The idea of being both banker and neighbor is more than a corporate slogan at Heritage Bank. It is the means by which we measure our company’s delivery of value-added services to our ever-growing markets. We believe it has been an effective means of creating our public persona and of cementing our commitment to being THE community banking system in western Kentucky and Tennessee. In each of our existing and newly developed locations, we have worked to strongly connect the people of Heritage Bank to the people we serve. The results are significant and we believe that all signs point to progress. This progress continued with our plans to establish Heritage Bank offices in the fastest growing city in Tennessee— Clarksville, Tennessee. This rapidly developing city is the 17th fastest growing municipality in the United States. Heritage Bank now has a pronounced presence in this potentially profitable metro area with our new Trenton Road office, Madison Street office and downtown location. Clarksville and Montgomery County serve a population of more than 136,000 people. Heritage Bank currently has 11 ATMs in this market alongside our new full-service banking center. Heritage Bank gained even greater concentration in the middle Tennessee markets with our acquisition of four Amsouth Bank offices in Cheatham and Houston Counties. Our bank now has a presence in Ashland City, Kingston Springs and Pleasant View in Cheatham County. We also have an office in Erin, Tennessee in Houston County. These newly-acquired neighborhood banks further deepens our investment in the western Tennessee market and opens doors for significantly greater business development in the years to come as we widen our geographic range. By the end of 2007, Heritage Bank will have expanded its number of neighborhood banks to a total of 18 sites in the two-state area. An exciting move for all of us at Heritage Bank last year was the relocation of many of our corporate offices to our new Lafayette Road location. This new state-of-the-art 25,000 square-foot facility houses retail banking services and an operational center for the company. We believe the efficiencies afforded by this new location will provide even greater potential for sustained growth and provides for us a third Hopkinsville bank center along with heightened visibility. Also in 2006, we opened our new Calvert City office and expanded our Murray office, aiding us in obtaining even greater market share in both of these communities. Banking Outside the Box Heritage Bank has found new non-interest income possibilities with the addition of two consumer service divisions via Heritage Solutions and Heritage Mortgage Services. Heritage Solutions is a Company designed to meet the unique needs of clients at every stage of life. From the young professional at the start of a career to the married couple starting a new family to the family starting to contemplate retirement, our starting point is always the same—the services of Heritage Solutions. This full-service financial Company offers a wide range of investment portfolio products and services to a variety of insurance products. Offices are located in Murray, Kentucky and Dickson, Tennessee. Also in 2006, Heritage Bank acquired ownership of the former Preferred Mortgage Company in Clarksville. The management experience of the local staff allowed Heritage Mortgage Services to make a seamless transition into Clarksville neighborhoods with the provision of home financing and mortgage products, adding new dimension to the Company’s array of financial offerings. Banking Made Simple Two media campaigns in 2006 were designed to stimulate the utilization of online banking and the employment of e-statements resulting in increasing numbers of online banking users and electronic statement customers. This availability simplifies our customers’ record-keeping responsibilities and keeps us more intrinsically connected to our online customers. We know from experience that the more ways we can find to serve our client base, the deeper our relationship with them becomes and the greater our opportunity to cross-sell other products and services. Signs of Success Everywhere you look these days, there are signs of financing provided by Heritage Bank. In the previous year we continued to expand our commercial and small business product lines resulting in millions of dollars in new commercial loans. It is our corporate intention to establish Heritage Bank as the “go-to” institution for both small business financing and corporate funding among all types and sizes of business and industry. The widespread involvement of our managers and staff in a host of community concerns aids us in forming close relationships with civic leaders and aspiring entrepreneurs, allowing us the opportunity to form profitable alliances. Respected Results It is for these reasons and a host of others that we are proud to present to you, our valued investors, this report of our financial growth in 2006. I am pleased to report that as of December 31, 2006 total assets increased to $770.9 million compared to $639.6 million in 2005. Deposits increased to $569.4 million compared to $482.7 million last year. Loans receivable reached a total of $495.0 million in 2006 from $397.3 million in the previous year. The company’s net income was reported at $3.9 million in 2006 compared to 2005’s total of $4.1 million. A Bright Horizon This is an exciting time to be a part of Heritage Bank and Hopfed Bancorp. In the year ahead we seek to discover new ways to utilize the continuous development of technological enhancements. We challenge our managers and staff to provide new insights into customer recruitment and retention. We strive to develop new and creative ways to make our company competitive in an ever more global arena. With your support and investment in those ideals, we look forward to yet another bright horizon for this historically successful Company. John E. Peck, President and CEO

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