What changed in this filing

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Item 1. Business

2025-09-30 compared with 2024-10-03 · 302 added, 277 removed, 905 unchanged (39% of the section changed)

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.

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 ability to fully and timely address the deficiencies that resulted

in the Agreement that First Federal Savings Bank of Kentucky has entered into with the Office of the Comptroller of the Currency (“OCC”);

First Federal Savings Bank of Kentucky’s ability to satisfy the Individual Minimum Capital Requirements imposed by the OCC;

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

statements regarding the quality of our loan and investment

and estimates of our risks and future costs and benefits.

Kentucky First Federal Bancorp’s actual results, performance

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

Risks and uncertainties that

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

prices for real estate

in the Company’s market areas;

the interest rate environment and the impact of the interest rate environment on our business, financial

condition and results of operations;

our ability to successfully execute our strategy to increase earnings, increase core deposits, reduce

reliance on higher cost funding sources and shift more of our loan portfolio towards higher-earning loans;

our ability to pay future dividends

and if so at what level;

our ability to receive any required regulatory approval or non-objection for the payment of dividends from First

Federal Savings and Loan Association of Hazard and First Federal Savings Bank of Kentucky to the Company or from the Company to shareholders;

Certain statements contained in this report, as well as other periodic reports filed with the Securities and Exchange Commission, that

are not historical facts are considered “forward-looking statements” under the Private Securities Litigation Reform Act of

1995, that are subject to certain risks and uncertainties.

These forward-looking statements may be identified by the use of words such

as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “intend”

and “potential,” or words of similar meaning, or future or conditional verbs such as “should,” “could,”

or “may.” Forward-looking statements include statements of our goals, intentions and expectations;

statements regarding our

ability to fully and timely address the deficiencies that resulted in the Agreement that First Federal Savings Bank of Kentucky has entered

into with the Office of the Comptroller of the Currency (“OCC”);

First Federal Savings Bank of Kentucky’s ability to

satisfy the Individual Minimum Capital Requirements imposed by the OCC;

statements regarding our business plans, prospects, growth and

operating strategies;

statements regarding the quality of our loan and investment portfolios;

and estimates of our risks and future costs

and benefits.

Kentucky First Federal Bancorp’s actual results, performance or achievements may materially differ from those expressed

or implied in the forward-looking statements.

Risks and uncertainties that could cause or contribute to such material differences include,

but are not limited to, general economic conditions;

prices for real estate in the Company’s market areas;

the interest rate environment

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

our ability to successfully

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

loan portfolio towards higher-earning loans;

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

our ability to receive any required

regulatory approval or non-objection to pay dividends to shareholders;

our ability to pay dividends from First Federal Savings and Loan

Association of Hazard and First Federal Savings Bank of Kentucky to the Company in order for the Company to pay dividends to shareholders;

the ability of First Federal MHC to receive approval of its members to waive the payment of any Company dividends to First Federal MHC

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changes in the level of inflation;

changes in the demand for loans, deposits

and other financial services that we provide;

the impacts of tariffs, sanctions and other

trade policies of the United States and its global trading counterparts;

changes in the demand for loans, deposits and other financial

services that we provide;

the possibility that future credit losses may be higher than currently expected;

pressures among financial services companies;

competitive pressures among

financial services companies;

the ability to attract, develop and retain qualified employees;

our ability to maintain

the security of our data processing and information technology systems;

the outcome of pending or threatened litigation, or of matters

before regulatory agencies;

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

and the other matters mentioned in Item 1A of the Company’s Annual Report on Form 10-K.

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.

our ability to maintain the security of

our data processing and information technology systems;

the outcome of pending or threatened litigation, or of matters before regulatory

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

matters mentioned in Item 1A of the Company’s Annual Report on Form 10-K.

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.

References in this Annual Report on Form 10-K

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Main Street, Frankfort, Kentucky 40602 and its main telephone number is (502) 223-1638.

First Federal of Hazard and First Federal of Kentucky

operate in four market areas.

First Federal of Hazard and First Federal of

Kentucky operate in four market areas.

First Federal of Hazard’s market area consists

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First Federal of Kentucky’s primary lending

area includes the Kentucky counties of Franklin, Boyle, Garrard and surrounding counties, with the majority of lending originated on properties

located in Franklin and Boyle Counties.

area includes the Kentucky counties of Franklin, Boyle, Garrard and surrounding counties, with the majority of lending originated on

properties located in Franklin and Boyle Counties.

Franklin County has a population of approximately

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Residential Mortgage Loans .

Historically, our primary lending activity is the origination of mortgage

loans to enable borrowers to purchase or refinance existing homes in the Banks’ respective market areas.

At June 30, 2024, residential

mortgage loans including construction loans and multi-family totaled $285.8 million, or 85.3%, of our total loan portfolio.

mix of adjustable-rate and fixed-rate mortgage loans with terms up to 30 years.

Adjustable-rate loans have an initial fixed term of one,

three, five or seven years.

After the initial term, the rate adjustments on most of our adjustable-rate loans are indexed to the MIRS

Transition Index, formerly known as PMMS+ Index.

The interest rates on these mortgages are adjusted once a year, with limitations on adjustments

generally of one percentage point per adjustment period, and a lifetime cap of five percentage points.

We determine loan fees charged,

interest rates and other provisions of mortgage loans on the basis of our own pricing criteria and competitive market conditions.

loans originated by the Banks have an additional advance clause which allows the borrower to obtain additional funds at prevailing interest

rates, subject to managements’ approval.

At June 30, 2024, the Company’s loan portfolio included $252.6

million in adjustable-rate residential mortgage loans, or 88.4% of the Company’s residential mortgage loan portfolio.

Historically,

our primary lending activity is the origination of mortgage loans to enable borrowers to purchase or refinance existing homes in the Banks’

respective market areas.

At June 30, 2025, residential mortgage loans including construction loans and multi-family totaled $276.2 million,

or 83.6%, of our total loan portfolio.

We offer a mix of adjustable rate and fixed-rate mortgages with terms up to 30 years.

loans with very short terms, fixed-rate mortgages are originated to be sold on the secondary market.

After the initial term, the rate

adjustments on most of our adjustable-rate loans are indexed to the MIRS Transition Index, formerly known as PMMS+ Index.

Loans originated

from early 2024 are indexed to the 1-Year Constant Maturity Treasury index, plus a margin.

The interest rates on these mortgages are adjusted

For older loans, the limitation on annual adjustments are mostly at 1.00% while loans originated since 2024 have an annual

limitation of 2.00% per adjustment period.

The annual lifetime cap on older loans is 5.00% above the original rate and 6.00% on newer

loans, with limitations on adjustments generally of one percentage point per adjustment period, and a lifetime cap of five percentage

We determine loan fees charged, interest rates and other provisions of mortgage loans on the basis of our own pricing criteria

and competitive market conditions.

Some loans originated by the Banks have an additional advance clause which allows the borrower to obtain

additional funds at prevailing interest rates, subject to managements’ approval.

At June 30, 2025, the Company’s loan portfolio

included $258.9 million in adjustable-rate residential mortgage loans, or 93.8% of the Company’s residential mortgage loan portfolio.

The retention of adjustable-rate loans in the

portfolio helps reduce our exposure to increases in prevailing market interest rates.

However, there are unquantifiable credit risks resulting

from potential increases in costs to borrowers in the event of upward repricing of adjustable-rate loans.

It is possible that during periods

of rising interest rates, the risk of default on adjustable-rate loans may increase due to increases in interest costs to borrowers.

although adjustable-rate loans allow us to increase the sensitivity of our interest-earning assets to changes in interest rates, the extent

of this interest sensitivity is limited by the initial fixed-rate period before the first adjustment and the periodic and lifetime interest

rate adjustment limitations.

Accordingly, there can be no assurance that yields on our adjustable-rate loans will fully adjust to compensate

for increases in our cost of funds.

Finally, adjustable-rate loans may decrease at a pace faster than decreases in our cost of funds,

resulting in reduced net income.

In recent months, the Company has attempted to shift direction from adjustable-rate loans secured by

owner-occupied homes.

The Company is well-positioned to originate fixed-rate loans secured by owner-occupied homes for sale into the secondary

Doing so will free capital and liquidity for potential investment in higher-yielding types of assets.

However, there are unquantifiable credit risks

resulting from potential increases in costs to borrowers in the event of upward repricing of adjustable-rate loans.

It is possible that

during periods of rising interest rates, the risk of default on adjustable-rate loans may increase due to increases in interest costs

to borrowers.

Further, although adjustable-rate loans allow us to increase the sensitivity of our interest-earning assets to changes

in interest rates, the extent of this interest sensitivity is limited by the initial fixed-rate period before the first adjustment and

the periodic and lifetime interest rate adjustment limitations.

Accordingly, there can be no assurance that yields on our adjustable-rate

loans will fully adjust to compensate for increases in our cost of funds.

Finally, adjustable-rate loans may decrease at a pace faster

than decreases in our cost of funds, resulting in reduced net income.

In recent months, the Company has attempted to shift direction

from adjustable-rate loans secured by owner-occupied homes.

The Company is well-positioned to originate fixed-rate loans secured by owner-occupied

homes for sale into the secondary market.

Doing so will free capital and liquidity for potential investment in higher-yielding types

While one- to four-family residential real estate

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by a state licensed or certified appraiser.

For owner-occupied properties, the borrower may be able to borrow up to 95% of the value if

they secure and pay for private mortgage insurance or they may be able to obtain a second mortgage (at a higher interest rate) in which

they borrow up to 90% of the value.

For owner-occupied properties, the borrower may be able to borrow up to 95% of the value

if they secure and pay for private mortgage insurance or they may be able to obtain a second mortgage (at a higher interest rate) in

which they borrow up to 90% of the value.

The Boards of Directors of the Banks may approve a loan above the 80% loan-to-value ratio without

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Our construction loans generally provide for the payment of interest only during the construction phase, which is usually

less than one year.

9 to 15 months.

Loans generally can be made with a maximum loan to value ratio of 80% of the appraised value.

Funds are disbursed

as progress is made toward completion of the construction based on site inspections by qualified bank staff.

Funds are disbursed as

progress is made toward completion of the construction based on site inspections by qualified bank staff or professional appraisers.

Construction financing is generally considered

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Consumer Lending.

Our consumer loans include home equity lines of credit, loans secured

by savings deposits, automobile loans and unsecured or personal loans.

At June 30, 2024, our consumer loan balance totaled $12.2 million,

or 3.6%, of our total loan portfolio.

Of the consumer loan balance at June 30, 2024, $10.6 million were home equity loans, $819,000 were

loans secured by savings deposits and $117,000 were automobile or unsecured loans.

Our home equity loans are made on the security of residential

real estate and have terms of up to 15 years.

Most of our home equity loans are second mortgages subordinate only to first mortgages also

held by the bank and do not exceed 80% of the estimated value of the property, less the outstanding principal of the first mortgage, although

we do offer home equity loans up to 90% of the value less the balance of the first mortgage at a premium rate to qualified borrowers.

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

30, 2025, our consumer loan balance totaled $16.3 million, or 5.0%, of our total loan portfolio.

Of the consumer loan balance at June

30, 2025, $14.6 million were home equity loans, $813,000 were loans secured by savings deposits and $885,000 were automobile or unsecured

Our home equity loans are made on the security of residential real estate and have terms of up to 15 years.

Most of our home equity

loans are second mortgages subordinate only to first mortgages also held by the bank and do not exceed 80% of the estimated value of

the property, less the outstanding principal of the first mortgage, although we do offer home equity loans up to 90% of the value less

the balance of the first mortgage at a premium rate to qualified borrowers.

These loans are not secured by private mortgage insurance.

Our home equity loans require the monthly payment of 1.0% to 2.0% of the unpaid

principal until maturity, when the remaining unpaid principal, if any, is due.

Home equity loans bear variable rates of interest indexed

to the prime rate for loans with 80% or less loan-to-value ratio, and 2% above the prime rate for loans with a loan-to-value ratio in

excess of 80%.

Interest rates on these loans can be adjusted monthly.

At June 30, 2024, the total outstanding home equity loans amounted

to 3.2% of the Company’s total loan portfolio.

Our home equity loans require the monthly payment of 1.0% to 2.0% of the unpaid principal until maturity, when the remaining unpaid principal,

if any, is due.

Home equity loans bear variable rates of interest indexed to the prime rate for loans with 80% or less loan-to-value

ratio, and 2% above the prime rate for loans with a loan-to-value ratio in excess of 80%.

Interest rates on these loans can be adjusted

At June 30, 2025, the total outstanding home equity loans amounted to 4.5% of the Company’s total loan portfolio.

Loans secured by savings are originated for up

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Loan Approval Procedures and Authority .

Our lending activities follow written, nondiscriminatory, underwriting

standards and loan origination procedures established by each Bank’s Board of Directors and management.

Each Bank’s loan staff

can approve or deny loans totaling $500,000 or less.

First Federal of Hazard’s loan committee consists of its two senior officers,

while First Federal of Kentucky’s loan approval process allows for various combinations of experienced bank officers to approve

or deny loans.

Loans that do not conform to this criteria must be submitted to the Board of Directors or Loan Committee composed of at

least three directors, for approval.

Our lending activities follow written, nondiscriminatory, underwriting standards and loan origination procedures established by each

Bank’s Board of Directors and management.

Each Bank’s loan staff can approve or deny loans totaling $500,000 or less.

Federal of Hazard’s loan committee consists of its two senior officers, while First Federal of Kentucky’s loan approval process

allows for various combinations of experienced bank officers to approve or deny loans.

Loans that do not conform to this criteria must

be submitted to the Board of Directors or Loan Committee composed of at least three directors, for approval.

It is the Company’s practice to record

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change the rates and terms of the loan at that time.

If conditions exist whereby either Bank experiences a significant increase

in loans outstanding or commits to originate loans that are riskier than a typical one- to four-family mortgage, management and the boards

will consider reflecting the anticipated loss exposure in a separate liability.

Upon implementation of ASU 2016-13 or the current expected

credit loss (CECL) model at July 1, 2023, the Banks began to utilize a separate liability to reflect anticipated credit losses on loan

If conditions exist whereby either Bank experiences

a significant increase in loans outstanding or commits to originate loans that are riskier than a typical one- to four-family mortgage,

management and the boards will consider reflecting the anticipated loss exposure in a separate liability.

Upon implementation of ASU

2016-13 or the current expected credit loss (CECL) model at July 1, 2023, the Banks began to utilize a separate liability to reflect

anticipated credit losses on loan commitments.

At June 30, 2025, this amount totaled $59,000.

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Frankfort First Bancorp has one subsidiary, First Federal of Kentucky.

As federally chartered savings institutions,

the Banks are permitted to invest an amount equal to 2% of assets in subsidiaries, with an additional investment of 1% of assets where

such investment serves primarily community, inner-city and community-development purposes.

Under such limitations, as of June 30, 2023,

First Federal of Hazard and First Federal of Kentucky were authorized to invest up to $1.8 million and $5.7 million, respectively, in

the stock of or loans to subsidiaries, including the additional 1% investment for community, inner-city and community development purposes.

As federally chartered savings institutions, the Banks are permitted

to invest an amount equal to 2% of assets in subsidiaries, with an additional investment of 1% of assets where such investment serves

primarily community, inner-city and community-development purposes.

Under such limitations, as of June 30, 2025, First Federal of Hazard

and First Federal of Kentucky were authorized to invest up to $1.7 million and $5.0 million, respectively, in the stock of or loans to

subsidiaries, including the additional 1% investment for community, inner-city and community development purposes.

We face significant competition for the attraction

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of 7.2% in Perry County.

Its largest competitors, Hazard Bancorp (Peoples Bank & Trust Company of Hazard,) 1 st Trust Bank,

Inc., and Community Trust Bancorp, Inc.

(Community Trust Bank, Inc.) had Perry County deposit market shares of 42.7%, 23.6% and 28.7%,

respectively.

First Federal of Hazard’s competition for loans comes primarily from financial institutions in its market area and,

to a lesser extent, from other financial services providers, such as mortgage companies and mortgage brokers.

Competition for loans also

comes from the increasing number of non-depository financial services companies entering the mortgage market, such as insurance companies,

securities companies and specialty finance companies.

First Federal of Kentucky’s principal competitors for deposits

in its market area are other banking institutions, such as commercial banks and credit unions, as well as mutual funds and other investments.

First Federal of Kentucky principally competes for deposits by offering a variety of deposit accounts, convenient business hours and branch

locations, customer service and a well-trained staff.

According to the FDIC, at June 30, 2024, First Federal of Kentucky had deposit market

share of 7.0%, 7.1% and 13.6% for the Kentucky counties of Franklin, Boyle and Garrard.

Its largest competitors for depositors are the

Boyle Bancorp, Inc.

Its largest competitors, Hazard Bancorp (Peoples Bank & Trust Company of Hazard,), Community Trust Bancorp,

(Community Trust Bank), and 1 st Trust Bank, Inc., had Perry County deposit market shares of 37.1%, 29.3% and 22.1%, respectively.

First Federal of Hazard’s competition for loans comes primarily from financial institutions in its market area and, to a lesser

extent, from other financial services providers, such as mortgage companies and mortgage brokers.

Competition for loans also comes from

the increasing number of non-depository financial services companies entering the mortgage market, such as insurance companies, securities

companies and specialty finance companies.

First Federal of Kentucky’s principal competitors

for deposits in its market area are other banking institutions, such as commercial banks and credit unions, as well as mutual funds and

other investments.

First Federal of Kentucky principally competes for deposits by offering a variety of deposit accounts, convenient

business hours and branch locations, customer service and a well-trained staff.

According to the FDIC, at June 30, 2025, First Federal

of Kentucky had deposit market share of 8.2%, 8.2% and 17.5% for the Kentucky counties of Franklin, Boyle and Garrard.

Its largest competitors

for depositors are the Boyle Bancorp, Inc.

(The Farmers National Bank of Danville) at 27.4%, Wesbanco Bank, Inc.

(Wesbanco) at 15.5% and Community Trust Bancorp,

Inc., (Community Trust Bank) at 8.3% market share in the three-county area.

Boyle Bancorp, Wesbanco, Inc., and Community Trust Bancorp,

had assets at June 30, 2024, of $940.3 million, $18.1 billion, and $5.8 billion, respectively.

The Bank also faces considerable competition

from credit unions including the Commonwealth Credit Union ($2.3 billion in assets) and the Expree Credit Union ($102.1 million in assets).

First Federal of Kentucky competes for loans with other depository institutions, as well as specialty mortgage lenders and brokers and

consumer finance companies.

First Federal of Kentucky principally competes for loans on the basis of interest rates and the loan fees

it charges, the types of loans it originates and the convenience and service it provides to borrowers.

In addition, First Federal of Kentucky

believes it has developed strong relationships with the businesses, real estate agents, builders and general public in its market area.

(Wesbanco) at 14.2%

and Community Trust Bancorp, Inc., Traditional Bank, Inc, at 7.8%, (Community Trust Bank) at 7.7% market share in the three-county area.

Boyle Bancorp, Wesbanco, Inc., Traditional Bank, Inc.

and Community Trust Bancorp, Inc.

had assets at June 30, 2025, of $1.0 billion,

$27.5 billion, $2.4 billion, and $6.4 billion, respectively.

The Bank also faces considerable competition from credit unions including

the Commonwealth Credit Union ($2.6 billion in assets) and the Expree Credit Union ($109.6 million in assets).

First Federal of Kentucky

competes for loans with other depository institutions, as well as specialty mortgage lenders and brokers and consumer finance companies.

First Federal of Kentucky principally competes for loans on the basis of interest rates and the loan fees it charges, the types of loans

it originates and the convenience and service it provides to borrowers.

In addition, First Federal of Kentucky believes it has developed

strong relationships with the businesses, real estate agents, builders and general public in its market area.

At June 30, 2025, we had 54 full-time employees

and three part-time employees, none of whom was represented by a collective bargaining unit.

and two part-time employees, none of whom was represented by a collective bargaining unit.

We believe our relationship with our employees

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Agreements with Regulators .

13, 2024, First Federal of Kentucky entered into a formal written agreement (the “Agreement”) with the OCC, which became effective

as of the same date.

The Agreement will remain effective until it is amended by First Federal of Kentucky and the OCC, or the OCC modifies,

waives or terminates the Agreement.

August 13, 2024, First Federal of Kentucky entered into a formal written agreement (the “Agreement”) with the OCC, which

became effective as of the same date.

The Agreement will remain effective until it is amended by First Federal of Kentucky and the OCC,

or the OCC modifies, waives or terminates the Agreement.

As a result of the Agreement, pursuant to 12 C.F.R.

§ 5.51(c)(7)(ii), First Federal of Kentucky

is in “troubled condition,” and is not an “eligible savings association” for purposes of 12 C.F.R.

§ 5.51(c)(7)(ii), First

Federal of Kentucky is in “troubled condition,” and is not an “eligible savings association” for purposes of

§ 5.3, unless otherwise informed in writing by the OCC.

In addition to the Agreement, the OCC has also imposed individual minimum capital requirements

(“IMCRs”) on First Federal of Kentucky.

The IMCRs require First Federal of Kentucky to maintain a common equity tier 1 capital

ratio of at least 9.0%, a tier 1 capital ratio of at least 11.0%, a total capital ratio of at least 12.0%, and a leverage ratio of at

In addition to the Agreement, the OCC has also imposed individual

minimum capital requirements (“IMCRs”) on First Federal of Kentucky.

The IMCRs require First Federal of Kentucky to maintain

a common equity tier 1 capital ratio of at least 9.0%, a tier 1 capital ratio of at least 11.0%, a total capital ratio of at least 12.0%,

and a leverage ratio of at least 9.0%.

Under the terms of the Agreement, First Federal

of Kentucky is required to take the following actions within the time frames specified in the Agreement:

a compliance committee composed of at least three of First Federal of Kentucky’s directors to monitor and oversee First Federal

of Kentucky’s compliance with the provisions of the Agreement and submit quarterly evaluation reports to First Federal of Kentucky’s

board of directors regarding actions First Federal of Kentucky has taken to comply with the Agreement and the results and status of such

to the OCC, adopt and implement an acceptable revised written three-year strategic plan establishing objectives for First Federal of

Kentucky’s overall risk profile, balance sheet mix, funding structure, interest rate risk, liquidity and capital adequacy, earnings

performance, and asset and core deposit growth, together with strategies to achieve those objectives;

to the OCC, adopt and implement an acceptable revised written succession plan for First Federal of Kentucky that is designed to promote

adequate staffing and continuity of capable management;

a revised written liquidity risk management program for First Federal of Kentucky that provides for the identification, measurement,

monitoring, and control of First Federal of Kentucky’s liquidity risk exposure, and that emphasizes the importance of cash flow

projections, diversified funding sources, a cushion of highly liquid assets, robust liquidity stress testing scenario analyses, and a

formal, well-developed contingency funding plan as primary tools for measuring and managing liquidity risk;

a revised written interest rate risk program that includes risk management systems to identify, measure, monitor, and control interest

The Agreement requires First Federal of Kentucky’s Board to (i)

ensure that First Federal of Kentucky timely adopts and implements all corrective actions required by the Agreement and (ii) verify that

First Federal of Kentucky adheres to the corrective actions and that they are effective in addressing First Federal of Kentucky’s

deficiencies that resulted in the Agreement.

First Federal of Kentucky’s Board and management are committed to fully addressing

the provisions of the Agreement within the required time frames.

As of the date of this filing, First Federal of Kentucky’s Board

and management believe that First Federal of Kentucky has made progress toward addressing the deficiencies that resulted in the Agreement

and intends to satisfy the Agreement’s requirements as expeditiously as possible.

For additional information, see Item 1A, “Risk

Factors - We are required to comply with the terms of a formal written agreement and IMCRs issued by the OCC, and lack of compliance

could result in monetary penalties and /or additional regulatory actions ” and Note K - Stockholders’ Equity and Regulatory

Capital of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

create a compliance committee

composed of at least three of First Federal of Kentucky’s directors to monitor and oversee First Federal of Kentucky’s

compliance with the provisions of the Agreement and submit quarterly evaluation reports to First Federal of Kentucky’s board

of directors regarding actions First Federal of Kentucky has taken to comply with the Agreement and the results and status of such

submit to the OCC, adopt

and implement an acceptable revised written three-year strategic plan establishing objectives for First Federal of Kentucky’s

overall risk profile, balance sheet mix, funding structure, interest rate risk, liquidity and capital adequacy, earnings performance,

and asset and core deposit growth, together with strategies to achieve those objectives;

submit to the OCC, adopt

and implement an acceptable revised written succession plan for First Federal of Kentucky that is designed to promote adequate staffing

and continuity of capable management;

adopt a revised written

liquidity risk management program for First Federal of Kentucky that provides for the identification, measurement, monitoring, and

control of First Federal of Kentucky’s liquidity risk exposure, and that emphasizes the importance of cash flow projections,

diversified funding sources, a cushion of highly liquid assets, robust liquidity stress testing scenario analyses, and a formal,

well-developed contingency funding plan as primary tools for measuring and managing liquidity risk;

adopt a revised written

interest rate risk program that includes risk management systems to identify, measure, monitor, and control interest rate risk.

The Agreement requires First Federal of Kentucky’s

Board to (i) ensure that First Federal of Kentucky timely adopts and implements all corrective actions required by the Agreement and

(ii) verify that First Federal of Kentucky adheres to the corrective actions and that they are effective in addressing First Federal

of Kentucky’s deficiencies that resulted in the Agreement.

First Federal of Kentucky’s Board and management are committed

to fully addressing the provisions of the Agreement within the required time frames.

As of the date of this filing, First Federal of

Kentucky’s Board and management believe that First Federal of Kentucky has made progress toward addressing the deficiencies that

resulted in the Agreement and intends to satisfy the Agreement’s requirements as expeditiously as possible.

For additional information,

see Item 1A, “Risk Factors - We are required to comply with the terms of a formal written agreement and IMCRs issued by the

OCC, and lack of compliance could result in monetary penalties and/or additional regulatory actions ” and Note K - Stockholders’

Equity and Regulatory Capital of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Regulation of Federal Savings Associations

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in notes to financial statements.

In August 2024, First Federal of Kentucky entered into an Agreement

with the OCC.

The OCC has also imposed individual minimum capital requirements (“IMCRs”) which require First Federal of Kentucky

to achieve and maintain capital levels in excess of the minimum capital standards required under OCC’s Prompt Corrective Action

Under the IMCRs, First Federal of Kentucky must achieve and maintain a common equity tier 1 capital ratio of at least 9.0%,

a tier 1 capital ratio of at least 11.0%, a total capital ratio of at least 12.0%, and a leverage ratio of at least 9.0%.

2024, First Federal of Kentucky exceeded the requirements of the IMCRs as its common equity tier 1 capital ratio was 16.25%, its tier

1 capital ratio was 16.25%, its total capital ratio was 16.25%, and its leverage ratio was 10.24%.

For additional information, see Item

1A, “Risk Factors - We are required to comply with the terms of a formal written agreement and IMCRs issued by the OCC, and lack

of compliance could result in monetary penalties and /or additional regulatory actions ” and Note K - Stockholders’ Equity

and Regulatory Capital of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

In August 2024, First Federal of Kentucky entered

into an Agreement with the OCC.

The OCC has also imposed individual minimum capital requirements (“IMCRs”) which require

First Federal of Kentucky to achieve and maintain capital levels in excess of the minimum capital standards required under OCC’s

Prompt Corrective Action framework.

Under the IMCRs, First Federal of Kentucky must achieve and maintain a common equity tier 1 capital

ratio of at least 9.0%, a tier 1 capital ratio of at least 11.0%, a total capital ratio of at least 12.0%, and a leverage ratio of at

At June 30, 2025, First Federal of Kentucky exceeded the requirements of the IMCRs as its common equity tier 1 capital ratio

was 16.83%, its tier 1 capital ratio was 16.83%, its total capital ratio was 16.83%, and its leverage ratio was 9.97%.

For additional

information, see Item 1A, “Risk Factors - We are required to comply with the terms of a formal written agreement and IMCRs issued

by the OCC, and lack of compliance could result in monetary penalties and/or additional regulatory actions ” and Note K - Stockholders’

Equity and Regulatory Capital of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Prompt Corrective Regulatory Action .

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As a result of the Agreement with the OCC, pursuant to 12 C.F.R.

5.51(c)(7)(ii), First Federal of Kentucky is in “troubled condition,” and is not an “eligible savings association”

for purposes of 12 C.F.R.

§ 5.51(c)(7)(ii), First Federal

of Kentucky is in “troubled condition,” and is not an “eligible savings association” for purposes of 12 C.F.R.

§ 5.3, unless otherwise informed in writing by the OCC.

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During the current year,

our assessments totaled $81,000 and are expected to increase in the fiscal year ended June 30, 2025.

our assessments totaled $97,000.

Insurance of Deposit Accounts.

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Federal Home Loan Bank System.

First Federal of Hazard and First Federal of Kentucky are members of the Federal Home Loan Bank System, which consists of 12 regional

Federal Home Loan Banks.

Federal of Hazard and First Federal of Kentucky are members of the Federal Home Loan Bank System, which consists of 11 regional Federal

Home Loan Banks.

The Federal Home Loan Bank provides a central credit facility primarily for member institutions.

of the Federal Home Loan Bank of Cincinnati, First Federal of Hazard and First Federal of Kentucky are each required to acquire and hold

shares of capital stock in that Federal Home Loan Bank.

First Federal of Hazard and First Federal of Kentucky were in compliance with

this requirement with investments in Federal Home Loan Bank of Cincinnati stock at June 30, 2024, of $960,000 million and $3.3 million,

respectively.

As members of the Federal

Home Loan Bank of Cincinnati, First Federal of Hazard and First Federal of Kentucky are each required to acquire and hold shares of capital

stock in that Federal Home Loan Bank.

First Federal of Hazard and First Federal of Kentucky were in compliance with this requirement with

investments in Federal Home Loan Bank of Cincinnati stock at June 30, 2025, of $866,000 and $3.1 million, respectively.

Reserve Requirements.

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subject to various regulatory sanctions, including financial penalties.

Laundering and OFAC.

Under federal law, financial institutions must maintain anti-money laundering programs that include

established internal policies, procedures, and controls.

Financial institutions are also prohibited from entering into specified financial

transactions and account relationships and must meet enhanced standards for due diligence and customer identification.

Financial institutions

must take reasonable steps to conduct enhanced scrutiny of account relationships to guard against money laundering and to report any

suspicious transactions.

Law enforcement authorities have been granted increased access to financial information maintained by financial

institutions.

Bank regulators routinely examine institutions for compliance with these obligations and they consider an institution’s

compliance in connection with the regulatory review of applications, including applications for banking mergers and acquisitions.

Department of the Treasury’s Office of Foreign Assets Control, or “OFAC,” is responsible for helping to insure

entities do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and Acts of

OFAC publishes lists of persons, organizations, and countries suspected of aiding, harboring or engaging in terrorist acts,

known as Specially Designated Nationals and Blocked Persons.

If the Bank finds a name on any transaction, account or wire transfer that

is on an OFAC list, the Bank must freeze or block such account or transaction, file a suspicious activity report and notify the appropriate

Treasury Department’s Financial Crises Enforcement Network rules include customer due diligence requirements

for banks, including a requirement to identify and verify the identity of beneficial owners of customers that are legal entities, subject

to certain exclusions and exemptions.

Against Tying Arrangements .

Federal savings associations are prohibited, subject to some exceptions, from extending credit

to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that

the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

Anti-Money Laundering

Under federal law, financial institutions must maintain anti-money laundering programs that include established

internal policies, procedures, and controls.

Financial institutions are also prohibited from entering into specified financial transactions

and account relationships and must meet enhanced standards for due diligence and customer identification.

Financial institutions must

take reasonable steps to conduct enhanced scrutiny of account relationships to guard against money laundering and to report any suspicious

transactions.

Law enforcement authorities have been granted increased access to financial information maintained by financial institutions.

Bank regulators routinely examine institutions for compliance with these obligations and they consider an institution’s compliance

in connection with the regulatory review of applications, including applications for banking mergers and acquisitions.

of the Treasury’s Office of Foreign Assets Control, or “OFAC,” is responsible for helping to insure that U.S.

do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and Acts of Congress.

OFAC publishes

lists of persons, organizations, and countries suspected of aiding, harboring or engaging in terrorist acts, known as Specially Designated

Nationals and Blocked Persons.

If the Bank finds a name on any transaction, account or wire transfer that is on an OFAC list, the Bank

must freeze or block such account or transaction, file a suspicious activity report and notify the appropriate authorities.

Treasury Department’s Financial Crises Enforcement Network rules include customer due diligence requirements for banks, including

a requirement to identify and verify the identity of beneficial owners of customers that are legal entities, subject to certain exclusions

and exemptions.

Prohibitions Against

Tying Arrangements .

Federal savings associations are prohibited, subject to some exceptions, from extending credit to or

offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the

customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

Other Regulations.

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laws applicable to credit transactions, such as the:

● Truth-In-Lending

Act, governing disclosures of credit terms to consumer borrowers;

Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;

Credit Reporting Act, governing the use and provision of information to credit reporting agencies;

Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;

in Savings Act, prescribing disclosure and advertising requirements with respect to deposit accounts;

and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.

Truth-In-Lending Act, governing

disclosures of credit terms to consumer borrowers;

Equal Credit Opportunity

Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;

Fair Credit Reporting Act,

governing the use and provision of information to credit reporting agencies;

Fair Debt Collection Act,

governing the manner in which consumer debts may be collected by collection agencies;

Truth in Savings Act, prescribing

disclosure and advertising requirements with respect to deposit accounts;

Rules and regulations of

the various federal agencies charged with the responsibility of implementing such federal laws.

The operations of First Federal of Hazard and

First Federal of Kentucky also are subject to the:

to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for

complying with administrative subpoenas of financial records;

Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts

and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services;

Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital

check images and copies made from that image, the same legal standing as the original paper check;

USA PATRIOT Act, which requires savings associations to, among other things, establish broadened anti-money laundering compliance programs,

and due diligence policies and controls to ensure the detection and reporting of money laundering.

Such required compliance programs

are intended to supplement existing compliance requirements that also apply to financial institutions under the Bank Secrecy Act and

the Office of Foreign Assets Control regulations.

Right to Financial Privacy

Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with

administrative subpoenas of financial records;

Electronic Funds Transfer

Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’

rights and liabilities arising from the use of automated teller machines and other electronic banking services;

Check Clearing for the

21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images

and copies made from that image, the same legal standing as the original paper check;

The USA PATRIOT Act, which

requires savings associations to, among other things, establish broadened anti-money laundering compliance programs, and due diligence

policies and controls to ensure the detection and reporting of money laundering.

Such required compliance programs are intended to

supplement existing compliance requirements that also apply to financial institutions under the Bank Secrecy Act and the Office of

Foreign Assets Control regulations.

Holding Company Regulation

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Waivers of Dividends by First Federal MHC .

Federal Reserve Board regulations require First Federal MHC to notify

the Federal Reserve Board if it proposes to waive the right to receive dividends declared by Kentucky First.

The Dodd-Frank Act specified

that dividends may be waived if certain conditions are met, including that the Federal Reserve Board does not object after being given

written notice of the dividend and proposed waiver.

The Federal Reserve Board may not object to such a waiver (i) if the mutual holding

company involved has, prior to December 1, 2009, reorganized into a mutual holding company structure, engaged in a minority stock offering

and waived dividends it had a right to receive;

(ii) the board of directors of the mutual holding company expressly determines that a

waiver of the dividend is consistent with its fiduciary duties to members and (iii) the waiver would not be detrimental to the safe and

sound operation of the savings association subsidiaries of the holding company.

Beginning with the dividend paid in September 2012, First

Federal MHC has annually sought member approval to obtain Federal Reserve Board approval to waive the MHC’s dividends from the Company.

In January 2024, the board announced that due to low income at the banks, the dividend to shareholders would be suspended indefinitely,

and First Federal MHC suspended efforts to seek member approval to obtain the dividend waiver in the coming year.

If at such time as Kentucky

First has sufficient income and liquidity to pay future dividends, it is expected that that First Federal MHC will once again solicit

member approval of the dividend waiver.

For more information, see Item 1A, “Risk Factors – Our ability to pay dividends

is subject to the ability of First Federal of Hazard and First Federal of Kentucky to make capital distributions to Kentucky First and

the waiver of dividends by First Federal MHC.”

Federal Reserve Board regulations require First Federal MHC to notify the Federal Reserve Board if it proposes to waive the right

to receive dividends declared by Kentucky First.

The Dodd-Frank Act specified that dividends may be waived if certain conditions are

met, including that the Federal Reserve Board does not object after being given written notice of the dividend and proposed waiver.

Federal Reserve Board may not object to such a waiver (i) if the mutual holding company involved has, prior to December 1, 2009, reorganized

into a mutual holding company structure, engaged in a minority stock offering and waived dividends it had a right to receive;

board of directors of the mutual holding company expressly determines that a waiver of the dividend is consistent with its fiduciary

duties to members and (iii) the waiver would not be detrimental to the safe and sound operation of the savings association subsidiaries

of the holding company.

Beginning with the dividend paid in September 2012, First Federal MHC has annually sought member approval to

obtain Federal Reserve Board approval to waive the MHC’s dividends from the Company.

In January 2024, the Company announced that

dividends to shareholders would be suspended indefinitely, and that First Federal MHC had suspended efforts to seek member approval to

obtain the dividend waiver in the coming year.

If at such time as Kentucky First has sufficient income and liquidity to pay future dividends,

it is expected that that First Federal MHC will, subject to any required regulatory approvals, once again solicit member approval of

the dividend waiver.

For more information, see Item 1A, “Risk Factors – Our ability to pay dividends is subject to the

ability of First Federal of Hazard and First Federal of Kentucky to make capital distributions to Kentucky First and the waiver of dividends

by First Federal MHC.”

Conversion of First Federal MHC to Stock

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Federal and State Taxation

We report our income on

a fiscal year basis using the cash method of accounting.

See Note H-Federal Income Taxes in the Notes to Consolidated Financial Statements

for a description of the change in accounting method available through the Tax Cuts and Jobs Act.

We report our income on a fiscal year basis using the cash method of

See Note I-Federal Income Taxes in the Notes to Consolidated Financial Statements for a description of the change in accounting

method available through the Tax Cuts and Jobs Act.

Federal Taxation .

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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-K

Item 1. Business