Kentucky First Federal Bancorp Reports Improved Net Loss and Increased Interest Income

Kentucky First Federal Bancorp reported a net loss of $2,000 for the six months ending December 31, 2024, a slight improvement from a net loss of $536,000 during the same period in 2023. The company's total interest income increased by 22.7% to $9.4 million, driven primarily by a rise in interest income from loans, which reached $8.7 million, up from $7.1 million a year earlier. Interest expense also rose, increasing 26.8% to $5.5 million, resulting in a net interest income of $3.9 million, a 17.4% increase compared to the prior year. The average rate earned on interest-earning assets rose to 5.17%, contributing to the overall improvement in net interest income.

In terms of financial position, total assets decreased slightly to $374.2 million, down 0.2% from $374.9 million at the end of June 2024. This decline was primarily attributed to a decrease in loans, which fell by $2.8 million to $330.2 million. The company also reported a significant increase in cash and cash equivalents, which rose by 14.7% to $21.0 million, largely due to increased utilization of fed funds sold. The securities portfolio, consisting mainly of mortgage-backed securities, decreased by 10.6% to $8.8 million.

Operationally, Kentucky First Federal Bancorp's non-performing loans decreased to approximately $3.0 million, representing 0.9% of total loans, down from 1.2% at the end of June 2024. The allowance for credit losses remained stable at $2.1 million, covering 70.9% of non-performing loans. The company also classified $5.2 million in assets as substandard, a decrease from $7.2 million in June 2024. Total liabilities decreased by 0.3% to $326.2 million, with a notable reduction in Federal Home Loan Bank advances.

Looking ahead, the company is focused on addressing regulatory requirements imposed by the Office of the Comptroller of the Currency (OCC), which include maintaining specific capital ratios and implementing a revised strategic plan. Management remains optimistic about improving loan originations and increasing non-interest income through enhanced market conditions for mortgage sales. However, they acknowledge that economic uncertainties could impact future performance. The company has suspended quarterly dividends indefinitely, pending regulatory approvals and financial stability.