Kentucky First Federal Bancorp Releases Earnings

HAZARD, Ky. and FRANKFORT, Ky. and DANVILLE, Ky. and LANCASTER, Ky., May 04, 2020 (GLOBE NEWSWIRE) -- Kentucky First Federal Bancorp (Nasdaq:  KFFB), the holding company (the “Company”) for First Federal Savings and Loan Association of Hazard and First Federal Savings Bank of Kentucky, announced net earnings of $240,000 or $0.03 diluted earnings per share for the three months ended March 31, 2020, compared to net earnings of $207,000 or $0.02 diluted earnings per share for the three months ended March 31, 2019, an increase of $33,000 or 15.9%.   Net earnings were $722,000 or $0.09 diluted earnings per share for the nine months ended March 31, 2020, compared to net earnings of $512,000 or $0.06 diluted earnings per share for the nine months ended March 31, 2019, an increase of $210,000 or 41.0%.

The increase in net earnings for the quarter ended March 31, 2020 was primarily attributable to a decrease in non-interest expense and was somewhat offset by a decrease in net interest income. 

Non-interest expense decreased $67,000 or 3.1% to $2.1 million for the recently ended quarter due to cost-saving measures implemented by management.  Net interest income decreased $24,000 or 1.0% to $2.3 million for the quarter just ended as interest income increased $13,000 or 0.4% to $3.2 million, and interest expense increased $37,000 or 4.4% to $882,000.  Interest income increased period-to-period due to increased average volume of interest-earning assets, which increased $10.4 million or 3.5% to $305.6 million for the quarter ended March 31, 2020, compared to the prior-year period, while the average interest rate earned on the assets decreased 13 basis points to 420 basis points.  Interest expense increased for the just-ended quarterly period due to increased average volume of funding sources during the period.  The average funding levels increased $9.0 million or 3.6% to $255.7 million for the quarter ended March 31, 2020 while the average rate paid on deposits and borrowings decreased 1 basis point to 138 basis points for the recently-ended quarter.   Income tax expense increased $10,000 or 20.8% and totaled $58,000 for the quarter just ended in response to the higher overall taxable income. 

The increase in net earnings on a nine-month basis was primarily attributable to a decrease in non-interest expense and an increase in non-interest income, which were somewhat offset by increased provision for loan losses and decreased net interest income.

Non-interest expense decreased $311,000 or 4.7% to $6.3 million for the nine months ended March 31, 2020 compared to the prior year period due primarily to lower contributions to the Company’s Defined Benefit pension plan, which result from the freeze placed on the plan effective April 1, 2019.    Non-interest income increased $40,000 or 20.7% to $233,000 for the just-ended nine-month period due primarily to increased gains on sales of loans.  Provision for loan losses increased $53,000 to $64,000 for the nine-months ended March 31, 2020, while net interest income decreased $29,000 or 0.4% to $7.0 million for the period just ended in response to the higher overall taxable income.  The decrease in net interest income resulted primarily from a greater increase in interest expense over interest income.  Interest income increased $380,000 or 4.0% to $9.8 million for the nine-month period just ended as interest expense increased $409,000 or 17.5% to $2.8 million for the period.  Interest income increased period-to-period due primarily to increased average volume of interest-earning assets, which increased $11.7 million or 4.0% to $305.5 million for the nine months ended March 31, 2020, compared to the prior-year period, while the average interest rate earned on the assets remained constant at 427 basis points.  Interest expense increased due primarily to an increased average rate paid on funding sources, although the average volume of funding sources also increased during the period.  The average rate paid on deposits and borrowings increased 16 basis points to 143 basis points for the nine months ended March 31, 2020, while average funding levels increased $11.3 million or 0.2% to $255.9 million for the nine-month period just ended.

At March 31, 2020, assets totaled $331.0 million, an increase of $209,000 or 0.1% compared to June 30, 2019.  This increase was attributed primarily to an increase in cash and cash equivalents, which was somewhat offset by decreases in time deposits in other financial institutions and loans, net.  Cash and cash equivalents increased $7.2 million or 72.6% to $17.0 million as time deposits in other financial institutions and loan repayments, net of disbursements were used to increase on-hand liquidity.  Time deposits in other financial institutions decreased $4.2 million or 60.9% to $2.7 million, while loans, net decreased $2.3 million or 0.8% to $278.6 million at March 31, 2020.  Total liabilities increased $918,000 or 0.3% to $265.4 million at March 31, 2020, primarily as a result of increased deposits, which increased $12.7 million or 6.5% to $208.6 million at March 31, 2020.  Somewhat offsetting the increase in deposits was a decrease of $11.7 million or 17.5% in FHLB advances, which totaled $55.0 million at the recent period end. 

The Company’s response to the COVID-19 pandemic has been multi-faceted and focused on continued delivery of customer service, while prioritizing the health, safety and welfare of our customers and employees.  Service continues to be provided through innovative methods including drive-up windows, automated teller machines, and digital banking platforms (mobile and online), and limited customer physical contact along with enhanced cleaning protocols and maintaining social distancing among our employees.  Management has deep concerns about the economic effect of the pandemic.  While the Commonwealth of Kentucky has a plan for many businesses to re-open by the end of May, the total economic impact is unknowable at this point.  In response to the economic impact of business closures affecting citizens of the Commonwealth, the Banks are currently offering short-term payment deferral or payment reduction plans to loan customers.  The number of customers requesting these plans has been fewer than expected to date.  Management estimates that the impact to cash flow resulting from customers participating in these plans will be immaterial.  Interest income will continue to accrue for loans in these plans, which were otherwise performing before acceptance into the plans.  At the end of the deferral periods the monthly payments on each loan will be recalculated and, if requested, the maturity date will be extended.  First Federal Savings Bank of Kentucky began participating in the Small Business Administration Paycheck Protection Program to assist the Banks’ customers and members of the communities who have been adversely impacted by the pandemic.  While this program is expected to contribute only modestly to the net earnings of the Company, management believes strongly in helping the communities in which we operate.

At March 31, 2020, the Company reported its book value per share as $7.94. The change in shareholders’ equity was primarily associated with net profits for the period, less dividends paid on common stock and cost of shares repurchased for treasury purposes. 

This press release may contain statements that are forward-looking, as that term is defined by the Private Securities Litigation Act of 1995 or the Securities and Exchange Commission in its rules, regulations and releases.  The Company intends that such forward-looking statements be subject to the safe harbors created thereby.  All forward-looking statements are based on current expectations regarding important risk factors including, but not limited to, the effect of the COVID-19 pandemic, including the length of time that the pandemic continues, and the effect of the pandemic on the general economy and on the businesses of our borrowers and their ability to make payments on their obligations; real estate values; the impact of interest rates on financing; changes in general economic conditions; legislative and regulatory changes that adversely affect the business of the Company; changes in the securities markets; and the Risk Factors described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended June 30, 2019.  Accordingly, actual results may differ from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by the Company or any other person that results expressed therein will be achieved.

Kentucky First Federal Bancorp is the parent company of First Federal Savings and Loan Association of Hazard, which operates one banking office in Hazard, Kentucky and First Federal Savings Bank of Kentucky, which operates three banking offices in Frankfort, Kentucky, two banking offices in Danville, Kentucky and one banking office in Lancaster, Kentucky.  Kentucky First Federal Bancorp shares are traded on the Nasdaq National Market under the symbol KFFB.  At March 31, 2020, the Company had approximately 8,262,215 shares outstanding of which approximately 57.2% was held by First Federal MHC.

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75%; width:75%; min-width:75%;">SUMMARY OF FINANCIAL HIGHLIGHTS	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">	1%; width:1%; min-width:1%;">
Condensed Consolidated Balance Sheets
			March 31,			June 30,
			2020			2019
			(In thousands, except share data)
			(Unaudited)
Assets
Cash and Cash Equivalents		$	17,025		$	9,861
Time deposits in other financial institutions			2,723			6,962
Investment Securities			1,170			1,820
Loans available-for sale			560			--
Loans, net			278,639			280,969
Real estate acquired through foreclosure			748			710
Other Assets			30,115			30,449
Total Assets		$	330,980		$	330,771
Liabilities
Deposits		$	208,555		$	195,836
FHLB Advances			55,042			66,703
Other Liabilities			1,814			1,954
Total Liabilities			265,411			264,493
Shareholders' Equity			65,569			66,278
Total Liabilities and Equity		$	330,980		$	330,771
Book Value Per Share		$	7.94		$	7.96

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	Condensed Consolidated Statements of Income
	(In thousands, except share data)
			Nine months ended March 31,		Three months ended March 31,
1%; width:1%; min-width:1%;">	54%; width:54%; min-width:54%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">2020	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">2019	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">2020	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">2019
			(Unaudited)			(Unaudited)
	Interest Income	$	9,796	$	9,416		$	3,205	$	3,192
	Interest Expense		2,751		2,342			882		845
	Net Interest Income		7,045		7,074			2,323		2,347
	Provision for Losses on Loans		64		11			--		--
	Non-interest Income		233		193			81		81
	Non-interest Expense		6,316		6,627			2,106		2,173
	Income Before Income Taxes		898		629			298		255
	Income Taxes		176		117			58		48
	Net Income	$	722	$	512		$	240	$	207
	Earnings per share:
	Basic and diluted	$	0.09	$	0.06		$	0.03	$	0.02
	Weighted average outstanding shares:
	Basic and diluted		8,259,807		8,348,242			8,246,874		8,319,122

Don Jennings, President, or Clay Hulette, Vice President
(502) 223-1638
216 West Main Street
P.O. Box 535
Frankfort, KY 40602