Kentucky First Federal Bancorp(US:KFFB)2023-09-28 20:33Financial Position - As of June 30, 2023, Kentucky First Federal Bancorp had total assets of $349.0 million, deposits of $226.3 million, and stockholders' equity of $50.7 million[17]. - First Federal of Hazard had total assets of $89.1 million, net loans of $81.0 million, and total capital of $18.0 million as of June 30, 2023[20]. - First Federal of Kentucky had total assets of $260.4 million, net loans of $232.7 million, and total capital of $30.5 million as of June 30, 2023[21]. - As of June 30, 2023, the company had $20.2 million in available liquidity, including $8.2 million in cash and cash equivalents, with uninsured deposits estimated at approximately $13.8 million or 6.10% of total deposits[130]. Loan Portfolio - The loan portfolio included $271.4 million in residential mortgage loans, representing 85.9% of the total loan portfolio[29]. - Adjustable-rate residential mortgage loans accounted for $237.4 million, or 87.5% of the residential mortgage loan portfolio[30]. - At June 30, 2023, construction loans totaled $12.3 million, or 3.9% of the total loan portfolio[34]. - Multi-family loans amounted to $19.1 million, or 6.0% of the total loan portfolio[37]. - Nonresidential real estate loans totaled $30.2 million, or 9.6% of the total loan portfolio[38]. - As of June 30, 2023, commercial non-mortgage loans totaled $1.2 million, representing 0.4% of the total loan portfolio[40]. - Consumer loans amounted to $10.8 million, or 3.5% of the total loan portfolio, with home equity loans making up $9.2 million[41]. - Home equity loans accounted for 2.9% of the company's total loan portfolio as of June 30, 2023[41]. - Loans secured by savings deposits represented 0.3% of the total loan portfolio at June 30, 2023[42]. - At June 30, 2023, the company serviced $21.7 million in loans for the Federal Home Loan Bank of Cincinnati[44]. - As of June 30, 2023, approximately 96.3% of the loan portfolio is collateralized by real estate, indicating a high exposure to real estate market disruptions[125]. - At June 30, 2023, $240.1 million, or 76.1%, of the loan portfolio is secured by one-to-four family real estate, all located in Kentucky, which increases lending risks due to regional economic conditions[126]. Competition and Market Share - The company faces significant competition for deposits and loan origination, with larger competitors having greater resources[65]. - First Federal of Hazard had a deposit market share of 6.9% in Perry County, while its largest competitors had market shares of 38.7%, 24.0%, and 27.6%[66]. - First Federal of Kentucky's deposit market shares in Franklin, Boyle, and Garrard counties were 8.2%, 7.0%, and 16.9%, respectively, with major competitors holding 24.5%, 17.3%, and 6.8%[67]. - The company faces intense competition in its market areas, which could reduce net interest income and profitability due to price competition for loans and deposits[134]. Financial Performance - Net income decreased by $657,000 or 41.3% compared to the fiscal year ended June 30, 2022, primarily due to decreased net interest income and increased provision for loan losses[120]. - Net interest income decreased by $304,000 or 3.3%, totaling $8.9 million, while interest income increased by $1.8 million or 16.9% to $12.8 million[120]. - Interest expense increased by $2.1 million or 122.5% to $3.9 million, attributed to higher average rates on deposits and FHLB advances[120]. - Non-interest income decreased by $213,000 or 41.4% during the fiscal year ended June 30, 2023, totaling $302,000, primarily due to decreased gains on loan sales[128]. Regulatory Environment - First Federal of Hazard and First Federal of Kentucky are subject to extensive regulation by the OCC and FDIC, ensuring compliance with safety and soundness standards[69]. - The Dodd-Frank Act significantly changed the financial regulatory regime, imposing enhanced regulations on U.S. banks and financial services firms[70]. - Federal regulations require a minimum Tier 1 leverage ratio of 4.0% and a common equity Tier 1 ratio of 4.5%[75]. - The minimum capital requirements include a new common equity Tier 1 capital ratio of 4.5%, a Tier 1 to risk-based assets capital ratio of 6%, and a total capital ratio of 8%[141]. - The capital levels of First Federal of Hazard and First Federal of Kentucky exceeded the minimum required capital amounts for capital adequacy as of June 30, 2023[77]. Economic Conditions - The unemployment rate in Perry County was 6.6% in July 2023, compared to 3.8% in Kentucky and the United States[24]. - The median household income in Perry County was $43,931, significantly lower than the state average of $52,326 and the national average of $74,580[24]. - Rising inflation and interest rates may adversely affect borrowers' ability to repay loans, increasing the potential for delinquencies and defaults[123]. - Future interest rate increases may lead to a decline in net interest income due to the faster repricing of liabilities compared to assets[120]. - The Federal Reserve Board increased the target federal funds rate to a range of 5.25% to 5.50% as of August 2023, impacting net interest income[119]. - Changes in U.S. tax laws may adversely affect the market for residential properties and the demand for mortgage loans, potentially impacting the company's loan portfolio[140]. Internal Controls and Governance - As of June 30, 2023, the company's internal control over financial reporting was assessed as effective[177]. - The company has established adequate internal control over financial reporting to safeguard assets from unauthorized use[176]. - The company has adopted a Code of Ethics and Business Conduct applicable to all directors, officers, and employees[188]. - The company is classified as a smaller reporting company, which affects certain regulatory requirements[169]. - The company has not reported any disagreements with accountants on accounting and financial disclosure[171]. Shareholder Actions - The company repurchased a total of 10,980 shares of its Common Stock at an average price of $6.05 per share during May 2023[166]. - The company has completed its program to repurchase up to 150,000 shares of its Common Stock, initiated on February 3, 2021[166]. - First Federal MHC has received Federal Reserve Board approval to waive quarterly dividends totaling $0.40 per share annually, expected to continue through the third quarter of 2024[157]. - The company expects to continue waiving future dividends, with quarterly dividends of $0.10 per common share approved through May 2024[108]. Risks and Uncertainties - The implementation of the new accounting standard CECL starting July 1, 2023, may require the company to increase its allowance for loan losses, potentially impacting financial condition and results of operations[132]. - Changes in management's estimates and assumptions may materially impact the consolidated financial statements and financial condition[144]. - Security breaches in internet banking activities could expose the company to legal liability and damage its reputation[148]. - The company is not a party to any pending legal proceedings that could have a material adverse effect on its financial condition[163]. Miscellaneous - The documents do not include any future outlook or performance guidance[201]. - There are no mentions of new products or technology developments in the provided content[201]. - No information regarding market expansion or acquisitions was found in the documents[201]. - The overall content is limited to formal filings and signatures without substantive financial information[201].