What changed in this filing

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Item 1. Financial Statements

2023-11-14 compared with 2023-05-15 · 717 added, 561 removed, 264 unchanged (83% of the section changed)

Financial Statements

First Federal Bancorp

CONSOLIDATED BALANCE SHEETS

thousands, except share data)

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

September 30,

Cash and due from financial institutions

3 unchanged sentences

Securities available for sale

Securities held-to-maturity, at amortized cost- approximate fair value of $ 273 and $ 323 at March 31, 2023 and June 30, 2022, respectively

Securities held-to-maturity, at amortized cost- approximate fair value of $ 241 and $ 259 at September 30, 2023 and June 30, 2023, respectively

Loans held for sale

Loans, net of allowance of $ 1,633 and $ 1,529 at March 31, 2023 and June 30, 2022, respectively

Real estate owned, net

Loans, net of allowance of $ 2,126 and $ 1,634 at September 30, 2023 and June 30, 2023, respectively 1

Other real estate owned, net

Premises and equipment, net

3 unchanged sentences

Prepaid income taxes

Deferred income taxes

Prepaid expenses and other assets

3 unchanged sentences

Accrued interest payable

Accrued income taxes

Deferred income taxes

9 unchanged sentences

Retained earnings

Unearned employee stock ownership plan (ESOP)

Treasury shares at cost, 498,369 and 441,369 common shares at March 31, 2023 and June 30, 2022, respectively

Treasury shares at cost, 509,349 common shares at September 30, 2023 and June 30, 2023, respectively

Accumulated other comprehensive income (loss)

1 unchanged sentence

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)

Nine months ended

1 Beginning July 1, 2023 the ACL was estimated based on current

expected credit loss methodology.

Prior to July 1, 2023, the estimate was based on the incurred loss methodology.

See additional discussion

in Note 1, Basis of Presentation.

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

Three months ended

September 30,

Interest income

8 unchanged sentences

Net interest income

Provision (credit) for loan losses

Net interest income after provision for loan losses

Provision for credit losses

Net interest income after provision for credit losses

Non-interest income

Earnings on bank-owned life insurance

Net gain on sales of loans

Net gain (loss) on sales of real estate owned

Net gain on sale of property and equipment held for sale

Net gain (loss) on sales of loans

Net gain on sale of other real estate owned

Net gain on sale of real estate owned

Total non-interest income

11 unchanged sentences

Total non-interest expense

Income before income taxes

Income tax expense

EARNINGS PER SHARE

Income (loss) before income taxes

Income tax expense (benefit)

NET INCOME (LOSS)

EARNINGS (LOSS) PER SHARE

Basic and diluted

DIVIDENDS PER SHARE

accompanying notes to condensed consolidated financial statements.

First Federal Bancorp

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Nine months ended

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

INCOME (LOSS)

(In thousands)

Three months ended

Other comprehensive gains (losses), net of tax:

Unrealized holding gains (losses) on securities designated as available-for-sale, net of taxes (benefit) of $( 119 ), $ 0 , $( 6 ) and $ 0 during the respective periods

Comprehensive income

accompanying notes to condensed consolidated financial statements.

First Federal Bancorp

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

the nine months ended

amounts in thousands, except per share data)

September 30,

Net income (loss)

Other comprehensive losses, net of tax:

Unrealized losses on securities designated as available-for-sale, net of tax benefits of $ 46 and $ 143 during the respective periods

Comprehensive loss

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

September 30, 2023

comprehensive

income (loss)

Balance at June 30, 2023

Allocation of ESOP shares

Acquisition of shares for Treasury

Cumulative impact of adoption of ASC 326

Balance at July 1, 2023

Other comprehensive loss

Cash dividends of $0.10 per common share

Balance at March 31, 2023

stock ownership

Balance at September 30, 2023

September 30, 2022

comprehensive

income (loss)

Balance at June 30, 2022

Allocation of ESOP shares

Acquisition of shares for Treasury

Cash dividends of $ 0.30 per common share

Balance at March 31, 2022

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

Balance at December 31, 2022

Allocation of ESOP shares

Acquisition of shares for Treasury

Other comprehensive loss

Cash dividends of $0.10 per common share

Balance at March 31, 2023

comprehensive

Balance at December 31, 2021

Allocation of ESOP shares

Cash dividends of $ 0.10 per common share

Balance at March 31, 2022

accompanying notes to condensed consolidated financial statements.

First Federal Bancorp

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended

Balance at September 30, 2023

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Three months ended

September 30,

Cash flows from operating activities:

Net income (loss)

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

2 unchanged sentences

Amortization of premiums on investment securities

Net gain on sale of loans

Net loss on sale of real estate owned

Net gain on sale of property & equipment

Net (gain) loss on sale of loans

Net (gain) loss on sale of other real estate

Net (gain) loss on sale of real estate owned

ESOP compensation expense

Earnings on bank-owned life insurance

Provision (credit) for loan losses

Provision for credit losses

Origination of loans held for sale

Proceeds from loans held for sale

Deferred income taxes

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

3 unchanged sentences

Other liabilities

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Purchase of investments available for sale

Purchase of FHLB stock

Maturities of time deposits in other financial institutions

Securities maturities, prepayments and calls:

2 unchanged sentences

Proceeds from redemption of FHLB stock

Proceeds from sale of other real estate

Loans originated for investment, net of principal collected

Proceeds from sale of property and equipment held for sale

Proceeds from sale of real estate owned

Additions to premises and equipment, net

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities:

3 unchanged sentences

Repayments on Federal Home Loan Bank advances

Treasury stock purchased

Dividends paid on common stock

3 unchanged sentences

Ending cash and cash equivalents

accompanying notes to condensed consolidated financial statements.

First Federal Bancorp

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

Nine months ended

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Three months ended

September 30,

Supplemental disclosure of cash flow information:

1 unchanged sentence

Interest on deposits and borrowings

Transfers of loans to real estate owned, net

Loans made on sale of real estate owned

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.

See accompanying notes to condensed consolidated

financial statements.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

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,

(“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.

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.

Basis of Presentation

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.

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.

of operations for the three-month and nine-month periods ended March 31, 2023, are not necessarily indicative of the results which may

be expected for an entire fiscal year.

The condensed consolidated balance sheet as of June 30, 2022, 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.

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 2022 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.

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 three-month period ended September

30, 2023, are not necessarily indicative of the results which may be expected for an entire fiscal year.

The condensed consolidated balance

sheet as of June 30, 2023, has been derived from the audited consolidated balance sheet as of that date.

Certain information and note

disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S.

generally accepted accounting

principles have been condensed or omitted.

These condensed consolidated financial statements should be read in conjunction with the consolidated

financial statements and notes thereto included in the Company’s Form 10-K annual report for 2023 filed with the Securities and

Exchange Commission.

Principles of Consolidation - The

consolidated financial statements include the accounts of the Company, Frankfort First, and its wholly-owned banking subsidiaries, First

Federal of Hazard and First Federal of Kentucky (collectively hereinafter “the Banks”).

All intercompany transactions and

balances have been eliminated in consolidation.

Critical Accounting Policies and Estimates

Investments – Management determines

the classification of debt securities at purchase as held-to-maturity, trading, or available-for-sale.

Held-to-maturity securities are

those we have both the intent and ability to hold to maturity and are reported at amortized cost.

Securities that are not considered held-to-maturity

are considered either trading or available-for-sale securities in accordance with Financial Accounting Standards Board Accounting Standards

Codification (“ASC”) 320, Investments – Debt Securities, and are reported at fair value in the statement of financial

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.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Basis of Presentation (continued)

Critical Accounting Policies and Estimates

Allowance for Credit Losses – We

account for the allowance for credit losses under ASC 326, Measurement of Credit Losses on Financial Instruments, which is commonly known

We measure expected credit losses of financial assets on a weighted average remaining maturity (WARM) basis.

We maintain an allowance for credit losses (“ACL”)

at a level that is appropriate to cover estimated credit losses on individually evaluated loans, as well as estimated credit losses inherent

in the estimated life of the loan portfolio.

Credit losses are charged to and recoveries are credited to the ACL.

Loans with similar risk characteristics are evaluated

on a collective basis within homogeneous loan pools under ASC 326.

Our homogeneous loan pools are primarily determined by loan purpose

and collateral type.

Pools include residential real estate (composed of one-to four-family, multi-family, and construction), land, farm,

nonresidential real estate, commercial and industrial, and consumer loans (composed of Loans on deposit, home equity, automobile, and

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.

factors used to derive our ACL include delinquency trends, current economic conditions and trends, strength of supervision and administration

of the loan portfolio, levels of underperforming loans, trends in loan losses and underwriting exceptions.

Reasonable and supportable

economic forecasts that may offset collectibility are also included as factors in our ACL model.

Management continually reevaluates the

other subjective factors included in its ACL analysis.

Income Taxes – Income

tax expense is based on the taxes due on the consolidated tax return plus deferred taxes on the expected future tax benefits and consequences

of temporary differences between carrying amounts and tax bases of assets and liabilities, using enacted tax rates.

New Accounting Standards

FASB ASC 326 - In June 2016, the

Financial Accounting Standards Board (“FASB”) issued ASU No.

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

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,

held-to-maturity 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 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.

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Measurement of Credit Losses on Financial Instruments.

This standard requires credit losses on most financial assets and certain

other instruments to be measured using an expected loss model, which is referred to as the current expected credit loss (CECL) model.

Under this model entities estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments,

but not expected extensions or modifications) from the date of initial recognition of that instrument.

The ASU replaces the current accounting

model for purchased credit impaired and debt securities.

The allowance for credit losses for purchased financial assets with a more-than-insignificant

amount of credit deterioration since origination (referred to as “PCD assets”), should be determined in a similar manner to

other financial assets measured on an amortized cost basis.

However, upon initial recognition, the allowance for credit losses is added

to the purchase price to determine the initial amortized cost basis.

The subsequent accounting for PCD financial assets is the same expected

loss model described herein.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Basis of Presentation (continued)

Accounting Standards (continued)

We have selected and engaged a third-party software

provider for modeling our data.

We have run parallel calculations using both our traditional allowance calculation methodology and the

new CECL software for the two most recent quarterly periods.

We are pleased with the progress being made on the fine tuning of the data

inputs for the model.

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.

March 2022 the Financial Accounting Standards Board (“FASB”) issued ASU No.

2022-02, Financial Instruments – Credit

Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures, as an update to its post-implementation review activities associated

The amendments in this Update eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables-Troubled

Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors

when a borrower is experiencing financial difficulty.

Specifically, rather than applying the recognition and measurement guidance for

TDRs, an entity must apply the loan refinancing and restructuring guidance provided to determine whether a modification results in a

new loan or a continuation of an existing loan.

This Update also requires disclosure by public business entities of current-period gross

write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial

Instruments-Credit Losses-Measured at Amortized Cost.

Because the Company has not yet adopted amendments in Update 2016-13, the amendments

in this Update are effective for the fiscal year beginning July 1, 2023.

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.

New Accounting Standards (continued)

The Company will now use forward-looking information

to enhance its credit loss estimates.

The amendment requires enhanced disclosures to aid investors and other users of financial statements

to better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting

standards of our portfolio.

The largest impact to the Company was on its allowance for loan and lease losses, although the ASU also amends

the accounting for credit losses on available-for-sale debt securities, held-to-maturity securities, and purchased financial assets with

credit deterioration.

The standard was effective for public companies for annual periods and interim periods within those annual periods

beginning after December 15, 2019.

However, the FASB 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 was applied through

a cumulative effect adjustment to retained earnings (modified-retrospective approach).

In addition, ASC 326 made changes to the accounting

for available-for-sale (“AFS”) debt securities.

One such change requires credit losses to be presented as an allowance rather

than as a write-down on AFS securities.

Management does not intend to sell or believes that it is more likely than not that they will

be required to sell.

We adopted ASC 326 effective July 1, 2023, using

the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet (“OBS”) credit

Results for reporting periods beginning after July 1, 2023 are presented under ASC 326, while prior period amounts continue

to be reported in accordance with previously applicable GAAP.

Upon adoption of the ASU we recorded an increase

in the allowance for credit loss (“ACL”) for loans which represented a $ 497,000 increase from the Allowance for Loan Losses

(“ALLL”) at June 30, 2023.

This transaction further resulted in an increase of $ 54,000 to the ACL for unfunded commitments,

a decrease of $ 414,000 to retained earnings and a deferred tax asset of $ 137,000 .

A liability of $ 54,000 was established to account

for off-balance sheet unfunded commitments.

Management considered contractual commitments at September 30, 2023, most of which are commitments

to complete construction projects or the balance of unfunded lines of credit.

These totaled approximately $ 26.1 million at September 30,

To calculate the liability, management applied a loss criteria similar to that used for funded loans to calculate the ACL.

The following table illustrates the impact of

ASC 326 at July 1, 2023:

(Dollars in thousands)

Residential real estate:

One- to four-family

Nonresidential real estate

Commercial and industrial

Consumer and other:

Loans on deposits

Allowance for credit losses on loans

Allowance for credit losses on unfunded credit exposures

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Basis of Presentation (continued)

New Accounting Standards (continued)

ASU 2019-05, Financial Instruments-Credit Losses,

Targeted Transition Relief, allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments

that (1) were previously recorded at amortized cost and (2) are within the scope of ASC 326-20, if the instruments are eligible for the

fair value option under ASC 825-10.

The fair value option election does not apply to held-to-maturity debt securities.

Entities are required

to make this election on an instrument-by-instrument basis.

ASU 2019-05 has the same effective date as ASU 2016-13.

We adopted ASU 2019-05

on July 1, 2023, and did not elect the fair value option on any financial instruments.

2022-02, Financial Instruments –

Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures, eliminates the accounting guidance for troubled debt

restructurings (“TDRs”) by creditors in Subtopic 310-40, Receivables-Troubled Debt Restructurings by Creditors, for entities

that have adopted the current expected credit loss model introduced by ASU 2016-13, Financial Instruments – Credit Losses (Topic

Measurement of Credit Losses on Financial Instruments.

ASU 2022-02 also requires disclosure by public business entities of

current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic

326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost.

The Company adopted the standard on July 1, 2023.

Other accounting standards that have been issued

or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial

position, results of operations or cash flows.

Earnings Per Share

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

Nine months ended

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:

Three months ended

Net income allocated to common shareholders, basic and diluted

EARNINGS PER SHARE

September 30,

Net income (loss) allocated to common shareholders, basic and diluted

$ ( 175,000 )

Earnings per share, basic and diluted

Weighted average common shares outstanding, basic and diluted

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

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

There were no stock option shares outstanding

for the three-month periods ended September 30, 2023 and 2022.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Investment Securities

following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at March

31, 2023 and June 30, 2022, the corresponding amounts of gross unrealized gains recognized in accumulated other comprehensive income

and gross unrecognized gains and losses:

March 31, 2023

The following table summarizes the amortized cost

and fair value of securities available-for-sale and securities held-to-maturity at September 30, 2023 and June 30, 2023, the corresponding

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

September 30, 2023

(in thousands)

9 unchanged sentences

Agency mortgage-backed:

pledged securities (including overnight and time deposits in other financial institutions) totaled $ 6.2 million and $ 1.7 million at March

At September 30, 2023 and June 30, 2023 the Company’s

debt securities consisted of mortgage-backed securities, which do not have a single maturity date.

Actual maturities may differ from contractual

maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Our pledged securities totaled $ 5.6 million and

$ 5.9 million at September 30, 2023 and June 30, 2023, respectively.

In addition, at September 30, 2023 and June 30, 2023, our pledged

assets included overnight deposits of $ 1.5 million and $ 1.5 million, respectively.

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

Those securities were agency mortgage-backed securities, which carry a very limited amount of risk.

Also, we have no intention to

sell nor feel that we will be compelled to sell such securities before maturity.

Based on our evaluation, no reserve for credit loss was

considered necessary.

Debt securities in an unrealized loss position as a percent of total debt securities were 99.9 % and 100 % at September

30, 2023 and June 30, 2023, 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, and have had values impacted by increased interest rates.

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

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Investment Securities (continued)

of March 31, 2023:

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 September 30, 2023.

September 30, 2023

Available-for-Sale

1 unchanged sentence

Less Than 12 Months

Mortgage-backed securities

Agency mortgage-backed securities

12 Months or More

Mortgage-backed securities

Agency mortgage-backed securities

Total temporarily impaired AFS securities

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Investment Securities (continued)

Held to Maturity

(in thousands)

Less Than 12 Months

Mortgage-backed securities

Agency mortgage-backed securities

12 Months or More

Mortgage-backed securities

Agency mortgage-backed securities

Total temporarily impaired HTM securities

of June 30, 2022:

were no available-for-sale investment securities in an unrealized loss position at June 30, 2022.

June 30, 2023

Available-for-Sale

(in thousands)

Less Than 12 Months

Mortgage-backed securities

Agency mortgage-backed securities

12 Months or More

Mortgage-backed securities

Agency mortgage-backed securities

Total temporarily impaired AFS securities

Held to Maturity

(in thousands)

Less Than 12 Months

Agency mortgage-backed securities

12 Months or More

Agency mortgage-backed securities

Total temporarily impaired HTM securities

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Loans receivable

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 loan 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

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.

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.

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.

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.

composition of the loan portfolio was as follows:

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.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Loans receivable (continued)

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

September 30,

(in thousands)

2 unchanged sentences

Nonresidential real estate

Commercial nonmortgage

Commercial and industrial

Consumer and other:

Loans on deposits

Allowance for loan losses

amounts above include net deferred loan costs of $ 336,000 and $ 290,000 as of March 31, 2023 and June 30, 2022, respectively.

allowance for loan losses is a valuation allowance for probable incurred credit losses.

Loan losses are charged 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 past loss experience, the nature and volume of the portfolio, trends in the

level of delinquent and problem loans, adverse situations that may affect the borrower’s ability to repay, the estimated value

of any underlying collateral and current and anticipated economic conditions in the primary lending area.

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

allowance consists of specific and general components.

The specific component relates to loans that are individually classified as impaired

or loans otherwise classified as substandard or doubtful.

The general component covers all loans and is based on historical loss experience

adjusted for current factors.

In consultation with regulators, the Company considers a time frame of two years when estimating the appropriate

level of allowance for loan losses.

This period may be shortened or extended based on anticipated trends in the banks or in the banks’

historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over

the most recent eight quarters.

This actual loss experience is supplemented with other economic factors based on the risks present for

each portfolio segment.

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Loans receivable (continued)

economic factors include consideration of the following:

levels of and trends in delinquencies and impaired loans;

levels of and trends

in charge-offs and recoveries;

trends in volume and terms of loans;

changes in lending policies, procedures and practices;

ability and depth of lending management and other relevant staff;

economic trends and conditions;

industry conditions;

and effects of

changes in credit concentrations.

Our portfolio segments include residential real estate, nonresidential real estate and land, loans

on deposits and consumer and other loans.

Risk factors associated with our portfolio segments are as follows:

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.

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.

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.

also originate loans to individuals to finance the construction of residential dwellings for personal use or for use as rental property.

We occasionally 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.

and Nonresidential Loans

offer mortgage loans secured by residential multi-family (five or more units), and nonresidential real estate.

Nonresidential real estate

loans are 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.

Loans secured by multi-family and commercial real estate

generally have larger balances and involve a greater degree of risk than one- to four-family residential mortgage 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.

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Allowance for credit losses

The amounts above include net deferred loan costs

of $ 325,000 and $ 330,000 as of September 30, 2023 and June 30, 2023, respectively.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Loans receivable (continued)

consumer loans include home equity lines of credit, loans secured by savings deposits, automobile loans, and unsecured loans.

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.

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

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.

loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all

amounts due according to the contractual terms of the loan agreement.

Although most of our loans are secured by collateral, we rely heavily

on the capacity of our borrowers to generate sufficient cash flow to service their debt.

As a result, our loans do not become collateral-dependent

until there is deterioration in the borrower’s cash flow and financial condition, which makes it necessary for us to look to the

collateral for our sole source of repayment.

Collateral-dependent loans which are more than ninety days delinquent are considered to

constitute more than a minimum delay in repayment and are evaluated for impairment under the policy at that time.

utilize updated independent appraisals to determine fair value for collateral-dependent loans, adjusted for estimated selling costs,

in determining our specific reserve.

In some situations, management does not secure an updated independent appraisal.

These situations

may involve small loan amounts or loans that, in management’s opinion, have an abnormally low loan-to-value ratio.

respect to the Banks’ investment in troubled debt restructurings, multi-family and nonresidential loans, and the evaluation of

impairment thereof, such loans are nonhomogenous and, as such, may be deemed to be collateral-dependent when they become more than 90

days delinquent.

We obtain updated independent appraisals in these situations or when we suspect that the previous appraisal may no longer

be reflective of the property’s current fair value.

This process varies from loan to loan, borrower to borrower, and also varies

based on the nature of the collateral.

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (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.

recoveries, if any, are credited to the allowance.

Management estimates the allowance balance required

using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and

supportable forecasts.

Historical credit loss experience, derived from the Company’s data, provides the basis for estimation of

expected credit losses, although management also compares the Company’s data with peer group data.

Adjustments to historical loss

information may be made for differences in:

lending policy, procedures and practice;

economic conditions;

the nature and volume of the

loan portfolio;

volume delinquent and problem loans;

the current and anticipated economic conditions in the primary lending area;

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

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

Management monitors the adequacy of the ACL on an ongoing basis and reports its adequacy quarterly to the Board of Directors.

believes the ACL at September 30, 2023 is adequate.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Loans receivable (continued)

following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended March 31, 2023:

(in thousands)

Residential real estate:

One-to four-family

Nonresidential real estate

Commercial nonmortgage

Consumer and other:

Loans on deposits

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

(in thousands)

Expected credit losses are estimated over the

contractual term of the loans, adjusted for expected prepayments, when appropriate.

The contractual term excludes expected extensions,

renewals, and modifications unless either of the following applies:

management has a reasonable expectation at the reporting date that

a modification will be executed with an individual borrower or the extension or renewal options are included in the original or modified

contract at the reporting date and are not unconditionally cancellable by the Banks.

The Banks categorize loans into risk categories

based on relevant information about the ability of borrowers to service their debt such as:

current financial information, historical

payment experience, credit documentation, and current economic trends, among other factors.

Management utilizes a risk rating scale ranging

from 1-Highest Pass to 9-Loss to evaluate loan quality.

Consumer purpose loans are identified as either performing or nonperforming based

on the payment status of the loans.

Nonperforming consumer loans are loans that are nonaccrual or 90 days or more past due and still accruing.

Our portfolio segments include residential real

estate, nonresidential real estate, farm, land, commercial and industrial, and consumer and other loans.

Risk factors associated with

our portfolio segments are as follows:

Residential Real Estate

One- to four-family

Nonresidential real estate

Commercial nonmortgage

Consumer and other:

Loans on deposits

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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 occasionally 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.

are disbursed as progress is made toward completion of the construction.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Loans receivable (continued)

following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended March 31, 2022:

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

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

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

Loans secured by automobiles are made directly to consumers (there are no relationships with dealers) and are based on the

value of the vehicle and the borrower’s creditworthiness.

Vehicle loans present a higher level of risk because of the natural decline

in the value of the property as well as its mobility.

Unsecured loans are based entirely on the borrower’s creditworthiness and

present the highest level of risk to the bank.

Impaired loans

The Banks choose the most appropriate method for

accounting for impaired loans.

For secured loans, which make up the vast majority of the loans in the Banks’ portfolio, this method

involves determining the fair value of the collateral, reduced by estimated selling costs.

Where appropriate, the Banks would account

for impaired loans by determining the present value of expected future cash flows discounted at the loan’s effective interest rate.

A loan is considered impaired when, based on current

information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of

the loan agreement.

Although most of our loans are secured by collateral, we rely heavily on the capacity of our borrowers to generate

sufficient cash flow to service their debt.

As a result, our loans do not become collateral-dependent until there is deterioration in

the borrower’s cash flow and financial condition, which makes it necessary for us to look to the collateral for our sole source

of repayment.

Collateral-dependent loans which are more than ninety days delinquent are considered to constitute more than a minimum delay

in repayment and are evaluated for impairment under the policy at that time.

We utilize updated independent appraisals to determine

fair value for collateral-dependent loans, adjusted for estimated selling costs, in determining our specific reserve.

In some situations,

management does not secure an updated independent appraisal.

These situations may involve small loan amounts or loans that, in management’s

opinion, have an abnormally low loan-to-value ratio.

With respect to the Banks’ investment in

troubled debt restructurings, multi-family and nonresidential loans, and the evaluation of impairment thereof, such loans are nonhomogenous

and, as such, may be deemed to be collateral-dependent when they become more than 90 days delinquent.

We obtain updated independent appraisals

in these situations or when we suspect that the previous appraisal may no longer be reflective of the property’s current fair value.

This process varies from loan to loan, borrower to borrower, and also varies based on the nature of the collateral.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Loans receivable (continued)

The following table presents the activity in the

ACL by portfolio segment for the three months ended September 30, 2023, after restatement of beginning balance for adoption of ASC 326:

September 30, 2023:

(in thousands)

2 unchanged sentences

Nonresidential real estate

Commercial nonmortgage

Commercial and industrial

Consumer and other

Loans on deposits

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

For the three months ended September 30, 2023,

the provision for credit losses totaled $ 6,000 including $ 4,000 for provision for credit loss on loans and $ 2,000 for credit losses on

unfunded commitments.

At September 30, 2023, the allowance for credit losses on unfunded commitments totaled $ 56,000 .

The following table presents the activity in the

ALLL by portfolio segment for the three months ended September 30, 2022:

(in thousands)

2 unchanged sentences

Nonresidential real estate

Commercial nonmortgage

Commercial and industrial

Consumer and other:

Loans on deposits

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Loans receivable (continued)

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, 2023.

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

The following table presents the amortized cost

basis of collateral-dependent loans by portfolio class as of September 30, 2023.

The recorded investment in loans excludes accrued interest

receivable due to immateriality.

September 30, 2023:

(in thousands)

and recorded investment

Amortized Cost

Loans individually evaluated for impairment:

2 unchanged sentences

Nonresidential real estate

Loans collectively evaluated for impairment:

Residential real estate:

One- to four-family

Nonresidential real estate

Commercial nonmortgage

Loans on deposits

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

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Loans receivable (continued)

following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio class and based

on impairment method as of June 30, 2022.

Commercial and industrial

Real estate stands as collateral for loans individually

evaluated for impairment.

The following tables present the balance in the

ALLL and the recorded investment in loans by portfolio class and based on impairment method as of June 30, 2023.

June 30, 2023:

(in thousands)

Loans acquired

credit quality*

attributed to

3 unchanged sentences

Nonresidential real estate

Consumer and other

Loans collectively evaluated for impairment:

5 unchanged sentences

Loans on deposits

These loans were evaluated

at acquisition date at their estimated fair value and there has been no subsequent deterioration since acquisition.

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Loans receivable (continued)

following table presents interest income on loans individually evaluated for impairment by class of loans for the nine months ended March

(in thousands)

With no related allowance recorded:

One- to four-family

Nonresidential real estate

Purchased credit-impaired loans

With an allowance recorded:

One- to four-family

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

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)

Income Recognized

Three months ended September 30,

With no related allowance recorded:

2 unchanged sentences

Nonresidential real estate

Consumer and other

Purchased credit-impaired loans

With an allowance recorded:

One- to four-family

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Loans receivable (continued)

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, 2023 and June 30, 2022:

March 31, 2023

There were no impaired loans with an allowance

recorded at June 30, 2023.

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, 2023, and June 30, 2023:

September 30, 2023

June 30, 2023

7 unchanged sentences

Nonresidential real estate and land

Commercial and industrial

to four-family loans in process of foreclosure totaled $ 1.2 million and $ 489,000 at March 31, 2023 and June 30, 2022, respectively.

Debt Restructurings:

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.

Nonaccrual loans had no related allowance for

credit losses based on individual evaluation at September 30, 2023.

One- to four-family loans in process of foreclosure

totaled $ 1.2 million and $ 766,000 at September 30, 2023 and June 30, 2023, respectively.

There were no loans modified during the three

months ended September 30, 2023 to borrowers experiencing financial difficulties.

Troubled Debt Restructurings:

Prior to the adoption of ASC 326 a Troubled Debt

Restructuring (“TDR”) was the situation where the Bank granted a concession to the borrower that the Banks would not otherwise

have considered due to the borrower’s financial difficulties.

All TDRs are considered “impaired.”

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,

2022 or 60 days following the termination of the 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.

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

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.

March 31, 2023 and June 30, 2022, the Company had $ 1.2 million and $ 1.4 million of loans classified as TDRs, respectively.

at March 31, 2023, approximately 15.9 % were related to the borrower’s completion of Chapter 7 bankruptcy proceedings with no reaffirmation

of the debt to the Banks.

the nine- and three-months ended March 31, 2023, the Company restructured no loans as TDRs.

No TDRs defaulted during the nine-month periods

ended March 31, 2023 or 2022.

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

At June 30, 2023, the Company had $ 1.4 million

of loans classified as TDRs.

During the three months ended September 30, 2022

the Company added no loans restructured as TDRs.

No TDRs defaulted during the three-month periods ended September 30, 2022.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Loans receivable (continued)

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

The following table presents the aging of the

principal balance outstanding in past due loans as of September 30, 2023, by class of loans:

(in thousands)

2 unchanged sentences

Nonresidential real estate

Commercial non-mortgage

Commercial and industrial

Consumer and other:

Loans on deposits

following tables present the aging of the principal balance outstanding in past due loans as of June 30, 2022, by class of loans:

The following tables present the aging of

the principal balance outstanding in past due loans as of June 30, 2023, by class of loans:

June 30, 2023:

(in thousands)

5 unchanged sentences

Loans on deposits

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

March 31, 2023

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Loans receivable (continued)

Quality Indicators:

Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such

current financial information, historical payment experience, credit documentation, public information, and current economic trends,

among other factors.

The Company analyzes loans individually by classifying the loans as to credit risk.

This analysis is performed on

an annual basis.

The Company uses the following definitions for risk ratings:

Loans classified as special mention have a potential weakness that deserves management’s close attention.

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 as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the

collateral pledged, if any.

Credit Quality Indicators:

The Company categorizes loans into risk categories

based on relevant information about the ability of borrowers to service their debt such as:

current financial information, historical

payment experience, credit documentation, public information, and current economic trends, among other factors.

The Company analyzes loans

individually by classifying the loans as to credit risk.

This analysis is performed on an annual basis.

The Company uses the following

definitions for risk ratings:

Special Mention.

Loans classified

as special mention have a potential weakness that deserves management’s close attention.

If left uncorrected, these potential weaknesses

may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Loans classified

as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if

Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

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.

not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass rated

Loans listed that are not rated are included in groups of homogeneous loans and are evaluated for credit quality based on performing

See the aging of past due loan table above.

As of March 31, 2023, and based on the most recent analysis performed, the risk category

of loans by class of loans is as follows:

(in thousands)

Residential real estate:

One- to four-family

Nonresidential real estate

Commercial nonmortgage

Loans on deposits

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

March 31, 2023

They are characterized

by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

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.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Loans receivable (continued)

June 30, 2022, the risk category of loans by class of loans was as follows:

Loans not meeting the criteria above that are

analyzed individually as part of the above-described process are considered to be pass rated loans.

Loans listed that are not rated are

included in groups of homogeneous loans and are evaluated for credit quality based on performing status.

See the aging of past due loan

As of September 30, 2023, and based on the most recent analysis performed, the risk category of loans by class of loans is

Loans Amortized Cost by Origination Fiscal Year

of September 30, 2023

to four-family

period gross charge offs

Nonresidential

period gross charge offs

and industrial

period gross charge offs

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Loans receivable (continued)

At June 30, 2023, the risk category of loans by

class of loans was as follows:

(in thousands)

2 unchanged sentences

Nonresidential real estate

Commercial nonmortgage

Commercial and industrial

Consumer and other

Loans on deposits

Credit Impaired Loans:

Company purchased loans during fiscal year 2013 for which there was, at acquisition, evidence of deterioration of credit quality since

origination and it was probable, at acquisition, that all contractually required payments would not be collected.

The carrying amount

of those loans, net of a purchase credit discount of $ 88,000 and $ 88,000 at March 31, 2023 and June 30, 2022, respectively, is as follows:

Purchased Credit Impaired Loans:

The Company purchased loans during fiscal year

2013 for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition,

that all contractually required payments would not be collected.

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

of $ 88,000 at June 30, 2023 is as follows:

(in thousands)

One- to four-family residential real estate

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

Accretable yield, or income expected to be collected,

is as follows:

(in thousands)

3 unchanged sentences

Balance at end of period

those purchased loans disclosed above, the Company made no increase in allowance for loan losses for the year ended June 30, 2022, nor

for the nine-month period ended March 31, 2023.

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

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Disclosures About Fair Value of Assets and Liabilities

topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market participants (exit price) at the measurement date.

ASC topic 820 also establishes a fair value hierarchy which requires

an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

describes six levels of inputs that may be used to measure fair value:

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

2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities;

quoted prices in

active markets that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially

the full term of the assets or liabilities.

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.

is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of

such instruments pursuant to the valuation hierarchy.

quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy.

market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics.

Level 2 securities include agency mortgage-backed securities and agency bonds.

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

For those purchased loans disclosed above, the

Company made no increase in allowance for loan losses for the year ended June 30, 2023, and noallowance for loan losses were reversed

during those periods.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Disclosures About Fair Value of Assets

and Liabilities

ASC topic 820 defines fair value as the price

that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (exit price)

at the measurement date.

ASC topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable

inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes six levels of inputs that may be

used to measure fair value:

Level 1 – Quoted prices

in active markets for identical assets or liabilities.

Level 2 – Observable inputs

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

quoted prices in active markets that are not active;

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

Level 3 – Unobservable

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

Following is a description of the valuation methodologies

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

Where quoted market prices are available in an

active market, securities are classified within Level 1 of the valuation hierarchy.

If quoted market prices are not available, then fair

values are estimated by using pricing models, quoted prices of securities with similar characteristics.

Level 2 securities include agency

mortgage-backed securities and agency bonds.

Financial assets measured at fair value on a recurring

basis are summarized below:

Fair Value Measurements Using

1 unchanged sentence

Quoted Prices

March 31, 2023

September 30, 2023

Agency mortgage-backed:

1 unchanged sentence

Agency mortgage-backed:

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.

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Disclosures About Fair Value of Assets and Liabilities (continued)

the time a loan is considered impaired, it is evaluated for loss based on the fair value of collateral securing the loan if the loan

is collateral dependent.

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.

Impaired loans carried at fair value generally receive

specific allocations of the allowance for loan losses.

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

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.

were no loans measured on a nonrecurring basis using the fair value of the collateral for collateral-dependent loans, at March 31, 2023

or at June 30, 2022.

acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a

new cost basis.

These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell.

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.

was no other real estate owned (“OREO”) written down during the nine- or three-month periods ended March 31, 2023 or 2022.

There was no OREO measured on a nonrecurring basis during the period at fair value less costs to sell at March 31, 2023 or June 30, 2022.

following is a disclosure of the fair value of financial instruments, both assets and liabilities, whether or not recognized in the consolidated

balance sheet, for which it is practicable to estimate that value.

For financial instruments where quoted market prices are not available,

fair values are based on estimates using present value and other valuation methods.

methods used are greatly affected by the assumptions applied, including the discount rate and estimates of future cash flows.

the fair values presented may not represent amounts that could be realized in an exchange for certain financial instruments.

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Disclosures About Fair Value of Assets and Liabilities (continued)

on the foregoing methods and assumptions, the carrying value and fair value of the Company’s financial instruments at March 31,

2023 and June 30, 2022 are as follows:

There were no assets or liabilities which were

measured at fair value on a nonrecurring basis at September 30, 2023, and June 30, 2023.

The following is a disclosure of the fair

value of financial instruments, both assets and liabilities, whether or not recognized in the consolidated balance sheet, for which it

is practicable to estimate that value.

For financial instruments where quoted market prices are not available, fair values are based on

estimates using present value and other valuation methods.

The methods used are greatly affected by the assumptions

applied, including the discount rate and estimates of future cash flows.

Therefore, the fair values presented may not represent amounts

that could be realized in an exchange for certain financial instruments.

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Disclosures About Fair Value of Assets

and Liabilities (continued)

Based on the foregoing methods and assumptions,

the carrying value and fair value of the Company’s financial instruments at September 30, 2023 and June 30, 2023 are as follows:

Fair Value Measurements at

March 31, 2023 Using

September 30, 2023 Using

(in thousands)

3 unchanged sentences

Held-to-maturity securities

Loans held for sale

Loans receivable – net

12 unchanged sentences

Held-to-maturity securities

Loans held for sale

Loans receivable - net

5 unchanged sentences

Accrued interest payable

First Federal Bancorp

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Other Comprehensive Loss

The Company’s other comprehensive loss is

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

The following is a summary of the accumulated other

comprehensive loss balances, net of tax:

Kentucky First Federal Bancorp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Other Comprehensive Income (Loss)

The Company’s other comprehensive income

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

The following is a summary of the accumulated

other comprehensive income balances, net of tax:

(in thousands)

Nine months ended

Three months ended

Balance at beginning of period

Current period change

Balance at end of period

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

Nine months ended

September 30,

Beginning balance

Current year change

Ending balance

Other comprehensive income (loss) components and

related tax effects for the periods indicated were as follows:

Three months ended

September 30,

(in thousands)

Unrealized holding losses on available-for-sale securities

First Federal Bancorp

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

Net-of-tax amount

Kentucky First Federal Bancorp

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