Narrated Al-Aswad:
While we were sitting in a circle in `Abdullah's gathering, Hudhaifa came and stopped before us, and greeted us and then said, "People better than you became hypocrites." Al-Aswad said: I testify the uniqueness of Allah! Allah says: "Verily! The hypocrites will be in the lowest depths of the Fire." (4.145) On that `Abdullah smiled and Hudhaifa sat somewhere in the Mosque. `Abdullah then got up and his companions (sitting around him) dispersed. Hudhaifa then threw a pebble at me (to attract my attention). I went to him and he said, "I was surprised at `Abdullah's smile though he understood what I said. Verily, people better than you became hypocrite and then repented and Allah forgave them."
USC-MSA web (English) reference: Vol. 6, Book 60, Hadith 126
Arabic reference: Book 65, Hadith 4602