What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-05-17 · 304 added, 970 removed, 365 unchanged (78% of the section changed)

Financial Statements

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

First Federal Bancorp

CONSOLIDATED BALANCE SHEETS

thousands, except share data)

September 30,

Cash and due from financial institutions

4 unchanged sentences

Securities available-for-sale

Securities held-to-maturity, at amortized cost- approximate fair value of $508 and $611 at March 31, 2021 and June 30, 2020, respectively

Securities held-to-maturity, at amortized cost- approximate fair value of $ 452 and $ 476 at September 30, 2021 and June 30, 2021, respectively

Loans held for sale

Loans, net of allowance of $1,622 and $1,488 at March 31, 2021 and June 30, 2020, respectively

Loans, net of allowance of $ 1,610 and $ 1,622 at September 30, 2021 and June 30, 2021, respectively

Real estate owned, net

5 unchanged sentences

Prepaid expenses and other assets

LIABILITIES AND SHAREHOLDERS’

LIABILITIES AND SHAREHOLDERS’ EQUITY

Federal Home Loan Bank advances

1 unchanged sentence

Accrued interest payable

Accrued income taxes

Deferred income taxes

2 unchanged sentences

Commitments and contingencies

Shareholders’

Shareholders’ equity

Preferred stock, 500,000 shares authorized, $ .01 par value;

4 unchanged sentences

Retained earnings

Unearned employee stock ownership plan (ESOP), 14,924 shares and 28,931 shares at March 31, 2021 and June 30, 2020, respectively

Treasury shares at cost, 369,349 and 342,849 common shares at March 31, 2021 and June 30, 2020, respectively

Unearned employee stock ownership plan (ESOP), 5,586 shares and 10,255 shares at September 30, 2021 and June 30, 2021, respectively

Treasury shares at cost, 369,349 and 369,349 common shares at September 30, 2021 and June 30, 2021, respectively

Accumulated other comprehensive income

Total shareholders’

Total liabilities and shareholders’

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

Nine months ended

Total shareholders’ equity

Total liabilities and shareholders’ equity

accompanying notes to condensed consolidated financial statements.

First Federal Bancorp

CONSOLIDATED STATEMENTS OF OPERATIONS

in thousands, except per share data)

Three months ended

September 30,

Interest income

15 unchanged sentences

Net gain (loss) on sales of real estate owned

Valuation adjustment for real estate owned

Total non-interest income

1 unchanged sentence

Employee compensation and benefits

Data processing

Occupancy and equipment

2 unchanged sentences

Outside service fees

Data processing

Auditing and accounting

Franchise and other taxes

Regulatory assessments

Foreclosure and real estate owned expenses (net)

Franchise and other taxes

Total non-interest expense

Income before income taxes

Federal income tax expense

Income tax expense

EARNINGS PER SHARE

1 unchanged sentence

DIVIDENDS PER SHARE

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

(In thousands)

Nine months ended

accompanying notes to condensed consolidated financial statements.

First Federal Bancorp

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended

September 30,

Other comprehensive gains (losses), net of tax:

Unrealized holding Gains (losses) on securities designated as available-for-sale,

net of taxes of $(1), $0, $0 and $0 during the respective periods

Unrealized holding gains (losses) on securities designated as available-for-sale, net of taxes of $ 0 and $( 1 ) during the respective periods

Comprehensive income

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’

For the nine months ended

(Dollar amounts in thousands, except per share

March 31, 2021

accompanying notes to condensed consolidated financial statements.

First Federal Bancorp

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

the three months ended

amounts in thousands, except per share data)

comprehensive

2 unchanged sentences

Allocation of ESOP shares

Acquisition of shares for Treasury

Other comprehensive loss

Cash dividends of $ 0.10 per common share

Balance at March 31, 2021

March 31, 2020

Balance at September 30, 2021

comprehensive

4 unchanged sentences

Cash dividends of $ 0.10 per common share

Balance at March 31, 2020

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’

For the three months ended

(Dollar amounts in thousands, except per share

March 31, 2021

comprehensive

Balance at December 31, 2020

Allocation of ESOP shares

Acquisition of shares for Treasury

Cash dividends of $0.10 per common share

Balance at March 31, 2021

March 31, 2020

comprehensive

Balance at December 31, 2019

Allocation of ESOP shares

Acquisition of shares for treasury

Other comprehensive income

Cash dividends of $0.10 per common share

Balance at March 31, 2020

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine months ended

Balance at September 30, 2020

accompanying notes to condensed consolidated financial statements.

First Federal Bancorp

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended

September 30,

Cash flows from operating activities:

Adjustments to reconcile net

income to net cash provided by operating activities

Accretion of purchased loan credit

Amortization of purchased loan

Amortization of deferred loan origination

Amortization of premiums on investment

Adjustments to reconcile net income to net cash provided by operating activities

Accretion of purchased loan credit discount

Amortization of purchased loan premium

Amortization of deferred loan origination costs (fees)

Amortization of premiums on investment securities

Net gain on sale of loans

Net (gain) loss on sale of real

Valuation adjustments of real estate

Net (gain) loss on sale of real estate owned

ESOP compensation expense

3 unchanged sentences

Proceeds from loans held for sale

Increase (decrease) in cash, due

to changes in:

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

Accrued interest receivable

2 unchanged sentences

Other liabilities

Net cash provided by operating

Net cash provided by operating activities

Cash flows from investing activities:

Purchase of time deposits in other

financial institutions

Maturities of time deposits in

other financial institutions

Securities maturities, prepayments

Maturities of time deposits in other financial institutions

Securities maturities, prepayments and calls:

Held to maturity

Available for sale

Purchase of FHLB stock

Loans originated for investment,

net of principal collected

Proceeds from sale of real estate

Loans originated for investment, net of principal collected

Proceeds from sale of real estate owned

Additions to real estate owned

to premises and equipment, net

Net cash provided by (used in)

investing activities

Additions to premises and equipment, net

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Net increase in deposits

Payments by borrowers for taxes

and insurance, net

Proceeds from Federal Home Loan

Bank advances

Repayments on Federal Home Loan

Bank advances

Payments by borrowers for taxes and insurance, net

Proceeds from Federal Home Loan Bank advances

Repayments on Federal Home Loan Bank advances

Treasury stock purchased

paid on common stock

provided by (used in) financing activities

Dividends paid on common stock

Net cash provided by (used in) financing activities

Net increase in cash and cash equivalents

cash and cash equivalents

and cash equivalents

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine months ended

Beginning cash and cash equivalents

Ending cash and cash equivalents

accompanying notes to condensed consolidated financial statements.

First Federal Bancorp

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

Three months ended

September 30,

Supplemental disclosure of cash flow information:

4 unchanged sentences

Loans made on sale of real estate owned

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

The Kentucky First Federal Bancorp (“Kentucky

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,

(“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.

accompanying notes to condensed consolidated financial statements.

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

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.

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, 2021, 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, 2020 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.

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.

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 2020 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.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Basis of Presentation (continued)

New Accounting Standards

FASB ASC 326 - In June 2016, the

FASB issued ASU No.

2016-13, Financial Instruments –

Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

final standard will change estimates for credit losses related to financial assets measured at amortized cost such as loans, held-to-maturity

debt securities, and certain other contracts.

For estimating credit losses, the FASB is replacing the incurred loss model with an expected

loss model, which is referred to as the current expected credit loss (CECL) model.

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 will be on its allowance for loan and lease losses, although the ASU also

amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

The standard is effective for public companies for annual periods and interim periods within those annual periods beginning after December

However, the FASB has 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 will be applied through a cumulative

effect adjustment to retained earnings (modified-retrospective approach), except for debt securities for which an other-than-temporary

impairment had been recognized before the effective date.

A prospective transition approach is required for these debt securities.

have formed a functional committee that is assessing our data and system needs and are evaluating the impact of adopting the new guidance.

We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting

period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact

of the new guidance on the consolidated financial statements.

However, the Company does expect ASU 2016-13 to add complexity and costs

to its current credit loss evaluation process.

FASB ASC 820 –

In August 2018,

the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for

Fair Value Measurement.

This guidance reduces the level of detail surrounding the processes used by the Company in determining the

fair value of some of its assets.

The Company adopted this ASU effective July 1, 2020, with no material impact to the financial statements.

FASB ASC 740–

2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes.

The amendments in this

ASU removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income

taxes during interim periods.

The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for

tax goodwill and allocating taxes to members of a consolidated group.

For public business entities, the amendments in this ASU are effective

for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, or July 1, 2021, with respect to the

Early adoption is permitted.

We do not anticipate a significant impact to our consolidated financial statements.

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.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

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.

of operations for the three-month period ended September 30, 2021, 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, 2021, 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 2021 filed with the Securities and Exchange Commission.

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.

Accounting Standards

ASC 326 - In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

of Credit Losses on Financial Instruments.

The final standard will change estimates for credit losses related to financial assets

measured at amortized cost such as loans, held-to-maturity debt securities, and certain other contracts.

For estimating credit losses,

the FASB is replacing the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL)

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 will be on

its allowance for loan and lease losses, although the ASU also amends the accounting for credit losses on available-for-sale debt securities

and purchased financial assets with credit deterioration.

The standard is effective for public companies for annual periods and interim

periods within those annual periods beginning after December 15, 2019.

However, the FASB has 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

ASU 2016-13 will be applied through a cumulative effect adjustment to retained earnings (modified-retrospective approach),

except for debt securities for which an other-than-temporary impairment had been recognized before the effective date.

A prospective

transition approach is required for these debt securities.

We have formed a functional committee that is assessing our data and system

needs and are evaluating the impact of adopting the new guidance.

We expect to recognize a one-time cumulative effect adjustment to the

allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective but cannot yet determine

the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements.

the Company does expect ASU 2016-13 to add complexity and costs to its current credit loss evaluation process.

ASC 740– In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income

The amendments in this ASU removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod

allocation and calculating income taxes during interim periods.

The ASU also adds guidance to reduce complexity in certain areas, including

recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

The Company adopted ASU 2019-12

effective July 1, 2021, with no material impact to our consolidated financial statements.

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.

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

Three months ended

(in thousands)

September 30,

Net income allocated to common shareholders, basic and diluted

Nine months ended

Three months ended

Earnings per share, basic and diluted

Weighted average common shares outstanding, basic and diluted

There were no stock option shares outstanding

for the nine- or three-month periods ended March 31, 2021 and 2020.

were no stock option shares outstanding for the three-month periods ended September 30, 2021 and 2020.

Investment Securities

The following table summarizes the amortized cost

and fair value of securities available-for-sale and securities held-to-maturity at March 31, 2021 and June 30, 2020, the corresponding

and fair value of securities available-for-sale and securities held-to-maturity at September 30, 2021 and June 30, 2021, the corresponding

amounts of gross unrealized gains recognized in accumulated other comprehensive income and gross unrecognized gains and losses:

March 31, 2021

September 30, 2021

(in thousands)

unrealized/ unrecognized

Amortized cost

Gross unrealized/ unrecognized

Estimated fair value

Available-for-sale Securities

4 unchanged sentences

(in thousands)

unrealized/ unrecognized

Amortized cost

Gross unrealized/ unrecognized

Estimated fair value

Available-for-sale Securities

2 unchanged sentences

Agency mortgage-backed:

pledged securities (including overnight and time deposits in other financial institutions) totaled $ 1.8 million and $ 1.8 million at September

30, 2021 and June 30, 2021, respectively.

evaluated securities in unrealized loss positions for evidence of other-than-temporary impairment, 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

Based on our evaluation, no impairment has been recognized through earnings.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Investment Securities (continued)

Our pledged securities (including overnight and

time deposits in other financial institutions) totaled $1.8 million and $1.9 million at March 31, 2021 and June 30, 2020, respectively.

We evaluated securities in unrealized loss positions

for evidence of other-than-temporary impairment, 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 impairment

has been recognized through earnings.

September 30, 2021

Loans receivable

The composition of the loan portfolio was as follows:

September 30,

(in thousands)

6 unchanged sentences

Allowance for loan losses

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Loans receivable (continued)

The amounts above include net deferred loan costs

of $ 262,000 and $ 167,000 as of September 30, 2021 and June 30, 2021, respectively.

The following table presents the activity in the

allowance for loan losses by portfolio segment for the nine months ended March 31, 2021:

allowance for loan losses by portfolio segment for the three months ended September 30, 2021:

(in thousands)

9 unchanged sentences

Loans on deposits

The following table presents the activity in the

allowance for loan losses by portfolio segment for the three months ended March 31, 2021:

(in thousands)

for loan losses

Residential real estate:

One- to four-family

Nonresidential real estate

Commercial nonmortgage

Consumer and other:

Loans on deposits

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

September 30, 2021

Loans receivable (continued)

The following table presents the activity in the

allowance for loan losses by portfolio segment for the nine months ended March 31, 2020:

(in thousands)

for loan losses

Residential real estate:

One- to four-family

Nonresidential real estate

Commercial nonmortgage

Consumer and other:

Loans on deposits

The following table presents the activity in the

allowance for loan losses by portfolio segment for the three months ended March 31, 2020:

allowance for loan losses by portfolio segment for the three months ended September 30, 2020:

(in thousands)

for loan losses

Beginning balance

Provision for loan losses

Ending balance

Residential real estate:

4 unchanged sentences

Loans on deposits

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Loans receivable (continued)

The following table presents the balance in the

allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of March 31, 2021.

allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of September 30, 2021.

The recorded investment in loans excludes accrued interest receivable due to immateriality.

March 31, 2021:

September 30, 2021:

(in thousands)

individually evaluated

acquired with deteriorated credit quality

principal balance

Loans individually evaluated

Loans acquired with deteriorated credit quality

Unpaid principal balance

and recorded investment

allowance attributed to loans

Ending allowance attributed to loans

Loans individually evaluated for impairment:

10 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

September 30, 2021

Loans receivable (continued)

3 unchanged sentences

(in thousands)

Loans individually

Loans acquired with

deteriorated credit quality

Unpaid principal

Loans individually evaluated

Loans acquired with deteriorated credit quality

Unpaid principal balance

and recorded investment

Ending allowance

attributed to loans

Unallocated allowance

Total allowance

Ending allowance attributed to loans

Loans individually evaluated for impairment:

2 unchanged sentences

Nonresidential real estate

Consumer and other:

Loans collectively evaluated for impairment:

4 unchanged sentences

Loans on deposits

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Loans receivable (continued)

The following table presents interest income

on loans individually evaluated for impairment by class of loans for the nine months ended March 31:

(in thousands)

With no related allowance recorded:

One- to four-family

Nonresidential real estate

Consumer and other

Purchased credit-impaired

With an allowance recorded:

One- to four-family

The following table presents interest income

on loans individually evaluated for impairment by class of loans for the three months ended March 31:

The following table presents interest income on

loans individually evaluated for impairment by class of loans for the three months ended September 30:

(in thousands)

Average Recorded

Cash Basis Income

Average Recorded

Cash Basis Income

Average Recorded Investment

Income Recognized

Cash Basis Income Recognized

Average Recorded Investment

Cash Basis Income Recognized

With no related allowance recorded:

3 unchanged sentences

Consumer and other

Purchased credit-impaired

Purchased credit-impaired loans

With an allowance recorded:

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

September 30, 2021

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 March 31, 2021 and June 30, 2020:

March 31, 2021

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 September 30, 2021, and June 30, 2021:

September 30, 2021

June 30, 2021

5 unchanged sentences

Residential real estate:

One- to four-family residential

One- to four-family residential real estate

Nonresidential real estate and land

1 unchanged sentence

One- to four-family loans in process of foreclosure

totaled $649,000 and $694,000 at March 31, 2021 and June 30, 2020, respectively.

totaled $ 525,000 and $ 577,000 at September 30, 2021 and June 30, 2021, respectively.

Troubled Debt Restructurings:

A Troubled Debt Restructuring (“TDR”)

is the situation where the Bank grants a concession to the borrower that the Banks would not otherwise have considered due to the borrower’s

A Troubled Debt Restructuring (“TDR”)

is the situation where the Bank grants 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.”

The provisions of the CARES Act included an

election to not apply the guidance on accounting for troubled debt restructurings to loan modifications, such as extensions or

deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) March 31, 2021 or (ii) 60 days after the end of the

COVID-19 national emergency.

The relief can only be applied to modifications for borrowers that were not more than 30 days past due

as of December 31, 2019.

In December 2020, Congress amended the CARES Act through the Consolidated Appropriation Act of 2021, which

provided additional COVID-19 relief to American families and businesses, including extending TDR relief under the CARES Act until

the earlier of December 31, 2021 or 60 days following the termination of the national emergency.

The Company elected to adopt these

provisions of the CARES Act.

As of March 31, 2021, the Banks had granted deferrals to 101 loans totaling $18.4 million.

borrower who owed $859,000 at March 31, 2021, had been granted an additional extension and returned to normal payment status in

All other borrowers granted a deferral, composed of 100 loans totaling $17.5 million in principal had resumed regular

payments at March 31, 2021.

At March 31, 2021 and June 30, 2020, the Company

had $1.9 million and $1.9 million of loans classified as TDRs, respectively.

Of the TDRs at March 31, 2021, approximately 29.4% were

related to the borrower’s completion of Chapter 7 bankruptcy proceedings with no reaffirmation of the debt to the Banks.

During the nine months ended March 31, 2021,

the Company had two loans, which were associated with a single borrower and were both secured by a single-family residence, restructured

The loans were classified as TDRs pursuant to court action under Chapter 7 bankruptcy proceedings without the borrower reaffirming

the debt personally, and totaled $143,000 at March 31, 2021, and were current on payments as of that date.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Loans receivable (continued)

During the nine months ended March 31, 2020,

the Company had three loans restructured as TDRs.

One borrower refinanced a piece of one- to four-family, non-owner occupied, residential

property to bring to current amounts owed on other loans with the Bank.

Because the borrower’s financial condition had deteriorated,

it was unlikely that the borrower could have secured financing elsewhere.

The restructured loan is collateralized and cross-collateralized

by real estate.

Another single-family residential borrower filed for Chapter 7 bankruptcy protection and did not reaffirm the debt personally,

although the Company’s collateral position remains intact.

Finally, a first and second mortgage on an 8-plex were refinanced into

a single loan with a slightly extended maturity term and a lower interest rate, which was consistent with similarly-priced comparable

loans at the time of refinance.

The following table summarizes TDR loan modifications

that occurred during the nine months ended March 31, 2021 and 2020, and their performance, by modification type:

(in thousands)

Troubled Debt

Restructurings

Performing to

Troubled Debt

Restructurings

Performing to

Troubled Debt

Restructurings

Nine months ended March 31, 2021

Residential real estate:

Chapter 7 bankruptcy

Nine months ended March 31, 2020

Residential real estate:

Terms extended

Terms extended and additional funds advanced

Chapter 7 bankruptcy

No TDRs defaulted during the nine-month periods

ended March 31, 2021 or 2020.

There were no TDR loan modifications that occurred

during the three months ended March 31, 2021 and 2020.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Loans receivable (continued)

All TDRs are considered “impaired.”

In December 2020, Congress amended the CARES Act

through the Consolidated Appropriation Act of 2021, which provided additional COVID-19 relief to American families and businesses, including

extending the TDR relief under the CARES Act until the earlier of December 31, 2021 or 60 days following the termination of the national

The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019.

The Company elected to adopt these provisions of the CARES Act.

In response to the COVID-19 pandemic and the widespread economic downturn

that immediately resulted, the Company adopted a loan forbearance plan in which then-current affected borrowers could request deferral

of their loan payments for a period of three months.

A total of $815,000 in loans were accepted into the plan for the twelve months ended

June 30, 2021.

At June 30, 2021 all of those loans had reached the end of their three-month deferral data period and returned to regular

payment status.

At September 30, 2021 and June 30, 2021, the Company

had $ 1.7 million of loans classified as TDRs.

Of the TDRs at September 30, 2021, approximately 27.2 % were related to the borrower’s

completion of Chapter 7 bankruptcy proceedings with no reaffirmation of the debt to the Banks.

During the three months ended September 30,

2021, and 2020 the Company added no loans restructured as TDRs.

No TDRs defaulted during the three-month periods ended September 30,

2021, or 2020.

The following table presents the aging of the

principal balance outstanding in past due loans as of March 31, 2021, by class of loans:

principal balance outstanding in past due loans as of September 30, 2021, by class of loans:

(in thousands)

2 unchanged sentences

Nonresidential real estate

Commercial non-mortgage

Commercial and industrial

Consumer and other:

Loans on deposits

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

Loans receivable (continued)

The following tables present the aging of the

4 unchanged sentences

Nonresidential real estate

Commercial nonmortgage

Commercial and industrial

Loans on deposits

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Loans receivable (continued)

Credit Quality Indicators:

3 unchanged sentences

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.

The Company analyzes loans

individually by classifying the loans as to credit risk.

This analysis is performed on an annual basis.

3 unchanged sentences

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.

Loans classified

4 unchanged sentences

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.

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.

Loans not meeting the criteria above that are

3 unchanged sentences

See the aging of past due loan

As of March 31, 2021, and based on the most recent analysis performed, the risk category of loans by class of loans is as

As of September 30, 2021, and based on the most recent analysis performed, the risk category of loans by class of loans is

(in thousands)

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

September 30, 2021

Loans receivable (continued)

At June 30, 2020, the risk category of loans

by class of loans was as follows:

At June 30, 2021, the risk category of loans by

class of loans was as follows:

(in thousands)

9 unchanged sentences

The carrying amount of those loans, net of a purchase credit discount

of $351,000 and $351,000 at March 31, 2021 and June 30, 2020, respectively, is as follows:

of $ 88,000 and $ 88,000 at September 30, 2021 and June 30, 2021, respectively, is as follows:

(in thousands)

September 30,

One- to four-family residential real estate

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Loans receivable (continued)

Accretable yield, or income expected to be collected,

is as follows:

Accretable yield, or income expected to

be collected, is as follows:

(in thousands)

September 30,

Twelve months

4 unchanged sentences

For those purchased loans disclosed above, the

Company made no increase in allowance for loan losses for the year ended June 30, 2020, nor for the nine-month period ended March 31,

Company made no increase in allowance for loan losses for the year ended June 30, 2021, nor for the three-month period ended September

Neither were any allowance for loan losses reversed during those periods.

Disclosures About Fair Value of Assets

and Liabilities

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

Disclosures About Fair Value of Assets and

ASC topic 820 defines fair value as the price

5 unchanged sentences

used to measure fair value:

Level 1 –

Quoted prices

Level 1 – Quoted prices

in active markets for identical assets or liabilities.

Level 2 –

Observable inputs

Level 2 – Observable inputs

other than Level 1 prices, such as quoted prices for similar assets or liabilities;

1 unchanged sentence

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or

Level 3 –

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.

7 unchanged sentences

mortgage-backed securities and agency bonds.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Disclosures About Fair Value of Assets

and Liabilities (continued)

Financial assets measured at fair value on a recurring

basis are summarized below:

Fair Value Measurements Using

(in thousands)

Quoted Prices

September 30, 2021

Agency mortgage-backed:

June 30, 2021

Agency mortgage-backed:

Impaired Loans

Following is a description of the valuation methodologies

and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheet

as well as the general classification of such assets pursuant to the valuation hierarchy.

For assets classified within Level 3 of the

fair value hierarchy, the process used to develop the reported fair value is described below.

At the time a loan is considered impaired, it

1 unchanged sentence

If a loss is identified,

a specific allocation will be established as part of the allowance for loan losses such that the loan’s net carrying value is at

its estimated fair value.

1 unchanged sentence

For collateral-dependent loans, fair value is commonly based on recent real estate appraisals.

These appraisals may utilize a single

valuation approach or a combination of approaches including comparable sales and the income approach.

Adjustments are routinely made

in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.

Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted

or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s

expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.

These appraisals may utilize a single valuation

approach or a combination of approaches including comparable sales and the income approach.

Adjustments are routinely made in the appraisal

process by the independent appraisers to adjust for differences between the comparable sales and income data available.

Such adjustments

are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Non-real estate collateral

may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted

based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s

expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.

Impaired loans are

evaluated on a quarterly basis for additional impairment and adjusted accordingly.

There were no impaired loans, which were measured

on a nonrecurring basis during the period using the fair value of the collateral for collateral-dependent loans, at September 30, 2021,

or at June 30, 2021.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

Disclosures About Fair Value of Assets

and Liabilities (continued)

Other Real Estate

9 unchanged sentences

for determining fair value.

Financial assets measured at fair value on a

recurring basis are summarized below:

Fair Value Measurements Using

(in thousands)

Quoted Prices

March 31, 2021

Agency mortgage-backed:

June 30, 2020

Agency mortgage-backed:

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Disclosures About Fair Value of Assets

and Liabilities (continued)

Assets measured at fair value on a non-recurring

basis are summarized below:

Fair Value Measurements Using

(in thousands)

Quoted Prices

June 30, 2020

Other real estate owned, net

One- to four-family

There were no impaired loans, which were measured

using the fair value of the collateral for collateral-dependent loans, at March 31, 2021, or at June 30, 2020.

Amounts charged off related

to the resolution of impaired loans were $45,000 for the nine-month period ended March 31, 2021 and $9,000 off for the nine-month period

ended March 31, 2020.

Other real estate owned (“OREO”)

was written down $19,000 and $0 during the nine- and three-months ended March 31, 2020.

One single-family residential property, which

was held as OREO and was written down by $19,000 during the nine months ended March 31, 2021, was sold during the period.

OREO measured at fair value less costs to sell at March 31, 2021.

The following table presents quantitative information

about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2020:

(in thousands)

Foreclosed and repossessed assets:

One- to four-family

Sales comparison approach

Adjustments for differences between

comparable sales

-2.7% to 41.2% (20.4%)

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Disclosures About Fair Value of Assets

and Liabilities (continued)

There was no other real estate owned (“OREO”)

written down during the three-months ended September 30, 2021 or 2020.

There was no OREO measured on a nonrecurring basis during the period

at fair value less costs to sell at September 30, 2021 or June 30, 2021.

The following is a disclosure of the fair value

3 unchanged sentences

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.

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.

Based on the foregoing methods and assumptions,

the carrying value and fair value of the Company’s financial instruments at March 31, 2021 and June 30, 2020 are as follows:

the carrying value and fair value of the Company’s financial instruments at September 30, 2021 and June 30, 2021 are as follows:

Fair Value Measurements at

March 31, 2021 Using

September 30, 2021 Using

(in thousands)

1 unchanged sentence

Cash and cash equivalents

Time deposits in other financial institutions

Available-for-sale securities

17 unchanged sentences

Loans held for sale

Loans receivable –

Loans receivable – net

Federal Home Loan Bank stock

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

September 30, 2021

Other Comprehensive Income (Loss)

The Company’s other comprehensive income

is comprised solely of unrealized gains and losses on available-for-sale securities.

1 unchanged sentence

comprehensive income balances, net of tax:

Nine months ended

Three months ended

September 30,

Beginning balance

1 unchanged sentence

Ending balance

Other comprehensive income (loss) components

and related tax effects for the periods indicated were as follows:

Nine months ended

(in thousands)

Unrealized holding gains (losses) on available-for-sale securities

Net-of-tax amount

Other comprehensive income (loss) components and

related tax effects for the periods indicated were as follows:

Three months ended

September 30,

(in thousands)

2 unchanged sentences

Kentucky First Federal Bancorp

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain statements contained in this report that

are not historical facts are forward-looking statements that are subject to certain risks and uncertainties.

When used herein, the terms

“anticipates,”

“plans,”

“expects,”

“believes,”

and similar expressions as they relate

to Kentucky First Federal Bancorp or its management are intended to identify such forward-looking statements.

Kentucky First Federal

Bancorp’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking

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, interest rate environment, competitive conditions in

the financial services industry, changes in law, governmental policies and regulations, rapidly changing technology affecting financial

services, the potential effects of the COVID-19 pandemic on the local and national economic environment, on our customers and on our

operations (as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic),

and the other matters mentioned in Item 1A of the Company’s Annual Report on Form 10-K for the year ended June 30, 2020.

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.

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 nine month periods ended March 31, 2021 and 2020, along with the related calculations of tax-equivalent net interest income,

net interest margin and net interest spread for the related periods.

Nine Months Ended March 31,

(Dollars in thousands)

Interest-earning assets:

Mortgage-backed securities

Other securities

Other interest-earning assets

Total interest-earning assets

Allowance for loan losses

Non-interest-earning assets

Interest-bearing liabilities:

Demand deposits

Certificates of deposit

Total deposits

Total interest-bearing liabilities

Noninterest-bearing demand deposits

Noninterest-bearing liabilities

Total liabilities

Shareholders’

Total liabilities and shareholders’

Net interest spread

Net interest margin

Average interest-earning assets to average interest-bearing liabilities

Includes loan fees, immaterial

in amount, in both interest income and the calculation of yield on loans.

Also includes loans on nonaccrual status.

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 March 31, 2021 and 2020, 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 March 31,

(Dollars in thousands)

Interest-earning assets:

Mortgage-backed securities

Other securities

Other interest-earning assets

Total interest-earning assets

Allowance for loan losses

Non-interest-earning assets

Interest-bearing liabilities:

Demand deposits

Certificates of deposit

Total deposits

Total interest-bearing liabilities

Noninterest-bearing demand deposits

Noninterest-bearing liabilities

Total liabilities

Shareholders’

Total liabilities and shareholders’

Net interest spread

Net interest margin

Average interest-earning assets to average interest-bearing liabilities

Includes loan fees, immaterial

in amount, in both interest income and the calculation of yield on loans.

Also includes loans on nonaccrual status.

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, 2020 to March 31, 2021

Risks and Uncertainties Related to COVID-19 -

In March 2020 the World Health Organization determined that the spread of a new coronavirus, COVID-19, had risen to such a level as to

constitute a worldwide pandemic.

The spread of this virus has created a global public health crisis.

Uncertainty related to the effects

of the virus have disrupted financial markets, activity in all aspects of life including governmental, business and consumer routines

and the markets in which the Company operates.

In response to the crisis governmental authorities closed or limited the operations of

many non-essential businesses and required various responses from individuals including stay-at-home restrictions and social distancing.

These governmental restrictions, along with a fear of contracting the virus, have resulted in severe reduction of commercial and consumer

activity, which is resulting in loss of revenues by businesses, a dramatic spike in unemployment, material decreases in oil and gas prices

and in business valuations, disrupted global supply chains and market volatility.

Management continues to monitor the general impact

of COVID-19, as well as certain provisions of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, enacted on

March 27, 2020, and other more recent legislative and regulatory relief efforts including the Consolidated Appropriations Act, 2021.

the impact is contingent upon the duration and severity of the economic downturn, management cannot determine or estimate the magnitude

of the impact at this time.

While the pandemic has affected the physical operations of the Banks, the business has been mostly unchanged

with consistent levels of consumer transactions and loan originations.

The potential for a deterioration in asset quality remains, but

actual asset quality has improved.

Classified assets at March 31, 2021, totaled $8.5 million compared to $10.5 million at March 31, 2020.

Management attributes some of this improved performance to the overall strengthening in the residential real estate market.

Approximately

95% of the Company’s loans are secured by residential real estate.

Business Continuity, Processes and Controls

As a financial institution, the Banks are considered

essential businesses and have remained open for business.

We have implemented our pandemic preparedness plan and have maintained regular

business hours except for closing for business on Fridays at 4:30 p.m.

We continue to offer customer service through drive-thru facilities,

automated teller machines, remote deposit capture and online and mobile banking applications.

We are offering by-appointment options

for transactions requiring in-person contact while maintaining social distancing mandates and surface cleaning protocols.

practicing recommended personal hygiene protocols and social distancing while working on premises.

A small number of employees are working

We do not face current material resource constraints through the implementation of our pandemic preparedness plan and do not

anticipate incurring any material cost related to its implementation.

We have not identified any material operational or internal control

challenges or risks, nor do we anticipate any significant challenges to our ability to maintain our systems and controls, related to

operational changes resulting from implementation of the pandemic preparedness plan.

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, 2020 to March 31, 2021 (continued)

Financial Position and Results of Operations

Bank regulators have issued guidance and are

encouraging banks to work with customers affected by COVID-19.

Accordingly, we have been actively working with borrowers affected by

COVID-19 by offering a payment deferral program providing for either a three-month interest-only period or a full payment deferral for

three months.

While interest and fees will continue to accrue to income, under normal GAAP accounting if eventual credit losses on these

deferred payments emerge, interest and/or fee income accrued may need to be reversed.

As a result, interest income in future periods

could be negatively impacted.

At this time management anticipates that the deferral program will have an immaterial impact to the Company’s

financial condition and results of operation, while recognizing that a sustained negative economic impact from COVID-19 could change

this assessment, as borrowers’

ability to repay is impacted in future periods.

At March 31, 2021 the Company and the Banks were

considered well-capitalized with capital ratios in excess of regulatory requirements.

However, an extended economic recession resulting

from the COVID-19 pandemic could adversely impact the Company’s and the Banks’

capital position and regulatory capital ratios

due to a potential increase in credit losses.

Lending Operations and Credit Risk

As noted herein the Company is working with its

borrowers who are negatively impacted by COVID-19 by offering a payment deferral program.

As of March 31, 2021, we had borrowers with

101 loans avail themselves of our payment deferral program with a total principal balance of $18.4 million in loans modified.

with outstanding principal of $859,000 had been granted an additional extension and returned to regular paying status in April 2021.

All other borrowers granted a deferral, composed of 100 loans totaling $17.5 million in principal had resumed regular payments.

The CARES Act and subsequent Consolidated Appropriations

Act, 2021, includes a Paycheck Protection Program (“PPP”), which is administered by the Small Business Administration (“SBA”)

and is designed to aid small- and medium-sized businesses through federally-guaranteed loans disbursed through banks.

These loans are

intended to provide eight weeks of payroll and other costs to assist those businesses to either remain open or to re-open quickly and

allow their workers to pay their bills.

First Federal of Kentucky qualified as an SBA lender to assist the small business community in

securing this important funding.

As of March 31, 2021, First Federal of Kentucky had approved and closed with the SBA 73 PPP loans representing

$2.6 million in funding.

Of those loans a total of 28 loans aggregating $1.2 million had been repaid at the end of the period.

understanding that loans funded through the PPP are fully guaranteed by the United States government.

Should those circumstances change,

the bank could be required to increase its allowance for loan and lease losses related to these loans resulting in an increase in the

provision for loan and lease losses.

The Banks are prepared to continue to offer short-term

assistance in accordance with regulatory guidelines.

Management continues to identify and monitor weaknesses in the loan portfolio resulting

from fallout from the pandemic.

On a portfolio level, management continues to monitor aggregate exposures to highly sensitive segments

such as residential rental properties for changes in asset quality and payment performance.

Management also monitors unfunded commitments

such as lines of credit and overdraft protection to determine liquidity and funding issues that may arise with our customers.

conditions worsen, the Company could need to increase its required allowance for loan losses through additional provisions for loan losses.

It is possible that the Company’s asset quality metrics could be materially and adversely impacted in future periods, if the effects

of COVID-19 are prolonged.

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, 2020 to March 31, 2021 (continued)

At March 31, 2021, the

Company’s assets totaled $332.6 million, an increase of $11.5 million, or 3.6%, from total assets at June 30, 2020.

This increase

was attributed primarily to an increase in loans, net.

Cash and cash equivalents:

and cash equivalents increased $1.1 million or 7.8% to $14.8 million at March 31, 2021.

Most of the Company’s cash and cash equivalents

are held in interest-bearing demand deposits.

Time deposits in other financial institutions:

Time deposits in other financial institutions decreased by $2.0 million or 88.9% to $247,000 at March 31, 2021.

As short-term

time deposits matured the funds were used to repay FHLB advances, reinvested at the highest earning level possible or simply carried

as interest-bearing demand deposits.

Investment securities:

31, 2021, our securities portfolio consisted of mortgage-backed securities.

Investment securities decreased $615,000 or 54.0% to $524,000

at March 31, 2021.

Loans receivable,

net, increased by $13.3 million or 4.7% to $299.2 million at March 31, 2021.

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:

March 31, 2021, the Company had non-performing loans (loans 90 or more days past due or on nonaccrual status) of approximately $6.2 million,

or 2.1% of total loans (including acquired loans), compared to $7.4 million or 2.6%, of total loans at June 30, 2020.

The Company’s

allowance for loan losses totaled $1.6 million and $1.5 million at March 31, 2021 and June 30, 2020, respectively.

The allowance for

loan losses at March 31, 2021, represented 26.1% of nonperforming loans and 0.5% of total loans (including acquired loans), while at

June 30, 2020, the allowance represented 20.1% of nonperforming loans and 0.5% of total loans.

The Company had $8.5 million in assets classified

as substandard for regulatory purposes at March 31, 2021, including loans ($8.4 million), loans acquired in the CKF Bancorp transaction

and real estate owned (“REO”) ($141,000.) Classified loans as a percentage of total loans (including loans acquired) was

2.8% and 3.1% at March 31, 2021 and June 30, 2020, 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)

Substandard assets

Doubtful assets

Total classified assets

At March 31, 2021, the Company’s real estate

acquired through foreclosure represented 1.7% of substandard assets compared to 6.7% at June 30, 2020.

During the periods presented the

Company made one loan totaling $37,000 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 $44,000 and $23,000 at March 31, 2021 and June

30, 2020, respectively.

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, 2020 to March 31, 2021 (continued)

The following table presents the aggregate carrying

value of REO at the dates indicated:

March 31, 2021

June 30, 2020

One- to four-family

At March 31, 2021 and June 30, 2020, the Company

had $1.6 million and $1.7 million of loans classified as special mention, respectively (including loans acquired in the CKF Bancorp transaction

on December 31, 2012).

This category includes assets which do not currently expose us to a sufficient degree of risk to warrant classification,

but do possess credit deficiencies or potential weaknesses deserving our close attention.

Total liabilities increased

$11.5 million, or 4.3% to $280.7 million at March 31, 2021, primarily as a result of increases in deposits.

Deposits increased $13.3 million

or 6.3% to $225.5 million at March 31, 2021, while advances decreased $1.5 million or 2.8% to $53.2 million at March 31, 2021.

Shareholders’

March 31, 2021, the Company’s shareholders’

equity totaled $51.9 million, a decrease of $21,000 or 0.0% from the June 30,

The change in shareholders’

equity was primarily associated with common shares purchased by the Company to hold as

treasury shares, and net profits for the period less dividends paid on common stock.

The Company paid dividends of $1.0 million or

92.2% of net income for the nine-month period just ended.

On July 7, 2020, 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 2021.

Management believes

that the Company has sufficient capital to continue the current dividend policy without affecting the well-capitalized status of either

subsidiary bank.

Management cannot speculate on future dividend levels, because various factors, including capital levels, income levels,

liquidity levels, regulatory requirements and overall financial condition of the Company are considered before dividends are declared.

However, 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, 2020

for additional discussion regarding dividends.

Kentucky First Federal Bancorp

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Comparison of Operating Results for the Nine-month

Periods Ended March 31, 2021 and 2020

Net income totaled $1.1 million or $0.14 diluted

earnings per share for the nine months ended March 31, 2021, an increase of $406,000 or 56.2% from net income of $722,000 or $0.09 diluted

earnings per share for the same period in 2020.

The increase in net income on a nine-month basis was primarily attributable to higher

net interest income, higher non-interest income and lower non-interest expense, which were partially offset by increased provision for

loan losses and increased provision for income tax.

Net Interest Income

Net interest income before provision for loan

losses increased $266,000 or 3.8% to $7.3 million for the nine-month period just ended.

Interest income decreased by $825,000, or 8.4%,

to $9.0 million, while interest expense decreased $1.1 million or 39.7% to $1.7 million for the nine months ended March 31, 2021.

The decrease in interest income period-to-period

was due primarily to a decrease in the average rate earned on interest-earning assets, as the average volume of interest-earning assets

increased period-to-period.

The average rate decreased 50 basis points to 3.77% for the recently-ended nine-month period compared to the

prior year period, while the average balance of interest-earning assets increased $11.6 million or 3.8% to $317.1 million for the nine

months ended March 31, 2021.

Interest income on loans decreased $566,000 or 6.0% to $8.8 million, due primarily to a decrease in the average

rate earned on the loan portfolio, which decreased 44 basis points to 4.00%, while the average balance increased $12.7 million or 4.5%

to $294.8 million for the nine-month period ended March 31, 2021.

Interest income from interest-bearing deposits and other decreased $242,000

or 66.5% to $122,000 for the nine months just ended due primarily to a decrease in the average rate earned, which decreased 146 basis

points to 0.75% for the recently-ended period compared to the period a year ago.

The decrease in interest expense was due primarily

to a decrease of 59 basis points on the average rate paid on funding sources, which totaled 0.84% for the nine months ended March 31,

The Company’s interest-bearing liabilities have repriced quickly as we are able to take advantage of the low interest rate

environment that currently exists.

Interest expense on deposits decreased $497,000 or 27.2% to $1.3 million for the nine months ended

March 31, 2021, while interest expense on borrowings decreased $594,000 or 64.1% to $333,000 for the same period.

The decrease in interest

expense on deposits was attributed primarily to a decrease in the average rate paid on interest-bearing deposits, which decreased 40 basis

points to 0.85% for the recently ended period, while the average balance of interest-bearing deposits increased $14.2 million or 7.3%

to $208.9 million for the most recent period.

The decrease in interest expense on borrowings was attributed to both to a lower average

rate paid on the borrowings and a lower average balance of borrowings period to period.

The average balance of borrowings outstanding

decreased $6.0 million or 9.8% to $55.2 million for the recently ended nine-month period, while the average rate paid on borrowings decreased

121 basis points to 0.81% for the most recent period.

Net interest spread increased from 2.84% for

the prior year semiannual period to 2.93% for the nine-month period ended March 31, 2021.

Provision for Losses on Loans

Provision for loan losses increased $128,000

for the nine-month period ended March 31, 2021, and totaled $192,000 compared to $64,000 for the prior year semi-annual period.

provision was primarily in response to the higher level of loans maintained in the portfolio as well as increased levels of multi-family

and commercial real estate loans, which carry somewhat more risk.

While management continues to consider the potential impact of COVID-19

on asset quality, no adjustment to the allowance for loan losses has been made for that specific reason.

Near the onset of the pandemic,

the Company granted deferrals to borrowers representing $18.1 million in loans, but the overwhelming majority of those borrowers have

resumed regular payments.

Further, 95% of the Company’s loan portfolio is secured by residential real estate, which has performed

well during the pandemic.

Kentucky First Federal Bancorp

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Comparison of Operating Results for the Nine-month

Periods Ended March 31, 2021 and 2020 (continued)

Non-interest Income

Non-interest income increased $200,000 or 85.8%

to $433,000 for the nine months ended March 31, 2021, compared to the prior year period, primarily because of an increase in net gains

on sales of loans.

Net gain on sales of loans increased $205,000 to $280,000 for the recently-ended nine-month period.

In the current

interest rate environment, many borrowers are choosing long-term, fixed rate loans, which the bank usually sells to the Federal Home

Loan Bank of Cincinnati (“FHLB”).

An increase in volume of these loans sold was responsible for the increase in gain on sale

Non-interest Expense

Non-interest expense decreased $185,000 or 2.9%

and totaled $6.1 million for the nine months ended March 31, 2021, primarily due to cost-saving measures implemented by management.

Employee compensation and benefits decreased

$141,000 or 3.4% to $4.0 million primarily due to lower employee compensation.

The Banks were operating with fewer full-time equivalent

employees in the nine-month period just ended compared to the prior year period.

Also contributing to lower compensation cost was an

increase in the number of loans originated in the recently-ended period compared to the prior year period.

The Banks are required to

defer a portion of the costs associated with loan originations and those costs are primarily related to personnel costs.

Somewhat offsetting

the decreases in other employee compensation and benefits expense was an increase in contributions to the Company’s Defined Benefit

(“DB”) pension plan.

DB pension contributions increased $38,000 or 5.5% to $720,000 for the nine-month period recently ended

compared to the prior year period.

Higher DB pension contributions were a result of higher administrative fees and Pension Benefit Guarantee

Corporation premiums, as the Company’s DB plan was frozen effective April 1, 2019.

Other non-interest expense decreased $68,000

or 12.6% to $472,000 for the nine months ended March 31, 2021, primarily due to lower general insurance expenses, discretionary employee

and meeting expenses, regulatory assessments and general loan expenses.

Franchise and other taxes decreased $64,000 or 33.0% and totaled

$130,000 for the nine months ended March 31, 2021, as the Banks became subject to Kentucky corporate income tax on its earnings rather

than being subject to the Kentucky Savings and Loan tax effective January 1, 2021.

Voice and data communications expense decreased $48,000

or 37.5% to $80,000 for the nine-month period just ended as upgraded technology savings were realized.

Somewhat offsetting the decreases in various

non-interest expense items were increases in FDIC insurance premiums and data processing expenses.

FDIC insurance premiums increased

to $129,000 for the nine months ended March 31, 2021.

In the prior year semi-annual period the Banks were able to utilize their Small

Bank Assessment Credits (“SBAC”).

The SBAC were depleted in the quarterly period ended June 30, 2020.

Data processing increased

$42,000 or 10.8% to $430,000 for the period just ended as core processing costs increased and the Company expanded its technology infrastructure.

Income Tax Expense

Income tax expense increased $117,000 or 66.5%

to $293,000 for the nine months ended March 31, 2021, compared to the prior year period.

The effective tax rates for the nine-month periods

ended March 31, 2021 and 2020, were 20.6% and 19.6%, respectively.

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 March 31, 2021 and 2020

Net income totaled $473,000 or $0.06 diluted

earnings per share for the three months ended March 31, 2021, an increase of $233,000 or 97.1% from net income of $240,000 or $0.03 diluted

earnings per share for the same period in 2020.

Net Interest Income

Net interest income before provision for loan

losses increased $125,000 or 5.4% to $2.4 million for the three-month period just ended, as interest expense decreased at a faster pace

than interest income decreased for the quarter just ended.

Interest income decreased by $265,000, or 8.3%, to $2.9 million, while interest

expense decreased $390,000 or 44.2% to $492,000 for the three months ended March 31, 2021.

Interest income on loans decreased $205,000 or

6.6% to $2.9 million, due primarily to a decrease in the average rate earned on the loan portfolio.

The average rate earned on the loan

portfolio decreased 53 basis points to 3.88%, while the average balance increased $16.9 million or 6.0% to $298.8 million for the three-month

period ended March 31, 2021.

Interest income from interest-bearing deposits and other decreased $54,000 or 58.7% to $38,000 for the three

months just ended due to a decrease in the average rate earned, which decreased 95 basis points to 0.68% for the recently-ended period

compared to the period a year ago.

Interest expense on deposits decreased $241,000

or 38.4% to $387,000 for the three months ended March 31, 2021, while interest expense on borrowings decreased $149,000 or 58.7% to $105,000

for the same period.

The decrease in interest expense on deposits was attributed primarily to a decrease in the average rate paid on interest-bearing

deposits, which decreased 53 basis points to 0.74% for the recently ended period, while the average balance of interest-bearing deposits

increased $11.6 million or 5.9% to $210.1 million for the most recent period.

The decrease in interest expense on borrowings was attributed

to both to a lower average rate paid on the borrowings and a lower average balance of borrowings period to period.

The average balance

of borrowings outstanding decreased $306,000 or 0.5% to $57.0 million for the recently ended three-month period, while the average rate

paid on borrowings decreased 103 basis points to 0.74% for the most recent period.

Net interest spread increased 10 basis points

from 2.82% for the prior year quarterly period to 2.92% for the three-month period ended March 31, 2021.

Provision for Losses on Loans

There was no provision for loan losses for the

three-month periods ended March 31, 2021 or 2020.

The Company had recorded higher provision earlier in the fiscal year in response to

the higher level of loans maintained in the portfolio as well as increased levels of multi-family and commercial real estate loans, which

carry somewhat more risk.

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 March 31, 2021 and 2020 (continued)

Non-interest Income

Non-interest income increased $101,000 or 124.7%

to $182,000 for the three months ended March 31, 2021, compared to the prior year period, primarily because of an increase in net gains

on sales of loans.

Net gain on sales of loans increased $90,000 to $125,000 for the recently-ended three-month period over the prior

In the current interest rate environment, many borrowers are choosing long-term, fixed rate loans, which the Banks usually

sell to the FHLB.

An increase in volume of these loans sold was responsible for the increase in gain on sale of loans.

Non-interest Expense

Non-interest expense decreased $87,000 or 4.1%

and totaled $2.0 million for the three months ended March 31, 2021, primarily due to cost-saving measures implemented by management.

Franchise and other taxes decreased $65,000 or

100.0% for the three months ended March 31, 2021, as the Banks became subject to Kentucky corporate income tax on its earnings rather

than being subject to the Kentucky Savings and Loan tax effective January 1, 2021.

Other non-interest expense decreased $21,000 or 12.4%

to $149,000 for the three months ended March 31, 2021, primarily due to lower discretionary employee and meeting expenses, and expenses

associated with management of the loan portfolio.

Employee compensation and benefits decreased $17,000 or 1.2% to $1.4 million primarily

due to lower employee and director compensation as well as higher deferred compensation cost attributed to an increase in the number

of loans originated during the period.

The Company’s DB pension contributions decreased $18,000 or 7.1% to $234,000 for the three-month

period recently ended compared to the prior year period.

Lower DB pension contributions for the quarter were a result of lower total

costs than originally anticipated.

Somewhat offsetting the decreases in various

non-interest expense items was an increase in FDIC insurance premiums, which totaled $41,000 for the three months ended March 31, 2021,

compared to zero for the prior year period due to a lack of SBAC credits for the current period.

Income Tax Expense

Income tax expense increased $80,000 or 137.9%

to $138,000 for the three months ended March 31, 2021, compared to the prior year period.

As described herein, the Banks became subject

to Kentucky corporate income tax on its earnings rather than being subject to the Kentucky Savings and Loan tax effective January 1,

The effective tax rates for the three-month periods ended March 31, 2021 and 2020, were 22.6% and 19.5%, respectively.

Kentucky First Federal Bancorp

Quantitative and Qualitative Disclosures

About Market Risk

This item is not applicable as the Company is

a smaller reporting company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements