Kentucky First Federal Bancorp — Q2 2026 Earnings Summary

Financial Performance

• Net income for the three months ended June 30, 2026, was $680,000 ($0.08 diluted EPS), compared to $176,000 ($0.02 diluted EPS) in the same period in 2025, an increase of $504,000.
• Net earnings for the twelve months ended June 30, 2026, were $1.9 million ($0.24 diluted EPS), compared to $181,000 ($0.02 diluted EPS) in the prior year, an increase of $1.7 million.
• Net interest income for the quarter increased 33.9% to $3.1 million, driven by a 6.4% increase in interest income to $5.3 million and a 17.2% decrease in interest expense to $2.2 million.
• Net interest income for the twelve months increased 33.2% to $11.1 million, with interest income rising 8.1% to $20.8 million and interest expense falling 11.2% to $9.7 million.
• Non-interest income for the quarter rose 43.2% to $159,000, primarily due to a 107.7% increase in net gains on loan sales.
• Non-interest income for the twelve months increased 25.8% to $629,000.
• Non-interest expense for the quarter decreased 0.6% to $2.2 million, largely due to a 59.6% drop in FDIC insurance premiums.
• Non-interest expense for the twelve months increased 5.1% to $9.0 million, driven by a 51.0% rise in data processing expenses and a 4.6% increase in employee compensation and benefits.
• Provision for loan losses for the quarter increased $183,000 to $186,000; for the twelve months, it increased $198,000 to $237,000.
• Income tax expense for the twelve months increased $538,000 to $595,000.
• Total assets decreased 2.4% to $362.4 million at June 30, 2026, from $371.2 million in 2025, primarily due to a $7.5 million decrease in loans to $320.6 million.
• Total liabilities decreased 3.3% to $312.1 million, with deposits falling 6.0% to $260.8 million, largely due to a $14.3 million decrease in brokered deposits.
• Federal Home Loan Bank advances increased 13.6% to $48.6 million.
• Shareholders' equity increased 4.0% to $50.3 million.
• Book value per share was $6.22 at June 30, 2026, compared to $5.98 in 2025.
• Average interest-earning assets decreased 2.0% to $360.1 million, while the average rate earned on these assets increased 62 basis points to 5.90%.
• Average interest-bearing liabilities decreased 3.3% to $306.1 million, while the average rate paid decreased 52 basis points to 2.91%.

Business Segments and Product Lines

• The increase in the average rate earned on assets was primarily driven by new loan production carrying higher interest rates and adjustable-rate mortgages repricing upward.
• Investment securities increased $1.1 million (11.2%) due to purchases made during the year.
• Real estate acquired through foreclosure totaled $79,000 at June 30, 2026, compared to zero in the prior year.

Risks and Challenges

• Provision for loan losses increased in response to an estimated loss on foreclosure of a residential real estate loan and management's decision to increase the overall provision due to upward loan repricing, inflation, a slight downturn in local real estate prices, and overall economic uncertainty.
• Data processing expenses increased due to higher rates, additional servicing expenses, and a change in service providers.
• Employee compensation and benefits increased due to normal salary adjustments and the addition of executive and deposit development staff.

Management Commentary and Tone

• Management anticipates current FDIC insurance rates to remain stable following the termination of the formal written agreement with the Office of the Comptroller of the Currency regarding its subsidiary, First Federal Savings Bank of Kentucky.
• The company's strategy includes increasing earnings, increasing core deposits, reducing reliance on higher-cost funding sources, and shifting the loan portfolio toward higher-earning loans.

Other Key Points

• The company operates five banking offices: one in Hazard, Kentucky; three in Frankfort, Kentucky; two in Danville, Kentucky; and one in Lancaster, Kentucky.
• As of June 30, 2026, there were approximately 8,086,715 shares outstanding, with approximately 58.5% held by First Federal MHC.
• The company is the parent of First Federal Savings and Loan Association of Hazard and First Federal Savings Bank of Kentucky.
• Shares are traded on the Nasdaq National Market under the symbol KFFB.