KFFB Swings to Profit on Strong Net Interest Income Growth

TL;DR

**KFFB's profit swing is a bullish sign, driven by strong loan income despite deposit outflows; buy the dip if it comes.**

AI Summary

Kentucky First Federal Bancorp (KFFB) reported a significant turnaround in its financial performance for the three months ended September 30, 2025, achieving a net income of $344 thousand, a substantial improvement from a net loss of $15 thousand in the same period of 2024. This positive shift was primarily driven by a robust increase in net interest income, which rose by 33.9% to $2.504 million from $1.870 million year-over-year. Interest income from loans, including fees, increased by $430 thousand to $4.695 million. Total assets decreased by 1.27% from $371.211 million at June 30, 2025, to $366.492 million at September 30, 2025, mainly due to a $4.855 million net decrease in cash and cash equivalents. Deposits also saw a decrease of $6.148 million, falling to $271.415 million. Non-interest expense increased by $191 thousand to $2.204 million, largely due to a $90 thousand increase in outside service fees and a $62 thousand increase in data processing expenses. The company's allowance for credit losses remained stable at $2.166 million, with no provision for credit losses recorded in the current quarter, compared to $15 thousand in the prior year.

Why It Matters

This turnaround to profitability is a critical signal for investors, indicating KFFB's ability to generate earnings in a challenging economic environment, especially with a 33.9% surge in net interest income. For employees, a profitable company offers greater job security and potential for growth. Customers may benefit from a more stable and competitive banking institution. In the broader market, KFFB's performance, particularly its loan growth and deposit management, provides insight into regional banking health and competitive dynamics, especially against larger financial institutions that might struggle with similar deposit outflows but on a grander scale.

Risk Assessment

Risk Level: medium — While KFFB achieved net income, total assets decreased by $4.719 million to $366.492 million, and deposits decreased by $6.148 million to $271.415 million. This decline in deposits could indicate funding challenges or increased competition for customer funds, which, if sustained, could impact future liquidity and profitability, despite the current positive earnings.

Analyst Insight

Investors should monitor KFFB's deposit trends closely in upcoming quarters, as the $6.148 million decrease is a notable concern. While the net income turnaround is positive, sustained deposit outflows could pressure future net interest margins and liquidity, warranting a cautious approach.

Financial Highlights

debt To Equity

6.51

revenue

$5.052M

operating Margin

20.5%

total Assets

$366.492M

total Debt

$237.760M

net Income

$344K

eps

$0.04

gross Margin

49.6%

cash Position

$14.625M

revenue Growth

+9.4%

Revenue Breakdown

Key Numbers

• $344K — Net Income (Swung from a $15K loss in Q3 2024 to a profit in Q3 2025, indicating a significant financial turnaround.)
• $2.504M — Net Interest Income (Increased by 33.9% from $1.870M in Q3 2024, driving the return to profitability.)
• $4.695M — Interest Income from Loans (Increased by $430K from Q3 2024, showing strength in core lending operations.)
• $366.492M — Total Assets (Decreased by $4.719M (1.27%) from June 30, 2025, primarily due to reduced cash and cash equivalents.)
• $271.415M — Total Deposits (Decreased by $6.148M from June 30, 2025, indicating potential funding challenges.)
• $2.204M — Total Non-Interest Expense (Increased by $191K from Q3 2024, partially offsetting gains in net interest income.)
• $0.04 — Basic and Diluted EPS (Positive earnings per share compared to a loss of $0.00 in Q3 2024.)
• $2.166M — Allowance for Credit Losses (Remained stable, with no provision for credit losses in Q3 2025, suggesting stable asset quality.)

Key Players & Entities

• Kentucky First Federal Bancorp (company) — Registrant and mid-tier holding company
• First Federal Savings and Loan Association of Hazard (company) — Primary operation and subsidiary of KFFB
• Frankfort First Bancorp, Inc. (company) — Holding company for First Federal Savings Bank of Kentucky
• First Federal Savings Bank of Kentucky (company) — Primary operation and subsidiary of Frankfort First
• First Federal MHC (company) — Majority owner of Kentucky First Federal Bancorp
• $344 thousand (dollar_amount) — Net income for the three months ended September 30, 2025
• $15 thousand (dollar_amount) — Net loss for the three months ended September 30, 2024
• $2.504 million (dollar_amount) — Net interest income for the three months ended September 30, 2025
• $1.870 million (dollar_amount) — Net interest income for the three months ended September 30, 2024
• $6.148 million (dollar_amount) — Net decrease in deposits for the three months ended September 30, 2025

FAQ

Risk Factors

• Deposit Outflows [medium — financial]: Total deposits decreased by $6.148 million to $271.415 million in Q3 2025. This outflow, coupled with a decrease in cash and cash equivalents by $4.855 million, could indicate potential funding challenges or a strategic shift in asset allocation.
• Rising Non-Interest Expenses [medium — operational]: Non-interest expense increased by $191 thousand to $2.204 million, primarily driven by a $90 thousand rise in outside service fees and a $62 thousand increase in data processing expenses. These rising costs could pressure future profitability if not managed effectively.
• Interest Rate Sensitivity [medium — financial]: While net interest income increased significantly, the bank's profitability is sensitive to changes in interest rates. Fluctuations in market rates could impact the net interest margin, especially given the $2.548 million in total interest expense.
• Regulatory Compliance [low — regulatory]: As a financial institution, KFFB is subject to various regulatory assessments and compliance requirements. Changes in regulations or increased compliance costs could impact operational expenses and profitability.

Industry Context

The community banking sector is characterized by its focus on local markets and relationship-based lending. Banks like KFFB face competition from larger national institutions and credit unions, as well as evolving fintech companies. Current industry trends include rising interest rates impacting net interest margins, increased focus on digital banking services, and ongoing regulatory scrutiny.

Regulatory Implications

KFFB operates under the purview of federal banking regulators, including the FDIC and the Federal Reserve. Compliance with capital requirements, lending standards, and consumer protection laws is paramount. Any changes in these regulations, such as increased capital adequacy ratios or new reporting requirements, could impact the bank's operations and profitability.

What Investors Should Do

1. Monitor deposit trends closely.
2. Analyze the drivers of non-interest expense growth.
3. Evaluate the sustainability of net interest income growth.
4. Assess asset quality trends.

Key Dates

• 2025-09-30: End of Q3 2025 — Reported net income of $344K, a significant turnaround from a net loss in the prior year, driven by strong net interest income.
• 2025-06-30: End of Q2 2025 — Total assets stood at $371.211 million, providing a baseline for the subsequent quarter's decrease.
• 2024-09-30: End of Q3 2024 — Reported a net loss of $15K and lower net interest income, highlighting the substantial improvement in the current year.

Glossary

Net Interest Income

The difference between interest income generated by a bank and the interest paid out to its depositors and lenders. (A key driver of KFFB's profitability, showing a significant increase of 33.9% to $2.504 million.)

Allowance for Credit Losses

An estimate of the losses expected from loans that may not be repaid. (Remained stable at $2.166 million with no provision for credit losses in Q3 2025, suggesting stable asset quality.)

Securities available-for-sale

Investments in debt or equity securities that are not classified as held-to-maturity or trading securities, and are reported at fair value. (The fair value of these securities increased, contributing to other comprehensive income.)

Securities held-to-maturity

Investments in debt securities that the company has the intent and ability to hold until maturity. (Reported at amortized cost, with a slight decrease in approximate fair value.)

Federal Home Loan Bank stock

Stock held in the Federal Home Loan Bank system, which provides liquidity to member financial institutions. (The company reduced its holdings of FHLB stock, with proceeds from redemption exceeding new purchases.)

Other comprehensive income

Unrealized gains or losses on certain investments and other items that are not included in net income but affect shareholders' equity. (Included unrealized gains on available-for-sale securities, contributing positively to total comprehensive income.)

Year-Over-Year Comparison

Compared to the prior year's third quarter, Kentucky First Federal Bancorp has demonstrated a significant financial turnaround. Net income swung from a loss of $15 thousand to a profit of $344 thousand, primarily driven by a robust 33.9% increase in net interest income to $2.504 million. While total assets saw a slight decrease of 1.27% and deposits declined by $6.148 million, the core lending business showed strength with a 10.1% rise in interest income from loans. However, non-interest expenses also rose by $191 thousand, partially offsetting the gains in net interest income.

Key Financial Figures

• $0.01 — ange on which registered Common Stock, $0.01 par value per share KFFB The NASDAQ Sto

Filing Documents

• ea0264903-10q_kentucky.htm (10-Q) — 1678KB
• ea026490301ex31-1_kentucky.htm (EX-31.1) — 9KB
• ea026490301ex31-2_kentucky.htm (EX-31.2) — 9KB
• ea026490301ex32-1_kentucky.htm (EX-32.1) — 4KB
• ea026490301ex32-2_kentucky.htm (EX-32.2) — 4KB
• 0001213900-25-110700.txt ( ) — 9083KB
• kffb-20250930.xsd (EX-101.SCH) — 56KB
• kffb-20250930_cal.xml (EX-101.CAL) — 44KB
• kffb-20250930_def.xml (EX-101.DEF) — 210KB
• kffb-20250930_lab.xml (EX-101.LAB) — 435KB
• kffb-20250930_pre.xml (EX-101.PRE) — 226KB
• ea0264903-10q_kentucky_htm.xml (XML) — 2418KB

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION 1 ITEM 1 FINANCIAL STATEMENTS 1 Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Operations 2 Condensed Consolidated Statements of Comprehensive Income 3 Consolidated 4 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 7 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 29 ITEM 3 Quantitative and Qualitative Disclosures About Market Risk 36 ITEM 4 Controls and Procedures 36

OTHER INFORMATION

PART II OTHER INFORMATION 37

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

: Financial Statements

ITEM 1: Financial Statements Kentucky First Federal Bancorp CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) September 30, 2025 June 30, 2025 Unaudited ASSETS Cash and due from financial institutions $ 1,855 $ 2,342 Fed funds sold 2,104 8,577 Interest-bearing demand deposits 10,666 8,561 Cash and cash equivalents 14,625 19,480 Securities available-for-sale- at fair value 11,727 9,757 Securities held-to-maturity, at amortized cost-approximate fair value of $ 159 and $ 167 at September 30, 2025 and June 30, 2025, respectively 161 171 Loans held for sale 305 877 Loans, net of allowance for credit losses of $ 2,166 and $ 2,170 at September 30, 2025 and June 30, 2025, respectively 326,450 327,248 Office premises and equipment - at depreciated cost 4,168 4,211 Federal Home Loan Bank stock - at cost 3,441 3,980 Accrued interest receivable 1,435 1,438 Bank-owned life insurance 3,023 3,001 Prepaid expenses and other assets 1,157 1,048 Total assets $ 366,492 $ 371,211 LIABILITIES AND SHAREHOLDERS' EQUITY Savings $ 43,918 $ 48,616 Certificates of deposit 196,061 199,575 Demand deposit accounts 31,436 29,372 Deposits 271,415 277,563 Federal Home Loan Bank advances 43,784 42,760 Advances by borrowers for taxes and insurance 1,190 869 Accrued interest payable 396 949 Accrued Income Taxes 14 63 Deferred income taxes 61 30 Other liabilities 853 608 Total liabilities 317,713 322,842 Shareholders' equity Preferred stock, 500,000 shares authorized, $ .01 par value; no shares issued - - Common stock, 20,000,000 shares authorized, $ .01 par value; 8,596,064 shares issued 86 86 Additional paid-in capital 34,891 34,891 Retained earnings - restricted 17,850 17,506 Treasury shares at cost, 509,349 common shares at September 30, 2025 and June 30, 2025, respectively ( 3,969 ) ( 3,969 ) Accumulated other comprehensive loss ( 79 ) ( 14

financial statements

financial statements. 1 Kentucky First Federal Bancorp CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per share data) Three months ended September 30, 2025 2024 Interest income Loans, including fees $ 4,695 $ 4,265 Mortgage-backed securities 98 81 Interest-bearing deposits and other 259 274 Total interest income 5,052 4,620 Interest expense Interest-bearing demand deposits 30 9 Savings 49 50 Certificates of deposit 1,990 1,876 Deposits 2,069 1,935 Borrowings 479 815 Total interest expense 2,548 2,750 Net interest income 2,504 1,870 Provision for credit losses - 15 Net interest income after provision for credit losses 2,504 1,855 Non-interest income Earnings on bank-owned life insurance 22 22 Net gain on sales of loans 65 60 Other 66 55 Total non-interest income 153 137 Non-interest expense Employee compensation and benefits 1,204 1,186 Data processing 226 164 Occupancy and equipment 136 137 FDIC insurance premiums 61 63 Voice and data communications 33 34 Advertising 43 42 Outside service fees 160 70 Auditing and accounting 95 80 Regulatory assessments 23 23 Foreclosure and real estate owned expenses (net) 26 21 Franchise and other taxes 31 28 Other 166 165 Total non-interest expense 2,204 2,013 Income (loss) before income taxes 453 ( 21 ) Income tax expense (benefit) 109 ( 6 ) NET INCOME (LOSS) $ 344 $ ( 15 ) EARNINGS (LOSS) PER SHARE Basic and diluted $ 0.04 $ ( 0.00 ) DIVIDENDS PER SHARE $ 0.00 $ 0.00 See accompanying notes to condensed consolidated

financial statements

financial statements. 2 Kentucky First Federal Bancorp CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In thousands) Three months ended September 30, 2025 2024 Net income (loss) $ 344 $ ( 15 ) Other comprehensive income, net of tax: Unrealized gains on securities designated as available-for-sale, net of taxes of $ 22 and $ 80 during the respective periods 66 241 Comprehensive income $ 410 $ 226 See accompanying notes to condensed consolidated

financial statements

financial statements. 3 Kentucky First Federal Bancorp CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the three months ended (Unaudited) (Dollar amounts in thousands, except per share data) September 30, 2025 Common stock Additional paid-in capital Retained earnings Treasury shares Accumulated other comprehensive loss Total Balance at June 30, 2025 $ 86 $ 34,891 $ 17,506 $ ( 3,969 ) $ ( 145 ) $ 48,369 Net income – – 344 – – 344 Other comprehensive income, net of tax – – – – 66 66 Balance at September 30, 2025 $ 86 $ 34,891 $ 17,850 $ ( 3,969 ) $ ( 79 ) $ 48,779 September 30, 2024 Common stock Additional paid-in capital Retained earnings Treasury shares Accumulated other comprehensive loss Total Balance at June 30, 2024 $ 86 $ 34,891 $ 17,325 $ ( 3,969 ) $ ( 336 ) $ 47,997 Net loss – – ( 15 ) – – ( 15 ) Other comprehensive income, net of tax – – – – 241 241 Balance at September 30, 2024 $ 86 $ 34,891 $ 17,310 $ ( 3,969 ) $ ( 95 ) $ 48,223 See accompanying notes to condensed consolidated

financial statements

financial statements. 4 Kentucky First Federal Bancorp CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Three months ended September 30, 2025 2024 Cash flows from operating activities: Net income (loss) $ 344 $ ( 15 ) Adjustments to reconcile net loss to net cash from operating activities Depreciation 48 53 Accretion of purchased loan credit discount - ( 9 ) Amortization of deferred loan origination fees ( 27 ) ( 6 ) Amortization of premiums on investment securities ( 10 ) ( 5 ) Net gain on sale of loans ( 65 ) ( 60 ) Earnings on bank-owned life insurance ( 22 ) ( 21 ) Provision for credit losses - 15 Origination of loans held for sale ( 2,002 ) ( 2,813 ) Proceeds from loans held for sale 2,639 1,481 Deferred income taxes 8 ( 27 ) Accrued income taxes ( 49 ) - Increase (decrease) in cash, due to changes in: Accrued interest receivable 3 ( 108 ) Prepaid expenses and other assets ( 109 ) ( 117 ) Accrued interest payable ( 553 ) 66 Other liabilities 245 159 Net cash provided by (used in) operating activities 450 ( 1,407 ) Cash flows from investing activities: Purchase of investments-AFS ( 2,405 ) - Securities maturities, prepayments and calls: Held to maturity 9 13 Available for sale 535 559 Proceeds from redemption of FHLB stock 617 133 Purchase of FHLB Stock ( 78 ) ( 342 ) Loans originated for investment, net of principal collected 825 ( 148 ) Additions to premises and equipment, net ( 5 ) ( 2 ) Net cash provided by (used in) investing activities ( 502 ) 213 Cash flows from financing activities: Net decrease in deposits ( 6,148 ) ( 1,224 ) Payments by borrowers for taxes and insurance, net 321 333 Proceeds from Federal Home Loan Bank advances 10,730 11,750 Repayments on Federal Home Loan Bank advances ( 9,706 ) ( 10,683 ) Net cash provided by (used in) financing activities ( 4,803 ) 176 Net decrease

financial statements

financial statements. 5 Kentucky First Federal Bancorp CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Unaudited) (In thousands) Three months ended September 30, 2025 2024 Supplemental disclosure of cash flow information: Cash paid during the period for: Income taxes $ 150 $ - Interest on deposits and borrowings $ 3,101 $ 2,684 See accompanying notes to condensed consolidated

financial statements

financial statements. 6 Kentucky First Federal Bancorp NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2025 (unaudited) The Kentucky First Federal Bancorp ("Kentucky First" or the "Company") was incorporated under federal law in March 2005 and is the mid-tier holding company for First Federal Savings and Loan Association of Hazard, Hazard, Kentucky ("First Federal of Hazard") and Frankfort First Bancorp, Inc. ("Frankfort First"). Frankfort First is the holding company for First Federal Savings Bank of Kentucky, Frankfort, Kentucky ("First Federal of Kentucky"). First Federal of Hazard and First Federal of Kentucky (hereinafter collectively the "Banks") are Kentucky First's primary operations, which consist of operating the Banks as two independent, community-oriented savings institutions. Note 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements, which represent the condensed consolidated balance sheets and results of operations of the Company, were prepared in accordance with the instructions for Form 10-Q and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles. However, in the opinion of management, all adjustments (consisting of only normal recurring adjustments) which are necessary for a fair presentation of the condensed consolidated financial statements have been included. The results of operations for the three-month period ended September 30, 2025, are not necessarily indicative of the results which may be expected for an entire fiscal year. The condensed consolidated balance sheet as of June 30, 2025, has been derived from the audited consolidated balance sheet as of that date. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with U.S. generally acc

View Full Filing

View this 10-Q filing on SEC EDGAR