NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2017
(unaudited)
The Kentucky First Federal Bancorp (“Kentucky
First” or the “Company”) was incorporated under federal law in March 2005, and is the mid-tier holding company
for First Federal Savings and Loan Association of Hazard, Hazard, Kentucky (“First Federal of Hazard”) and Frankfort
First Bancorp, Inc. (“Frankfort First”). Frankfort First is the holding company for First Federal Savings Bank of Kentucky,
Frankfort, Kentucky (“First Federal of Kentucky”). First Federal of Hazard and First Federal of Kentucky (hereinafter
collectively the “Banks”) are Kentucky First’s primary operations, which consist of operating the Banks as two
independent, community-oriented savings institutions.
In December 2012, the Company acquired CKF
Bancorp, Inc., a savings and loan holding company which operated three banking locations in Boyle and Garrard Counties in Kentucky.
In accounting for the transaction the assets and liabilities of CKF Bancorp were recorded on the books of First Federal of Kentucky
in accordance with accounting standard ASC 805, Business Combinations.
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, 2017, are not necessarily indicative of the results which may be expected for an entire fiscal year. The
consolidated balance sheet as of June 30, 2016 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 2016 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 Kentucky (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, 2017
(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)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income allocated to common shareholders, basic and diluted
|
|
$
|
719
|
|
|
$
|
1,120
|
|
|
$
|
168
|
|
|
$
|
178
|
|
|
|
Nine months ended
March 31,
|
|
|
Three months ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Weighted average common shares outstanding, basic and diluted
|
|
|
8,342,203
|
|
|
|
8,321,890
|
|
|
|
8,350,270
|
|
|
|
8,326,593
|
|
There were no stock option shares outstanding
for the nine month period ended March 31, 2017 and the three-month periods ended March 31, 2017 and 2016. There were 189,322 weighted
stock option shares outstanding for the nine-month period ended March 31, 2016, which were antidilutive for the period. All of
the options previously granted expired December 13, 2015.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2017
(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, 2017 and June 30, 2016, the corresponding
amounts of gross unrealized gains recognized in accumulated other comprehensive income and gross unrecognized gains and losses:
|
|
March 31, 2017
|
|
(in
thousands)
|
|
Amortized
cost
|
|
|
Gross
unrealized/
unrecognized
gains
|
|
|
Gross
unrealized/
unrecognized
losses
|
|
|
Estimated
fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
76
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
1,630
|
|
|
$
|
48
|
|
|
$
|
8
|
|
|
$
|
1,670
|
|
Agency bonds
|
|
|
501
|
|
|
|
—
|
|
|
|
—
|
|
|
|
501
|
|
|
|
$
|
2,131
|
|
|
$
|
48
|
|
|
$
|
8
|
|
|
$
|
2,171
|
|
|
|
|
|
|
June 30, 2016
|
|
|
|
|
(in thousands)
|
|
Amortized
cost
|
|
|
Gross
unrealized/
unrecognized
gains
|
|
|
Gross
unrealized/
unrecognized
losses
|
|
|
Estimated
fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
79
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
81
|
|
FHLMC stock
|
|
|
8
|
|
|
|
45
|
|
|
|
—
|
|
|
|
53
|
|
|
|
$
|
87
|
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
2,048
|
|
|
$
|
70
|
|
|
$
|
2
|
|
|
$
|
2,118
|
|
Agency bonds
|
|
|
2,031
|
|
|
|
2
|
|
|
|
1
|
|
|
|
2,033
|
|
|
|
$
|
4,079
|
|
|
$
|
72
|
|
|
$
|
3
|
|
|
$
|
4,151
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2017
(unaudited)
3.
Investment Securities
(continued)
At March 31, 2017, the Company’s 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, 2017
|
|
(in thousands)
|
|
Amortized Cost
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
Held-to-maturity Securities
|
|
|
|
|
|
|
|
|
Within one year
|
|
$
|
501
|
|
|
$
|
501
|
|
Mortgage-backed
|
|
|
1,630
|
|
|
|
1,670
|
|
|
|
$
|
2
131
|
|
|
$
|
2
171
|
|
Our pledged securities totaled $2.2 million
and $1.7 million at March 31, 2017, and June 30, 2016, respectively.
The Company sold its Federal Home Loan Mortgage
Company (FHLMC or Freddie Mac) stock in March 2017.
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, 2017
(unaudited)
4.
Loans receivable
The composition of the loan portfolio was as
follows:
|
|
March
31,
|
|
|
June 30,
|
|
(in thousands)
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
194,057
|
|
|
$
|
186,125
|
|
Multi-family
|
|
|
15,725
|
|
|
|
15,559
|
|
Construction
|
|
|
2,881
|
|
|
|
2,809
|
|
Land
|
|
|
1,169
|
|
|
|
1,186
|
|
Farm
|
|
|
2,069
|
|
|
|
1,735
|
|
Nonresidential real estate
|
|
|
28,407
|
|
|
|
27,138
|
|
Commercial nonmortgage
|
|
|
2,400
|
|
|
|
1,847
|
|
Consumer and other:
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
1,666
|
|
|
|
1,813
|
|
Home equity
|
|
|
6,906
|
|
|
|
6,155
|
|
Automobile
|
|
|
44
|
|
|
|
69
|
|
Unsecured
|
|
|
350
|
|
|
|
552
|
|
|
|
|
255,674
|
|
|
|
244,988
|
|
|
|
|
|
|
|
|
|
|
Undisbursed portion of loans in process
|
|
|
(995
|
)
|
|
|
(5,118
|
)
|
Deferred loan origination costs
|
|
|
36
|
|
|
|
113
|
|
Allowance for loan losses
|
|
|
(1,515
|
)
|
|
|
(1,515
|
)
|
|
|
$
|
253,200
|
|
|
$
|
238,468
|
|
The following table presents the activity in the allowance for loan
losses by portfolio segment for the nine months ended March 31, 2017:
(in thousands)
|
|
Beginning
balance
|
|
|
Provision
for loan
losses
|
|
|
Loans
charged
off
|
|
|
Recoveries
|
|
|
Ending
balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
862
|
|
|
$
|
182
|
|
|
$
|
(221
|
)
|
|
$
|
2
|
|
|
$
|
825
|
|
Multi-family
|
|
|
192
|
|
|
|
25
|
|
|
|
—
|
|
|
|
—
|
|
|
|
217
|
|
Construction
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
Land
|
|
|
2
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Farm
|
|
|
3
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Nonresidential real estate
|
|
|
217
|
|
|
|
26
|
|
|
|
—
|
|
|
|
—
|
|
|
|
243
|
|
Commercial nonmortgage
|
|
|
18
|
|
|
|
(14
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Consumer and other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
4
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
Home equity
|
|
|
11
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12
|
|
Automobile
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unsecured
|
|
|
1
|
|
|
|
2
|
|
|
|
(5
|
)
|
|
|
2
|
|
|
|
—
|
|
Unallocated
|
|
|
200
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200
|
|
Totals
|
|
$
|
1,515
|
|
|
$
|
222
|
|
|
$
|
(226
|
)
|
|
$
|
4
|
|
|
$
|
1,515
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2017
(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, 2017:
(in thousands)
|
|
Beginning
balance
|
|
|
Provision for
loan losses
|
|
|
Loans
charged off
|
|
|
Recoveries
|
|
|
Ending
balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
801
|
|
|
$
|
148
|
|
|
$
|
(126
|
)
|
|
$
|
2
|
|
|
$
|
825
|
|
Multi-family
|
|
|
211
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
217
|
|
Construction
|
|
|
4
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
Land
|
|
|
3
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
Farm
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Nonresidential real estate
|
|
|
230
|
|
|
|
13
|
|
|
|
—
|
|
|
|
—
|
|
|
|
243
|
|
Commercial nonmortgage
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Consumer and other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
Home equity
|
|
|
12
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12
|
|
Automobile
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unsecured
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unallocated
|
|
|
200
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200
|
|
Totals
|
|
$
|
1,473
|
|
|
$
|
166
|
|
|
$
|
(126
|
)
|
|
$
|
2
|
|
|
$
|
1,515
|
|
The following table presents the activity in the allowance for loan
losses by portfolio segment for the nine months ended March 31, 2016:
(in thousands)
|
|
Beginning
balance
|
|
|
Provision for
loan losses
|
|
|
Loans
charged off
|
|
|
Recoveries
|
|
|
Ending
balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
1,059
|
|
|
$
|
(190
|
)
|
|
$
|
(17
|
)
|
|
$
|
11
|
|
|
$
|
863
|
|
Multi-family
|
|
|
94
|
|
|
|
102
|
|
|
|
—
|
|
|
|
—
|
|
|
|
196
|
|
Construction
|
|
|
21
|
|
|
|
(14
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
Land
|
|
|
7
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
4
|
|
Farm
|
|
|
9
|
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Nonresidential real estate
|
|
|
121
|
|
|
|
123
|
|
|
|
—
|
|
|
|
—
|
|
|
|
244
|
|
Commercial nonmortgage
|
|
|
10
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
Consumer and other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
13
|
|
|
|
(6
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
Home equity
|
|
|
31
|
|
|
|
(11
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
Automobile
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unsecured
|
|
|
3
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
Unallocated
|
|
|
200
|
|
|
|
17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
217
|
|
Totals
|
|
$
|
1,568
|
|
|
$
|
11
|
|
|
$
|
(17
|
)
|
|
$
|
11
|
|
|
$
|
1,573
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2017
(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, 2016:
(in thousands)
|
|
Beginning
balance
|
|
|
Provision for
loan losses
|
|
|
Loans
charged off
|
|
|
Recoveries
|
|
|
Ending
balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
1,045
|
|
|
$
|
(187
|
)
|
|
$
|
(4
|
)
|
|
$
|
9
|
|
|
$
|
863
|
|
Multi-family
|
|
|
96
|
|
|
|
100
|
|
|
|
—
|
|
|
|
—
|
|
|
|
196
|
|
Construction
|
|
|
14
|
|
|
|
(7
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
Land
|
|
|
8
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Farm
|
|
|
9
|
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Nonresidential real estate
|
|
|
143
|
|
|
|
101
|
|
|
|
—
|
|
|
|
—
|
|
|
|
244
|
|
Commercial nonmortgage
|
|
|
10
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
Consumer and other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
11
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
Home equity
|
|
|
30
|
|
|
|
(10
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
Automobile
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unsecured
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
Unallocated
|
|
|
200
|
|
|
|
17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
217
|
|
Totals
|
|
$
|
1,568
|
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
9
|
|
|
$
|
1,573
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2017
(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, 2017. The recorded investment in loans excludes accrued interest receivable and deferred loan costs, net due to immateriality.
March 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
$
|
4,159
|
|
|
$
|
1,706
|
|
|
$
|
5,865
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans collectively evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
|
|
|
|
|
|
|
|
$
|
188,192
|
|
|
$
|
825
|
|
|
$
|
—
|
|
|
$
|
825
|
|
Multi-family
|
|
|
|
|
|
|
|
|
|
|
15,725
|
|
|
|
217
|
|
|
|
—
|
|
|
|
217
|
|
Construction
|
|
|
|
|
|
|
|
|
|
|
2,881
|
|
|
|
5
|
|
|
|
—
|
|
|
|
5
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
1,169
|
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
Farm
|
|
|
|
|
|
|
|
|
|
|
2,069
|
|
|
|
4
|
|
|
|
—
|
|
|
|
4
|
|
Nonresidential real estate
|
|
|
|
|
|
|
|
|
|
|
28,407
|
|
|
|
243
|
|
|
|
—
|
|
|
|
243
|
|
Commercial nonmortgage
|
|
|
|
|
|
|
|
|
|
|
2,400
|
|
|
|
4
|
|
|
|
—
|
|
|
|
4
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
|
|
|
|
|
|
|
|
1,666
|
|
|
|
3
|
|
|
|
—
|
|
|
|
3
|
|
Home equity
|
|
|
|
|
|
|
|
|
|
|
6,906
|
|
|
|
12
|
|
|
|
—
|
|
|
|
12
|
|
Automobile
|
|
|
|
|
|
|
|
|
|
|
44
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
350
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unallocated
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
249,809
|
|
|
|
1,315
|
|
|
|
200
|
|
|
|
1,515
|
|
|
|
|
|
|
|
|
|
|
|
$
|
255,674
|
|
|
$
|
1,315
|
|
|
$
|
200
|
|
|
$
|
1,515
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2017
(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, 2016.
June 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
$
|
3,400
|
|
|
$
|
2,146
|
|
|
$
|
5,546
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Nonresidential real estate
|
|
|
—
|
|
|
|
164
|
|
|
|
164
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,400
|
|
|
|
2,310
|
|
|
|
5,710
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans collectively evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
|
|
|
|
|
|
|
|
$
|
180,579
|
|
|
$
|
862
|
|
|
$
|
—
|
|
|
$
|
862
|
|
Multi-family
|
|
|
|
|
|
|
|
|
|
|
15,559
|
|
|
|
192
|
|
|
|
—
|
|
|
|
192
|
|
Construction
|
|
|
|
|
|
|
|
|
|
|
2,809
|
|
|
|
5
|
|
|
|
—
|
|
|
|
5
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
1,186
|
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
Farm
|
|
|
|
|
|
|
|
|
|
|
1,735
|
|
|
|
3
|
|
|
|
—
|
|
|
|
3
|
|
Nonresidential real estate
|
|
|
|
|
|
|
|
|
|
|
26,974
|
|
|
|
217
|
|
|
|
—
|
|
|
|
217
|
|
Commercial nonmortgage
|
|
|
|
|
|
|
|
|
|
|
1,847
|
|
|
|
18
|
|
|
|
—
|
|
|
|
18
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
|
|
|
|
|
|
|
|
1,813
|
|
|
|
4
|
|
|
|
—
|
|
|
|
4
|
|
Home equity
|
|
|
|
|
|
|
|
|
|
|
6,155
|
|
|
|
11
|
|
|
|
—
|
|
|
|
11
|
|
Automobile
|
|
|
|
|
|
|
|
|
|
|
69
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
552
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
Unallocated
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
239,278
|
|
|
|
1,315
|
|
|
|
200
|
|
|
|
1,515
|
|
|
|
|
|
|
|
|
|
|
|
$
|
244,988
|
|
|
$
|
1,315
|
|
|
$
|
200
|
|
|
$
|
1,515
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2017
(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, 2017 and 2016:
March 31, 2017:
(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
|
|
$
|
4,159
|
|
|
$
|
—
|
|
|
$
|
3,871
|
|
|
$
|
7
|
|
|
$
|
7
|
|
Purchased credit-impaired loans
|
|
|
1,706
|
|
|
|
—
|
|
|
|
1,981
|
|
|
|
57
|
|
|
|
57
|
|
|
|
|
5,865
|
|
|
|
—
|
|
|
|
5,852
|
|
|
|
64
|
|
|
|
64
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
5,865
|
|
|
$
|
—
|
|
|
$
|
5,852
|
|
|
$
|
64
|
|
|
$
|
64
|
|
March 31, 2016:
(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
|
|
$
|
3,260
|
|
|
$
|
—
|
|
|
$
|
3,081
|
|
|
$
|
7
|
|
|
$
|
7
|
|
Purchased credit-impaired loans
|
|
|
2,391
|
|
|
|
—
|
|
|
|
2,833
|
|
|
|
53
|
|
|
|
53
|
|
|
|
|
5,651
|
|
|
|
—
|
|
|
|
5,914
|
|
|
|
60
|
|
|
|
60
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
5,651
|
|
|
$
|
—
|
|
|
$
|
5,914
|
|
|
$
|
60
|
|
|
$
|
60
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2017
(unaudited)
4.
Loans receivable
(continued)
The following table presents loans individually
evaluated for impairment by class of loans as of and for the three months ended March 31, 2017 and 2016:
March 31, 2017:
(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
|
|
$
|
4,159
|
|
|
$
|
—
|
|
|
$
|
4,050
|
|
|
$
|
4
|
|
|
$
|
4
|
|
Purchased credit-impaired loans
|
|
|
1,706
|
|
|
|
—
|
|
|
|
1,762
|
|
|
|
17
|
|
|
|
17
|
|
|
|
|
5,865
|
|
|
|
—
|
|
|
|
5,812
|
|
|
|
21
|
|
|
|
21
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
5,865
|
|
|
$
|
—
|
|
|
$
|
5,812
|
|
|
$
|
21
|
|
|
$
|
21
|
|
March 31, 2016:
(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
|
|
$
|
3,260
|
|
|
$
|
—
|
|
|
$
|
3,127
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Purchased credit-impaired loans
|
|
|
2,391
|
|
|
|
—
|
|
|
|
2,439
|
|
|
|
19
|
|
|
|
19
|
|
|
|
|
5,651
|
|
|
|
—
|
|
|
|
5,566
|
|
|
|
21
|
|
|
|
21
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
5,651
|
|
|
$
|
—
|
|
|
$
|
5,566
|
|
|
$
|
21
|
|
|
$
|
21
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2017
(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, 2017 and June 30, 2016:
|
|
March 31, 2017
|
|
|
June 30, 2016
|
|
(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
|
|
$
|
5,131
|
|
|
$
|
1,363
|
|
|
$
|
4,785
|
|
|
$
|
2,166
|
|
Nonresidential real estate and land
|
|
|
150
|
|
|
|
—
|
|
|
|
173
|
|
|
|
—
|
|
Consumer
|
|
|
5
|
|
|
|
—
|
|
|
|
11
|
|
|
|
—
|
|
|
|
$
|
5,286
|
|
|
$
|
1,363
|
|
|
$
|
4,969
|
|
|
$
|
2,166
|
|
Troubled Debt Restructurings:
A Troubled Debt Restructuring (“TDR”)
is the situation where the Bank grants a concession to the borrower that the Banks would not otherwise have considered due to the
borrower’s financial difficulties. All TDRs are considered “impaired.” At March 31, 2017 and June 30, 2016, the
Company had $1.6 million and $1.8 million of loans classified as TDRs, respectively. Of the TDRs at March 31, 2017, approximately
18.5% 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 TDRs by loan type
at March 31, 2017 and June 30, 2016, 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, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Real Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family
|
|
|
33
|
|
|
$
|
1,970
|
|
|
$
|
1,572
|
|
|
$
|
666
|
|
|
$
|
906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Real Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family
|
|
|
35
|
|
|
$
|
2,136
|
|
|
$
|
1,835
|
|
|
$
|
1,318
|
|
|
$
|
517
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2017
(unaudited)
4.
Loans receivable
(continued)
There were no troubled loans modified during
the three months ended March 31, 2017 or 2016.
The following table summarizes TDR loan modifications
that occurred during the nine months ended March 31, 2017 and 2016, 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, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Terms extended
|
|
$
|
97
|
|
|
$
|
—
|
|
|
$
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Terms extended
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
The Company had no allocated specific reserves
to customers whose loan terms had been modified in troubled debt restructurings as of March 31, 2017 or at June 30, 2016. The Company
had no commitments to lend on loans classified as TDRs at March 31, 2017 or June 30, 2016.
One TDR with a carrying value of $3,000 defaulted
during the nine- and three-month periods ended March 31, 2017, and is in the foreclosure process as of the date of this filing.
There were no TDRs that defaulted during the nine- or three- month periods ended March 31, 2016.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2017
(unaudited)
4.
Loans receivable
(continued)
The following table presents the aging of the
principal balance outstanding in past due loans as of March 31, 2017, 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
|
|
$
|
4,388
|
|
|
$
|
2,304
|
|
|
$
|
6,692
|
|
|
$
|
187,365
|
|
|
$
|
194,057
|
|
Multi-family
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,725
|
|
|
|
15,725
|
|
Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,881
|
|
|
|
2,881
|
|
Land
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,169
|
|
|
|
1,169
|
|
Farm
|
|
|
548
|
|
|
|
—
|
|
|
|
548
|
|
|
|
1,521
|
|
|
|
2,069
|
|
Nonresidential real estate
|
|
|
—
|
|
|
|
133
|
|
|
|
133
|
|
|
|
28,274
|
|
|
|
28,407
|
|
Commercial non-mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,400
|
|
|
|
2,400
|
|
Consumer and other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,666
|
|
|
|
1,666
|
|
Home equity
|
|
|
11
|
|
|
|
11
|
|
|
|
22
|
|
|
|
6,884
|
|
|
|
6,906
|
|
Automobile
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
44
|
|
|
|
44
|
|
Unsecured
|
|
|
5
|
|
|
|
—
|
|
|
|
5
|
|
|
|
345
|
|
|
|
350
|
|
Total
|
|
$
|
4,952
|
|
|
$
|
2,448
|
|
|
$
|
7,400
|
|
|
$
|
248,274
|
|
|
$
|
255,674
|
|
The following tables present the aging of the
principal balance outstanding in past due loans as of June 30, 2016, 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
|
|
$
|
5,712
|
|
|
$
|
4,377
|
|
|
$
|
10,089
|
|
|
$
|
176,036
|
|
|
$
|
186,125
|
|
Multi-family
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,559
|
|
|
|
15,559
|
|
Construction
|
|
|
548
|
|
|
|
—
|
|
|
|
548
|
|
|
|
2,261
|
|
|
|
2,809
|
|
Land
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,186
|
|
|
|
1,186
|
|
Farm
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,735
|
|
|
|
1,735
|
|
Nonresidential real estate
|
|
|
—
|
|
|
|
153
|
|
|
|
153
|
|
|
|
26,985
|
|
|
|
27,138
|
|
Commercial nonmortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,847
|
|
|
|
1,847
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,813
|
|
|
|
1,813
|
|
Home equity
|
|
|
37
|
|
|
|
—
|
|
|
|
37
|
|
|
|
6,118
|
|
|
|
6,155
|
|
Automobile
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
69
|
|
|
|
69
|
|
Unsecured
|
|
|
9
|
|
|
|
—
|
|
|
|
9
|
|
|
|
543
|
|
|
|
552
|
|
Total
|
|
$
|
6,306
|
|
|
$
|
4,530
|
|
|
$
|
10,836
|
|
|
$
|
234,152
|
|
|
$
|
244,988
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, 2017
(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, 2017, 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
|
|
$
|
—
|
|
|
$
|
6,002
|
|
|
$
|
11,348
|
|
|
$
|
—
|
|
|
$
|
176,741
|
|
Multi-family
|
|
|
15,394
|
|
|
|
—
|
|
|
|
331
|
|
|
|
—
|
|
|
|
—
|
|
Construction
|
|
|
2,881
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Land
|
|
|
1,135
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Farm
|
|
|
1,533
|
|
|
|
—
|
|
|
|
536
|
|
|
|
—
|
|
|
|
—
|
|
Nonresidential real estate
|
|
|
28,258
|
|
|
|
—
|
|
|
|
149
|
|
|
|
—
|
|
|
|
—
|
|
Commercial nonmortgage
|
|
|
2,400
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
1,666
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Home equity
|
|
|
6,890
|
|
|
|
—
|
|
|
|
16
|
|
|
|
—
|
|
|
|
—
|
|
Automobile
|
|
|
44
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unsecured
|
|
|
316
|
|
|
|
29
|
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
60,517
|
|
|
$
|
6,031
|
|
|
$
|
12,385
|
|
|
$
|
—
|
|
|
$
|
176,741
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2017
(unaudited)
4.
Loans receivable
(continued)
At June 30, 2016, 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
|
|
$
|
—
|
|
|
$
|
6,387
|
|
|
$
|
11,970
|
|
|
$
|
—
|
|
|
$
|
167,768
|
|
Multi-family
|
|
|
15,220
|
|
|
|
—
|
|
|
|
339
|
|
|
|
—
|
|
|
|
—
|
|
Construction
|
|
|
2,809
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Land
|
|
|
1,186
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Farm
|
|
|
1,735
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Nonresidential real estate
|
|
|
26,061
|
|
|
|
904
|
|
|
|
173
|
|
|
|
—
|
|
|
|
—
|
|
Commercial nonmortgage
|
|
|
1,817
|
|
|
|
30
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
1,813
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Home equity
|
|
|
6,149
|
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
Automobile
|
|
|
69
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unsecured
|
|
|
552
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
57,411
|
|
|
$
|
7,321
|
|
|
$
|
12,488
|
|
|
$
|
—
|
|
|
$
|
167,768
|
|
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 $388,000 and $464,000 at March 31, 2017 and June 30, 2016, respectively, is as follows:
(in thousands)
|
|
March 31, 2017
|
|
|
June 30, 2016
|
|
|
|
|
|
|
|
|
One- to four-family residential real estate
|
|
$
|
1,706
|
|
|
$
|
2,146
|
|
Nonresidential real estate
|
|
|
—
|
|
|
|
164
|
|
Outstanding balance
|
|
$
|
1,706
|
|
|
$
|
2,310
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2017
(unaudited)
4.
Loans receivable
(continued)
Accretable yield, or income expected to be collected, is as follows
(in thousands)
|
|
Three months
ended March
31, 2017
|
|
|
Nine months
ended March
31, 2017
|
|
|
Twelve
months ended
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
900
|
|
|
$
|
981
|
|
|
$
|
1,021
|
|
Accretion of income
|
|
|
(45
|
)
|
|
|
(137
|
)
|
|
|
(164
|
)
|
Reclassifications from nonaccretable difference
|
|
|
—
|
|
|
|
60
|
|
|
|
124
|
|
Disposals, net of recoveries
|
|
|
(114
|
)
|
|
|
(163
|
)
|
|
|
—
|
|
Balance at end of period
|
|
$
|
741
|
|
|
$
|
741
|
|
|
$
|
981
|
|
For those purchased loans disclosed above, the Company made no increase
in allowance for loan losses for the year ended June 30, 2016, nor for the nine- or three-month periods ended March 31, 2017. 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 and FHLMC stock.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2017
(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, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
77
|
|
|
$
|
—
|
|
|
$
|
77
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
81
|
|
|
$
|
—
|
|
|
$
|
81
|
|
|
$
|
—
|
|
FHLMC stock
|
|
|
53
|
|
|
|
—
|
|
|
|
53
|
|
|
|
—
|
|
|
|
$
|
134
|
|
|
$
|
—
|
|
|
$
|
134
|
|
|
$
|
—
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2017
(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, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
40
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
40
|
|
Land
|
|
|
79
|
|
|
|
—
|
|
|
|
—
|
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
274
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
274
|
|
Land
|
|
|
79
|
|
|
|
—
|
|
|
|
—
|
|
|
|
79
|
|
There were no impaired loans, which were measured
using the fair value of the collateral for collateral-dependent loans, at March 31, 2017, and June 30, 2016. There was no specific
provision made for the nine month periods ended March 31, 2017 or 2016.
Other real estate owned measured at fair value
less costs to sell, had carrying amounts of $119,000 and $353,000 at March 31, 2017 and June 30, 2016, respectively. Other real
estate owned was written down $83,000 and $150,000 during the nine months ended March 31, 2017 and 2016, respectively.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2017
(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, 2017
and June 30, 2016:
|
|
|
|
|
|
|
|
|
Range
|
|
|
Fair Value
|
|
|
Valuation
|
|
Unobservable
|
|
(Weighted
|
March 31, 2017
|
|
(in thousands)
|
|
|
Technique(s)
|
|
Input(s)
|
|
Average)
|
Foreclosed and repossessed assets:
|
|
|
|
|
|
|
|
|
|
|
1-4 family
|
|
$
|
40
|
|
|
Sales comparison approach
|
|
Adjustments for differences between comparable sales
|
|
-14.4% to 45.8% (28.1%)
|
Land
|
|
$
|
79
|
|
|
Sales comparison approach
|
|
Adjustments for differences between comparable sales
|
|
3.5% to 6.6% (5.0%)
|
|
|
|
|
|
|
|
|
|
Range
|
|
|
Fair Value
|
|
|
Valuation
|
|
Unobservable
|
|
(Weighted
|
June 30, 2016
|
|
(in thousands)
|
|
|
Technique(s)
|
|
Input(s)
|
|
Average)
|
Foreclosed and repossessed assets:
|
|
|
|
|
|
|
|
|
|
|
1-4 family
|
|
$
|
274
|
|
|
Sales comparison approach
|
|
Adjustments for differences between comparable sales
|
|
-24.0% to 15.2% (-5.1%)
|
Land
|
|
$
|
79
|
|
|
Sales comparison approach
|
|
Adjustments for differences between comparable sales
|
|
3.5% to 6.6% (5.0%)
|
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.
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2017
(unaudited)
5.
Disclosures About Fair Value of Assets
and Liabilities (continued)
The following methods were used to estimate
the fair value of all other financial instruments at March 31, 2017 and June 30, 2016:
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.
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, 2017 and June 30, 2016, was not material.
Kentucky First
Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2017
(unaudited)
5.
Disclosures About Fair Value of Assets
and Liabilities (continued)
Based on the foregoing methods and assumptions,
the carrying value and fair value of the Company’s financial instruments at March 31, 2017 and June 30, 2016 are as follows:
|
|
|
|
|
Fair Value Measurements at
|
|
(in thousands)
|
|
Carrying
|
|
|
March 31, 2017 Using
|
|
|
|
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
12,653
|
|
|
$
|
12,653
|
|
|
|
|
|
|
|
|
|
|
$
|
12,653
|
|
Term deposits in other financial institutions
|
|
|
5,199
|
|
|
|
5,199
|
|
|
|
|
|
|
|
|
|
|
|
5,199
|
|
Available-for-sale securities
|
|
|
77
|
|
|
|
|
|
|
$
|
77
|
|
|
|
|
|
|
|
77
|
|
Held-to-maturity securities
|
|
|
2,131
|
|
|
|
|
|
|
|
2,171
|
|
|
|
|
|
|
|
2,171
|
|
Loans held for sale
|
|
|
195
|
|
|
|
|
|
|
|
195
|
|
|
|
|
|
|
|
195
|
|
Loans receivable - net
|
|
|
253,200
|
|
|
|
|
|
|
|
|
|
|
|
258,867
|
|
|
|
258,867
|
|
Federal Home Loan Bank stock
|
|
|
6,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a
|
|
Accrued interest receivable
|
|
|
677
|
|
|
|
|
|
|
|
17
|
|
|
|
660
|
|
|
|
677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
181,619
|
|
|
$
|
80,344
|
|
|
$
|
101,262
|
|
|
|
|
|
|
|
181,606
|
|
Federal Home Loan Bank advances
|
|
|
53,839
|
|
|
|
|
|
|
|
54,039
|
|
|
|
|
|
|
|
54,039
|
|
Advances by borrowers for taxes and insurance
|
|
|
552
|
|
|
|
552
|
|
|
|
|
|
|
|
|
|
|
|
552
|
|
Accrued interest payable
|
|
|
30
|
|
|
|
|
|
|
|
30
|
|
|
|
|
|
|
|
30
|
|
|
|
|
|
|
Fair Value Measurements at
|
|
(in thousands)
|
|
Carrying
|
|
|
June 30, 2016 Using
|
|
|
|
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
13,108
|
|
|
$
|
13,108
|
|
|
|
|
|
|
|
|
|
|
$
|
13,108
|
|
Term deposits in other financial institutions
|
|
|
3,711
|
|
|
|
3,711
|
|
|
|
|
|
|
|
|
|
|
|
3,711
|
|
Available-for-sale securities
|
|
|
134
|
|
|
|
|
|
|
$
|
134
|
|
|
|
|
|
|
|
134
|
|
Held-to-maturity securities
|
|
|
4,079
|
|
|
|
|
|
|
|
4,151
|
|
|
|
|
|
|
|
4,151
|
|
Loans receivable – net
|
|
|
238,468
|
|
|
|
|
|
|
|
|
|
|
$
|
242,456
|
|
|
|
242,456
|
|
Federal Home Loan Bank stock
|
|
|
6,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a
|
|
Accrued interest receivable
|
|
|
710
|
|
|
|
|
|
|
|
21
|
|
|
|
689
|
|
|
|
710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
188,572
|
|
|
$
|
81,814
|
|
|
$
|
106,820
|
|
|
|
|
|
|
$
|
188,634
|
|
Federal Home Loan Bank advances
|
|
|
33,211
|
|
|
|
|
|
|
|
33,517
|
|
|
|
|
|
|
|
33,517
|
|
Advances by borrowers for taxes and insurance
|
|
|
741
|
|
|
|
741
|
|
|
|
|
|
|
|
|
|
|
|
741
|
|
Accrued interest payable
|
|
|
22
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
22
|
|
Kentucky First Federal Bancorp
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
March 31, 2017
(unaudited)
6.
Other Comprehensive Income (Loss)
The Company’s other comprehensive income is comprised
solely of unrealized gains and losses on available-for-sale securities. The following is a summary of the accumulated other comprehensive
income balances, net of tax:
|
|
Three months
ended
March 31, 2017
|
|
|
Nine months
ended
March 31, 2017
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
67
|
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income before reclassification
|
|
|
(24
|
)
|
|
|
12
|
|
Amounts reclassified from accumulated other comprehensive income
|
|
|
(42
|
)
|
|
|
(42
|
)
|
Net current period other comprehensive loss
|
|
|
(66
|
)
|
|
|
(30
|
)
|
Ending balance
|
|
$
|
1
|
|
|
$
|
1
|
|
Other comprehensive income (loss) components and related tax
effects for the periods indicated were as follows:
|
|
Nine months ended March 31,
|
|
(in thousands)
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Unrealized holding gains (losses) on available-for-sale securities
|
|
$
|
(45
|
)
|
|
$
|
(24
|
)
|
Tax effect
|
|
|
(15
|
)
|
|
|
(8
|
)
|
Net-of-tax amount
|
|
$
|
(30
|
)
|
|
$
|
(16
|
)
|
|
|
Three months ended March 31,
|
|
(in thousands)
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Unrealized holding gains (losses) on available-for-sale securities
|
|
$
|
(100
|
)
|
|
$
|
(8
|
)
|
Tax effect
|
|
|
(34
|
)
|
|
|
(3
|
)
|
Net-of-tax amount
|
|
$
|
(66
|
)
|
|
$
|
(5
|
)
|
Kentucky First Federal Bancorp