Kentucky First Federal Bancorp

Statement of Financial Condition

*General.*At June 30, 2026, assets totaled $362.4 million, a decrease of $8.8 million, or 2.4%, compared to June 30, 2025. The decrease was related primarily to a decrease of $7.8 million or 2.4% in loans, net, which totaled $319.4 million at June 30, 2026. Cash and cash equivalents decreased $3.0 million or 15.4% at June 30, 2026. These were slightly offset by increases in securities available for sale of $1.1 million or 11.8%. Total liabilities decreased $10.7 million, or 3.3%, to $312.1 million at June 30, 2026, primarily as a result of decreased deposits, which decreased $16.7 million or 6.0% to $260.8 million at June 30, 2026 and were somewhat offset by increased Federal Home Loan Bank advances, which increased $5.8 million or 13.6% to $48.6 million.

Loans. Our primary lending activity is the origination of loans for the purchase, refinance, or construction of one- to four-family residential real estate located in our market areas. As opportunities arise, we also originate church loans, commercial real estate loans, and multi-family and nonresidential real estate loans. At June 30, 2026, one- to four- family residential real estate loans totaled $240.0 million, or 74.6% of total loans, compared to $251.3 million, or 76.3% of total loans at June 30, 2025. Please refer to Note C-Loans of the Notes to Consolidated Financial Statements for a further breakdown of consumer and other loans.

The following table sets forth the composition of our loan portfolio at the dates indicated.

The following table sets forth certain information at June 30, 2026 regarding the dollar amount of loans repricing or maturing during the periods indicated. The table does not include any estimate of prepayments which significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below. Demand loans having no stated maturity are reported as due in one year or less.

As of June 30, 2026, there were $27.4 million fixed-rate and $93.0 million adjustable-rate real estate loans maturing or adjusting in more than a year, while there were $211,000 fixed-rate and no adjustable-rate commercial loans maturing or adjusting in more than a year.

The following table shows loan origination activity during the periods indicated.

Allowance for Credit Loss and Asset Quality. The allowance for loan losses is a valuation allowance for the probable incurred losses in the loan portfolio. We evaluate the allowance for loan losses no less than quarterly. When additional allowances are needed a provision for losses on loans is charged against earnings. The recommendations for increases or decreases to the allowance are presented by management to the Banks’ boards of directors. The Company’s board of directors oversees the overall allowance level for the Company and may propose increases or decreases for allowance levels at the Banks.

The Allowance for Credit Loss is established to recognize the probable incurred losses associated with lending activities. Loss and risk factors are based on our historical loss experience and industry averages and are adjusted for significant factors that in management’s judgment affect the collectibility of the portfolio as of the evaluation date. These significant factors may include changes in lending policies and procedures, changes in existing general economic and business conditions affecting our primary lending area, credit quality trends, collateral value, loan volumes and concentrations, seasoning of the loan portfolio, recent loss experience, duration of the current business cycle and bank regulatory examination results.

The allowance for credit losses totaled $2.3 million and $2.2 million at June 30, 2026 and 2025, respectively, which represented 0.70% and 0.66% of total loans, respectively. The allowance included no specific reserves at June 30, 2026 or 2025. Such reserves are calculated when a non-homogeneous loan is considered impaired. An impaired loan is one in which it is likely that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Most of the Company’s loans are collateral-based and, in case of impairment, the loans are carried at the lower of cost or fair value less disposal costs.

Nonperforming loans, which consist of all loans 90 days or more past due and nonaccrual loans, totaled $2.6 million and $3.9 million at June 30, 2026 and 2025, respectively. The allowance for loan losses totaled 87.9% and 56.1% of nonperforming loans at June 30, 2026 and 2025, respectively.

We account for the allowance for credit losses under ASC 326, Measurement of Credit Losses on Financial Instruments, which is commonly known as CECL. We measure expected credit losses of financial assets on a weighted average remaining maturity (WARM) basis.

We maintain an allowance for credit losses (“ACL”) at a level that is appropriate to cover estimated credit losses on individually evaluated loans, as well as estimated credit losses inherent in the estimated life of the loan portfolio. Credit losses are charged to ACL and recoveries are credited to the ACL.

Loans with similar risk characteristics are evaluated on a collective basis within homogeneous loan pools under ASC 326. Our homogeneous loan pools are primarily determined by loan purpose and collateral type. Pools include residential real estate (composed of one-to four-family, multi-family, and construction), land, farm, nonresidential real estate, commercial and industrial, and consumer loans (composed of Loans on deposit, home equity, automobile, and unsecured). Credits that are nonaccrual status are subject to individual evaluation.

Historical loss rates for loans are adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions on loss recognition. Qualitative factors used to derive our ACL include delinquency trends, current economic conditions and trends, strength of supervision and administration of the loan portfolio, levels of underperforming loans, trends in loan losses and underwriting exceptions. Reasonable and supportable economic forecasts that may offset collectibility are also included as factors in our ACL model. Management continually reevaluates the other subjective factors included in its ACL analysis. Our loss reserves do not include $221,000 in remaining discounts on acquired loans at June 30, 2026.

Our banking regulators, as an integral part of their examination process, periodically review our allowance for credit losses. The examinations may require us to make additional provisions for loan losses based on judgments different from ours. In addition, because further events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that increases will not be necessary should the quality of any loans deteriorate because of the factors discussed above. Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations.

Summary of Loan Loss Experience. The following table sets forth an analysis of the allowance for loan losses for the periods indicated. Where specific loan loss allowances have been established, any difference between the loss allowance and the amount of loss realized has been charged or credited to the allowance. At July 1, 2023, the adoption of CECL led to an immediate increase of $497,000 to the allowance.

The following table sets forth the breakdown of the allowance for loan losses by loan category, which management believes can be allocated on an approximate basis, at the dates indicated.

Nonperforming and Classified Assets. When a loan becomes 90 days delinquent, the loan may be placed on nonaccrual status at which time the accrual of interest ceases, the interest previously accrued to income is reversed and interest income is thereafter recognized on a cash basis. Payments on a nonaccrual loan are applied to the outstanding principal and interest as determined at the time of collection of the loan or applied entirely to principal, depending on management’s assessment of ultimate collectability. In situations where management believes collection of interest due is likely even if the loan is more than 90 days delinquent, then management may decide not to place the loan on non-accrual status.

We consider repossessed assets and loans that are 90 days or more past due to be nonperforming assets. Real estate that we acquire because of foreclosure or by deed-in-lieu of foreclosure is classified as real estate owned until it is sold. When property is acquired, it is recorded at the lower of carrying value of the investment or fair value less estimated selling costs at the date of foreclosure. Holding costs and declines in fair value after acquisition of the property are charged against income.

Under current accounting guidelines, a loan is defined as impaired when, based on current information and events, it is probable that the creditor will be unable to collect all amounts due under the contractual terms of the loan agreement. Loans identified as impaired are evaluated on an individual basis. At June 30, 2026, there were no loans individually considered impaired with valuation adjustments.

The following table provides information with respect to our nonperforming assets at the dates indicated.

Interest income that would have been recorded for the years ended June 30, 2026 and 2025, had nonaccrual loans been current according to their original terms amounted to $47,000, and $50,000, respectively. Income related to nonaccrual loans included in interest income for the years ended June 30, 2026 and 2025 amounted to $33,000, and $42,000, respectively.

Federal regulations require us to regularly review and classify our assets. In addition, our regulators have the authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: substandard, doubtful and loss. “Substandard assets” must have one or more defined weaknesses and are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. “Doubtful assets” have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified “loss” is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. The regulations also provide for a “special mention” category, described as 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. Special mention assets totaled $2.2 million and $672,000 at June 30, 2026 and 2025, respectively.

The following table shows the aggregate amounts of our assets classified for regulatory purposes at the dates indicated.

Substandard assets at June 30, 2026, consisted of 96 loans totaling $6.2 million and two parcels of real estate owned with an aggregate carrying value of $79,000, compared to substandard assets at June 30, 2025, consisted of 99 loans totaling $6.1 million and no real estate owned. During the fiscal years ended June 30, 2026 and 2025, the Company made no loans to facilitate the purchase of real estate owned.

The table below summarizes substandard loans at June 30, 2026:

Other than disclosed above, there are no other loans at June 30, 2026 that we have serious doubts about the ability of the borrowers to comply with the present loan repayment terms.

*Delinquencies.*The following table provides information about delinquencies in our loan portfolios at the dates indicated.

Securities. Our securities portfolio consists of mortgage-backed securities with maturities of 30 years or less, which totaled $11.0 million at June 30, 2026, a net change of $1.1 million, compared to the $9.9 million total at June 30, 2025. This balance increased due to purchases made during the year ended June 30, 2025. All of our mortgage-backed securities were issued by Ginnie Mae, Fannie Mae or Freddie Mac.

The following table sets forth the carrying values and fair values of our securities portfolio at the dates indicated.

At June 30, 2026 and 2025, we did not own any securities that had an aggregate book value in excess of 10% of our equity at that date.

The following table sets forth the maturities and weighted average yields of debt securities at June 30, 2026. At June 30, 2026, there were $576,000 in securities with adjustable rates.

Other Assets. Other assets at June 30, 2026 included bank owned life insurance policies with a carrying value of $3.1 million and $3.0 million at June 30, 2026 and 2025, respectively, of which First Federal of Kentucky is the owner and beneficiary. Both subsidiary Banks are members and stockholders of the FHLB. FHLB stock, at cost, totaled $3.9 million and $4.0 million at June 30, 2026 and 2025.

Deposits. Our primary source of funds is retail deposit accounts held primarily by individuals within our market areas. Deposits totaled $260.8 million at June 30, 2026, decreasing $16.7 million or 6.0% between the two periods. At June 30, 2026 the Company had $29.6 million in brokered certificates of deposit compared to $44.0 million at June 30, 2025. The company also utilized national market certificates of deposit that totaled $5.3 million and $1.6 million at June 30, 2026 and 2025 respectively.

The following table sets forth the balances of our deposit products at the dates indicated.

The following table indicates at June 30, 2026, the amount of certificate of deposit accounts with balances equal to or greater than $100,000, by time remaining until maturity. The brokered certificates of deposit had a maximum face value of $100,000. The Federal Deposit Insurance Corporation (“FDIC”) currently insures deposits up to $250,000 in most cases, making certificate of deposit accounts with balances equal to or greater than $100,000 less volatile as before the limit was raised.

The following table sets forth our certificate of deposit accounts classified by rates at the dates indicated.

The following table sets forth the amount and maturities of certificate accounts at June 30, 2026.

The following table sets forth the average balances and rates paid on deposits.

The following table sets forth the deposit activities for the periods indicated.

Borrowings. Advances from the Federal Home Loan Bank of Cincinnati amounted to $48.6 million and $42.8 million at June 30, 2026 and 2025, respectively.

The following table presents certain information regarding our Federal Home Loan Bank of Cincinnati advances during the periods and at the dates indicated.

Capital. Total shareholders’ equity totaled $50.3 million at June 30, 2026, an increase of $1.9 million or 4.0%, compared to June 30, 2025. The increase was primarily due to net earnings in the period.

Effective January 1, 2015, the Company and the Banks became subject to the capital regulations in accordance with Basel III. These regulations established higher minimum risk-based capital ratio requirements, a new common equity Tier 1 risk-based capital ratio and a new capital conservation buffer (“CCB”). The regulations also included a revised definition of capital and changed the risk-weighting of certain assets. For purposes of prompt corrective action, the new regulations establish definitions of “well capitalized” as follows:

Additionally, the CCB of Common Equity Tier 1 Risk-Based capital above the minimum risk-based capital requirements was introduced. The CCB is 2.5%. The Company and the Banks, in order to avoid limitations on capital distributions, including dividend payments, engaging in share repurchases and certain discretionary bonus payments to executive officers, must maintain the CCB at the appropriate level.

Community Bank Leverage Ratio

Certain community banks and holding companies (which include the Company, Frankfort First, First Federal of Kentucky and First Federal of Hazard) that satisfy certain qualifying criteria, including having less than $10 billion in average total consolidated assets and a leverage ratio (referred to as the “community bank leverage ratio”) of greater than 9%, were eligible to opt-in to the CBLR framework. The CBLR ratio is the ratio of a banking organization’s Tier 1 capital to its average total consolidated assets as reported on the banking organization’s applicable regulatory filings. The Banks elected to utilize the CBLR framework effective for the quarter ended March 31, 2021. See Note J-Stockholders’ Equity and Regulatory Capital in audited financial statements.

At June 30, 2026, both First Federal of Hazard’s and First Federal of Kentucky’s regulatory capital substantially exceeded all minimum regulatory capital requirements. Management is not aware of any recent event that would cause this classification to change. See Note J-Stockholders’ Equity and Regulatory Capital in the Notes to Financial Statements.