What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-15 compared with 2026-02-13 · 243 added, 299 removed, 158 unchanged (77% of the section changed)

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 business plans, prospects, growth and operating strategies;

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;

the success of our recently restructured management team;

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;

competitive conditions in the financial

services industry;

Kentucky First

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

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

economic conditions;

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

the interest rate environment and the impact of the

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

our ability to successfully execute our strategy

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

higher-earning loans;

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;

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;

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;

to attract, develop and retain qualified employees;

our ability to maintain the security of our data processing and information technology

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

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

competitive pressures among financial services

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, 2025.

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.

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.

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

7 unchanged sentences

the “Banks”) as two independent, community-oriented savings institutions.

On December 31, 2012, the Company acquired CKF Bancorp,

Inc., a savings and loan holding company which operated three banking locations in Boyle and Garrard Counties in Kentucky.

In accounting

for the transaction, the assets and liabilities of CKF Bancorp were recorded on the books of First Federal of Kentucky in accordance with

accounting standard ASC 805, Business Combinations.

On December 31, 2012, the Company acquired CKF

Bancorp, Inc., a savings and loan holding company which operated three banking locations in Boyle and Garrard Counties in Kentucky.

accounting for the transaction, the assets and liabilities of CKF Bancorp were recorded on the books of First Federal of Kentucky in accordance

with accounting standard ASC 805, Business Combinations.

Our results of operations are dependent primarily

9 unchanged sentences

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.

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 were subject to regulatory approval.

On December 10, 2025,

the Company and First Federal of Kentucky received final regulatory non-objection, effective immediately, to these appointments.

In connection with this transition, Don D.

Jennings was appointed Director of Operations of First Federal of Kentucky and continues to

serve as President of the Company and Chairman of the Board of Directors of First Federal of Kentucky.

Kentucky First Federal Bancorp

In connection

with this transition, Don D.

Jennings was appointed Director of Operations of First Federal of Kentucky and continues to serve as President

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

Kentucky First Federal

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

4 unchanged sentences

entered into a formal written agreement (the “Agreement”) with the OCC, which became effective as of the same date.

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.

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 least 9.0%.

As of December 31, 2025, First Federal Savings Bank of Kentucky’s common equity tier 1

capital ratio was 13.99%, its tier 1 capital ratio was 13.99%, its total capital ratio was 14.76%, and its leverage ratio was

As First Federal of Kentucky has not been designated as “less than well capitalized” and has maintained capital

levels in excess of the IMCRs, there have been no restrictions or waiver requirements imposed on First Federal of Kentucky for

rolling brokered deposits or other types of wholesale deposits.

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:

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 actions;

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 addressed the deficiencies that resulted in the Agreement.

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.

19, 2026, the OCC published notification that it has terminated the Agreement.

As a result of the termination of the Agreement, First

Federal of Kentucky is no longer considered to be in “troubled condition” pursuant to 12 C.F.R.

§ 5.51(c)(7)(ii) and

is an “eligible savings association” for purposes of 12 C.F.R.

In addition to terminating the Agreement, the OCC also lifted the individual

minimum capital requirements imposed on First Federal of Kentucky in connection with the Agreement.

For additional information, see the

Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 19, 2026.

, see Exhibit 10.1

to the Company’s Current Report on Form 8-K filed with the Securities and Exchange on February 19, 2026.

Asset/Liability Management

12 unchanged sentences

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

General market participants believe that the FOMC

will continue interest rate decreases.

Our December 31, 2025 EVE is anticipated to increase by approximately 4.1 %

and 0.6 % 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.

Geopolitical volatility and recent inflation results lead general market

participants to conclude there will likely be no interest rate decreases by the FOMC in this calendar year.

Our March 31, 2026 EVE is

anticipated to decrease by approximately 1.9% and increase by 7.5% under sudden and sustained decrease in prevailing market interest rates

of 100 basis points and 200 basis points, respectively, and increase by 0.8% under a sudden and sustained increase in prevailing market

rates of 100 basis points 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

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

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.

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

3 unchanged sentences

The following table represents the average balance

sheets for the six-month periods ended December 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.

Six Months Ended December 31,

sheets for the nine-month periods ended March 31, 2026 and 2025, 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)

25 unchanged sentences

The following table represents the average balance

sheets for the three-month periods ended December 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 December 31,

sheets for the three-month periods ended March 31, 2026 and 2025, along with the related calculations of tax-equivalent net interest income,

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

Three Months Ended March 31,

(Dollars in thousands)

18 unchanged sentences

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, 2025 to December 31, 2025

June 30, 2025 to March 31, 2026

Financial Position and Results of Operations

At December 31, 2025 the Company and the Banks were

At March 31, 2026, 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 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 December 31, 2025, First Federal Savings Bank of Kentucky’s common equity tier 1 capital ratio was 13.99%,

its tier 1 capital ratio was 13.99%, its total capital ratio was 14.76%, and its leverage ratio was 10.37%.

As First Federal of Kentucky has not been designated as “less

than well capitalized” and has maintained capital levels in excess of the IMCRs, there have been no restrictions or waiver requirements

imposed on First Federal of Kentucky for rolling brokered deposits or other types of wholesale deposits.

At December 31, 2025, the Company’s

impact the Company’s and the Banks’ capital position.

At March 31, 2026, the Company’s

assets totaled $374.5 million, an increase of $3.3 million, or 0.9%, from total assets at June 30, 2025, due primarily to the increase

in loans, as well as an increase in securities available-for-sale.

in cash and cash equivalents, as well as increases in loans, net and securities available-for-sale.

Cash and cash equivalents:

cash equivalents overall increased $192,000 or 1.0% to $19.7 million at December 31, 2025.

Most of the Company’s cash and cash equivalents

are held in interest-bearing demand deposits that increased $5.5 million or 64.5%, which were slightly offset by fed funds sold decreasing

$5.3 million or 61.9% compared to June 30, 2025.

Investment securities:

At December 31,

2025, our securities portfolio, which consisted of mortgage-backed securities, increased $1.4 million or 14.2% and totaled $11.3 million,

compared to June 30, 2025.

Loans, net and loans held-for-sale

in the aggregate increased $2.3 million or 0.8% and totaled $330.5 million at December 31, 2025.

Loans receivable, net, increased by $2.6

million or 0.7% to $329.8 million at December 31, 2025.

Loans held-for-sale decreased $254,000 and totaled $623,000 at December 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 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 elevated balances loans held-for-sale.

and cash equivalents overall increased $1.8 million or 9.3% to $21.3 million at March 31, 2026.

Most of the Company’s cash and cash

equivalents are held in interest-bearing demand deposits that increased $5.4 million or 62.8%, which were partially offset by fed funds

sold decreasing $3.5 million or 40.9% compared to June 30, 2025.

Debt securities:

At March 31, 2026,

our securities portfolio, which consisted of mortgage-backed securities, increased $580,000 or 5.2% and totaled $10.3 million, compared

to June 30, 2025.

Loans, net and loans

held-for-sale in the aggregate increased $760,000 or 0.2% and totaled $328.9 million at March 31, 2026.

Loans receivable, net, increased

by $1.0 million or 0.3% to $328.2 million at March 31, 2026.

Loans held-for-sale decreased $215,000 and totaled $662,000 at March 31,

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 elevated balances of

loans held-for-sale.

Non-performing and classified loans:

December 31, 2025, the Company had non-performing loans (loans 90 or more days past due or on nonaccrual status) of approximately $2.4

million, or 0.7% 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 both December 31, 2025 and June 30, 2025.

The ACL at December 31, 2025, represented 92.7% 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 total loans.

The Company had $6.3 million in assets classified

as substandard for regulatory purposes at December 31, 2025, with $0 in real estate owned (“REO”).

Classified loans as a percentage

of total loans (including loans acquired) was 1.9% and 1.9% at December 31, 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 our

assets classified for regulatory purposes at the dates indicated:

(dollars in thousands)

Substandard assets

Doubtful assets

Total classified assets

The Company had no real estate acquired through foreclosure

at December 31, 2025 or June 30, 2025.

During the period presented the Company made no loans to facilitate the purchase of its other real

estate owned by qualified buyers.

Loans to facilitate the sale of other real estate owned, which were included in substandard loans, totaled

$0 and $0 at December 31, 2025 and June 30, 2025, respectively.

March 31, 2026, the Company had non-performing loans (loans 90 or more days past due and still accruing or loans on nonaccrual status)

of approximately $2.4 million, or 0.7% 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 both March 31, 2026 and June 30, 2025.

The ACL at March 31, 2026, represented 92.3% 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 total loans.

The Company had $ 6.4 million in assets

classified as substandard for regulatory purposes at March 31, 2026, with $0 in real estate owned (“REO”).

Substandard loans

as a percentage of total loans (including loans acquired) was 1.9% and 1.9% at March 31, 2026 and June 30, 2025, respectively.

Of substandard

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

Kentucky First Federal Bancorp

2 unchanged sentences

Discussion of Financial Condition Changes from

June 30, 2025 to December 31, 2025 (continued)

At December 31, 2025 and June 30, 2025, the Company

June 30, 2025 to March 31, 2026 (continued)

The table below shows the aggregate amounts of

our assets classified for regulatory purposes at the dates indicated:

(dollars in thousands)

Substandard assets

Doubtful assets

Total classified assets

The Company had no real estate acquired through

foreclosure at March 31, 2026 or June 30, 2025.

During the period presented the Company made no loans to facilitate the purchase of its

other real estate owned by qualified buyers.

Loans to facilitate the sale of other real estate owned, which were included in substandard

loans, totaled $0 and $0 at March 31,2026 and June 30, 2025, respectively.

At March 31, 2026 and June 30, 2025, the Company

had $65,000 and $672,000 of loans classified as special mention, respectively.

2 unchanged sentences

close attention.

Total liabilities increased

$3.3 million, or 1.0% to $326.2 million at December 31, 2025, as Federal Home Loan Bank advances increased $8.7 million or 20.3% to $51.4

million and demand deposit accounts increased $874,000 or 3.0%.

Savings decreased $5.1 million or 10.5% and totaled

43.5 million at December 31, 2025 primarily related to a decrease in savings accounts associated with distributions of funds in administration

of various estate accounts.

Certificates of deposit decreased $123,000 or 0.1%, due to brokered certificates of deposit decreasing $5.6

million or 12.8% to $38.4 million, which were offset by retail certificates of deposit increasing $5.5 million or 3.6%.

Total liabilities

increased $2.0 million, or 0.6% to $324.9 million at March 31, 2026, as Federal Home Loan Bank advances increased $6.2 million or 14.4%

to $48.9 million and demand deposit accounts increased $3.4 million or 11.4%.

Savings account deposits decreased $4.9 million

or 10.1% and totaled $43.7 million at March 31, 2026 primarily related to a decrease in savings accounts associated with distributions

of funds in administration of various estate accounts.

Certificates of deposit decreased $2.3 million or 1.2%, due to brokered certificates

of deposit decreasing $5.7 million or 12.9% to $38.3 million, which were offset by national market deposits increasing $4.1 million and

totaling $5.7 million.

National market deposits are an online listing service that offer certificate of deposits to national customers,

attracting additional certificates of deposit under $250,000.

Shareholders’ Equity:

31, 2025, the Company’s shareholders’ equity totaled $49.1 million, an increase of $732,000 or 1.5% from June 30, 2025.

increase in shareholders’ equity was primarily associated with net income of $648,000, as well as accumulated other comprehensive

loss decreasing $84,000 or 57.9% from a loss of $145,000 at June 30, 2025 to a loss of $61,000 at December 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 Federal Savings Bank of Kentucky to the Company or from the Company to shareholders;

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 OCC;

First Federal Savings

Bank of Kentucky’s ability to satisfy the IMCR’s imposed by the OCC;

the ability of First Federal MHC to receive approval

of its members to waive the payment of any Company dividends to First Federal MHC;

and our ability to successfully execute our strategy

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

See “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.

March 31, 2026, the Company’s shareholders’ equity totaled $49.7 million, an increase of $1.3 million or 2.7% from June 30,

The increase in shareholders’ equity was primarily associated with net income of $1.2 million, as well as accumulated other

comprehensive loss decreasing $60,000 or 41.4% from a loss of $145,000 at June 30, 2025 to a loss of $85,000 at March 31, 2026.

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.

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 Federal Savings Bank of Kentucky to the Company or from the Company 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;

and our ability to

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

of our loan portfolio towards higher-earning loans.

See “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

1 unchanged sentence

AND RESULTS OF OPERATIONS (continued)

Comparison of Operating Results for the Six-month

Periods Ended December 31, 2025 and 2024

Net income totaled $648,000 or $0.08 diluted earnings per share for

the six-months ended December 31, 2025, an increase of $650,000 from net loss of $2,000 or ($0.00) diluted earnings per share for the

same period in 2024.

The increase in net earnings for the six-months ended December 31, 2025, was primarily attributable to increased

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

Comparison of Operating Results for the Nine-month

Periods Ended March 31, 2026 and 2025

Net income totaled $1.2 million or $0.15 diluted

earnings per share for the nine-months ended March 31, 2026, an increase of $1.2 million from net earnings of $5,000 or $0.00 diluted

earnings per share for the same period in 2025.

The increase in net earnings for the nine months ended March 31, 2026, was primarily

attributable to increased net interest income, which was partially offset by higher non-interest expense.

Net Interest Income

1 unchanged sentence

33.0% to $8.0 million due primarily to increased interest income and decreased interest expense.

Interest income increased $825,000 or 8.8%

due to an increase in the average rate earned on interest-earning assets, which increased 48 basis points to 5.65%.

Interest income increased $1.2 million

or 8.7% due to an increase in the average rate earned on interest-earning assets, which increased 49 basis points to 5.69%.

Average interest-earning

assets decreased $1.6 million or 0.5% to $362.1 million for the recently-ended quarterly period.

The average rate earned on assets was

due primarily to an increase in the rate earned on loans, which was the result of new loan production carrying higher interest rates and

assets decreased $2.5 million or 0.7% to $363.0 million for the recently-ended nine months.

The average rate earned on assets was due

primarily to an increase in the rate earned on loans, which was the result of new loan production carrying higher interest rates and

adjustable rate mortgages continuing to reprice upward.

Interest expense decreased $428,000 or 7.8% to $5.1 million for the six-months

Interest expense decreased $754,000 or 9.2% to $7.5 million for the nine-months

recently ended due to a decrease in the average balance of interest-bearing liabilities as well as a decrease in the average rate paid

3 unchanged sentences

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

was due the average rate earned on loans increasing 60 basis points to 5.80% despite the average balance of loans decreasing $4.3 million

or 1.3% compared to the six months ended December 31, 2024.

The decrease in interest expense was primarily due

to decreased interest expense on FHLB advances of $584,000 or 37.3%.

The decrease in interest expense on FHLB advances was due to both

the average rate paid decreasing 38 basis points to 4.34% and the average balance decreasing $21.1 million to $45.3 million compared to

the same period last year.

Net interest spread increased from 1.63% for the prior

year six-month period to 2.37% for the six-month period ended December 31, 2025.

was due to the average rate earned on loans increasing 61 basis points to 5.86% despite the average balance of loans decreasing $3.4 million

or 1.0% compared to the nine months ended March 31, 2025.

The decrease in interest expense was primarily

due to decreased interest expense on FHLB advances of $707,000 or 32.3%.

The decrease in interest expense on FHLB advances was due to

both the average rate paid decreasing 32 basis points to 4.33% and the average balance decreasing $17.2 million to $45.6 million compared

to the same period last year.

Net interest spread increased from 1.69% for the

prior year nine-month period to 2.48% for the nine-month period ended March 31, 2026.

Provision for Credit Losses

Management determined that a $10,000 provision for

credit loss was prudent during the recently-ended six-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 Six-month

Periods Ended December 31, 2025 and 2024 (continued)

Management determined that a $51,000 provision

for credit loss was prudent during the recently-ended nine month period due to shifts in loan concentrations.

Non-interest Income

Non-interest income increased $23,000 or 7.5% to $331,000

for the six-months ended December 31, 2025 compared to the prior year period, primarily because of an increase in net gains from sale

of loans of $25,000 or 17.7%.

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

Non-interest income increased $81,000 or 20.8%

to $470,000 for the nine-months ended March 31, 2026 compared to the prior year period, primarily because of an increase in net gains

from sale of loans of $66,000 or 40.7%.

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

Non-interest Expense

Non-interest expense increased $412,000 or 9.8% to

$4.6 million for the six months ended December 31, 2025, primarily due to higher data processing expense, outside service fees, and employee

compensation and benefits.

Data processing expense increased $180,000 or 66.4%, outside service fees increased $169,000 or 75.1%, and

employee compensation and benefits increased $119,000 or 5.0%.

These were slightly offset by professional fees decreasing $81,000

Income tax expense increased $219,000 to an income

tax expense of $206,000 for the six months ended December 31, 2025, compared to the prior year period due to increased earnings.

The effective

tax rates for the six-month periods ended December 31, 2025 and 2024 were 24.1% and 86.7%, respectively.

Included in net income is earnings

of $44,000 on bank-owned life insurance which is non-taxable.

Non-interest expense increased $446,000 or 7.0% to $6.8 million for

the nine months ended March 31, 2026, primarily due to higher data processing expense, outside service fees, and employee compensation

and benefits.

Data processing expense increased $244,000 or 54.1% due to increased core processing rates, outside service fees increased

$134,000 or 35.5%, and employee compensation and benefits increased $198,000 or 5.5% due to annual performance-based adjustments and higher

health insurance costs.

These were partially offset by professional fees decreasing $142,000 or 49.0%.

Income tax expense increased $386,000 to an

income tax expense of $380,000 for the nine months ended March 31, 2026, compared to the prior year period due to increased

The effective tax rate for the nine-month period ended March 31, 2026 was 23.6%.

Included in net income is earnings of $66,000 on bank-owned life insurance which is non-taxable.

Kentucky First Federal Bancorp

2 unchanged sentences

Comparison of Operating Results for the Three-month

Periods Ended December 31, 2025 and 2024

Periods Ended March 31, 2026 and 2025

Net income totaled $581,000 or $0.07 diluted earnings

per share for the three months ended December 31, 2025, an increase of $291,000 from net income of $13,000 or $0.00 diluted earnings per

share for the same period in 2024.

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

higher net interest income, which was partially offset by higher non interest expense and higher income taxes.

per share for the three months ended March 31, 2026, an increase of $574,000 from net income of $7,000 or $0.00 diluted earnings per share

for the same period in 2025.

The increase in net earnings for the quarter ended March 31, 2026 was primarily attributable to higher net

interest income, which was partially offset by higher non-interest expense, higher provision for credit losses, and higher income taxes.

Net Interest Income

Net interest income increased $618,000 or 30.3% to

$2.6 million due primarily to interest income increasing while interest expense decreased period to period.

Net interest income increased $736,000 or 34.5%

to $2.9 million due primarily to interest income increasing while interest expense decreased period to period.

Interest income increased

3 unchanged sentences

increased 48 basis points to 5.76% and was the primary reason for the increase in interest income, as average interest-earning assets

decreased $623,000 or 0.2% to $361.7 million for the recently-ended quarterly period.

decreased $2.2 million or 0.6% to $365.1 million for the recently-ended quarterly period.

The increase in interest income was due primarily

2 unchanged sentences

was due to the average rate earned on loans increasing 62 basis points to 5.97%.

The average balance of loans decreased $2.3 million or

0.7% to $331.4 million for the three months ended December 31, 2025.

The average balance of loans decreased $882,000 or 0.3%

to $332.3 million for the three months ended March 31, 2026.

The average balance of interest-bearing liabilities

decreased $3.8 million or 1.2% to $312.9 million for the quarter just ended, and the average rate paid decreased 37 basis points to 3.06%.

The cost of liabilities decreased primarily due to decreased FHLB advance expense, which was $248,000 or 33.0% less than the same period

ended December 31, 2024.

While the average rate paid on FHLB advances decreased 29 basis points to 4.35%, the primary reason for

the decrease was the average balance decreasing $18.5 million or 28.5%.

Net interest spread increased from 1.75% for the prior

year quarterly period to 2.45% for the three-month period ended December 31, 2025.

The cost of liabilities decreased primarily due to decreased certificates of deposit expense, which was $203,000 or 10.1% less than the

same period ended March 31, 2025.

The average rate paid on certificates of deposit decreasing 55 basis points to 3.62% is the primary

reason for the decrease.

Interest expense on FHLB advances also decreased $123,000 as the average balance decreased $8.6 million or 15.3%

and the average rate paid decreased 24 basis points to 4.18% period to period.

Net interest spread increased from 1.85% for the

prior year quarterly period to 2.70% for the three-month period ended March 31, 2026.

Provision for Credit Losses

Management determined that a $10,000 provision for

credit loss was prudent due to our current expected credit loss analysis performed during the recently-ended quarter.

Kentucky First Federal Bancorp

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (continued)

Comparison of Operating Results for the Three-month

Periods Ended December 31, 2025 and 2024 (continued)

Management determined that a $41,000 provision

for credit loss was prudent due to our current expected credit loss analysis performed during the recently-ended quarter and shifting

loan concentrations.

Non-interest Income

Non-interest income increased $7,000 or 4.1% to $178,000

for the recently ended quarter primarily due to increased net gain of sale on loans, increasing $20,000 or 24.7% for the three months

recently ended.

Non-interest income increased $58,000 or 71.6%

to $139,000 for the recently ended quarter primarily due to increased net gain of sale on loans, increasing $41,000 or 186.4% for the

three months recently ended.

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

Non-interest Expense

Non-interest expense increased $220,000 or 10.0% and

totaled $2.4 million for the three months ended December 31, 2025, primarily due to increased data processing expense, employee compensation

and benefits, and outside service fees.

Income taxes expense increased $104,000 to an expense

of $97,000 from a benefit of $94,000 for the three months ended December 31, 2024 for the recently-ended period.

The effective tax rates

for the three-month periods ended December 31, 2025 and 2024, were 24.2% and -116.7%, respectively.

Included in net income is earnings

of $22,000 on bank-owned life insurance which is non-taxable.

Non-interest expense increased $34,000 or 1.6%

and totaled $2.2 million for the three months ended March 31, 2026, primarily due to increased data processing expense and employee compensation

and benefits.

Income taxes expense increased $166,000 to

$174,000 for the three months ended March 31, 2026.

The effective tax rate for the three-month period ended March 31, 2026, was

Included in net income is earnings of $29,000 on bank-owned life insurance which is non-taxable.

Kentucky First Federal Bancorp

1 unchanged sentence

About Market Risk

This item is not applicable as the Company is a smaller

reporting company.

This item is not applicable as the Company is

a smaller reporting company.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis