1. Debt Prepayment or Debt Extinguishment Costs;
2. Settlement of Zero-Coupon Debt Instruments or Other
Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing;
3. Contingent Consideration Payments Made after a
Business Combination;
4. Proceeds from the Settlement of Insurance Claims;
5. Proceeds from the Settlement of Corporate-Owned
Life Insurance Policies, including Bank-Owned Life Insurance Policies;
6. Distributions Received from Equity Method Investees;
7. Beneficial Interests in Securitization Transactions;
and
8. Separately Identifiable Cash Flows and Application
of the Predominance Principle.
The
amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods
within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15,
2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption
in an interim period. Management is finalizing its assessment of impact of the effects of adopting the new guidance on the consolidated
financial statements, but it is not expected to have a material impact.
|
|
Three months ended September 30,
|
|
(in thousands)
|
|
2017
|
|
|
2016
|
|
Net income allocated to common shareholders, basic and diluted
|
|
$
|
280
|
|
|
$
|
297
|
|
|
|
Three months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
Weighted average common shares outstanding, basic and diluted
|
|
|
8,359,607
|
|
|
|
8,335,931
|
|
There
were no stock option shares outstanding for the three month periods ended September 30, 2017 and 2016.
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 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 September 30, 2017 and June 30, 2017, the corresponding amounts of gross unrealized gains recognized in accumulated other comprehensive
income and gross unrecognized gains and losses:
|
|
September 30, 2017
|
|
(in thousands)
|
|
Amortized cost
|
|
|
Gross unrealized/ unrecognized gains
|
|
|
Gross
unrealized/ unrecognized losses
|
|
|
Estimated fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
69
|
|
|
$
|
1
|
|
|
$
|
--
|
|
|
$
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
1,368
|
|
|
$
|
42
|
|
|
$
|
8
|
|
|
$
|
1,402
|
|
|
|
June 30, 2017
|
|
(in thousands)
|
|
Amortized cost
|
|
|
Gross unrealized/ unrecognized gains
|
|
|
Gross
unrealized/ unrecognized losses
|
|
|
Estimated fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
70
|
|
|
$
|
1
|
|
|
$
|
--
|
|
|
$
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
1,487
|
|
|
$
|
45
|
|
|
$
|
9
|
|
|
$
|
1,523
|
|
At
September 30, 2017, the Company’s debt securities consist of mortgage-backed securities, which 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.
|
|
September 30, 2017
|
|
(in thousands)
|
|
Amortized Cost
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
Held-to-maturity Securities
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
1,368
|
|
|
$
|
1,402
|
|
Our
pledged securities (including overnight and time deposits in other financial institutions) totaled $2.2 million and $2.3 million
at September 30 and June 30, 2017, respectively.
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)
September
30, 2017
(unaudited)
4.
Loans receivable
The
composition of the loan portfolio was as follows:
|
|
September 30,
|
|
|
June 30,
|
|
(in thousands)
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
196,497
|
|
|
$
|
197,936
|
|
Multi-family
|
|
|
15,067
|
|
|
|
15,678
|
|
Construction
|
|
|
2,320
|
|
|
|
2,398
|
|
Land
|
|
|
901
|
|
|
|
1,304
|
|
Farm
|
|
|
2,368
|
|
|
|
2,062
|
|
Nonresidential real estate
|
|
|
31,104
|
|
|
|
29,211
|
|
Commercial nonmortgage
|
|
|
2,200
|
|
|
|
2,540
|
|
Consumer and other:
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
1,632
|
|
|
|
1,607
|
|
Home equity
|
|
|
6,819
|
|
|
|
6,853
|
|
Automobile
|
|
|
38
|
|
|
|
42
|
|
Unsecured
|
|
|
471
|
|
|
|
400
|
|
|
|
|
259,417
|
|
|
|
260,031
|
|
|
|
|
|
|
|
|
|
|
Undisbursed portion of loans in process
|
|
|
(2,047
|
)
|
|
|
(296
|
)
|
Deferred loan origination costs
|
|
|
42
|
|
|
|
42
|
|
Allowance for loan losses
|
|
|
(1,554
|
)
|
|
|
(1,533
|
)
|
|
|
$
|
255,858
|
|
|
$
|
258,244
|
|
The
following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September
30, 2017:
(in thousands)
|
|
Beginning balance
|
|
|
Provision for loan losses
|
|
|
Loans charged off
|
|
|
Recoveries
|
|
|
Ending balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
773
|
|
|
$
|
(20
|
)
|
|
$
|
(18
|
)
|
|
$
|
39
|
|
|
$
|
774
|
|
Multi-family
|
|
|
243
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
243
|
|
Construction
|
|
|
6
|
|
|
|
1
|
|
|
|
--
|
|
|
|
--
|
|
|
|
7
|
|
Land
|
|
|
4
|
|
|
|
(2
|
)
|
|
|
--
|
|
|
|
--
|
|
|
|
2
|
|
Farm
|
|
|
9
|
|
|
|
1
|
|
|
|
--
|
|
|
|
--
|
|
|
|
10
|
|
Nonresidential real estate
|
|
|
270
|
|
|
|
14
|
|
|
|
--
|
|
|
|
--
|
|
|
|
284
|
|
Commercial nonmortgage
|
|
|
6
|
|
|
|
1
|
|
|
|
--
|
|
|
|
--
|
|
|
|
7
|
|
Consumer and other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
4
|
|
|
|
1
|
|
|
|
--
|
|
|
|
--
|
|
|
|
5
|
|
Home equity
|
|
|
17
|
|
|
|
3
|
|
|
|
--
|
|
|
|
--
|
|
|
|
20
|
|
Automobile
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Unsecured
|
|
|
1
|
|
|
|
1
|
|
|
|
--
|
|
|
|
--
|
|
|
|
2
|
|
Unallocated
|
|
|
200
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
200
|
|
Totals
|
|
$
|
1,533
|
|
|
$
|
--
|
|
|
$
|
(18
|
)
|
|
$
|
39
|
|
|
$
|
1,554
|
|
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 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 September
30, 2016:
(in thousands)
|
|
Beginning balance
|
|
|
Provision for loan losses
|
|
|
Loans charged off
|
|
|
Recoveries
|
|
|
Ending balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
862
|
|
|
$
|
(16
|
)
|
|
$
|
(43
|
)
|
|
$
|
--
|
|
|
$
|
803
|
|
Multi-family
|
|
|
192
|
|
|
|
16
|
|
|
|
--
|
|
|
|
--
|
|
|
|
208
|
|
Construction
|
|
|
5
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
5
|
|
Land
|
|
|
2
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
2
|
|
Farm
|
|
|
3
|
|
|
|
1
|
|
|
|
--
|
|
|
|
--
|
|
|
|
4
|
|
Nonresidential real estate
|
|
|
217
|
|
|
|
5
|
|
|
|
--
|
|
|
|
--
|
|
|
|
222
|
|
Commercial nonmortgage
|
|
|
18
|
|
|
|
(3
|
)
|
|
|
--
|
|
|
|
--
|
|
|
|
15
|
|
Consumer and other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
4
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
4
|
|
Home equity
|
|
|
11
|
|
|
|
1
|
|
|
|
--
|
|
|
|
--
|
|
|
|
12
|
|
Automobile
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Unsecured
|
|
|
1
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1
|
|
Unallocated
|
|
|
200
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
200
|
|
Totals
|
|
$
|
1,515
|
|
|
$
|
4
|
|
|
$
|
(43
|
)
|
|
$
|
--
|
|
|
$
|
1,476
|
|
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 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 September
30, 2017. The recorded investment in loans excludes accrued interest receivable and deferred loan costs, net due to immateriality.
There were no impaired loans at September 30, 2017, that had a related specific allowance.
September 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid Principal Balance and Recorded Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
$
|
3,195
|
|
|
$
|
1,502
|
|
|
$
|
4,697
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
|
|
131
|
|
|
|
--
|
|
|
|
131
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
3,326
|
|
|
|
1,502
|
|
|
|
4,828
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans collectively evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
|
|
|
|
|
|
|
|
$
|
191,800
|
|
|
$
|
774
|
|
|
$
|
--
|
|
|
$
|
774
|
|
Multi-family
|
|
|
|
|
|
|
|
|
|
|
15,067
|
|
|
|
243
|
|
|
|
--
|
|
|
|
243
|
|
Construction
|
|
|
|
|
|
|
|
|
|
|
2,320
|
|
|
|
7
|
|
|
|
--
|
|
|
|
7
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
901
|
|
|
|
2
|
|
|
|
--
|
|
|
|
2
|
|
Farm
|
|
|
|
|
|
|
|
|
|
|
2,368
|
|
|
|
10
|
|
|
|
--
|
|
|
|
10
|
|
Nonresidential real estate
|
|
|
|
|
|
|
|
|
|
|
30,973
|
|
|
|
284
|
|
|
|
--
|
|
|
|
284
|
|
Commercial nonmortgage
|
|
|
|
|
|
|
|
|
|
|
2,200
|
|
|
|
7
|
|
|
|
--
|
|
|
|
7
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
|
|
|
|
|
|
|
|
1,632
|
|
|
|
5
|
|
|
|
--
|
|
|
|
5
|
|
Home equity
|
|
|
|
|
|
|
|
|
|
|
6,819
|
|
|
|
20
|
|
|
|
--
|
|
|
|
20
|
|
Automobile
|
|
|
|
|
|
|
|
|
|
|
38
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
471
|
|
|
|
2
|
|
|
|
--
|
|
|
|
2
|
|
Unallocated
|
|
|
|
|
|
|
|
|
|
|
--
|
|
|
|
--
|
|
|
|
200
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
254,589
|
|
|
|
1,354
|
|
|
|
200
|
|
|
|
1,554
|
|
|
|
|
|
|
|
|
|
|
|
$
|
259,417
|
|
|
$
|
1,354
|
|
|
$
|
200
|
|
|
$
|
1,554
|
|
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 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, 2017. There were no impaired loans at June 30, 2017, that had a related specific allowance.
June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid Principal Balance and Recorded Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
$
|
3,706
|
|
|
$
|
1,676
|
|
|
$
|
5,382
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
Nonresidential real estate
|
|
|
131
|
|
|
|
--
|
|
|
|
131
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
3,837
|
|
|
|
1,676
|
|
|
|
5,513
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans collectively evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
|
|
|
|
|
|
|
|
$
|
192,554
|
|
|
$
|
773
|
|
|
$
|
--
|
|
|
$
|
773
|
|
Multi-family
|
|
|
|
|
|
|
|
|
|
|
15,678
|
|
|
|
243
|
|
|
|
--
|
|
|
|
243
|
|
Construction
|
|
|
|
|
|
|
|
|
|
|
2,398
|
|
|
|
6
|
|
|
|
--
|
|
|
|
6
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
1,304
|
|
|
|
4
|
|
|
|
--
|
|
|
|
4
|
|
Farm
|
|
|
|
|
|
|
|
|
|
|
2,062
|
|
|
|
9
|
|
|
|
--
|
|
|
|
9
|
|
Nonresidential real estate
|
|
|
|
|
|
|
|
|
|
|
29,080
|
|
|
|
270
|
|
|
|
--
|
|
|
|
270
|
|
Commercial nonmortgage
|
|
|
|
|
|
|
|
|
|
|
2,540
|
|
|
|
6
|
|
|
|
--
|
|
|
|
6
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
|
|
|
|
|
|
|
|
1,607
|
|
|
|
4
|
|
|
|
--
|
|
|
|
4
|
|
Home equity
|
|
|
|
|
|
|
|
|
|
|
6,853
|
|
|
|
17
|
|
|
|
--
|
|
|
|
17
|
|
Automobile
|
|
|
|
|
|
|
|
|
|
|
42
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
400
|
|
|
|
1
|
|
|
|
--
|
|
|
|
1
|
|
Unallocated
|
|
|
|
|
|
|
|
|
|
|
--
|
|
|
|
--
|
|
|
|
200
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
254,518
|
|
|
|
1,333
|
|
|
|
200
|
|
|
|
1,533
|
|
|
|
|
|
|
|
|
|
|
|
$
|
260,031
|
|
|
$
|
1,333
|
|
|
$
|
200
|
|
|
$
|
1,533
|
|
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 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 September
30, 2017 and 2016:
September
30, 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
|
|
$
|
3,195
|
|
|
$
|
-
|
|
|
$
|
3,450
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Nonresidential real estate
|
|
|
131
|
|
|
|
-
|
|
|
|
131
|
|
|
|
-
|
|
|
|
-
|
|
Purchased credit-impaired loans
|
|
|
1,502
|
|
|
|
-
|
|
|
|
1,589
|
|
|
|
30
|
|
|
|
30
|
|
|
|
|
4,828
|
|
|
|
-
|
|
|
|
5,170
|
|
|
|
32
|
|
|
|
32
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
4,828
|
|
|
$
|
-
|
|
|
$
|
5,170
|
|
|
$
|
32
|
|
|
$
|
32
|
|
September
30, 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
|
|
$
|
3,980
|
|
|
$
|
--
|
|
|
$
|
3,690
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Purchased credit-impaired loans
|
|
|
2,091
|
|
|
|
--
|
|
|
|
2,201
|
|
|
|
14
|
|
|
|
14
|
|
|
|
|
6,071
|
|
|
|
--
|
|
|
|
5,891
|
|
|
|
16
|
|
|
|
16
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
$
|
6,071
|
|
|
$
|
--
|
|
|
$
|
5,891
|
|
|
$
|
16
|
|
|
$
|
16
|
|
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 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 September 30, 2017 and June 30, 2017:
|
|
September 30, 2017
|
|
|
June 30, 2017
|
|
(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
|
|
$
|
4,790
|
|
|
$
|
1,598
|
|
|
$
|
4,870
|
|
|
$
|
1,770
|
|
Nonresidential real estate and land
|
|
|
150
|
|
|
|
539
|
|
|
|
151
|
|
|
|
--
|
|
Consumer
|
|
|
9
|
|
|
|
22
|
|
|
|
8
|
|
|
|
11
|
|
|
|
$
|
4,949
|
|
|
$
|
2,159
|
|
|
$
|
5,029
|
|
|
$
|
1,781
|
|
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 September 30, 2017 and June 30, 2017, the Company had $1.7 million and $1.5 million of loans classified as TDRs, respectively.
Of the TDRs at September 30, 2017, approximately 15.9% were related to the borrower’s completion of Chapter 7 bankruptcy
proceedings with no reaffirmation of the debt to the Banks.
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 2017
(unaudited)
4.
Loans receivable
(continued)
The
following table summarizes TDR loan modifications that occurred during the three months ended September 30, 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
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
Residential real estate:
|
|
|
|
|
|
|
|
|
|
Terms extended
|
|
$
|
314
|
|
|
$
|
--
|
|
|
$
|
314
|
|
The
Company had no TDRs during the three months ended September 30, 2016. The Company had no allocated specific reserves to customers
whose loan terms had been modified in troubled debt restructurings as of September 30, 2017 or at June 30, 2017. The Company had
no commitments to lend on loans classified as TDRs at September 30, 2017 or June 30, 2017.
Four
TDRs with a carrying value of $136,000 defaulted during the three-month period ended September 30, 2017. The properties were taken
into REO and sold. There were no TDRs that defaulted during the three- month period ended September 30, 2016.
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 2017
(unaudited)
4.
Loans receivable
(continued)
The
following table presents the aging of the principal balance outstanding in past due loans as of September 30, 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
|
|
$
|
3,973
|
|
|
$
|
3,847
|
|
|
$
|
7,820
|
|
|
$
|
188,677
|
|
|
$
|
196,497
|
|
Multi-family
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
15,067
|
|
|
|
15,067
|
|
Construction
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
2,320
|
|
|
|
2,320
|
|
Land
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
901
|
|
|
|
901
|
|
Farm
|
|
|
--
|
|
|
|
539
|
|
|
|
539
|
|
|
|
1,829
|
|
|
|
2,368
|
|
Nonresidential real estate
|
|
|
630
|
|
|
|
133
|
|
|
|
763
|
|
|
|
30,341
|
|
|
|
31,104
|
|
Commercial non-mortgage
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
2,200
|
|
|
|
2,200
|
|
Consumer and other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,632
|
|
|
|
1,632
|
|
Home equity
|
|
|
3
|
|
|
|
22
|
|
|
|
25
|
|
|
|
6,794
|
|
|
|
6,819
|
|
Automobile
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
38
|
|
|
|
38
|
|
Unsecured
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
471
|
|
|
|
471
|
|
Total
|
|
$
|
4,606
|
|
|
$
|
4,541
|
|
|
$
|
9,147
|
|
|
$
|
250,270
|
|
|
$
|
259,417
|
|
The
following tables present the aging of the principal balance outstanding in past due loans as of June 30, 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
|
|
$
|
5,193
|
|
|
$
|
4,496
|
|
|
$
|
9,689
|
|
|
$
|
188,247
|
|
|
$
|
197,936
|
|
Multi-family
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
15,678
|
|
|
|
15,678
|
|
Construction
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
2,398
|
|
|
|
2,398
|
|
Land
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,304
|
|
|
|
1,304
|
|
Farm
|
|
|
539
|
|
|
|
--
|
|
|
|
539
|
|
|
|
1,523
|
|
|
|
2,062
|
|
Nonresidential real estate
|
|
|
635
|
|
|
|
133
|
|
|
|
768
|
|
|
|
28,443
|
|
|
|
29,211
|
|
Commercial nonmortgage
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
2,540
|
|
|
|
2,540
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,607
|
|
|
|
1,607
|
|
Home equity
|
|
|
17
|
|
|
|
11
|
|
|
|
28
|
|
|
|
6,825
|
|
|
|
6,853
|
|
Automobile
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
42
|
|
|
|
42
|
|
Unsecured
|
|
|
13
|
|
|
|
--
|
|
|
|
13
|
|
|
|
387
|
|
|
|
400
|
|
Total
|
|
$
|
6,397
|
|
|
$
|
4,640
|
|
|
$
|
11,037
|
|
|
$
|
248,994
|
|
|
$
|
260,031
|
|
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 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 September 30, 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
|
|
$
|
--
|
|
|
$
|
4,569
|
|
|
$
|
9,998
|
|
|
$
|
--
|
|
|
$
|
181,930
|
|
Multi-family
|
|
|
14,686
|
|
|
|
--
|
|
|
|
381
|
|
|
|
--
|
|
|
|
--
|
|
Construction
|
|
|
2,320
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Land
|
|
|
901
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Farm
|
|
|
1,829
|
|
|
|
--
|
|
|
|
539
|
|
|
|
--
|
|
|
|
--
|
|
Nonresidential real estate
|
|
|
30,954
|
|
|
|
--
|
|
|
|
150
|
|
|
|
--
|
|
|
|
--
|
|
Commercial nonmortgage
|
|
|
2,174
|
|
|
|
26
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
1,632
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Home equity
|
|
|
6,819
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Automobile
|
|
|
38
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Unsecured
|
|
|
467
|
|
|
|
--
|
|
|
|
4
|
|
|
|
--
|
|
|
|
--
|
|
|
|
$
|
61,820
|
|
|
$
|
4,595
|
|
|
$
|
11,072
|
|
|
$
|
--
|
|
|
$
|
181,930
|
|
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 2017
(unaudited)
4.
Loans receivable
(continued)
At
June 30, 2017, 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
|
|
$
|
--
|
|
|
$
|
6,110
|
|
|
$
|
9,883
|
|
|
$
|
--
|
|
|
$
|
181,943
|
|
Multi-family
|
|
|
14,541
|
|
|
|
--
|
|
|
|
1,137
|
|
|
|
--
|
|
|
|
--
|
|
Construction
|
|
|
2,398
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Land
|
|
|
1,304
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Farm
|
|
|
1,523
|
|
|
|
--
|
|
|
|
539
|
|
|
|
--
|
|
|
|
--
|
|
Nonresidential real estate
|
|
|
29,061
|
|
|
|
--
|
|
|
|
150
|
|
|
|
--
|
|
|
|
--
|
|
Commercial nonmortgage
|
|
|
2,513
|
|
|
|
27
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans on deposits
|
|
|
1,607
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Home equity
|
|
|
6,744
|
|
|
|
93
|
|
|
|
16
|
|
|
|
--
|
|
|
|
--
|
|
Automobile
|
|
|
42
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Unsecured
|
|
|
396
|
|
|
|
--
|
|
|
|
4
|
|
|
|
--
|
|
|
|
--
|
|
|
|
$
|
60,129
|
|
|
$
|
6,230
|
|
|
$
|
11,729
|
|
|
$
|
--
|
|
|
$
|
181,943
|
|
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 at September 30, 2017 and June 30, 2017, respectively, is
as follows:
(in thousands)
|
|
September 30, 2017
|
|
|
June 30,
2017
|
|
|
|
|
|
|
|
|
One- to four-family residential real estate
|
|
$
|
1,502
|
|
|
$
|
1,676
|
|
Nonresidential real estate
|
|
|
--
|
|
|
|
--
|
|
Outstanding balance
|
|
$
|
1,502
|
|
|
$
|
1,676
|
|
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 2017
(unaudited)
4.
Loans receivable
(continued)
Accretable
yield, or income expected to be collected on loans purchased during fiscal year 2013, is as follows
(in thousands)
|
|
Three months
ended
September 30,
2017
|
|
|
Three months
ended
September 30,
2016
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
720
|
|
|
$
|
981
|
|
Accretion of income
|
|
|
(22
|
)
|
|
|
(46
|
)
|
Reclassifications from nonaccretable difference
|
|
|
-
|
|
|
|
-
|
|
Disposals, net of recoveries
|
|
|
1
|
|
|
|
-
|
|
Balance at end of period
|
|
$
|
699
|
|
|
$
|
935
|
|
For
those purchased loans disclosed above, the Company made no increase in allowance for loan losses for the year ended June 30, 2017,
nor for the three-month period ended September 30, 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 that the entity has the ability to access at
the measurement date.
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 reflect a reporting entity’s own assumptions and 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)
September
30, 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
70
|
|
|
$
|
--
|
|
|
$
|
70
|
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency mortgage-backed: residential
|
|
$
|
71
|
|
|
$
|
--
|
|
|
$
|
71
|
|
|
$
|
--
|
|
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 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)
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
70
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
103
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
103
|
|
Land
|
|
|
79
|
|
|
|
-
|
|
|
|
-
|
|
|
|
79
|
|
There
were no impaired loans, which were measured using the fair value of the collateral for collateral-dependent loans, at September
30, 2017, and June 30, 2017. There was no specific provision made for the three month periods ended September 30, 2017 or 2016.
Other real estate owned measured at fair value
less costs to sell, had carrying amounts of $182,000 at June 30, 2017. Other real estate owned was not written down during the
three months ended September 30, 2017 and 2016.
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 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 September 30, 2017 and June 30, 2017:
September 30, 2017
|
|
Fair Value
(in thousands)
|
|
|
Valuation
Technique(s)
|
|
Unobservable
Input(s)
|
|
Range
(Weighted
Average)
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
70
|
|
|
Sales comparison approach
|
|
Adjustments for differences between comparable sales
|
|
-23.5% to 13.8% (-1.5%)
|
June 30, 2017
|
|
Fair Value (in thousands)
|
|
|
Valuation
Technique(s)
|
|
Unobservable
Input(s)
|
|
Range
(Weighted
Average)
|
|
|
|
|
|
|
|
|
|
|
Foreclosed and repossessed assets:
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
103
|
|
|
Sales comparison approach
|
|
Adjustments for differences between comparable sales
|
|
-3.6% to 45.8% (9.5%)
|
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)
September
30, 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 September 30, 2017 and June 30, 2017:
Cash and cash equivalents, interest-bearing
deposits and time deposits in other financial institutions
: 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
:
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 September 30, 2017 and
June 30, 2017, was not material.
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 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 September
30, 2017 and June 30, 2017 are as follows:
|
|
|
|
Fair Value Measurements at
|
|
|
|
|
September 30, 2017 Using
|
(in thousands)
|
|
Carrying Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
8,346
|
|
|
$
|
8,346
|
|
|
|
|
|
|
|
|
|
|
$
|
8,346
|
|
Term deposits in other financial institutions
|
|
|
6,928
|
|
|
|
6,928
|
|
|
|
|
|
|
|
|
|
|
|
6,928
|
|
Available-for-sale securities
|
|
|
70
|
|
|
|
|
|
|
$
|
70
|
|
|
|
|
|
|
|
70
|
|
Held-to-maturity securities
|
|
|
1,368
|
|
|
|
|
|
|
|
1,402
|
|
|
|
|
|
|
|
1,402
|
|
Loans receivable - net
|
|
|
255,858
|
|
|
|
|
|
|
|
|
|
|
|
267,115
|
|
|
|
267,115
|
|
Federal Home Loan Bank stock
|
|
|
6,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a
|
|
Accrued interest receivable
|
|
|
679
|
|
|
|
|
|
|
|
679
|
|
|
|
|
|
|
|
679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
188,187
|
|
|
$
|
77,449
|
|
|
$
|
110,209
|
|
|
|
|
|
|
|
187,658
|
|
Federal Home Loan Bank advances
|
|
|
46,230
|
|
|
|
|
|
|
|
46,314
|
|
|
|
|
|
|
|
46,314
|
|
Advances by borrowers for taxes and insurance
|
|
|
1,054
|
|
|
|
1,054
|
|
|
|
|
|
|
|
|
|
|
|
1,054
|
|
Accrued interest payable
|
|
|
22
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
Fair
Value Measurements at
|
|
|
|
|
|
June
30, 2017 Using
|
(in thousands)
|
|
Carrying
Value
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
12,804
|
|
|
$
|
12,804
|
|
|
|
|
|
|
|
|
|
$
|
12,804
|
Term deposits
in other financial institutions
|
|
|
4,201
|
|
|
|
4,201
|
|
|
|
|
|
|
|
|
|
|
4,201
|
Available-for-sale
securities
|
|
|
71
|
|
|
|
|
|
|
$
|
71
|
|
|
|
|
|
|
71
|
Held-to-maturity
securities
|
|
|
1,487
|
|
|
|
|
|
|
|
1,523
|
|
|
|
|
|
|
1,523
|
Loans receivable
– net
|
|
|
258,244
|
|
|
|
|
|
|
|
|
|
|
$
|
269,606
|
|
|
269,606
|
Federal Home Loan
Bank stock
|
|
|
6,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a
|
Accrued interest
receivable
|
|
|
679
|
|
|
|
|
|
|
|
679
|
|
|
|
|
|
|
679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
182,845
|
|
|
$
|
78,561
|
|
|
$
|
103,786
|
|
|
|
|
|
|
$182,347
|
Federal Home Loan
Bank advances
|
|
|
55,780
|
|
|
|
|
|
|
|
55,881
|
|
|
|
|
|
|
55,881
|
Advances by borrowers
for taxes and insurance
|
|
|
818
|
|
|
|
|
|
|
|
818
|
|
|
|
|
|
|
818
|
Accrued interest
payable
|
|
|
21
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
21
|
Kentucky
First Federal Bancorp
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September
30, 2017
(unaudited)
6.
Accumulated Other Comprehensive Income (Loss)
The
Company’s accumulated 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
September 30,
2017
|
|
|
|
|
|
Beginning balance
|
|
$
|
1
|
|
Current year change
|
|
|
--
|
|
Ending balance
|
|
$
|
1
|
|
Accumulated
other comprehensive income (loss) components and related tax effects for the periods indicated were as follows:
|
|
Three months ended September 30,
|
|
(in thousands)
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Unrealized holding gains (losses) on available-for-sale securities
|
|
$
|
1
|
|
|
$
|
(8
|
)
|
Tax effect
|
|
|
--
|
|
|
|
(3
|
)
|
Net-of-tax amount
|
|
$
|
1
|
|
|
$
|
(5
|
)
|
7.
Subsequent Events
Subsequent to September 30, 2017, the former President/CEO and
a current director of First Federal Savings Bank of Kentucky passed away. Mr. Garland was covered under the bank-owned life insurance
program operated as part of the overall employee benefits program, which has been in place for many years. As a result of the
passing of this director, the Bank will be receiving the insurance proceeds on the policies maintained for the director in the
amount of approximately $1.2 million. Because the cash value of the policies pertaining to Mr. Garland totaled $792,000 at September
30, 2017, the Company expects to recognize income of approximately $370,000.
Kentucky
First Federal Bancorp