非利息收入：首九個月 47.0 萬美元（上年 38.9 萬美元），主要受惠於貸款出售收益增加（22.8 萬美元 vs 16.2 萬美元）。

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 March 31, 2026

 

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 May 15, 2026, the latest practicable date, the Corporation
had 8,086,715 shares of $.01 par value common stock outstanding (including 4,727,938 shares held by First Federal MHC).

 

 

 

 
 

 
 

 

  

INDEX

 

 
  
  
 Page

 
 PART I FINANCIAL INFORMATION
  
 1

 
  
  
  

 
 ITEM 1 FINANCIAL STATEMENTS
  
 1

 
  
  
  

 
 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
  
 31

 
  
  
  

 
 ITEM 3 Quantitative and Qualitative Disclosures About Market Risk
  
 39

 
  
  
  

 
 ITEM 4 Controls and Procedures
  
 39

 
  
  
  

 
 PART II OTHER INFORMATION
  
 40

 
  
  
  

 
 SIGNATURES
  
 42

 

 

 
i

 
 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1: Financial Statements

 

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

  

 
   
 March 31,
 2026  
 June 30,
 2025 

 
   
 Unaudited  
   

 
 ASSETS 
    
   

 
 Cash and due from financial institutions 
 $2,289  
 $2,342 

 
 Fed funds sold 
  5,073  
  8,577 

 
 Interest-bearing demand deposits 
  13,934  
  8,561 

 
 Cash and cash equivalents 
  21,296  
  19,480 

 
 Debt securities available-for-sale, at fair value 
  10,265  
  9,757 

 
   
     
    

 
 Debt securities held-to-maturity, at amortized cost-approximate fair value of $141 and $167 at March 31, 2026 and June 30, 2025, respectively 
  143  
  171 

 
 Loans held for sale 
  662  
  877 

 
 Loans, net of allowance for credit losses of $2,217 and $2,170 at March 31, 2026 and June 30, 2025, respectively 
  328,223  
  327,248 

 
 Office premises and equipment - at depreciated cost 
  4,195  
  4,211 

 
 Federal Home Loan Bank stock - at cost 
  3,804  
  3,980 

 
 Accrued interest receivable 
  1,593  
  1,438 

 
 Bank-owned life insurance 
  3,067  
  3,001 

 
 Prepaid expenses and other assets 
  1,293  
  1,048 

 
 Total assets 
 $374,541  
 $371,211 

 
 LIABILITIES AND SHAREHOLDERS’ EQUITY 
     
    

 
 Savings 
 $43,697  
 $48,616 

 
 Certificates of deposit 
  197,261  
  199,575 

 
 Demand deposit accounts 
  32,731  
  29,372 

 
 Deposits 
  273,689  
  277,563 

 
 Federal Home Loan Bank advances 
  48,937  
  42,760 

 
 Advances by borrowers for taxes and insurance 
  593  
  869 

 
 Accrued interest payable 
  709  
  949 

 
 Accrued income tax 
  120  
  63 

 
 Deferred income taxes 
  59  
  30 

 
 Other liabilities 
  776  
  608 

 
 Total liabilities 
  324,883  
  322,842 

 
   
     
    

 
 Shareholders’ equity 
     
    

 
 Preferred stock, 500,000 shares authorized, $.01 par value; no shares issued 
  -
  
  -
 

 
 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 - restricted 
  18,735  
  17,506 

 
 Treasury shares at cost, 509,349 common shares at March 31, 2026 and June 30, 2025, respectively 
  (3,969) 
  (3,969)

 
 Accumulated other comprehensive loss 
  (85) 
  (145)

 
 Total shareholders’ equity 
  49,658  
  48,369 

 
 Total liabilities and shareholders’ equity 
 $374,541  
 $371,211 

 

 

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)

 

 
   
 Nine months ended
 March 31,  
 Three months ended
 March 31, 

 
   
 2026  
 2025  
 2026  
 2025 

 
 Interest income 
    
    
    
   

 
 Loans, including fees 
 $14,536  
 $13,158  
 $4,957  
 $4,456 

 
 Mortgage-backed securities 
  304  
  229  
  99  
  72 

 
 Interest-bearing deposits and other 
  645  
  862  
  201  
  318 

 
 Total interest income 
  15,485  
  14,249  
  5,257  
  4,846 

 
   
     
     
     
    

 
 Interest expense 
     
     
     
    

 
 Interest-bearing demand deposits 
  88  
  30  
  33  
  12 

 
 Savings 
  149  
  169  
  50  
  70 

 
 Certificates of deposit 
  5,741  
  5,826  
  1,810  
  2,013 

 
 Deposits 
  5,978  
  6,025  
  1,893  
  2,095 

 
 Borrowings 
  1,479  
  2,186  
  497  
  620 

 
 Total interest expense 
  7,457  
  8,211  
  2,390  
  2,715 

 
 Net interest income 
  8,028  
  6,038  
  2,867  
  2,131 

 
 Provision for credit losses 
  51  
  36  
  41  
  21 

 
 Net interest income after provision for credit losses 
  7,977  
  6,002  
  2,826  
  2,110 

 
   
     
     
     
    

 
 Non-interest income 
     
     
     
    

 
 Earnings on bank-owned life insurance 
  66  
  65  
  29  
  21 

 
 Net gain on sales of loans 
  228  
  162  
  63  
  22 

 
 Other 
  176  
  162  
  47  
  38 

 
 Total non-interest income 
  470  
  389  
  139  
  81 

 
   
     
     
     
    

 
 Non-interest expense 
     
     
     
    

 
 Employee compensation and benefits 
  3,813  
  3,615  
  1,298  
  1,219 

 
 Data processing 
  695  
  451  
  244  
  180 

 
 Occupancy and equipment 
  423  
  414  
  152  
  142 

 
 FDIC insurance premiums 
  208  
  196  
  69  
  57 

 
 Voice and data communications 
  92  
  104  
  26  
  38 

 
 Advertising 
  124  
  131  
  24  
  40 

 
 Outside service fees 
  511  
  377  
  117  
  153 

 
 Auditing and accounting 
  286  
  258  
  95  
  92 

 
 Regulatory assessments 
  53  
  71  
  7  
  24 

 
 Foreclosure and real estate owned expenses, net 
  68  
  64  
  23  
  23 

 
 Franchise and other taxes 
  103  
  101  
  32  
  31 

 
 Legal fees 
  147
  
  289
  
  13
  
  60
 

 
 Other 
  315  
  321  
  110  
  117 

 
 Total non-interest expense 
  6,838  
  6,392  
  2,210  
  2,176 

 
   
     
     
     
    

 
 Income (loss) before income taxes 
  1,609  
  (1) 
  755  
  15 

 
   
     
     
     
    

 
 Income tax expense (benefit) 
  380  
  (6) 
  174  
  8 

 
   
     
     
     
    

 
 NET INCOME 
 $1,229  
 $5  
 $581  
 $7 

 
 EARNINGS PER SHARE 
     
     
     
    

 
 Basic and diluted 
 $0.15  
 $0.00  
 $0.07  
 $0.00 

 
 DIVIDENDS PER SHARE 
 $0.00  
 $0.00  
 $0.00  
 $0.00 

 

 

See accompanying notes to condensed consolidated
financial statements.

 

 
2

 
 

 

 

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME

(Unaudited)

(In thousands)

 

 
   
 Nine months ended
 March 31,  
 Three months ended
 March 31, 

 
   
 2026  
 2025  
 2026  
 2025 

 
 Net income 
 $1,229  
 $5  
 $581  
 $7 

 
   
     
     
     
    

 
 Other comprehensive income (loss), net of tax: 
     
     
     
    

 
 Unrealized holding gains (losses) on securities designated as available-for-sale, net of taxes of $20, $50, ($8) and $30 during the respective periods 
  60  
  150  
  (24) 
  90 

 
 Comprehensive income 
 $1,289  
 $155  
 $557  
 $97 

 

 

See accompanying notes to condensed consolidated
financial statements.

 

 
3

 
 

 

 

Kentucky First Federal Bancorp

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’
EQUITY

For the nine months ended

(Unaudited)

(Dollar amounts in thousands, except per share
data)

 

March 31, 2026

 

 
   
 Common 
 stock  
 Additional 
 paid-in 
 capital  
 Retained 
 earnings  
 Treasury 
 shares  
 Accumulated 
 other 
 comprehensive 
 loss  
 Total 

 
 Balance at July 1, 2025 
 $86  
 $34,891  
 $17,506  
 $(3,969) 
 $(145) 
 $48,369 

 
 Net income 
  –
  
  –
  
  1,229  
  –  
  –
  
  1,229 

 
 Other comprehensive income, net of tax 
  –
  
  –
  
  –
  
  –  
  60  
  60 

 
 Balance at March 31, 2026 
 $86  
 $34,891  
 $18,735  
 $(3,969) 
 $(85) 
 $49,658 

 

 

March 31, 2025

 

 
   
 Common 
 stock  
 Additional 
 paid-in 
 capital  
 Retained 
 earnings  
 Treasury 
 shares  
 Accumulated 
 other 
 comprehensive 
 loss  
 Total 

 
 Balance at July 1, 2024 
 $86  
 $34,891  
 $17,325  
 $(3,969) 
 $(336) 
 $47,997 

 
 Net income 
  –
  
  –
  
  5  
  –  
  –
  
  5 

 
 Other comprehensive income, net of tax 
  –
  
  –
  
  –
  
  –  
  150  
  150 

 
 Balance at March 31, 2025 
 $86  
 $34,891  
 $17,330  
 $(3,969) 
 $(186) 
 $48,152 

 

 

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

(Unaudited)

(Dollar amounts in thousands, except per share
data)

 

March 31, 2026

 

 
   
 Common 
 stock  
 Additional 
 paid-in 
 capital  
 Retained 
 earnings  
 Treasury 
 shares  
 Accumulated 
 other 
 comprehensive 
 loss  
 Total 

 
 Balance
 at January 1, 2026 
 $86  
 $34,891  
 $18,154  
 $(3,969) 
 $(61) 
 $49,101 

 
 Net income 
  –
  
  –
  
  581  
  –  
  –
  
  581 

 
 Other comprehensive loss, net of tax 
  –
  
  –
  
  –
  
  –  
  (24) 
  (24)

 
 Balance at March 31, 2026 
 $86  
 $34,891  
 $18,735  
 $(3,969) 
 $(85) 
 $49,658 

 

 

March 31, 2025

 

 
   
 Common 
 stock  
 Additional 
 paid-in 
 capital  
 Retained 
 earnings  
 Treasury 
 shares  
 Accumulated 
 other 
 comprehensive 
 loss  
 Total 

 
 Balance
 at January 1, 2025 
 $86  
 $34,891  
 $17,323  
 $(3,969) 
 $(276) 
 $48,055 

 
 Net income 
  –
  
  –
  
  7  
  –  
  –
  
  7 

 
 Other comprehensive income, net of tax 
  –
  
  –
  
  –
  
  –  
  90  
  90 

 
 Balance at March 31, 2025 
 $86  
 $34,891  
 $17,330  
 $(3,969) 
 $(186) 
 $48,152 

 

 

See accompanying notes to condensed consolidated
financial statements.

 

 
5

 
 

 

 

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 
   
 Nine months ended
 March 31, 

 
   
 2026  
 2025 

 
 Cash flows from operating activities: 
    
   

 
 Net income 
 $1,229  
 $5 

 
 Adjustments to reconcile net income to net cash from operating activities 
     
    

 
 Depreciation 
  148  
  173 

 
 Amortization of deferred loan origination fees, net 
  (102) 
  (18)

 
 Amortization of premiums on debt securities 
  (36) 
  (15)

 
 Net gain on sale of loans 
  (228) 
  (162)

 
 Earnings on bank-owned life insurance 
  (66) 
  (64)

 
 Provision for credit losses 
  51  
  36 

 
 Origination of loans held for sale 
  (8,583) 
  (5,010)

 
 Proceeds from loans held for sale 
  9,026  
  5,010 

 
 Deferred Income Taxes 
  9
  
  (79)

 
 Accrued Income Tax 
  57  
  -
 

 
 Increase (decrease) in cash, due to changes in: 
     
    

 
 Accrued interest receivable 
  (155) 
  (258)

 
 Prepaid expenses and other assets 
  (245) 
  (48)

 
 Accrued interest payable 
  (240) 
  468 

 
 Other liabilities 
  168  
  (153)

 
 Net cash provided by (used in) operating activities 
  1,033  
  (115)

 
   
     
    

 
 Cash flows from investing activities: 
     
    

 
 Purchase of securities available-for-sale
 
  (2,405) 
  -
 

 
 Securities maturities, prepayments and calls: 
     
    

 
 Held-to-maturity 
  26  
  31 

 
 Available-for-sale 
  2,015  
  1,663 

 
 Proceeds from redemption of FHLB stock 
  764  
  592 

 
 Purchase of FHLB stock 
  (588) 
  (342)

 
 Loans originated for investment, net of principal collected 
  (924) 
  2,460 

 
 Additions to premises and equipment, net 
  (132) 
  (148)

 
 Net cash provided by (used in) investing activities 
  (1,244) 
  4,256 

 
   
     
    

 
 Cash flows from financing activities: 
     
    

 
 Net change  in deposits 
  (3,874) 
  21,247 

 
 Payments by borrowers for taxes and insurance, net 
  (276) 
  (361)

 
 Proceeds from Federal Home Loan Bank advances 
  34,802  
  14,446 

 
 Repayments on Federal Home Loan Bank advances 
  (28,625) 
  (30,007)

 
 Net cash provided by financing activities 
  2,027  
  5,325 

 
   
     
    

 
 Net increase in cash and cash equivalents 
  1,816  
  9,466 

 
   
     
    

 
 Beginning cash and cash equivalents 
  19,480  
  18,287 

 
   
     
    

 
 Ending cash and cash equivalents 
 $21,296  
 $27,753 

 

 

See accompanying notes to condensed consolidated
financial statements.

 

 
6

 
 

 

 

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)

(Unaudited)

(In thousands)

 

 
   
 Nine months ended 

March 31, 

 
   
 2026  
 2025 

 
 Supplemental disclosure of cash flow information: 
    
   

 
   
     
    

 
 Cash paid during the period for: 
     
    

 
   
     
    

 
 Income taxes 
 $470  
 $-
 

 
   
     
    

 
 Interest on deposits and borrowings 
 $7,697  
 $7,743 

 

 

See accompanying notes to condensed consolidated
financial statements.

 

 
7

 
 

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2026

(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.

 

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 nine-month period ended March
31, 2026, 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, 2025, 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 2025 filed with the Securities and
Exchange Commission on September 30, 2025.

 

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. The Company is a majority-owned subsidiary of First Federal MHC. The accounts of First
Federal MHC are not consolidated in the accompanying consolidated financial statements of the Company.

 

Critical Accounting Policies and Estimates

 

Debt Securities – 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)

March 31, 2026

(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 (ACL) 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 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.

 

Recently Issued Accounting Pronouncements
Not Yet Effective

 

In October 2023, the Financial Accounting Standards
Board (FASB) issued ASU 2023-06 Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and
Simplification Initiative (ASU 2023-06). The amendments in this ASU are the result of FASB’s decision to incorporate into the Accounting
Standards Codification certain disclosure requirements, referred by the SEC, for incremental information to US GAAP. Topics in the ASU
that have applicability to the Company are (1) Statement of Cash Flows which requires an accounting policy disclosure in annual periods
where cash flows associated with derivative instruments and their related gains and losses are presented in the statement of cash flows,
(2) Debt which requires disclosure of amounts and terms of unused lines of credit and unfunded commitments and the weighted-average interest
rate on outstanding short-term borrowings, and (3) Derivatives and Hedging which adds cross-reference to disclosure requirements related
to where cash flows associated with derivative instruments and their related gains and losses are presented in the statement of cash flows.

 

 
9

 
 

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

March 31, 2026

(unaudited)

 

Note 1. Basis of Presentation (continued)

 

Recently Issued Accounting Pronouncements
Not Yet Effective (continued)

 

The effective date for each amendment will be
the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early
adoption prohibited. If by June 30, 2027 the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the
pending content of the related amendment will be removed from the Accounting Standards Codification and will not become effective for
any entity. Management is reviewing the provisions of ASU 2023-06, and does not expect the adoption of the ASU to have a material effect
on the Company’s financial statements.

 

In November 2024, FASB issued ASU 2024-03 Income
Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update
require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments require
that at each interim and annual reporting period (1) the Company disclose the amounts of (a) employee compensation, (b) depreciation,
and (c) intangible asset amortization included in each relevant expense caption presented on the face of the income statement within continuing
operations that contains any of the expense categories listed; (2) include certain amounts that are already required to be disclosed under
current generally accepted accounting principles in the same disclosure as the other disaggregation requirements; (3) disclose a qualitative
description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively; (4) disclose the
total amount of selling expenses and, in annual reporting periods, the Company’s definition of selling expenses. The amendments
in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after
December 15, 2027. Early adoption is permitted. The amendments in this update should be applied either (1) prospectively to financial
statements issued for reporting periods after the effective date of this update or (2) retrospectively to any or all prior periods presented
in the financial statements. Management is currently evaluating the update and does not expect adoption of the update to have a material
effect on the Company’s financial position or results of operations.

 

Accounting Pronouncements Adopted in Fiscal
Year 2025

 

In November 2023, FASB issued ASU 2023-07 Segment
Reporting (ASU 2023-07). The amendments in ASU 2023-07 apply to all public entities that are required to report segment information in
accordance with FASB ASC Topic 280, Segment Reporting. The amendments in ASU 2023-07 are intended to improve reportable segment disclosure
requirements primarily through requiring enhanced disclosures about significant segment expenses. The amendments require that a public
entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the Chief Operating Decision
Maker (“CODM”) and included within each reported measure of segment profit or loss. Public entities are required to disclose,
on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. In addition,
public entities must provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by
FASB ASC Topic 280, Segment Reporting in interim periods. The amendments clarify that if the CODM uses more than one measure of a segment’s
profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those
additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure,
if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding
amounts in the public entity’s consolidated financial statements. The amendments require that a public entity disclose the title
and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment
performance and deciding how to allocate resources. Finally, the amendments require that a public entity that has a single reportable
segment provide all the disclosures required by the amendments in ASU 2023-07 and all existing segment disclosures in ASC Topic 280. ASU
2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December
15, 2024. A public entity that adopts ASU 2023-07 is required to apply the amendments retrospectively to all prior periods presented in
the financial statements. Upon adoption of ASU 2023-07, the segment expense categories and amounts disclosed in the prior periods should
be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company adopted ASU 2023-07
on January 1, 2025 with little impact as currently the Company’s financial service operations are aggregated into one reportable
operating segment.

 

 
10

 
 

 

  

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

March 31, 2026

(unaudited)

 

Note 1. Basis of Presentation (continued)

 

Accounting Pronouncements Adopted in Fiscal
Year 2025 (continued)

 

In December 2023, FASB issued ASU No. 2023-09,
Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09). FASB issued ASU 2023-09 to address investor requests for
more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation
and income taxes paid information. ASU 2023-09 is to be applied on a prospective basis and became effective for annual periods beginning
after December 15, 2024. ASU 2023-09 impacts income tax disclosures, and did not have a material impact to the Company’s consolidated
financial statements.

 

In November 2023, the FASB issued ASU 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update require annual and interim
disclosures on significant segment expenses that are regularly provided to the chief operating decision maker and require annual and interim
disclosures on “other segment items”, where the other segment items category is the difference between segment revenue less
segment expense compared to the reported measure of segment profit or loss. In addition, the amendments require all annual disclosures
that are currently required to be reported on an interim basis and require the disclosure of the title and position of the chief operating
decision maker and how that position uses the information to assess segment performance and the allocation of resources. While the Company
only has one reportable segment, the update requires public entities with a single segment to provide all segment disclosures under ASC
280. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within the fiscal years beginning
after December 15, 2024. The Company adopted ASU 2023-07 in the fiscal year ended June 30, 2025, and the adoption of this guidance did
not have a material impact on the Company’s consolidated financial statements. 

 

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:

 

 
   
 Nine months ended
 March 31,  
 Three months ended
 March 31, 

 
   
 2026  
 2025  
 2026  
 2025 

 
 Net income allocated to common shareholders, basic and diluted 
 $1,229,000  
 $5,000  
 $581,000  
 $7,000 

 
   
     
     
     
    

 
 Earnings per share, basic and diluted 
 $0.15  
 $0.00  
 $0.07  
 $0.00 

 
 Weighted average common shares outstanding, basic and diluted 
  8,086,715  
  8,086,715  
  8,086,715  
  8,086,715 

 

 

There were no stock option shares outstanding
for the nine- or three-month periods ended March 31, 2026 and 2025.

 

 
11

 
 

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

March 31, 2026

(unaudited)

 

Note 3. Debt Securities

 

The following table summarizes the amortized
cost and fair value of securities available-for-sale and securities held-to-maturity at March 31, 2026 and June 30, 2025, the corresponding
amounts of gross unrealized gains recognized in accumulated other comprehensive income and gross unrecognized gains and losses:

 

 
   
 March 31, 2026 

 
 (in thousands) 
 Amortized
 cost  
 Gross
 unrealized
 gains  
 Gross
 unrealized 
 losses  
 Estimated
 fair value 

 
 Available-for-sale Securities 
    
    
    
   

 
 Agency mortgage-backed: residential 
 $10,378  
 $     2  
 $115  
 $10,265 

 
   
     
     
     
    

 
 Held-to-maturity Securities 
     
     
     
    

 
 Agency mortgage-backed: residential 
 $143  
 $1  
 $3  
 $141 

 

 

 
   
 June 30, 2025 

 
 (in thousands) 
 Amortized
 cost  
 Gross
 unrealized
 gains  
 Gross
 unrealized
 losses  
 Estimated
 fair value 

 
 Available-for-sale Securities 
    
    
    
   

 
 Agency mortgage-backed: residential 
 $9,950  
 $       -
  
 $193  
 $9,757 

 
   
     
     
     
    

 
 Held-to-maturity Securities 
     
     
     
    

 
 Agency mortgage-backed: residential 
 $171  
 $-
  
 $4  
 $167 

 

 

At March 31, 2026 and June 30, 2025 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.

 

There were no pledged securities for both March
31, 2026 and June 30, 2025. In addition, at both March 31, 2026 and June 30, 2025, there were no pledged overnight deposits.

 

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 believe 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 81.6% and 88.8% at
March 31, 2026 and June 30, 2025, 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 March 31, 2026.

 

March 31, 2026

 

Available-for-Sale 

 

 
 (in thousands) 
 Amortized
 cost  
 Gross
 unrealized
 losses  
 Fair value 

 
 Less Than 12 Months 
    
    
   

 
 Agency mortgage-backed securities 
 $2,563  
 $6  
 $2,557 

 
 12 Months or More 
     
     
    

 
 Agency mortgage-backed securities 
  5,957  
  109  
  5,848 

 
 Total 
 $8,520  
 $115  
 $8,405 

 

 

 
12

 
 

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

March 31, 2026

(unaudited)

 

Note 3. Debt Securities (continued)

 

March 31, 2026

 

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 
  83  
  3  
  80 

 
 Total 
 $83  
 $3  
 $80 

 

 

June 30, 2025

 

Available-for-Sale 

 

 
 (in thousands) 
 Amortized
 cost  
 Gross
 unrealized
 losses  
 Fair value 

 
 Less Than 12 Months 
    
    
   

 
 Agency mortgage-backed securities 
 $2,000  
 $20  
 $1,980 

 
 12 Months or More 
     
     
    

 
 Agency mortgage-backed securities 
  6,700  
 $173  
 $6,527 

 
 Total temporarily impaired AFS securities 
 $8,700  
 $193  
 $8,507 

 

 

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 
  171  
  4  
  167 

 
 Total temporarily impaired HTM securities 
 $171  
 $4  
 $167 

 

 

 
13

 
 

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

March 31, 2026

(unaudited)

 

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.

 

All interest accrued but not received for loans
placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery
method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually
due are brought current and future payments are reasonably assured.

 

The composition of the loan portfolio was as follows:

 

 
   
 March 31,  
 June 30, 

 
 (in thousands) 
 2026  
 2025 

 
 Residential real estate 
    
   

 
 One- to four-family 
 $242,718  
 $251,338 

 
 Multi-family 
  17,122  
  15,505 

 
 Construction 
  11,910  
  9,314 

 
 Land 
  1,842  
  1,508 

 
 Farm 
  2,112  
  3,023 

 
 Nonresidential real estate 
  35,163  
  31,698 

 
 Commercial and industrial 
  619  
  691 

 
 Consumer and other: 
     
    

 
 Loans on deposits 
  594  
  813 

 
 Home equity 
  17,500  
  14,643 

 
 Automobile 
  167  
  134 

 
 Unsecured 
  693  
  751 

 
   
  330,440  
  329,418 

 
 Allowance for credit losses 
  (2,217) 
  (2,170)

 
   
 $328,223  
 $327,248 

 

 

The amounts above include net deferred loan costs
of $70,000 and $149,000 as of March 31, 2026 and June 30, 2025, respectively.

 

 
14

 
 

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

March 31, 2026

(unaudited)

 

Note 4. Loans receivable (continued)

 

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 of 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 March 31, 2026 is adequate.

 

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.

 

 
15

 
 

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

March 31, 2026

(unaudited)

 

Note 4. Loans receivable (continued)

 

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 also lend to builders for construction
of speculative or custom residential properties for resale, but on a limited basis. 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.

 

 
16

 
 

 

 

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)

March 31, 2026

(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 i