10-Q 1 f10q1223_kentucky.htm QUARTERLY REPORT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended December 31, 2023

 

OR

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from ____________ to _______________

 

Commission File Number: 0-51176

 

KENTUCKY FIRST FEDERAL BANCORP

(Exact name of registrant as specified in its charter)

 

United States of America   61-1484858
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

655 Main Street, Hazard, Kentucky 41702

(Address of principal executive offices)(Zip Code)

 

(502) 223-1638

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbol(s)   Name of each exchange on which registered
Common Stock, $0.01 par value per share   KFFB   The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
Non-Accelerated filer Smaller Reporting Company
    Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: At February 9, 2024, the latest practicable date, the Corporation had 8,086,715 shares of $.01 par value common stock outstanding.

 

 

 

 

 

 

INDEX

 

        Page
PART I FINANCIAL INFORMATION   1
         
  ITEM 1 FINANCIAL STATEMENTS    
         
    Condensed Consolidated Balance Sheets   1
         
    Condensed Consolidated Statements of Operations   2
         
    Condensed Consolidated Statements of Comprehensive Income   3
         
    Consolidated Statements of Changes in Shareholders’ Equity   4
         
    Condensed Consolidated Statements of Cash Flows   6
         
    Notes to Condensed Consolidated Financial Statements   8
         
  ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations   30
         
  ITEM 3 Quantitative and Qualitative Disclosures About Market Risk   39
         
  ITEM 4 Controls and Procedures   39
         
PART II OTHER INFORMATION   40
         
SIGNATURES   43

 

i

 

 

PART I-FINANCIAL INFORMATION

 

ITEM 1: Financial Statements

 

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)

 

   December 31,   June 30, 
   2023   2023 
ASSETS        
         
Cash and due from financial institutions  $1,992   $2,284 
Fed funds sold   684    665 
Interest-bearing demand deposits   11,908    5,218 
Cash and cash equivalents   14,584    8,167 
           
Securities available-for-sale   10,918    12,080 
Securities held-to-maturity, at amortized cost- approximate fair value of $223 and $259 at December 31, 2023 and June 30, 2023, respectively   234    274 
Loans held for sale   270    
 
Loans, net of allowance for credit loss of $2,132 and $1,634 at December 31, 2023 and June 30, 2023, respectively1   325,648    313,807 
Real estate owned, net   10    70 
Premises and equipment, net   4,361    4,435 
Federal Home Loan Bank stock, at cost   4,243    4,623 
Accrued interest receivable   1,078    902 
Bank-owned life insurance   2,873    2,831 
Goodwill   947    947 
Prepaid federal income taxes   241    144 
Prepaid expenses and other assets   840    742 
           
Total assets  $366,247   $349,022 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
Deposits  $244,629   $226,309 
Federal Home Loan Bank advances   71,008    70,087 
Advances by borrowers for taxes and insurance   334    793 
Accrued interest payable   167    70 
Accrued income taxes   
    
 
Deferred income taxes   216    513 
Other liabilities   710    539 
Total liabilities   317,064    298,311 
           
Commitments and contingencies   
    
 
           
Shareholders’ equity          
Preferred stock, 500,000 shares authorized, $.01 par value; no shares issued and outstanding   
    
 
Common stock, 20,000,000 shares authorized, $.01 par value; 8,596,064 shares issued   86    86 
Additional paid-in capital   34,891    34,891 
Retained earnings   18,509    20,130 
Unearned employee stock ownership plan (ESOP)   
    
 
Treasury shares at cost, 509,349 common shares at December 31, 2023 and June 30, 2023, respectively   (3,969)   (3,969)
Accumulated other comprehensive income (loss)   (334)   (427)
Total shareholders’ equity   49,183    50,711 
           
Total liabilities and shareholders’ equity  $366,247   $349,022 

 

1 Beginning July 1, 2023 the ACL was estimated based on current expected credit loss methodology. Prior to July 1, 2023, the estimate was based on the incurred loss methodology. See additional discussion in Note 1, Basis of Presentation.

 

See accompanying notes to condensed consolidated financial statements.

 

1

 

 

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share data)

 

   Six months ended
December 31,
   Three months ended
December 31,
 
   2023   2022   2023   2022 
Interest income                
Loans, including fees  $7,087   $5,539   $3,628   $2,895 
Mortgage-backed securities   191    229    92    115 
Interest-bearing deposits and other   383    248    207    121 
Total interest income   7,661    6,016    3,927    3,131 
                     
Interest expense                    
Interest-bearing demand deposits   16    20    8    9 
Savings   112    173    55    71 
Certificates of Deposit   2,595    461    1,445    224 
Deposits   2,723    654    1,508    304 
Borrowings   1,610    482    762    379 
Total interest expense   4,333    1,136    2,270    683 
Net interest income   3,328    4,880    1,657    2,448 
Provision for loan losses   15    113    9    -- 
Net interest income after provision for loan losses   3,313    4,767    1,648    2,448 
                     
Non-interest income                    
Earnings on bank-owned life insurance   42    41    21    20 
Net gain on sales of loans   6    6    7    (1)
Net gain (loss) on sales of real estate owned   4    
--
    
--
    
--
 
Net gain on sale of property and equipment held for sale   
--
    10    
--
    
--
 
Other   69    110    18    50 
Total non-interest income   121    167    46    69 
                     
Non-interest expense                    
Employee compensation and benefits   2,515    2,454    1,273    1,260 
Data processing   280    230    147    124 
Occupancy and equipment   289    313    147    159 
FDIC insurance premiums   107    41    72    20 
Voice and data communications   57    61    19    27 
Advertising   88    79    49    47 
Outside service fees   213    104    135    46 
Auditing and accounting   172    176    107    95 
Regulatory assessments   32    50    15    25 
Foreclosure and real estate owned expenses (net)   43    45    20    21 
Franchise and other taxes   53    78    20    41 
Other   283    327    145    165 
Total non-interest expense   4,132    3,958    2,149    2,030 
                     
Income (loss) before income taxes   (698)   976    (455)   487 
                     
Income tax expense   (162)   229    (94)   113 
                     
NET INCOME (LOSS)  $(536)  $747   $(361)  $374 
                     
EARNINGS PER SHARE                    
Basic and diluted
  $(0.07)  $0.09   $(0.05)  $0.04 
DIVIDENDS PER SHARE  $0.10   $0.20   $0.10   $0.10 

 

See accompanying notes to condensed consolidated financial statements.

 

2

 

 

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

 

   Six months ended
December 31,
   Three months ended
December 31,
 
   2023   2022   2023   2022 
Net income (loss)  $(536)  $747   $(361)  $374 
                     
Other comprehensive gains (losses), net of tax:                    
Unrealized holding gains (losses) on securities designated as available-for-sale, net of taxes of $31, $(114), $77 and $29 during the respective periods   93    (343)   231    87 
Comprehensive income (loss)  $(443)  $404   $(130)  $461 

 

See accompanying notes to condensed consolidated financial statements.

 

3

 

 

Kentucky First Federal Bancorp

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the six months ended

(Dollar amounts in thousands, except per share data)

 

December 31, 2023

   Common
stock
   Additional
paid-in
capital
   Retained
earnings
   Treasury
shares
   Accumulated
other
comprehensive
income (loss)
   Total 
Balance at June 30, 2023  $86   $34,891   $20,130   $(3,969)  $(427)  $50,711 
Cumulative impact of adoption of ASC 326, net tax       
    (414)   
    
    (414)
Balance at July 1, 2023   86    34,891    19,716    (3,969)   (427)   50,297 
Net loss       
    (536)   
    
    (536)
Other comprehensive loss       
    
    
    93    93 
Cash dividends of $0.10 per common share       
    (671)   
    
    (671)
                               
Balance at December 31, 2023  $86   $34,891   $18,509   $(3,969)  $(334)  $49,183 

 

December 31, 2022

 

   Common
stock
   Additional
paid-in
capital
   Retained
earnings
   Unearned
employee
stock
ownership
plan
(ESOP)
   Treasury
shares
   Accumulated
other
comprehensive
loss
   Total 
Balance at June 30, 2022  $86   $34,892   $20,560   $(5)  $(3,508)  $
   $52,025 
                                    
Net income       
    747    
    
    
    747 
Allocation of ESOP shares       
    
    5    
    
    5 
Acquisition of shares for Treasury       
    
    
    (108)   
    (108)
Other comprehensive loss                            (343)   (343)
Cash dividends of $0.20 per common share       
    (685)   
    
    
    (685)
                                    
Balance at December 31, 2022  $86   $34,892   $20,622   $
   $(3,616)  $(343)  $51,641 

 

See accompanying notes to condensed consolidated financial statements.

 

4

 

 

Kentucky First Federal Bancorp

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the three months ended

(Dollar amounts in thousands, except per share data)

 

December 31, 2023

 

   Common
stock
   Additional
paid-in
capital
   Retained
earnings
   Unearned
employee
stock
ownership
plan
(ESOP)
   Treasury
shares
   Accumulated
other
comprehensive
income
   Total 
Balance at September 30, 2023  $86   $34,891   $19,206   $
      –
   $(3,969)  $(565)  $49,649 
                                    
Net income (loss)       
    (361)   
    
    
    (361)
Allocation of ESOP shares       
-
    
    
    
    
    
 
Acquisition of shares for Treasury       
    
    
    
    
    
 
Other comprehensive income                            231    231 
Cash dividends of $0.10 per common share       
    (336)   
    
    
    (336)
                                    
Balance at December 31, 2023  $86   $34,891   $18,509   $
   $(3,969)  $(334)  $49,183 

 

December 31, 2022

 

   Common
stock
   Additional
paid-in
capital
   Retained
earnings
   Unearned
employee
stock
ownership
plan
(ESOP)
   Treasury
shares
   Accumulated
other
comprehensive
income
   Total 
Balance at September 30, 2022  $86   $34,892   $20,591   $(2)  $(3,508)  $(430)  $51,629 
                                    
Net income       
    374    
    
    
    374 
Allocation of ESOP shares       
    
    2    
    
    2 
Acquisition of shares for Treasury       
    
    
    (108)        (108)
Other comprehensive income                            87    87 
Cash dividends of $0.10 per common share       
    (343)   
    
    
    (343)
                                    
Balance at December 31, 2022  $86   $34,892   $20,622   $
   $(3,616)  $(343)  $51,641 

 

See accompanying notes to condensed consolidated financial statements.

 

5

 

 

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

   Six months ended
December 31,
 
   2023   2022 
Cash flows from operating activities:        
Net income (loss)  $(536)  $747 
Adjustments to reconcile net income to net cash provided by operating activities          
Depreciation   119    132 
Accretion of purchased loan credit discount   (11)   (23)
Amortization of deferred loan origination costs (fees)   1    (3)
Amortization of premiums on investment securities   (11)   (11)
Net gain on sale of loans   (6)   (6)
Net (gain) loss on sale of real estate owned   (4)   
 
Net (gain) loss on sale of property & equipment   
    (10)
ESOP compensation expense   
    5 
Earnings on bank-owned life insurance   (42)   (41)
Provision for loan losses   15    113 
Origination of loans held for sale   (782)   (157)
Proceeds from loans held for sale   518    315 
Deferred Income Taxes   (192)   
 
Increase (decrease) in cash, due to changes in:          
Accrued interest receivable   (176)   (191)
Prepaid expenses and other assets   (195)   (51)
Accrued interest payable   97    3 
Other liabilities   113    (47)
Income taxes   
    28 
Net cash used in operating activities   (1,092)   803 
           
Cash flows from investing activities:          
Purchase of investments available for sale   
    (4,974)
Maturities of time deposits in other financial institutions   
    
 
Securities maturities, prepayments and calls:          
Held to maturity   37    33 
Available for sale   1,301    1,468 
Proceeds from sale of FHLB stock   532    1,549 
Purchase of FHLB stock   (152)   (44)
Loans originated for investment, net of principal collected   (12,338)   (24,468)
Proceeds from sale of property and equipment held for sale   
    180 
Proceeds from sale of real estate owned   64    
 
Additions to premises and equipment, net   (45)   (116)
Net cash provided by (used in) investing activities   (10,601)   (26,372)
           
Cash flows from financing activities:          
Net increase (decrease) in deposits   18,320    (30,474)
Payments by borrowers for taxes and insurance, net   (459)   (495)
Proceeds from Federal Home Loan Bank advances   48,800    94,800 
Repayments on Federal Home Loan Bank advances   (47,879)   (55,638)
Treasury stock purchased   
    (108)
Dividends paid on common stock   (671)   (685)
Net cash provided by financing activities   18,111    7,400 
           
Net increase (decrease) in cash and cash equivalents   6,418    (18,169)
           
Beginning cash and cash equivalents   8,167    25,823 
           
Ending cash and cash equivalents  $14,584   $7,654 

 

See accompanying notes to condensed consolidated financial statements.

 

6

 

 

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Unaudited)

(In thousands)

 

   Six months ended
December 31,
 
   2023   2022 
Supplemental disclosure of cash flow information:        
         
Cash paid during the period for:        
           
Income taxes  $125   $200 
           
Interest on deposits and borrowings  $4,236   $1,133 

 

See accompanying notes to condensed consolidated financial statements.

 

7

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023

(unaudited)

 

The Kentucky First Federal Bancorp (“Kentucky First” or the “Company”) was incorporated under federal law in March 2005 and is the mid-tier holding company for First Federal Savings and Loan Association of Hazard, Hazard, Kentucky (“First Federal of Hazard”) and Frankfort First Bancorp, Inc. (“Frankfort First”). Frankfort First is the holding company for First Federal Savings Bank of Kentucky, Frankfort, Kentucky (“First Federal of Kentucky”). First Federal of Hazard and First Federal of Kentucky (hereinafter collectively the “Banks”) are Kentucky First’s primary operations, which consist of operating the Banks as two independent, community-oriented savings institutions.

 

In December 2012, the Company acquired CKF Bancorp, Inc., a savings and loan holding company which operated three banking locations in Boyle and Garrard Counties in Kentucky. In accounting for the transaction, the assets and liabilities of CKF Bancorp were recorded on the books of First Federal of Kentucky in accordance with accounting standard ASC 805, Business Combinations.

 

Note 1. Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements, which represent the condensed consolidated balance sheets and results of operations of the Company, were prepared in accordance with the instructions for Form 10-Q and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles. However, in the opinion of management, all adjustments (consisting of only normal recurring adjustments) which are necessary for a fair presentation of the condensed consolidated financial statements have been included. The results of operations for the six-month period ended December 31, 2023, are not necessarily indicative of the results which may be expected for an entire fiscal year. The condensed consolidated balance sheet as of June 30, 2023, has been derived from the audited consolidated balance sheet as of that date. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report for 2023 filed with the Securities and Exchange Commission.

 

Principles of Consolidation - The consolidated financial statements include the accounts of the Company, Frankfort First, and its wholly-owned banking subsidiaries, First Federal of Hazard and First Federal of Kentucky (collectively hereinafter “the Banks”). All intercompany transactions and balances have been eliminated in consolidation.

 

Critical Accounting Policies and Estimates

 

Investments – Management determines the classification of debt securities at purchase as held-to-maturity, trading, or available-for-sale. Held-to-maturity securities are those we have both the intent and ability to hold to maturity and are reported at amortized cost. Securities that are not considered held-to-maturity are considered either trading or available-for-sale securities in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 320, Investments – Debt Securities, and are reported at fair value in the statement of financial position. We have no trading securities. The adjustment to fair value for available-for-sale securities for unrealized gains and losses is included as a separate component of shareholders’ equity, net of tax.

 

Loans – Loans for which we have the ability and intent to hold until maturity and/or payoff are reported at the carrying value of the unpaid principal reduced by unearned interest, an allowance for credit losses and unamortized deferred fees and costs and premiums. Interest income is accrued on a level yield basis. In circumstances where management believes that collection of interest income is uncollectible on specific loans, after considering economic and business conditions, collateral value and collection efforts, interest accrual is discontinued. Interest income may be recognized on the cash basis when received unless a determination has been made by management to apply all of the payment against principal.

 

8

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 1. Basis of Presentation (continued)

 

Critical Accounting Policies and Estimates (continued)

 

Allowance for Credit Losses – We account for the allowance for credit losses under ASC 326, Measurement of Credit Losses on Financial Instruments, which is commonly known as CECL. We measure expected credit losses of financial assets on a weighted average remaining maturity (WARM) basis.

 

We maintain an allowance for credit losses (“ACL”) at a level that is appropriate to cover estimated credit losses on individually evaluated loans, as well as estimated credit losses inherent in the estimated life of the loan portfolio. Credit losses are charged to and recoveries are credited to the ACL.

 

Loans with similar risk characteristics are evaluated on a collective basis within homogeneous loan pools under ASC 326. Our homogeneous loan pools are primarily determined by loan purpose and collateral type. Pools include residential real estate (composed of one-to four-family, multi-family, and construction), land, farm, nonresidential real estate, commercial and industrial, and consumer loans (composed of Loans on deposit, home equity, automobile, and unsecured). Credits that are nonaccrual status are subject to individual evaluation.

 

Historical loss rates for loans are adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions on loss recognition. Qualitative factors used to derive our ACL include delinquency trends, current economic conditions and trends, strength of supervision and administration of the loan portfolio, levels of underperforming loans, trends in loan losses and underwriting exceptions. Reasonable and supportable economic forecasts that may offset collectibility are also included as factors in our ACL model. Management continually reevaluates the other subjective factors included in its ACL analysis.

 

Income Taxes – Income tax expense is based on the taxes due on the consolidated tax return plus deferred taxes on the expected future tax benefits and consequences of temporary differences between carrying amounts and tax bases of assets and liabilities, using enacted tax rates.

 

New Accounting Standards

 

FASB ASC 326 - In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard requires credit losses on most financial assets and certain other instruments to be measured using an expected loss model, which is referred to as the current expected credit loss (CECL) model. Under this model entities estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications) from the date of initial recognition of that instrument. The ASU replaces the current accounting model for purchased credit impaired and debt securities. The allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (referred to as “PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described herein.

 

9

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 1. Basis of Presentation (continued)

 

New Accounting Standards (continued)

 

The Company will now use forward-looking information to enhance its credit loss estimates. The amendment requires enhanced disclosures to aid investors and other users of financial statements to better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of our portfolio. The largest impact to the Company was on its allowance for loan and lease losses, although the ASU also amends the accounting for credit losses on available-for-sale debt securities, held-to-maturity securities, and purchased financial assets with credit deterioration. The standard was effective for public companies for annual periods and interim periods within those annual periods beginning after December 15, 2019. However, the FASB delayed the implementation of the ASU for smaller reporting companies until years beginning after December 15, 2022, or in the Company’s case the fiscal year beginning July 1, 2023. ASU 2016-13 was applied through a cumulative effect adjustment to retained earnings (modified-retrospective approach).

 

In addition, ASC 326 made changes to the accounting for available-for-sale (“AFS”) debt securities. One such change requires credit losses to be presented as an allowance rather than as a write-down on AFS securities. Management does not intend to sell or believes that it is more likely than not that they will be required to sell.

 

We adopted ASC 326 effective July 1, 2023, using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet (“OBS”) credit exposures. Results for reporting periods beginning after July 1, 2023 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

 

Upon adoption of the ASU we recorded an increase in the allowance for credit loss (“ACL”) for loans which represented a $497,000 increase from the Allowance for Loan Losses (“ALLL”) at June 30, 2023. This transaction further resulted in an increase of $54,000 to the ACL for unfunded commitments, a decrease of $414,000 to retained earnings and a deferred tax asset of $137,000.

 

The following table illustrates the impact of ASC 326 at July 1, 2023:

 

   As Reported   Pre-ASC   Impact of 
   Under   326   ASC 326 
(Dollars in thousands)  ASC 326   Adoption   Adoption 
Assets:            
Loans            
Residential real estate:            
One- to four-family  $1,597   $857   $740 
Multi-family   133    278    (145)
Construction   138    41    97 
Land   15    1    14 
Farm   6    4    2 
                
Nonresidential real estate   184    405    (221)
Commercial and industrial   5    23    (18)
Consumer and other:             - 
Loans on deposits   
-
    1    (1)
Home equity   51    23    28 
Automobile   1    
-
    1 
Unsecured   1    1    - 
Allowance for credit losses on loans  $2,131    1,634    497 
                
Liabilities:               
Allowance for credit losses on unfunded credit exposures  $54    
-
    54 

 

10

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 1. Basis of Presentation (continued)

 

New Accounting Standards (continued)

 

ASU 2019-05, Financial Instruments-Credit Losses, Targeted Transition Relief, allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of ASC 326-20, if the instruments are eligible for the fair value option under ASC 825-10. The fair value option election does not apply to held-to-maturity debt securities. Entities are required to make this election on an instrument-by-instrument basis. ASU 2019-05 has the same effective date as ASU 2016-13. We adopted ASU 2019-05 on July 1, 2023, and did not elect the fair value option on any financial instruments.

 

ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, eliminates the accounting guidance for troubled debt restructurings (“TDRs”) by creditors in Subtopic 310-40, Receivables-Troubled Debt Restructurings by Creditors, for entities that have adopted the current expected credit loss model introduced by ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  ASU 2022-02 also requires disclosure by public business entities of current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost. The Company adopted the standard on July 1, 2023.

 

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

 

Note 2. Earnings Per Share

 

Diluted earnings per share is computed taking into consideration common shares outstanding and dilutive potential common shares to be issued or released under the Company’s share-based compensation plans. The factors used in the basic and diluted earnings per share computations follow:

 

   Six months ended
December 31,
   Three months ended
December 31,
 
   2023   2022   2023   2022 
Net income allocated to common shareholders, basic and diluted  $(536,000)  $747,000   $(361,000)  $374,000 
                     
EARNINGS PER SHARE   $ (0.07 )    $ 0. 09     $ (0.05 )    $ 0. 04  
Weighted average common shares outstanding, basic and diluted
   8,098,715    8,152,477    8,098,715    8,150,718 

 

There were no stock option shares outstanding for the six- or three-month periods ended December 31, 2023 and 2022.

 

11

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 3. Investment Securities

 

The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at December 31, 2023 and June 30, 2023, the corresponding amounts of gross unrealized gains recognized in accumulated other comprehensive income and gross unrecognized gains and losses:

 

   December 31, 2023 
(in thousands)  Amortized
cost
   Gross
unrealized
gains
   Gross
unrealized
losses
   Estimated
fair value
 
Available-for-sale Securities                
Agency mortgage-backed: residential  $11,363   $1   $446   $10,918 
                             
Held-to-maturity Securities                    
Agency mortgage-backed: residential  $234   $
--
   $11   $223 

 

   June 30, 2023 
(in thousands)  Amortized
cost
   Gross
unrealized
gains
   Gross
unrealized
losses
   Estimated
fair value
 
Available-for-sale Securities                
Agency mortgage-backed: residential  $12,649   $
   $569   $12,080 
                             
Held-to-maturity Securities                    
Agency mortgage-backed: residential  $274   $
   $15   $259 

 

At December 31, 2023 and June 30, 2023 the Company’s debt securities consisted of mortgage-backed securities, which do not have a single maturity date. Actual maturities may differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

Our pledged securities totaled $0 and $5.9 million at December 31, 2023 and June 30, 2023, respectively. In addition, at December 31, 2023 and June 30, 2023, our pledged assets included overnight deposits of $0 and $1.5 million, respectively. The Banks began utilizing FHLB letters of credit to secure public deposits in the recently ended quarter.

 

We evaluated securities in unrealized loss positions for evidence of credit loss, considering duration, severity, financial condition of the issuer, our intention to sell or requirement to sell. Those securities were agency mortgage-backed securities, which carry a very limited amount of risk. Also, we have no intention to sell nor feel that we will be compelled to sell such securities before maturity. Based on our evaluation, no reserve for credit loss was considered necessary. Debt securities in an unrealized loss position as a percent of total debt securities were 99.9% and 100% at December 31, 2023 and June 30, 2023, respectively. The following table provides the amortized cost, gross unrealized losses, fair value, and length of time the individual securities have been in a continuous unrealized loss position as of December 31, 2023.

 

December 31, 2023

 

Available-for-Sale 

 

(in thousands)  Amortized
Cost
   Gross
Unrealized
(losses)
   Fair Value 
Less Than 12 Months            
Agency mortgage-backed securities  $
--
   $
--
   $
--
 
12 Months or More               
Agency mortgage-backed securities   11,354    (446)   10,908 
Total temporarily impaired AFS securities  $11,354   $(446)  $10,908 

 

12

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 3. Investment Securities (continued)

 

Held to Maturity 

 

(in thousands)  Amortized
Cost
   Gross
Unrealized
(losses)
   Fair Value 
Less Than 12 Months               
Agency mortgage-backed securities  $70   $(1)  $69 
12 Months or More               
Agency mortgage-backed securities   164    (10)   154 
Total temporarily impaired HTM securities  $234   $(11)  $223 

 

June 30, 2023

 

Available-for-Sale 

 

(in thousands)  Amortized
Cost
   Gross
Unrealized
(losses)
   Fair Value 
Less Than 12 Months               
Agency mortgage-backed securities  $12,649   $569   $12,080 
12 Months or More               
Agency mortgage-backed securities   
-
    
-
    
-
 
Total temporarily impaired AFS securities  $12,649   $569   $12,080 

 

Held to Maturity 

 

(in thousands)  Amortized
Cost
   Gross
Unrealized
Losses
   Fair Value 
Less Than 12 Months               
Agency mortgage-backed securities  $
-
   $
-
   $
-
 
12 Months or More               
Agency mortgage-backed securities   274    15    259 
Total temporarily impaired HTM securities  $274   $15   $259 

 

Note 4. Loans receivable

  

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal amount outstanding, adjusted for deferred loan origination costs, net, discounts on purchased loans, and the allowance for credit losses. Interest income is accrued on the unpaid principal balance unless the collectability of the loan is in doubt. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments. Interest income on one- to four-family residential loans is generally discontinued at the time a loan is 180 days delinquent and on other loans at the time a loan is 90 days delinquent. All other loans are moved to non-accrual status in accordance with the Company’s policy, typically 90 days after the loan becomes delinquent. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

 

13

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 4. Loans receivable (continued)

 

The composition of the loan portfolio was as follows:

 

   December 31,   June 30, 
(in thousands)  2023   2023 
Residential real estate        
One- to four-family  $250,922   $240,076 
Multi-family   18,727    19,067 
Construction   13,165    12,294 
Land   841    470 
Farm   1,337    1,346 
Nonresidential real estate   30,493    30,217 
Commercial nonmortgage   1,113    1,184 
Consumer and other:          
Loans on deposits   795    855 
Home equity   9,614    9,217 
Automobile   156    104 
Unsecured   617    611 
    327,780    315,441 
Allowance for loan losses   (2,132)   (1,634)
   $325,648   $313,807 

 

The amounts above include net deferred loan costs of $314,000 and $330,000 as of December 31, 2023 and June 30, 2023, respectively.

 

The allowance for credit losses is a valuation allowance that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected for the loans. Loan losses are charged off against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

 

Management estimates the allowance balance required using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical credit loss experience, derived from the Company’s data, provides the basis for estimation of expected credit losses, although management also compares the Company’s data with peer group data. Adjustments to historical loss information may be made for differences in: lending policy, procedures and practice; economic conditions; the nature and volume of the loan portfolio; volume delinquent and problem loans; the current and anticipated economic conditions in the primary lending area; and other external factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

  

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the pool evaluation. When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the sale of the collateral, the expected credit losses are based on the fair value of the collateral at the reporting date, less any discounts and selling costs.

 

Management monitors loan performance on a monthly basis and performs a quarterly evaluation of the adequacy of the ACL. The Banks begin enhanced monitoring of all loans rated 5-Watch or worse and obtain a new appraisal or asset valuation for most loans placed on nonaccrual status. New appraisals are usually not obtained on loans with outstanding principal amounts of $50,000 or less. Management, at its discretion, may determine that additional adjustments to the appraisal or valuation are required. Valuation adjustments will be made as necessary based on factors, including, but not limited to: the economy, deferred maintenance, industry, type of collateral, age of the appraisal, etc., and the knowledge Management has about a particular situation. In addition, the cost to sell or liquidate the collateral is also estimated and deducted from the valuation in order to determine the net realizable value to the Banks. When determining the ACL, certain factors involved in the evaluation are inherently subjective and require material estimates that may be susceptible to significant change, including the amounts and timing of future cash flows. Management monitors the adequacy of the ACL on an ongoing basis and reports its adequacy quarterly to the Board of Directors. Management believes the ACL at December 31, 2023 is adequate.

 

14

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

  

Note 4. Loans receivable (continued)

 

Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments, when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a modification will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Banks.

 

The Banks categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, and current economic trends, among other factors. Management utilizes a risk rating scale ranging from 1-Highest Pass to 9-Loss to evaluate loan quality. Consumer purpose loans are identified as either performing or nonperforming based on the payment status of the loans. Nonperforming consumer loans are loans that are nonaccrual or 90 days or more past due and still accruing.

 

Our portfolio segments include residential real estate, nonresidential real estate, farm, land, commercial and industrial, and consumer and other loans. Risk factors associated with our portfolio segments are as follows:

 

Residential Real Estate

 

Our primary lending activity is the origination of mortgage loans, which enable a borrower to purchase or refinance existing homes in the Banks’ respective market areas. We further classify our residential real estate loans as one- to four-family (owner-occupied vs nonowner-occupied), multi-family or construction. We believe that our first mortgage position on loans secured by residential real estate presents lower risk than our other loans, with the exception of loans secured by deposits.

 

We offer a mix of adjustable-rate and fixed-rate mortgage loans with terms up to 30 years for owner-occupied properties. For these properties a borrower may be able to borrow up to 97% of the value with private mortgage insurance. Alternatively, the borrower may be able to borrow up to 90% of the value through other programs offered by the bank.

 

We offer loans on one- to four-family rental properties at a maximum of 80% loan-to-value (“LTV”) ratio and we generally charge a slightly higher interest rate on such loans.

 

We also originate loans to individuals to finance the construction of residential dwellings for personal use or for use as rental property. We lend to builders for construction of speculative or custom residential properties for resale. Construction loans are generally less than one year in length, do not exceed 80% of the appraised value, and provide for the payment of interest only during the construction phase. Funds are disbursed as progress is made toward completion of the construction.

 

Multi-family Loans

 

We offer mortgage loans secured by residential multi-family (five or more units). Generally, these loans are originated for 25 years or less and do not exceed 80% of the appraised value. Loans secured by multi-family generally have larger balances and involve a greater degree of risk than one- to four-family residential mortgage loans. These loans depend on the borrower’s creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment on such loans may be subject to a greater extent to adverse conditions in the real estate market or economy than owner-occupied residential loans.

 

15

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 4. Loans receivable (continued)

 

Nonresidential Loans

 

We offer mortgage loans secured by nonresidential real estate comprised generally of commercial office buildings, churches and properties used for other purposes. Generally, these loans are originated for 25 years or less and do not exceed 80% of the appraised value. As with multi-family loans, commercial real estate loans generally have larger balances and involve a greater degree of risk than one- to four-family residential mortgage loans and these loans depend on the borrower’s creditworthiness, as well as the feasibility and cash flow potential of the project. Payments on loans secured by nonresidential properties often depend on successful operation and management of the properties. As a result, repayment on such loans may be subject to a greater extent to adverse conditions in the real estate market or economy than owner-occupied residential loans.

 

Consumer lending

 

Our consumer loans include home equity lines of credit, loans secured by savings deposits, automobile loans, and unsecured loans. Home equity loans are generally second mortgage loans subordinate only to first mortgages also held by the bank and do not exceed 80% of the estimated value of the property. We do offer home equity loans up to 90% of the estimated value to qualified borrowers and these loans carry a premium interest rate. Loans secured by savings are originated up to 90% of the depositor’s savings account balance and bear interest at a rate higher than the rate paid on the deposit account. Because the deposit account must be pledged as collateral to secure the loan, the inherent risk of this type of loan is minimal. Loans secured by automobiles are made directly to consumers (there are no relationships with dealers) and are based on the value of the vehicle and the borrower’s creditworthiness. Vehicle loans present a higher level of risk because of the natural decline in the value of the property as well as its mobility. Unsecured loans are based entirely on the borrower’s creditworthiness and present the highest level of risk to the bank. 

 

Impaired loans

 

The Banks choose the most appropriate method for accounting for impaired loans. For secured loans, which make up the vast majority of the loans in the Banks’ portfolio, this method involves determining the fair value of the collateral, reduced by estimated selling costs. Where appropriate, the Banks would account for impaired loans by determining the present value of expected future cash flows discounted at the loan’s effective interest rate.

 

A loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Although most of our loans are secured by collateral, we rely heavily on the capacity of our borrowers to generate sufficient cash flow to service their debt. As a result, our loans do not become collateral-dependent until there is deterioration in the borrower’s cash flow and financial condition, which makes it necessary for us to look to the collateral for our sole source of repayment. Collateral-dependent loans which are more than ninety days delinquent are considered to constitute more than a minimum delay in repayment and are evaluated for impairment under the policy at that time.

 

We utilize updated independent appraisals to determine fair value for collateral-dependent loans, adjusted for estimated selling costs, in determining our specific reserve. In some situations, management does not secure an updated independent appraisal. These situations may involve small loan amounts or loans that, in management’s opinion, have an abnormally low loan-to-value ratio.

 

With respect to the Banks’ investment in troubled debt restructurings, multi-family and nonresidential loans, and the evaluation of impairment thereof, such loans are nonhomogenous and, as such, may be deemed to be collateral-dependent when they become more than 90 days delinquent. We obtain updated independent appraisals in these situations or when we suspect that the previous appraisal may no longer be reflective of the property’s current fair value. This process varies from loan to loan, borrower to borrower, and also varies based on the nature of the collateral

 

16

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 4. Loans receivable (continued)

 

The following table presents the activity in the ACL by portfolio segment for the six months ended December 31, 2023, after restatement of beginning balance for adoption of ASC 326:

 

December 31, 2023:

 

(in thousands)  Pre-ASC
326
Adoption
   Impact of
ASC 326
Adoption
   As
Reported
Under
ASC 326
   Provision
(credit)
for loan
losses
   Loans
charged
off
   Recoveries 

Credit Losses for Unfunded
Liabilities

   Ending
balance
 
Residential real estate                                
One- to four-family  $857   $740   $1,597   $(1)  $(9)  $
      -
    
-
   $1,587 
Multi-family   278    (145)   133    (3)   
-
    
-
    
-
    130 
Construction   41    97    138    (11)   
-
    
-
    (3)   124 
Land   1    14    15    7    
-
    
-
    
-
    22 
Farm   4    2    6    (1)   
-
    
-
    
-
    5 
Nonresidential real estate   405    (221)   184    14    
-
    
-
    
-
    198 
Commercial and industrial   23    (18)   5    1    
-
    
-
    
-
    6 
Consumer and other                                        
Loans on deposits   1    (1)   
-
    
-
    
-
    
-
    
-
    - 
Home equity   23    28    51    10    
-
    
-
    (2)   59 
Automobile   
-
    1    1    (1)   
-
    
-
    
-
    - 
Unsecured   1    
-
    1    
-
    
-
    
-
    
-
    1 
   $1,634   $497   $2,131   $15   $(9)  $
-
    (5)  $2,132 

 

For the six months ended December 31, 2023, the provision for credit losses totaled $20,000 including $15,000 for provision for credit loss on loans and $5,000 for credit losses on unfunded commitments. At December 31, 2023, the allowance for credit losses on unfunded commitments totaled $58,000.

 

The following table presents the activity in the ALLL by portfolio segment for the six months ended December 31, 2022:

 

(in thousands)  Beginning
balance
   Provision
for loan
losses
   Loans
charged
off
   Recoveries   Ending
balance
 
Residential real estate:                    
One- to four-family  $800   $(35)  $
   $13   $778 
Multi-family   231    132    
    
    363 
Construction   4    22    
    
    26 
Land   3    (2)   
    
    1 
Farm   5    
    
    
    5 
Nonresidential real estate   461    (4)   
    
    457 
Commercial nonmortgage   2    
    
    
    2 
Consumer and other:                         
Loans on deposits   1    
    
    
    1 
Home equity   21    
    
    
    21 
Automobile   
    
    
    
    
 
Unsecured   1    
    
    
    1 
Totals  $1,529   $113   $
   $13   $1,655 

 

17

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 4. Loans receivable (continued)

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended December 31, 2023:

 

(in thousands)  Beginning
balance
   Provision
for loan
losses
   Loans
charged off
   Recoveries   Credit
Losses for
Unfunded
Liabilities
   Ending
balance
 
Residential real estate:                        
One- to four-family  $1612   $(25)  $
        –
   $
        –
        $1,587 
Multi-family   130    
    
    
         130 
Construction   128    (2)   
    
    -2    124 
Land   14    8    
    
         22 
Farm   5    
    
    
         5 
Nonresidential real estate   179    19    
    
         198 
Commercial nonmortgage   5    1    
    
         6 
Consumer and other:                              
Loans on deposits   
    
    
    
         
 
Home equity   52    8    
    
    -1    59 
Automobile   
    
    
    
         
 
Unsecured   1    
    
    
         1 
Totals  $2,126   $6   $
   $
    -3   $2,132 

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended December 31, 2022:

 

(in thousands)  Beginning
balance
   Provision
for loan
losses
   Loans
charged
off
   Recoveries   Ending
balance
 
Residential real estate:                    
One- to four-family  $808   $(43)  $
        –
   $13   $778 
Multi-family   381    (18)   
    
    363 
Construction   14    12    
    
    26 
Land   
    1    
    
    1 
Farm   6    (1)   
    
    5 
Nonresidential real estate   410    47    
    
    457 
Commercial nonmortgage   2    
    
    
    2 
Consumer and other:                         
Loans on deposits   1    
    
    
        –
    1 
Home equity   19    2    
    
    21 
Automobile   
    
    
    
    
 
Unsecured   1    
    
    
    1 
Totals  $1,642   $
   $
   $13   $1,655 

 

18

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 4. Loans receivable (continued)

 

The following table presents the amortized cost basis of collateral-dependent loans by portfolio class as of December 31, 2023. The recorded investment in loans excludes accrued interest receivable due to immateriality.

 

December 31, 2023:

 

(in thousands)  Amortized Cost
Basis
   Ending
allowance on
collateral-
dependent
loans
 
Loans individually evaluated for impairment:        
Residential real estate:        
One- to four-family  $3,285   $
          –
 
Nonresidential real estate   1,980    
 
Commercial and industrial   
    
 
    5,265    
 

 

Real estate stands as collateral for loans individually evaluated for impairment.

 

The following tables present the balance in the ALLL and the recorded investment in loans by portfolio class and based on impairment method as of December 31, 2023.

 

December 31, 2023:

 

(in thousands)  Loans
individually
evaluated
   Loans acquired
with
deteriorated
credit quality*
   Ending loans
balance
   Ending
allowance
attributed to
loans
 
Loans individually evaluated for impairment:                
Residential real estate                
One- to four-family  $3,285   $185   $3,448   $
-
 
Nonresidential real estate   1,980    
-
    1,980    
-
 
Home Equity   
-
    
-
    
-
    
-
 
    5,265    185    5,450    
-
 
Loans collectively evaluated for impairment:                    
Residential real estate                    
One- to four-family            $247,452   $1,587 
Multi-family             18,727    130 
Construction             13,165    124 
Land             841    22 
Farm             1,337    5 
Nonresidential real estate             28,513    198 
Commercial and industrial             1,113    6 
Consumer and other                    
Loans on deposits             795    
-
 
Home equity             9,614    59 
Automobile             156    
-
 
Unsecured             617    1 
              322,330    2,132 
             $327,780   $2,132 

 

* These loans were evaluated at acquisition date at their estimated fair value and there has been no subsequent deterioration since acquisition.

 

19

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 4. Loans receivable (continued)

 

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of June 30, 2023.

 

June 30, 2023:

 

(in thousands)  Loans
individually
evaluated
   Loans acquired
with
deteriorated
credit quality*
   Ending loans
balance
   Ending
allowance
attributed to
loans
 
Loans individually evaluated for impairment:                
Residential real estate                
One- to four-family  $2,833   $196   $3,029   $
-
 
Nonresidential real estate   1,717    
-
    1,717    
-
 
Home Equity   267    
-
    267    
-
 
    4,817    196    5,013    
-
 
Loans collectively evaluated for impairment:                    
Residential real estate                    
One- to four-family            $237,047   $857 
Multi-family             19,067    278 
Construction             12,294    41 
Land             470    1 
Farm             1,346    4 
Nonresidential real estate             28,500    405 
Commercial and industrial             1,184    23 
Consumer and other                    
Loans on deposits             855    1 
Home equity             8,950    23 
Automobile             104    
-
 
Unsecured             611    1 
              310,428    1,634 
             $315,441   $1,634 

 

*These loans were evaluated at acquisition date at their estimated fair value and there has been no subsequent deterioration since acquisition.

 

20

 

  

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 4. Loans receivable (continued)

 

The following table presents interest income on loans individually evaluated for impairment by class of loans for the six months ended December 31:

 

   Average
Recorded
Investment
   Interest
Income
Recognized
   Cash Basis
Income
Recognized
   Average
Recorded
Investment
   Interest
Income
Recognized
   Cash Basis
Income
Recognized
 
(in thousands)  2023   2022 
With no related allowance recorded:                        
One- to four-family  $2,966   $44   $44   $3,234   $82   $82 
Multi-family   
    
             --
    
--
    564    10    10 
Farm   
    
    
    266    
    
          –
 
Nonresidential real estate   1,849    51    51    1,065                 29    29 
Consumer   134    
--
    
--
    46    4    4 
Purchased credit-impaired loans   191    7--    7--    387    11    11 
    5,140    102    102    5,562    136    136 
With an allowance recorded:                              
One- to four-family   
    
    
    
    
    
 
   $5,140   $102   $102   $5,562   $136   $136 

 

The following table presents interest income on loans individually evaluated for impairment by class of loans for the three months ended December 31:

 

   Average Recorded Investment   Interest
Income Recognized
   Cash Basis Income Recognized   Average Recorded Investment   Interest
Income
Recognized
   Cash Basis Income Recognized 
(in thousands)  2023   2022 
With no related allowance recorded:                        
Residential real estate:                        
One- to four-family  $3,077   $20   $20   $3,182   $61   $61 
Multi-family   
    
        --
    
--
    561    5    5 
Farm   
    
    
    261    
          –
    
              –
 
Nonresidential real estate   1,994    49    49    1,203    28    28 
Consumer   
--
    
--
    
--
    
    3    3 
Purchased credit-impaired loans   191    1    1    383    4    4 
    5,262    70    70    5,590    101    101 
With an allowance recorded:                              
One- to four-family   
    
    
    
    
    
 
   $5,262   $70   $70   $5,590   $101   $101 

 

21

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 4. Loans receivable (continued)

 

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of December 31, 2023 and June 30, 2023:

 

   December 31, 2023   June 30, 2023 
(in thousands)  Nonaccrual   Loans
Past Due Over
90 Days Still
Accruing
   Nonaccrual   Loans
Past Due Over
90 Days Still
Accruing
 
Residential real estate:                
One- to four-family residential real estate  $3,285   $219   $3,029   $365 
Nonresidential real estate and land   1,688    
    1,717    28 
Consumer   
    35    267    0 
   $4,973   $254   $5,013   $393 

 

One- to four-family loans in process of foreclosure totaled $1.2 million and $766,000 at December 31, 2023 and June 30, 2023, respectively.

 

Troubled Debt Restructurings:

 

Prior to the adoption of ASC 326 a Troubled Debt Restructuring (“TDR”) was the situation where the Bank granted a concession to the borrower that the Banks would not otherwise have considered due to the borrower’s financial difficulties. All TDRs are considered “impaired.”

 

At June 30, 2023, the Company had $1.4 million of loans classified as TDRs.

 

During the six months ended December 31, 2023 there were no loans modified to borrowers experiencing financial difficulty.

 

22

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 4. Loans receivable (continued)

 

The following table presents the aging of the principal balance outstanding in past due loans as of December 31, 2023, by class of loans:

 

(in thousands)  30-89 Days
Past Due
   90 Days or
Greater
Past Due
   Total Past
Due
   Loans Not
Past Due
   Total 
Residential real estate:                    
One-to four-family  $4,229   $1,609   $5,838   $245,084   $250,922 
Multi-family   
    
    
    18,727    18,727 
Construction   122    
    122    13,043    13,165 
Land   
    
    
    841    841 
Farm   
    
    
    1,337    1,337 
Nonresidential real estate   
    
    
    30,493    30,493 
Commercial non-mortgage   
    
    
    1,113    1,113 
Consumer and other:                         
Loans on deposits   
    
    
    795    795 
Home equity   15    35    50    9,564    9,614 
Automobile   
    
    
    156    156 
Unsecured   
    
    
    617    617 
Total  $4,366   $1,644   $6,010   $321,770   $327,780 

 

The following tables present the aging of the principal balance outstanding in past due loans as of June 30, 2023, by class of loans:

 

June 30, 2023: 

(in thousands)  30-89 Days
Past Due
   Greater
than 90 Days
Past Due
   Total
Past Due
   Loans Not
Past Due
   Total 
Residential real estate                    
One- to four-family  $3,415   $1,514   $4,929   $235,147   $240,076 
Multi-family   
-
    
-
    
-
    19,067    19,067 
Construction   
-
    
-
    
-
    12,294    12,294 
Land   
-
    
-
    
-
    470    470 
Farm   
-
    
-
    
-
    1,346    1,346 
Nonresidential real estate   662    
-
    662    29,555    30,217 
Commercial and industrial   
-
    28    28    1,156    1,184 
Consumer and other                         
Loans on deposits   
-
    
-
    
-
    855    855 
Home equity   168    267    435    8,782    9,217 
Automobile   
-
    
-
    
-
    104    104 
Unsecured   17    
-
    17    594    611 
   $4,262   $1,809   $6,071   $309,370   $315,441 

 

23

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2023
(unaudited)

 

Note 4. Loans receivable (continued)

  

Credit Quality Indicators:

 

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on an annual basis. The Company uses the following definitions for risk ratings:

 

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

 

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

 

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

 

24

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2023
(unaudited)

 

Note 4. Loans receivable (continued)

 

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass rated loans. Loans listed that are not rated are included in groups of homogeneous loans and are evaluated for credit quality based on performing status. See the aging of past due loan table above. As of December 31, 2023, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

 

                           Revolving     
(in thousands)  Term Loans Amortized Cost by Origination Fiscal Year   Loans
Amortized
     
As of September 30, 2023  2024   2023   2022   2021   2020   Prior   Cost Basis   Total 
Residential real estate:                                
One- to four-family             
 
                 
Risk Rating:                                
Pass  $19,334   $50,511   $48,507   $45,146   $26,457   $55,508   $-   $245,503 
Special mention   
-
    
-
    
-
    
-
    -    148    -    148 
Substandard   
-
    
-
    13    18    149    5,091    -    5,271 
Doubtful   
-
    
-
    
-
    
-
    -    -    -    - 
Total  $19,334   $50,551   $48,520   $45,164   $26,606   $60,747   $-   $250,922 
                                         
Current period gross charge offs  $
-
   $
-
   $
-
   $
-
   $-   $9   $-   $9 
                                         
Multi-family        
 
         
 
                     
Risk Rating:                                        
Pass  $-   $6,191   $5,988   $1,258   $1,408   $3,882   $-   $18,727 
Special mention   -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    - 
Total  $-   $6,191   $5,988   $1,258   $1,408   $3,882   $-   $18,727 
                                         
Current period gross charge offs  $-   $-   $-   $-   $-   $-   $-   $- 
                                         
Construction                                        
Risk Rating:                                        
Pass  $3,091   $9,223   $448   $23   $-   $380   $-   $13,165 
Special mention   -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    - 
Total  $3,091   $9,223   $448   $23   $-   $380   $-   $13,165 
                                         
Current period gross charge offs  $-   $-   $-   $-   $-   $-   $-   $- 
                                         
Land                                        
Risk Rating:                                        
Pass  $600   $540   $217   $540   $54   $-   $-   $841 
Special mention   -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    - 
Total  $600   $540   $217   $540   $54   $-   $-   $841 
                                         
Current period gross charge offs  $-   $-   $-   $-   $-   $-   $-   $- 
                                         
Farm                                        
Risk Rating:                                        
Pass  $-   $-   $251   $28   $23   $1,035   $-   $1,337 
Special mention   -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    - 
Total  $-   $-   $251   $28   $23   $1,035   $-   $1,337 
                                         
Current period gross charge offs  $-   $-   $-   $-   $-   $-   $-   $- 
                                         
Nonresidential real estate                                        
Risk Rating:                                        
Pass  $1,295   $3,465   $3,216   $3,558   $5,831   $11,230   $-   $27,823 
Special mention   -    -    -    -    -    675    -    675 
Substandard   
-
    772    
-
    
-
    -    1,233    -    1,995 
Doubtful   -    -    -    -    -    -    -    - 
Total  $1,295   $3,465   $3,216   $3,558   $5,831   $13,128   $-   $30,493 
                                         
Current period gross charge offs  $-   $-   $-   $-   $-   $-   $-   $- 
                                         
Commercial and industrial                                        
Risk Rating:                                        
Pass  $396   $-   $677   $40   $-   $-   $-   $1,113 
Special mention   -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    - 
Total  $396   $-   $677   $40   $-   $-   $-   $1,113 
                                         
Current period gross charge offs  $-   $-   $-   $-   $-   $-   $-   $- 
                                         
Share Loans                                        
Risk Rating:                                        
Pass  $27   $98   $-   $19   $181   $470   $-   $795 
Special mention   -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    - 
Total  $27   $98   $-   $19   $181   $470   $-   $795 
                                         
Current period gross charge offs  $-   $-   $-   $-   $-   $-   $-   $- 
                                         
Home Equity                                        
Risk Rating:                                        
Pass  $-   $-   $-   $-   $-   $-   $9,198   $9,198 
Special mention   -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    416    416 
Doubtful   -    -    -    -    -    -    -    - 
Total  $-   $-   $-   $-   $-   $-   $9,614   $9,614 
                                         
Current period gross charge offs  $-   $-   $-   $-   $-   $-   $-   $- 
                                         
Auto                                        
Risk Rating:                                        
Pass  $110   $35   $4   $7   $-   $-   $-   $156 
Special mention   -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    - 
Total  $110   $35   $4   $7   $-   $-   $-   $156 
                                         
Current period gross charge offs  $-   $-   $-   $-   $-   $-   $-   $- 
                                         
Unsecured                                        
Risk Rating:                                        
Pass  $102   $11   $35   $18   $-   $451   $-   $617 
Special mention   -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    - 
Total  $102   $11   $35   $18   $-   $451   $-   $617 
                                         
Current period gross charge offs  $-   $-   $-   $-   $-   $-   $-   $- 

 

25

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2023
(unaudited)

 

Note 4. Loans receivable (continued)

 

At December 31, 2023, the risk category of loans by class of loans was as follows:

 

(in thousands)  Pass   Special
Mention
   Substandard   Doubtful 
Residential real estate:                
One- to four-family  $245,503   $148   $5,271   $
       -
 
Multi-family   18,727    
-
    
-
    
-
 
Construction   13,165    
-
    
-
    
-
 
Land   841    
-
    
-
    
-
 
Farm   1,337    
-
    
-
    
-
 
Nonresidential real estate   27,823    675    1,995    
-
 
Commercial nonmortgage   1,113    
-
    
-
    
-
 
Consumer:                    
Loans on deposits   795    
-
    
-
    
-
 
Home equity   9,198    
-
    416    
-
 
Automobile   156    
-
    
-
    
-
 
Unsecured   617    
-
    
-
    
-
 
   $319,230   $840   $7,710   $
-
 

 

At June 30, 2023, the risk category of loans by class of loans was as follows:

 

(in thousands)  Pass   Special
Mention
   Substandard   Doubtful 
Residential real estate                
One- to four-family  $234,765   $170   $5,141   $
        -
 
Multi-family   19,067    
-
    
-
    
-
 
Construction   12,294    
-
    
-
    
-
 
Land   470    
-
    
-
    
-
 
Farm   1,346    
-
    
-
    
-
 
Nonresidential real estate   28,520    684    1,013    
-
 
Commercial and industrial   1,184    
-
    
-
    
-
 
Consumer and other                    
Loans on deposits   855    
-
    
-
    
-
 
Home equity   8,879    
-
    338    
-
 
Automobile   104    
-
    
-
    
-
 
Unsecured   611    
-
    
-
    
-
 
   $308,095   $854   $6,492   $
-
 

 

Purchased Credit Impaired Loans:

 

The Company purchased loans during fiscal year 2013 for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans, net of a purchase credit discount of $88,000 and $88,000 at December 31, 2023 and June 30, 2023, respectively, is as follows:

 

(in thousands)  December 31,
2023
   June 30,
2023
 
One- to four-family residential real estate  $185   $196 

 

Accretable yield, or income expected to be collected, is as follows:

 

(in thousands)  Six months
ended
December 31,
2023
   Twelve months
ended
June 30,
2023
 
Balance at beginning of period  $294   $339 
Accretion of income   (20)   (45)
Balance at end of period  $274   $294 

 

For purchased loans, the Company made no increase in allowance for loan losses for the year ended June 30, 2023, nor for the six-month period ended December 31, 2023. Neither were any allowance for loan losses reversed during those periods.

 

26

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023

(unaudited)

 

Note 5. Disclosures About Fair Value of Assets and Liabilities

 

ASC topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (exit price) at the measurement date. ASC topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes six levels of inputs that may be used to measure fair value:

 

Level 1 – Quoted prices in active markets for identical assets or liabilities.

 

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

 

Securities

 

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics. Level 2 securities include agency mortgage-backed securities and agency bonds.

 

Financial assets measured at fair value on a recurring basis are summarized below:

 

   Fair Value Measurements Using 
(in thousands)  Fair Value   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
 
December 31, 2023                
Agency mortgage-backed: residential  $10,918   $
   $10,918   $
       –
 
                     
June 30, 2023                    
Agency mortgage-backed: residential  $12,080   $
   $12,080   $
 

 

There were no assets or liabilities which were measured at fair value on a nonrecurring basis at December 31, 2023, and June 30, 2023.

 

The following is a disclosure of the fair value of financial instruments, both assets and liabilities, whether or not recognized in the consolidated balance sheet, for which it is practicable to estimate that value. For financial instruments where quoted market prices are not available, fair values are based on estimates using present value and other valuation methods.

 

The methods used are greatly affected by the assumptions applied, including the discount rate and estimates of future cash flows. Therefore, the fair values presented may not represent amounts that could be realized in an exchange for certain financial instruments.

 

27

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2022

(unaudited)

 

Note 5. Disclosures About Fair Value of Assets and Liabilities (continued)

 

Based on the foregoing methods and assumptions, the carrying value and fair value of the Company’s financial instruments at December 31, 2023 and June 30, 2023 are as follows:

 

       Fair Value Measurements at 
   Carrying   December 31, 2023 Using 
(in thousands)  Value   Level 1   Level 2   Level 3   Total 
Financial assets                    
Cash and cash equivalents  $14,584   $14,584    
 
    
 
   $14,584 
Available-for-sale securities   10,918    
 
   $10,918    
 
    10,918 
Held-to-maturity securities   234    
 
    223    
 
    234 
Loans receivable, net   325,918              300,185    300,185 
Federal Home Loan Bank stock   4,243    
 
    
 
    
 
    n/a 
Accrued interest receivable   1,078    
 
    1,078    
 
    1,078 
                          
Financial liabilities                         
Deposits  $244,629   $84,032   $159,476    
 
    243,508 
Federal Home Loan Bank advances   71,008    
 
    70,960    
 
    70,960 
Advances by borrowers for taxes and insurance   334    
 
    334    
 
    334 
Accrued interest payable   167    
 
    167    
 
    167 

 

       Fair Value Measurements at 
   Carrying   June 30, 2023 Using 
(in thousands)  Value   Level 1   Level 2   Level 3   Total 
Financial assets                    
Cash and cash equivalents  $8,167   $8,167    
 
    
 
   $8,167 
                          
Available-for-sale securities   12,080        $12,080         12,080 
Held-to-maturity securities   274    
 
    259    
 
    259 
Loans receivable - net   313,807    
 
    
 
   $293,530    293,530 
Federal Home Loan Bank stock   4,623    
 
    
 
    
 
    n/a 
Accrued interest receivable   902    
 
    902    
 
    902 
                          
Financial liabilities                         
Deposits  $226,309   $88,994   $136,577        $225,571 
Federal Home Loan Bank advances   70,087    
 
    69,863    
 
    69,863 
Advances by borrowers for taxes and insurance   793    
 
    793    
 
    793 
Accrued interest payable   70    
 
    70    
 
    70 
                          

 

28

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2022

(unaudited)

 

Note 6. Other Comprehensive Income (Loss)

 

The Company’s other comprehensive income is comprised solely of unrealized gains and losses on available-for-sale securities. The following is a summary of the accumulated other comprehensive income balances, net of tax:

 

(in thousands)  Six months
ended
December 31,
2023
   Three months
ended
December 31,
2023
 
Balance at beginning of period  $(427)  $(565)
Current period change   93    231 
Balance at end of period  $(334)  $(334)

 

Other comprehensive income (loss) components and related tax effects for the periods indicated were as follows:

 

   Six months ended   Three months ended 
   December 31,   December 31, 
(in thousands)  2023   2022   2023   2022 
Unrealized holding gains (losses on available-for-sale securities  $124   $(457)  $308   $116 
Tax effect   (31)   114    (77)   (29)
   $93   $(343)  $231   $87 

 

29

 

 

Kentucky First Federal Bancorp

 

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Statements

 

Certain statements contained in this report, as well as other periodic reports filed with the Securities and Exchange Commission, that are not historical facts are considered “forward-looking statements” under the Private Securities Litigation Reform Act of 1995, that are subject to certain risks and uncertainties. These forward-looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “intend” and “potential,” or words of similar meaning, or future or conditional verbs such as “should,” “could,” or “may.” Forward-looking statements include statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. Kentucky First Federal Bancorp’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions; prices for real estate in the Company’s market areas; the interest rate environment and the impact of the interest rate environment on our business, financial condition and results of operations; our ability to successfully execute our strategy to increase earnings, increase core deposits, reduce reliance on higher cost funding sources and shift more of our loan portfolio towards higher-earning loans; our ability to pay future dividends and if so at what level; our ability to receive any required regulatory approval or non-objection for the payment of dividends from First Federal Savings and Loan Association of Hazard and First Federal Savings Bank of Kentucky to the Company or from the Company to shareholders; competitive conditions in the financial services industry; changes in the level of inflation; changes in the demand for loans, deposits and other financial services that we provide; the possibility that future credit losses may be higher than currently expected; competitive pressures among financial services companies; the ability to attract, develop and retain qualified employees; our ability to maintain the security of our data processing and information technology systems; the outcome of pending or threatened litigation, or of matters before regulatory agencies; changes in law, governmental policies and regulations, rapidly changing technology affecting financial services, and the other matters mentioned in Item 1A of the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 and in this Form 10-Q. Except as required by applicable law or regulation, the Company does not undertake the responsibility, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

 

Asset/Liability Management

 

Management and the boards of the subsidiary Banks are responsible for the asset/liability management issues that affect the individual Banks. Either Bank may work with its sister Bank to mitigate potential asset/liability risks to the Banks and to the Company as a whole. Management utilizes a third-party to perform interest rate risk (“IRR”) calculations for each of the Banks. Management monitors and considers methods of managing the rate sensitivity and repricing characteristics of each of the Bank’s balance sheet components to maintain acceptable levels of change in the economic value of equity (“EVE”) as well as evaluating the impact on earnings in the event of changes in prevailing market interest rates. Interest rate sensitivity analysis is used to measure our interest rate risk by computing estimated changes in EVE that are a result of changes in the net present value of its cash flows from assets, liabilities, and off-balance sheet items. These changes in cash flow are estimated based on hypothetical instantaneous and permanent increases and decreases in market interest rates.

 

In March 2022 the Federal Open Market Committee (“FOMC”) of the Federal Reserve Bank began raising the target range for the fed funds rate of interest and since that time has raised the short-term interest rate by 500 basis points. At September 30, 2023, we believe our risk associated with rising interest rates was moderate. Our IRR model indicated that at June 30, 2023, our EVE was approximately 16.5%, despite the historic interest rate increases during the previous twelve months. Although general market participants believe that the FOMC will now pause interest rate increases for a period of time, our June 30, 2023 EVE is anticipated to be approximately 14.6% and 11.9% under sudden and sustained increase in prevailing market interest rates of 100 basis points and 200 basis points, respectively. Computations or prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments, and deposit run-offs. These computations should not be relied upon as indicative of actual results. Further, the computations do not contemplate any actions the Banks may undertake in response to changes in interest rates. Certain shortcomings are inherent in this method of computing EVE. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in differing degrees to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates.

 

30

 

 

Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

 

Average Balance Sheets

 

The following table represents the average balance sheets for the six-month periods ended December 31, 2023 and 2022, along with the related calculations of tax-equivalent net interest income, net interest margin and net interest spread for the related periods.

 

   Six Months Ended December 31, 
   2023   2022 
   Average
Balance
   Interest
And
Dividends
   Yield/
Cost
   Average
Balance
   Interest
And
Dividends
   Yield/
Cost
 
   (Dollars in thousands) 
Interest-earning assets:                        
Loans 1  $321,103   $7,087    4.41%  $290,100   $5,539    3.82%
Mortgage-backed securities   11,572    191    3.30    13,961    229    3.28 
Other interest-earning assets   13,424    383    5.71    15,253    248    3.25 
Total interest-earning assets   346,099    7,661    4.43    319,314    6,016    3.77 
                               
Less: Allowance for loan losses   (1,840)             (1,587)          
Non-interest-earning assets   12,341              11,873           
Total assets  $356,600             $329,600           
                               
Interest-bearing liabilities:                              
Demand deposits  $17,430   $16    0.18%  $20,905   $20    0.19%
Savings   55,427    112    0.40    74,545    173    0.46 
Certificates of deposit   155,122    2,595    3.35    117,080    461    0.79 
Total deposits   227,979    2,723    2.39    212,530    654    0.62 
Borrowings   62,310    1,610    5.17    49,879    482    1.93 
Total interest-bearing liabilities   290,289    4,333    2.99    262,409    1,136    0.87 
                               
Noninterest-bearing demand deposits   14,634              13,957           
Noninterest-bearing liabilities   1,851              1,512           
Total liabilities   306,774              277,878           
                               
Shareholders’ equity   49,826              51,722           
Total liabilities and shareholders’ equity  $356,600             $329,600           
Net interest spread       $3,328    1.44%       $4,880    2.90%
Net interest margin             1.92%             3.06%
Average interest-earning assets to average interest-bearing liabilities             119.23%             121.69%

 

1 Includes loan fees, immaterial in amount, in both interest income and the calculation of yield on loans. Also includes loans on nonaccrual status.

 

31

 

 

Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

 

Average Balance Sheets

 

The following table represents the average balance sheets for the three-month periods ended December 31, 2023 and 2022, along with the related calculations of tax-equivalent net interest income, net interest margin and net interest spread for the related periods.

 

   Three Months Ended December 31, 
   2023   2022 
   Average
Balance
   Interest
And
Dividends
   Yield/
Cost
   Average
Balance
   Interest
And
Dividends
   Yield/
Cost
 
   (Dollars in thousands) 
Interest-earning assets:                        
Loans 1  $324,221   $3,628    4.48%  $297,640   $2,895    3.89%
Mortgage-backed securities   11,541    92    3.19    14,048    115    3.27 
Other securities                        
Other interest-earning assets   15,009    207    5.52    11,161    121    4.34 
Total interest-earning assets   350,771    3,927    4.48    322,849    3,131    3.88 
                               
Less: Allowance for loan losses   (2,023)             (1,642)          
Non-interest-earning assets   12,136              11,948           
Total assets  $360,884             $333,155           
                               
Interest-bearing liabilities:                              
Demand deposits  $16,848   $8    0.19%  $20,234   $9    0.18%
Savings   54,757    55    0.40    75,546    71    0.39 
Certificates of deposit   153,964    1445    3.75    112,888    224    0.79 
Total deposits   225,569    1,508    2.67    205,668    304    0.59 
Borrowings   68,242    762    4.47    61,965    379    2.45 
Total interest-bearing liabilities   293,811    2,270    3.09    267,633    683    1.02 
                               
Noninterest-bearing demand deposits   16,110              12,738           
Noninterest-bearing liabilities   1,575              1,247           
Total liabilities   311,496              281,618           
                               
Shareholders’ equity   49,388              51,537           
Total liabilities and shareholders’ equity  $360,884             $333,155           
Net interest spread       $1,657    1.39%       $2,448    2.86%
Net interest margin             1.89%             3.03%
Average interest-earning assets to average interest-bearing liabilities             119.39%             121.31%

 

1 Includes loan fees, immaterial in amount, in both interest income and the calculation of yield on loans. Also includes loans on nonaccrual status.

 

32

 

 

Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

 

Discussion of Financial Condition Changes from June 30, 2023 to December 31, 2023

 

Financial Position and Results of Operations

 

At December 31, 2023 the Company and the Banks were considered well-capitalized with capital ratios in excess of regulatory requirements. However, an extended economic recession could adversely impact the Company’s and the Banks’ capital position and regulatory capital ratios due to a potential increase in credit losses.

 

Assets: At December 31, 2023, the Company’s assets totaled $366.2 million, an increase of $17.2 million, or 4.9%, from total assets at June 30, 2023, due primarily to the increase in loans, net, as well as an increase in cash and cash equivalents.

 

Cash and cash equivalents: Cash and cash equivalents increased $6.4 million or 78.6% to $14.6 million at December 31, 2023. Most of the Company’s cash and cash equivalents are held in interest-bearing demand deposits.

 

Investment securities: At December 31, 2023, our securities portfolio, which consisted of mortgage-backed securities, decreased $1.2 million or 9.7% and totaled $11.2 million, compared to June 30, 2023.

 

Loans: Loans, net and loans available-for sale in the aggregate increased $12.1 million or 3.9% and totaled $325.6 million and $270,000, respectively at December 31, 2023. Loans receivable, net, increased by $11.8 million or 3.8% to $325.6 million at December 31, 2023. Loans available-for-sale increased to $270,000 at December 31, 2023. Management continues to look for high-quality loans to add to its portfolio and will continue to emphasize loan originations to the extent that it is profitable, prudent and consistent with our interest rate risk strategies.

 

Non-Performing and Classified Loans: At December 31, 2023, the Company had non-performing loans (loans 90 or more days past due or on nonaccrual status) of approximately $5.2 million, or 1.6% of total loans compared to $5.4 million or 1.7%, of total loans at June 30, 2023. The Company’s ACL totaled $2.1 million at December 31, 2023 and the ALLL totaled $1.6 million at June 30, 2023, respectively. The ACL at December 31, 2023, represented 41.0% of nonperforming loans and 0.7% of total loans, while at June 30, 2023, ALLL represented 34.8% of nonperforming loans and 0.5% of total loans.

 

The Company had $7.7 million in assets classified as substandard for regulatory purposes at December 31, 2023, including real estate owned (“REO”) of $10,000. Classified loans as a percentage of total loans (including loans acquired) was 2.4% and 2.3% at December 31, 2023 and June 30, 2023, respectively. Of substandard loans, 100.0% were secured by real estate on which the Banks have priority lien position.

 

The table below shows the aggregate amounts of our assets classified for regulatory purposes at the dates indicated:

 

(dollars in thousands)  December 31,
2023
   June 30,
2023
 
Substandard assets  $7,710   $7,266 
Doubtful assets        
Loss assets        
Total classified assets  $7,710   $7,266 

 

At December 31, 2023, the Company’s real estate acquired through foreclosure represented 0.1% of substandard assets compared to 0.1% at June 30, 2023. During the period presented the Company made no loans to facilitate the purchase of its other real estate owned by qualified buyers. Loans to facilitate the sale of other real estate owned, which were included in substandard loans, totaled $0 and $0 at December 31, 2023 and June 30, 2023, respectively.

 

33

 

 

Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

 

Discussion of Financial Condition Changes from June 30, 2023 to December 31, 2023 (continued)

 

The following table presents the aggregate carrying value of REO at the dates indicated:

 

   December 31, 2023   June 30, 2023 
   Number of
Properties
   Net
Carrying
Value
   Number of
Properties
   Net
Carrying
Value
 
One- to four-family   1   $10    2   $70 
Total REO   1   $10    2   $70 

 

At December 31, 2023 and June 30, 2023, the Company had $840,000 and $854,000 of loans classified as special mention, respectively. This category includes assets which do not currently expose us to a sufficient degree of risk to warrant classification, but does possess credit deficiencies or potential weaknesses deserving our close attention.

 

Liabilities: Total liabilities increased $18.8 million, or 6.3% to $317.1 million at December 31, 2023, as deposits increased $18.3 million or 8.1% to $244.6 million and advances increased $921,000 or 1.3% to $71.0 million.

 

Certificates of deposit increased $23.3 million or 17.0% and totaled $160.1 million at December 31, 2023, which $44.1 million brokered deposits, an increase of $23.1 million or 110.0%. Demand deposit accounts increased $1.4 million or 4.6% and totaled $32.8 million at quarter end. Savings accounts decreased $6.4 million or 11.1% and totaled $51.2 million at the end of the current period. The cost of liabilities has been increasing rapidly due to higher costs of both wholesale and retail funding.  Continued increases in liability costs, especially for wholesale funds, will primarily be driven by future increases in market rates by the Federal Reserve.  It is believed that we are near the peak of this rate cycle which, if so, will likely slow the increasing costs of our liabilities. 

 

Shareholders’ Equity: At December 31, 2023, the Company’s shareholders’ equity totaled $49.2 million, a decrease of $1.5 million or 3.0% from the June 30, 2023 total. The decrease in shareholders’ equity was primarily associated with adoption of the CECL accounting standard ($414,000), net loss for the period and dividends paid on common stock.

 

The Company paid dividends of $671,000 compared to net loss of $536,000 for the six-month period just ended. On July 6, 2023, the members of First Federal MHC again approved a dividend waiver on annual dividends of up to $0.40 per share of Kentucky First Federal Bancorp common stock. The Board of Directors of First Federal MHC applied for approval of another waiver. The Federal Reserve Bank of Cleveland has notified the Company that it did not object to the waiver of dividends paid by the Company to First Federal MHC, and, as a result, First Federal MHC will be permitted to waive the receipt of dividends for quarterly dividends up to $0.10 per common share through the third calendar quarter of 2024. However, on October 13, 2023, the Company announced that future dividends will be reduced primarily due to the recent decline in earnings of the Banks. After careful consideration, on January 16, 2024, the board determined that it would be prudent to suspend the payment of dividends completely until such time as earnings and liquidity improve. Our ability to pay future dividends and if so at what level will also be dependent on our ability to successfully execute our strategy to increase earnings and core deposits, reduce reliance on higher cost funding sources and shift more of our loan portfolio towards higher-earning loans, and the receipt of required regulatory approval or non-objection for the payment of dividends from the Banks to the Company or from the Company to shareholders. Nevertheless, management continues to believe that a strong dividend is consistent with the Company’s long-term capital management strategy. See “Risk Factors” in Part II, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 for additional discussion regarding dividends.

 

34

 

 

Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

 

Comparison of Operating Results for the Six-month Periods Ended December 31, 2023 and 2022

 

General

 

Net income totaled $(536,000) or $(0.07) diluted earnings per share for the six months ended December 31, 2023, a decrease of $1.3 million or 171.8% from net income of $747,000 or $0.09 diluted earnings per share for the same period in 2022. The decrease in net earnings for the six months ended ended December 31, 2023, was primarily attributable to lower net interest income, and higher non-interest expense, which were partially offset by lower income taxes and lower provision for credit losses. 

 

Net Interest Income

 

Net interest income decreased $1.6 million or 31.8% to $3.3 million due primarily to interest expense increasing more than interest income increased period to period. Interest expense increased $3.2 million or 281.4%, while interest income increased $1.6 million or 27.3% to $7.7 million for the six months ended December 31, 2023. During the unprecedented interest rate increases seen in the market since March 2022, our funding sources have repriced more quickly than our assets have repriced, which has had a negative impact on net interest income.

 

The average rate earned on interest-earning assets increased 66 basis points to 4.43% and was the primary reason for the increase in interest income. The increase in interest income was due primarily to an increase of $1.5 million or 27.9% in interest income from loans, which totaled $7.1 million for the period.

 

The increase in interest income from loans period-to-period was due to increases in both the average balance of loans and the average rate earned on those loans. The average balance of loans increased $31.0 million or 10.7% to $321.1 million for the six months ended December 31, 2023, while the average rate increased 60 basis points to 4.41%.

 

The average balance of interest-bearing liabilities increased $27.9 million or 10.6% to $290.3 million for the six months just ended, and the average rate paid increased 212 basis points to 2.99%. The cost of liabilities increased rapidly due to higher costs of both wholesale and retail funding.  Continued increases in liability costs, especially for wholesale funds, will primarily be driven by future increases in market rates by the Federal Reserve. It is widely believed that we are near the peak of this rate cycle which, if so, will likely slow the increasing costs of our liabilities.

 

Net interest spread decreased from 2.90% for the prior year quarterly period to 1.44% for the six-month period ended December 31, 2023.

 

Provision for Losses on Loans

 

Management determined that a $15,000 provision for credit loss was prudent in light of the increase in the loan portfolio during the recently ended six-months December 31, 2023.

 

35

 

 

Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

 

Comparison of Operating Results for the Six-month Periods Ended December 31, 2023 and 2022 (continued)

 

Non-interest Income

 

Non-interest income decreased $46,000 or 27.5% to $121,000 for the six months ended December 31, 2023, compared to the prior year period, primarily because of a decrease in other non-interest income, which is comprised of various items including bank-related fees and services 

 

Non-interest Expense

 

Non-interest expense increased $174,000 or 4.4% to $4.1 million for the six months ended December 31, 2023, primarily due to higher outside service fee, as well as higher employee compensation and benefits.

 

Outside service fee expense increased $109,000 or 104.8% and totaled $213,000 due to additional professional expenses and costs associated with them.

 

Employee compensation and benefits expense increased $61,000 or 2.5% and totaled $2.5 million for the six months just ended due to additional salary expense and additional deferred loan costs by closing more loans.

 

Income Tax Expense

 

Income tax expense decreased $391,000 or 170.7% to an income tax benefit of $162,000 for the six months ended December 31, 2023, compared to the prior year period due to decreased earnings. The effective tax rates for the six-month periods ended December 31, 2023 and 2022, were 23.2% and 23.5%, respectively.

 

36

 

 

Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

 

Comparison of Operating Results for the Three-month Periods Ended December 31, 2023 and 2022

 

General

 

Net loss totaled $361,000 or ($0.05) diluted earnings per share for the three months ended December 30, 2023, a decrease of $735,000 or 196.5% from net income of $374,000 or $0.04 diluted earnings per share for the same period in 2022. The decrease in net earnings for the quarter ended December 30, 2023, was primarily attributable to lower net interest income, and higher non-interest expense, which were partially offset by lower income taxes.

 

Net Interest Income

 

Net interest income decreased $791,000 or 32.3% to $1.7 million due primarily to interest expense increasing more than interest income increased period to period. Interest expense increased $1.6 million or 232.4%, while interest income increased $796,000 or 25.4% to $3.9 million for the recently-ended quarter. During the unprecedented interest rate increases seen in the market since March 2022, our funding sources have repriced more quickly than our assets have repriced, which has had a negative impact on net interest income.

 

The average rate earned on interest-earning assets increased 60 basis points to 4.48% and was the primary reason for the increase in interest income, although average interest-earning assets also increased $27.9 million or 8.7% to $350.8 million for the recently-ended quarterly period. The increase in interest income was due primarily to an increase of $733,000 or 25.3% in interest income from loans, which totaled $3.6 million for the period.

 

The increase in interest income from loans period-to-period was due to increases in both the average balance of loans and the average rate earned on those loans. The average balance of loans increased $26.6 million or 8.9% to $324.2 million for the three months ended December 31, 2023, while the average rate increased 59 basis points to 4.48%.

 

The average balance of interest-bearing liabilities increased $26.2 million or 9.8% to $293.8 million for the quarter just ended, and the average rate paid increased 207 basis points to 3.09%. The cost of liabilities increased rapidly due to higher costs of both wholesale and retail funding.  Continued increases in liability costs, especially for wholesale funds, will primarily be driven by future increases in market rates by the Federal Reserve. It is widely believed that we are near the peak of this rate cycle which, if so, will likely slow the increasing costs of our liabilities. 

 

Net interest spread decreased from 2.86% for the prior year quarterly period to 1.39% for the three-month period ended December 31, 2023.

 

Provision for Cred Losses

 

Management determined that a $9,000 provision for credit loss was prudent in light of the increase in the loan portfolio during the recently-ended quarter.

 

37

 

 

Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)

 

Comparison of Operating Results for the Three-month Periods Ended December 31, 2023 and 2022 (continued)

 

Non-interest Income

 

Non-interest income decreased $23,000 or 33.3% to $46,000 for the recently ended quarter primarily because of a decrease in other non-interest income, which is comprised of various items including bank-related fees and services.

 

Non-interest Expense

 

Non-interest expense increased $119,000 or 5.9% and totaled $2.1 million for the three months ended December 31, 2023, primarily due to increased FDIC insurance premiums and other various bank expenses.

 

Income Tax Expense

 

Income taxes decreased $207,000 or 183.2% from an expense of $113,000 for the three months ended December 31, 2022, to a benefit of $94,000 for the recently-ended period. The effective tax rates for the three-month periods ended December 31, 2023 and 2022, were 20.7% and 23.2%, respectively.

 

38

 

 

Kentucky First Federal Bancorp

 

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk

 

This item is not applicable as the Company is a smaller reporting company.

 

ITEM 4: Controls and Procedures

 

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report, and have concluded that the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

 

Based upon their evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have also concluded that there were no significant changes during the quarter ended December 31, 2023 in the Company’s internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

39

 

 

Kentucky First Federal Bancorp

 

PART II-OTHER INFORMATION

 

ITEM 1. Legal Proceedings

 

None.

 

ITEM 1A. Risk Factors

 

Please see “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 for information regarding risk factors that could materially affect the Company’s business, financial condition, or future results of operations. Other than as set forth below, there have been changes with regard to the risk factors disclosed in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December June 30, 2023.

 

On January 16, 2024, the company announced the suspension of quarterly dividends indefinitely. The suspension of our quarterly cash dividend could have an adverse impact on the market price of our common stock.

 

Holders of our common stock are only entitled to receive such dividends as our Board of Directors may declare out of funds available for such payments under applicable law and regulatory guidance. Although we have historically declared cash dividends on our common stock, we are not required to do so, and on January 16, 2024, the Company announced the suspension of quarterly dividends indefinitely. We cannot predict when or whether the Company will be able to pay future common stock dividends and if so, the amount of any such common stock dividends. The suspension of our common stock dividend could adversely affect the market price of our common stock.

 

40

 

 

Kentucky First Federal Bancorp

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

(c) The following table sets forth information regarding Company’s repurchases of its common stock during the quarter ended December 31, 2023.

 

Period   Total # of
shares
purchased
    Average
price paid
per share
(including
commissions)
    Total # of
shares
purchased
as part of
publicly
announced
plans or
programs
    Maximum #
of shares
that may
yet be
purchased
under the
plans or
programs
 
October 1-31, 2023         $              
November 1-30, 2023         $           –        
December 1-31, 2023        –     $      –               –  

 

(1)On May 18, 2023, the Company announced that it had substantially completed its program to repurchase up to 150,000 shares of its Common Stock, which was initiated on February 3, 2021

 

ITEM 3. Defaults Upon Senior Securities

 

Not applicable.

 

ITEM 4. Mine Safety Disclosures.

 

Not applicable.

 

ITEM 5. Other Information

 

During the fiscal quarter ended December 31, 2023, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.

 

41

 

 

Kentucky First Federal Bancorp

 

ITEM 6. Exhibits

 

3.11   Charter of Kentucky First Federal Bancorp
     
3.22   Bylaws of Kentucky First Federal Bancorp, as amended and restated
     
3.33   Amendment No. 1 to the Bylaws of Kentucky First Federal Bancorp
     
3.44   Amendment No. 2 to the Bylaws of Kentucky First Federal Bancorp
     
3.45   Amendment No. 3 to the Bylaws of Kentucky First Federal Bancorp
     
4.11   Specimen Stock Certificate of Kentucky First Federal Bancorp
     
16.16   Letter of FORVIS, LLP dated November 29, 2023 to the SEC
     
31.1   CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2   CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1   CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
32.2   CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
101.0   The following materials from Kentucky First Federal Bancorp’s Quarterly Report On Form 10-Q for the quarter ended December 31, 2023 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Income; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Changes in Shareholders’ Equity; (v) the Condensed Consolidated Statements of Cash Flows: and (vi) the related Notes.
     
104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

(1) Incorporated herein by reference to the Company’s Registration Statement on Form S-1 (File No. 333-119041).
   
(2) Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the Year Ended June 30, 2012 (File No. 0-51176).
   
(3) Incorporated herein by reference to the Company’s Current Report on Form 8-K filed August 25, 2017 (File No. 0-51176).
   
(4) Incorporated herein by reference to the Company’s Current Report on Form 8-K filed September 28, 2020 (File No. 0-51176).
   
(5) Incorporated herein by reference to the Company’s Current Report on Form 8-K filed February 2, 2022 (File No. 51176).

 

(6)Incorporated herein by reference to the Company’s Current Report on Form 8-K filed November 29, 2023 (File No. 51176).

 

42

 

 

Kentucky First Federal Bancorp

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    KENTUCKY FIRST FEDERAL BANCORP
       
Date: February 14, 2024   By: /s/ Don D. Jennings
      Don D. Jennings
      Chief Executive Officer
       
Date: February 14, 2024   By: /s/ Tyler W. Eades
      Tyler W. Eades
      Vice President and Chief Financial Officer

 

 

43

 
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