UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
OR
¨ TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to _______________
Commission File Number: 0-51176
KENTUCKY FIRST FEDERAL BANCORP |
(Exact name of registrant as specified in its charter) |
United States of America |
|
61-1484858 |
(State or other jurisdiction of |
|
(I.R.S. Employer Identification No.) |
incorporation or organization) |
|
|
216 West Main Street, Frankfort, Kentucky 40601 |
(Address of principal executive offices)(Zip Code) |
|
(502) 223-1638 |
(Registrant’s telephone number, including area code) |
|
|
(Former name, former address and former fiscal year, if changed since last report) |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months or such shorter period that the issuer was required to file such reports and (2) has been subject to such filing requirements
for the past ninety days:
Yes x No
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x
No ¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer,” and “smaller reporting company,” in Rule
12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨ |
Accelerated filer ¨ |
Non-accelerated filer ¨ |
Smaller Reporting Company x |
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act.)
Yes ¨ No
x
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of
each of the issuer’s classes of common stock, as of the latest practicable date: At May 13, 2015, the latest practicable
date, the Corporation had 8,439,515 shares of $.01 par value common stock outstanding.
INDEX
PART I
ITEM 1: Financial Information
Kentucky First Federal Bancorp
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
| |
March 31, | | |
June 30, | |
| |
2015 | | |
2014 | |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
Cash and due from financial institutions | |
$ | 4,826 | | |
$ | 4,191 | |
Interest-bearing demand deposits | |
| 5,007 | | |
| 7,320 | |
Cash and cash equivalents | |
| 9,833 | | |
| 11,511 | |
| |
| | | |
| | |
Securities available for sale | |
| 168 | | |
| 247 | |
Securities held-to-maturity, at amortized cost- approximate fair value of $7,836 and $9,195 at March 31, 2015 and June 30, 2014, respectively | |
| 7,689 | | |
| 9,018 | |
Loans, net of allowance of $1,593 and $1,473 at March 31, 2015 and June 30, 2014, respectively | |
| 244,533 | | |
| 246,788 | |
Real estate owned, net | |
| 2,285 | | |
| 1,846 | |
Premises and equipment, net | |
| 4,584 | | |
| 4,629 | |
Federal Home Loan Bank stock, at cost | |
| 6,482 | | |
| 6,482 | |
Accrued interest receivable | |
| 772 | | |
| 891 | |
Bank-owned life insurance | |
| 2,948 | | |
| 2,878 | |
Goodwill | |
| 14,507 | | |
| 14,507 | |
Prepaid federal income taxes | |
| 144 | | |
| 227 | |
Prepaid expenses and other assets | |
| 555 | | |
| 631 | |
| |
| | | |
| | |
Total assets | |
$ | 294,500 | | |
$ | 299,655 | |
| |
| | | |
| | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| |
| | | |
| | |
Deposits | |
$ | 202,173 | | |
$ | 213,142 | |
Federal Home Loan Bank advances | |
| 22,644 | | |
| 17,200 | |
Advances by borrowers for taxes and insurance | |
| 455 | | |
| 616 | |
Accrued interest payable | |
| 32 | | |
| 32 | |
Deferred federal income taxes | |
| 600 | | |
| 210 | |
Deferred revenue | |
| 614 | | |
| 631 | |
Other liabilities | |
| 938 | | |
| 619 | |
Total liabilities | |
| 227,456 | | |
| 232,450 | |
| |
| | | |
| | |
Commitments and contingencies | |
| - | | |
| - | |
| |
| | | |
| | |
Shareholders’ equity | |
| | | |
| | |
Preferred stock, 500,000 shares authorized, $.01 par value; no shares issued and outstanding | |
| - | | |
| - | |
Common stock, 20,000,000 shares authorized, $.01 par value; 8,596,064 shares issued | |
| 86 | | |
| 86 | |
Additional paid-in capital | |
| 34,646 | | |
| 34,671 | |
Retained earnings | |
| 34,479 | | |
| 34,027 | |
Unearned employee stock ownership plan (ESOP), 126,980 shares and 140,987 shares at March 31, 2015 and June 30, 2014, respectively | |
| (1,270 | ) | |
| (1,410 | ) |
Treasury shares at cost, 112,563 and 27,886 common shares at March 31, 2015 and June 30, 2014, respectively | |
| (937 | ) | |
| (239 | ) |
Accumulated other comprehensive income | |
| 40 | | |
| 70 | |
Total shareholders’ equity | |
| 67,044 | | |
| 67,205 | |
| |
| | | |
| | |
Total liabilities and shareholders’ equity | |
$ | 294,500 | | |
$ | 299,655 | |
See accompanying notes.
Kentucky First Federal Bancorp
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)
| |
Nine months ended March 31, | | |
Three months ended March 31, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
Interest income | |
| | | |
| | | |
| | | |
| | |
Loans, including fees | |
$ | 9,093 | | |
$ | 9,519 | | |
$ | 3,038 | | |
$ | 3,137 | |
Mortgage-backed securities | |
| 84 | | |
| 102 | | |
| 27 | | |
| 32 | |
Other securities | |
| 19 | | |
| 22 | | |
| 6 | | |
| 8 | |
Interest-bearing deposits and other | |
| 195 | | |
| 237 | | |
| 65 | | |
| 77 | |
Total interest income | |
| 9,391 | | |
| 9,880 | | |
| 3,136 | | |
| 3,254 | |
| |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| | | |
| | | |
| | | |
| | |
Interest-bearing demand deposits | |
| 23 | | |
| 22 | | |
| 7 | | |
| 7 | |
Savings | |
| 177 | | |
| 180 | | |
| 59 | | |
| 58 | |
Certificates of Deposit | |
| 698 | | |
| 839 | | |
| 246 | | |
| 247 | |
Deposits | |
| 898 | | |
| 1,041 | | |
| 312 | | |
| 312 | |
Borrowings | |
| 180 | | |
| 217 | | |
| 61 | | |
| 65 | |
Total interest expense | |
| 1,078 | | |
| 1,258 | | |
| 373 | | |
| 377 | |
Net interest income | |
| 8,313 | | |
| 8,622 | | |
| 2,763 | | |
| 2,877 | |
Provision for loan losses | |
| 302 | | |
| 531 | | |
| 36 | | |
| 78 | |
Net interest income after provision for loan losses | |
| 8,011 | | |
| 8,091 | | |
| 2,727 | | |
| 2,799 | |
| |
| | | |
| | | |
| | | |
| | |
Non-interest income | |
| | | |
| | | |
| | | |
| | |
Earnings on bank-owned life insurance | |
| 70 | | |
| 68 | | |
| 23 | | |
| 22 | |
Net gain on sales of loans | |
| 28 | | |
| 55 | | |
| 13 | | |
| — | |
Net gain (loss) on sales of OREO | |
| 124 | | |
| (10 | ) | |
| (18 | ) | |
| 7 | |
Vaulation adjustments of OREO | |
| (27 | ) | |
| (34 | ) | |
| (13 | ) | |
| — | |
Other | |
| 201 | | |
| 240 | | |
| 63 | | |
| 78 | |
Total non-interest income | |
| 396 | | |
| 319 | | |
| 68 | | |
| 107 | |
Non-interest expense | |
| | | |
| | | |
| | | |
| | |
Employee compensation and benefits | |
| 3,698 | | |
| 3,908 | | |
| 1,189 | | |
| 1,396 | |
Occupancy and equipment | |
| 469 | | |
| 409 | | |
| 198 | | |
| 124 | |
Outside service fees | |
| 153 | | |
| 104 | | |
| 66 | | |
| 25 | |
Legal fees | |
| 58 | | |
| 27 | | |
| 32 | | |
| 10 | |
Data processing | |
| 327 | | |
| 327 | | |
| 118 | | |
| 107 | |
Auditing and accounting | |
| 189 | | |
| 165 | | |
| 59 | | |
| 66 | |
FDIC insurance premiums | |
| 173 | | |
| 172 | | |
| 54 | | |
| 57 | |
Franchise and other taxes | |
| 198 | | |
| 203 | | |
| 64 | | |
| 67 | |
Foreclosure and OREO expenses (net) | |
| 155 | | |
| 107 | | |
| 34 | | |
| 37 | |
Other | |
| 697 | | |
| 721 | | |
| 176 | | |
| 223 | |
Total non-interest expense | |
| 6,117 | | |
| 6,143 | | |
| 1,990 | | |
| 2,112 | |
| |
| | | |
| | | |
| | | |
| | |
Income before income taxes | |
| 2,290 | | |
| 2,267 | | |
| 805 | | |
| 794 | |
| |
| | | |
| | | |
| | | |
| | |
Federal income tax expense | |
| 756 | | |
| 755 | | |
| 266 | | |
| 303 | |
| |
| | | |
| | | |
| | | |
| | |
NET INCOME | |
$ | 1,534 | | |
$ | 1,512 | | |
$ | 539 | | |
$ | 491 | |
| |
| | | |
| | | |
| | | |
| | |
EARNINGS PER SHARE | |
| | | |
| | | |
| | | |
| | |
Basic and diluted | |
$ | 0.18 | | |
$ | 0.18 | | |
$ | 0.06 | | |
$ | 0.06 | |
DIVIDENDS PER SHARE | |
$ | 0.30 | | |
$ | 0.30 | | |
$ | 0.10 | | |
$ | 0.10 | |
See accompanying notes.
Kentucky First Federal Bancorp
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(Unaudited)
(In thousands)
| |
Nine months ended March 31, | | |
Three months ended March 31, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Net income | |
$ | 1,534 | | |
$ | 1,512 | | |
$ | 539 | | |
$ | 491 | |
| |
| | | |
| | | |
| | | |
| | |
Other comprehensive income (loss), net of taxes (benefits): Unrealized holding gains (losses) on securities designated as available for sale, net of taxes (benefits) of $(15), $24, $2 and $9 during the respective periods | |
| (30 | ) | |
| 47 | | |
| 4 | | |
| 18 | |
Comprehensive income | |
$ | 1,504 | | |
$ | 1,559 | | |
$ | 543 | | |
$ | 509 | |
See accompanying notes.
Kentucky First Federal Bancorp
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| |
Nine months ended | |
| |
March 31, | |
| |
2015 | | |
2014 | |
Cash flows from operating activities: | |
| | | |
| | |
Net income | |
$ | 1,534 | | |
$ | 1,512 | |
Adjustments to reconcile net income to net cash provided by operating | |
| | | |
| | |
Activities | |
| | | |
| | |
Depreciation | |
| 206 | | |
| 218 | |
Accretion of purchased loan credit discount | |
| (270 | ) | |
| (125 | ) |
Amortization of purchased loan premium | |
| 14 | | |
| 7 | |
Amortization (accretion) of deferred loan origination costs (fees) | |
| 44 | | |
| (17 | ) |
Amortization of premiums on investment securities | |
| 117 | | |
| 169 | |
Amortization of premiums on Federal Home Loan Bank advances | |
| — | | |
| (56 | ) |
Amortization of premiums on deposits | |
| (191 | ) | |
| (316 | ) |
Net gain on sale of loans | |
| (28 | ) | |
| (55 | ) |
Net loss (gain) on sale of real estate owned | |
| (89 | ) | |
| — | |
Valuation adjustments of real estate owned | |
| 27 | | |
| 34 | |
Deferred gain on sale of real estate owned | |
| (17 | ) | |
| (6 | ) |
ESOP compensation expense | |
| 115 | | |
| 116 | |
Earnings on bank-owned life insurance | |
| (70 | ) | |
| (68 | ) |
Provision for loan losses | |
| 302 | | |
| 531 | |
Origination of loans held for sale | |
| (599 | ) | |
| (1,502 | ) |
Proceeds from loans held for sale | |
| 627 | | |
| 1,752 | |
Increase (decrease) in cash, due to changes in: | |
| | | |
| | |
Accrued interest receivable | |
| 119 | | |
| 19 | |
Prepaid expenses and other assets | |
| 76 | | |
| 68 | |
Accrued interest payable | |
| — | | |
| 1 | |
Other liabilities | |
| 319 | | |
| 20 | |
Federal income taxes | |
| 488 | | |
| 177 | |
Net cash provided by operating activities | |
| 2,724 | | |
| 2,479 | |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Purchase of held-to-maturity U.S. Treasury notes | |
| (8,500 | ) | |
| (10,000 | ) |
Securities maturities, prepayments and calls: | |
| | | |
| | |
Held to maturity | |
| 9,712 | | |
| 12,186 | |
Available for sale | |
| 34 | | |
| 26 | |
Loans originated for investment, net of principal collected | |
| 724 | | |
| 10,203 | |
Proceeds from sale of real estate owned | |
| 1,064 | | |
| — | |
Proceeds from FHLB stock redemption | |
| — | | |
| 1,250 | |
Additions to premises and equipment, net | |
| (161 | ) | |
| (207 | ) |
Net cash provided by investing activities | |
| 2,873 | | |
| 13,458 | |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Net decrease in deposits | |
| (10,778 | ) | |
| (12,144 | ) |
Payments by borrowers for taxes and insurance, net | |
| (161 | ) | |
| (151 | ) |
Proceeds from Federal Home Loan Bank advances | |
| 19,300 | | |
| 10,000 | |
Repayments on Federal Home Loan Bank advances | |
| (13,856 | ) | |
| (16,025 | ) |
Dividends paid on common stock | |
| (1,082 | ) | |
| (1,127 | ) |
Treasury stock repurchases | |
| (698 | ) | |
| (42 | ) |
Net cash used in financing activities | |
| (7,275 | ) | |
| (19,489 | ) |
| |
| | | |
| | |
Net decrease in cash and cash equivalents | |
| (1,678 | ) | |
| (3,552 | ) |
| |
| | | |
| | |
Beginning cash and cash equivalents | |
| 11,511 | | |
| 16,540 | |
| |
| | | |
| | |
Ending cash and cash equivalents | |
$ | 9,833 | | |
$ | 12,988 | |
See accompanying notes.
Kentucky First Federal Bancorp
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
(In thousands)
| |
Nine months ended | |
| |
March 31, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Supplemental disclosure of cash flow information: | |
| | | |
| | |
Cash paid during the period for: | |
| | | |
| | |
Federal income taxes | |
$ | 255 | | |
$ | 575 | |
| |
| | | |
| | |
Interest on deposits and borrowings | |
$ | 1,269 | | |
$ | 1,629 | |
| |
| | | |
| | |
Transfers of loans to real estate owned, net | |
$ | 1,780 | | |
$ | 1,259 | |
| |
| | | |
| | |
Loans made on sale of real estate owned | |
$ | 439 | | |
$ | 35 | |
See accompanying notes.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2015
(unaudited)
On March 2, 2005, First Federal Savings and
Loan Association of Hazard (“First Federal of Hazard” or the “Association”) completed a Plan of Reorganization
(the “Plan” or the “Reorganization”) pursuant to which the Association reorganized into the mutual holding
company form of ownership with the incorporation of a stock holding company, Kentucky First Federal Bancorp (the “Company”)
as parent of the Association. Coincident with the Reorganization, the Association converted to the stock form of ownership, followed
by the issuance of all the Association’s outstanding stock to Kentucky First Federal Bancorp. Completion of the Plan of Reorganization
culminated with Kentucky First Federal Bancorp issuing 4,727,938 common shares, or 55% of its common shares, to First Federal Mutual
Holding Company (“First Federal MHC”), a federally chartered mutual holding company, with 2,127,572 common shares,
or 24.8% of its shares offered for sale at $10.00 per share to the public and a newly formed Employee Stock Ownership Plan (“ESOP”).
The Company received net cash proceeds of $16.1 million from the public sale of its common shares. The Company’s remaining
1,740,554 common shares were issued as part of the $31.4 million cash and stock consideration paid for 100% of the common shares
of Frankfort First Bancorp (“Frankfort First”) and its wholly-owned subsidiary, First Federal Savings Bank of Frankfort
(“First Federal of Frankfort”). The acquisition was accounted for using the purchase method of accounting and resulted
in the recordation of goodwill and other intangible assets totaling $15.4 million.
On December 31, 2012, the Company completed
its acquisition of CKF Bancorp, Inc. (“CKF Bancorp”), the parent company of Central Kentucky Federal Savings Bank (“Central
Kentucky FSB”), pursuant to the provisions of the Agreement of Merger dated as of November 3, 2011 and amended as of September
28, 2012. The acquisition was accounted for using the acquisition method of accounting and resulted in the recordation of bargain
purchase gain of $958,000.
1. Basis of Presentation
The accompanying unaudited consolidated financial
statements, which represent the 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 consolidated financial statements have been included. The results of operations for the nine- and three-month
periods ended March 31, 2015, are not necessarily indicative of the results which may be expected for an entire fiscal year. The
consolidated balance sheet as of June 30, 2014 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 accepted accounting principles have been condensed or omitted. These consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual
report for 2014 filed with the Securities and Exchange Commission.
Principles of Consolidation -
The consolidated financial statements include the accounts of the Company, Frankfort First, and its wholly-owned banking subsidiaries,
First Federal of Hazard and First Federal of Frankfort (collectively hereinafter “the Banks”). All intercompany transactions
and balances have been eliminated in consolidation.
Reclassifications - Certain amounts
presented in prior periods have been reclassified to conform to the current period presentation. Such reclassifications had no
impact on prior years’ net income or shareholders’ equity.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2015
(unaudited)
2. Earnings Per Share
Diluted earnings per share is computed taking
into consideration common shares outstanding and dilutive potential common shares to be issued or released under the Company’s
share-based compensation plans. The factors used in the basic and diluted earnings per share computations follow:
| |
Nine months ended March 31, | | |
Three months ended March 31, | |
(in thousands) | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | | |
| | | |
| | | |
| | |
Net income allocated
to common shareholders, basic and diluted | |
$ | 1,534 | | |
$ | 1,512 | | |
$ | 539 | | |
$ | 491 | |
| |
Nine months ended March 31, | | |
Three months ended March 31, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
Weighted
average common shares outstanding, basic and diluted | |
| 8,360,824 | | |
| 8,373,329 | | |
| 8,317,518 | | |
| 8,376,353 | |
There were 309,800 stock option shares outstanding
for the nine- and three-month periods ended March 31, 2015 and 2014. The stock option shares outstanding were antidilutive for
the respective periods.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2015
(unaudited)
3. Investment Securities
The following table summarizes the amortized
cost and fair value of securities available-for-sale and securities held-to-maturity at March 31, 2015 and June 30, 2014, the corresponding
amounts of gross unrealized gains recognized in accumulated other comprehensive income and gross unrecognized gains and losses:
| |
March 31, 2015 | |
(in thousands) | |
Amortized cost | | |
Gross unrealized/ unrecognized gains | | |
Gross unrealized/ unrecognized losses | | |
Estimated fair value | |
| |
| | |
| | |
| | |
| |
Available-for-sale Securities | |
| | | |
| | | |
| | | |
| | |
Agency mortgage-backed: residential | |
$ | 101 | | |
$ | 2 | | |
$ | — | | |
$ | 103 | |
FHLMC stock | |
| 7 | | |
| 58 | | |
| — | | |
| 65 | |
| |
$ | 108 | | |
$ | 60 | | |
$ | — | | |
$ | 168 | |
| |
| | | |
| | | |
| | | |
| | |
Held-to-maturity Securities | |
| | | |
| | | |
| | | |
| | |
Agency mortgage-backed: residential | |
$ | 3,060 | | |
$ | 142 | | |
$ | — | | |
$ | 3,202 | |
Agency bonds | |
| 4,629 | | |
| 5 | | |
| — | | |
| 4,634 | |
| |
$ | 7,689 | | |
$ | 147 | | |
$ | — | | |
$ | 7,836 | |
| |
| | |
June 30, 2014 | | |
| | |
| |
(in thousands) | |
Amortized cost | | |
Gross unrealized/ unrecognized gains | | |
Gross unrealized/ unrecognized losses | | |
Estimated fair value | |
| |
| | |
| | |
| | |
| |
Available-for-sale Securities | |
| | | |
| | | |
| | | |
| | |
Agency mortgage-backed: residential | |
$ | 134 | | |
$ | 2 | | |
$ | — | | |
$ | 136 | |
FHLMC stock | |
| 8 | | |
| 103 | | |
| — | | |
| 111 | |
| |
$ | 142 | | |
$ | 105 | | |
$ | — | | |
$ | 247 | |
| |
| | | |
| | | |
| | | |
| | |
Held-to-maturity Securities | |
| | | |
| | | |
| | | |
| | |
Agency mortgage-backed: residential | |
$ | 3,792 | | |
$ | 180 | | |
$ | 1 | | |
$ | 3,971 | |
Agency bonds | |
| 5,226 | | |
| 3 | | |
| 5 | | |
| 5,224 | |
| |
$ | 9,018 | | |
$ | 183 | | |
$ | 6 | | |
$ | 9,195 | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2015
(unaudited)
| 3. | Investment Securities (continued) |
The Company’s equity securities consist
of Federal Home Loan Mortgage Company (FHLMC or Freddie Mac) stock, while our debt securities consist of agency bonds and mortgage-backed
securities. Mortgage-backed securities do not have a single maturity date. The amortized cost and fair value of held-to-maturity
debt securities are shown by contractual maturity. Securities not due at a single maturity date are shown separately.
| |
March 31, 2015 | |
(in thousands) | |
Amortized Cost | | |
Fair Value | |
| |
| | |
| |
Held-to-maturity Securities | |
| | | |
| | |
Within one year | |
$ | 2,015 | | |
$ | 2,016 | |
One to five years | |
| 2,614 | | |
| 2,618 | |
Mortgage-backed | |
| 3,060 | | |
| 3,202 | |
| |
$ | 7,689 | | |
$ | 7,836 | |
Our pledged securities at March 31, 2015, and
June 30, 2014 totaled $2.2 million and $2.6 million, respectively.
There were no sales of investment securities
during the nine month periods ended March 31, 2015 and 2014.
We evaluated securities in unrealized loss
positions for evidence of other-than-temporary impairment, considering duration, severity, financial condition of the issuer, our
intention to sell or requirement to sell. Those securities were agency bonds, which carry a very limited amount of risk. Also,
we have no intention to sell nor feel that we will be compelled to sell such securities before maturity. Based on our evaluation,
no impairment has been recognized through earnings.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2015
(unaudited)
4. Loans receivable
The composition of the loan portfolio was as
follows:
| |
March 31 | | |
June 30, | |
(in thousands) | |
2015 | | |
2014 | |
| |
| | |
| |
Residential real estate | |
| | | |
| | |
One- to four-family | |
$ | 191,553 | | |
$ | 196,381 | |
Multi-family | |
| 16,389 | | |
| 14,002 | |
Construction | |
| 2,986 | | |
| 2,122 | |
Land | |
| 2,297 | | |
| 2,362 | |
Farm | |
| 1,880 | | |
| 1,644 | |
Nonresidential real estate | |
| 22,585 | | |
| 21,945 | |
Commercial nonmortgage | |
| 1,765 | | |
| 2,080 | |
Consumer and other: | |
| | | |
| | |
Loans on deposits | |
| 2,573 | | |
| 2,564 | |
Home equity | |
| 5,571 | | |
| 5,359 | |
Automobile | |
| 65 | | |
| 64 | |
Unsecured | |
| 425 | | |
| 638 | |
| |
| 248,089 | | |
| 249,161 | |
| |
| | | |
| | |
Undisbursed portion of loans in process | |
| (2,071 | ) | |
| (952 | ) |
Deferred loan origination costs | |
| 108 | | |
| 52 | |
Allowance for loan losses | |
| (1,593 | ) | |
| (1,473 | ) |
| |
$ | 244,533 | | |
$ | 246,788 | |
The following table presents the activity in the allowance for loan
losses by portfolio segment for the nine months ended March 31, 2015:
(in thousands) | |
Beginning balance | | |
Provision for loan losses | | |
Loans charged off | | |
Recoveries | | |
Ending balance | |
| |
| | |
| | |
| | |
| | |
| |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | 1,003 | | |
$ | 254 | | |
$ | (202 | ) | |
$ | 20 | | |
$ | 1,075 | |
Multi-family | |
| 73 | | |
| 21 | | |
| — | | |
| — | | |
| 94 | |
Construction | |
| 11 | | |
| 6 | | |
| — | | |
| — | | |
| 17 | |
Land | |
| 10 | | |
| 1 | | |
| | | |
| | | |
| 11 | |
Farm | |
| 9 | | |
| 2 | | |
| — | | |
| — | | |
| 11 | |
Nonresidential real estate | |
| 112 | | |
| 14 | | |
| — | | |
| — | | |
| 126 | |
Commercial nonmortgage | |
| 11 | | |
| (1 | ) | |
| — | | |
| — | | |
| 10 | |
Consumer and other: | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans on deposits | |
| 13 | | |
| 2 | | |
| — | | |
| — | | |
| 15 | |
Home equity | |
| 28 | | |
| 4 | | |
| — | | |
| — | | |
| 32 | |
Automobile | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Unsecured | |
| 3 | | |
| (1 | ) | |
| — | | |
| — | | |
| 2 | |
Unallocated | |
| 200 | | |
| — | | |
| — | | |
| — | | |
| 200 | |
Totals | |
$ | 1,473 | | |
$ | 302 | | |
$ | (202 | ) | |
$ | 20 | | |
$ | 1,593 | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2015
(unaudited)
4. Loans receivable (continued)
The following table presents the activity in the allowance for loan
losses by portfolio segment for the three months ended March 31, 2015:
(in thousands) | |
Beginning balance | | |
Provision for loan losses | | |
Loans charged off | | |
Recoveries | | |
Ending balance | |
| |
| | |
| | |
| | |
| | |
| |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | 1,086 | | |
$ | 13 | | |
$ | (37 | ) | |
$ | 13 | | |
$ | 1,075 | |
Multi-family | |
| 80 | | |
| 14 | | |
| — | | |
| — | | |
| 94 | |
Construction | |
| 7 | | |
| 10 | | |
| — | | |
| — | | |
| 17 | |
Land | |
| 13 | | |
| (2 | ) | |
| — | | |
| — | | |
| 11 | |
Farm | |
| 9 | | |
| 2 | | |
| — | | |
| — | | |
| 11 | |
Nonresidential real estate | |
| 123 | | |
| 3 | | |
| — | | |
| — | | |
| 126 | |
Commercial nonmortgage | |
| 12 | | |
| (2 | ) | |
| — | | |
| — | | |
| 10 | |
Consumer and other: | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans on deposits | |
| 15 | | |
| — | | |
| — | | |
| — | | |
| 15 | |
Home equity | |
| 32 | | |
| — | | |
| — | | |
| — | | |
| 32 | |
Automobile | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Unsecured | |
| 4 | | |
| (2 | ) | |
| — | | |
| — | | |
| 2 | |
Unallocated | |
| 200 | | |
| — | | |
| — | | |
| — | | |
| 200 | |
Totals | |
$ | 1,581 | | |
$ | 36 | | |
$ | (37 | ) | |
$ | 13 | | |
$ | 1,593 | |
The following table presents the activity in the allowance for loan
losses by portfolio segment for the nine months ended March 31, 2014:
(in thousands) | |
Beginning balance | | |
Provision for loan losses | | |
Loans charged off | | |
Recoveries | | |
Ending balance | |
| |
| | |
| | |
| | |
| | |
| |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | 871 | | |
$ | 499 | | |
$ | (392 | ) | |
$ | 12 | | |
$ | 990 | |
Multi-family | |
| 63 | | |
| 10 | | |
| — | | |
| — | | |
| 73 | |
Construction | |
| 8 | | |
| 2 | | |
| — | | |
| — | | |
| 10 | |
Land | |
| 12 | | |
| (4 | ) | |
| — | | |
| — | | |
| 8 | |
Farm | |
| 6 | | |
| 3 | | |
| — | | |
| — | | |
| 9 | |
Nonresidential real estate | |
| 94 | | |
| 21 | | |
| — | | |
| — | | |
| 115 | |
Commercial nonmortgage | |
| 13 | | |
| (1 | ) | |
| — | | |
| — | | |
| 12 | |
Consumer and other: | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans on deposits | |
| 12 | | |
| 2 | | |
| — | | |
| — | | |
| 14 | |
Home equity | |
| 25 | | |
| 3 | | |
| — | | |
| — | | |
| 28 | |
Automobile | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Unsecured | |
| 6 | | |
| (4 | ) | |
| — | | |
| 1 | | |
| 3 | |
Unallocated | |
| 200 | | |
| — | | |
| — | | |
| — | | |
| 200 | |
Totals | |
$ | 1,310 | | |
$ | 531 | | |
$ | (392 | ) | |
$ | 13 | | |
$ | 1,462 | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2015
(unaudited)
4. Loans receivable (continued)
The following table presents the activity in the allowance for loan
losses by portfolio segment for the three months ended March 31, 2014:
(in thousands) | |
Beginning balance | | |
Provision for loan losses | | |
Loans charged off | | |
Recoveries | | |
Ending balance | |
| |
| | |
| | |
| | |
| | |
| |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | 982 | | |
$ | 62 | | |
$ | (62 | ) | |
$ | 8 | | |
$ | 990 | |
Multi-family | |
| 64 | | |
| 9 | | |
| — | | |
| — | | |
| 73 | |
Construction | |
| 10 | | |
| — | | |
| — | | |
| — | | |
| 10 | |
Land | |
| 10 | | |
| (2 | ) | |
| — | | |
| — | | |
| 8 | |
Farm | |
| 8 | | |
| 1 | | |
| — | | |
| — | | |
| 9 | |
Nonresidential real estate | |
| 102 | | |
| 13 | | |
| — | | |
| — | | |
| 115 | |
Commercial nonmortgage | |
| 16 | | |
| (4 | ) | |
| — | | |
| — | | |
| 12 | |
Consumer and other: | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans on deposits | |
| 14 | | |
| — | | |
| — | | |
| — | | |
| 14 | |
Home equity | |
| 28 | | |
| — | | |
| — | | |
| — | | |
| 28 | |
Autombile | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Unsecured | |
| 4 | | |
| (1 | ) | |
| — | | |
| — | | |
| 3 | |
Unallocated | |
| 200 | | |
| — | | |
| — | | |
| — | | |
| 200 | |
Totals | |
$ | 1,438 | | |
$ | 78 | | |
$ | (62 | ) | |
$ | 8 | | |
$ | 1,462 | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2015
(unaudited)
4. Loans receivable (continued)
The following table presents the balance in
the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of March
31, 2015. The recorded investment in loans excludes accrued interest receivable and deferred loan costs, net due to immateriality.
March 31, 2015: | |
| | |
| | |
| | |
| | |
| | |
| |
(in thousands) | |
Loans individually evaluated | | |
Loans acquired with deteriorated credit quality | | |
Ending loans balance | | |
Ending allowance attributed to loans | | |
Unallocated allowance | | |
Total allowance | |
Loans individually evaluated for impairment: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | 1,725 | | |
$ | 2,517 | | |
$ | 4,242 | | |
$ | 8 | | |
$ | — | | |
$ | 8 | |
Land | |
| — | | |
| 381 | | |
| 381 | | |
| — | | |
| — | | |
| | |
Nonresidential real estate | |
| — | | |
| 528 | | |
| 528 | | |
| — | | |
| — | | |
| — | |
| |
| 1,725 | | |
| 3,426 | | |
| 5,151 | | |
| 8 | | |
| — | | |
| 8 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans collectively evaluated for impairment: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
| | | |
| | | |
$ | 187,378 | | |
$ | 1,067 | | |
$ | — | | |
$ | 1,067 | |
Multi-family | |
| | | |
| | | |
| 16,389 | | |
| 94 | | |
| — | | |
| 94 | |
Construction | |
| | | |
| | | |
| 2,986 | | |
| 17 | | |
| — | | |
| 17 | |
Land | |
| | | |
| | | |
| 1,916 | | |
| 11 | | |
| — | | |
| 11 | |
Farm | |
| | | |
| | | |
| 1,880 | | |
| 11 | | |
| — | | |
| 11 | |
Nonresidential real estate | |
| | | |
| | | |
| 22,057 | | |
| 126 | | |
| — | | |
| 126 | |
Commercial nonmortgage | |
| | | |
| | | |
| 1,765 | | |
| 10 | | |
| — | | |
| 10 | |
Consumer: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans on deposits | |
| | | |
| | | |
| 2,573 | | |
| 15 | | |
| — | | |
| 15 | |
Home equity | |
| | | |
| | | |
| 5,571 | | |
| 32 | | |
| — | | |
| 32 | |
Automobile | |
| | | |
| | | |
| 65 | | |
| — | | |
| — | | |
| — | |
Unsecured | |
| | | |
| | | |
| 425 | | |
| 2 | | |
| — | | |
| 2 | |
Unallocated | |
| | | |
| | | |
| — | | |
| — | | |
| 200 | | |
| 200 | |
| |
| | | |
| | | |
| 243,005 | | |
| 1,385 | | |
| 200 | | |
| 1,585 | |
| |
| | | |
| | | |
$ | 248,089 | | |
$ | 1,393 | | |
$ | 200 | | |
$ | 1,593 | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2015
(unaudited)
4. Loans receivable (continued)
The following tables present the balance
in the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of June
30, 2014.
June 30, 2014: | |
| | |
| | |
| | |
| | |
| | |
| |
(in thousands) | |
Loans individually evaluated | | |
Loans acquired with deteriorated credit quality | | |
Ending loans balance | | |
Ending allowance attributed to loans | | |
Unallocated allowance | | |
Total allowance | |
Loans individually evaluated for impairment: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | 2,159 | | |
$ | 2,735 | | |
$ | 4,894 | | |
$ | 14 | | |
$ | — | | |
$ | 14 | |
Land | |
| — | | |
| 444 | | |
| 444 | | |
| — | | |
| — | | |
| | |
Nonresidential real estate | |
| — | | |
| 529 | | |
| 529 | | |
| — | | |
| — | | |
| — | |
Commercial nonmortgage | |
| — | | |
| 68 | | |
| 68 | | |
| — | | |
| — | | |
| — | |
| |
| 2,159 | | |
| 3,776 | | |
| 5,935 | | |
| 14 | | |
| — | | |
| 14 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans collectively evaluated for impairment: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
| | | |
| | | |
$ | 191,487 | | |
$ | 989 | | |
$ | — | | |
$ | 989 | |
Multi-family | |
| | | |
| | | |
| 14,002 | | |
| 73 | | |
| — | | |
| 73 | |
Construction | |
| | | |
| | | |
| 2,122 | | |
| 11 | | |
| — | | |
| 11 | |
Land | |
| | | |
| | | |
| 1,918 | | |
| 10 | | |
| — | | |
| 10 | |
Farm | |
| | | |
| | | |
| 1,644 | | |
| 9 | | |
| — | | |
| 9 | |
Nonresidential real estate | |
| | | |
| | | |
| 21,416 | | |
| 112 | | |
| — | | |
| 112 | |
Commercial nonmortgagel | |
| | | |
| | | |
| 2,012 | | |
| 11 | | |
| — | | |
| 11 | |
Consumer: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans on deposits | |
| | | |
| | | |
| 2,564 | | |
| 13 | | |
| — | | |
| 13 | |
Home equity | |
| | | |
| | | |
| 5,359 | | |
| 28 | | |
| — | | |
| 28 | |
Automobile | |
| | | |
| | | |
| 64 | | |
| — | | |
| — | | |
| — | |
Unsecured | |
| | | |
| | | |
| 638 | | |
| 3 | | |
| — | | |
| 3 | |
Unallocated | |
| | | |
| | | |
| — | | |
| — | | |
| 200 | | |
| 200 | |
| |
| | | |
| | | |
| 243,226 | | |
| 1,259 | | |
| 200 | | |
| 1,459 | |
| |
| | | |
| | | |
$ | 249,161 | | |
$ | 1,273 | | |
$ | 200 | | |
$ | 1,473 | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2015
(unaudited)
4. Loans receivable (continued)
The following table presents loans individually
evaluated for impairment by class of loans as of and for the nine months ended March 31, 2015 and 2014:
March 31, 2015:
(in thousands) | |
Unpaid Principal Balance and Recorded Investment | | |
Allowance for Loan Losses Allocated | | |
Average Recorded Investment | | |
Interest Income Recognized | | |
Cash Basis Income Recognized | |
| |
| | |
| | |
| | |
| | |
| |
With no related allowance recorded: | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | 1,658 | | |
$ | — | | |
$ | 1,516 | | |
$ | 26 | | |
$ | 26 | |
Purchased credit-impaired loans | |
| 3,426 | | |
| — | | |
| 3,552 | | |
| 191 | | |
| 83 | |
| |
| 5,084 | | |
| — | | |
| 5,068 | | |
| 217 | | |
| 109 | |
With an allowance recorded: | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
| 67 | | |
| 8 | | |
| 104 | | |
| 4 | | |
| 4 | |
| |
$ | 5,151 | | |
$ | 8 | | |
$ | 5,172 | | |
$ | 221 | | |
$ | 113 | |
March 31, 2014:
(in thousands) | |
Unpaid Principal Balance and Recorded Investment | | |
Allowance for Loan Losses Allocated | | |
Average Recorded Investment | | |
Interest Income Recognized | | |
Cash Basis Income Recognized | |
| |
| | |
| | |
| | |
| | |
| |
With no related allowance recorded: | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | 4,388 | | |
$ | — | | |
$ | 4,723 | | |
$ | — | | |
$ | — | |
Purchased credit-impaired loans | |
| 3,747 | | |
| — | | |
| 3,822 | | |
| — | | |
| — | |
| |
| 8,135 | | |
| — | | |
| 8,545 | | |
| — | | |
| — | |
With an allowance recorded: | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
| 208 | | |
| 14 | | |
| 208 | | |
| — | | |
| — | |
| |
$ | 8,343 | | |
$ | 14 | | |
$ | 8,753 | | |
$ | — | | |
$ | — | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2015
(unaudited)
4. Loans receivable (continued)
The following tables present the recorded
investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2015, and June 30,
2014:
| |
March 31, 2015 | | |
June 30, 2014 | |
(in thousands) | |
Nonaccrual | | |
Loans Past Due Over 90 Days Still Accruing | | |
Nonaccrual | | |
Loans Past Due Over 90 Days Still Accruing | |
| |
| | |
| | |
| | |
| |
One- to four-family residential real estate | |
$ | 3,853 | | |
$ | 1,234 | | |
$ | 5,767 | | |
$ | 3,513 | |
Nonresidential real estate and land | |
| 660 | | |
| 37 | | |
| 384 | | |
| — | |
Commercial nonmortgage | |
| 26 | | |
| 36 | | |
| 47 | | |
| — | |
Consumer | |
| 34 | | |
| 16 | | |
| 29 | | |
| — | |
| |
$ | 4,573 | | |
$ | 1,323 | | |
$ | 6,227 | | |
$ | 3,513 | |
Troubled Debt Restructurings:
A Troubled Debt Restructuring (“TDR”)
is the situation where the Bank grants a concession to the borrower that the Bank would not otherwise have considered due to the
borrower’s financial difficulties. All TDRs are considered “impaired.” At March 31, 2015 and June 30, 2014, the
Company had $1.8 million and $2.0 million of loans classified as TDRs, respectively. Of the TDRs at March 31, 2015, approximately
40.2% were related to the borrower’s completion of Chapter 7 bankruptcy proceedings with no reaffirmation of the debt to
the Banks.
The following table presents TDR’s
by loan type at March 31, 2015 and June 30, 2014, and their performance, by modification type:
(dollars in thousands) | |
Number of Loans | | |
Pre- Modification Outstanding Recorded Investment | | |
Post- Modification Outstanding Recorded Investment | | |
TDRs Performing to Modified Terms | | |
TDRs Not Performing to Modified Terms | |
| |
| | |
| | |
| | |
| | |
| |
March 31, 2015 | |
| | | |
| | | |
| | | |
| | | |
| | |
Residential Real Estate: | |
| | | |
| | | |
| | | |
| | | |
| | |
1-4 Family | |
| 39 | | |
$ | 2,142 | | |
$ | 2,142 | | |
$ | 1,617 | | |
$ | 221 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
June 30, 2014 | |
| | | |
| | | |
| | | |
| | | |
| | |
Residential Real Estate: | |
| | | |
| | | |
| | | |
| | | |
| | |
1-4 Family | |
| 39 | | |
$ | 2,230 | | |
$ | 2,230 | | |
$ | 1,621 | | |
$ | 376 | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2015
(unaudited)
4. Loans receivable (continued)
There was one TDR loan modification totaling
$20,000 for the three months ended March 31, 2015, which resulted in extension of the term of the loan with no additional principal
or change in interest rate. The loan is performing to modified terms at March 31, 2015. The following table summarizes TDR loan
modifications for the three months ended March 31, 2014, and their performance, by modification type:
(in thousands) | |
Troubled Debt Restructurings Performing to Modified Terms | | |
Troubled Debt Restructurings Not Performing to Modified Terms | | |
Total Troubled Debt Restructurings | |
| |
| | |
| | |
| |
Three months ended March 31, 2014 | |
| | | |
| | | |
| | |
Residential real estate: | |
| | | |
| | | |
| | |
Rate reduction | |
$ | — | | |
$ | — | | |
$ | — | |
Bankruptcies | |
| 82 | | |
| — | | |
| 82 | |
Total troubled debt restructures | |
$ | 82 | | |
$ | — | | |
$ | 82 | |
There was one TDR loan modification totaling
$20,000 for the nine months ended March 31, 2015, which resulted in extension of the term of the loan with no additional principal
or change in interest rate. The loan is performing to modified terms at March 31, 2015. The following table summarizes TDR loan
modifications that occured during the nine months ended March 31, 2014, and their performance, by modification type
(in thousands) | |
Troubled Debt Restructurings Performing to Modified Terms | | |
Troubled Debt Restructurings Not Performing to Modified Terms | | |
Total Troubled Debt Restructurings | |
| |
| | |
| | |
| |
Nine months ended March 31, 2014 | |
| | | |
| | | |
| | |
Residential real estate: | |
| | | |
| | | |
| | |
Rate reduction | |
$ | — | | |
$ | — | | |
$ | — | |
Bankruptcies | |
| 457 | | |
| — | | |
| 457 | |
Total troubled debt restructures | |
$ | 457 | | |
$ | — | | |
$ | 457 | |
The Company had no allocated specific reserves
to customers whose loan terms had been modified in troubled debt restructurings as of March 31, 2015, or at June 30, 2014. The
Company had no commitments to lend on loans classified as TDRs at March 31, 2015 or June 30, 2014.
There were no TDRs that defaulted during
the nine- or three-month periods ended March 31, 2015, while there was one TDR that defaulted in the nine and three-month periods
ended March 31, 2014. That default was a result of bankruptcy and resulted in additional provision for loan losses of $194,000
during the nine- and three-months ended March 31, 2014.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2015
(unaudited)
4. Loans receivable (continued)
The following table presents the aging
of the principal balance outstanding in past due loans as of March 31, 2015, by class of loans:
(in thousands) | |
30-89 Days Past Due | | |
90 Days or Greater Past Due | | |
Total Past Due | | |
Loans Not Past Due | | |
Total | |
| |
| | |
| | |
| | |
| | |
| |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | |
One-to four-family | |
$ | 6,122 | | |
$ | 2,841 | | |
$ | 8,963 | | |
$ | 182,590 | | |
$ | 191,553 | |
Multi-family | |
| — | | |
| — | | |
| — | | |
| 16,389 | | |
| 16,389 | |
Construction | |
| — | | |
| — | | |
| — | | |
| 2,986 | | |
| 2,986 | |
Land | |
| 224 | | |
| 37 | | |
| 261 | | |
| 2,036 | | |
| 2,297 | |
Farm | |
| — | | |
| — | | |
| — | | |
| 1,880 | | |
| 1,880 | |
Nonresidential real estate | |
| — | | |
| 320 | | |
| 320 | | |
| 22,265 | | |
| 22,585 | |
Commercial non-mortgage | |
| — | | |
| — | | |
| — | | |
| 1,765 | | |
| 1,765 | |
Consumer and other: | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans on deposits | |
| — | | |
| — | | |
| — | | |
| 2,573 | | |
| 2,573 | |
Home equity | |
| — | | |
| 44 | | |
| 44 | | |
| 5,527 | | |
| 5,571 | |
Automobile | |
| — | | |
| — | | |
| — | | |
| 65 | | |
| 65 | |
Unsecured | |
| 1 | | |
| 36 | | |
| 37 | | |
| 388 | | |
| 425 | |
Total | |
$ | 6,347 | | |
$ | 3,278 | | |
$ | 9,625 | | |
$ | 238,464 | | |
$ | 248,089 | |
The following tables present the aging
of the principal balance outstanding in past due loans as of June 30, 2014, by class of loans:
(in thousands) | |
30-89 Days Past Due | | |
90 Days or Greater Past Due | | |
Total Past Due | | |
Loans Not Past Due | | |
Total | |
| |
| | |
| | |
| | |
| | |
| |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | |
One-to four-family | |
$ | 4,481 | | |
$ | 9,060 | | |
$ | 13,541 | | |
$ | 182,840 | | |
$ | 196,381 | |
Multi-family | |
| — | | |
| — | | |
| — | | |
| 14,002 | | |
| 14,002 | |
Construction | |
| 343 | | |
| — | | |
| 343 | | |
| 1,779 | | |
| 2,122 | |
Land | |
| — | | |
| 364 | | |
| 364 | | |
| 1,998 | | |
| 2,362 | |
Farm | |
| — | | |
| — | | |
| — | | |
| 1,644 | | |
| 1,644 | |
Nonresidential real estate | |
| 375 | | |
| 396 | | |
| 771 | | |
| 21,174 | | |
| 21,945 | |
Commercial nonmortgage | |
| — | | |
| 88 | | |
| 88 | | |
| 1,992 | | |
| 2,080 | |
Consumer: | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans on deposits | |
| — | | |
| — | | |
| — | | |
| 2,564 | | |
| 2,564 | |
Home equity | |
| — | | |
| 33 | | |
| 33 | | |
| 5,326 | | |
| 5,359 | |
Automobile | |
| — | | |
| — | | |
| — | | |
| 64 | | |
| 64 | |
Unsecured | |
| 68 | | |
| — | | |
| 68 | | |
| 570 | | |
| 638 | |
Total | |
$ | 5,267 | | |
$ | 9,941 | | |
$ | 15,208 | | |
$ | 233,953 | | |
$ | 249,161 | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2015
(unaudited)
4. Loans receivable (continued)
Credit Quality Indicators:
The Company categorizes loans into risk
categories based on relevant information about the ability of borrowers to service their debt such as: current financial information,
historical payment experience, credit documentation, public information, and current economic trends, among other factors. The
Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on an annual basis.
The Company uses the following definitions for risk ratings:
Special Mention. Loans
classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected,
these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit
position at some future date.
Substandard. Loans classified
as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged,
if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized
by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful. Loans classified
as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses
make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and
improbable.
Loans not meeting the criteria above that
are analyzed individually as part of the above-described process are considered to be pass rated loans. Loans listed that are not
rated are included in groups of homogeneous loans and are evaluated for credit quality based on performing status. See the aging
of past due loan table above. As of March 31, 2015, and based on the most recent analysis performed, the risk category of loans
by class of loans is as follows:
(in thousands) | |
Pass | | |
Special Mention | | |
Substandard | | |
Doubtful | | |
Not rated | |
| |
| | |
| | |
| | |
| | |
| |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | — | | |
$ | 5,268 | | |
$ | 8,731 | | |
$ | — | | |
$ | 177,554 | |
Multi-family | |
| 16,389 | | |
| — | | |
| — | | |
| — | | |
| — | |
Construction | |
| 2,986 | | |
| — | | |
| — | | |
| — | | |
| — | |
Land | |
| 1,428 | | |
| — | | |
| 869 | | |
| — | | |
| — | |
Farm | |
| 1,880 | | |
| — | | |
| — | | |
| — | | |
| — | |
Nonresidential real estate | |
| 19,407 | | |
| 1,136 | | |
| 2,042 | | |
| — | | |
| — | |
Commercial nonmortgage | |
| 1,765 | | |
| — | | |
| | | |
| — | | |
| — | |
Consumer: | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans on deposits | |
| 2,573 | | |
| — | | |
| — | | |
| — | | |
| — | |
Home equity | |
| 5,541 | | |
| — | | |
| 30 | | |
| — | | |
| — | |
Automobile | |
| 65 | | |
| — | | |
| — | | |
| — | | |
| — | |
Unsecured | |
| 389 | | |
| 36 | | |
| — | | |
| — | | |
| — | |
| |
$ | 52,423 | | |
$ | 6,440 | | |
$ | 11,672 | | |
$ | — | | |
$ | 177,554 | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31 2015
(unaudited)
4. Loans receivable (continued)
At June 30, 2014, the risk category of
loans by class of loans was as follows:
(in thousands) | |
Pass | | |
Special Mention | | |
Substandard | | |
Doubtful | | |
Not rated | |
| |
| | |
| | |
| | |
| | |
| |
Residential real estate: | |
| | | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | — | | |
$ | 2,928 | | |
$ | 11,287 | | |
$ | — | | |
$ | 182,166 | |
Multi-family | |
| 14,002 | | |
| — | | |
| — | | |
| — | | |
| — | |
Construction | |
| 2,122 | | |
| — | | |
| — | | |
| — | | |
| — | |
Land | |
| 1,366 | | |
| — | | |
| 996 | | |
| — | | |
| — | |
Farm | |
| 1,644 | | |
| — | | |
| — | | |
| — | | |
| — | |
Nonresidential real estate | |
| 18,920 | | |
| 965 | | |
| 2,060 | | |
| — | | |
| — | |
Commercial nonmortgage | |
| 2,014 | | |
| — | | |
| 66 | | |
| — | | |
| — | |
Consumer: | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans on deposits | |
| 2,564 | | |
| — | | |
| — | | |
| — | | |
| — | |
Home equity | |
| 5,359 | | |
| — | | |
| — | | |
| — | | |
| — | |
Automobile | |
| 64 | | |
| — | | |
| — | | |
| — | | |
| — | |
Unsecured | |
| 606 | | |
| 3 | | |
| 29 | | |
| — | | |
| — | |
| |
$ | 48,661 | | |
$ | 3,896 | | |
$ | 14,438 | | |
$ | — | | |
$ | 182,166 | |
Purchased Credit Impaired Loans:
The Company purchased loans during fiscal
year 2013 for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable,
at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans, net of a purchase
credit discount of $618,000 and $782,000 at March 31, 2015 and June 30, 2014, respectively, is as follows:
(in thousands) | |
March
31, 2015 | | |
June
30, 2014 | |
| |
| | |
| |
One- to four-family residential real estate | |
$ | 2,517 | | |
$ | 2,735 | |
Land | |
| 381 | | |
| 444 | |
Nonresidential real estate | |
| 528 | | |
| 529 | |
Commercial nonmortgage | |
| — | | |
| 68 | |
Outstanding balance | |
$ | 3,426 | | |
$ | 3,776 | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2015
(unaudited)
4. Loans receivable (continued)
Accretable yield, or income expected to be collected, is as
follows
(in thousands) | |
Three months ended March 31, 2015 | | |
Nine months ended March 31, 2015 | | |
Twelve months ended June 30, 2014 | |
| |
| | |
| | |
| |
Balance at beginning of period | |
$ | 1,249 | | |
$ | 1,478 | | |
$ | 1,294 | |
New loans purchased | |
| — | | |
| — | | |
| — | |
Accretion of income | |
| (105 | ) | |
| (270 | ) | |
| (155 | ) |
Reclassifications from nonaccretable difference | |
| — | | |
| — | | |
| 339 | |
Disposals | |
| (77 | ) | |
| (141 | ) | |
| — | |
Balance at end of period | |
$ | 1,067 | | |
$ | 1,067 | | |
$ | 1,478 | |
For those purchased loans disclosed above, the Company made
no increase in allowance for loan losses for the year ended June 30, 2014, nor for the nine- or three-month periods ended March
31, 2015. Neither were any allowance for loan losses reversed during those periods.
5. Disclosures About Fair Value of Assets
and Liabilities
ASC topic 820 defines fair value as the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. ASC topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of
inputs that may be used to measure fair value:
Level 1 - Quoted prices in active
markets for identical assets or liabilities.
Level 2 - Observable
inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that
are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full
term of the assets or liabilities.
Level 3 – Unobservable
inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Following is a description of the valuation
methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to
the valuation hierarchy.
Securities
Where quoted market prices are available
in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available,
then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics. Level 2 securities
include agency mortgage-backed securities.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2015
(unaudited)
| 5. | Disclosures About Fair Value of Assets and Liabilities
(continued) |
Impaired Loans
At the time a loan is considered impaired,
it is evaluated for loss based on the fair value of collateral securing the loan if the loan is collateral dependent. If a loss
is identified, a specific allocation will be established as part of the allowance for loan losses such that the loan’s net
carrying value is at its estimated fair value. Impaired loans carried at fair value generally receive specific allocations of the
allowance for loan losses. For collateral-dependent loans, fair value is commonly based on recent real estate appraisals. These
appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.
Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable
sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the
inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s
financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market
conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business,
resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and
adjusted accordingly.
Other Real Estate
Assets acquired through or instead of loan
foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets
are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent
real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable
sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust
for differences between the comparable sales and income data available. Such adjustments are usually significant and typically
result in a Level 3 classification of the inputs for determining fair value.
Financial assets measured at fair value
on a recurring basis are summarized below:
| |
Fair Value Measurements Using | |
(in thousands) | |
Fair Value | | |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
| |
Significant Other Observable Inputs (Level 2) | | |
Significant
Unobservable Inputs
(Level 3) | |
| |
| | |
| | |
| | |
| |
March 31, 2015 | |
| | | |
| | | |
| | | |
| | |
Agency mortgage-backed: residential | |
$ | 103 | | |
$ | — | | |
$ | 103 | | |
$ | — | |
FHLMC stock | |
| 65 | | |
| — | | |
| 65 | | |
| — | |
| |
$ | 168 | | |
$ | — | | |
$ | 168 | | |
$ | — | |
June 30, 2014 | |
| | | |
| | | |
| | | |
| | |
Agency mortgage-backed: residential | |
$ | 136 | | |
$ | — | | |
$ | 136 | | |
$ | — | |
FHLMC stock | |
| 111 | | |
| — | | |
| 111 | | |
| — | |
| |
$ | 247 | | |
$ | — | | |
$ | 247 | | |
$ | — | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2015
(unaudited)
5. Disclosures About Fair Value of Assets
and Liabilities (continued)
Assets measured at fair value on a non-recurring
basis are summarized below:
| |
Fair Value Measurements Using | |
(in thousands) | |
Fair Value | | |
Quoted
Prices in Active
Markets for Identical
Assets (Level 1) | | |
Significant
Other Observable
Inputs (Level 2) | | |
Significant
Unobservable Inputs
(Level 3) | |
| |
| | |
| | |
| | |
| |
March 31, 2015 | |
| | | |
| | | |
| | | |
| | |
Impaired loans | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | 67 | | |
$ | — | | |
$ | — | | |
$ | 67 | |
| |
| | | |
| | | |
| | | |
| | |
Other real estate owned, net | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
| 963 | | |
| — | | |
| — | | |
| 963 | |
| |
| | | |
| | | |
| | | |
| | |
June 30, 2014 | |
| | | |
| | | |
| | | |
| | |
Impaired loans | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
$ | 186 | | |
$ | — | | |
$ | — | | |
$ | 186 | |
| |
| | | |
| | | |
| | | |
| | |
Other real estate owned, net | |
| | | |
| | | |
| | | |
| | |
One- to four-family | |
| 1,140 | | |
| — | | |
| — | | |
| 1,140 | |
Land | |
| 15 | | |
| — | | |
| — | | |
| 15 | |
Impaired loans, which were measured using
the fair value of the collateral for collateral-dependent loans totaled $75,000 and $200,000 at March 31, 2015, and June 30, 2014,
respectively with specific valuation allowance of $8,000 and $14,000, respectively. There was no specific provision made for the
nine month periods ended March 31, 2015 or 2014.
Other real estate owned measured at fair
value less costs to sell, had carrying amounts of $963,000 and $1.2 million at March 31, 2015 and June 30, 2014, respectively.
Other real estate owned was written down $27,000 and $34,000 during the nine months ended March 31, 2015 and 2014, respectively.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2015
(unaudited)
5. Disclosures About Fair Value of Assets
and Liabilities (continued)
The following table presents quantitative
information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at
March 31, 2015 and June 30, 2014:
| |
| | |
| |
| |
Range |
| |
Fair Value | | |
Valuation | |
Unobservable | |
(Weighted |
March 31, 2015 | |
(in thousands) | | |
Technique(s) | |
Input(s) | |
Average) |
Impaired Loans: | |
| | | |
| |
| |
|
Residential real estate | |
| | | |
| |
| |
|
One- to four- family | |
$ | 67 | | |
Sales comparison approach | |
Adjustments for differences between comparable sales | |
4.64% to 10.31% (7.91%) |
| |
| | | |
| |
| |
|
Foreclosed and repossessed assets: | |
| | | |
| |
| |
|
1-4 family | |
$ | 963 | | |
Sales comparison approach | |
Adjustments for differences between comparable sales | |
-1.4% to 18.6% (0.94%) |
| |
| | |
| |
| |
Range |
| |
Fair Value | | |
Valuation | |
Unobservable | |
(Weighted |
June 30, 2014 | |
(in thousands) | | |
Technique(s) | |
Input(s) | |
Average) |
Impaired Loans: | |
| | | |
| |
| |
|
Residential real estate | |
| | | |
| |
| |
|
One- to four- family | |
$ | 186 | | |
Sales comparison approach | |
Adjustments for differences between comparable sales | |
3.1% to 19.8% (4.3%) |
| |
| | | |
| |
| |
|
Foreclosed and repossessed assets: | |
| | | |
| |
| |
|
1-4 family | |
$ | 1,140 | | |
Sales comparison approach | |
Adjustments for differences between comparable sales | |
-37.1% to 30.2% (1.1%) |
Land | |
$ | 15 | | |
Sales comparison approach | |
Adjustments for differences between comparable sales | |
20.2% to 38.9% (20.8%) |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2015
(unaudited)
5. Disclosures About Fair Value of Assets
and Liabilities (continued)
The following is a disclosure of the fair
value of financial instruments, both assets and liabilities, whether or not recognized in the consolidated balance sheet, for which
it is practicable to estimate that value. For financial instruments where quoted market prices are not available, fair values are
based on estimates using present value and other valuation methods.
The methods used are greatly affected by
the assumptions applied, including the discount rate and estimates of future cash flows. Therefore, the fair values presented may
not represent amounts that could be realized in an exchange for certain financial instruments.
The following methods
were used to estimate the fair value of all other financial instruments at March 31, 2015 and June 30, 2014:
Cash and cash equivalents and interest-bearing
deposits: The carrying amounts presented in the consolidated statements of financial condition for cash and cash equivalents
are deemed to approximate fair value.
Held-to-maturity securities: For held-to-maturity
securities, fair value is estimated by using pricing models, quoted price of securities with similar characteristics, which is
level 2 pricing for the other securities.
Loans held for sale: Loans originated and
intended for sale in the secondary market are determined by FHLB pricing schedules.
Loans: The loan portfolio has been segregated
into categories with similar characteristics, such as one- to four-family residential, multi-family residential and nonresidential
real estate. These loan categories were further delineated into fixed-rate and adjustable-rate loans. The fair values for the resultant
loan categories were computed via discounted cash flow analysis, using current interest rates offered for loans with similar terms
to borrowers of similar credit quality. For loans on deposit accounts and consumer and other loans, fair values were deemed to
equal the historic carrying values. The fair values of the loans does not necessarily represent an exit price.
Loans receivable represents the Company’s most
significant financial asset, which is in Level 3 for fair value measurements. A third party provides financial modeling for the
Company and results are based on assumptions and factors determined by management.
Federal Home Loan Bank stock: It is not practicable
to determine the fair value of FHLB stock due to restrictions placed on its transferability.
Accrued interest receivable: The carrying
amount is the estimated fair value.
Deposits: The fair value of NOW accounts,
passbook accounts, and money market deposits are deemed to approximate the amount payable on demand. Fair values for fixed-rate
certificates of deposit have been estimated using a discounted cash flow calculation using the interest rates currently offered
for deposits of similar remaining maturities.
Federal Home Loan Bank advances: The fair
value of these advances is estimated using the rates currently offered for similar advances of similar remaining maturities or,
when available, quoted market prices.
Advances by borrowers for taxes and insurance
and accrued interest payable: The carrying amount presented in the consolidated statement of financial condition is deemed
to approximate fair value.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2015
(unaudited)
5. Disclosures About Fair Value of Assets
and Liabilities (continued)
Commitments to extend credit:
For fixed-rate and adjustable-rate loan commitments, the fair value estimate considers the difference between current levels of
interest rates and committed rates. The fair value of outstanding loan commitments at March 31, 2015 and June 30, 2014, was not
material.
Based on the foregoing methods and assumptions,
the carrying value and fair value of the Company’s financial instruments at March 31, 2015 and June 30, 2014 are as follows:
| |
| | |
Fair Value Measurements at | |
(in thousands) | |
| | |
March 31, 2015 Using | |
| |
Carrying
Value | | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Financial assets | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
$ | 9,833 | | |
$ | 9,833 | | |
| | | |
| | | |
$ | 9,833 | |
Available-for-sale securities | |
| 168 | | |
| | | |
$ | 168 | | |
| | | |
| 168 | |
Held-to-maturity securities | |
| 7,689 | | |
| | | |
| 7,836 | | |
| | | |
| 7,836 | |
Loans receivable – net | |
| 244,533 | | |
| | | |
| | | |
$ | 247,308 | | |
| 247,308 | |
Federal Home Loan Bank stock | |
| 6,482 | | |
| | | |
| | | |
| | | |
| n/a | |
Accrued interest receivable | |
| 772 | | |
| | | |
| 44 | | |
| 728 | | |
| 772 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Financial liabilities | |
| | | |
| | | |
| | | |
| | | |
| | |
Deposits | |
$ | 202,173 | | |
$ | 79,341 | | |
$ | 123,006 | | |
| | | |
| 202,347 | |
Federal Home Loan Bank advances | |
| 22,644 | | |
| | | |
| 23,026 | | |
| | | |
| 23,026 | |
Advances by borrowers for taxes and insurance | |
| 455 | | |
| 455 | | |
| | | |
| | | |
| 455 | |
Accrued interest payable | |
| 32 | | |
| | | |
| 32 | | |
| | | |
| 32 | |
| |
| | |
Fair Value Measurements at | |
(in thousands) | |
| | |
June 30, 2014 Using | |
| |
Carrying
Value | | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Financial assets | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
$ | 11,511 | | |
$ | 11,511 | | |
| | | |
| | | |
$ | 11,511 | |
Available-for-sale securities | |
| 247 | | |
| | | |
$ | 247 | | |
| | | |
| 247 | |
Held-to-maturity securities | |
| 9,018 | | |
| | | |
| 9,195 | | |
| | | |
| 9,195 | |
Loans receivable – net | |
| 246,788 | | |
| | | |
| | | |
$ | 253,780 | | |
| 253,780 | |
Federal Home Loan Bank stock | |
| 6,482 | | |
| | | |
| | | |
| | | |
| n/a | |
Accrued interest receivable | |
| 891 | | |
| | | |
| | | |
| 891 | | |
| 891 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Financial liabilities | |
| | | |
| | | |
| | | |
| | | |
| | |
Deposits | |
$ | 213,142 | | |
$ | 88,854 | | |
$ | 124,390 | | |
| | | |
$ | 213,244 | |
Federal Home Loan Bank advances | |
| 17,200 | | |
| | | |
| 18,303 | | |
| | | |
| 18,303 | |
Advances by borrowers for taxes and insurance | |
| 616 | | |
| 616 | | |
| | | |
| | | |
| 616 | |
Accrued interest payable | |
| 32 | | |
| | | |
| 32 | | |
| | | |
| 32 | |
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2015
(unaudited)
6. Other Comprehensive Income (Loss)
The following is a summary of the accumulated other comprehensive
income balances, net of tax:
| |
Balance at June 30, 2014 | | |
Current Year Change | | |
Balance at March 31, 2015 | |
| |
| | |
| | |
| |
Unrealized gains (losses) on available-for-sale securities | |
$ | 70 | | |
$ | (30 | ) | |
$ | 40 | |
Other comprehensive income (loss) components and related tax
effects for the periods indicated were as follows:
| |
Nine
months ended March 31, | |
(in
thousands) | |
2015 | | |
2014 | |
| |
| | |
| |
Unrealized holding gains (losses) on available-for-sale securities | |
$ | (45 | ) | |
$ | 71 | |
Tax effect | |
| (15 | ) | |
| 24 | |
Net-of-tax amount | |
$ | (30 | ) | |
$ | 47 | |
| |
Three
months ended March 31, | |
(in
thousands) | |
2015 | | |
2014 | |
| |
| | |
| |
Unrealized holding gains on available-for-sale securities | |
$ | 6 | | |
$ | 27 | |
Tax effect | |
| 2 | | |
| 9 | |
Net-of-tax amount | |
$ | 4 | | |
$ | 18 | |
Kentucky First Federal Bancorp
ITEM 2: MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward-Looking Statements
Certain statements contained in this report
that are not historical facts are forward-looking statements that are subject to certain risks and uncertainties. When used herein,
the terms “anticipates,” “plans,” “expects,” “believes,” and similar expressions
as they relate to Kentucky First Federal Bancorp or its management are intended to identify such forward looking statements. Kentucky
First Federal Bancorp’s actual results, performance or achievements may materially differ from those expressed or implied
in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include,
but are not limited to, general economic conditions, prices for real estate in the Company’s market areas, interest rate
environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations,
rapidly changing technology affecting financial services and the other matters mentioned in Item 1A of the Company’s Annual
Report on Form 10-K for the year ended June 30, 2014.
Kentucky First Federal Bancorp
ITEM 2: MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Average Balance Sheets
The following table represents the average
balance sheets for the nine month periods ended March 31, 2015 and 2014, along with the related calculations of tax-equivalent
net interest income, net interest margin and net interest spread for the related periods.
| |
Nine Months Ended March 31, | |
| |
2015 | | |
2014 | |
| |
Average
Balance | | |
Interest
And Dividends | | |
Yield/
Cost | | |
Average
Balance | | |
Interest
And Dividends | | |
Yield/
Cost | |
| |
(Dollars in thousands) | |
Interest-earning assets: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans
1 | |
$ | 246,297 | | |
$ | 9,093 | | |
| 4.92 | % | |
$ | 261,697 | | |
$ | 9,519 | | |
| 4.85 | % |
Mortgage-backed securities | |
| 3,529 | | |
| 84 | | |
| 3.17 | | |
| 4,889 | | |
| 102 | | |
| 2.78 | |
Other securities | |
| 5,814 | | |
| 19 | | |
| 0.44 | | |
| 7,850 | | |
| 22 | | |
| 0.37 | |
Other
interest-earning assets | |
| 13,974 | | |
| 195 | | |
| 1.86 | | |
| 18,346 | | |
| 237 | | |
| 1.72 | |
Total interest-earning
assets | |
| 269,614 | | |
| 9,391 | | |
| 4.64 | | |
| 292,782 | | |
| 9,880 | | |
| 4.50 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Less: Allowance for loan
losses | |
| (1,513 | ) | |
| | | |
| | | |
| (1,376 | ) | |
| | | |
| | |
Non-interest-earning
assets | |
| 29,490 | | |
| | | |
| | | |
| 29,710 | | |
| | | |
| | |
Total
assets | |
$ | 297,591 | | |
| | | |
| | | |
$ | 321,116 | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Interest-bearing liabilities: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Demand deposits | |
$ | 16,296 | | |
$ | 23 | | |
| 0.19 | % | |
$ | 17,930 | | |
$ | 22 | | |
| 0.16 | % |
Savings | |
| 58,815 | | |
| 177 | | |
| 0.40 | | |
| 57,806 | | |
| 180 | | |
| 0.42 | |
Certificates of deposit | |
| 129,991 | | |
| 698 | | |
| 0.72 | | |
| 150,814 | | |
| 839 | | |
| 0.74 | |
Total deposits | |
| 205,102 | | |
| 898 | | |
| 0.58 | | |
| 226,550 | | |
| 1,041 | | |
| 0.61 | |
Borrowings | |
| 18,960 | | |
| 180 | | |
| 1.27 | | |
| 21,175 | | |
| 217 | | |
| 1.37 | |
Total
interest-bearing liabilities | |
| 224,062 | | |
| 1,078 | | |
| 0.64 | | |
| 247,725 | | |
| 1,258 | | |
| 0.68 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Noninterest-Bearing demand
deposits | |
| 4,154 | | |
| | | |
| | | |
| 3,639 | | |
| | | |
| | |
Noninterest-bearing
liabilities | |
| 2,117 | | |
| | | |
| | | |
| 2,279 | | |
| | | |
| | |
Total liabilities | |
| 230,333 | | |
| | | |
| | | |
| 253,643 | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Shareholders’
equity | |
| 67,258 | | |
| | | |
| | | |
| 67,473 | | |
| | | |
| | |
Total
liabilities and shareholders’ equity | |
$ | 297,591 | | |
| | | |
| | | |
$ | 321,116 | | |
| | | |
| | |
Net
interest income/average yield | |
| | | |
$ | 8,313 | | |
| 4.00 | % | |
| | | |
$ | 8,622 | | |
| 3.82 | % |
Net
interest margin | |
| | | |
| | | |
| 4.11 | % | |
| | | |
| | | |
| 3.93 | % |
Average interest-earning
assets to average interest-bearing liabilities | |
| | | |
| | | |
| 120.33 | % | |
| | | |
| | | |
| 118.19 | % |
1
Includes loan fees, immaterial in amount, in both interest income and the calculation of yield on loans. Also includes loans on
nonaccrual status.
Kentucky First Federal Bancorp
ITEM 2: MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Average Balance Sheets (continued)
The following table represents the average
balance sheets for the three month periods ended March 31, 2015 and 2014, along with the related calculations of tax-equivalent
net interest income, net interest margin and net interest spread for the related periods.
| |
Three Months Ended March 31, | |
| |
2015 | | |
2014 | |
| |
Average
Balance | | |
Interest
And Dividends | | |
Yield/
Cost | | |
Average
Balance | | |
Interest
And Dividends | | |
Yield/
Cost | |
| |
(Dollars in thousands) | |
Interest-earning assets: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans
2 | |
$ | 245,935 | | |
$ | 3,038 | | |
| 4.94 | % | |
$ | 254,815 | | |
$ | 3,137 | | |
| 4.92 | % |
Mortgage-backed securities | |
| 3,277 | | |
| 27 | | |
| 3.30 | | |
| 4,433 | | |
| 32 | | |
| 2.89 | |
Other securities | |
| 6,038 | | |
| 6 | | |
| 0.40 | | |
| 7,556 | | |
| 8 | | |
| 0.42 | |
Other
interest-earning assets | |
| 13,070 | | |
| 65 | | |
| 1.99 | | |
| 14,644 | | |
| 77 | | |
| 2.10 | |
Total interest-earning
assets | |
| 268,320 | | |
| 3,136 | | |
| 4.68 | | |
| 281,448 | | |
| 3,254 | | |
| 4.62 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Less: Allowance for loan
losses | |
| (1,281 | ) | |
| | | |
| | | |
| (1,424 | ) | |
| | | |
| | |
Non-interest-earning
assets | |
| 29,785 | | |
| | | |
| | | |
| 30,234 | | |
| | | |
| | |
Total
assets | |
$ | 296,824 | | |
| | | |
| | | |
$ | 310,258 | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Interest-bearing liabilities: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Demand deposits | |
$ | 16,185 | | |
$ | 7 | | |
| 0.17 | % | |
$ | 14,503 | | |
$ | 7 | | |
| 0.19 | % |
Savings | |
| 59,228 | | |
| 59 | | |
| 0.40 | | |
| 60,074 | | |
| 58 | | |
| 0.39 | |
Certificates of deposit | |
| 124,467 | | |
| 246 | | |
| 0.79 | | |
| 143,133 | | |
| 247 | | |
| 0.69 | |
Total deposits | |
| 199,880 | | |
| 312 | | |
| 0.62 | | |
| 217,710 | | |
| 312 | | |
| 0.57 | |
Borrowings | |
| 23,637 | | |
| 61 | | |
| 1.03 | | |
| 20,166 | | |
| 65 | | |
| 1.29 | |
Total
interest-bearing liabilities | |
| 223,517 | | |
| 373 | | |
| 0.67 | | |
| 237,876 | | |
| 377 | | |
| 0.63 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Noninterest-bearing demand
deposits | |
| 4,306 | | |
| | | |
| | | |
| 3,478 | | |
| | | |
| | |
Noninterest-bearing
liabilities | |
| 1,759 | | |
| | | |
| | | |
| 1,904 | | |
| | | |
| | |
Total liabilities | |
| 229,582 | | |
| | | |
| | | |
| 243,258 | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Shareholders’
equity | |
| 67,242 | | |
| | | |
| | | |
| 67,000 | | |
| | | |
| | |
Total
liabilities and shareholders’ equity | |
$ | 296,824 | | |
| | | |
| | | |
$ | 310,258 | | |
| | | |
| | |
Net
interest income/average yield | |
| | | |
$ | 2,763 | | |
| 4.01 | % | |
| | | |
$ | 2,877 | | |
| 3.99 | % |
Net
interest margin | |
| | | |
| | | |
| 4.12 | % | |
| | | |
| | | |
| 4.09 | % |
Average interest-earning
assets to average interest-bearing liabilities | |
| | | |
| | | |
| 120.05 | % | |
| | | |
| | | |
| 118.32 | % |
2
Includes loan fees, immaterial in amount, in both interest income and the calculation of yield on loans. Also includes loans on
nonaccrual status.
Kentucky First Federal Bancorp
ITEM 2: MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Discussion of Financial Condition Changes
from June 30, 2014 to March 31, 2015
Assets: At March 31, 2015,
the Company’s assets totaled $294.5 million, a decrease of $5.2 million, or 1.7%, from total assets at June 30, 2014. This
decrease was attributed primarily to decreases in loans, cash and cash equivalents and investment securities.
Cash and cash equivalents: Cash
and cash equivalents decreased by $1.7 million or 14.6% to $9.8 million at March 31, 2015.
Loans: Loans receivable,
net, decreased by $2.3 million or 0.9% to $244.5 million at March 31, 2015, due primarily to low levels of loan demand and loan
payoffs received. While we experienced modest loan growth in the past two calendar quarters after several quarters of decline,
management continues to look for high-quality loans to add to its portfolio and will continue to emphasize loan originations to
the extent that it is profitable, prudent and consistent with our interest rate risk strategies.
Non-Performing Loans: At
March 31, 2015, the Company had non-performing loans (loans 90 or more days past due or on nonaccrual status) of approximately
$5.9 million, or 2.4% of total loans (including loans purchased in the acquisition), compared to $9.7 million or 3.95%, of total
loans at June 30, 2014. The Company’s allowance for loan losses totaled $1.6 million and $1.5 million at March 31,
2015, and June 30, 2014, respectively. The allowance for loan losses at March 31, 2015, represented 27.2% of nonperforming loans
and 0.65% of total loans (including loans purchased in the acquisition), while at June 30, 2014, the allowance represented 15.1%
of nonperforming loans and 0.60% of total loans.
The Company had $14.0 million in assets
classified as substandard for regulatory purposes at March 31, 2015, including loans ($11.7 million) and real estate owned (“REO”)
($2.3 million), including loans acquired in the CKF Bancorp transaction. Classified loans as a percentage of total loans (including
loans acquired on December 31, 2012) was 4.7% and 5.9% at March 31, 2015 and June 30, 2014, respectively. Of substandard loans,
99.7% were secured by real estate on which the Banks have priority lien position.
Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Discussion of Financial Condition Changes
from June 30, 2014 to March 31, 2015 (continued)
The table below shows the aggregate amounts
of our assets classified for regulatory purposes at the dates indicated:
(dollars in thousands) | |
March 31, 2015 | | |
June 30, 2014 | |
Substandard assets | |
$ | 13,957 | | |
$ | 16,284 | |
Doubtful assets | |
| — | | |
| — | |
Loss assets | |
| — | | |
| — | |
Total classified assets | |
$ | 13,957 | | |
$ | 16,284 | |
At March 31, 2015, the Company’s
real estate acquired through foreclosure represented 16.4% of substandard assets compared to 11.3% at June 30, 2014. During the
nine months ended March 31, 2015 and the fiscal year ended June 30, 2014, the Company made loan(s) to facilitate the purchase of
its other real estate owned by qualified borrowers. During the nine months ended March 31, 2015, the Company sold property with
carrying value of $397,000 for $484,000, while during the year ended June 30, 2014, property with a carrying value of $189,000
was sold for $200,000. Such loans are considered loans to facilitate an exchange and, as such, the Company defers recognition of
any gain until the proper time in the future. Loans to facilitate the sale of other real estate owned, which were included in substandard
loans, totaled $305,000 and $309,000 at March 31, 2015 and June 30, 2014, respectively.
Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Discussion of Financial Condition Changes
from June 30, 2014 to March 31, 2015 (continued)
The following table presents the aggregate
carrying value of REO at the dates indicated:
| |
March 31, 2015 | | |
June 30, 2014 | |
| |
Number | | |
Net | | |
Number | | |
Net | |
| |
of | | |
Carrying | | |
of | | |
Carrying | |
| |
Properties | | |
Value | | |
Properties | | |
Value | |
Single family, non-owner occupied | |
| 15 | | |
$ | 2,252 | | |
| 20 | | |
$ | 1,831 | |
Building lot | |
| 5 | | |
| 33 | | |
| 3 | | |
| 15 | |
Total REO | |
| 20 | | |
$ | 2,285 | | |
| 23 | | |
$ | 1,846 | |
At March 31, 2015, and June 30, 2014, the
Company had $6.5 million and $3.9 million of loans classified as special mention, respectively (including loans purchased at December
31, 2012.) This category includes 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. The primary reason for this increase
was related to two larger borrowers who each experienced some weakness in cash flow, but had no delinquency and their loans were
well secured by real estate.
Securities: At March
31, 2015, the Company’s investment securities had decreased $1.4 million or 15.2% to $7.9 million compared to June 30, 2014.
Liabilities: At March 31,
2015, the Company’s liabilities totaled $227.5 million, a decrease of $5.0 million, or 2.1%, from total liabilities at June
30, 2014. The decrease in liabilities was attributed primarily to a decrease in deposits and was partially offset by an increase
in FHLB advances. Deposits decreased $11.0 million or 5.1% to $202.2 million at March 31, 2015, as certificate of deposit customers
have sought higher yields elsewhere. FHLB advances increased $5.4 million or 31.7% from $17.2 million at June 30, 2014 to $22.6
million at March 31, 2015.
Shareholders’ Equity:
At March 31, 2015, the Company’s shareholders’ equity totaled $67.0 million, a decrease of $161,000 or 0.2% from the
June 30, 2014 total, primarily as a result of the Company’s repurchase of its outstanding common shares for treasury purposes,
which totaled $698,000 during the nine months just ended. In addition to the purchase of treasury stock, the change in shareholders’
equity was chiefly associated with net profits for the period less dividends paid on common stock.
Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Discussion of Financial Condition Changes
from June 30, 2014 to March 31, 2015 (continued)
The Company paid dividends of $1.1 million
or 70.5% of net income for the nine month period just ended. On July 8, 2014, the members of First Federal MHC for the third time
approved a dividend waiver on annual dividends of up to $0.40 per share of Kentucky First Federal Bancorp common stock. The Board
of Directors of First Federal MHC applied for approval of another waiver. On August 3, 2014 the Company received notice from the
Federal Reserve Bank of Cleveland that there would be no objection to a waiver of dividends paid by the Company to First Federal
MHC. As a result, First Federal MHC will be permitted to waive the receipt of dividends for quarterly dividends up to $0.10 per
common share through the third quarter of 2015. Management believes that the Company has sufficient capital to continue the current
dividend policy without affecting the well-capitalized status of either subsidiary bank. Management cannot speculate on future
dividend levels, because various factors, including capital levels, income levels, liquidity levels, regulatory requirements and
overall financial condition of the Company are considered before dividends are declared. However, management continues to believe
that a strong dividend is consistent with the Company’s long-term capital management strategy. See “Risk Factors”
in Part II, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended June 30, 2014 for additional discussion
regarding dividends.
Comparison of Operating Results for
the Nine Month Periods Ended March 31, 2015 and 2014
General
Net income totaled $1.5 million for the
nine months ended March 31, 2015, an increase of $22,000 or 1.5% from net income for the same period in 2014.
Net Interest Income
Net interest income after provision for
loan losses decreased $80,000 or 1.0% and totaled $8.0 million and $8.1 million for the nine months ended March 31, 2015 and 2014,
respectively. Provision for loan losses decreased by $229,000 or 43.1% to $302,000 for the nine month period just ended compared
to $531,000 for the prior year period. Interest income decreased $489,000 or 4.9%, to $9.4 million, while interest expense decreased
$180,000 or 14.3% to $1.1 million for the nine months ended March 31, 2015, after amortization of fair value adjustments on interest
bearing accounts.
Interest income on loans decreased $426,000
or 4.5% to $9.1 million, due primarily to a decrease in the average balance of the loan portfolio. The average balance of loans
outstanding decreased $15.4 million to $246.3 million for the nine month period just ended, while the average rate earned on loans
outstanding increased 7 basis points to 4.92% for the recently ended period. Interest income on mortgage-backed residential securities
(“MBS”) decreased $18,000 or 17.6% to $84,000 for the nine months ended March 31, 2015, as the average balance decreased
$1.4 million or 27.8% to $3.5 million for the recently ended period, while the average rate earned increased 39 basis points to
3.2% compared to the period a year ago. Interest income on other securities, primarily composed of agency bonds, totaled $19,000
during the recent nine month period, compared to $22,000 for the prior year period. The average balance of the other investment
securities was $5.8 million for the nine month period just ended and the average rate earned on those securities was 44 basis points.
Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Comparison of Operating Results for
the Nine Month Periods Ended March 31, 2015 and 2014 (continued)
Net Interest Income (continued)
Interest income on interest-bearing deposits
and other decreased for the period just ended primarily because of lower dividends received on FHLB of Cincinnati stock. The Company’s
dividends from FHLB of Cincinnati decreased $41,000 or 17.3% to $196,000 for the nine month period ended March 31, 2015 compared
to the 2014 period. The Company’s stock in FHLB of Cincinnati was partially redeemed pursuant to the FHLB of Cincinnati’s
most recent amended Capital Plan, which became effective February 17, 2014. Because of the redemption, the Company’s average
balance of FHLB of Cincinnati stock decreased $942,000 or 12.7% to $6.5 million for the nine months ended March 31, 2015, compared
to the prior year period. In addition to the lower average balance of FHLB of Cincinnati stock, the average rate paid by the FHLB
of Cincinnati decreased 23 basis points to 4.03% for the recently ended period compared to last year.
Interest expense on deposits decreased
$143,000 or 13.7% to $898,000 for the nine month period ended March 31, 2015, due primarily to a decrease in average deposits outstanding.
Average deposits outstanding decreased $21.4 million or 9.5% to $205.1 million for the recently ended nine month period, while
the average rate paid on deposits increased 1 basis point to 58 basis points for the current year period. Interest expense on borrowings
decreased $37,000 or 17.1% to $180,000 for the nine month period ended March 31, 2015, compared to the prior year period. The decrease
in interest expense on borrowings was attributed to both lower average balance outstanding and lower rates paid, as the average
balance outstanding decreased $2.2 million or 10.5% to $19.0 million and the average rate paid on borrowings decreased 10 basis
points to 1.27% for the recently ended nine month period.
Net interest margin increased from 3.93%
for the prior year period to 4.11% for the nine months ended March 31, 2015.
Provision for Losses on Loans
The Company recorded $302,000 in provision
for losses on loans during the nine months ended March 31, 2015, compared to a provision of $531,000 for the nine months ended
March 31, 2014. There can be no assurance that the loan loss allowance will be adequate to absorb unidentified losses on loans
in the portfolio, which could adversely affect the Company’s results of operations.
Non-interest Income
Non-interest income totaled $396,000 for
the nine months ended March 31, 2015, an increase of $77,000 or 24.1% from the same period in 2014. The increase in non-interest
income was primarily attributable to a $134,000 increase in net gain on sales of REO. Somewhat offsetting the gain on sale of REO
were decreases in other non-interest income and gains on sale of loans. Other non-interest income decreased $39,000 or 16.3% to
$201,000 for the nine month period ended March 31, 2015, due primarily to decreases in fee income on deposit accounts. Gains on
sale of loans decreased $27,000 or 49.1% to $28,000 for the recently ended nine month period. The Company had both fewer loans
and lower dollar volume of long-term, fixed rate loans that it sold to the FHLB during the period due to lower customer demand.
There were no sales of investments during the nine month period just ended.
Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Comparison of Operating Results for
the Nine Month Periods Ended March 31, 2015 and 2014 (continued)
Non-interest Expense
Non-interest expense totaled $6.1 million
for each of the nine month periods ended March 31, 2015 and 2014. A $210,000 or 5.4% decrease in employee compensation and benefits
expense, which totaled $3.7 million for the nine months ended March 31, 2015, was offset by increases in other expenses. Employee
compensation and benefits expense decreased primarily because the Company ceased for the fiscal year contributions to its multiple-employer
defined benefit pension plan in response to favorable funding levels. Occupancy and equipment, which totaled $469,000 for the recent
period ended, increased $60,000 or 14.7% due to aging facilities and necessary repairs thereon. Outside service fees, primarily
associated with outside loan review and ESOP administration, increased $49,000 or 47.1% to $153,000 for the nine months ended March
31, 2015. Foreclosure and OREO expenses, net, increased $48,000 or 44.9% to $155,000 for the nine month period just ended as the
Company continued to work through the REO process. Legal fees totaled $58,000, an increase of $31,000 or 114.8%, for the recently
ended nine month period, primarily because of costs associated with the proposed merger of the two banks.
Federal Income Tax Expense
Federal income tax expense totaled $756,000
for the nine months ended March 31, 2015, compared to $755,000 in the prior year period. The effective tax rates were 33.0% and
33.3% for the nine month periods ended March 31, 2015 and 2014, respectively.
Comparison of Operating Results for
the Three Month Periods Ended March 31, 2015 and 2014
General
Net income totaled $539,000 for the three
months ended March 31, 2015, an increase of $48,000 or 9.8% from net income of $491,000 for the same period in 2014.
Net Interest Income
Net interest income after provision for
loan losses decreased $72,000 or 2.6% to $2.7 million for the three month period just ended compared to $2.8 million for the prior
year quarter. Net interest income before provision for loan loss decreased $114,000 or 4.0% to $2.8 million for the quarter ended
March 31, 2015. Provision for losses on loans decreased $42,000 to $36,000 for the recently-ended quarter compared to a provision
of $78,000 in the prior year period. Interest income decreased by $118,000, or 3.6%, to $3.1 million, while interest expense decreased
$4,000 or 1.1% to $373,000 for the three months ended March 31, 2015, after amortization of fair value adjustments on interest
bearing accounts.
Interest income on loans decreased $99,000
or 3.2% to $3.0 million, due to a decrease in the average size of the loan portfolio. The average balance of loans outstanding
for the three month period ended March 31, 2015, decreased $8.9 million or 3.5% to $245.9 million, while the average rate earned
increased 2 basis points to 4.94% for the period. Interest income on interest-bearing deposits and other decreased $12,000 or 15.6%
to $65,000 for the three months ended March 31, 2015, primarily as a result of the redemption of FHLB of Cincinnati stock discussed
above. As a result of the lower level of FHLB stock owned and lower dividend rates paid by the FHLB, dividend income decreased
$13,000 or 16.7% to $65,000 for the three month period ended March 31, 2015 compared to the prior year period.
Kentucky First Federal Bancorp
MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Comparison of Operating Results
for the Three Month Periods Ended March 31, 2015 and 2014
(continued)
Interest expense on deposits
totaled $312,000 for the three month periods ended March 31, 2015 and 2014, while interest expense on borrowings decreased $4,000
or 6.2% to $61,000 for the most recently ended period. The average balance of deposits decreased $17.8 million to $199.9 million
for the most recent period, while the average balance paid on deposits increased 5 basis points to 0.62%. The decrease in average
deposits was attributed to rate-sensitive deposit customers withdrawing funds to seek additional yield as the historically low
interest rate environment continues. The decrease in interest expense on borrowings also was attributed to lower outstanding rates
paid on amounts outstanding, as the average balance of outstanding borrowings increased $3.5 million or 17.2% to $23.6 million
for the recently ended quarterly period.
Net interest margin increased
slightly from 4.09% for the prior year quarterly period to 4.12% for the quarter ended March 31, 2015.
Provision for Losses on Loans
The Company recorded $36,000
in provision for losses on loans during the three months ended March 31, 2015, compared to a $78,000 provision for the three months
ended March 31, 2014. There can be no assurance that the loan loss allowance will be adequate to absorb unidentified losses on
loans in the portfolio, which could adversely affect the Company’s results of operations.
Non-interest Income
Non-interest income totaled
$68,000 for the three months ended March 31, 2015, a decrease of $39,000 from the same period in 2014. The Company recorded net
loss from sales of REO of $18,000 during the recently ended quarter compared to a net gain in the prior year period. There were
no sales of investments during the three month period just ended.
Non-interest Expense
Non-interest expense decreased
$122,000 or 5.8% and totaled $2.0 million for the three months ended March 31, 2015 compared to $2.1 million for the same period
in 2014. Employee compensation and benefits decreased $207,000 or 14.8% to $1.2 million for the quarterly period, because of changes
in pension laws which reduced expenses. New pension laws temporarily reduce funding requirements for multiple-employer pension
plan in which the Company participates. Although the Company’s liabilities for future pension benefit expenses was at least
100% funded at March 31, 2015, and no further defined benefit pension costs are anticipated for the balance of the fiscal year,
the Company expects that its pension funding costs will be higher in the future.
Federal Income Tax Expense
Federal income taxes expense
totaled $266,000 for the three months ended March 31, 2015, compared to $303,000 in the prior year period. The effective tax rates
were 33.0% and 38.2% for the three-month periods ended March 31, 2015 and 2014, respectively.
Kentucky First Federal Bancorp
ITEM 3: Quantitative and Qualitative
Disclosures About Market Risk
This item is not applicable as the Company
is a smaller reporting company.
ITEM 4: Controls and Procedures
The Company’s Chief Executive Officer
and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures (as defined under Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report, and have
concluded that the Company’s disclosure controls and procedures were effective.
The Company’s Chief Executive Officer
and Chief Financial Officer have also concluded that there were no significant changes during the quarter ended March 31, 2015,
in the Company’s internal control over financial reporting or in other factors that have materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial reporting.
Kentucky First Federal Bancorp
PART II
None.
There have been no material changes in the
risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014.
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
(c) The following table sets forth information regarding
Company’s repurchases of its common stock during the quarter ended March 31, 2015.
| |
| | |
| | |
Total # of | | |
| |
| |
| | |
Average | | |
shares purchased | | |
Maximum # of shares | |
| |
Total | | |
price paid | | |
as part of publicly | | |
that may yet be | |
| |
# of shares | | |
per share | | |
announced plans | | |
purchased under | |
Period | |
purchased | | |
(incl commissions) | | |
or programs | | |
the plans or programs | |
| |
| | |
| | |
| | |
| |
January 1-31, 2015 | |
| — | | |
$ | — | | |
| — | | |
| 78,323 | |
February 1-28, 2015 | |
| 18,000 | | |
$ | 8.20 | | |
| 18,000 | | |
| 60,323 | |
March 1-31, 2015 | |
| — | | |
$ | — | | |
| — | | |
| 60,323 | |
(1) On January 16, 2014, the Company announced
a program (its seventh) to repurchase of up to 150,000 shares of its common stock.
| ITEM 3. | Defaults Upon Senior Securities |
Not applicable.
| ITEM 4. | Mine Safety Disclosures. |
Not applicable.
None.
|
3.11 |
Charter of Kentucky First Federal Bancorp |
|
3.21 |
Bylaws of Kentucky First Federal Bancorp, as amended and restated |
|
4.11 |
Specimen Stock Certificate of Kentucky First Federal Bancorp |
|
31.1 |
CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
31.2 |
CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
32.1 |
CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
32.2 |
CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
101.0 |
The following materials from Kentucky Firt Federal Bancorp’s Quarterly Report |
|
|
|
|
|
On Form 10-Q for the quarter ended March 31, 2015 formatted in Extensivle Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets; (ii) the Consolidated Sttements of Income; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows: and (v) the related Notes. |
| (1) | Incorporated herein by reference to the Company’s
Registration Statement on Form S-1 (File No. 333-119041). |
Kentucky First Federal Bancorp
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
KENTUCKY FIRST FEDERAL BANCORP
Date: |
May 15, 2015 |
|
By: |
/s/Don D. Jennings |
|
|
|
|
Don D. Jennings |
|
|
|
|
Chief Executive Officer |
|
|
|
|
|
Date: |
May 15, 2015 |
|
By: |
/s/ R. Clay Hulette |
|
|
|
|
R. Clay Hulette |
|
|
|
|
Vice President and Chief Financial Officer |
Exhibit 31.1
CERTIFICATION
I, Don D. Jennings, certify that:
1. I
have reviewed this Quarterly Report on Form 10-Q of Kentucky First Federal Bancorp;
2. Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4 The registrant’s other certifying officer
and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b) Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s
internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The
registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 15, 2015 |
/s/Don D. Jennings |
|
Don D. Jennings |
|
Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, R. Clay Hulette, certify that:
1. I
have reviewed this Quarterly Report on Form 10-Q of Kentucky First Federal Bancorp
2. Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4 The registrant’s other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrant’s disclosure
controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s
internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The
registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 15, 2015 |
/s/R. Clay Hulette |
|
R. Clay Hulette |
|
Vice President and Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
In connection with the Quarterly Report of Kentucky First Federal
Bancorp (the "Company") on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission
on the date hereof (the "Report"), I, Don D. Jennings, the Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements
of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report
fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/Don D. Jennings |
|
Don D. Jennings |
|
Chief Executive Officer |
|
May 15, 2015 |
|
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
In connection with the Quarterly Report
of Kentucky First Federal Bancorp (the "Company") on Form 10-Q for the period ending March 31, 2015 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, R. Clay Hulette, the Treasurer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements
of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report
fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/R. Clay Hulette |
|
R. Clay Hulette |
|
Vice President and Chief Financial Officer |
|
May 15, 2015 |
|
Kentucky First Federal B... (NASDAQ:KFFB)
Historical Stock Chart
From Apr 2024 to May 2024
Kentucky First Federal B... (NASDAQ:KFFB)
Historical Stock Chart
From May 2023 to May 2024