What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-05-15 · 225 added, 292 removed, 154 unchanged (77% of the section changed)

2 unchanged sentences

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;

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;

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;

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 the regulatory approvals necessary for the Company’s and First Federal Savings Bank

of Kentucky’s management transition and the success of our restructured management team following the receipt of such regulatory

our ability to receive any required regulatory approval or non-objection to pay dividends to shareholders;

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;

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;

competitive conditions in the financial services industry;

changes in the level

of inflation;

the impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts;

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;

changes in the level of inflation;

the impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts including the prolonged

government shutdown;

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;

competitive pressures among financial services companies;

the ability to attract, develop and retain qualified

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 for the year

ended June 30, 2024 and in the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2024 and for the period

ended December 31, 2024 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

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 for the year ended June 30, 2025 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.

The Company was incorporated as a mid-tier holding

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Kentucky First Federal

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Management Transition

On October 2, 2025, the

Boards of Kentucky First Federal Bancorp and First Federal Savings Bank of Kentucky, an indirect wholly-owned bank subsidiary of the Company

(“First Federal of Kentucky”), appointed R.

Clay Hulette as Chief Executive Officer of the Company and as President and Chief

Executive Officer of First Federal of Kentucky, respectively.

Such appointments remain subject to regulatory approval.

Pending regulatory

approval, Mr.

Hulette will serve as interim President and Chief Executive Officer of First Federal of Kentucky.

In connection with this

transition, Don D.

Jennings has been appointed Director of Operations of First Federal of Kentucky and will continue to serve as President

of the Company and Chairman of the Board of Directors of First Federal of Kentucky.

Regulatory Developments

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

Kentucky First Federal

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

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 Exhibit 10.1 to the Company Current Report on Form 8-K filed with the Securities and Exchange Commission on August 15,

2024 and 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 the Company’s Annual Report

on Form 10-K filed with the Securities and Exchange Commission on October 3, 2024.

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 Exhibit 10.1

to the Company Current Report on Form 8-K filed with the Securities and Exchange Commission on August 15, 2024 and 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 the Company’s Annual Report on Form 10-K filed with

the Securities and Exchange Commission on September 30, 2025.

Asset/Liability Management

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

General market participants believe that the

FOMC will now continue interest rate decreases.

Our March 31, 2025 EVE is anticipated to increase by approximately 5.9% and 3.2%

under sudden and sustained decrease in prevailing market interest rates of 100 basis points and 200 basis points, respectively.

company continues to strive for acceptable EVE in both increasing and decreasing interest rate environments.

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.

These computations should not be relied upon as indicative of actual

Further, the computations do not contemplate any actions the Banks may undertake in response to changes in interest rates.

General market participants believe that the FOMC will now continue

interest rate decreases.

Our June 30, 2025 EVE is anticipated to increase by approximately 4.1% and 0.9% under sudden and sustained decrease

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

The Company continues to strive for acceptable

EVE in both increasing and decreasing interest rate environments.

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.

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 EVE.

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.

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.

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

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 nine-month periods ended March 31, 2025 and 2024, along with the related calculations of tax-equivalent net interest income,

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

Nine Months Ended March 31,

(Dollars in thousands)

Interest-earning assets:

Mortgage-backed securities

Other interest-earning assets

Total interest-earning assets

Allowance for credit losses

Non-interest-earning assets

Interest-bearing liabilities:

Demand deposits

Certificates of deposit

Total deposits

Total interest-bearing liabilities

Noninterest-bearing demand deposits

Noninterest-bearing liabilities

Total liabilities

Shareholders’ equity

Total liabilities and shareholders’ equity

Net interest spread

Net interest margin

Average interest-earning assets to average interest-bearing liabilities

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

Also includes loans on nonaccrual status.

Kentucky First Federal Bancorp

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Average Balance Sheets (continued)

The following table represents the average balance sheets for the three-month

periods ended March 31, 2025 and 2024, 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,

sheets for the three-month periods ended September 30, 2025 and 2024, 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 September 30,

(Dollars in thousands)

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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.

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

Also includes loans on nonaccrual status.

3 unchanged sentences

Discussion of Financial Condition Changes from

June 30, 2024 to March 31, 2025

June 30, 2025 to September 30, 2025

Financial Position and Results of Operations

At March 31, 2025 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 Company in its Current Report on Form 8-K filed on August 15, 2024, in addition to the formal

written Agreement, the OCC has also imposed individual minimum capital requirements (“IMCRs”) on First Federal Savings Bank

The IMCRs require First Federal Savings Bank 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%.

31, 2025, First Federal Savings Bank of Kentucky’s common equity tier 1 capital ratio was 16.72%, its tier 1 capital ratio was 16.72%,

its total capital ratio was 16.72%, and its leverage ratio was 10.13%.

At March 31, 2025, the

Company’s assets totaled $380.7 million, an increase of $5.8 million, or 1.5%, from total assets at June 30, 2024, due primarily

to the increase in cash and cash equivalents, as well as an increase in accrued interest receivable of $258,000 or 22.1%.

At September 30, 2025 the Company and the Banks

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

As disclosed in “Regulatory Developments

Regarding First Federal of Kentucky”, the OCC has imposed individual minimum capital requirements (“IMCRs”) on First

Federal Savings Bank of Kentucky.

The IMCRs require First Federal Savings Bank 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

As of September 30, 2025, First Federal Savings Bank of Kentucky’s common equity tier 1 capital ratio was 16.07%,

its tier 1 capital ratio was 16.07%, its total capital ratio was 16.07%, and its leverage ratio was 10.29%.

At September 30, 2025, the

Company’s assets totaled $366.5 million, a decrease of $4.7 million, or 1.3%, from total assets at June 30, 2025, due primarily

to the decrease in fed funds sold, as well as a decrease in loans, net of allowance.

Cash and cash equivalents:

Cash and cash equivalents overall increased $9.5 million or 51.8% to

$27.8 million at March 31, 2025.

Most of the Company’s cash and cash equivalents are held in fed funds sold that the company began

utilizing more in the quarter ended December 31, 2024.

Fed funds sold totaled $17.1 million at March 31, 2025, an increase of $16.4 million

compared to June 30, 2024.

Cash and due from financial institutions increased $666,000 or 34.8% while interest-bearing demand deposits

decreased $7.6 million on 48.3% compared to June 30, 2024.

and cash equivalents overall decreased $4.9 million or 24.9% to $14.6 million at September 30, 2025.

The decrease is primarily due to

fed funds sold decreasing $6.5 million or 75.5% and totaling $2.1 million at September 30, 2025.

Most of the Company’s cash and

cash equivalents are held in interest-bearing demand deposits, which increased $2.1 million or 24.6% and totaled $10.7 million.

Investment securities:

31, 2025, our securities portfolio, which consisted of mortgage-backed securities, decreased $1.4 million or 15.0% and totaled $8.2 million

30, 2025, our securities portfolio, which consisted of mortgage-backed securities, increased $2.0 million or 20.2% and totaled $11.9 million,

compared to June 30, 2025.

Loans, net and

loans held-for-sale in the aggregate decreased $2.3 million or 0.7% and totaled $330.6 million and $272,000, respectively at March

Loans receivable, net, decreased by $2.5 million or 0.7% to $330.6 million at March 31, 2025.

Loans held-for-sale

increased by $162,000 at March 31, 2025.

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

Because market interest rates have become more favorable, the Company has had more success in selling mortgages into the

secondary market, which has led to an increase in loans held-for-sale.

The increase is due to the purchase of mortgage-backed securities totaling $2.5 million during the quarter

ended September 30, 2025.

Loans, net and loans

held-for-sale in the aggregate decreased $1.4 million or 0.4% and totaled $326.8 million at September 30, 2025.

Loans receivable, net,

decreased by $798,000 or 0.2% to $326.5 million at September 30, 2025.

Loans held-for-sale decreased to $305,000 at September 30, 2025.

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.

Because market interest rates have become more favorable,

the Company has had more success in selling mortgages into the secondary market, which has led to a consistently having a balance in loans

held-for-sale.

Non-Performing and Classified Loans:

At March 31, 2025, the Company had non-performing loans (loans 90 or

more days past due or on nonaccrual status) of approximately $3.8 million, or 1.1% of total loans compared to $3.9 million or 1.2%, of

total loans at June 30, 2024.

The Company’s ACL totaled $2.2 million at March 31, 2025 and the ACL totaled $2.1 million at June

30, 2024, respectively.

The ACL at March 31, 2025, represented 56.9% of nonperforming loans and 0.6% of total loans, while at June 30,

2024, ACL represented 54.6% of nonperforming loans and 0.6% of total loans.

September 30, 2025, the Company had non-performing loans (loans 90 or more days past due or on nonaccrual status) of approximately $3.2

million, or 1.0% of total loans compared to $3.9 million or 1.2%, of total loans at June 30, 2025.

The Company’s ACL totaled $2.2

million at September 30, 2025 and the ACL totaled $2.2 million at June 30, 2025, respectively.

The ACL at September 30, 2025, represented

67.1% of nonperforming loans and 0.7% of total loans, while at June 30, 2025, ACL represented 54.1% of nonperforming loans and 0.7% of

The Company had $5.2 million in assets classified

as substandard for regulatory purposes at March 31, 2025, including real estate owned (“REO”) of $10,000.

Classified loans

as a percentage of total loans (including loans acquired) was 1.8% and 2.1% at March 31, 2025 and June 30, 2024, respectively.

Of substandard

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

as substandard for regulatory purposes at September 30, 2025, and there was no real estate owned (REO).

Classified loans as a percentage

of total loans (including loans acquired) was 1.6% and 1.9% at September 30, 2025 and June 30, 2025, 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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(dollars in thousands)

September 30,

Substandard assets

1 unchanged sentence

Total classified assets

At March 31, 2025, the Company’s real estate

acquired through foreclosure represented 0.2% of substandard assets compared to 0.1% at June 30, 2024.

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 at March 31, 2025 and June 30, 2024, respectively.

The Company’s real estate acquired through

foreclosure represented 0.0% of substandard assets at both September 30, 2025 and June 30, 2025 as there was no real estate owned in either

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 September 30,

2025 and June 30, 2025, respectively.

Kentucky First Federal Bancorp

2 unchanged sentences

Discussion of Financial Condition Changes from

June 30, 2024 to March 31, 2025 (continued)

June 30, 2025 to September 30, 2025 (continued)

The following table presents the aggregate carrying

value of REO at the dates indicated:

March 31, 2025

June 30, 2024

One-to-four-family

At March 31, 2025 and June 30, 2024, the Company

At September 30, 2025 and June 30, 2025, the Company

had $661,000 and $672,000 of loans classified as special mention, respectively.

2 unchanged sentences

close attention.

Total liabilities increased

$5.6 million, or 1.7% to $332.6 million at March 31, 2025, as deposits increased $21.2 million or 8.3%.

Certificates of deposit increased

$22.1 million or 12.5% and totaled $198.6 million at March 31, 2025, of which $44.0 million were brokered deposits.

Demand deposit accounts

decreased $2.4 million or 7.5% and totaled $29.8 million at quarter end.

Savings accounts increased $1.6 million or 3.4% and totaled $49.0

million at the end of the current period.

Accrued interest payable increased $468,000 or 265.9%.

Federal Home Loan Bank advances decreased $15.6

million or 22.6% to $53.4 million at March 31, 2025 as the company continues to decrease reliance on Federal Home Loan Bank advances.

Total liabilities

decreased $5.1 million, or 1.6% to $317.7 million at September 30, 2025, as deposits decreased $6.1 million or 2.2%.

Certificates of

deposit decreased $3.5 million or 1.8% and totaled $196.1 million at September 30, 2025, of which $34.4 million were brokered

deposits, compared to $44.0 million at June 30, 2025.

Savings deposit accounts decreased $4.7 million or 9.7% and totaled $43.9

million at quarter end.

Demand deposit accounts increased $2.1 million or 7.0% and totaled $31.4 million at the end of the current

Federal Home Loan Bank Advances increased $1.0 million or 2.4% and totaled $43.8 million at September 30, 2025.

costs have begun to decrease due to a decrease in general market interest rates and balance sheet management.

Continued decreases in

funding costs will be contingent on market forces including future Federal Reserve rate decisions.

Shareholders’ Equity:

31, 2025, the Company’s shareholders’ equity totaled $48.2 million, an increase of $155,000 or 0.3% from June 30, 2024.

increase in shareholders’ equity was primarily associated with accumulated other comprehensive loss decreasing $150,000 or 44.6%

from a loss of $336,000 at June 30, 2024 to a loss of $186,000 at March 31, 2025.

On January 16, 2024, the Company announced the suspension of quarterly

dividends indefinitely.

Holders of our common stock are only entitled to receive such dividends as our Board of Directors may declare

out of funds available for such payments under applicable law and regulatory guidance.

We cannot predict when or whether the Company will

be able to pay future common stock dividends and if so, the amount of any such common stock dividends.

Our ability to pay future dividends

and if so at what level will also be dependent on numerous factors, including:

our ability to receive any required regulatory approval

or non-objection to pay dividends or for the payment of dividends from First Federal Savings and Loan Association of Hazard and First

30, 2025, the Company’s shareholders’ equity totaled $48.8 million, an increase of $410,000 or 0.8% from the June 30, 2025.

The increase in shareholders’ equity was primarily associated with net income of $344,000 in the quarter as well as decreased other

comprehensive loss of $66,000.

On January 16, 2024, the Company announced the

suspension of quarterly dividends indefinitely.

Holders of our common stock are only entitled to receive such dividends as our Board of

Directors may declare out of funds available for such payments under applicable law and regulatory guidance.

We cannot predict when or

whether the Company will be able to pay future common stock dividends and if so, the amount of any such common stock dividends.

to pay future dividends and if so at what level will also be dependent on numerous factors, including:

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;

7 unchanged sentences

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

“Risk Factors” in Part II, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 and

this Form 10-Q for additional discussion regarding dividends.

Kentucky First Federal Bancorp

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Comparison of Operating Results for the Nine-month

Periods Ended March 31, 2025 and 2024

Net income totaled $5,000 or $0.00 diluted earnings per share for the

nine months ended March 31, 2025, an increase of $648,000 from net loss of $643,000 or ($0.08) diluted earnings per share for the same

period in 2024.

The increase in net earnings for the nine-months ended March 31, 2025, was primarily attributable to increased net interest

income, and higher non-interest income, which were partially offset by lower income tax benefit and higher non-interest expense.

Net Interest Income

Net interest income increased $946,000 or 18.6%

to $6.0 million due primarily to interest income increasing more than interest expense increased period to period.

Interest income increased

$2.4 million or 20.4%, while interest expense increased $1.5 million or 21.8% to $8.2 million for the nine-months recently ended.

the last two years, the repricing of many of our assets has been slowed by contractual limits on rate changes, whereas the cost of most

liabilities did not have this constraint.

As market rates have steadied and even fallen slightly, the increase in cost of liabilities

has slowed while we have begun to see our increase in interest income be greater than our increase in interest expense.

The average rate earned on interest-earning assets increased 69 basis

points to 5.20% and was the primary reason for the increase in interest income, although average interest-earning assets also increased

$16.0 million or 4.6% to $365.5 million for the recently-ended nine months.

The increase in interest income was due primarily to an increase

of $2.2 million or 20.4% in interest income from loans, which totaled $13.2 million for the period.

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

was due to increases in both the average balance of loans and the average rate earned on those loans.

The average balance of loans increased

$10.9 million or 3.4% to $334.3 million for the nine months ended March 31, 2025, while the average rate increased 74 basis points to

Although the average balance of interest-bearing

liabilities increased $17.8 million or 6.1% to $311.7 million for the nine months just ended, the average rate paid increased 45 basis

points to 3.51%.

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

decrease in interest rates have allowed our liabilities to decline as well.

Net interest spread increased from 1.46% for the

prior year nine-month period to 1.69% for the nine-month period ended March 31, 2025.

Provision for Credit Losses

Management determined that a $36,000 provision

for credit loss was prudent during the recently-ended nine-month period.

Kentucky First Federal Bancorp

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Comparison of Operating Results for the Nine-month

Periods Ended March 31, 2025 and 2024 (continued)

Non-interest Income

Non-interest income increased $190,000 or 95.5%

to $389,000 for the nine-months ended March 31, 2025 compared to the prior year period, primarily because of an increase in net gains

from sale of loans of $148,000 or 1057.1%.

Recently, the market has become more conducive to the sale of fixed rate mortgages to the secondary

Non-interest Expense

Non-interest expense increased $245,000 or 4.0%

to $6.4 million for the nine-months ended Mach 31, 2025, primarily due to higher other non-interest expense due mostly to increased professional

The increase in professional fees is primarily attributable to corrective actions taken to address the provisions of the previously

disclosed agreement that First Federal Savings Bank of Kentucky entered into with the Office of the Comptroller of the Currency.

Income tax benefit decreased $194,000 or 97.0% to an income tax benefit

of $6,000 for the nine-months ended March 31, 2025, compared to the prior year period due to decreased losses.

The effective tax rates

for the nine-month periods ended March 31, 2025 and 2024 were -600.0% and -23.8%, respectively.

Included in net income is earnings of

$65,000 on bank-owned life insurance which is non-taxable.

“Risk Factors” in Part II, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended June 30, 2025 for

additional discussion regarding dividends.

Kentucky First Federal Bancorp

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Comparison of Operating Results for the Three-month

Periods Ended March 31, 2025 and 2024

Periods Ended September 30, 2025 and 2024

Net income totaled $344,000 or $0.4 diluted earnings

per share for the three months ended March 31, 2025, an increase of $114,000 or 106.5% from net loss of $107,000 or $(0.01) diluted earnings

per share for the three months ended September 30, 2025, an increase of $359,000 from net loss of $15,000 or ($0.00) diluted earnings

per share for the same period in 2024.

The increase in net earnings for the quarter ended March 31, 2025, was primarily attributable to

higher net interest income, which was partially offset by higher non-interest income.

The increase in net earnings for the quarter ended September 30, 2025, was primarily attributable

to increased net interest income partially offset by increased total non-interest expense.

Net Interest Income

Net interest income increased $366,000 or 20.7% to $2.1 million due

primarily to interest income increasing more than interest expense increased period to period.

Net interest income increased $634,000 or 33.9%

to $2.5 million due primarily to both increased interest income and decreased interest expense.

Interest income increased $432,000 or

while interest expense increased $307,000 or 12.7% to $2.7 million for the recently-ended quarter.

During the interest rate increases

seen in the market starting March 2022, our funding sources repriced more quickly than our assets repriced, due to being liability sensitive

and restrictions on maximum asset repricing amounts.

As rates have begun to plateau or even decrease, our assets have started to reprice

more quickly than our liabilities.

9.4%, while interest expense decreased $202,000 or 7.3% to $2.5 million for the recently-ended quarter.

Repricing of many of our loans

had been slowed by contractual limits on rate changes, whereas the cost of most liabilities did not have this constraint.

many of our loans during the recent period of increasing rates had been slowed by contractual limits on those rate changes, whereas the

cost of most liabilities did not have this constraint.

As market rates have steadied and even fallen slightly, the cost of liabilities

has decreased, while the average rate earned on assets continues to increase as adjustable rate loans that were constrained due to those

limits continue to reprice and because, as loans pay off, new market-rate loans tend to have a higher rate.

The company has also

adjusted the annual and lifetime caps on certain new loans that will better align with the company's interest rate risk profile.

also made effective funding concentration changes to control total cost of funds.

The average rate earned on interest-earning assets

increased 60 basis points to 5.28% and was the primary reason for the increase in interest income, although average interest-earning assets

also increased $10.2 million or 2.9% to $367.3 million for the recently-ended quarterly period.

The increase in interest income was due

primarily to an increase of $615,000 or 16.0% in interest income from loans, which totaled $4.5 million for the period.

increased 54 basis points to 5.59% and was the primary reason for the increase in interest income, outweighing the decrease in average

interest earning assets of $4.0 million or 1.1% to $361.7 million for the recently-ended quarterly period.

The increase in interest income

was due primarily to an increase of $430,000 or 10.1% in interest income from loans, which totaled $4.7 million for the period.

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

was due to increases in both the average balance of loans and the average rate earned on those loans.

The average balance of loans increased

$4.8 million or 1.5% to $333.2 million for the three months ended March 31, 2025, while the average rate increased 67 basis points to

The average balance of interest-bearing liabilities

increased $15.1 million or 5.0% to $316.6 million for the quarter just ended, and the average rate paid increased 24 basis points to 3.43%.

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

was due to average rate earned on loans increasing 63 basis points to 5.71%.

The average balance of loans decreased $7.2 million or 2.1%

to $328.8 million for the three months ended September 30, 2025.

While average total interest-bearing liabilities

decreased $3.0 million or 1.0%, the primary reason for decreased interest expense was the decrease in the average rate paid on interest

bearing liabilities, decreasing 22 basis points to 3.33% for the three-month period ended September 30, 2025.

Although interest expense

on certificates of deposit increased $114,000 or 6.1% due to the average balance increasing $20.5 million, this was offset by interest

expense on FHLB borrowings decreasing $336,000 as the average balance decreased $25.0 million and the average rate paid decreased 37

basis points to 4.36%.

The average cost of interest-bearing demand deposit accounts increased 42 basis points due to increased rates

paid on certain demand deposit accounts.

The pricing associated with these accounts is becoming more competitive in general.

Some institutions

are willing to pay higher rates for demand accounts, and the higher cost is associated with the banks efforts to strengthen customer

relationships by paying tiered interest rates to customers with significant loan balances and some local government entities.

Net interest spread increased from 1.50% for the

prior year quarterly period to 1.85% for the three-month period ended March 31, 2025.

prior year quarterly period to 2.26% for the three-month period ended September 30, 2025.

Provision for Credit Losses

Management determined that a provision for credit

loss of $21,000 was prudent due to our current expected credit loss analysis performed during the recently-ended quarter.

Management determined foregoing a provision for

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

Kentucky First Federal Bancorp

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Comparison of Operating Results for the Three-month

Periods Ended March 31, 2025 and 2024 (continued)

Periods Ended September 30, 2025 and 2024 (continued)

Non-interest Income

Non-interest income increased $3,000 or 3.8% to $81,000 for the recently-ended

quarter primarily due to increased net gain of sale on loans, increasing $14,000 or 175.0% for the three-months recently ended.

the market has become more conducive to the sale of fixed rate mortgages to the secondary market, although such activity slowed during

the winter months.

Non-interest income increased $16,000 or 11.7%

to $153,000 for the three months ended September 30, 2025, compared to the prior year period, primarily because of an increase in net

gains on sales of loans as the demand for fixed rate loans has increased in the quarter recently ended.

Non-interest Expense

Non-interest expense increased $191,000 or 9.5%

and totaled $2.2 million for the three-months ended March 31, 2025, primarily due to increased outside service fees which increased $81,000

or 112.5% due to increased fees as well as engaging additional third party services.

Income tax expense increased $46,000 or 121.1% from a benefit of $38,000

for the three months ended March 31, 2024, to an expense of $8,000 for the recently-ended period.

The effective tax rates for the three-month

periods ended March 31, 2025 and 2024, were 53.3% and -26.2%, respectively.

Included in net income is earnings of $21,000 on bank-owned

life insurance which is non-taxable.

and totaled $2.2 million for the three months ended September 30, 2025, primarily due to increased data processing charges and increased

outside service fees.

Data processing costs increased $62,000 or 37.8%

and totaled $226,000 due to higher rates and additional fees associated with expanded technology services offered to customers.

Outside service fees increased $90,000 or 128.6%

and totaled $160,000 due to higher rates as well as additional third party services utilized in the quarter.

Income Tax Expense

Income tax expense increased $115,000 from a benefit

of $6,000 for the three months ended September 30, 2024, to an expense of $109,000 for the recently-ended period due to higher earnings.

The effective tax rates for the three-month periods ended September 30, 2025 and 2024 were 24.1% and 28.6%, respectively.

Kentucky First Federal Bancorp

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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-Q

Item 2. Management’s Discussion and Analysis