                                          -              -
</TABLE>

     The estimated fair values of financial instruments were as follows at
          December 31, 2001:

<TABLE>
<CAPTION>
                                                                                    Estimated
                                                                      Carrying         Fair
                                                                       Amount         Value
                                                                    ------------   ------------
       <S>                                                          <C>            <C>
       Financial assets:
         Cash and due from banks                                    $      3,941          3,941
         Interest-earning deposits in Federal Home Loan Bank                  39             39
         Federal funds sold                                                  690            690
         Securities available for sale                                   100,519        100,519
         Securities held to maturity                                       4,462          4,664
         Loans held for sale                                                 928            928
         Loans receivable                                                170,016        172,730
         Accrued interest receivable                                       1,405          1,405
       Financial liabilities:
         Deposits                                                        200,316        203,169
         Advances from borrowers for taxes and insurance                     201            201
         Advances from Federal Home Loan Bank                             38,747         40,177
       Off-balance-sheet liabilities:
         Commitments to extend credit                                          -              -
         Commercial letters of credit                                          -              -
</TABLE>

                                      F-27

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000

(10) 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 and cash equivalents with financial institutions exceeded the
          insurance coverage as of December 31, 2002 and 2001. The excess
          balance of such items as of December 31, 2002 and 2001 was $3.9
          million and $567,000, respectively.

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

     During September 2001, the Bank Board of Directors authorized management to
          terminate the plan effective December 31, 2001. This action resulted
          in the Company recognizing a pretax curtailment loss of approximately
          $1.4 million.

     The following table sets forth the plan's funded status and amounts
          recognized in the consolidated balance sheets at December 31:

                                                       2002           2001
                                                   ------------   ------------
       Change in benefit obligation:
          Benefit obligation at beginning of year  $      2,633          3,630
          Service cost                                        -             92
          Interest costs                                    195            266
          Actuarial loss                                     10            204
          Benefits paid                                    (195)           (60)
          Settlements                                         -           (830)
          Curtailment                                         -           (669)
                                                   ------------   ------------
          Benefit obligation at end of year               2,643          2,633
                                                   ------------   ------------

                                      F-28

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                (Table Amounts in Thousands, Except Percent ages)

(11) Employee Benefit Plans: (Continued)
     Pension Plan (Continued)

<TABLE>
<CAPTION>
                                                                        2002           2001
                                                                    ------------   ------------
       <S>                                                          <C>            <C>
       Change in plan assets
          Fair value of plan assets at beginning of year                   1,244          2,011
          Actual return on plan assets                                        55            106
          Employers contributions                                            311            109
          Benefits paid                                                     (195)           (60)
          Settlements                                                          -           (922)
                                                                    ------------        -------
          Fair value of plan assets at end of year                         1,415          1,244
                                                                    ------------        -------

       Funded status                                                      (1,228)        (1,389)
       Unrecognized net asset                                                (16)           (21)
                                                                    ------------        --------
          Accrued pension cost                                      $     (1,244)        (1,410)
                                                                    ============        =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                        2002          2001           2000
                                                      ---------     ---------     ---------
       <S>                                                 <C>           <C>           <C>
       Discount rate                                       6.75%         7.70%         7.75%
       Expected long-term rate of return on assets         7.00%         7.00%         7.00%
       Rate of increase in compensation levels              N/A          4.50%         4.50%
</TABLE>

     The components of net periodic pension cost for the years ended December
          31, were as follows:

<TABLE>
<CAPTION>
                                                         2002         2001         2000
                                                       ---------    ---------    ---------
       <S>                                             <C>                 <C>         <C>
       Service cost                                    $       -           92          101
       Interest cost on projected benefit obligation         195          266          184
       Expected return on plan assets                        (85)        (132)        (147)
       Amortization of transitional asset                     (6)          (7)          (7)
       Amortization of prior service cost                      -           15           18
       Amortization of net loss                               42           85            3
                                                       ---------    ---------    ---------
       Net periodic pension cost                       $     146          319          152
                                                       =========    =========    =========
</TABLE>

                                      F-29

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000

(11) Employee Benefit Plans: (Continued)
     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. 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 provided 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 in 2000. There was no compensation expense related to the
          MRP for the years ended December 31, 2002 and 2001.

     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 reserved 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 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.

                                      F-30

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000

(11) Employee Benefit Plans: (Continued)
     Stock Option Plan (Continued)
     The options granted 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).

     The following summary represents the activity under the stock option plans:

<TABLE>
<CAPTION>
                                                                       Weighted
                                                       Number of   Average Exercise
                                                         Shares         Price
                                                      -----------  ----------------
       <S>                                            <C>          <C>
       Options outstanding, January 1, 2001               520,475  $          16.85
       Granted                                             50,000             12.33
       Exercised                                                -
       Forfeited                                         (168,166)            17.42
                                                      -----------
       Options outstanding, December 31, 2001             402,309             16.05
       Granted
       Exercised                                                -
       Forfeited                                                -
                                                     ------------
       Options outstanding, December 31, 2002             402,309             16.05
                                                     ============
</TABLE>

     The following is a summary of stock options outstanding at December 31,
          2002:

                          Weighted
                          Average
                         Remaining
         Exercise       Contractual       Options         Options
           Price        Life (Years)    Outstanding     Exercisable
       -------------   -------------   -------------   -------------
       $       17.42             5.2         312,309         312,309
               12.33             8.4          50,000          12,500
               10.00             7.4          40,000          20,000
       -------------   -------------   -------------   -------------
               16.05             5.8         402,309         344,809
                                       =============   =============

     The weighted average fair value of options granted during December 31, 2001
          and 2000 was $7.68 and $8.13 per share, respectively. 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 3.44% and 6.28%,
          volatility of 32.00% and 35.00%, expected dividend yield of 3.67% and
          3.96% and expected life of six years for options granted during the
          years ended December 31, 2001 and 2000, respectively.

                                      F-31

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                (Table Amounts in Thousands, Except Percentages)

(11) Employee Benefit Plans: (Continued)
     401(k) Plan
     During 2002, the Bank initiated a 401(k) retirement program. The plan is
          available to all employees who meet minimum eligibility requirements.
          Participants may generally contribute up to 15% of earnings, and in
          addition, management will match employee contributions up to 4%.
          Expense related to Company contributions amounted to $135,000 in 2002.

     Deferred Compensation Plan
     During the third quarter of 2002, the Company purchased assets and assumed
          the liabilities relating to a nonqualified deferred compensation plan
          for certain employees of the Fulton division. The Company owns single
          premium life insurance policies on the life of each participant and is
          the beneficiary of the policy value. When a participant retires, the
          benefits accrued for each participant will be distributed to the
          participant in equal installments for 15 years.

     The Deferred Compensation Plan also provides the participant with life
          insurance coverage, which is a percentage of the net death proceeds
          for the policy, if any, applicable to the participant.

(12) Income Taxes:

     The provision for income taxes for the years ended December 31, 2002, 2001
          and 2000 consisted of the following:

                                             2002          2001          2000
                                          ----------    ----------    ----------
       Current
          Federal                         $    2,217         1,436         1,282
          State                                    -             -             -
                                          ----------    ----------    ----------
                                               2,217         1,436         1,282
       Deferred                                  129          (463)           91
                                          ----------    ----------    ----------
                                          $    2,346           973         1,373
                                          ==========    ==========    ==========

     Total income tax expense for the years ended December 31, 2002, 2001 and
          2000 differed from the amounts computed by applying the U.S. federal
          income tax rate of 34 percent to income before income taxes as
          follows:

<TABLE>
<CAPTION>
                                                    2002            2001          2000
                                                  ----------     ----------    ----------
       <S>                                        <C>                   <C>         <C>
       Expected federal income tax
        expense at statutory tax rate             $    2,360            953         1,373
       Other                                             (14)            20             -
                                                  ----------     ----------    ----------
       Total federal income tax expense           $    2,346            973         1,373
                                                  ==========     ==========    ==========
       Effective rate                                   33.8%          34.6%         34.0%
                                                  ==========     ==========    ==========
</TABLE>

     The components of deferred taxes as of December 31, 2002 and 2001 are
          summarized as follows:

                                      F-32

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                (Table Amounts in Thousands, Except Percentages)

(12) Income Taxes: (Continued)

                                                        2002           2001
                                                    ------------   ------------
       Deferred tax liabilities:
           FHLB stock dividends                     $       (541)          (504)
           Post 1987 bad debt reserves                       (50)          (100)
           Unrealized appreciation
             on securities available for sale               (451)          (294)
                                                    ------------   ------------
                                                          (1,042)          (898)
                                                    ------------   ------------
       Deferred tax assets:
           Bad debt reserves                                 495            314
           Pension cost                                      473            462
           Accrued interest expense                            5             13
           Accrued expenses                                   22            191
                                                    ------------   ------------
                                                             995            980
                                                    ------------   ------------
       Net deferred tax asset (liability)           $        (47)            82
                                                    ============   ============

     Thrift institutions, in determining taxable income, were previously allowed
          special bad debt deductions based on specified experience formula 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, 2002 and 2001, the
          Bank recaptured approximately $146,000 of tax bad debt reserves into
          taxable income. A similar amount will be recaptured in 2003.

     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).

                                      F-33

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                (Table Amounts in Thousands, Except Percentages)

(12) 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, 2002 and 2001 includes approximately
          $4,027,000 which represents such bad debt deductions for which no
          deferred income taxes have been provided.

(13) 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, 2002 and 2001, was $5,049,000 and
          $3,482,000, respectively. During 2002, new loans to such related
          parties amounted to $1,907,000, and repayments amounted to $340,000.
          During 2001, new loans to such related parties amounted to $3,318,000
          and repayments amounted to $2,687,000.

(14) 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, 2002 and 2001 of
          approximately $6,346,000 and $10,638,000, respectively. Of these
          amounts, approximately $930,000 and $123,000 as of December 31, 2002
          and 2001, respectively, were for fixed rate loans. The interest rates
          for the fixed rate loan commitments ranged from 5.13% to 6.25% and
          5.50% to 6.25% for December 31, 2002 and 2001, respectively. Unused
          lines of credit were approximately $17,075,000 and $6,986,000 as of
          December 31, 2002 and 2001, respectively.

     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.

                                      F-34

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                (Table Amounts in Thousands, Except Percentages)

(15) Regulatory Matters:
     The Company is a unitary thrift holding company and, as such, is subject to
          regulation, examination and supervision by the OTS.

     The Bank is also subject to various regulatory requirements administered by
          the OTS. Failure to meet minimum capital requirements can initiate
          certain mandatory and possibly additional discretionary actions by
          regulators that, if undertaken, could have a direct material effect on
          the Company's and the Bank's financial statements. Under capital
          adequacy guidelines and the regulatory framework for prompt corrective
          action, the Bank must meet specific capital guidelines that involve
          quantitative measures of the Bank's assets, liabilities and certain
          off-balance sheet items as calculated under regulatory accounting
          practices. The Bank's capital amounts and classification are also
          subject to qualitative judgments by the regulators about components,
          risk weightings and other factors.

     Quantitative measures established by regulation to ensure capital adequacy
          require the Bank to maintain minimum amounts and ratios (set forth in
          the table below) of tangible and core capital (as defined in the
          regulations) to adjusted total assets (as defined), and of total
          capital (as defined) and Tier 1 to risk weighted assets (as defined).
          Management believes, as of December 31, 2002 and 2001, that the Bank
          meets all capital adequacy requirements to which it is subject.

     The most recent notification from the OTS categorized the Bank as well
          capitalized under the regulatory framework for prompt corrective
          action. To be categorized as well capitalized the Bank must maintain
          minimum total, tangible and core capital ratios as set forth in the
          table below. There are no conditions or events since that notification
          that management believes have changed the institution's category.

     The Company's and the Bank's actual capital amounts and ratios as of
          December 31, 2002 and 2001 are presented below (dollars in thousands):

                                      F-35

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                (Table Amounts in Thousands, Except Percentages)

(15) Regulatory Matters: (Continued)

<TABLE>
<CAPTION>
                                                                                                         Required to be Categorized
                                                                                                         as Well Capitalized Under
                                          Company                  Bank           Required for Capital    Prompt Corrective Action
                                           Actual                 Actual           Adequacy Purposes            Provisions
                                    -------------------    -------------------    --------------------   --------------------------
                                     Amount     Ratio       Amount     Ratio       Amount     Ratio       Amount           Ratio
                                    --------   --------    --------   --------    --------   ---------   --------       ------------

       <S>                            <C>          <C>       <C>          <C>       <C>          <C>     <C>                  <C>
       AS OF DECEMBER 31, 2002
       Tangible capital to
       adjusted total assets          39,803        9.5%     37,705        9.0%      6,265       1.50%        N/A               N/A

       Core capital to adjusted
       total assets                   39,803        9.5%     37,705        9.0%     16,708       4.00    $ 20,884              5.00%

       Total capital to risk
       weighted assets                41,258       15.5%     39,160       14.8%     21,129       8.00      26,411             10.00

       Tier I capital to risk
       weighted assets                39,803       14.9%     37,705       14.3%        N/A        N/A      15,847              6.00

       AS OF DECEMBER 31, 2001
       Tangible capital to
       adjusted total assets          43,019       15.1%     39,191       13.8%      4,271       1.50%        N/A               N/A

       Core capital to adjusted
       total assets                   43,019       15.1%     39,191       13.8%     11,389       4.00    $ 14,237              5.00%

       Total capital to risk
       weighted assets                43,942       29.6%     40,114       27.0%     11,890       8.00      14,863             10.00

       Tier I capital to risk
       weighted assets                43,019       28.9%     39,191       26.4%        N/A        N/A       8,918              6.00
</TABLE>

                                      F-36

<PAGE>



                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000

(16) 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 capital distributions reducing equity below the
          required balance of the liquidation account. The Bank paid dividends
          to the Company totaling $8,000,000 and $3,880,000 during the years
          ended December 31, 2001 and 2000, respectively.

     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 2001 and 2000, the Company requested and received regulatory
          approval to acquire a total of 500,000 shares of its outstanding
          common stock. As of December 31, 2002, 408,909 shares had been
          repurchased at an average price of $11.88 per share.

(17) Earnings Per Share:
     Earnings per share of common stock are based on the weighted average number
          of basic shares and dilutive shares outstanding during the year.

     The following is a reconciliation of weighted average common shares for the
          basic and dilutive earnings per share computations:

<TABLE>
<CAPTION>
                                                  Years Ended December 31,
                                            --------------------------------------
                                               2002          2001          2000
                                            ----------    ----------    ----------
       <S>                                   <C>           <C>           <C>
       Basic Earnings per Share:
           Weighted average common shares    3,630,668     3,758,053     3,979,664
                                            ==========    ==========    ==========
       Diluted Earnings per Share:
           Weighted average common shares    3,630,668     3,758,053     3,979,664
           Diluted effect of stock options       5,812         6,639             -
                                            ----------    ----------    ----------
       Weighted average common and
           incremental shares                3,636,480     3,764,692     3,979,664
                                            ==========    ==========    ==========
</TABLE>

                                      F-37

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                          (Table Amounts in Thousands)

(18) Condensed Parent Company Only Financial Statements:
     The following condensed balance sheets as of December 31, 2002 and 2001 and
          condensed statements of income and cash flows for the years ended
          December 31, 2002, 2001 and 2000 of the parent company only should be
          read in conjunction with the consolidated financial statements and the
          notes thereto.

     Consolidated Balance Sheets:

                                                        2002           2001
                                                    ------------   ------------
       Assets:
           Cash and due from banks                  $         25             12
           Receivable from subsidiary                         69          4,026
           Federal funds sold                              2,440            190
           Investment in subsidiary                       23,860         18,876
                                                    ------------   ------------
                  Total assets                      $     26,394         23,104
                                                    ============   ============
       Liabilities and equity
         Liabilities:
           Dividends payable                                 399            399
                                                    ------------   ------------
                  Total liabilities                          399            399
                                                    ------------   ------------
         Equity:
           Common stock                                       40             40
           Additional paid-in capital                     21,442         21,443
           Retained earnings                               8,495          5,497
           Treasury stock                                 (4,857)        (4,845)
           Accumulated other comprehensive                   875            570
                                                    ------------   ------------
                  Total equity                            25,995         22,705
                                                    ------------   ------------
                  Total liabilities and equity      $     26,394         23,104
                                                    ============   ============

                                      F-38

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                          (Table Amounts in Thousands)

(18) Condensed Parent Company Only Financial Statements: (Continued)

     Condensed Income Statements:

<TABLE>
<CAPTION>
                                                              2002        2001        2000
                                                            --------    --------    --------
       <S>                                                  <C>           <C>         <C>
       Interest and dividend income
           Dividend income                                  $    -         8,000       3,880
           Time deposits                                           4          56          34
                                                            --------    --------    --------
           Total interest and dividend income                      4       8,056       3,914
                                                            --------    --------    --------
       Non-interest expenses                                     132         133         160
                                                            --------    --------    --------
       Income (loss) before income taxes and equity
        in undistributed earnings of Bank                       (128)      7,923       3,754
       Income tax benefit                                        (43)        (27)        (42)
                                                            --------    --------    --------
       Income (loss) before equity in undistributed
        earnings of Bank                                         (85)      7,950       3,796
       Equity in undistributed earnings of Bank                4,679      (6,111)     (1,130)
                                                            --------    --------    --------
       Net income                                           $  4,594       1,839       2,666
                                                            ========    ========    ========
</TABLE>

                                      F-39

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                          (Table Amounts in Thousands)

(18) Condensed Parent Company Only Financial Statements: (Continued)

     Condensed Statement of Cash Flows:

<TABLE>
<CAPTION>
                                                                        2002        2001        2000
                                                                      --------    --------    --------
       <S>                                                            <C>           <C>         <C>
       Cash flows from operating activities:
           Net income                                                 $  4,594       1,839       2,666
           Adjustments to reconcile net income to
             net cash (used in) provided by operating activities:
           Equity in undistributed earnings of Bank                     (4,679)      6,111       1,130
           Increase (decrease) in:
             Current income taxes payable                                  (42)        (27)        (50)
             Accrued expenses                                              -           (13)         13
                                                                      --------    --------    --------
               Net cash (used in) provided by operating activities        (127)      7,910       3,759
                                                                      --------    --------    --------
       Cash flows for investing activities:
           (Advance for) payment on  receivable
             from subsidiary                                             4,000      (4,000)        -
           Net (increase) decrease in federal funds sold                (2,250)        940        (930)
                                                                      --------    --------    --------
               Net cash provided (used in) by investing activities       1,750      (3,060)       (930)
                                                                      --------    --------    --------
       Cash flows from financing activities:
           Recovery of proceeds from issuance
            of common stock                                                  -           -          40
           Purchase of treasury stock                                      (12)     (3,202)     (1,643)
           Dividends paid                                               (1,598)     (1,666)     (1,626)
                                                                      --------    --------    --------
               Net cash used in financing
                 activities                                             (1,610)     (4,868)     (3,229)
                                                                      --------    --------    --------
       Net increase (decrease) in cash                                      13         (18)       (400)
       Cash at beginning of year                                            12          30         430
                                                                      --------    --------    --------
       Cash at end of year                                            $     25          12          30
                                                                      ========    ========    ========
</TABLE>

                                      F-40

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
             (Table Amounts in Thousands, Except Per Share Amounts)

(19) Quarterly Results of Operations: (Unaudited)
     Summarized unaudited quarterly operating results for the years ended
          December 31, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                     First         Second          Third          Fourth
                                                    Quarter       Quarter         Quarter        Quarter
                                                  ------------   ------------   ------------   ------------
       <S>                                        <C>               <C>            <C>            <C>
       December 31, 2002:

          Interest income                         $      4,587          4,679          4,950          5,826
          Interest expense                               2,049          2,001          2,332          3,038
                                                  ------------   ------------   ------------   ------------
          Net interest income                            2,538          2,678          2,618          2,788
          Provision for loan losses                         90             90            250            365
                                                  ------------   ------------   ------------   ------------
          Net interest income after
               provision for loan losses                 2,448          2,588          2,368          2,423
          Noninterest income                               436            402            677            795
          Noninterest expense                            1,136          1,141          1,144          1,776
                                                  ------------   ------------   ------------   ------------
          Income before income taxes                     1,748          1,849          1,901          1,442
          Income taxes                                     615            624            632            475
                                                  ------------   ------------   ------------   ------------
          Net income                              $      1,133          1,225          1,269            967
                                                  ============   ============   ============   ============
          Basic earnings per share                $       0.31           0.34           0.35           0.26
                                                  ============   ============   ============   ============
          Diluted earnings per share              $       0.31           0.34           0.35           0.26
                                                  ============   ============   ============   ============
          Weighted average shares
               outstanding:
                 Basic                               3,631,499      3,630,396      3,630,396      3,630,396
                                                  ============   ============   ============   ============
                 Diluted                             3,631,499      3,636,979      3,637,928      3,639,076
                                                  ============   ============   ============   ============

       December 31, 2001:

          Interest income                         $      4,302          4,380          4,445          4,435
          Interest expense                               2,360          2,473          2,437          2,482
                                                  ------------   ------------   ------------   ------------
          Net interest income                            1,942          1,907          2,008          1,953
          Provision for loan losses                         60             42             60             60
                                                  ------------   ------------   ------------   ------------
          Net interest income after
           provision for loan losses                     1,882          1,865          1,948          1,893
          Noninterest income                                98            180            279            160
          Noninterest expense                              934          1,017          2,792            750
                                                  ------------   ------------   ------------   ------------
</TABLE>

                                      F-41

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
             (Table Amounts in Thousands, Except Per Share Amounts)

(19) Quarterly Results of Operations: (Unaudited) (Continued)

<TABLE>
<CAPTION>
                                                First         Second         Third           Fourth
                                               Quarter        Quarter        Quarter         Quarter
                                             ------------   ------------   ------------    ------------
       <S>                                   <C>               <C>            <C>             <C>
       Income (loss) before
        income taxes                         $      1,046          1,028           (565)          1,303
       Income tax expense (benefit)                   377            367           (171)            400
                                             ------------   ------------   ------------    ------------
       Net income (loss)                     $        669            661           (394)            903
                                             ============   ============   ============    ============
       Basic earnings (loss)
        per share                            $       0.17           0.17          (0.11)           0.25
                                             ============   ============   ============    ============
       Diluted earnings (loss)
        per share                            $       0.17           0.17          (0.11)           0.25
                                             ============   ============   ============    ============
       Weighted average shares
        outstanding
          Basic                                 3,856,949      3,806,893      3,718,780       3,650,668
                                             ============   ============   ============    ============
          Diluted                               3,856,949      3,806,893      3,726,347       3,657,307
                                             ============   ============   ============    ============
</TABLE>

(20) Comprehensive Income:

     SFAS 130, Reporting Comprehensive Income, 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,
          2002, 2001 and 2000:

<TABLE>
<CAPTION>
                                                        Pre-Tax      (Expense)     Net of Tax
                                                         Amount       Benefit        Amount
                                                       ----------    ----------    ----------
       <S>                                             <C>                 <C>           <C>
       December 31, 2002:

          Unrealized holding gains for the period      $    1,030          (350)          680
          Reclassification adjustments for gains
                included in net income                       (568)          193          (375)
                                                       ----------    ----------    ----------
                                                       $      462          (157)          305
                                                       ==========    ==========    ==========

       December 31, 2001:

          Minimum pension liability adjustment         $      336          (114)          222
          Unrealized holding gains for the period             856          (291)          565
          Reclassification adjustment for gains
            included in net income                            (88)           30           (58)
                                                       ----------    ----------    ----------
                                                       $    1,104          (375)          729
                                                       ==========    ==========    ==========
</TABLE>

                                      F-42

<PAGE>

                      HOPFED BANCORP, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                        DECEMBER 31, 2002, 2001 AND 2000
                          (Table Amounts in Thousands)

(20) Comprehensive Income: (Continued)

<TABLE>
<CAPTION>
                                                        Pre-Tax       (Expense)    Net of Tax
                                                         Amount        Benefit       Amount
                                                       ----------    ----------    ----------
       <S>                                             <C>                 <C>           <C>
       December 31, 2000:
          Minimum pension liability adjustment         $     (336)          114          (222)
          Unrealized holding gains for the period           1,458          (496)          962
                                                       ----------    ----------    ----------
                                                       $    1,122          (382)          740
                                                       ==========    ==========    ==========
</TABLE>

                                      F-43