What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-15 compared with 2024-02-14 · 204 added, 204 removed, 163 unchanged (71% of the section changed)

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Forward-Looking Statements

Certain statements contained in this report, as well as other periodic

reports filed with the Securities and Exchange Commission, that are not historical facts are considered “forward-looking statements”

under the Private Securities Litigation Reform Act of 1995, that are subject to certain risks and uncertainties.

These forward-looking

statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,”

“estimate,” “intend” and “potential,” or words of similar meaning, or future or conditional verbs

such as “should,” “could,” or “may.” Forward-looking statements include statements of our goals, intentions

and expectations;

Certain statements contained in this report, as

well as other periodic reports filed with the Securities and Exchange Commission, that are not historical facts are considered “forward-looking

statements” under the Private Securities Litigation Reform Act of 1995, that are subject to certain risks and uncertainties.

forward-looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,”

“plan,” “estimate,” “intend” and “potential,” or words of similar meaning, or future or

conditional verbs such as “should,” “could,” or “may.” Forward-looking statements include statements

of our goals, intentions and expectations;

statements regarding our business plans, prospects, growth and operating strategies;

statements regarding the quality

of our loan and investment portfolios;

regarding the quality of our loan and investment portfolios;

and estimates of our risks and future costs and benefits.

Kentucky First Federal Bancorp’s

actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements.

and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions;

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;

the interest rate environment and the impact of the interest rate environment

on our business, financial condition and results of operations;

our ability to successfully execute our strategy to increase earnings,

increase core deposits, reduce reliance on higher cost funding sources and shift more of our loan portfolio towards higher-earning loans;

the interest rate environment and the impact of the interest

rate environment on our business, financial condition and results of operations;

our ability to successfully execute our strategy to increase

earnings, increase core deposits, reduce reliance on higher cost funding sources and shift more of our loan portfolio towards higher-earning

our ability to pay future dividends and if so at what level;

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technology affecting financial services, and the other matters mentioned in Item 1A of the Company’s Annual Report on Form 10-K

for the year ended June 30, 2023 and in this Form 10-Q.

Except as required by applicable law or regulation, the Company does not undertake

the responsibility, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any

forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated

or unanticipated events.

for the year ended June 30, 2023 and in the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2023 and for

the period ended September 30, 2023.

Except as required by applicable law or regulation, the Company does not undertake the responsibility,

and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements

to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

Asset/Liability Management

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to mitigate potential asset/liability risks to the Banks and to the Company as a whole.

Management utilizes a third-party to perform

interest rate risk (“IRR”) calculations for each of the Banks.

Management monitors and considers methods of managing the

rate sensitivity and repricing characteristics of each of the Bank’s balance sheet components to maintain acceptable levels of

change in the economic value of equity (“EVE”) as well as evaluating the impact on earnings in the event of changes in prevailing

market interest rates.

Interest rate sensitivity analysis is used to measure our interest rate risk by computing estimated changes in

EVE that are a result of changes in the net present value of its cash flows from assets, liabilities, and off-balance sheet items.

changes in cash flow are estimated based on hypothetical instantaneous and permanent increases and decreases in market interest rates.

In March 2022 the Federal Open Market Committee (“FOMC”)

of the Federal Reserve Bank began raising the target range for the fed funds rate of interest and since that time has raised the short-term

interest rate by 500 basis points.

At September 30, 2023, we believe our risk associated with rising interest rates was moderate.

IRR model indicated that at June 30, 2023, our EVE was approximately 16.5%, despite the historic interest rate increases during the previous

twelve months.

Although general market participants believe that the FOMC will now pause interest rate increases for a period of time,

our June 30, 2023 EVE is anticipated to be approximately 14.6% and 11.9% under sudden and sustained increase in prevailing market interest

rates of 100 basis points and 200 basis points, respectively.

Computations or prospective effects of hypothetical interest rate changes

are based on numerous assumptions, including relative levels of market interest rates, loan prepayments, and deposit run-offs.

computations should not be relied upon as indicative of actual results.

Further, the computations do not contemplate any actions the

Banks may undertake in response to changes in interest rates.

Certain shortcomings are inherent in this method of computing EVE.

example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in differing degrees

to changes in market interest rates.

The interest rates on certain types of assets and liabilities may fluctuate in advance of changes

in market interest rates, while interest rates on other types may lag behind changes in market rates.

Management utilizes a third-party to perform interest

rate risk (“IRR”) calculations for each of the Banks.

Management monitors and considers methods of managing the rate sensitivity

and repricing characteristics of each of the Bank’s balance sheet components to maintain acceptable levels of change in the economic

value of equity (“EVE”) as well as evaluating the impact on earnings in the event of changes in prevailing market interest

Interest rate sensitivity analysis is used to measure our interest rate risk by computing estimated changes in EVE that are a result

of changes in the net present value of its cash flows from assets, liabilities, and off-balance sheet items.

These changes in cash flow

are estimated based on hypothetical instantaneous and permanent increases and decreases in market interest rates.

In March 2022 the Federal Open Market Committee

(“FOMC”) of the Federal Reserve Bank began raising the target range for the fed funds rate of interest and since that time

has raised the short-term interest rate by 500 basis points.

At March 31, 2024, we believe our risk associated with rising interest rates

was moderate.

Our IRR model indicated that at December 31, 2023, our EVE was approximately 16.4%, despite the historic interest rate increases

during the previous twelve months.

Although general market participants believe that the FOMC will now pause interest rate increases for

a period of time, our December 31, 2023 EVE is anticipated to be approximately 14.7% and 10.6% under sudden and sustained increase in

prevailing market interest rates of 100 basis points and 200 basis points, respectively.

Computations or prospective effects of hypothetical

interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments, and deposit

These computations should not be relied upon as indicative of actual results.

Further, the computations do not contemplate any

actions the Banks may undertake in response to changes in interest rates.

Certain shortcomings are inherent in this method of computing

For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in differing

degrees to changes in market interest rates.

The interest rates on certain types of assets and liabilities may fluctuate in advance of

changes in market interest rates, while interest rates on other types may lag behind changes in market rates.

Kentucky First Federal Bancorp

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The following table represents the average balance

sheets for the six-month periods ended December 31, 2023 and 2022, along with the related calculations of tax-equivalent net interest

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

Six Months Ended December 31,

sheets for the nine-month periods ended March 31, 2024 and 2023, 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)

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Total interest-earning assets

Allowance for loan losses

Allowance for credit losses

Non-interest-earning assets

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Certificates of deposit

Total deposits

Total interest-bearing deposits

Total interest-bearing liabilities

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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.

Includes loan fees, immaterial in amount, in both interest income and the calculation of yield on loans.

Also includes loans on nonaccrual status.

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The following table represents the average balance

sheets for the three-month periods ended December 31, 2023 and 2022, along with the related calculations of tax-equivalent net interest

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

Three Months Ended December 31,

sheets for the three-month periods ended March 31, 2024 and 2023, 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)

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Mortgage-backed securities

Other securities

Other interest-earning assets

Total interest-earning assets

Allowance for loan losses

Allowance for credit losses

Non-interest-earning assets

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Certificates of deposit

Total deposits

Total interest-bearing deposits

Total interest-bearing liabilities

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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.

Includes loan fees, immaterial in amount, in both interest income and the calculation of yield on loans.

Also includes loans on nonaccrual status.

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AND RESULTS OF OPERATIONS (continued)

Discussion of Financial Condition Changes

from June 30, 2023 to December 31, 2023

Discussion of Financial Condition Changes from

June 30, 2023 to March 31, 2024

Financial Position and Results of Operations

At December 31, 2023 the Company and the Banks

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

However, an extended economic recession could

adversely impact the Company’s and the Banks’ capital position and regulatory capital ratios due to a potential increase

in credit losses.

At December 31, 2023, the

Company’s assets totaled $366.2 million, an increase of $17.2 million, or 4.9%, from total assets at June 30, 2023, due primarily

to the increase in loans, net, as well as an increase in cash and cash equivalents.

At March 31, 2024 the Company and the Banks were

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

However, an extended economic recession could adversely

impact the Company’s and the Banks’ capital position and regulatory capital ratios due to a potential increase in credit losses.

At March 31, 2024, the Company’s

assets totaled $369.1 million, an increase of $20.1 million, or 5.8%, from total assets at June 30, 2023.

This increase was attributed

primarily to increases in loans, net, primarily in adjustable rate residential mortgage loans

Cash and cash equivalents:

and cash equivalents increased $6.4 million or 78.6% to $14.6 million at December 31, 2023.

Most of the Company’s cash and cash

equivalents are held in interest-bearing demand deposits.

and cash equivalents increased $7.2 million or 88.8% to $15.4 million at March 31, 2024.

Most of the Company’s cash and cash equivalents

are held in interest-bearing demand deposits.

Investment securities:

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compared to June 30, 2023.

Loans, net and loans

available-for sale in the aggregate increased $12.1 million or 3.9% and totaled $325.6 million and $270,000, respectively at December

Loans receivable, net, increased by $11.8 million or 3.8% to $325.6 million at December 31, 2023.

Loans available-for-sale

increased to $270,000 at December 31, 2023.

Management continues to look for high-quality loans to add to its portfolio and will continue

to emphasize loan originations to the extent that it is profitable, prudent and consistent with our interest rate risk strategies.

Loans, net increased

$14.3 million or 4.6% and totaled $328.1 million at March 31, 2024.

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:

December 31, 2023, the Company had non-performing loans (loans 90 or more days past due or on nonaccrual status) of approximately $5.2

million, or 1.6% of total loans compared to $5.4 million or 1.7%, of total loans at June 30, 2023.

The Company’s ACL totaled $2.1

million at December 31, 2023 and the ALLL totaled $1.6 million at June 30, 2023, respectively.

The ACL at December 31, 2023, represented

41.0% of nonperforming loans and 0.7% of total loans, while at June 30, 2023, ALLL represented 34.8% of nonperforming loans and 0.5% of

March 31, 2024, the Company had non-performing loans (loans 90 or more days past due or on nonaccrual status) of approximately $5.2 million,

or 1.6% of total loans (including acquired loans), compared to $5.4 million or 1.7%, of total loans at June 30, 2023.

The Company’s

ACL totaled $2.1 million at March 31, 2024 and the Company’s allowance for loan loss totaled $1.6 million at June 30, 2023.

ACL at March 31, 2024, represented 40.4% of nonperforming loans and 0.6% of total loans, while at June 30, 2023, ALLL represented 34.8%

of nonperforming loans and 0.5% of total loans.

The Company had $7.6 million in assets classified

as substandard for regulatory purposes at December 31, 2023, including real estate owned (“REO”) of $10,000.

Classified loans

as a percentage of total loans (including loans acquired) was 2.4% and 2.3% at December 31, 2023 and June 30, 2023, respectively.

substandard loans, 100.0% were secured by real estate on which the Banks have priority lien position.

as substandard for regulatory purposes at March 31, 2024, and real estate owned (“REO”) of $10,000.

Classified loans as a

percentage of total loans (including loans acquired) was 2.4% and 2.3% at March 31, 2024 and June 30, 2023, respectively.

Of substandard

loans, 100.0% were secured by real estate on which the Banks have priority lien position.

The table below shows the aggregate amounts of

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Total classified assets

At December 31, 2023, the Company’s real

estate acquired through foreclosure represented 0.1% of substandard assets compared to 0.1% at June 30, 2023.

During the period presented

the Company made no loans to facilitate the purchase of its other real estate owned by qualified buyers.

Loans to facilitate the sale

of other real estate owned, which were included in substandard loans, totaled $0 and $0 at December 31, 2023 and June 30, 2023, respectively.

At March 31, 2024, the Company’s real estate

acquired through foreclosure represented 0.1% of substandard assets compared to 0.1% at June 30, 2023.

During the period presented the

Company made no loans to facilitate the purchase of its other real estate owned by qualified buyers.

Loans to facilitate the sale of other

real estate owned, which were included in substandard loans, totaled $0 and $0 at March 31, 2024 and June 30, 2023, respectively.

Kentucky First Federal Bancorp

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AND RESULTS OF OPERATIONS (continued)

Discussion of Financial Condition Changes

from June 30, 2023 to December 31, 2023 (continued)

Discussion of Financial Condition Changes from

June 30, 2023 to March 31, 2024 (continued)

The following table presents the aggregate carrying

value of REO at the dates indicated:

December 31, 2023

March 31, 2024

June 30, 2023

One- to four-family

At December 31, 2023 and June 30, 2023, the Company

At March 31, 2024 and June 30, 2023, the Company

had $810,000 and $854,000 of loans classified as special mention, respectively.

This category includes assets which do not currently

expose us to a sufficient degree of risk to warrant classification, but does possess credit deficiencies or potential weaknesses deserving

our close attention.

Total liabilities

increased $18.8 million, or 6.3% to $317.1 million at December 31, 2023, as deposits increased $18.3 million or 8.1% to $244.6 million

and advances increased $921,000 or 1.3% to $71.0 million.

This category includes assets which do not currently expose

us to a sufficient degree of risk to warrant classification, but does possess credit deficiencies or potential weaknesses deserving our

close attention.

Total liabilities increased

$21.8 million, or 7.3% to $320.1 million at March 31, 2024, as deposits increased $19.8 million or 8.7% to $246.1 million and advances

increased $2.3 million or 3.2% to $72.3 million.

Certificates of deposit increased $26.7 million

or 17.0% and totaled $160.1 million at December 31, 2023, which $44.1 million brokered deposits, an increase of $23.1 million or 110.0%.

or 19.4% and totaled $164.0 million at March 31, 2024, which included $43.9 million of brokered deposits, an increase of $22.9 million

Demand deposit accounts increased $1.6 million or 5.1% and totaled $33.0 million at quarter end.

Savings accounts decreased $6.4 million

or 11.1% and totaled $51.2 million at the end of the current period.

The cost of liabilities has been increasing rapidly due to higher

costs of both wholesale and retail funding.

Continued increases in liability costs, especially for wholesale funds, will primarily

be driven by future increases in market rates by the Federal Reserve.

It is believed that we are near the peak of this rate cycle

which, if so, will likely slow the increasing costs of our liabilities.

Savings accounts decreased

$8.5 million or 14.7% and totaled $49.1 million at the end of the current period.

The cost of liabilities has been increasing rapidly

due to higher costs of both wholesale and retail funding.

Continued increases in liability costs, especially for wholesale funds,

will primarily be driven by future increases in market rates by the Federal Reserve.

It is believed that we are near the peak of

this rate cycle which, if so, will likely slow the increasing costs of our liabilities.

Shareholders’ Equity:

December 31, 2023, the Company’s shareholders’ equity totaled $49.2 million, a decrease of $1.5 million or 3.0% from the

June 30, 2023 total.

The decrease in shareholders’ equity was primarily associated with adoption of the CECL accounting standard

($414,000), net loss for the period and dividends paid on common stock.

The Company paid dividends of $671,000 compared to net loss of $536,000

for the six-month period just ended.

On July 6, 2023, the members of First Federal MHC again approved a dividend waiver on annual dividends

of up to $0.40 per share of Kentucky First Federal Bancorp common stock.

The Board of Directors of First Federal MHC applied for approval

of another waiver.

The Federal Reserve Bank of Cleveland has notified the Company that it did not object to the waiver of dividends paid

by the Company to First Federal MHC, and, as a result, First Federal MHC will be permitted to waive the receipt of dividends for quarterly

dividends up to $0.10 per common share through the third calendar quarter of 2024.

However, on October 13, 2023, the Company announced

that future dividends will be reduced primarily due to the recent decline in earnings of the Banks.

After careful consideration, on January

16, 2024, the board determined that it would be prudent to suspend the payment of dividends completely until such time as earnings and

liquidity improve.

Our ability to pay future dividends and if so at what level will also be dependent on our ability to successfully execute

our strategy to increase earnings and core deposits, reduce reliance on higher cost funding sources and shift more of our loan portfolio

towards higher-earning loans, and the receipt of required regulatory approval or non-objection for the payment of dividends from the Banks

to the Company or from the Company to shareholders.

Nevertheless, management continues to believe that a strong dividend is consistent

with the Company’s long-term capital management strategy.

See “Risk Factors” in Part II, Item 1A, of the Company’s

Annual Report on Form 10-K for the year ended June 30, 2023 for additional discussion regarding dividends.

31, 2024, the Company’s shareholders’ equity totaled $49.0 million, a decrease of $1.7 million or 3.3% from the June 30, 2023

The decrease in shareholders’ equity was primarily associated with adoption of the CECL accounting standard which resulted

in a $414,000 net loss for the period and dividends paid on common stock.

The Company paid dividends of $671,000 and had

net loss of $643,000 for the nine-month period just ended.

On July 6, 2023, the members of First Federal MHC again approved a dividend

waiver on annual dividends of up to $0.40 per share of Kentucky First Federal Bancorp common stock.

The Board of Directors of First Federal

MHC applied for approval of another waiver.

The Federal Reserve Bank of Cleveland has notified the Company that it did not object to the

waiver of dividends paid by the Company to First Federal MHC, and, as a result, First Federal MHC was permitted to waive the receipt of

dividends for quarterly dividends up to $0.10 per common share through the third calendar quarter of 2024.

However, on October 13, 2023,

the Company announced that future dividends will be reduced primarily due to the recent decline in earnings of the Banks.

After careful

consideration, on January 16, 2024, the board determined that it would be prudent to suspend the payment of dividends completely until

such time as earnings and liquidity improve.

Our ability to pay future dividends and if so at what level will also be dependent on our

ability to successfully execute our strategy to increase earnings and core deposits, reduce reliance on higher cost funding sources and

shift more of our loan portfolio towards higher-earning loans, and the receipt of required regulatory approval or non-objection for the

payment of dividends from the Banks to the Company or from the Company to shareholders.

Nevertheless, management continues to believe

that a strong dividend is consistent with the Company’s long-term capital management strategy.

See “Risk Factors” in

Part II, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 for additional discussion regarding

Kentucky First Federal Bancorp

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AND RESULTS OF OPERATIONS (continued)

Comparison of Operating Results for the Six-month

Periods Ended December 31, 2023 and 2022

Comparison of Operating Results for the Nine-month

Periods Ended March 31, 2024 and 2023

Net income totaled $(643,000) or $(0.08) diluted

earnings per share for the six months ended December 31, 2023, a decrease of $1.3 million or 171.8% from net income of $747,000 or $0.09

earnings per share for the nine-months ended March 31, 2024, a decrease of $1.5 million or 172.2% from net income of $891,000 or $0.11

diluted earnings per share for the same period in 2023.

The decrease in net earnings for the six months ended ended December 31, 2023,

was primarily attributable to lower net interest income, and higher non-interest expense, which were partially offset by lower income

taxes and lower provision for credit losses.

The decrease in net earnings for the nine months ended March 31, 2024 was primarily

attributable to lower net interest income, and higher non-interest expense, which were partially offset by lower income taxes and lower

provision for credit losses.

Net Interest Income

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Interest expense

increased $3.2 million or 281.4%, while interest income increased $1.6 million or 27.3% to $7.7 million for the six months ended December

During the unprecedented interest rate increases seen in the market since March 2022, our funding sources have repriced more

quickly than our assets have repriced, which has had a negative impact on net interest income.

increased $4.4 million or 193.0%, while interest income increased $2.6 million or 28.3% to $11.8 million for the nine months ended March

During the unprecedented interest rate increases experienced in the market since March 2022, our funding sources have repriced

more quickly than our assets have repriced, which has had a negative impact on net interest income.

The average rate earned on interest-earning assets

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The average balance of loans increased

$31.0 million or 10.7% to $321.1 million for the six months ended December 31, 2023, while the average rate increased 60 basis points

$28.7 million or 9.8% to $323.4 million for the nine months ended March 31, 2024, while the average rate increased 65 basis points to

The average balance of interest-bearing liabilities

increased $27.9 million or 10.6% to $290.3 million for the six months just ended, and the average rate paid increased 212 basis points

increased $28.5 million or 10.7% to $293.9 million for the nine months just ended, and the average rate paid increased 190 basis points

The cost of liabilities increased rapidly due to higher costs of both wholesale and retail funding.

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Net interest spread decreased from 2.66% for the

prior year quarterly period to 1.44% for the six-month period ended December 31, 2023.

Provision for Losses on Loans

Management determined that a $15,000 provision

for credit loss was prudent in light of the increase in the loan portfolio during the recently ended six-months December 31, 2023.

prior year quarterly period to 1.46% for the nine-month period ended March 31, 2024.

Provision for (Recovery of) Credit Losses

Management determined that a $13,000 recovery

of credit losses was prudent in light of the strengthening loan portfolio overall during the recently ended nine-month period.

loans are now being individually evaluated for specific loss allocation and are therefore excluded from the homogeneous pooled loss analysis.

The result is a more targeted representation of currently expected credit losses on loans.

Kentucky First Federal Bancorp

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AND RESULTS OF OPERATIONS (continued)

Comparison of Operating Results for the Six-month

Periods Ended December 31, 2023 and 2022 (continued)

Comparison of Operating Results for the Nine-month

Periods Ended March 31, 2024 and 2023 (continued)

Non-interest Income

Non-interest income decreased $37,000 or 15.7%

to $121,000 for the six months ended December 31, 2023, compared to the prior year period, primarily because of a decrease in other non-interest

to $199,000 for the nine months ended March 31, 2024, compared to the prior year period, primarily because of a decrease in other non-interest

income, which is comprised of various items including bank-related fees and services.

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Non-interest expense increased $273,000 or 4.6%

to $4.1 million for the six months ended December 31, 2023, primarily due to higher outside service fee, as well as higher employee compensation

and benefits.

Outside service fee expense increased $109,000 or 104.8% and totaled

$213,000 due to additional professional expenses and costs associated with them.

Employee compensation and benefits expense increased

$61,000 or 2.5% and totaled $2.5 million for the six months just ended due to additional salary expense and additional deferred loan

costs by closing more loans.

Income Tax Expense

to $6.1 million for the nine months ended March 31, 2024, primarily due to higher outside service fee, FDIC insurance premiums, as well

as higher employee compensation and benefits.

Outside service fee expense increased $103,000

or 56.9% and totaled $284,000 due to additional professional expenses and costs associated with them.

FDIC insurance premiums expense increased $101,000

or 160.3% and totaled $164,000 due to the FDIC increasing premiums throughout the industry in their effort to get the Deposit Insurance

Fund closer to the statutory minimum of 1.35%.

The ratio dipped after the recent bank failures of Silicon Valley Bank and Signature Bank.

Employee compensation and benefits expense increased $64,000 or 1.7%

and totaled $3.8 million for the nine months just ended due to additional salary expense.

Income Tax Expense (Benefit)

Income tax expense decreased $483,000 or 170.7%

to an income tax benefit of $162,000 for the six months ended December 31, 2023, compared to the prior year period due to decreased earnings.

The effective tax rates for the six-month periods ended December 31, 2023 and 2022, were 23.2% and 23.5%, respectively.

to an income tax benefit of $200,000 for the nine months ended March 31, 2024, compared to the prior year period due to decreased earnings.

The effective tax rates for the nine-month periods ended March 31, 2024 and 2023, were 23.7% and 24.1%, respectively.

Comparison of Operating Results for the Three-month

Periods Ended March 31, 2024 and 2023

Net loss totaled $107,000 or ($0.01) diluted earnings

per share for the three months ended March 31, 2024, a decrease of $251,000 or 174.3% from net income of $144,000 or $0.02 diluted earnings

per share for the same period in 2023.

The decrease in net earnings for the quarter ended March 31, 2024, was primarily attributable to

lower net interest income, and higher non-interest expense, which were partially offset by lower income taxes.

Kentucky First Federal Bancorp

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AND RESULTS OF OPERATIONS (continued)

Comparison of Operating Results for the Three-month

Periods Ended December 31, 2023 and 2022

Net loss totaled $361,000 or ($0.05) diluted

earnings per share for the three months ended December 30, 2023, a decrease of $735,000 or 196.5% from net income of $374,000 or $0.04

diluted earnings per share for the same period in 2022.

The decrease in net earnings for the quarter ended December 30, 2023, was primarily

attributable to lower net interest income, and higher non-interest expense, which were partially offset by lower income taxes.

Net Interest Income

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$1.2 million or 106.7%, while interest income increased $963,000 or 30.0% to $4.2 million for the recently-ended quarter.

unprecedented interest rate increases seen in the market since March 2022, our funding sources have repriced more quickly than our assets

have repriced, which has had a negative impact on net interest income.

During the unprecedented

interest rate increases seen in the market since March 2022, our funding sources have repriced more quickly than our assets have repriced,

which has had a negative impact on net interest income.

The average rate earned on interest-earning assets

increased 60 basis points to 4.48% and was the primary reason for the increase in interest income, although average interest-earning

assets also increased $27.9 million or 8.7% to $350.8 million for the recently-ended quarterly period.

The increase in interest income

was due primarily to an increase of $733,000 or 25.3% in interest income from loans, which totaled $3.6 million for the period.

increased 75 basis points to 4.67% and was the primary reason for the increase in interest income, although average interest-earning assets

also increased $30.0 million or 9.2% to $357.1 million for the recently-ended quarterly period.

The increase in interest income was due

primarily to an increase of $858,000 or 28.8% in interest income from loans, which totaled $3.8 million for the period.

The increase in interest income from loans period-to-period

1 unchanged sentence

The average balance of loans increased

$26.6 million or 8.9% to $324.2 million for the three months ended December 31, 2023, while the average rate increased 59 basis points

$24.4 million or 8.0% to $328.4 million for the three months ended March 31, 2024, while the average rate increased 75 basis points to

The average balance of interest-bearing liabilities

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Net interest spread decreased from 2.22% for the

prior year quarterly period to 1.39% for the three-month period ended December 31, 2023.

Provision for Cred Losses

Management determined that a $9,000 provision

for credit loss was prudent in light of the increase in the loan portfolio during the recently-ended quarter.

Kentucky First Federal Bancorp

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

prior year quarterly period to 1.48% for the three-month period ended March 31, 2024.

Provision for (Recovery of) Credit Losses

Management determined that a $28,000 recovery

of credit losses was prudent in light of the strengthening loan portfolio overall during the recently ended three-month period.

loans are now being individually evaluated for specific loss allocation and are therefore excluded from the homogeneous pooled loss analysis.

The result is a more targeted representation of currently expected credit losses on loans.

Comparison of Operating Results for the Three-month

Periods Ended December 31, 2023 and 2022 (continued)

Periods Ended March 31, 2024 and 2023 (continued)

Non-interest Income

Non-interest income decreased $23,000 or 33.3%

to $46,000 for the recently ended quarter primarily because of a decrease in other non-interest income, which is comprised of various

items including bank-related fees and services.

Non-interest income increased $9,000 or 13.0%

to $78,000 for the recently ended quarter primarily due to net gain on sales of loans, which increased from $0 to $8,000 for the three

months ended March 31, 2024.

Non-interest Expense

Non-interest expense increased $100,000 or 5.2%

and totaled $2.1 million for the three months ended December 31, 2023, primarily due to increased FDIC insurance premiums and other various

bank expenses.

Income Tax Expense

and totaled $2.0 million for the three months ended March 31, 2024, primarily due to increased auditing and accounting expense, FDIC insurance

premiums and other various bank expenses.

Income Tax Expense (Benefit)

Income taxes decreased $92,000 or 170.4% from

an expense of $113,000 for the three months ended December 31, 2022, to a benefit of $94,000 for the recently-ended period.

an expense of $58,000 for the three months ended March 31, 2023, to a benefit of $38,000 for the recently ended period.

The effective

tax rates for the three-month periods ended December 31, 2023 and 2022, were 20.7% and 23.2%, respectively.

tax rates for the three-month periods ended March 31, 2024 and 2023, were 26.2% and 27.3%, respectively.

Kentucky First Federal Bancorp

4 unchanged sentences

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 2. Management’s Discussion and Analysis