Kentucky First Federal Bancorp Releases Earnings

HAZARD, Ky. and FRANKFORT, Ky., Nov. 4 /PRNewswire-FirstCall/ -- Kentucky First Federal Bancorp (Nasdaq: KFFB), the holding company for First Federal Savings and Loan Association of Hazard and First Federal Savings Bank of Frankfort, Kentucky, announced a net loss of $362,000 or $(0.05) diluted earnings per share for the three months ended September 30, 2009, compared to net income of $312,000 or $0.04 diluted earnings per share for the three months ended September 30, 2008, a decrease of $674,000.

The decrease in net earnings for the quarter ended September 30, 2009 was primarily attributable to a provision for loan loss of $968,000 compared to a provision of $15,000 in the prior year's quarter. The provision was chiefly the result of the Company's establishing specific valuation reserves in response to deterioration in the financial position of a single borrower. Also contributing to the decrease in net earnings was a decrease in net interest income. Interest income decreased $237,000 or 7.6% from $3.1 million for the quarter ended September 30, 2008 to $2.9 million for the quarter just ended. While interest expense decreased on a quarter-to-quarter basis, the decrease of $194,000 or 12.4% was insufficient to offset the decrease in interest income. Interest expense was $1.4 million for the quarter just ended. FDIC premiums increased $36,000 or 600.0% to $42,000 for the quarter ended September 30, 2009, compared to $6,000 for the quarter ended September 30, 2008.

At September 30, 2009 assets had decreased $5.1 million or 2.1% to $235.8 million compared to $240.9 million at June 30, 2009. This decrease was attributed primarily to a decrease in cash and cash equivalents and investment securities, which resulted from the Company's efforts to effectively utilize liquidity by continuing its strategy of funding loans to the extent possible and then paying down borrowings. Also contributing to the decrease in assets was the increase in the allowance for loan and lease losses, which increased $921,000 or 135.8% to $1.6 million at September 30, 2009. FHLB advances decreased $6.2 million or 15.3% to $34.0 million at September 30, 2009. Funding for the borrowing reduction came primarily from maturing investment securities, which decreased $3.6 million or 17.4% to $17.0 million at September 30, 2009. Additional funding also came from an increase of $1.6 million or 1.1% in deposits, which totaled $141.3 million at September 30, 2009.

At September 30, 2009, the Company reported its book value per share as $7.35.

This press release may contain statements that are forward-looking, as that term is defined by the Private Securities Litigation Act of 1995 or the Securities and Exchange Commission in its rules, regulations and releases. The Company intends that such forward-looking statements be subject to the safe harbors created thereby. All forward-looking statements are based on current expectations regarding important risk factors including, but not limited to, real estate values, the impact of interest rates on financing, changes in general economic conditions, legislative and regulatory changes that adversely affect the business of the Company, changes in the securities markets and the Risk Factors described in Item 1A of the Company's Annual Report on Form 10-K for the year ended June 30, 2009. Accordingly, actual results may differ from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by the Company or any other person that results expressed therein will be achieved.

Kentucky First Federal Bancorp is the parent company of First Federal Savings and Loan Association, which operates one banking office in Hazard, Kentucky and First Federal Savings Bank, which operates three banking offices in Frankfort, Kentucky. Kentucky First Federal Bancorp shares are traded on the Nasdaq National Market under the symbol KFFB. At September 30, 2009, the Company had approximately 7,867,000 shares outstanding of which approximately 60.1% was held by First Federal MHC.

         SUMMARY OF FINANCIAL HIGHLIGHTS

         Condensed Consolidated Statements of Financial Condition

                                                September 30, June 30,
                                                    2009       2009
                                                    ----       ----
                                           (In thousands, except share data)
                                                (Unaudited)  (Audited)
     Assets
        Cash and Cash Equivalents                  $3,236     $4,217
        Investment Securities                      16,980     20,550
        Loans Available for Sale                       --        230
        Loans Receivable, net                     188,378    188,931
        Other Assets                               27,253     26,973
                                                   ------     ------
             Total Assets                        $235,847   $240,901
                                                 ========   ========
     Liabilities
        Deposits                                 $141,311   $139,743
        FHLB Advances                              34,005     40,156
        Other Liabilities                           2,729      2,608
                                                    -----      -----
           Total Liabilities                      178,045    182,507
     Shareholders' Equity                          57,802     58,394
                                                   ------     ------
     Total Liabilities and Equity                $235,847   $240,901
                                                 ========   ========
     Book Value Per Share                           $7.35      $7.42
                                                    =====      =====


         Condensed Consolidated Statements of Operations
         (In thousands, except share data)

                                            Three months ended September 30,
                                                    2009       2008
                                                    ----       ----
                                                      (Unaudited)

        Interest Income                            $2,894     $3,131
        Interest Expense                            1,366      1,560
                                                    -----      -----
        Net Interest Income                         1,528      1,571
        Provision for Losses on Loans                 968         15
        Non-interest Income                            67         55
        Non-interest Expense                        1,177      1,146
                                                    -----      -----
        Income (Loss) Before Income Taxes            (550)       465
        Income Taxes (Benefit)                       (188)       153
                                                     ----        ---
        Net Income (Loss)                           $(362)      $312
                                                    =====       ====
        Earnings (loss) per share:
          Basic                                    $(0.05)      0.04
                                                   ======       ====
          Diluted                                  $(0.05)      0.04
                                                   ======       ====
        Weighted average outstanding shares:
          Basic                                 7,564,576  7,692,010
                                                =========  =========
          Diluted                               7,564,576  7,692,010
                                                =========  =========