Kentucky First Federal Bancorp
For the period ended Dec 31, 2025. Filed Feb 13, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2025 · Filed Feb 13, 2026
KFFB$5.93+6.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001213900-25-110700
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-02-13.
0001213900-26-016540
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 54 previous paragraphs and 71 current paragraphs.
23 unchanged; 24 reworded; 22 added; 7 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 4 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Average Balance Sheets(continued)
Current report
Liabilities: 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%.
Current report
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%.
Current report
Comparison of Operating Results for the Six-month Periods Ended December 31, 2025 and 2024
Current report
Net interest income increased $1.3 million or 32.1% to $5.2 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%. 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 adjustable rate mortgages continuing to reprice upward. Interest expense decreased $428,000 or 7.8% to $5.1 million for the six-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 on those funds. Average interest-bearing liabilities decreased $1.7 million or 0.5% to $308.7 million for the quarterly period just ended, while the average rate paid decreased 26 basis points to 3.28% for the period.
Current report
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.
Current report
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.
Current report
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.
Current report
Comparison of Operating Results for the Six-month Periods Ended December 31, 2025 and 2024 (continued)
Current report
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 or 35.4%.
Current report
Income Tax
Current report
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.
Current report
General
Current report
Net Interest Income
Current report
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. Interest income increased $392,000 or 8.2% to $5.2 million, while interest expense decreased $226,000 or 8.2% to $2.5 million for the recently-ended quarter. As market rates have begun to decrease, liabilities have repriced down while our assets continue to reprice upward.
Current report
The average balance of interest-bearing liabilities decreased $2.9 million or 0.9% to $308.2 million for the quarter just ended, and the average rate paid decreased 26 basis points to 3.27%. 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%.
Current report
Provision for Credit Losses
Current report
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.
Current report
Non-interest Income
Current report
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. Recently, the market has become more conducive to the sale of fixed rate mortgages to the secondary market.
Current report
Non-interest Expense
Removed paragraphs (7)
Previous report
The following table presents the aggregate carrying value of REO at the dates indicated:
Previous report
Liabilities: 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 period. Federal Home Loan Bank Advances increased $1.0 million or 2.4% and totaled $43.8 million at September 30, 2025. Funding 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.
Previous report
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 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. Repricing of 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. The Company also made effective funding concentration changes to control total cost of funds.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Income Tax Expense
Reworded paragraphs (24)
Previous wording
Certain statements contained in this report, as well as other periodic reports filed with the Securities and Exchange Commission, that are not historical facts are considered “forward-looking statements” under the Private Securities Litigation Reform Act of 1995, that are subject to certain risks and uncertainties. These forward-looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “intend” and “potential,” or words of similar meaning, or future or conditional verbs such as “should,” “could,” or “may.” Forward-looking statements include statements of our goals, intentions and expectations; statements regarding our ability to fully and timely address the deficiencies that resulted in the Agreement that First Federal Savings Bank of Kentucky has entered into with the Office of the Comptroller of the Currency (“OCC”); First Federal Savings Bank of Kentucky’s ability to satisfy the Individual Minimum Capital Requirements imposed by the OCC; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. Kentucky First Federal Bancorp’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions; prices for real estate in the Company’s market areas; the interest rate environment and the impact of the interest rate environment on our business, financial condition and results of operations; our ability to successfully execute our strategy to increase earnings, increase core deposits, reduce reliance on higher cost funding sources and shift more of our loan portfolio towards higher-earning loans; our ability to pay future dividends and if so at what level; our ability to receive 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 approvals; 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 including the prolonged U.S. government shutdown; changes in the demand for loans, dep…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Certain statements contained in this report, as well as other periodic reports filed with the Securities and Exchange Commission, that are not historical facts are considered “forward-looking statements” under the Private Securities Litigation Reform Act of 1995, that are subject to certain risks and uncertainties. These forward-looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “intend” and “potential,” or words of similar meaning, or future or conditional verbs such as “should,” “could,” or “may.” Forward-looking statements include statements of our goals, intentions and expectations; statements regarding our ability to fully and timely address the deficiencies that resulted in the Agreement that First Federal Savings Bank of Kentucky has entered into with the Office of the Comptroller of the Currency (“OCC”); First Federal Savings Bank of Kentucky’s ability to satisfy the Individual Minimum Capital Requirements imposed by the OCC; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. Kentucky First Federal Bancorp’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions; prices for real estate in the Company’s market areas; the interest rate environment and the impact of the interest rate environment on our business, financial condition and results of operations; our ability to successfully execute our strategy to increase earnings, increase core deposits, reduce reliance on higher cost funding sources and shift more of our loan portfolio towards higher-earning loans; our ability to pay future dividends and if so at what level; 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; 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; the ability to attract, develop and retain qual…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
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.
Current wording
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 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.
Previous wording
On August 13, 2024, First Federal of Kentucky entered into a formal written agreement (the “Agreement”) with the OCC, which became effective as of the same date. The Agreement will remain effective until it is amended by First Federal of Kentucky and the OCC, or the OCC modifies, waives or terminates the Agreement. As a result of the Agreement, pursuant to 12 C.F.R. § 5.51(c)(7)(ii), First Federal of Kentucky is in “troubled condition,” and is not an “eligible savings association” for purposes of 12 C.F.R. § 5.3, unless otherwise informed in writing by the OCC. In addition to the Agreement, the OCC has also imposed individual minimum capital requirements (“IMCRs”) on First Federal of Kentucky. The IMCRs require First Federal of Kentucky to maintain a common equity tier 1 capital ratio of at least 9.0%, a tier 1 capital ratio of at least 11.0%, a total capital ratio of at least 12.0%, and a leverage ratio of at least 9.0%.
Current wording
On August 13, 2024, First Federal of Kentucky entered into a formal written agreement (the “Agreement”) with the OCC, which became effective as of the same date. The Agreement will remain effective until it is amended by First Federal of Kentucky and the OCC, or the OCC modifies, waives or terminates the Agreement. As a result of the Agreement, pursuant to 12 C.F.R. § 5.51(c)(7)(ii), First Federal of Kentucky is in “troubled condition,” and is not an “eligible savings association” for purposes of 12 C.F.R. § 5.3, unless otherwise informed in writing by the OCC. In addition to the Agreement, the OCC has also imposed individual minimum capital requirements (“IMCRs”) on First Federal of Kentucky. The IMCRs require First Federal of Kentucky to maintain a common equity tier 1 capital ratio of at least 9.0%, a tier 1 capital ratio of at least 11.0%, a total capital ratio of at least 12.0%, and a leverage ratio of at 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 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.
Previous wording
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 September 30, 2025.
Current wording
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.
Previous wording
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. 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.
Current wording
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. 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.
Previous wording
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 least 9.0%. 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%.
Current wording
At December 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 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 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 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.
Previous wording
***Assets:***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.
Current wording
***Assets:***At December 31, 2025, the Company’s assets totaled $375.3 million, an increase of $4.1 million, or 1.1%, from total assets at June 30, 2025, due primarily to the increase in loans, as well as an increase in securities available-for-sale.
Previous wording
Cash and cash equivalents: Cash 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.
Current wording
Cash and cash equivalents: Cash and 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.
Previous wording
***Investment securities:***At September 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. The increase is due to the purchase of mortgage-backed securities totaling $2.5 million during the quarter ended September 30, 2025.
Current wording
***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.
Previous wording
Loans*:*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.
Current wording
Loans*:*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.
Previous wording
***Non-Performing and Classified Loans:***At 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 total loans.
Current wording
***Non-performing and classified loans:***At 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.
Previous wording
The Company had $5.2 million in assets classified 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.
Current wording
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.
Previous wording
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 period. 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.
Current wording
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.
Previous wording
At September 30, 2025 and June 30, 2025, the Company had $661,000 and $672,000 of loans classified as special mention, respectively. This category includes assets which do not currently expose us to a sufficient degree of risk to warrant classification, but does possess credit deficiencies or potential weaknesses deserving our close attention.
Current wording
At December 31, 2025 and June 30, 2025, the Company had $661,000 and $672,000 of loans classified as special mention, respectively. This category includes assets which do not currently expose us to a sufficient degree of risk to warrant classification, but do possess credit deficiencies or potential weaknesses deserving our close attention.
Previous wording
Shareholders’ Equity: At September 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.
Current wording
Shareholders’ Equity: At December 31, 2025, the Company’s shareholders’ equity totaled $49.1 million, an increase of $732,000 or 1.5% from June 30, 2025. The 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.
Previous wording
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 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 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.
Current wording
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 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.
Previous wording
Net income totaled $344,000 or $0.4 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 September 30, 2025, was primarily attributable to increased net interest income partially offset by increased total non-interest expense.
Current wording
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.
Previous wording
Management determined foregoing a provision for credit loss was prudent in light of the increase in the loan portfolio during the recently-ended quarter.
Current wording
Management determined that a $10,000 provision for credit loss was prudent during the recently-ended six-month period.
Previous wording
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.
Current wording
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.
Previous wording
The average rate earned on interest-earning assets 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.
Current wording
The average rate earned on interest-earning assets increased 44 basis points to 5.72% 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. The increase in interest income was due primarily to an increase of $447,000 or 10.1% in interest income from loans, which totaled $4.9 million for the period.
Previous wording
The increase in interest income from loans period-to-period 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.
Current wording
The increase in interest income from loans period-to-period was due to the average rate earned on loans increasing 58 basis points to 5.89%. The average balance of loans decreased $2.3 million or 0.7% to $331.4 million for the three months ended December 31, 2025.
Previous wording
Net interest spread increased from 1.50% for the prior year quarterly period to 2.26% for the three-month period ended September 30, 2025.
Current wording
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.
Previous wording
Non-interest expense increased $191,000 or 9.5% 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.
Current wording
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.
Previous wording
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.
Current wording
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.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Net income totaled $304,000 or $0.04 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.