Kentucky First Federal Bancorp (Nasdaq: KFFB), the holding company for First Federal Savings and Loan Association of Hazard and First Federal Savings Bank of Kentucky, reported net income of $680,000, or $0.08 diluted earnings per share, for the three months ended June 30, 2026. This represents an increase of $504,000 compared to net income of $176,000, or $0.02 diluted earnings per share, in the same quarter of the prior year. With approximately $362 million in total assets and seven banking offices across central and southeastern Kentucky, KFFB is among the smaller publicly traded community thrifts in the United States, and its results reflect the operating dynamics typical of institutions of that scale.

For the twelve months ended June 30, 2026, net earnings totaled $1.9 million, or $0.24 diluted earnings per share, up from $181,000, or $0.02 diluted earnings per share, in the prior fiscal year — an increase of $1.7 million.

Quarterly Results Driven by Higher Net Interest Income

The year-over-year improvement in quarterly net earnings was primarily attributable to higher net interest income. Net interest income rose $780,000, or 33.9%, to $3.1 million, reflecting both increased interest income and reduced interest expense. The combination of rising asset yields and declining funding costs during the quarter produced a notable widening of the company's net interest spread, a key profitability driver for deposit-taking financial institutions that has been closely watched across the banking sector in the current interest rate environment.

Interest income increased $319,000, or 6.4%, to $5.3 million, driven by a 62 basis point increase in the average rate earned on interest-earning assets to 5.90%. This rate improvement more than offset a $7.2 million, or 2.0%, decline in average interest-earning assets to $360.1 million. The higher average rate was primarily related to increased rates earned on loans, resulting from new loan production at higher interest rates and the continued upward repricing of adjustable rate mortgages.

Interest expense decreased $461,000, or 17.2%, to $2.2 million for the quarter. This decline reflected decreases in both the average balance of interest-bearing liabilities and the average rate paid. Average interest-bearing liabilities fell $10.5 million, or 3.3%, to $306.1 million, while the average rate paid declined 52 basis points to 2.91%.

Partially offsetting the higher net interest income was a $183,000 increase in the provision for loan losses. This increase was partially in response to an estimated loss on the foreclosure of a residential real estate loan and partially reflected management's decision that a higher overall provision was prudent given the upward repricing of loans that may pressure borrowers, marketplace inflation, a slight downturn in real estate prices in the company's markets, and general economic uncertainty.

Non-Interest Income and Expense

Non-interest income increased $48,000, or 43.2%, to $159,000 for the quarter, primarily due to a $42,000, or 107.7%, increase in net gains on loan sales compared to the prior-year quarter.

Non-interest expense decreased $12,000, or 0.6%, to $2.2 million, mainly driven by a $34,000, or 59.6%, reduction in FDIC insurance premiums. The company benefited from lower premiums following the previously announced termination by the Office of the Comptroller of the Currency of its formal written agreement with the company's indirect wholly owned subsidiary, First Federal Savings Bank of Kentucky. Such OCC agreements typically impose enhanced supervisory requirements and operational restrictions on regulated institutions, and their termination can signal to investors and regulators that the institution has remediated the identified deficiencies. Management said it anticipates current FDIC insurance rates to remain stable.

Full-Year Performance

The increase in net earnings for the twelve-month period was primarily attributable to increased net interest income and higher non-interest income, partially offset by increased non-interest expense, a higher provision for credit losses on loans, and greater income tax expense.

Net interest income for the full year increased $2.8 million, or 33.2%, to $11.1 million. Interest income rose $1.6 million, or 8.1%, to $20.8 million, while interest expense fell $1.2 million, or 11.2%, to $9.7 million. Non-interest income increased $129,000, or 25.8%, year over year, primarily due to increased net gains on loan sales.

Income tax expense increased $538,000 as a result of higher pre-tax earnings. Non-interest expense rose $435,000, or 5.1%, to $9.0 million, driven primarily by higher data processing costs and increased employee compensation and benefits. Data processing expense climbed $344,000, or 51.0%, due to increased rates, additional servicing-related expenses, and a change in provider for certain services. Employee compensation and benefits increased $221,000, or 4.6%, reflecting normal salary increases and the addition of executive and deposit development staff.

The provision for loan losses increased $198,000 to $237,000 for the full year, largely due to the same factors cited for the quarterly period.

Balance Sheet

At June 30, 2026, total assets stood at $362.4 million, down $8.8 million, or 2.4%, from $371.2 million at June 30, 2025. The decline was driven primarily by a $7.5 million, or 2.3%, decrease in loans, which totaled $320.6 million. Cash and cash equivalents decreased $3.0 million, or 15.4%, year over year, while investment securities increased $1.1 million, or 11.2%, due to purchases made during the year.

Total liabilities decreased $10.7 million, or 3.3%, to $312.1 million. Deposits fell $16.7 million, or 6.0%, to $260.8 million, primarily reflecting a $14.3 million, or 32.6%, reduction in brokered deposits. The reduction in higher-cost brokered deposits was a stated strategic priority for management, as smaller community banks across the industry have been working to replace wholesale funding with less expensive core deposit relationships amid sustained competition for depositors. Federal Home Loan Bank advances increased $5.8 million, or 13.6%, to $48.6 million.

Shareholders' equity increased $1.9 million, or 4.0%, to $50.3 million, primarily associated with net earnings during the period. Book value per share was $6.22 at June 30, 2026.

About Kentucky First Federal Bancorp

Kentucky First Federal Bancorp is the parent company of First Federal Savings and Loan Association of Hazard, which operates one banking office in Hazard, Kentucky, and First Federal Savings Bank of Kentucky, which operates three banking offices in Frankfort, Kentucky, two banking offices in Danville, Kentucky, and one banking office in Lancaster, Kentucky. The company operates under a mutual holding company structure, with First Federal MHC holding approximately 58.5% of outstanding shares as of June 30, 2026, a structure in which a mutual entity controls the majority of the stock and public shareholders hold the remainder. The company's shares are traded on the Nasdaq National Market under the symbol KFFB. At June 30, 2026, the company had approximately 8,086,715 shares outstanding.

Forward-Looking Statements

This press release may contain forward-looking statements as defined by the Private Securities Litigation Act of 1995 or the Securities and Exchange Commission in its rules, regulations, and releases. Such statements may be identified by words such as "believe," "expect," "anticipate," "plan," "estimate," "intend," and "potential," or future or conditional verbs such as "should," "could," or "may." Forward-looking statements include statements regarding the company's goals, intentions, expectations, business plans, prospects, growth, operating strategies, the quality of its loan and investment portfolios, and estimates of 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 forward-looking statements. Risks and uncertainties that could cause such differences include, but are not limited to, general economic conditions; real estate prices in the company's market areas; the interest rate environment and its impact on business, financial condition, and results of operations; the ability to execute strategies to increase earnings, grow core deposits, reduce reliance on higher-cost funding sources, and shift the loan portfolio toward higher-earning loans; the ability to pay future dividends and receive required regulatory approvals; the ability of First Federal MHC to receive member approval to waive dividends; competitive conditions in the financial services industry; inflation; the impacts of tariffs, sanctions, and trade policies; changes in demand for loans, deposits, and financial services; the possibility of higher-than-expected credit losses; competitive pressures; the ability to attract and retain qualified employees; data processing and IT system security; pending or threatened litigation; changes in law and regulation; rapidly changing technology; and other matters referenced 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 disclaims any obligation to publicly release revisions to forward-looking statements to reflect events or circumstances after the date of the statements.