Kentucky First Federal Bancorp (KFFB)·Q1 2026 Earnings Summary

Executive Summary

• Fiscal Q1 2026 (three months ended September 30, 2025) improved materially: net income rose to $0.34M ($0.04 EPS) vs a $0.02M loss YoY, driven by higher net interest income, flat credit costs, and modestly higher non-interest income .
• Net interest margin expanded to 2.77% from 2.05% YoY as asset yields rose and funding costs eased; net interest spread widened to 2.26% from 1.50% .
• Funding mix improved sequentially: brokered CDs fell to $34.4M (from $44.0M) and deposits declined $6.1M as the company used excess liquidity to pay down funding; book value per share increased to $6.03 .
• No formal guidance or Street consensus was available this quarter; no earnings call transcript was published. The management transition announced in October (R. Clay Hulette appointed CEO, subject to regulatory approval) and ongoing OCC Agreement remediation remain key narrative drivers .

What Went Well and What Went Wrong

What Went Well

• Net interest income rose 33.9% YoY to $2.50M as asset yields increased 54 bps to 5.59% and the cost of interest-bearing liabilities fell 22 bps to 3.33% .
• No provision for credit losses; ACL coverage of nonperforming loans improved to 67.1% (vs 54.1% in June), while NPLs declined to ~1.0% of loans (from 1.2%) .
• Mortgage banking activity improved: non-interest income rose to $0.153M on higher secondary-market loan gains amid stronger demand for fixed-rate loans; management: “interest rates on loans have increased due to new loan production at higher coupons as well as repricing of our adjustable rate mortgages” .

What Went Wrong

• Operating expenses increased 9.5% YoY to $2.20M, led by higher data processing (+$62k) and outside services (+$90k), reflecting expanded technology offerings and third-party services .
• Total deposits declined $6.1M QoQ to $271.4M; savings fell $4.7M QoQ; CDs declined $3.5M QoQ, partly offset by +$2.1M in demand deposits .
• The OCC Agreement continues to constrain flexibility; management reiterated IMCR thresholds for the subsidiary bank and the need to execute on liquidity and IRR programs (though current capital ratios exceed IMCRs) .

Financial Results

Fiscal quarters shown: Q2 FY2025 (Dec-24), Q3 FY2025 (Mar-25), Q1 FY2026 (Sep-25)

Notes: Total Net Revenue = Net Interest Income + Non-Interest Income (computed from cited line items). Net Income Margin = Net Income / Total Net Revenue (computed).

Segment breakdown (loan mix, period-end)

Balance sheet and capital KPIs

Operating efficiency (computed from financial statements)

Guidance Changes

The company does not provide quantitative revenue/earnings guidance. Dividend policy remains suspended; regulatory remediation continues under the OCC Agreement.

Earnings Call Themes & Trends

(No earnings call transcript was published for Q1 FY2026.)

Management Commentary

• Strategic focus: “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… [and] 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.”
• Loan pricing and repricing: “Interest rates on loans have increased due to new loan production at higher coupons as well as repricing of our adjustable rate mortgages to higher rates.”
• Mortgage banking: Non-interest income growth “primarily due to net gains on sales of loans… due to an increase in demand for fixed-rate secondary market loans.”
• Cost drivers: “Data processing charges… and outside service fees” drove YoY expense growth, tied to expanded technology offerings and third-party services .

Q&A Highlights

• No earnings call transcript or Q&A was published for Q1 FY2026. Key clarifications are drawn from the press release and 10-Q MD&A regarding NIM drivers, funding mix, mortgage banking, and regulatory progress .

Estimates Context

• Wall Street consensus: S&P Global showed no quarterly EPS or revenue consensus for Q1 FY2026; KFFB has limited analyst coverage. As a result, no “beat/miss” vs Street can be determined for EPS or revenue this quarter.*
• Benchmarking was based on reported totals from the company’s press release and 10-Q .

*Values retrieved from S&P Global.

Key Takeaways for Investors

• NIM and spread inflected positively, supporting a step-change in profitability; sustained asset repricing and easing funding costs are the primary lever to further margin normalization .
• Expense discipline is a watch item: elevated data processing and third-party service costs offset part of the NII uplift; observe whether these normalize post-remediation and post-technology investments .
• Credit quality is stable: no provision; improving ACL coverage vs NPLs; NPL ratio down to ~1.0%—a supportive backdrop if macro remains benign .
• Funding mix improved (brokered CD reduction), but total deposits declined QoQ; competitive pricing for DDA noted—monitor deposit retention and the balance between deposit growth and cost of funds .
• Regulatory remediation remains central; the subsidiary bank exceeds IMCRs, but the OCC Agreement continues to constrain optionality; any tangible milestones toward termination would be a valuation catalyst .
• Leadership transition (pending regulatory approval) could accelerate execution on strategic initiatives (earnings growth, core deposits, lower-cost funding)—a near-term narrative driver .
• With no Street coverage or guidance, quarter-to-quarter operating momentum (NIM, efficiency ratio, deposit mix) will likely drive the stock’s reaction path absent external catalysts .

Appendix: Additional Data Points

• Book value per share rose to $6.03; TBV equals BV for this period .
• Operating cash flow turned positive ($0.45M) vs negative prior-year quarter, reflecting stronger income and working capital movements .
• Capital ratios at the subsidiary bank (First Federal of Kentucky) exceed IMCR thresholds: CET1 16.07%, Tier 1 16.07%, Total 16.07%, Leverage 10.29% at 9/30/25 .